U.S. Steel Canada Inc. et al. v. United Steel Workers et al.

COURT FILE NO.: CV-14-00010695-00CL

DATE: 20221219

ONTARIO

SUPERIOR COURT OF JUSTICE

(COMMERCIAL LIST)

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 WITH RESPECT TO U. S. STEEL CANADA INC.

BETWEEN:

U.S. STEEL CANADA INC. et al.

Plaintiffs

– and –

THE UNITED STEEL PAPER AND FORESTRY, RUBBER, MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND SERVICE WORKERS INTERNATIONAL UNION (UNITED STEEL WORKERS et al.)

Defendants

COUNSEL:

Richard B. Swan, Raj S. Sahni and Danish Afroz, counsel for the Monitor, Ernst & Young Inc.

Geoff R. Hall, James D. Gage and Alexa Jarvis, counsel for Stelco Inc.

Robert B. Bell, Emily Y. Fan, Lucy Sun and Roger Jaipargas, counsel for DGAP Investments Limited

Andrew J. Hatnay, representative counsel for non-union retirees and active employees of U.S. Steel Canada Inc.

Tracey Henry, counsel for USW Local 8782 and USW Local 1005 ELHT and Pension Deficit Funding Trust

David Bish, counsel for the Plan Administrator, LifeWorks

HEARD: September 26, 2022

Further written submissions received by October 5, 2022

Second further written submissions received by October 27, 2022

REASONS FOR DECISION

McEwen, J.

[1] This motion deals with a dispute over a parcel of land (the “Reconveyance Parcel”).

[2] Ernst & Young Inc. (the “Monitor”) brings this motion. It does so in its capacity as the court-appointed Monitor of U.S. Steel Canada Inc. (“U.S. Steel”) and as the interim Land Restructuring Officer (“LRO”).[^1]

[3] The Monitor seeks an order directing Stelco Inc. (“Stelco”) (formerly U.S. Steel) to complete the land severance and conveyance of the Reconveyance Parcel pursuant to the June 5, 2018 reconveyance agreement (the “Reconveyance Agreement”). Stelco entered into the Reconveyance Agreement with Legacy Lands Limited Partnership (“LandCo”) which is administered by the Monitor. Under the Reconveyance Agreement, subject to certain steps which are in dispute, Stelco is to transfer title to the Reconveyance Parcel to LandCo’s nominee, Legacy Lands Lake Erie Inc. (the “LandCo Vendor”). LandCo and the LandCo Vendor are both part of a number of special purpose entities created to hold land (collectively, the “Land Vehicle”).

[4] DGAP Investments Ltd. (“DGAP”) supports the Monitor’s motion. DGAP is a wholly owned subsidiary of Empire Communities Corp. (“Empire”). Empire is a substantial residential homebuilder. As Empire’s corporate acquisition vehicle, DGAP entered into an Agreement of Purchase and Sale (the “Sales Agreement”) with the LandCo Vendor to purchase the Reconveyance Parcel and other land parcels in Haldimand, Ontario.

[5] Stelco opposes this motion. It claims that LandCo missed certain timelines mandated by the Reconveyance Agreement. As a result, Stelco submits that it is not required to reconvey the Reconveyance Parcel to the LandCo Vendor, but rather, based on the terms and conditions of the Reconveyance Agreement, LandCo is required to sell the Reconveyance Parcel to Stelco. Stelco brings a cross-motion in this regard.

[6] The other stakeholders who attended the motion take no position. The U.S. Steel employees, retirees and pensioners, however, submit that for their benefit, the court ought to deal with this matter as quickly and practically as possible.

[7] For the reasons that follow, I grant the Monitor’s motion and dismiss Stelco’s cross-motion.

BACKGROUND

Stelco

[8] Stelco is an integrated steel manufacturer. The United States Steel Corporation acquired Stelco in 2007. After the acquisition, Stelco operated in Canada as U.S. Steel.

[9] During this time, U.S. Steel operated two steel plants: Hamilton Works in Hamilton and Lake Erie Works in Nanticoke. Both remain in operation today.

[10] U.S. Steel’s steelmaking operations at both plants underwent major economic setbacks. Hamilton Works’ steelmaking operations permanently shut down in 2013 after sitting idle since 2010. In April 2013, U.S. Steel also halted Lake Erie Works’ coke making operation, one of the plant’s principal operations.

[11] Faced with economic uncertainty, U.S. Steel resorted to underfunding its pension obligations.

CCAA Protection

[12] In September 2014, U.S. Steel applied for and was granted protection under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (the “CCAA”). A number of orders followed, including those below.

[13] In December 2016, this court authorized U.S. Steel to enter into an acquisition and plan sponsor agreement with Bedrock Industries Canada LLC (“Bedrock”). Bedrock was declared the successful bidder as defined in a previous Sale and Investment Solicitation Process Order.

[14] Ultimately, in April 2017, this court issued an Amended Plan Order, which, amongst other things, accepted the filing of an amended and restated plan of compromise, arrangement and reorganization of U.S. Steel under the CCAA. At the same time, the court issued a Settlement Approval Order which included agreements with various salaried employees, retirees and pensioners.

[15] In June 2017, a plan was approved by each class of affected creditors and this court issued an order accepting the filing of the Second Amended Plan. When the transaction closed, U.S. Steel filed Articles of Reorganization and was renamed Stelco.

[16] Pursuant to the restructuring, an interim Land Vehicle Governance Order was issued in June 2017 which appointed the Monitor as the LRO. A significant amount of industrial land owned by U.S. Steel, now Stelco, was transferred to the Land Vehicle to be sold (the “Transferred Lands”) with a view to benefitting employees, retirees and pensioners. LandCo is a limited partner in a broader limited partnership collectively known as the “Land Vehicle Stakeholders”. The structure of the Land Vehicle Stakeholders includes a general partner, Legacy Lands GP Inc., and other limited partners, including U.S. Steel’s main registered pension plans, Non-USW ELHT, USW Local 1005 ELHT, USW Local 8782 ELHT and the pension deficit funding trust. As such, the Land Vehicle Stakeholders include the employees, retirees and pensioners.

[17] The conveyance of the Transferred Lands was part of a broader set of arrangements implemented for the direct or indirect benefit of Stelco’s employees, retirees and pensioners. Pursuant to the interim Land Vehicle Governance Order, the Monitor, as the Land Vehicle’s LRO, was to provide temporary guidance and administration over the Land Vehicle and oversee its sale with the monies going to the benefit of the employees, retirees and pensioners.

The Sale to Stelco

[18] In 2018, as part of the CCAA proceedings, the Land Vehicle sold portions of the Transferred Lands back to Stelco. The Land Vehicle retained approximately 4,300 acres (the “Planning Act Lands”).

[19] Because of the operation of the provisions of the Planning Act, R.S.O. 1990, c. P.13 (the “Planning Act”), the lands purchased by Stelco could not be separated from the Planning Act Lands. For this reason, the Land Vehicle transferred back to Stelco title to all the Transferred Lands, including the Planning Act Lands – which included the Reconveyance Parcel. The Planning Act Lands were explicitly returned to Stelco until such time that the agreed upon Planning Act and Ministry of Environment and Climate Change consents were obtained (respectively, the “Planning Act Consents” and the “MOECC Consent”).[^2] Once the consents were obtained, the Planning Act Lands, including the Reconveyance Parcel, were to be reconveyed to the LandCo Vendor. For this reason, Stelco and LandCo entered into the Reconveyance Agreement.

[20] There is no dispute between LandCo and Stelco that the Planning Act Lands were to be reconveyed if the provisions of the Reconveyance Agreement were met. Specifically, Stelco does not take the position that it acquired title to the Reconveyance Parcel through the aforementioned transactions. This is evidenced by the Reconveyance Agreement the parties entered into along with an Environmental Agreement and Indemnity also executed on June 5, 2018. Instead, Stelco is pursuing rights that it believes it has under the Reconveyance Agreement.

The Reconveyance Agreement, the Sale of the Reconveyance Parcel and the Dispute

[21] The interpretation of the Reconveyance Agreement is the primary subject of this motion. The land in dispute, the Reconveyance Parcel, is captured by the Reconveyance Agreement.

[22] The Reconveyance Parcel comprises 1,963.714 acres in Haldimand County, Ontario. The Reconveyance Parcel abuts the western flank of Stelco’s Lake Erie Works steel plant. Directly to the south of the Reconveyance Parcel is Lake Erie.

