G.E. Canada Equipment Financing G.P. v. Northern Sawmills Inc., 2012 ONSC 6664

SUPERIOR COURT OF JUSTICE - ONTARIO

COMMERCIAL LIST

COURT FILE NO.: CV10-9042-00CL
DATE: 20121126

RE: G.E. CANADA EQUIPMENT FINANCING G.P., Applicant

NORTHERN SAWILLS INC., Respondent

APPLICATION UNDER SECTION 243(1) OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985 c. C-36 and SECTION 101 OF THE COURTS OF JUSTICE ACT, R.S.O. 1990, c. C.43

BEFORE: Justice Newbould

COUNSEL:
Mary Paterson, for the Receiver PricewaterhouseCoopers Inc.
Elizabeth Pillon and Maria Konyukhova, for G.E. Canada Equipment Financing G.P.
Kristina Desimini, for Lucky Star Holdings Inc.
Stuart Brotman, for Morneau Shepell Ltd
Mark E. Bailey, for the Financial Services Commission of Ontario

DATE HEARD: November 19, 2012

E N D O R S E M E N T

1PwC was appointed as Receiver over the assets of Northern Sawmills Inc. in January 2011. It has completed a sale process and liquidated substantially all of the Northern assets. Once certain disputes are resolved, the Receiver will be able to finalize its distributions to the secured lenders. The Receiver brings this motion seeking (1) advice and direction to resolve disputes that are delaying finalizing distributions, (2) an order authorizing the Receiver to make certain distributions, and (3) an order approving its activities and its accounts and disbursements and those of its counsel.

2A total of $1,623,614 is available for distribution by the Receiver. Of this amount, and in accordance with the Receiver’s Charge as provided in the initial receivership order and a prior arrangement with Morneau, the costs of the Receiver are to rank in priority to all other charges and claims. The balance of the proceeds, less property taxes to be paid, total $498,181.20.

3The issue is what reserves are required for normal cost and wind-up deficiencies in Northern’s Hourly and Salaried Plans. Morneau Shepell Ltd (“Morneau”) as Plan Administrator makes two claims: (1) a section 81.6 Bankruptcy and Insolvency Act (“BIA”) claim and (2) a Pension Benefit Act (“PBA”) deemed trust claim.

4PwC was appointed on January 4, 2011 as receiver pursuant to section 243(1) of the BIA and section 101 of the Courts of Justice Act over all the assets, undertakings and properties acquired for or used in relation to a business carried on by Northern, including all proceeds thereof.

5At the initial hearing, the Receiver was authorized and directed to conduct a sales process in respect of the Northern property. The Northern property was sold by way of a liquidation sale/auction in respect of personal property and an agreement of purchase and sale in respect of the real property. The Receiver has liquidated virtually all of the Northern property. The proceeds will not satisfy Northern’s obligations to its secured creditors, who will suffer a shortfall. GE is the largest secured creditor.

6The Northern assets are subject to two charges ranking ahead of the secured lenders, being a Receiver’s charge and a tax liability to Thunder Bay in the amount of $157,864 undertaken to be paid in the sale of the realty. Northern has obligations to four secured lenders: GE, Royal Bank of Canada, Lucky Star Holdings Inc. and Buchanan Sales Inc.

Northern pension plans

7Northern was the employer under, and the administrator of, two defined benefit pension plans:

i) a Retirement Plan for Employees of Northern (the “Hourly Plan”);

ii) a Retirement Plan for Salaried Employees of Northern (the “Salaried Plan”).

8Unionized and non-unionized employees of Northern participated in the Hourly Plan prior to June 1, 2007. In February 2008, Northern filed amendments to the Hourly Plan with the Superintendent under the PBA seeking to cease participation of the non-unionized employees in the Hourly Plan effective June 1, 2007. Subsequently, on March 3, 2008, Northern filed documents with the Superintendent requesting the establishment of the Salaried Plan to be effective June 1, 2007.

9In the fall of 2008, Northern idled its operations and virtually all of its employees were laid off.

10In March 2010, the Superintendent issued notices of proposal giving notice that he intended to wind up the Hourly Plan and refuse to register the Salaried Plan.

11On September 2, 2010, the Superintendent ordered that:

(a) the Hourly Plan be wound-up with a wind-up date of January 1, 2008; and

(b) the Salaried Plan’s registration be revoked, which operated to terminate the Salaried Plan as of a date to be specified by the Superintendent. The Superintendent has not yet specified the date.

