COURT FILE AND PARTIES

COURT FILE NO.: CV-12-9728-00CL;
CV-12-9723-00-CL

DATE: 20121029

SUPERIOR COURT OF JUSTICE – ONTARIO
(COMMERCIAL LIST)

RE: (COURT FILE NO: CV-12-9728-00CL)

PARMALAT CANADA INC., Applicant

AND:

ONTARIO TEACHERS’ PENSION PLAN BOARD, Respondent

AND RE: (COURT FILE NO: CV-12-9723-00CL)

ONTARIO TEACHERS’ PENSION PLAN, Applicant

AND:

PARMALAT CANADA INC. (successor to Parmalat Dairy & Bakery Inc.)

BEFORE: CUMMING J.

COUNSEL:
William J. Burden, Timothy Pinos, Linda I. Knol and Jessica Zagar, for the Applicant, Parmalat Canada Inc.

Jessica Kimmel, Rebecca Burrows and Hannah Arthurs, for the Respondent, Ontario Teachers’ Pension Plan Board

HEARD: OCTOBER 18 AND 19, 2012

ENDORSEMENT

[ 1 ] There are two applications before the Court.

The Parmalat Canada Inc. Application

[ 2 ] Parmalat Canada Inc. (“Parmalat Canada”) brings an application pursuant to s. 46(1) of the Arbitration Act, 1991 S.O. 1991, c. 17 (“the Act ”) for an order setting aside the final award (the “Award”) of Ronald G. Slaght, Q.C. (the “Arbitrator”) who was the sole arbitrator in a dispute between Parmalat Canada and the Ontario Teachers’ Pension Plan Board (“Teachers’”).

[ 3 ] Parmalat Canada alleges that the Arbitrator failed to treat Parmalat Canada fairly (in contravention of s. 19 of the Act ), failed to give Parmalat Canada an opportunity to present its case and to respond to Teachers’ case, and issued a decision that is unreasonable.

[ 4 ] Parmalat Canada is active in all sectors of the dairy business in Canada. Given the financial crisis, collapse, and restructuring faced by its Italian parent, Parmalat Italy S.p.A. (“Parmalat Italy”), over 2003 to 2005, Parmalat Canada had to be refinanced or sold to avoid default on its existing financial obligations. This led ultimately to a Credit Agreement together with a so-called Liquidity Payment Agreement (“LPA”) with Teachers’, who provided a financing package in 2004 to Parmalat Canada of some $530 million in two tiers.

The Arbitration

[ 5 ] The Notice of Arbitration is dated July 21, 2011. The Arbitration Agreement dated September 27, 2011 sets forth a detailed schedule and timing for events culminating in the intended five day hearing commencing December 19, 2011.

[ 6 ] The Arbitrator gave his 92 page Award on March 26, 2012. Section 4.11(5) of the LPA provides that the decision of the Arbitrator is “final and binding” with no appeal.

[ 7 ] The Arbitrator states (at para. 36) that “…the parties understood that Parmalat Canada and its parent might have to cede some portion of its anticipated success to Teachers’, in exchange for the wherewithal to fund anticipated significant growth and equity creation in the Canadian business”.

[ 8 ] The LPA was negotiated to serve this purpose as one component of the financing package. That is, in exchange for the financing, one contractual term was that Parmalat Canada might have to pay a premium sum to Teachers’ in recognition of the recovery success of Parmalat Canada as seen in the liquidity and value added over time, enabled by the refinancing extended by Teachers’. The Arbitrator found (at para. 275) that Parmalat Canada had signed the LPA by July 5, 2004.

[ 9 ] If a “Liquidity Event” (defined in s. 1.1 of the LPA) were to occur then a “Liquidity Payment” (being a cash payment equal to 10% of the equity value of Parmalat Canada) was to be paid to Teachers’. A “Liquidity Event” included “an Indirect Change of Control”, also a defined term (in s. 1.1 of the LPA). These definitions are central to the Arbitration at hand:

“Indirect Change of Control” means any Person or Persons, acting jointly and in concert, acquiring, directly or indirectly, (a) securities carrying more than 40% of the votes attaching to all securities of Parmalat Italy, (b) the right to vote securities carrying more than 40% of the votes attaching to all securities of Parmalat Italy…. (d) securities or the right to vote securities of Parmalat Italy carrying any number of votes where thereafter a majority of the board of directors of Parmalat Italy are nominees of such Person or Persons.

