COURT FILE NO.: CV-18-590812-00CL
DATE: 2022-01-10
SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST)
RE: IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF CARILLION CANADA HOLDINGS INC.,CARILLION CANADA INC., CARILLION CANADA FINANCE CORP., CARILLION CONSTRUCTION INC., CARILLION PACIFIC CONSTRUCTION INC., CARILLION SERVICES INC., CARILLION SERVICES (FSCC) INC., BEARHILLS FIRE INC., OUTLAND CAMPS INC., OUTLAND RESOURCES INC., ROKSTAD POWER GP INC., 0891115 BC LTD., GOLDEN EARS PAINTING & SANDBLASTING LTD., PLOWE POWER SYSTEMS LTD. AND CARILLION GENERAL PARTNER (B.C.) LIMITED, Applicants
AND:
AND IN THE MATTER OF SECTION 101 OF THE COURTS OF JUSTICE ACT AND THE RECEIVERSHIP OF 491313 B.C. LTD., CARILLION INVESTMENTS (CANADA) INC., 2447586 ONTARIO INC., TWD ROADS MANAGEMENT INC., VANBOTS CAPITAL CORPORATION AND CARILLION CANADA (WOHC) INC., Debtors
BEFORE: Penny J.
COUNSEL: Alexander Soutter for Monitor and Receiver, Ernst & Young Inc.
Gregory Azeff for Weinrich Holdings Inc.
HEARD: December 8, 2021
ENDORSEMENT
[1] In this motion, Weinrich Holdings Inc. seeks: a) an order declaring that any limitation period applicable to its Alberta action against Carillion Canada Inc. was suspended (tolled) by the January 13, 2020 order of Justice Hainey; or, b) an order lifting the stay of proceedings granted in proceedings under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, nunc pro tunc in order to authorize and regularize the issuance of the Weinrich action as at the date upon which it was filed in the Alberta Court of Queen’s Bench on May 29, 2020.
[2] For the reasons that follow, the motion is denied.
Background
[3] Among other things, Carillion provided year-round routine and preventative maintenance services for approximately 40,000 kilometers of highway across Ontario and Alberta. This is generally referred to as the “roads business”.
[4] The initial order of Justice Hainey in this matter was made under the CCAA on January 25, 2018. The initial order appointed Ernst & Young Inc. as Monitor and, among other things, provided for a stay of all proceedings against the applicants. Under the terms of the stay “no proceeding or enforcement process in any court or tribunal shall be commenced or continued against or in respect of” the applicants (emphasis added).
[5] Weinrich was expressly advised that there was a stay of proceedings in favour of the applicants on or before April 10, 2019.
[6] In connection with the roads business, Carillion had leased premises in Alberta from Weinrich since June 2009. In May 2018, during the course of the CCAA proceedings, Weinrich became aware of damage to the leased premises caused during Carillion’s tenancy. Weinrich paid $408,835.08 for an engineering opinion and to replace a damaged building on the leased premises. Weinrich also expects to suffer additional damages caused by Carillion during its tenancy to a road on the leased premises. It is common ground that under the Alberta rules of court, and taking into account the temporary suspension of Alberta’s limitation period due to the COVID-19 pandemic, Weinrich had until August 2020 to commence its claim.
[7] In July 2018, the CCAA Court approved the sale of Carillion’s roads business to a company called Emcon. As part of that transaction, Emcon offered employment to most of the roads business’ 500 permanent and up to 1,100 seasonal employees. Carillion also assigned its interest in the Weinrich lease to the Alberta Ministry of Transportation. Weinrich consented to the assignment and did not seek any compensation from Carillion in exchange for its consent. Following Court approval of the sale, Alberta sublet the Weinrich premises to Emcon.
[8] Weinrich issued its Statement of Claim on May 29, 2020 (this was before its limitation period expired) without seeking the applicants’ and the Monitor’s consent or leave to do so from the CCAA Court. However, on June 2, 2020, Weinrich wrote to the Monitor, through counsel, and asked that the Monitor accept service of the Statement of Claim. In its letter, Weinrich confirmed its understanding that the action was stayed by virtue of the initial order.
[9] On June 5, 2020, counsel for Carillion wrote to Weinrich’s counsel, pointing out that: a) under the initial order, a stay of proceedings had been granted in respect of the applicants and, by virtue of this stay, no proceedings could be commenced or continued (in any court or tribunal) against the applicants except on consent or with leave of the Court; and, b) any claim by Weinrich against Carillion would have to be dealt with in the CCAA claims process.