12It would seem logical that the Superintendent could not revoke the registration of the Salaried Plan that had not been registered, but all counsel, including counsel for the Financial Services Commission of Ontario (FSCO), agreed that for the purposes of the PBA, revocation of a registered plan and a refusal to register a plan have the same effect.

13The Receiver was appointed on January 4, 2011, several months after the Superintendent made his orders in relation to the Hourly and Salaried Plans. The January 4, 2011 order also approved the proposed Sale Process.

14Morneau was appointed Administrator of the Hourly Plan on March 11, 2011 and Administrator of the Salaried Plan several months later on August 3, 2011.

Morneau recommendations

15In March 2011, the Superintendent sought Morneau’s submissions on: (a) whether there were contribution arrears for the Hourly Plan relating to periods before and after the wind up date for the Hourly Plan; and (b) what date should be used as the termination date of the Salaried Plan.

16In response to the first question, on July 6, 2011 Morneau advised that if January 1, 2008, is the wind-up date, it had determined that there were no unpaid normal cost contributions with respect to the period prior to January 2008 for Hourly members. Morneau has since confirmed that there were no unpaid normal cost contributions for the period before January 2008 in relation to the Hourly Plan.

17In response to the second question, Morneau did not answer the question directly but rather made the preliminary suggestion that FSCO should approve a transfer of the assets in the Salaried Plan to the Hourly Plan.

18On November 7, 2011, Morneau’s counsel wrote to the Receiver advising that Morneau intended to recommend to the Superintendent that the Hourly Plan and the Salaried Plan be treated as one plan and that the wind up date be November 16, 2010. Based on Morneau’s initial calculations, if these two changes were made i.e., merging the Salaried Plan into the Hourly Plan and changing the wind up date for the Hourly Plan, normal cost arrears would be $335,777. Morneau also sought interest in the amount of $39,780 calculated to January 3, 2011, the day before the Receiver was appointed.

19Morneau also alleged that sections 57(4) and 57(5) of the PBA established a deemed trust and lien over all of the Northern assets for any wind-up deficiency under both Plans. Morneau alleged that, if the Salaried Plan was merged into the Hourly Plan in accordance with its Recommendation, the wind-up deficiency would be more than $12 million.

20On November 18, 2011, Morneau made submissions to the Insolvency Coordinator at FSCO, recommending that (1) the Superintendent issue a Notice of Intended Decision to revise the wind up date of the Hourly Plan from January 1, 2008 to November 16, 2010; and (2) the Salaried Plan be merged into the Hourly Plan.

21On November 29, 2011, the Insolvency Coordinator at FSCO asked the Receiver and GE to make submissions on the Morneau Recommendation.

22On September 6, 2012, both GE and the Receiver made submissions to the Superintendent regarding the Morneau recommendations. They noted that if the Superintendent was to issue an order changing the wind up date for the Hourly Plan, such action could be a “proceeding” that was stayed by the receivership order. They also contended that the Superintendent had no jurisdiction under the PBA to change the wind up date for the Hourly Plan. The Superintendent has not taken any steps since GE and the Receiver made their submissions.

23On October 22, 2012, the Receiver asked Morneau for additional information to assist in quantifying any unpaid normal cost if the status quo was maintained. On November 6, 2012, Morneau confirmed that there was no normal cost deficiency with respect to the Hourly Plan and advised that, assuming the Salaried Plan was given a termination date of November 16, 2010, there was a normal cost deficiency in the amount of $147,732, which included $12,117 in interest. The Receiver does not yet have sufficient information to confirm this number.

24The amount of the claims asserted by Morneau on this motion depends in part on whether the wind up date for the Hourly Plan can be changed from January 1, 2008 to the date recommended by Morneau of November 16, 2010.

Issues

1. Stay of proceedings

25The Receiver, supported by PwC, take the position that the stay contained in the initial receivership order prevents the attempt by Morneau to have the Superintendent change the wind up date for the Hourly Plan and that no leave should be given to lift the stay for that purpose. They do not take the position that the stay prevents the Superintendent from determining the wind up date of the Salaried Plan or from considering the merger of the Salaried Plan into the Hourly Plan.

26Morneau takes the position that the stay does not cover what it is asking the Superintendent to do and that if it does, leave should be given to lift the stay for that purpose. The Superintendent supports the position of Morneau insofar as the “issues” before the Superintendent are not stayed. What those issues are is not spelled out in the factum of the Superintendent, i.e. whether what is properly before the Superintendent includes the recommendation of Morneau to change the wind up date for the Hourly Plan.