“Liquidity Event” means, other than an Exempt Transaction,

(i) an Indirect Change of Control;

(ii) a Change of Ownership;

(iii) a direct or indirect, sale or disposition of all or substantially all of the assets of the Obligors;

(iv) an amalgamation, merger, plan, proposal, arrangement (including any debt to equity conversion) or similar transaction involving any of the Obligors or their direct or indirect shareholders;

(v) any direct or indirect issuance of Participating Securities in respect of any Obligor, including a director or indirect initial public offering; and

(vi) any other transaction that has a substantially similar effect to the transactions described in paragraphs (i) to (v) above in that it provides significant liquidity or a realization of value to Parmalat Italy or its stakeholders based in whole or in part on the value of the Business.

and, for greater certainty, includes a deemed Liquidity Event pursuant to Section 2.1(2) or 2.1(5) but does not include a Deferred Liquidity Event.

[ 10 ] The $530 million financing package made available by Teachers’ was repaid early, about July 15, 2006, with Teachers’ realizing some $142,478,781.18 in income within two years.

[ 11 ] The Arbitrator noted (at para. 203) that the specific point underlining Parmalat Canada’s position and submissions before the Arbitrator was “…that significant liquidity or realization of value must result from any transaction to qualify it as a Liquidity Event....”. That is, Parmalat Canada argued that value realization and/or liquidity to fund the Liquidity Payment had to be present for a Liquidity Event to have occurred.

[ 12 ] The Arbitrator, however, concluded after a careful analysis and “plain reading” (para. 208) of the pertinent contractual language that “…the parties in arriving at the descriptions and definitions that would give rise to a Liquidity Event, have assumed or deemed that...an Indirect Change of Control, if triggered, provided significant liquidity or realization of value to the stakeholders” (para. 206).

[ 13 ] Teachers’ claimed that a Liquidity Event had occurred within the meaning and terms of the LPA such that there was a “Liquidity Payment” due to Teachers’ under the contractual obligations imposed by the LPA.

The First Claimed “Liquidity Event”

[ 14 ] The first claimed Liquidity Event by Teachers’ was alleged to have occurred on June 28, 2011 with the election of the Group Lactalis S.A. (“Lactalis”) slate of directors for Parmalat Italy that day, pursuant to the acquisition of sufficient shares by Lactalis to elect its slate. The LPA states (s. 1.1):

“Indirect Change of Control” means any Person or Persons, acting jointly and in concert, acquiring, directly or indirectly...(d) securities or the right to vote securities of Parmalat Italy carrying any number of votes where thereafter a majority of the board of directors of Parmalat Italy are nominees of such Person or Persons.

[ 15 ] Lactalis had acquired 28.97 % of the shares of Parmalat Italy by March 31, 2011 and put forward a slate of proposed directors, who were elected on June 28, 2011. The Arbitrator found (at para. 222) that the acquiring shareholder, Lactalis, being able to elect its slate of directors on June 28, 2011, thereby gained control of Parmalat Italy.

[ 16 ] The Arbitrator held, as seen in the Arbitral Award:

1. THE ARBITRATOR DECLARES that a Liquidity Event occurred within the meaning of subsection (d) of the definition of Indirect Change of Control in the LPA upon the acquisition by Group Lactalis S.A. (“Lactalis”) of securities of Parmalat S.p.A. (“Parmalat Italy”) and the subsequent election, on June 28, 2011, of the majority of the Board of Directors of Parmalat Italy from the Lactalis slate of nominees.

[ 17 ] Under the LPA, the obligations of Parmalat Canada terminated seven years from the “Closing Date”. The Arbitrator found (at para. 302) the Closing Date for the purposes of the LPA to be June 29, 2004. Thus, the Closing Date for the LPA of June 29, 2004 meant there was a termination date for the LPA of June 29, 2011, one day after the Indirect Change of Control by the election of the Lactalis slate of nominees as directors of Parmalat Italy on June 28, 2011. Hence, the LPA was in force and the Liquidity Payment triggered.