[23] After the execution of the Reconveyance Agreement, Stelco began to take steps to obtain Planning Act Consents. It engaged counsel and surveyors in this regard and, by December 2020, received draft surveys of the severance of the Planning Act Lands. Further survey work was carried on between March and May 2021. Stelco’s counsel and surveyors continued to co-ordinate further surveying work as required.

[24] In 2018, the Land Vehicle began a marketing and sales process with respect to the Planning Act Lands, including the Reconveyance Parcel. Ultimately, the Monitor determined that Empire’s offer to purchase the Reconveyance Parcel and some of the other Planning Act Lands, through its subsidiary, DGAP, was the best economic offer. It decided to pursue that transaction. Stelco expressed no opposition. Thereafter, the LandCo Vendor and DGAP entered into the Sales Agreement in February 2021. Fourteen parcels of land, comprising approximately 4,150 acres including the Reconveyance Parcel, were included in the Sales Agreement. Under the Reconveyance Agreement, the Reconveyance Parcel was to be conveyed to LandCo’s nominee, the LandCo Vendor to facilitate the sale.

[25] In March 2021, the Monitor brought a motion before this court seeking approval of the Sales Agreement. This court issued an order (the “Residual Farm Land Transaction Order”) approving the Sales Agreement, including the Reconveyance Parcel. Stelco did not oppose that motion, nor has it taken any steps to appeal, vary or set the order aside.

[26] The genesis for the dispute between the Monitor, DGAP and Stelco lies in the wording of Articles 4.1 and 4.2.

[27] Pursuant to Article 4.1, certain steps had to be taken by Stelco and LandCo as follows:

(a) As promptly as reasonably practicable after the date hereof, Stelco shall file consent applications under the Planning Act with the Committee of Adjustment of the City of Hamilton for the Hamilton Planning Act Lands and with the Committee of Adjustment for Haldimand County for the Lake Erie Planning Act Lands, and satisfy any conditions required to obtain, final and binding consents under the Planning Act (collectively, the “Planning Act Consents”) to enable the Planning Act Lands to be severed from the remainder of the Property and reconveyed (excluding any Stelco Equipment) to LandCo or as directed by LandCo, together with all necessary easements.

(h) Stelco and LandCo shall use commercially reasonable efforts to obtain consent from the MOECC to the assignment of the Environmental Framework Agreement[^3] by Stelco to LandCo in a form satisfactory to Stelco and LandCo in respect of the applicable Planning Act Lands.

(i) Within 15 Business Days after the later of the date on which: (i) the MOECC provides consent pursuant to Section 4.1(h); and (ii) a Planning Act Consent is obtained (which, for greater clarity means that all appeal periods have expired and all conditions have been satisfied) in respect of the applicable Planning Act Lands (the “Reconveyance Date”), Stelco shall reconvey to LandCo (or as it may direct) the Planning Act Lands (excluding any Stelco Equipment) that are the subject of such Planning Act Consent on the terms and subject to the conditions set out in this Agreement.

(k) On the Reconveyance Date, LandCo shall execute and shall deliver the following: (iv) the EFA Assignment Agreement.

(m) On the Reconveyance Date, LandCo and Stelco shall enter into such shared facilities and/or reciprocal easement agreements required for the operation of the Planning Act Lands and the balance of the Property, which shared facilities and/or reciprocal easement agreements shall be settled by the Parties prior to the Reconveyance Date.

[Emphasis added.]

Pursuant to Article 4.2, as defined, a three-year period was provided for with respect to the steps set out in Article 4.1. The relevant portions of Article 4.2 read as follows:

If on or before the third anniversary of the Closing Date Stelco’s applications for Planning Act Consents are refused in whole or in part or Stelco is unable to satisfy any conditions of such consent or if the MOECC fails to provide consent to the assignment of the Environmental Framework Agreement, with respect to the Hamilton Planning Act Lands or the Lake Erie Planning Act Lands or both of them or any part of the Hamilton Planning Act Lands or any part of the Lake Erie Planning Act Lands and if any such consents are outstanding at such time, unless the Parties otherwise agree at such time, the applicable Planning Act Lands shall not be reconveyed to LandCo (as applicable, the “Failed Consent Lands”), then Stelco shall pay as an additional purchase price (the “Failed Consent Lands Purchase Price”) to LandCo, an amount as agreed upon between LandCo and Stelco within 30 days following the earlier of the date on which: (i) any condition in a Planning Act Consent is not satisfied; and (ii) the Planning Act Consent application is denied and Stelco shall retain the Failed Consent Lands. Should LandCo and Stelco fail to agree upon a Failed Consent Lands Purchase Price within such 30-day period, then the Failed Consent Lands Purchase Price will be determined in accordance with the procedure set out in Schedule F….

[Emphasis added.]

[28] The Monitor’s counsel, on June 25, 2021, discovered that the Reconveyance Parcel had not been severed in accordance with the Reconveyance Agreement (20 days after the three-year period contemplated in Article 4.2) and contacted Stelco’s counsel to carry out the contemplated severance.

[29] Thereafter, notwithstanding the three-year timeline contained in the Reconveyance Agreement, Stelco took additional steps with respect to the severance of the Reconveyance Parcel. It bears noting that at this time, final Planning Act Consents had not been received as per Article 4.1(a) nor had MOECC Consent been obtained as per Article 4.1(h). Similarly, as per Article 4.2, no Planning Act Consents had been refused, nor had the MOECC refused to provide consent to the assignment of the EFA.

[30] In July 2021, Stelco’s counsel informed the Monitor’s counsel that it was working with Stelco to seek the severance of the Reconveyance Parcel, pursuant to its obligation under Article 4.1(a) of the Reconveyance Agreement. Based on Stelco’s correspondence, Stelco indicated that it did not anticipate any concerns with having the severance approved once the information was finalized and submitted.

[31] The Monitor’s counsel was in regular communication with Stelco’s counsel regarding the status of the Reconveyance Parcel. On November 16, 2021 – more than five months after the three-year period in the Reconveyance Agreement – Stelco filed an application with the Committee of Adjustment for Haldimand County (the “Committee”) seeking severance of the Reconveyance Parcel. In November 2021, Stelco’s counsel informed the Monitor’s counsel that they had submitted the severance application to the Committee and that the hearing date was scheduled for January 2022.

[32] Following the hearing, the Committee approved the severance of the Reconveyance Parcel on January 17, 2022. The appeal period expired and the decision was final and binding as of February 7, 2022. The Monitor’s counsel requested that Stelco’s counsel satisfy the remaining conditions attached to the Planning Act Consent. Despite repeated requests for confirmations from Stelco’s counsel that the remaining steps required for proper severance were being completed, the Monitor’s counsel did not hear from Stelco’s counsel for some time.

[33] During this time, neither Stelco nor LandCo took steps towards seeking the approvals outlined in Article 4.1(h) of the Reconveyance Agreement: obtaining the consent from the MOECC to the assignment of the EFA.

[34] Similarly, neither Stelco nor LandCo took any of the steps outlined in Article 4.1(m) to enter into shared facilities and/or reciprocal easement agreements (the “Reciprocal Agreements”) required for the operation of the Planning Act Lands.

[35] Difficulties began when Stelco learned in February 2022 that Empire planned to build a new development on the Reconveyance Parcel and other Planning Act Lands it purchased for both residential and industrial uses. The residential component calls for 15,000 homes and approximately 40,000 residents, along with other industrial uses. Stelco, in its factum, describes the proposed development (for which zoning approval would be required to allow for residential use) as an “existential threat” to its operations. Stelco argues that not only would the construction adversely affect its operations, but that residential housing in close proximity could result in its operations being deemed unsafe.

[36] In May 2022, Stelco took the position, for the first time, that it no longer had an obligation to convey the Reconveyance Parcel to the LandCo Vendor. Stelco advised that, based on the wording in Article 4.2 of the Reconveyance Agreement, Planning Act Consents and MOECC Consent had not been obtained within the three-year period; therefore, it had a right to purchase the Planning Act Lands, including the Reconveyance Parcel.

[37] The Monitor, supported by DGAP, disagreed. It took the position that Article 4.2 had not been breached since no Planning Act Consents had been refused nor had Stelco been unable to satisfy any conditions of such consent. Also, the MOECC had not failed to provide consent to the assignment of the EFA since no request had been made.