27The stay of proceedings in the Receivership order is as follows:

NO PROCEEDINGS AGAINST THE RECEIVER

7. THIS COURT ORDERS that no proceeding or enforcement process in any court or tribunal (each, a “Proceeding”), shall be commenced or continued against the Receiver except with the written consent of the Receiver or with leave of this Court.

NO PROCEEDINGS AGAINST THE DEBTOR OR THE PROPERTY

8. THIS COURT ORDERS that no Proceeding against or in respect of the Debtor or the Property shall be commenced or continued except with the written consent of the Receiver or with leave of this Court and any and all Proceedings currently under way against or in respect of the Debtor or the Property are hereby stayed and suspended pending further Order of this Court.

NO EXERCISE OF RIGHTS OR REMEDIES

9. THIS COURT ORDERS that all rights and remedies against the Debtor, the Receiver, or affecting the Property, are hereby stayed and suspended except with the written consent of the Receiver or leave of this Court, …

28Paragraph 7 stays a proceeding in a court or tribunal. The regulatory process in question is not in a court or tribunal and thus paragraph 7 is not applicable.

29Paragraph 8 stays a Proceeding against or in respect of Northern or its property, which includes the proceeds of that property. Morneau says that a Proceeding is only one in a court or tribunal because it is so defined in paragraph 7 of the order. Paragraph 9 stays any remedies “affecting” the property of Northern. The Receiver and PwC contend that changing the wind up date of the Hourly Plan would affect the property, being the proceeds of the sale of Northern assets. Morneau contends that it would not affect the property, but only determine the claims against it.

30I do not think that it can be said that Proceedings in paragraph 8 are limited to proceedings in a court or tribunal. It is the case that paragraph 7 states that a process in a court or tribunal is a Proceeding, but that paragraph does not define a Proceeding or purport to limit a Proceeding to a process in a court or tribunal. It merely states that a court or tribunal process is a Proceeding.

31This reading of the stay provisions is supported by the decision in Re Nortel Networks Limited (2010), 2010 ONSC 1304, 65 C.B.R. (5th) 231 (Comm. List); aff’d (2010), 67 C.B.R. (5th) 19 (Ont. C.A.). In that case a stay provision in an initial CCAA order containing the same language as the stay in this case was held by Morawetz J. to prevent warning notices given by the U.K. Pensions Regulator to various Nortel entities. The process by the U.K. regulator was not a court or tribunal process. Morawetz J. referred to authorities that broadly interpreted the word “proceedings” to cover both judicial and extra-judicial proceedings. His decision was upheld by the Court of Appeal.

32Morneau refers to the recent legislative changes to the BIA and CCAA that prevent stays in proceedings under those statutes from affecting a regulatory body’s investigations or a proceeding by or before a regulatory body. I am dealing however with a term of a court order that contains different language and cannot ignore that language.

33In my view, the process whereby the Superintendent is being asked to change the wind up date for the Hourly Plan is stayed by paragraphs 8 and 9 the receivership order. The process sought by Morneau to be undertaken is a proceeding in respect of Northern or its property, and thus is caught by section 8 of the order. It is also a remedy affecting the property of Northern, and is thus caught by section 9 of the order.

34In considering whether the stay should be lifted, a court is to consider the totality of the circumstances and the relative prejudice to both sides. See Houlden, Morawetz and Sarra, The 2012-2013 Annotated Bankruptcy and Insolvency Act (Toronto: Carswell, 2012) at L5, p. 993. See also General Motors Corp. v. Tiercon Industries Inc. [2005] O.J. No. 3750 per Hoy. J. (as she then was). A court may order that a stay be lifted if satisfied that a party seeking leave is likely to be materially prejudiced by the stay or there are other equitable grounds on which to justify lifting the stay. See Village Green Lifestyle Community Corp., Re, 2007 2944 (ON SC), [2007] 27 C.B.R. (5th) 199 at para. 13 per Pepall J. (as she then was).

35In considering an application for leave to lift a stay under the BIA, it has been held that there is no requirement to establish a prima facie case but an applicant must establish that there are sound reasons to relieve against the stay. See Re Ma (2001), 2001 ONCA 24076, 24 C.B.R. (4th) 68 (Ont. C.A.). I think the principle can safely be applied to a stay in a receivership order. However, in Re Ma, it was stated that if it were apparent that the proposed action had little prospect of success, it would be difficult to find that there were sound reasons for lifting the stay.