The Second Claimed “Liquidity Event”

[ 18 ] Teachers’ also claimed that there was a second Liquidity Event under the LPA. One provision of the LPA is that an “Indirect Change of Control” (as defined in s. 1.1 of the LPA) would result from any person acquiring “securities carrying more than 40% of the votes attaching to all securities of Parmalat Italy”. Lactalis had acquired more than 40% of the voting shares of Parmalat Italy by July 8, 2011, as some 54.3% of the outstanding voting securities of Parmalat Italy had been irrevocably tendered to the Lactalis’s takeover bid, which raised Lactalis’s overall holdings to more than 80%. The Arbitrator found (at para. 111) that this would constitute an Indirect Change of Control within the meaning of the LPA as of July 8, 2011 if the LPA was then in force, however, the LPA had expired some 10 days before.

[ 19 ] As noted above, the Arbitrator found that the Closing Date for the LPA was June 29, 2004 and thus, the termination date for the LPA was June 29, 2011. Thus, the Arbitrator held, (at paras. 316, 361) that Teachers’ could not succeed in its contention that a second Liquidity Event had occurred before the LPA expired.

The Submissions of Parmalat Canada

[ 20 ] Parmalat Canada asserts that the Arbitrator “unfairly decided the contractual dispute on an insufficient evidentiary record” and that the Arbitrator made an unsupportable “foundational conclusion” that Teachers’ was in a strengthened bargaining position such as to explain the broad ambit of the Liquidity Event as interpreted by the Arbitrator.

[ 21 ] Parmalat Canada asserts that the Arbitrator somehow discouraged Parmalat Canada from leading evidence about the negotiation of the LPA, in particular, the possible evidence by the lawyers involved in negotiating the LPA and evidence as to the strength of Parmalat Canada’s bargaining position during the negotiations leading to the Credit Agreement and LPA.

[ 22 ] In my view, there is no merit to these asserted complaints. It was clear and obvious from the outset to Parmalat Canada as to what the issues in the arbitration would be. The issue was whether a “Liquidity Event” had occurred within the meaning of the LPA such as to require a “Liquidity Payment”. This required an interpretation of the provisions of the LPA. There was a considerable degree of common ground as to the facts to which the interpreted LPA would apply, as seen in the 18 page “Agreed Statement of Facts” for the purposes of the Arbitration.

[ 23 ] The Arbitrator based his interpretation of the LPA upon a plain reading of its wording. While considering the factual matrix and general background against which the LPA is to be understood, he concluded (at para. 21) he was “driven to give effect primarily to the language of the LPA itself, which neither party argued was either unclear on its face or ambiguous in its meaning”.

[ 24 ] The LPA is a 20-page, intricately detailed, commercial contract, negotiated between sophisticated parties with able professional and legal advisors. Contracts consist of bundles of reasonable expectations created by the promises exchanged and resulting obligations. A court, or arbitrator, must apply an objective test in discerning and determining the contractual obligations.

[ 25 ] The parties to the arbitration determined the issues and the evidentiary record. Parmalat Canada takes the position that the Arbitrator’s interpretation is commercially unreasonable.

[ 26 ] In my view, it is apparent that the Arbitrator’s interpretation is fully consistent with the plain wording of the LPA. It would be apparent to Parmalat Canada and its counsel from the very outset upon receiving the Notice of Arbitration that the Arbitrator might well render a decision that accorded with such interpretation.

[ 27 ] It was up to Parmalat Canada to fully explore and advance any potentially available and admissible relevant evidence about the negotiation of the LPA or otherwise such as to suggest a different, narrower interpretation of the LPA. If this required, for example, opinion evidence from Italian legal experts as to applicable principles of foreign law that might inform the meaning of the LPA, or evidence from experts who advise as to mergers and acquisitions as to the possible meaning of words such as “significant liquidity” or “realization of value”, or evidence as to the events or transactions contemplated and intended by the parties to fall within the meaning of the defined “Liquidity Event”, it was incumbent upon Parmalat Canada to bring forward such evidence.

[ 28 ] Parmalat Canada asserts that the Arbitrator’s interpretation of the LPA is commercially unreasonable in that it leads to a “commercial absurdity”. I disagree. I reiterate. The LPA is a commercial contract between two parties in the context of a business deal, that is, a financing agreement. It represents private law-making. The Arbitrator’s interpretation in respect of its language as to “Liquidity Event”, and the application of that interpreted contractual provision to the factual situation, is straightforward given the plain language of the LPA and the factual matrix or background in evidence.