[38] This generally frames the dispute between the parties. I will now analyze the preliminary issues and then deal with the dispute between the parties concerning the Reconveyance Agreement.

PRELIMINARY ISSUES

First Preliminary Issue: The Application of the CCAA

[39] Stelco submits that the provisions of the CCAA do not apply to the dispute on this motion since Stelco has successfully emerged from CCAA protection. I disagree.

[40] In my view, the provisions of the CCAA are still applicable with respect to the motion and cross-motion. I do not accept Stelco’s submission that once the Second Amended Plan was granted on June 30, 2017, Stelco’s change of ownership and compromise of the claims against it, along with the transfer of its lands to the Land Vehicle, resulted in the provisions of the CCAA not being applicable to this matter.

[41] I have come to this conclusion primarily for the following reasons:

• The motion and cross-motion are brought within the CCAA proceeding and there is no other active court proceeding.
• In the interim Land Vehicle Governance Order, this court appointed the Monitor as the LRO to administer the Land Vehicle “until the Land Vehicle’s permanent governance regime is established and the LRO has been discharged by order of the Court, or until the LRO resigns in accordance with this Order or until such other time ordered by the court.” No such discharge or resignation has occurred.
• There are ongoing dealings with respect to the Land Vehicle Stakeholders – including employees, retirees and pensioners.
• To date, all stakeholders have operated under the framework of the CCAA. This court continues to make orders with respect to the Land Vehicle, including the approval of the Residual Farm Land Transaction which includes the Land Transaction Order in which the Reconveyance Parcel was transferred to Stelco.
• The Monitor, Stelco, and the Land Vehicle were all created as part of Stelco’s restructuring and are still involved, along with existing stakeholders, in this proceeding and affected by orders made by this court.
• The CCAA proceeding has not been terminated, nor has the Monitor completed its mandate or been discharged.

[42] I accept the Monitor’s submission that there must be a clear, bright line as to when a CCAA proceeding ends. I further agree that this court’s jurisdiction under the CCAA can only end upon termination of the CCAA proceedings pursuant to a clear court order and the discharge of the Monitor.

[43] Further, it would run contrary to the purpose and spirit of the CCAA if Stelco could take advantage of the provisions of the CCAA to effect a restructuring and thereafter, during the implementation of that restructuring, no longer be bound by the provisions of the CCAA. This would provide Stelco with all the benefits and none of the obligations contained in the Act.

[44] I pause here to note that a dispute arose at the motion concerning the applicability of s. 18.6 of the CCAA should it apply. Section 18.6 was added to the CCAA in June 2019 pursuant to s. 50 of the Budget Implementation Act, 2019, No. 1, S.C. 2019, c. 29. Section 50 provided that amendments to the CCAA (including s. 18.6) “apply only in respect of proceedings that are commenced under the Act on [June 21, 2019] or after.” Section 18.6 is relevant to the motion since it imposes a duty of good faith and allows the court to make any order that it considers appropriate if it is satisfied that an interested person has failed to act in good faith.

[45] Stelco argues that s. 18.6 does not apply to this motion since it is not retroactive. Stelco provided no caselaw with respect to this issue.

[46] In my view, it is not necessary to consider the issue of retroactivity. I accept the submissions of DGAP that the duty of good faith expected from parties in CCAA proceedings is not a new one created by s. 18.6 in 2019. Courts have long recognized their inherent jurisdiction, as well as several provisions of the CCAA, specifically s. 11, impose a duty of good faith: see Bellatrix Exploration Ltd (Re), 2020 ABQB 809, at para. 99; leave to appeal refused, 2021 ABCA 85. Bellatrix cites ss. 11.02(3), 33(3), 50(12), 50.4(11) and 65.12(2) of the CCAA to show that the duty to act in good faith is not a new duty.

[47] The courts, on repeated occasions, have recognized the duty of good faith as one of the “baseline considerations” that a court should always bear in mind when exercising CCAA authority: see Century Services Inc. v. Canada (Attorney General), 2010 SCC 60, [2010] 3 S.C.R. 379, at para. 70.

[48] Last, as the Supreme Court of Canada recently noted in 9354-9186 Québec inc. v. Callidus Capital Corp., 2020 SCC 10, 444 D.L.R. (4th) 373, at para. 50, the well-established requirement that parties must act in good faith in insolvency proceedings has recently been made express in s. 18.6 of the CCAA. This comment demonstrates that ongoing good faith obligations predate s. 18.6.

Second Preliminary Issue: DGAP’s Standing on the Motion

[49] Stelco submits that DGAP does not have standing on this motion or the cross-motion since it is not a party to the Reconveyance Agreement nor is it a third-party beneficiary. Stelco adds that if DGAP wished to participate in the motion, it ought to have applied for intervenor status.

[50] At the commencement of the motion, the parties agreed that I should hear the entire motion and deal with Stelco’s position that DGAP does not have standing in these Reasons.[^4]

[51] DGAP argues that r. 37.07(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 applies to the motion. Rule 37.07(1) provides that a notice of motion shall be served on any party or other person who will be affected by the order sought. Given the Sales Agreement that it entered into, DGAP submits that it is an affected person because its proprietary and economic interests depend on the outcome of the motion.

[52] I prefer the submissions of DGAP. First, in the circumstances of this case, I do not believe that DGAP was required to apply for intervenor status. DGAP has an existing Sales Agreement with respect to the Reconveyance Parcel over which Stelco now claims a right to purchase. Given this, I accept that DGAP is an interested person pursuant to r. 37.07(1) as it will obviously be affected by the order granted on this motion, within the CCAA proceeding.

[53] Last, if I am in error with respect to my analysis above, I would have granted DGAP intervenor status if requested. Stelco relied on City of Ottawa v. Clublink Corporation ULC, 2019 ONSC 7470 in support of its position that DGAP should not be afforded intervenor status.

[54] I begin by noting that intervenor status was granted to the community corporation which was opposing the development of a golf course in that case: see Clublink Corporation, at para. 24.

[55] The Clublink Corporation decision is analogous to this motion. Here, DGAP also has an interest in the proceeding and its participation did not complicate or escalate the costs of this motion. Further, DGAP brought a nuanced and useful perspective with respect to the lands it purchased, to the unique nature of the Reconveyance Parcel, and to its own rights under the CCAA and the Sales Agreement. It did not merely parrot the Monitor’s submissions. In these circumstances, I would have granted intervenor status had it been sought.

[56] I will now turn to the central issues on this motion, beginning with whether Stelco breached the Reconveyance Agreement or whether it is entitled to purchase the Reconveyance Parcel.

STELCO BREACHED THE RECONVEYANCE AGREEMENT

[57] For the reasons that follow, I agree with the Monitor and DGAP that Stelco breached the Reconveyance Agreement.

The Positions of the Parties

The Monitor’s Position[^5]

[58] First, the Monitor notes that Stelco could have bought the Planning Act Lands in 2018 but chose not to, nor did it ever oppose a sale, including to DGAP, until it discovered Empire’s development plans.

[59] Insofar as Article 4.2 is concerned, the Monitor submits that the three-year anniversary referred to therein has not been triggered.

[60] The critical part of Article 4.2 reads as follows:

If on or before the third anniversary of the Closing Date Stelco’s applications for Planning Act Consents are refused in whole or in part or Stelco is unable to satisfy any conditions of such consent or if the MOECC fails to provide consent to the assignment of the Environmental Framework Agreement, with respect to the Hamilton Planning Act Lands or the Lake Erie Planning Act Lands or both of them or any part of the Hamilton Planning Act Lands or any part of the Lake Erie Planning Act Lands and if any such consents are outstanding at such time, unless the Parties otherwise agree at such time, the applicable Planning Act Lands shall not be reconveyed to LandCo (as applicable, the “Failed Consent Lands”)….

[Emphasis added.]

[61] The Monitor submits that neither event contemplated by Article 4.2 has occurred that would entitle Stelco to purchase the Reconveyance Parcel as opposed to reconveying it to the LandCo Vendor.

[62] First, concerning the Planning Act Consents, Article 4.2 provides that the Planning Act Lands will not be reconveyed if, on or before the third anniversary of the closing date, Stelco’s application for Planning Act Consents are refused in whole or in part or Stelco is unable to satisfy any conditions of such consent. The Monitor states that, simply put, to date the Committee has not refused any portion of Stelco’s application. In fact, the Committee’s approval of the severance of the Reconveyance Parcel became final and binding on February 7, 2022. The Monitor further submits that Stelco, to date, has been able to satisfy all conditions in obtaining consent. There has been no failure.