36I see no purpose in lifting the stay to permit consideration by the Superintendent to change the wind up date of the Hourly Plan. The Hourly Plan was wound up at the initiation of the Superintendent with a wind up date of January 1, 2008. This was a final order. It is conceded by counsel for the Superintendent that there is no authority in the PBA permitting the Superintendent to reconsider the wind up date of the Hourly Plan.

37The position of the Receiver and GE is that the Superintendent is functus officio with respect to the wind up date of the Hourly Plan.

38Morneau takes the position that with an administrative proceeding, a court has discretion to reopen the proceeding, and relies on Chandler v. Alberta Association of Architects, 1989 41 (SCC), [1989] 2 S.C.R. 848. I do not think the case is of assistance to Morneau. In that case, Sopinka J. for the majority stated the following:

21. To this extent, the principle of functus officio applies. It is based, however, on the policy ground which favours finality of proceedings rather than the rule which was developed with respect to formal judgments of a court whose decision was subject to a full appeal. For this reason I am of the opinion that its application must be more flexible and less formalistic in respect to the decisions of administrative tribunals which are subject to appeal only on a point of law. Justice may require the reopening of administrative proceedings in order to provide relief which would otherwise be available on appeal.

22. Accordingly, the principle should not be strictly applied where there are indications in the enabling statute that a decision can be reopened in order to enable the tribunal to discharge the function committed to it by enabling legislation. (Underlining added)

39Morneau and the Superintendent concede that there are no indications in the PBA that the decision of the Superintendent in question can be reopened. Thus the exception to the principle of functus officio enunciated by Sopinka J. has no application.

40I also see substantial prejudice to GE if the stay were lifted. At the time the receivership action was commenced in January, 2011, the Hourly Plan had been wound up on the initiation of the Superintendent and the wind up date of January 1, 2008 was set by a final order. The Salaried Plan had been refused or revoked. In correspondence on February 9, 2011 and July 6, 2011 FSCO confirmed that the wind up date of the Hourly Plan was January 1, 2008. Sales proceedings had been initiated, approved by the Court and implemented by the Receiver, on notice to FSCO and Morneau. The sales and receivership proceedings were funded by GE and it and other stakeholders participating in the receivership proceedings incurred costs in pursuing their claims with expectations of recovery. Only in November 2011, some ten months after the initiation of the Receivership, did Morneau seek to implement a new wind up date and merge the Plans, the result of which if successful would be to alter existing priorities and negatively affect GE and other secured creditors of the Northern estate. By this time, the vast majority of the costs associated with this receivership had been incurred and paid out of the proceeds or directly by GE.

41In these circumstances, I agree with the Receiver that given the fact that GE relied on the status quo in seeking to appoint the Receiver and the fact that Morneau raised and quantified its claims after the Receiver had incurred the majority of the expenses associated with the estate, it is not equitable to lift the stay and permit Morneau to seek priority over the secured creditors or to permit the Superintendent to revise his final order in a manner that increases Morneau’s claim at the direct expense of the other secured creditors.

42I would also note that even if there had been no stay, the proceedings sought to be initiated by Morneau would be futile as the Superintendent has no power to change the wind up date of the Hourly Plan. No attempt is made by the Receiver or GE to prevent the Superintendent from carrying out his obligation to set a wind-up date for the Salaried Plan or to consider merging the Salaried Plan into the Hourly Plan. Thus I see no prejudice to the Superintendent.

2. Section 81.6 BIA claim

43Section 81.6 of the BIA grants a limited super-priority with respect to “normal costs” owed to a pension plan. Under section 81.6(2), claims for payment of normal costs rank ahead of the claims of secured creditors. Normal costs are defined in section 81.6(c)(i).

44Morneau has confirmed that if the wind up date remains the same, then there are no unpaid normal costs in relation to the Hourly Plan. As I have held that the wind up date is to remain, no reserve is required for the Hourly Plan.

45The Superintendent revoked the registration of the Salaried Plan by an order made under section 18(1)(b) of the PBA. That order operates to terminate the Salaried Plan as of a date specified by the Superintendent. The Superintendent has not yet specified a termination date for the Salaried Plan. Based on information provided by Morneau, it appears that the latest possible termination date is November 16, 2010 because that appears to be the last date of employment for an employee who participated in the Salaried Plan.