[ 29 ] In reality, Parmalat Canada is asserting that it would not be conceivably commercially reasonable for Parmalat Canada to enter into the LPA and agree to a simple change in control of Parmalat Italy triggering the payment of a premium by Parmalat Canada that may well amount to more than $100 million. That is, Parmalat Canada is saying that it is only commercially reasonable to have a Liquidity Payment when there is a visible value realization and/or liquidity to fund the Liquidity Payment. Hence, the argument goes, the definition of Liquidity Event must be construed narrowly so as to be applicable only when there is a clearly recognized value realization and/or liquidity to fund the Liquidity Payment.

[ 30 ] It might well be that many would say that as reasonable business persons they would not agree to the triggering of a premium payment other than with a much narrower event such as seen with an actual sale of the business at a fixed price, i.e. where there is a visible value of the business being realized.

[ 31 ] However, the test properly considered is not what others might or might not do (or what anyone might do with the benefit of hindsight). Rather, the test is to determine what the contract between the parties says, looking at the language of the contract on an objective test basis, coupled with the factual matrix and background as seen from any evidence properly admissible.

[ 32 ] The Arbitrator’s reasoning is clear from the following passages from his reasons. The Arbitrator states (note that the inclusions-taken from the definition of “Liquidity Event” in the LPA - in the square brackets below, and given emphasis, in paragraphs 203 and 204 , have been added by me to the text of the Arbitrator’s reasons for decision):

203. As to the specific point underlining Parmalat Canada’s submissions, that significant liquidity or realization of value must result from any transaction to qualify it as a Liquidity Event, I must first make the obvious point that this is not an explicit requirement or dictate of subsection (d) of the definition of Indirect Change of Control [“securities …carrying any number of votes where thereafter a majority of the board of directors of Parmalat Italy are nominees of such Person...”] Nor do I find anything in the factual matrix or other terms of the LPA that the parties intended to limit the reach of the language they did use in that way.

204. The main thrust of Parmalat Canada’s submission arises from subsection (vi) of the Liquidity Event definition where the parties make the measures described there [“any other transaction that has a substantially similar effect to the transactions described in paragraphs (i) to (v) above in that it provides significant liquidity or a realization of value to Parmalat Italy …based in whole or in part on the value of the Business] a requirement of any generic transaction that is contended to give rise to a Liquidity Event. Parmalat Canada argues that the full definition of Indirect Change of Control and each of its subsections should therefore also be read to include these conditions, in every element of the definition.

205. I do not read subsection (vi) that way. To the extent that I need to consider the question, I read (vi) to mean that any generic transaction must have those effects- a “similar effect to the transactions described in paragraphs (i) to (v) above…”-in that such transaction must also (my emphasis) provide significant liquidity or a realization of value.

206. In other words, the parties in arriving at the descriptions and definitions that would give rise to a Liquidity Event, have assumed or deemed that each and every one of (i) to (v) including an Indirect Change of Control, if triggered, provided significant liquidity or realization of value to the stakeholders. Subsection (vi) is confirming that those consequences are already embedded in each of (i) to (v). If one of the definitional hoops, (i) through (v), is passed through, then it is implicit that the transaction satisfies all that underlies the LPA.

207. I find that other than in respect of any generic transaction within (vi), it is not necessary nor is it appropriate to enter into an analysis of value or liquidity or its source in any specific transaction, if it otherwise falls within the plain language of one of the definitional sections, because it is intended that such transaction satisfies any requirements of LPA on that basis alone.

208. I reach this conclusion from a plain reading of the LPA, particularly the meaning of the Liquidity Event and the meaning of an Indirect Change of Control. I find as well however that to read Parmalat Canada’s caveats into the requirements would be unduly restricting the intent of these provisions, an intent derived from the language and from what I have found to be a more inclusive than exclusive platform for the LPA from the objective surrounding matrix.

[ 33 ] Parmalat Canada submits that the wording in paragraph (vi) of the definition of “Liquidity Event” properly means that proof of “significant liquidity or a realization of value” is required in addition to simply establishing “an Indirect Change of Control” under paragraph (i) before the definition of “Liquidity Event” has been fully met such that a “Liquidity Payment” is then required.

[ 34 ] This would apparently explain why Parmalat Canada sought to advance a Rule 21-type motion in the pre-hearing phase some 11 days prior to the commencement of the hearing on the basis that there was no need for evidence. The Arbitrator decided on December 8, 2011 that the motion should not properly be heard and advised that the hearing would commence on December 19, 2011, as scheduled.