[10] Weinrich only sought the Monitor’s consent to lift the stay on October 27, 2020 (after its limitation period expired)[^1]. The Monitor declined. Weinrich submitted a proof of claim to the Monitor in September 2021, more than three years after the claims bar date of August 20, 2018. The Monitor disallowed the claim (that decision is not at issue on this motion).
[11] Of central importance to Weinrich’s argument is the January 13, 2020 tolling order of the CCAA Court. Paragraph 3 of that order deemed certain time periods to be extended from the date the tolling order was granted to the date of the expiry of the stay period (as extended from time to time) granted under the initial order. Weinrich relies in particular on subparas. b) and c) which toll limitations relating to “current and future assets, undertakings and properties”, and “the business” of Carillion. The interpretation of para. 3 is controversial so I will set out the language in full:
THIS COURT ORDERS that, to the extent any prescription, time or limitation period may hereafter expire during the pendency of these CCAA proceedings relating to:
(a) any proceeding or enforcement process in any court or tribunal related to any claim or action that the Applicants or any one of them may assert against a third party… [I have left out certain exceptions which do not apply]
(b) the current and future assets, undertakings and properties of every nature and kind whatsoever of the Applicants or any of them, wherever situate; or
(c) the business of the Applicants or any of them; or
(d) any Claim against the Applicants submitted in accordance with the Claims Process (as defined below),
the term of such prescription, time or limitation period shall hereby be deemed extended by a period from and after the date of this Order to the expiry of the Stay Period. For greater certainty, nothing in this Order shall affect or alter the claims process established pursuant to the Claim Procedure Order dated July 6, 2018 (as amended from time to time) (the “Claims Process”) or the relevant claims bar dates established in the Claims Process.
[12] In July 2018, the CCAA Court issued the claims procedure order that commenced the claims process. The Monitor provided notice of the claims process in accordance with the approved procedures. The claims bar date was August 20, 2018.
[13] Under the initial order, the Monitor did not have the authority or discretion to accept late-filed claims. On two occasions, however, the court ordered that late-filed proofs of claim were deemed to have been submitted on or before the claims bar date. In each instance, the proofs of claim were submitted and the orders made before the methodology with respect to distributions to creditors was approved by the court and any distribution to creditors made.
[14] In August 2021, the Court made an interim distribution order. Under that order the applicants, with the assistance of the Monitor, have begun making interim distribution payments to creditors based on the approved distribution methodology.
[15] As noted, Weinrich did not submit a proof of claim (until September 2021) and did not participate in any interim distribution. Weinrich accepts that it has no entitlement to any “retroactive” participation in distributions already made but takes the position it ought to be able to participate in future distributions if its late-filed proof of claim were accepted.
Issues
[16] There are two essential, threshold issues raised on this motion:
(1) did the January 13, 2020 tolling order suspend the running of the limitation period for the Weinrich claim? or, if not,
(2) does the Court have the power to grant leave (by lifting the stay) nunc pro tunc to authorize the issuance of the Weinrich claim?
[17] If the answer to either of these questions is Yes, two other, subsidiary issues would arise:
(3) is it appropriate in the circumstances to lift the stay with respect to the Weinrich claim? and, if so,
(4) are there terms and conditions that should accompany the lifting of the stay?
[18] The determination of the two threshold questions particularly matters in this case because Carillion had third party liability property insurance with respect to the leased premises. Thus, if the Weinrich claim is not barred by the running of a limitation period, Weinrich’s potential claim, if successful, could give rise to a right of indemnity by Carillion under its property insurance contract.
Analysis
The Tolling Order
[19] Weinrich argues that, by its plain wording, the tolling order captures the Weinrich action because it makes claims in relation to both the “assets, undertakings and properties” of Carillion and its “business”. Consequently, under the tolling order, the limitation period with respect to the Weinrich action was tolled and continues to be tolled because the original stay is still in place.
[20] Weinrich further argues that its interpretation is consistent with the Monitor’s explanation to the CCAA Court at the time about the applicability and effect of the tolling order. Paragraph 5 of the Monitor’s Twenty-Fourth Report was filed in support of the Monitor’s motion for the tolling order. The Monitor submitted that the proposed tolling order would extend the term of any prescription, time or limitation period related to a proceeding or enforcement process against or in respect of the applicants, the current and future assets, undertakings and properties of the applicants, and the business of the applicants. Similar language was used in the Monitor’s notice of motion.
[21] I am unable to accede to these arguments.