46Morneau claims that there is a normal cost deficit of $147,732 including interest in the Salaried Plan using a termination date of November 16, 2010. The Receiver does not have sufficient information to confirm this figure. However the Receiver is agreeable to holding back this amount until the figure has been confirmed.

47If the wind up date of the Hourly Plan were changed to November 16, 2010 and the Salaried Plan merged into the Hourly Plan with that changed wind up date, Morneau calculates the normal cost claim under section 81.6 of the PBA to be $383,646 inclusive of interest to November 19, 2012, and for the purposes of this motion asserts a priority claim in the amount of $383,646 plus interest to the date of payment. Counsel for the Receiver in argument said that if it was open to change the wind up date, the Receiver was prepared to hold back this amount of $383,646.

48In view of the fact that the wind up date for the Hourly Plan cannot be changed, the amount of the holdback agreed to by the Receiver for the Salaried Plan of $147,732 is sufficient for the section 81.6 Salaried Plan claim. I assume it will be held in an interest bearing account so that if that amount is to be eventually paid, there will be interest on that money available.

49During the argument on this motion, GE contended that because the Salaried Plan had never been registered by the Superintendent and because it had never been registered under the Income Tax Act, it was a retirement compensation arrangement as defined in section 248(2) of the Income Tax Act and therefore exempt by virtue of section 47(3) 5. of PBA regulation 909 from the application of the PBA. Therefore, GE contends, there can be no section 81.6 claim regarding the Salaried Plan and there should be no holdback by the Receiver.

50This argument was not included in the GE factum and counsel for Morneau and for the Superintendent said they would want time to consider it before responding to it. In the circumstances, the order I make is that there should be a holdback of $147,732 as undertaken by the Receiver but if GE wishes to pursue the point, a motion can be brought by GE requesting that the holdback be terminated and Morneau and the Superintendent will then be able to deal with the point.

3. PBA deemed trust claim

51Morneau alleges that special payment deficits as well as a wind-up deficit of $12,384,000 exists, assuming the Plans are merged, and claims this amount which is substantially more than the assets available for distribution. Morneau’s calculation assumes that the Superintendent decides to follow Morneau’s recommendations and merge the Salaried Plan into the Hourly Plan and change the wind up date for the Hourly Plan from January 1, 2008 to November 16, 2010. Even if the Superintendent is not permitted or chooses not to make the changes recommended by Morneau, as at January 1, 2008 the Hourly Plan would have had a wind-up deficit of more than $5 million, which is well in excess of the assets of Northern available for distribution.

52In this case, the security granted to secured lenders took place in 2007 to 2009, well before the steps taken by the Superintendent to wind up the Hourly Plan and revoke the Salaried Plan. This is unlike the situation of the DIP lenders in Indalex in which their charge was created some two years after the salaried pension plan was terminated and the wind up date had been set. In Indalex, the executive pension plan was not wound up or a wind up date set until after the DIP charge had been created and thus the PBA deemed trust did not have first-in-time priority over the DIP charge. The situation in this case is akin to the executive plan in Indalex, and thus the Court of Appeal decision in Indalex is not authority that all Northern property is subject to a deemed trust. Unlike in Indalex, no constructive trust is claimed by Morneau over the Northern property.

53The PPSA creates a limited exception to the first-in-time rule that would ordinarily apply to determining priority between a security interest and a subsequent PBA deemed trust. Section 30(7) of the PPSA states:

30(7) A security interest in an account or inventory and its proceeds is subordinate to the interest of a person who is the beneficiary of a deemed trust arising under the Employment Standards Act or under the Pension Benefits Act. (Underlining added)

54Thus the beneficiaries of a PBA deemed trust have priority only over “an account or inventory and its proceeds”. They are not granted priority over other property.

55In this case, the value of Northern’s assets that constitute “account or inventory and its proceeds” realized in the auction of Northern’s non realty assets was $4,725.

56In its factum Morneau stated that the deemed trust might apply to the amount in a GIC account that the Receiver was proposing to distribute to secured creditors. However, it appears clear from the definition of “account” in the PPSA that an account does not include a GIC.

57During argument, counsel for Morneau said Morneau had no opposition to any balance over the section 81.6 claim being paid out by the Receiver to secured creditors subject to the deemed trust amount of $4,725. He conceded that Morneau has no evidence to say that the figure was wrong. On the evidence, it appears that the section 30(7) deemed trust claim in this case is limited to $4,725.