[ 35 ] It is also noted that, in its opening submissions at the arbitration hearing, Parmalat Canada referred to the dispute as being a “contract interpretation case” with the key issues to be determined as being “questions of law that should and can be determined from the clear words of the contract applying basic contract interpretation principles….”.

[ 36 ] Parmalat Canada now contends that it was unfair for the Arbitrator to have found that the so-called “first claimed Liquidity Event” constituted a “Liquidity Event” within the meaning of the LPA without receiving certain evidence: such as expert evidence concerning the meanings of the terms “significant liquidity” or “realization of value”; expert evidence as to the types of transactions, such as an “Indirect Change of Control”, that would qualify under each of the specific categories of “Liquidity Event” as defined and whether there would be significant liquidity or realization of value resulting from these transactions; expert opinion on principles of Italian law that might inform the meaning of the definition of “Indirect Change of Control” and “Liquidity Event”; and evidence from the lawyers involved in the negotiations as to what was contemplated by the definition of “Liquidity Event”.

[ 37 ] The Arbitrator was aware of his ability to seek further input from the parties following the conclusion of the hearing as he prepared the Award . However, as I have already noted, it was incumbent upon Parmalat Canada, not the Arbitrator, to seek to bring forward such admissible evidence as it considered relevant to the issues.

[ 38 ] More significantly however, the Arbitrator concluded that he did not need to pursue any additional evidence as he found on a plain reading of the LPA that with an “Indirect Change of Control” within the meaning of (i) of the definition of “Liquidity Event” there was not any requirement of independent proof of significant liquidity or realization of value to Parmalat Italy or its shareholders. Rather, he interpreted the LPA as the parties having agreed that, if there is the triggering event of an “Indirect Change of Control”, they have agreed that such event in itself provided assumed or deemed significant liquidity or realization of value.

[ 39 ] Parmalat Canada also argues that it was unfairly denied an adjournment request on the first morning of the hearing. The request was essentially tied to the fact that Mr. Ben Babcock, an advisor from Lazard to Parmalat Canada in 2004, would not be available until later than first expected. The Arbitrator, after receiving submissions, implemented a schedule that allowed the hearing to continue as scheduled but to continue into January and February whereby Mr. Babcock could give his evidence.

[ 40 ] In my view, the Arbitrator reasonably dealt with the adjournment request and there was no prejudice to Parmalat Canada in this regard. Section 4.11 of the LPA provides that the arbitration must be completed, and a decision rendered, within 90 days of the submission of the dispute to arbitration. There was a tight timeline by agreement, but the Arbitrator was quite prepared to go beyond the tight timeline as necessary to meet the fairness requirement to any determination of rights.

[ 41 ] In my view, the Arbitrator’s reference to relative bargaining positions was not a foundational conclusion or basis to his interpretation of the contract language. Rather, it was simply a comment or observation made obiter (given the evidence led about bargaining power) as to why perhaps the LPA had such a broad reach as seen in his plain reading of the definition of “Liquidity Event”, in particular, that paragraph (i) of the definition of “Liquidity Event” assumed or deemed that an “Indirect Change of Control”, if triggered, “provided significant liquidity or realization of value to the stakeholders” (paragraph 206 of the Arbitrator’s reasons for decision).

[ 42 ] The Arbitrator stated (at para. 197):

As I assess the matrix, there was a confluence of fortunate circumstances that led to a meaningful transaction between [Teachers’] and Parmalat Canada, with the approval of the Extraordinary Administration [for Parmalat Italy], and which I find put [Teachers’] in a somewhat strengthened bargaining position at the time, compared to the Parmalat entities. The parties understood they were negotiating an agreement, the LPA, at a time when it was not very predictable what the future would bring - the “black box” of Italy. Parmalat Canada required the loan in order to ensure its future predicted growth. The result was that broad and unconstrained language was used in the LPA, such that more circumstances of that unknown future would fall within the agreement (as Teachers’ contends has occurred) than fewer would do so (as Parmalat Canada contends is the case).

[ 43 ] Parmalat Canada was alive to the possibility that the LPA might be interpreted whereby an “Indirect Change of Control” was seen as a stand-alone triggering event for a “Liquidity Payment”. Parmalat Canada had taken the position, in its closing submissions, that, given its relative financial health and the significant fixed charges by Teachers’ for the loan, it would be commercially unreasonable to conclude that Parmalat Canada would have also agreed to an additional price or premium on the financing through a “Liquidity Payment” triggered simply through an “Indirect Change of Control”, without payment also being contingent upon a visible value-creating event.