[22] The interpretation of a court order is much like the interpretation of a statute: Canadian National Railway v. Holmes, 2015 ONSC 3038, 26 C.B.R. (6th) 328, at para. 18, aff’d 2016 ONCA 148, 34 C.B.R. (6th) 1. The Court must consider the plain language of the tolling order as well as its context and purpose. Here, the most obvious indication of the purpose of the tolling order is set out in its preamble. The relief sought was “an order tolling the period of time for any of the Applicants to commence an action against a third party” (emphasis added).
[23] While I accept that the provisions of subparas. 3(b) and (c) are open to a more ambiguous interpretation, I find that they were intended to mean, in the context of the proceedings as a whole (and as revealed through the language of the order as a whole, including the preamble), as yet unknown claims by the applicants related to their assets and business. There is no reference in these subparas. to claims of third parties against Carillion whatsoever. If subparas. 3(b) and (c) were intended to extend all limitations applicable to all possible third party claims against Carillion in general, this was an odd and ambivalent way to do it – why not just say so explicitly?
[24] In any event, the tolling order was, by its terms, effective only with respect to a prescription, time or limitation period which “may hereafter expire during the pendency of these CCAA proceedings”. The roads business was sold in July 2018. Thus, in January 2020 when the tolling order was issued, the Weinrich claim did not relate to any “current or future” property or to the then-existing “business” of Carillion.[^2]
[25] This interpretation of subparas. 3(b) and (c) is further supported by subpara. 3(d) of the tolling order, which clearly states, with respect to third party claims against Carillion, that only limitation periods applicable to a “Claim against the Applicants submitted in accordance with the Claims Process” are tolled (emphasis added). If the tolling order was intended to extend in general to “all third party claims against the Applicants”, it would have contained that express language, not the clear language of subpara. 3(d) which is to the opposite effect.
[26] Weinrich has also failed to articulate any principled basis, context or purpose for why a general suspension of all limitation periods of all third party claims against Carillion would have been in the interests of the applicants or other stakeholders in general. Given the claims process and claims bar dates established in the claims procedure order which had already been made in July 2018, there is no discernible benefit to the applicants, the Monitor, or the stakeholders of the applicants generally to toll claims of third parties against the applicants. In fact, doing so would only serve to create additional uncertainty as claims that were previously time-barred could then be potentially resurrected.
[27] Weinrich’s interpretation of the tolling order is inconsistent with one of the fundamental purposes of the CCAA, that all claims against the debtor should be determined in a single proceeding, according to a single process that does not favour one creditor over another. Weinrich’s interpretation undermines the intent of the claims process order that all claims against the applicants be dealt with in the claims process and leads to differential treatment between creditors. For example, those creditors with limitation periods expiring in the two years between the commencement of the CCAA proceeding and the granting of the tolling order would be unable to proceed with their claims, whereas a creditor whose limitation period expired the day after the tolling order was issued could proceed with its claim. This all strikes me as antithetical to the objectives of stability and certainty associated with CCAA proceedings in general, and the intent of the tolling order, viewed in the context of the prior claims procedure order made in July 2018, in particular.
[28] I accept Weinrich’s argument that the CCAA Court has the jurisdiction to make broad and generally applicable orders tolling the running of limitation periods for claims against the debtor. Orders of this nature have been made in the past. Here, however, the question is not whether the Court could have made a broad sweeping order tolling all third party claims against Carillion, but whether the Court in fact made such an order on January 13, 2020. For the reasons set out above, I find that it did not.
The Doctrine of Nunc Pro Tunc
[29] Weinrich’s second argument is that its claim was issued within the limitation period prescribed by Alberta law. Neither the Monitor nor the applicants consented to lifting the stay. Even though no request for consent was made or motion brought seeking leave to issue and proceed with the claim prior to the expiry of the limitation period, the Weinrich action is not a nullity or void ab initio. Rather, the lack of consent or court order is an irregularity which can be cured in appropriate circumstances. This case, Weinrich argues, provides appropriate circumstances - it is fair and appropriate for the Court to grant leave nunc pro tunc to “regularize” the proceeding retroactively to the date upon which it was actually commenced. No party would be unfairly or unduly prejudiced by such relief being granted because the insurance policy, which may be liable to respond to the claim if it is successful, is not available to other creditors or stakeholders of Carillion.