[63] In this regard, the Monitor further argues that the fact that it has taken more than three years to secure a severance from the Committee is of no moment. As noted, Article 4.2 simply speaks to Planning Act Consent refusals or Stelco’s inability to satisfy conditions. The Monitor submits that this is supported by the fact that Stelco continued to work to obtain Planning Act Consents beyond the three-year period contemplated in Article 4.2 and right up until the time it learned of Empire’s proposed development. The Monitor therefore submits that the passage of three years since the execution of the Reconveyance Agreement does not trigger Article 4.2 so as to prevent reconveyance and allow for Stelco’s purchase.

[64] Instead, the Monitor submits that the purpose of the purchase requirement was to address the scenario where Stelco’s applications for severance were refused, including situations where Stelco could not satisfy certain conditions imposed in respect of the Planning Act Consents. The Monitor argues, however, that it does not include scenarios where Stelco simply chooses not to (or neglects to) take the requisite actions to satisfy the conditions and obtain the severance.

[65] The Monitor relies on a number of decisions that establish the principle that a party to a contract cannot use its own breach or default as a basis for being relieved of its contractual obligations, but must use best efforts to satisfy its obligations: see Southcott Estates Inc. v. Toronto Catholic District School Board, 2010 ONCA 310, 104 O.R. (3d) 784, at para. 13, aff’d 2012 SCC 51, [2012] 2 S.C.R. 675; BHL Capital v. 2280858 Ontario Corp., 2021 ONSC 3400, at para. 48; UBS Securities Canada, Inc. v. Sand Brothers Canada, Ltd., 2009 ONCA 328, 95 O.R. (3d) 93, at para. 94.

[66] The Monitor submits that the principles enunciated in these cases further the conclusion that Stelco cannot fail to act with respect to its own obligations under the Reconveyance Agreement and then claim that it was “unable to satisfy” conditions required for Planning Act Consent. In this regard, the Monitor asserts that the fact that Stelco believes that the sale to DGAP would be to its detriment cannot change its legal obligations. Any issues concerning the proposed housing development must be dealt with by the appropriate planning authorities and should not be considered in the context of the provisions of the Reconveyance Agreement. It bears noting, in this regard, that Empire made a request for a Minister’s Zoning Order in February 2022.

[67] Second, the Monitor submits that the same situation exists with respect to the second provision of Article 4.2 concerning a situation where the “MOECC fails” to provide consent to the assignment of the EFA. Here, the Monitor submits that Stelco cannot sensibly argue that the MOECC failed to provide consent where Stelco never sought it.

[68] In support of its above arguments, the Monitor relies on the well-known principles set out by the Supreme Court of Canada in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633. The Monitor submits that this contractual provision must be read in context of the contract as a whole, giving the words their ordinary and grammatical meanings, and in consideration of the contract’s factual matrix or surrounding circumstances at the time it was executed.

[69] It further relies on the decision of the Court of Appeal for Ontario in Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205, 85 O.R. (3d) 254, at para. 24 where the court stated that a commercial contract is to be interpreted:

(a) as a whole, in a manner that gives meaning to all of its terms and avoids an interpretation that would render one or more of its terms ineffective;

(b) by determining the intention of the parties in accordance with the language they have used in the written document and based upon the “cardinal presumption” that they have intended what they have said;

(c) with regard to objective evidence of the factual matrix underlying the negotiation of the contract, but without reference to the subjective intention of the parties; and (to the extent that there is any ambiguity in the contract),

(d) in a fashion that accords with sound commercial principles and good business sense, and that avoid a commercial absurdity.

[70] The Monitor also repeats the well-accepted case law that contracts must be interpreted in a manner that accords with commercial principles and good business sense, and avoids a commercial absurdity: see Urmila Holding Inc. v. Anand Holdings Inc., 2021 ONSC 2707, at para. 25, citing All-Terrain Track Sales and Services Ltd. v. 798839 Ontario Limited, 2020 ONCA 129, at para. 27.

[71] Based on its above submissions, the Monitor submits that when one reviews the plain language of Article 4.2, the three-year anniversary has not been triggered. It further submits that Stelco has therefore breached the Reconveyance Agreement in refusing to carry out its obligations contained in Articles 4.1 and 4.2.

[72] Last, the Monitor submits that the fact that LandCo and Stelco have not entered into the Reciprocal Agreements contemplated by Article 4.1(m) is of no moment. There is no timeline associated with those agreements and they can be entered into at any time now or in the future, with court assistance if necessary.

Stelco’s Position

[73] Stelco submits that, as noted, in February 2022 it learned from the first time through media reports that Empire was the proposed purchaser and planned to build a significant mixed-use community on lands adjacent to Stelco’s Lake Erie Works steel plant. It complains that the construction of Empire’s proposed community would result in Stelco being subjected to noise, dust and odour claims, and increased environmental remediation and mitigation costs not currently incurred. Stelco argues that the Lake Erie Works steel plant was designed and built in an area zoned for industrial use. The increased activity in the area with respect to the planned subdivision would impede its operations and may force it to change how it currently operates.

[74] Furthermore, Stelco argues that a residential housing development so close to the Lake Erie Works steel plant would lead to evaluations of human health safety because of Stelco’s emissions and could result in Stelco’s operations being deemed unsafe.

[75] After learning of Empire’s development plans in February 2022, Stelco re-examined the Reconveyance Agreement. According to its Executive Chairman and Chief Executive Officer, Allen Kestenbaum, Stelco did not appreciate “throughout this period following June 5, 2021 and until after February 7, 2022” that as of June 5, 2021, it no longer had any obligation to transfer the Planning Act Lands given the three-year anniversary. Stelco submits that it was well within its legal rights to re-examine its rights and obligations under the Reconveyance Agreement, specifically Article 4.2.

[76] In this regard, Stelco also submits that it is important to note that LandCo took no steps within the three-year period to obtain the Planning Act Consents or the MOECC Consent to the assignment of the EFA. Stelco submits that LandCo also did nothing to enter into the Reciprocal Agreements required by Article 4.1(m) of the Reconveyance Agreement.

[77] Stelco concedes that it was taking steps with respect to obtaining Planning Act Consents beyond the three-year period while it was unaware of the proposed residential community planned by Empire. Thereafter Stelco, rightfully it claims, ceased any further efforts required under Article 4.2. Insofar as the proper interpretation of the Reconveyance Agreement is concerned, Stelco firstly submits that, notwithstanding the provisions of the Reconveyance Agreement, it cannot be said that LandCo had any interest in the Reconveyance Parcel since s. 50(21) of the Planning Act stipulates that an agreement does not create or convey an interest in land.

[78] With respect to the specific provisions of the Reconveyance Agreement itself, Stelco refers to three “covenants”:[^6]

• Pursuant to Article 4.1(a), Stelco was to file consent applications under the Planning Act with the Committee.
• Pursuant to Article 4.1(h) of the Reconveyance Agreement, Stelco and LandCo were to use commercially reasonable efforts to obtain consent from the MOECC to the assignment of the EFA by Stelco to LandCo.
• Pursuant to Article 4.1(m), LandCo and Stelco, on the Reconveyance Date, were to enter the Reciprocal Agreements in respect of the Reconveyance Parcel.

[79] With respect to the issue of the three-year timeline in Article 4.2, Stelco submits that one can look for assistance in interpreting Article 4.2 by referring to the Environmental Agreement and Indemnity which was executed the same day as the Reconveyance Agreement.

[80] Stelco points to the definition of “Failed Consent Lands” in Article 1.1 of the Environmental Agreement and Indemnity, which reads as follows:

“Failed Consent Lands” means the Hamilton Planning Act Lands or the Lake Erie Planning Act Lands or both of them or any part of the Hamilton Planning Act Lands or any part of the Lake Erie Planning Act Lands, in each case, that are not reconveyed to LandCo pursuant to the Reconveyance Agreement on or before the third anniversary of this Agreement.

[Emphasis added.]