58The Receiver and GE however take the position that the Receiver should not have to hold back this amount as the Receiver would be entitled under paragraph 3(r) of the receivership order to put Northern into bankruptcy and under the BIA, any PBA deemed trust would rank behind the secured creditors. If necessary the Receiver will take this step in order to protect the position of the secured creditors, but would prefer not to in order to avoid the extra expense of a bankruptcy, no doubt larger than $4,725. Counsel for Morneau in argument said that Morneau did not want to add to the costs by forcing a bankruptcy of Northern.

59In the circumstances, the appropriate order is that the Receiver need not hold back any amount for a section 30(7) deemed trust claim.

4. Approval of the Receiver’s Fifth Report and fees and disbursements

60The Receiver seeks approval of its activities referred to in its Fifth Report and approval of its fees and disbursements and the fees and disbursements of its counsel. Morneau in its factum states that it has raised significant concerns in respect of the conduct of the Receiver and in the circumstances, it would not be appropriate to approve the Fifth Report or the conduct of the Receiver at this stage or to approve its fees and disbursements. Rather, such requests should be considered at a time when the regulatory process has been completed and the pension claims have been finally determined.

61In October, 2011 GE, which had been funding the receivership costs, took the position that in light of Morneau’s pension claims that would rank ahead of GE’s security, GE would not pay any further costs of the receivership unless Morneau confirmed that it did not intend to assert priority over the receivership costs. Morneau took the position that it would not fund any receivership costs.

62On October 27, 2011, Morneau confirmed to the Receiver in writing that Morneau would not assert a priority of the claims pursuant to the PBA or the BIA over the costs of the receivership proceedings, including amounts subject to the Receiver’s Charge and the Receiver’s Borrowings Charge. The letter stated that the confirmation represented a concession to achieve a commercial resolution in the circumstances that does not prejudice the position of any party with respect to the priority of the PBA Claims or the BIA Claims relative to other claims. One of its terms was that the Receiver would obtain court approval of its fees and disbursements and those of its counsel in accordance with the receivership order and that Morneau would have the right to oppose any request for approval.

63Morneau takes the position that in raising the stay issue and seeking to distribute all the amounts the Receiver thinks is owing rather than protecting the pension claimants, the Receiver has not acted properly and has breached its fiduciary duties.

64I do not agree with Morneau’s assertions. The Receiver owed a duty as a court officer to take into account the interests of all stakeholders, including the secured creditors, and not just the pension claimants who would benefit from the pension claims asserted by Morneau. If the Receiver thought the claims of Morneau were not correct, it was entitled to raise that in its motion for directions, and even if the Receiver were not successful in the positions it took, that would not mean that it acted improperly.

65In this case, the Receiver readily agreed to hold back the amount of the section 81.6 claim as determined by the Court, which depended on the issue of the change of the wind up date for the Hourly Plan. It objected to any other holdback for the pension claims asserted by Morneau as it took the position that there were no other legitimate claims. I see nothing improper in that that would require its fees to be reduced.

66Morneau claims that the regulatory process in this case was developed by the Superintendent in consultation with the Receiver and that the Receiver should not have sat back with its position that the stay provisions of the receivership order prevented an attempt to change the wind up date for the Hourly Plan. I do not agree. First, everyone including the Superintendent was represented by counsel, and there is no reason why the Receiver was the person to advise interested parties what the stay provisions meant. More importantly, it was only in November, 2011 that Morneau took the position that the wind up date for the Hourly plan should be changed. Prior to that, the Superintendent had not suggested looking at any change. By the time that Morneau took its position on the claims in November, 2011, the bulk of the Receiver’s fees and those of its counsel had been incurred. It was at that stage that Morneau agreed to subordinate any pension claims to the Receiver’s past and future receivership cost. While the Receiver could have provided a more timely response, I would not see that as a basis for reducing its fees.

67I have reviewed the Receiver’s fees and disbursements and those of its counsel. They appear appropriate. No one has questioned the time spent or the hourly charges.

68In the circumstances, the activities of the Receiver in its Fifth Report and in its Supplement to its Fifth Report are approved, as are its fees and disbursements and those of its counsel.

Conclusion

69The Receiver may make distributions in accordance with the distribution schedule in paragraph 5 of its Supplement to its Fifth Report, which incorporates a holdback of $147,732 for the potential section 81.6 PBA claim. The cross-motion of Morneau is dismissed.

70If any party claims costs, and they cannot be agreed, brief written submissions may be made within 10 days, along with a cost outline, and brief written reply submissions may be made within a further 10 days.

Newbould J.