[30] In Canadian Imperial Bank of Commerce v. Green, 2015 SCC 60, [2015] 3 S.C.R. 801, at para. 90, Justice Côté enumerated the following non-exhaustive, non-determinative factors the Court may consider when granting an order nunc pro tunc:
(a) the opposing party will not be prejudiced by the order;
(b) the order would have been granted had it been sought at the appropriate time, such that the timing of the order is merely an irregularity;
(c) the irregularity is not intentional;
(d) the order will effectively achieve the relief sought or cure the irregularity;
(e) the delay has been caused by an act of the court; and
(f) the order would facilitate access to justice.
[31] Weinrich relies on these factors to argue that it should be granted an order nunc pro tunc in the circumstances of this case. However, the majority decision of the Court in Green, in dealing with the circumstances under which such an order may be granted, specifically held that leave to proceed with an action subject to these equitable factors, while theoretically available, can only be granted where leave is sought prior to the expiry of the limitation period. A nunc pro tunc order made after the expiry of a limitation period in these circumstances would be of no use to the plaintiff because the order could only be retroactive (i.e., backdated) to a date after the limitation period had already expired (paras. 92-94). No authority has been offered for the proposition that Weinrich is entitled to an order backdating the validity of its claim to May 29, 2020, the day it was issued by the Alberta Court of Queen’s Bench.
[32] The ratio of the majority in Green has since been described by the Court of Appeal for Ontario as the “red-line rule” which requires leave to be sought within the limitation period in order for an order of the court to be made nunc pro tunc. An application for leave nunc pro tunc, the Court went on to say, cannot succeed if the application is made after the expiry of the limitation period. This is because such an order would be of no use to the plaintiff, since it would only be retroactive to a date after the expiry of the limitation period: Pennyfeather v. Timminco Limited, 2017 ONCA 369, at para. 42.
[33] Weinrich relies on passages from Côté J.’s judgment (for example, in para. 101) to argue that Green is distinguishable and ought not to apply in this case. Weinrich submits the decision in Green turned on the comprehensive scheme under Part XXIII.1 of the Ontario Securities Act and the “delicate balance” it achieved in, among other things, establishing a specific statutory limitation period and a statutory requirement for leave to bring a claim for secondary market loss.
[34] Here, Weinrich argues, there is no comparable “delicate balance” in that there is no CCAA-specific limitation period. Further, s. 11 of the CCAA, while providing that a court may make an order imposing a stay, does not require the court to do so. And, more broadly, under s. 11 of the CCAA the court may “make any order that it considers appropriate in the circumstances”. Weinrich bolsters this argument with the fact that the very order made in this case permits the applicants and the Monitor to consent to the lifting of the stay without the need for any order of the court.
[35] I fail to see however how this distinction makes a difference to the underlying logic and rationale of Green. Compliance with orders of the court is at least as important as compliance with the provisions of a statutory regime. Similarly, the underlying concerns about fostering certainty, promoting due diligence and undermining the efficacy of limitations periods and their purposes are equally important and applicable in the context of CCAA proceedings as they are in OSA proceedings (and, as discussed below, in Bankruptcy and Insolvency Act proceedings and proceedings under construction lien legislation).
[36] As it happens, Green has been applied in contexts other than secondary market claims under the OSA. Indeed, the reasoning in Green has been specifically applied in the insolvency context to preclude the court from issuing backdated orders regularizing conduct or actions taken in the course of bankruptcy proceedings.
[37] In Douglas v. Stan Ferguson Fuels Ltd, 2018 ONCA 192, 139 O.R. (3d) 721, leave to appeal to S.C.C. ref’d, 2019 CanLII 6069, the Court of Appeal considered a subrogated claim issued by an insurer arising out of a leaking oil tank on property owned by a bankrupt. The question was the bankrupt’s capacity to sue and whether the insurer’s subrogated claim could be regularized by a backdated order under ss. 38 or 40 of the BIA permitting the claim to proceed. The Court of Appeal, citing Green, held that a nunc pro tunc order was not available in the circumstances because the “court has no authority to make a nunc pro tunc order if the party did not seek such an order before the relevant limitation period expired” (at paras. 103-104).
[38] The Court of Appeal’s decision in Thistle v. Schumilas, 2020 ONCA 88, 442 D.L.R. (4th) 339, leave to appeal to S.C.C. ref’d, 2020 CanLII 50444, is also instructive. In Thistle, an undischarged bankrupt sued his solicitor for negligence. Mr. Thistle was then faced with a motion for summary judgment on the basis that his cause of action in negligence had vested with his trustee. Mr. Thistle brought a motion for a nunc pro tunc order granting him standing to bring the action. The motion judge granted the nunc pro tunc order, notwithstanding that Mr. Thistle’s motion was brought more than two years after his cause of action arose. The Court of Appeal unanimously overturned the motion judge’s decision. Hourigan J.A. wrote that in circumstances where a motion for relief is brought after the expiry of a limitation period, a nunc pro tunc order cannot be made for the simple reason that such an order is of no practical effect. It would only serve to backdate the order to the date of the motion, which was already beyond the expiry of the limitation period. Given the decisions in Green and Douglas, he held, the motion judge erred in granting a nunc pro tunc order regularizing the proceeding for the respondent (at paras. 25 and 31).