[81] Stelco submits that the only commercially reasonable interpretation, when one considers the provisions of Article 4.2 and the above definition, is that the Planning Act Consents and the MOECC Consent had to be completed within the three-year period following the execution of the Reconveyance Agreement: in other words, by June 5, 2021. Since this was not done, Stelco has the right, pursuant to Article 4.2, to purchase the Reconveyance Parcel. Stelco submits that this argument is entirely consistent with the reasoning of the Court of Appeal for Ontario in Salah v. Timothy’s Coffees of the World Inc., 2010 ONCA 673, 74 B.L.R. (4th) 161, at para. 16, where the court held:

Where a transaction involves the execution of several documents that form parts of a larger composite whole – like a complex commercial transaction – and each agreement is entered into on the faith of the others being executed, then assistance in the interpretation of one agreement may be drawn from the related agreements.

Stelco argues that this is because “[t]he contours of the exact bargain between the parties may sometimes require consideration of more than one contract”: Downey v. Ecore International Inc., 2012 ONCA 480, 294 O.A.C. 200, at para. 38.

[82] Therefore, since the applications for the Planning Act Consents were not completed, nor was consent obtained from the MOECC within three years, the Reconveyance Parcel should not be reconveyed to the LandCo Vendor as it would qualify as one of the “Failed Consent Lands.” The result is that Stelco must purchase the Reconveyance Parcel.

[83] Stelco submits that it is immaterial what efforts it undertook since the three-year anniversary. With respect to the MOECC Consent, it submits that it is immaterial that Stelco never applied. Stelco argues that the words “if the MOECC fails to provide consent” apply if consent is not obtained for any reason, including a failure by Stelco to ask for consent. In its factum, Stelco equates the term “fails to provide” with the words “had not been obtained [by Stelco and LandCo]”, thus eliminating Stelco’s obligation to ask for consent.

[84] Stelco argues that LandCo had the opportunity to initiate the process pursuant to Article 4.1(h) within the three-year period but failed to do so.

[85] Insofar as the Reciprocal Agreements are concerned; Article 4.1(m) of the Reconveyance Agreement provides that LandCo and Stelco shall enter into the Reciprocal Agreements required for the operation of the Planning Act Lands prior to their reconveyance date.

[86] Stelco submits that no steps have been taken to date by either Stelco or LandCo to fulfill this commitment. Stelco submits that this, too, is important. Since 1988, Stelco has had the right granted by the MOECC to discharge wastewater from its sanitary lagoon, for irrigation purposes, over the Reconveyance Parcel and has done so. Reciprocal agreements would be necessary to allow this to continue, and if Stelco no longer has access, there could be adverse environmental impacts.

[87] Stelco also points to other emission issues and that none of the issues have been settled with LandCo as contemplated in Article 4.1(m).

[88] Stelco therefore submits that since LandCo’s motion does not even address the wastewater issue, much less explain how specific performance can be ordered with respect to it, it would be highly prejudicial to excise this covenant from the Reconveyance Agreement.

[89] Overall, Stelco argues that it has not breached the provisions of Article 4.2 and, pursuant to its terms, Stelco is entitled to purchase the Reconveyance Parcel.

Analysis

[90] I will now turn to the issues raised by the parties.

[91] Stelco primarily attempts to justify its refusal to reconvey the Reconveyance Parcel pursuant to the wording of Article 4.2 of the Reconveyance Agreement.

[92] First, Stelco submits that by the closing date of June 5, 2021, the Planning Act Consents and the consent of the MOECC had not been obtained. Therefore, the Reconveyance Parcel need not be conveyed and Stelco has a right to purchase.

[93] In my view, however, this argument ignores the plain wording of Article 4.2. Simply put, there is no requirement in Article 4.2 that the Reconveyance Parcel be conveyed within three years or that MOECC approval be obtained within three years.

[94] Instead, a plain reading of Article 4.2 stipulates that the three-year anniversary is only invoked if “Planning Act Consents are refused in whole or in part or Stelco is unable to satisfy any conditions of such consent or if the MOECC fails to provide consent to the assignment of the [EFA]”.

[95] Neither of these two events occurred.

[96] Insofar as the Planning Act Consents are concerned, to date, none have been refused in whole or in part, nor has Stelco been unable to satisfy any conditions of such consent. To the contrary, substantial Planning Act approval has been obtained and only certain standard conditions remain. The fact that the severance has not been completed is not a result of any refusal to grant Planning Act Consents, but rather the result of Stelco’s refusal to complete the necessary remaining steps. The fact that Stelco believes that the sale of the Reconveyance Parcel to DGAP may result in a detriment to its operations cannot change its legal obligations under the Reconveyance Agreement.

[97] Similarly, with respect to MOECC Consent to the assignment of the EFA, it cannot be said that the MOECC has failed to provide consent when none has been sought. The term requires positive action on behalf of Stelco or LandCo (pursuant to Article 4.1(h)) and this has not yet occurred.

[98] Article 4.2 provides that “if the MOECC fails to provide consent to the assignment”, then the provision is triggered.

[99] In this regard, the definition of the word “fails” aids in this analysis. The Oxford English Dictionary defines fails, in part, as “[n]ot to render the due or expected service or aid”, and “[t]o leave undone, omit, to perform, miss”: Oxford English Dictionary Online. Oxford University Press, September 2022.

[100] Under the first definition, the MOECC cannot fail to render a due or expected service if that service was never expected of them. Simply put, they cannot fail to do something which they were never asked to do. Since Stelco never sought the MOECC’s consent to the assignment, the MOECC could not have rendered any type of service in return. The MOECC, therefore, cannot be said to have failed to provide consent to the assignment.

[101] Similarly, under the second definition, the MOECC cannot be said to have omitted to perform an obligation. The MOECC’s performance in this regard is to provide consent to the assignment of the EFA. The MOECC cannot perform such an obligation if it is never asked to do so. In other words, the MOECC cannot be said to have failed in respect to a duty that was never given to it.

[102] The above definitions reinforce the conclusion that the MOECC did not fail to provide consent.

[103] The only problem that currently exists, insofar as Article 4.2 is concerned, is that Stelco now refuses to comply with its obligations under the Reconveyance Agreement. The basis for this is that Stelco is unhappy with Empire’s development plans.

[104] As noted above, in Southcott, the Court of Appeal for Ontario accepted, at para. 13, that

[i]t is a well-established principle of contract law that a party cannot use its own breach or default in satisfying a condition precedent as a basis for being relieved of its contractual obligations while a party in breach of its obligation to do what is required to complete a transaction cannot terminate the agreement by relying on a time is of the essence clause.

[105] Further, the Court of Appeal noted that it is a principle of law that no one in such a case can take advantage of the existence of a state of things which he himself produced: see Southcott, at para. 13.

[106] I am also of the view that the definition of “Failed Consent Lands” contained in the Environmental Agreement and Indemnity, does not assist Stelco. I say this for the following reasons.

[107] First, the “Failed Consent Lands” are also defined in Article 4.2 of the Reconveyance Agreement. The Reconveyance Agreement does not import a definition referenced in any other document for “Failed Consent Lands”, including the Environmental Agreement and Indemnity. In fact, the Reconveyance Agreement notes in Article 1.1 that “Failed Consent Lands” has the meaning set out in Article 4.2.

[108] There is therefore no necessity to import the definition of “Failed Consent Lands” from the Environmental Agreement and Indemnity into the Reconveyance Agreement. The definition of “Failed Consent Lands” in the Reconveyance Agreement is sufficiently clear and is defined as the lands that are not reconveyed to LandCo if the Planning Act Consents or the MOECC Consent is refused in whole or in part.

[109] I therefore do not accept Stelco’s argument that the court should read the contract as a whole in the sense that the inter-related contracts should be read together. What Stelco is, in effect, asking this court to do is to rewrite the Reconveyance Agreement by importing a definition from a related contract in place of the existing one contained in the Reconveyance Agreement.

[110] Second, even if this court adopted Stelco’s argument that the definition of “Failed Consent Lands” in the Environmental Agreement and Indemnity should be relied upon, it still does not assist Stelco given the operation of Article 4.2 of the Reconveyance Agreement. In my view, the two definitions, when interpreted properly, point towards the same interpretation. The definition in the Environmental Agreement and Indemnity reads: “‘Failed Consent Lands’ means [the Lands] … that are not reconveyed to LandCo pursuant to the Reconveyance Agreement on or before the third anniversary of this agreement” (Emphasis added). Here, the definition is still dependent on the operation of the Reconveyance Agreement. This is fatal to Stelco’s argument because the Reconveyance Agreement does not simply refer to the lands not conveyed on or before the three-year period. Instead, it refers to the lands not reconveyed pursuant to the Reconveyance Agreement on or before the third anniversary of the agreement.