[ 44 ] That is, Parmalat Canada was asserting that it would be commercially unreasonable for someone in its strong bargaining position to enter into an agreement that would require it to make a Liquidity Payment in the absence of a visible value-creating event.

Disposition of Parmalat Canada’s Application

[ 45 ] For the Court to intervene in this Arbitration, Parmalat Canada must establish pursuant to s. 46(1) 6 of the Act that Parmalat Canada was denied natural justice either because the Arbitrator failed to treat Parmalat Canada fairly or because the Arbitrator failed to give Parmalat Canada an opportunity to present a case and to respond to Teachers’ case. See Inforica Inc. v. CGI Informations Systems and Management Consultants Inc. (2009), 97 O.R. (3d) 16 (C.A.).

[ 46 ] McEwan, J. Kenneth and Ludmila B. Herbst in Commercial Arbitration in Canada (Toronto: Canada Law Book , 2011) at pp. 7-11 discuss the concept of treating the parties equally and fairly, as follows:

“Fair” has been defined as just, unbiased, equitable, without finesses, above-board and involving equal conditions for all. “Equally” implies an even balance and a uniform approach.

[ 47 ] The expedited schedule was a function of the parties’ negotiated agreement in s. 4.11 (4) of the LPA in the first instance and then in the Arbitration Agreement. Moreover, the agreed-upon schedule was essentially met. The Arbitrator exercised his discretion not to grant an adjournment but effectively met Parmalat Canada’s request in this regard by extending the hearing so as to permit Parmalat Canada time to call Mr. Babcock, and affording Parmalat Canada the opportunity to call experts on Italian law. There was no prejudice to Parmalat Canada in the Arbitrator’s disposition of the request for an adjournment. Each of the stated grounds for the adjournment request was addressed by the Arbitrator.

[ 48 ] The Arbitrator opined in dealing with the factual matrix as to the prima facie irrelevance and inadmissibility of evidence relating to pre-contractual drafts and negotiations in respect of the LPA which was not challenged by Parmalat Canada. Moreover, Parmalat Canada was not rebuffed in seeking to bring forward any evidence.

[ 49 ] Parmalat Canada has no right of appeal and has not challenged the Arbitrator’s jurisdiction and thus has no real basis to assert that the Arbitrator’s finding that a “Liquidity Event” occurred within the meaning of the LPA is “unreasonable”.

[ 50 ] There is no reasonable basis on which to suggest that the Arbitrator did not treat the parties equally or fairly. There is no basis on which to conclude that there was any breach of any rules of natural justice.

[ 51 ] For the reasons given, Parmalat Canada’s application for an order pursuant to s. 46 of the Act to set aside the Award of the Arbitrator dated March 26, 2012, is dismissed.

[ 52 ] If the parties cannot agree as to a disposition of costs, written submissions may be made, with Teachers’ submission to be made within 10 days, the reply of Parmalat Canada within 10 days thereafter and any reply by Teachers’ within five days thereafter.

The Application of Teachers’

[ 53 ] The Applicant Teachers’ makes application for:

(a) an order for enforcement of the arbitration award of Ronald G. Slaght, as Arbitrator, dated and delivered March 26, 2012 in an arbitration proceeding conducted pursuant to the Arbitration Act, 1991, S.O. 1991, C. 17 (the “Arbitration Award”), the operative provisions of which are set out in clauses 3, 4 and 6 of the arbitral award signed by him on May 18, 2012 (“Arbitral Award”) and for enforcement of the supplementary arbitral award of Ronald G. Slaght dated May 24, 2012 concerning the costs of arbitration proceeding (the “Supplementary Arbitral Award – Costs”), which require the Respondent to:

(i) deliver the Board’s Determination Notice forthwith and, in any event, within 30 days of May 18, 2012;

(ii) pay the Board’s Determination of the Liquidity Payment (pending a final determination of the amount of the Liquidity Payment owing);

(iii) pay to the Applicant the total sum of $1,250,000.00, inclusive of fees, disbursements and taxes, in respect of the Applicant’s costs of the arbitration forthwith and, in any event, within 30 days of May 24,2012 (i.e. June 23, 2012);