[39] After argument was concluded and this matter taken under reserve, counsel for both parties brought to my attention a recent decision of the Divisional Court in 1159337 Ontario Ltd. v. Saplys, 2021 ONSC 7909 (Div. Ct.), released on the very day counsel were before me making argument. Saplys involved a third party claim issued by 1159337 Ontario Limited against Saplys in a construction lien action initiated by 1159’s general contractor. The third party claim was issued in 2014 without leave of the court contrary to what was then s. 56 of the Construction Lien Act. Leave to issue the third party claim was sought for the first time after the expiry of the two-year limitation period. The motion judge in first instance held that under the authority of Green, she did not have the power to issue an order regularizing the third party claim. The Divisional Court dismissed 1159’s appeal on the basis that the motion judge had correctly applied the principles articulated in Green and Thistle. The court had no power to back-date an order if the limitation period had already expired.
[40] While Weinrich submits this ever-expanding network of cases applying the principle in Green to different contexts are all distinguishable on their facts, it has offered no authority to the contrary, but for the 2009 decision of the Alberta Court of Queen’s Bench in Tirecraft Group Inc., Re, 2009 ABQB 217, 53 C.B.R. (5th) 269.
[41] Weinrich relies on Tirecraft for the proposition that a nunc pro tunc order can be issued notwithstanding the expiry of a limitation period. Tirecraft, however, lacks persuasive precedential value in the present context because:
(a) it was decided in 2009, before Green (decided in 2015);
(b) it is a decision of the Alberta Court of Queen’s Bench and is not binding on this Court; the decisions of the Supreme Court of Canada in Green, the Ontario Court of Appeal in Thistle, Douglas, and Pennyfeather and the Divisional Court in Saplys are; and,
(c) it contains no analysis of the interplay between a court’s jurisdiction to issue nunc pro tunc orders and the effect of the expiry of a statutory limitation period.
[42] In summary, as in Green, I conclude that Weinrich knew about the stay imposed by the order of Hainey J. It had ample opportunity to take steps to regularize the issuance of its claim (issued in contravention of that order) well before the expiry of the Alberta limitation period. It failed to do so. Weinrich was aware of the requirement of obtaining consent or leave, yet it made the choice not to request consent until after the limitation period had expired. A party cannot proceed on the assumption that the discretion to grant a nunc pro tunc order will be exercised in their favour. It was not reasonable for Weinrich to assume that it would be granted relief: Green, paras. 99-100. The principles laid out in Green for the proper analysis of this situation, as amplified in numerous subsequent decisions of the Court of Appeal, the Divisional Court and the Ontario Superior Court, lead only to one result: the court has no authority to issue the order now sought. For these reasons, I decline to issue a nunc pro tunc order authorizing the issuance of Weinrich’s claim.
The Subsidiary Issues
[43] In light of my disposition of the threshold issues in this case, it is not necessary to address the subsidiary issues. Had I been required to do so, I note that Weinrich agreed that if the stay were lifted and it obtained an order against Carillion in its action, it would limit any recovery to the proceeds of any applicable policy of insurance. It was on this basis that the Monitor took no position on the request to lift the stay, subject to certain conditions which I regard as reasonable in the circumstances.
Conclusion
[44] For the reasons articulated above, the Weinrich motion is dismissed.
Penny J.
Date: 2022-01-10
[^1]: The initial order provided that the applicant and the Monitor could consent to the lifting of the stay without the need for an order of the court. It is common ground that the date on which Weinrich first “applied” to lift the stay was the date on which it sought the Monitor’s consent, as opposed to the date on which it actually commenced this motion. I note that Weinrich has offered no explanation for why it waited until October 27, 2020 to take this action.
[^2]: Weinrich argues that the insurance contract was an “asset” of Carillion. While this may be true, Weinrich’s claim is not against the insurance company, or even the insurance contract. Its claim is only against Carillion. The fact that, if the claim is successful, it may engage Carillion’s right to indemnity from a third party does not change this fact.