Court of Appeal for Ontario

Date: 2017-02-08

Docket: M46908 and M46916

Judges: Strathy C.J.O., Weiler and Benotto JJ.A.

In the Matter of the Companies' Creditors Arrangement Act

In the Matter of the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended

And in the Matter of a proposed plan of compromise or arrangement with respect to U.S. Steel Canada Inc.

Counsel

For the moving party, the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union: Ken Rosenberg, Lily Harmer, Karen Jones and Robert Healey

For the moving party, USW Local 1005: Sharon L.C. White

For the moving party, Representative Counsel to the non-union active employees and retirees of U.S. Steel Canada Inc.: Andrew J. Hatnay, Barbara Walancik and Amy Tang

For the responding party, U.S. Steel Canada Inc.: James Gage and Paul Steep

For the responding party, the Monitor, Ernst & Young Inc.: Robert Staley, Kevin Zych, and William A. Bortolin

Heard: In writing

Endorsement

[1] These motions for leave to appeal arise in the context of the ongoing proceedings under the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, involving U.S. Steel Canada Inc. ("USSC").

[2] In 2015, an order was made suspending the payment of certain benefits, referred to as "OPEBs" (other post-employment benefits, for example, prescription, dental and vision benefits) to retirees. The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union ("USW"), together with its local unions and representative counsel to the non-USW active and retired members, jointly brought a motion. They sought to have the payment of OPEBs reinstated on the basis that USSC's financial position had improved since the 2015 order was made.

[3] The CCAA judge dismissed the motion on the condition that USSC make a one-time payment of $2.7 million towards the benefits. The moving parties now seek leave to appeal from that decision.

[4] There is no dispute about the applicable test. Leave to appeal is granted sparingly in CCAA proceedings and only where there are serious and arguable grounds that are of real and significant interest to the parties. In assessing whether leave should be granted, the court must consider:

a. whether the proposed appeal is prima facie meritorious or frivolous;

b. whether the point on the proposed appeal is of significance to the practice;

c. whether the point on the proposed appeal is of significance to the action; and

d. whether the proposed appeal will unduly hinder the progress of the action.

See: Nortel Networks Corporation (Re), 2016 ONCA 332, 36 C.B.R. (6th) 1, at para. 34; Nortel Networks Corporation (Re), 2016 ONCA 749, at para. 6; Stelco Inc. (Re) (2005), 75 O.R. (3d) 5 (C.A.), at para. 24.

[5] In this case, the CCAA judge had broad discretion under s. 11. The test governing the exercise of that discretion is whether the order furthers the remedial objectives of the statute, namely, to permit the debtor to carry on business and avoid the social and economic consequences of liquidation: Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, [2010] 3 S.C.R. 379, at para. 70.

[6] It is rare that this court will interfere with a discretionary decision of a CCAA judge. In our view, there is no prima facie merit to the moving parties' submission that this court should do so in this case. The CCAA judge, who has extensive familiarity with the circumstances of the debtor, considered the evidence before him, the submissions of the parties and their respective "with prejudice" settlement discussions. He carefully balanced competing considerations, including the goal of a successful reorganization, which would benefit all interested parties, including the moving parties. In the final analysis, while he refused to reinstate the payment of benefits to the end of 2016, he ordered that USSC make a one-time payment of $2.7 million towards benefits. We are not satisfied that an appeal from that order has any real prospect of success.

[7] Given the fact-specific nature of the exercise of discretion in this case, the issue is not of significance to the insolvency practice.

[8] In the circumstances, it is unnecessary to consider the other aspects of the leave test.

[9] For these reasons, leave to appeal is denied. The motion is dismissed with costs to the respondent USSC, fixed at $2,500, inclusive of disbursements and all applicable taxes.

"G.R. Strathy C.J.O."

"K.M. Weiler J.A."

"M.L. Benotto J.A."