[111] Finally, when one looks at the definition of the “Planning Act Period” in the Environmental Agreement and Indemnity, it is defined as being “the period which will commence on the date of this Agreement and will end on the date on which all of the Planning Act Lands have either been reconveyed into LandCo and/or become Failed Consent Lands”. This definition does not support Stelco’s argument that the Environmental Agreement and Indemnity clearly sets out a firm three-year time period.

[112] Accordingly, I conclude that Stelco breached the Reconveyance Agreement.

[113] In addition to the Monitor and DGAP’s submissions that Stelco breached the Reconveyance Agreement, DGAP also asserts that Stelco failed to act in good faith. I will now consider that issue.

DGAP HAS NOT ESTABLISHED THAT STELCO FAILED TO ACT IN GOOD FAITH

[114] DGAP asserts that Stelco’s attempt to purchase the Reconveyance Parcel, instead of reconveying it to the LandCo Vendor, amounts to a breach of the duty of good faith. DGAP submits that the purpose of the Reconveyance Agreement was to comply with Planning Act obligations to allow Stelco to purchase certain lands and thereafter return the Planning Act Lands, including the Reconveyance Parcel.

[115] In this regard, DGAP submits that Stelco had clear obligations under Articles 4.1 and 4.2 which it failed to carry out.

[116] In particular, Articles 4.1(a) and 4.1(h) stipulate that Stelco “shall file consent applications under the Planning Act” and that it “shall use commercial reasonable efforts to obtain consent” from the MOECC. As noted above, Stelco took some steps with respect to obtaining Planning Act Consent and no steps with respect to obtaining MOECC Consent. It did, however, carry on with its obligations under Article 4.1(a) beyond the three-year period and in fact secured part of the aforementioned Planning Act Consent. It continued to carry on outside the three-year period until it learned of Empire’s development plans at which time it refused to take any further steps.

[117] DGAP submits that Stelco has failed to act in good faith by refusing to complete its obligations under Article 4.1 of the Reconveyance Agreement. The fact that the lands will be used for a mixed-use residential development does not change Stelco’s obligations under the Reconveyance Agreement. In any event DGAP argues Stelco ought to have known about the potential for development given Empire is a well-known residential home builder. Empire was publicly identified as the successful bidder for the Reconveyance Parcel and other Planning Act Lands and Stelco chose not to take any steps at that time.

[118] In these circumstances, DGAP submits that Stelco’s behaviour has been particularly egregious in that it seeks to subvert a court-approved transaction implemented in the process of its own restructuring – including the conveyancing of the Planning Act Lands and the approval of the Sales Agreement, both of which were implemented during the CCAA process.

[119] Stelco, on the other hand, denies that it failed to act in good faith. It submits (although I have now found to the contrary) that it has not breached the provisions of Article 4.2 and that it was reasonable for it to assert its contractual rights pursuant to Article 4.2 when it learned of Empire’s development plans.

[120] Stelco relies upon the affidavit of Mr. Kestenbaum. The following paragraphs are germane to this issue:

17. Stelco did not appreciate throughout this period following June 5, 2021 and until after February 7, 2022 that, as of June 5, 2021, (i) Stelco no longer had an obligation to transfer the Planning Act Lands and they were to be retained by Stelco, and (ii) Stelco was obligated to pay LandCo a purchase price for the Planning Act Lands to be agreed with LandCo or set by way of the arbitration process set out in the Reconveyance Agreement.

18. For Empire to complete its proposed residential development, the Reconveyance Parcel would have to be rezoned from industrial use to residential use. This would constitute a radically different land usage than anyone ever contemplated, and a land usage that would be fundamentally inconsistent with an adjacent steel plant.

19. For these reasons, upon learning that Empire was the proposed purchaser Stelco re-examined its rights and obligations under the Reconveyance Agreement, and sought to proceed to fulfil its obligations under section 4.2 of the Reconveyance Agreement.

[121] Mr. Kestenbaum was not cross-examined on his affidavit.

[122] Based on the filed record, notwithstanding the fact that I am troubled by Stelco’s conduct, I cannot conclude that it failed to act in good faith.

[123] As noted, Stelco asserts via Mr. Kestenbaum that it did not appreciate throughout the period following June 5, 2021 until after February 7, 2022, that it no longer had an obligation to transfer the Planning Act Lands.

[124] While Mr. Kestenbaum’s affidavit is silent about Stelco’s belief prior to June 5, 2021 and he does not provide attribution as to why he believes Stelco did not appreciate, following June 5, 2021, that it had no obligation to transfer the Planning Act Lands, the evidence was unchallenged in cross-examination and no competing affidavit has been filed.

[125] While I am concerned by what appears to be somewhat selective evidence in Mr. Kestenbaum’s affidavit, a finding of lack of good faith cannot be premised solely on questionable motives, but requires an assessment made regarding actual objective facts of things done or not done: see Bank of Montreal v. 592931 Ontario Inc., 2021 ONSC 4412, at para. 48.

[126] In these circumstances, I cannot conclude that Stelco failed to act in good faith or contrary to the purposes of the CCAA in pursuing its own self-interest based on its interpretation of the Reconveyance Agreement.

[127] Notwithstanding my finding that Stelco breached the Reconveyance Agreement, in the event that I am in error, I will now go on to consider other arguments raised by DGAP concerning Stelco’s liability.

STELCO’S ACTIONS DO NOT CONSTITUTE A COLLATERAL ATTACK ON A PREVIOUS COURT ORDER

[128] DGAP submits that Stelco’s failure to reconvey the Reconveyance Parcel is a collateral attack on the Residual Farm Land Transaction Order wherein this court approved the Sales Agreement. For the reasons that follow, I do not find that Stelco’s failure to reconvey the Reconveyance Parcel is a collateral attack on the Residual Farm Land Transaction Order.

[129] DGAP relies on the fact that in March 2021, this court ordered the Residual Farm Land Transaction Order which, amongst other things, approved the Sales Agreement. At that time, Stelco did not oppose the Sales Agreement, nor did it appeal or seek to vary or set aside the Residual Farm Land Transaction Order. It was not until May 2022 that Stelco gave any indication that it was opposed to the sale of the Reconveyance Parcel to DGAP. Stelco only reconsidered its obligations under the Reconveyance Agreement once it learned of Empire’s proposed development.

[130] DGAP therefore argues that the time and place for Stelco to raise objections was when the matter was initially brought before the court in March 2021. Instead, Stelco took no steps. DGAP submits that Stelco cannot stand on the sidelines, let the process run its course, and later complain when it finds out about the proposed use of the Reconveyance Parcel: see Fifth Third Bank v. O’Brien, unreported, CV-09-00387037-000, aff’d 2013 ONCA 5, 4 C.B.R. (6th) 126.

[131] The test for collateral attack is clearly articulated in R. v. Wilson, 1983 35 (SCC), [1983] 2 S.C.R. 594, at p. 599:

It has long been a fundamental rule that a court order, made by a court having jurisdiction to make it, stands and is binding and conclusive unless it is set aside on appeal or lawfully quashed. It is also well settled in the authorities that such an order may not be attacked collaterally – and a collateral attack may be described as an attack made in proceedings other than those whose specific object is the reversal, variation, or nullification of the order or judgment.

[132] The doctrine of collateral attack prevents a party from undermining previous orders issued by a court: see Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, at para. 71, citing Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77. In Garland, the Supreme Court of Canada characterized the purpose of collateral attacks in the following way: “[g]enerally, [collateral attacks] are invoked where the party is attempting to challenge the validity of a binding order in the wrong forum, in the sense that the validity of the order comes into question in separate proceedings when the party has not used the direct attack procedures that were open to it”: Garland, at para. 71.

[133] Finally, in Canada (Attorney General) v. Telezone Inc., 2010 SCC 62, [2010] 3 S.C.R. 585, at para. 61, the Supreme Court of Canada articulated the policy rational behind the doctrine of collateral attack:

The rule is a judicial creation (which must therefore yield to a contrary legislative enactment) based on general considerations related to the administration of justice, as explained in Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, at para. 72:

The fundamental policy behind the rule against collateral attack is to “maintain the rule of law and to preserve the repute of the administration of justice” (R. v. Litchfield, 1993 44 (SCC), [1993] 4 S.C.R. 333, at p. 349). The idea is that if a party could avoid the consequences of an order issued against it by going to another forum, this would undermine the integrity of the justice system. Consequently, the doctrine is intended to prevent a party from circumventing the effect of a decision rendered against it. [Emphasis added.]