(b) an order requiring the Respondent to pay interest on the Board’s Determination of the Liquidity Payment ( i.e . the amount referred to in paragraph 1(a)(ii) above:

(i) from June 28, 2011 to the date of delivery of the Board’s Determination Notice ( i.e . June 18, 2012) at a rate of 3% per annum in accordance with clause 7 of the Arbitral Award; and

(ii) since the Board’s Determination of the Liquidity Payment did not accompany the Board’s Determination Notice, from the date of delivery of the Board’s Determination Notice ( i.e. from June 19, 2012) to the date of payment at a rate of 16.8% per annum, or such other rate greater than 3% per annum as the Court may determine to be appropriate; or

(iii) in the alternative to paragraph (b)(ii) above, an order requiring the Respondent to pay interest on the Board’s Determination of the Liquidity Payment from June 19, 2012 to the date of payment at the same rate of 3% per annum as provided for in clause 7 of the Arbitral Award;

(c) an order requiring the Respondent to pay interest on the Supplementary Arbitral Award – Costs ( i.e . the amount referred to in paragraph 1(a)(iii) above):

(i) from April 26, 2012 to June 23, 2012 at a rate of 3% per annum in accordance with clause 2 of the Supplementary Arbitral Award – Costs; and

(ii) from June 24, 2012 to the date of payment at a rate of 16.8% per annum, or such other rate greater than 3% per annum as the Court may determine to be appropriate; or

(iii) in the alternative to paragraph (c)(ii) above, an order requiring the Respondent to pay interest on the Supplementary Arbitral Award – Costs from June 23, 2012 to the date of payment at the same rate of 3% per annum as provided for in clause 2 of that award;

(d) an order requiring the Respondent to pay the differential between the Board’s Determination of the Liquidity Payment and the amount of the Liquidity Payment, if any, once determined by the Valuer, plus interest calculated on that amount at a rate of 3% per annum up to the date of the delivery of the Board’s Determination Notice ( i.e . June 18, 2012) and thereafter at a rate of 16.8% per annum, or such other rate greater than 3% per annum as the Court may determine to be appropriate;

(e) costs of this application, plus all applicable taxes, on a full indemnity basis; and

(f) such further and other relief as to this Honourable Court may seem just.

Disposition of Teachers’ Application

[ 54 ] In paragraph (a) of its application, as quoted above, Teachers’ essentially makes an application for enforcement of the Arbitrator’s Award and Supplementary Arbitral Award concerning the costs of the Arbitration pursuant to the regime set forth in the LPA. An Order shall issue in this regard given the dismissal of Parmalat Canada’s application to set aside the Arbitration Award , and in terms which are in accord with the Award, this Endorsement and with the provisions of the LPA. The parties may speak to me if they cannot agree upon the language and terms of the Order.

[ 55 ] The one significant remaining outstanding matter is that of the interest rate(s) to properly apply to the various money components in the Award and Supplementary Arbitral Award, as referenced in paragraphs (b) to (d) of Teachers’ application. Teachers’ asks for 3% interest on some money components and an increased rate as high as 16.8% (the rate of return achieved by Teachers’ private capital group, being the group that entered into the LPA on behalf of Teachers’) after given dates.

[ 56 ] In my view, and I so find, the appropriate rate of interest on all outstanding money amounts is 3%. This is the rate referenced in the LPA (s. 2.2 (6)) which states “All amounts not paid hereunder when due shall bear interest at the Canadian prime rate…” which the parties agree is 3% per annum. The parties agree this is would also be the same rate as currently fixed pursuant to the Courts of Justice Act, R.S.O. 1990, c. C.43 for pre- and post-judgment interest. This is also the rate fixed by the Arbitrator for costs in his Supplemental Arbitral Award.

[ 57 ] The Court has considerable discretion in fixing the applicable interest rate, if any. In my view, the rate of interest should not be based upon an opportunity cost basis, as submitted by Teachers’. Rather, in my view, the interest rate for the outstanding money components in the situation at hand should be fixed at 3%. If the parties cannot agree upon the starting dates for interest to run in respect of any money components, I may be spoken to.

[ 58 ] If the parties cannot agree as to the disposition of costs in respect of the application of Teachers’, written submissions may be made.

[ 59 ] An Order shall issue in accordance with this Endorsement in respect of Teachers’ application.

CUMMING J.

Date: October 29, 2012