[134] I do not accept DGAP’s argument that Stelco’s position is a collateral attack on the validity of the Residual Farm Land Transaction Order. On this motion, Stelco does not seek to challenge that order through reversal, variation, or nullification. Instead, Stelco is enforcing rights it believes it has under the Reconveyance Agreement. Stelco is arguing – whether right or wrong – that Article 4.2 of the Reconveyance Agreement gives it the right to purchase the Reconveyance Parcel. Importantly, it is not attacking the Residual Farm Land Transaction Order in refusing to reconvey the Reconveyance Parcel. Stelco is simply asserting, what it believes to be, a contractual right.

[135] Further, with respect to DGAP’s argument that Stelco took no steps to appeal, vary or set aside the Residual Farm Land Transaction Order and that it cannot stand on the sidelines and then complain once it discovered Empire’s proposed development, Stelco’s actions do not satisfy the criteria for a collateral attack. Stelco is not taking steps to appeal, vary or set aside the Residual Farm Land Transaction Order; rather, it is exercising what it believes to be a contractual right under the Reconveyance Agreement.

[136] There is analogous jurisprudence to support this finding. In Garland, the court rejected the application of the collateral attack doctrine because “based on a plain reading of this rule, the doctrine of collateral attack does not apply in this case because here the specific object of the appellant’s action is not to invalidate or render inoperative the Board’s orders”: at para. 72. Similar to the facts in this case, Stelco’s objective is not to invalidate or render inoperative the Residual Farm Land Transaction Order.

[137] This reasoning permeates the analysis on the doctrine of collateral attack. In Telezone, at para. 64, the court relied on Garland to find that Telezone did not seek to avoid the consequences of the ministerial order issued against it. Therefore, the collateral attack doctrine could not be applied. Here, Stelco is not seeking to avoid the consequences of the Residual Farm Land Transaction order that approved the Sales Agreement. Instead, it is relying on the Reconveyance Agreement to argue it can purchase the Reconveyance Parcel.

[138] In this regard, the case relied upon by DGAP, Fifth Third Bank is distinguishable. In that case, the court ordered summary judgment in favour of the plaintiff and found that the defendant’s arguments were essentially collateral attacks against the appointment of a court-appointed receiver. The court found that the defendant’s argument fundamentally involved an attack on the bank’s decision to seek the appointment of receiver. In my view, all the complaints were therefore subsumed in the action, as opposed to the within case where Stelco relies on an outside agreement.

[139] Therefore, I find that Stelco’s actions are not a collateral attack on the Residual Farm Land Transaction Order.

PROMISSORY ESTOPPEL AND WAIVER DO NOT APPLY

[140] DGAP raises the equitable doctrines of promissory estoppel and waiver vis à vis Stelco. I do not accept that either doctrine applies in this case.

Promissory Estoppel

[141] The three components of promissory estoppel were set out by the Supreme Court of Canada in Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada, 2021 SCC 47, 463 D.L.R. (4th) 477, at para. 15:

(1) the parties must be in a legal relationship at the time of the promise or assurance;

(2) the promise or assurance be intended to affect that relationship and be acted on; and

(3) the other party in fact relied on the promise or assurance.

[Emphasis in original.]

[142] DGAP submits that the Reconveyance Agreement is part of the legal relationship between LandCo and Stelco. Within this legal relationship, DGAP asserts that Stelco provided certain assurances that it would reconvey the Reconveyance Parcel and Stelco acted on that promise by obtaining the Committee’s consent. LandCo relied on Stelco’s performance of the Reconveyance Agreement and communications between them that supported Stelco’s intention to comply with the provisions of the Reconveyance Agreement. The Land Vehicle conducted a sales process and, as a result, the LandCo Vendor entered into the Sales Agreement with DGAP. DGAP has relied upon Stelco’s promise to reconvey the Reconveyance Parcel and its obligations to do so under the Reconveyance Agreement. DGAP argues that it will obviously be harmed if the Reconveyance Parcel is not reconveyed to the LandCo Vendor.

[143] I do not agree with DGAP’s analysis and prefer the submissions of Stelco. First, I accept that the requirement of the pre-existing relationship between Stelco and DGAP is absent since those two companies are not parties to any agreement, nor did Stelco ever have any dealings with DGAP concerning the Reconveyance Agreement.

[144] Second, I further accept Stelco’s argument that, as set out in Maracle v. Travelers Indemnity Co. of Canada, 1991 58 (SCC), [1991] 2 S.C.R. 50, at p. 57, a party seeking to rely upon promissory estoppel “must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on.” Here, no promises were made by Stelco to DGAP as there was no agreement between Stelco and DGAP; they do not have a legal relationship; and the privity of contract doctrine precludes the finding that a promise was made by Stelco to DGAP that was intended to affect its legal relationship.

[145] Third, while I do not need to decide whether detrimental reliance is made out, given my findings under the first two branches of promissory estoppel, I am satisfied that DGAP has not established any detrimental reliance as a result of Stelco’s conduct.

[146] There is no evidence that DGAP changed its position in reliance upon a promise made by Stelco. DGAP entered into the Sales Agreement, understanding the provisions of the Reconveyance Agreement and did so before the three-year period had expired. Similarly, DGAP has adduced no evidence that it detrimentally relied on a promise made by Stelco.

[147] DGAP also relies upon promissory estoppel insofar as LandCo’s relationship with Stelco is concerned. I note that the Monitor, however, specifically advised that it would not be making any submissions on the issue of promissory estoppel and rather rely on its direct contractual arrangements with Stelco. DGAP cannot succeed in this regard where the Monitor has adduced no evidence concerning this issue.

[148] For these reasons, the doctrine of promissory estoppel does not apply.

Waiver

[149] I also do not believe that waiver applies.

[150] Waiver and promissory estoppel are closely related: see Saskatchewan River Bungalows Ltd. v. Marine Life Assurance Co., 1994 100 (SCC), [1994] 2 S.C.R. 490, at para. 18.

[151] As the Supreme Court of Canada further noted in Saskatchewan River Bungalows Ltd., at para. 19, waiver of contractual rights “occurs where one party to a contract … takes steps which amount to foregoing reliance on some known right or defect in the performance of the other party.”

[152] Waiver arises only where the evidence demonstrates that the party waiving had (1) a full knowledge of rights; and (2) an unequivocal and conscious intention to abandon them. The creation of such a stringent test is justified since no consideration moves from the party in whose favour the waiver operates and an overly broad interpretation of waiver would undermine the requirement of contractual consideration: see Saskatchewan River Bungalows Ltd., at para. 20.

[153] DGAP argues that since Stelco took steps towards completing the severance and reconveyance of the Reconveyance Parcel beyond of the three-year time period, it waived any right to rely on a strict interpretation of the time requirements in Article 4.2 of the Reconveyance Agreement. I disagree.

[154] Stelco’s uncontradicted evidence on this motion, as noted, is that between June 2021 and February 2022 it was unaware that as of June 5, 2021 it no longer had contractual obligations under Article 4.2 to continue with the reconveyance. In these circumstances, I agree with Stelco that the record does not allow me to find that there was a full knowledge of rights and an unequivocal and conscious intention to abandon them.

[155] In addition to the aforementioned arguments that the Monitor and DGAP have raised concerning Stelco’s liability under the Reconveyance Agreement, they also argue that LandCo can waive the MOECC approval contained in Article 4.2.

LANDCO CAN WAIVE MOECC CONSENT

[156] The Monitor seeks a direction that there is no further requirement to assign the EFA or obtain the consent of the MOECC, as contemplated in the Reconveyance Agreement. DGAP’s submissions on this issue support the Monitor’s position. I agree with these submissions.

[157] LandCo takes this position as a result of DGAP waiving the requirement under the Sales Agreement to obtain an assignment of the EFA with respect to the Reconveyance Parcel. LandCo, therefore, is similarly prepared to waive the requirement that Stelco assign the EFA and obtain MOECC Consent.

[158] In this regard, the Monitor and DGAP characterize Articles 4.1(h), 4.1(k)(vi) and Article 4.2 as conditions precedent that LandCo may unilaterally waive, distinct from true conditions precedent which cannot be unilaterally waived: see 384130 Ont. Limited v. 520611 Ont. Limited, 2021 ONSC 8568, at paras. 37, 38

[159] The Monitor and DGAP also assert that the Articles providing for the assignment of the EFA and MOECC Consent can be unilaterally waived since they were inserted for LandCo’s benefit. As such, LandCo may waive a condition precedent or provision solely for its benefit.

[160] In support of this position, the Monitor and DGAP argue that the assignment of the EFA in no way benefits Stelco. Because Stelco would no longer own the Reconveyance Parcel, it cannot be said to need “a clear contractual delineation of who was responsible for the Reconveyance Parcel”, as Stelco asserts. DGAP further argues that Stelco retains the benefits of the EFA as an assignee, regardless of whether the reassignment of the EFA is made to LandCo. In other words, assigning the EFA would not give Stelco any further rights; therefore the benefit of assigning the EFA and obtaining MOECC Consent only benefits LandCo, and therefore LandCo may unliterally waive it.

[161] Stelco, on the other hand, argues that LandCo may not waive Articles in the Reconveyance Agreement that also benefit Stelco. If the Articles at issue are not fulfilled and the Reconveyance Parcel is reconveyed to the LandCo Vendor, both Stelco and LandCo would be left in the position of not being able to rely on the provisions of the EFA which Stelco describes as a critical agreement.

[162] Stelco also argues that Article 4.1(h) and Article 4.1(k)(iv) are covenants. Because these provisions give rise to obligations, Stelco argues they cannot be characterized as conditions precedent. Article 4.1(h) required both Stelco and LandCo to “use commercially reasonable efforts” to obtain MOECC approval. Article 4.1(k)(iv) required LandCo to execute and deliver to Stelco the EFA Assignment Agreement pursuant to which LandCo was to assume all of the obligations, duties and liabilities of Stelco under the EFA. As covenants, LandCo may not waive obligations it covenanted to perform.

[163] Stelco further submits that Article 4.2 contains a condition precedent and a covenant with respect to MOECC Consent. Stelco submits that that MOECC failure to provide consent would constitute a condition precedent and if this occurs, then the covenant arises in that Stelco would purchase the Failed Consent Lands. In the circumstances of this case, Stelco submits that neither the condition precedent nor the covenant can be waived since they are also for Stelco’s benefit. Without the EFA in place, as between Stelco and LandCo, Stelco submits there will not be a clear contractual delineation of who is responsible for the Reconveyance Parcel for the purpose of environmental compliance and, importantly, there will be no framework for identifying and reporting environmental incidents and spills. Stelco submits that this is critical as the Environmental Agreement and Indemnity that was issued by the MOECC in favour of Stelco, LandCo and others, covers historical environmental contamination. Stelco, therefore submits that these covenants have a benefit to it and LandCo.

[164] Importantly, the MOECC takes no position on whether the assignment of the EFA can be waived and relies on the submissions of the parties to answer this question.

[165] For the reasons that follow I accept that LandCo can waive MOECC Consent.

[166] To determine whether LandCo may unilaterally waive the Articles in the Reconveyance Agreement that relate to assigning the EFA and MOECC Consent, three questions must be answered. First, whether the Articles are conditions precedent or covenants; second, whether the conditions precedent or covenants may be waived in law; and third, whether they solely operate for LandCo’s benefit such that they may be unilaterally waived.

[167] In answering the first question, I find that the Articles 4.1(h) and 4.1(k)(iv) are covenants and Article 4.2 contains two conditions precedent that give rise to a covenant.

[168] Conditions precedent and covenants are contractual instruments that require the court’s interpretation. As set out in Sattva, at para. 47, a contract must be read as a whole, having regard to the ordinary and grammatical meaning of the words used, consistent with the surrounding circumstances or factual matrix: see also Briggs v. Durham (Police Services Board), 2022 ONCA 823, at para. 41.

[169] A covenant is a formal agreement or promise. A condition precedent, on the other hand, is “an external condition upon which the existence of the obligations depends”: Turney v. Zhilka, 1959 12 (SCC), [1959] S.C.R. 578, at p. 583.

[170] As Perell J. noted, “[i]t is a question of construction whether the obligations of a contract are absolute and immediately binding or are contingent on an external event”: Tse v. Sood, 2015 ONSC 755, at para. 12, citing Wu Estate v. Zurich Insurance Co. (2006), 2006 16344 (ON CA), 268 D.L.R. (4th) 670 (Ont. C.A.), at para. 22, leave to appeal refused, [2006] S.C.C.A. No. 289; UBS Securities, at para. 90.

[171] Based on the above, it is my view that Articles 4.1(h) and 4.1(k)(iv) are covenants in that both provisions confer obligations upon LandCo and Stelco and neither is contingent upon third party approval for external conditions. Both are within the control of the parties to complete their obligations.

[172] Article 5.3 of the Reconveyance Agreement supports this interpretation: “Each agreement and obligation of any of the Parties in this Agreement, even though not expressed as a covenant, is considered for all purposes to be a covenant” (emphasis added).

[173] Therefore, Articles 4.1(h) and 4.1(k)(iv) are covenants.

[174] Next, Article 4.2 contains two conditions precedent followed by a covenant. The conditions precedent in Article 4.2 depend on (i) if on or before the third anniversary of the Closing Date, Stelco’s applications for Planning Act Consents are refused in whole or in part or Stelco is unable to satisfy any conditions of such consent; or (ii) if on or before the third anniversary of the Closing Date, the MOECC fails to provide consent to the assignment of the EFA. Both provisions represent conditions precedent in that they are external conditions that give rise to Stelco’s obligation to purchase the lands under the covenant. That said, the provisions in Article 4.2 are not true conditions precedent given the are not entirely dependent on the will of a third party. Both provisions require action on behalf of the parties: see 520 Ont. Limited, at para. 38.

[175] To answer the second question, I must determine whether and in what circumstances a covenant and a condition precedent may be waived.

[176] Covenants may be waived in certain circumstances. Stelco does not argue otherwise.

[177] However, a party may only waive an existing promissory condition, such as a covenant, in the sense of dispensing with the necessity of an opposing party performing an obligation undertaken by him or her for the sole benefit of the first party: see Canadian Encyclopedia Digest – Contracts – XII Express Terms; Performance of Contract – 2 Performance, at para. 818.

[178] In this case, Stelco argues that LandCo may not waive its own performance under Articles 4.1(h) and 4.1(k)(iv). Stelco, however, cites no caselaw for this proposition.

[179] I am of the view that in the circumstances of this case, LandCo can waive the covenants under Article 4.1 which is to be performed by both LandCo and Stelco if the covenants are only for the benefit of LandCo. This is supported by the aforementioned caselaw.

[180] A similar analysis applies to a condition precedent. A condition precedent may be waived by the party for whose benefit such condition was introduced into the contract: Khashaba v. Procom Consultants Group Ltd., 2018 ONSC 7617, at para. 49. Therefore, LandCo can waive the condition precedent if it was inserted into the contract for its benefit.

[181] The third and last question is whether waiver of the MOECC Consent to the assignment of the EFA, whether a covenant or a condition precedent, operates solely for the benefit of LandCo and therefore cannot be waived.

[182] In my view it does.

[183] The requirement for MOECC Consent to the assignment of EFA and the Reconveyance Agreement was premised upon the monetization of the Planning Act Lands.

[184] In this regard I do not accept Stelco’s argument that if the MOECC Consent is waived, it will be left in a position of not being able to rely on the provisions of the EFA which Stelco states is a critical agreement to help identify and report environmental incidents and spills to the MOECC. First, it bears repeating that the MOECC takes no position in this regard. Presumably, because it has no concerns about this issue. Second, I cannot see how this would be of any concern to Stelco since, once the Reconveyance Parcel is returned, Stelco would no longer have any obligations for lands it does not own. This is supported by Article 3.1(c) of the Reconveyance Agreement which notes that Stelco’s obligations under the EFA end once all of the Planning Act Lands are reconveyed to the Land Vehicle and/or they become Failed Consent Lands.

[185] It also bears noting that prior to June 2017, when the EFA was entered into, Stelco enjoys the benefit of an environmental release for pre-2017 historical contamination (the “Release”). Stelco, therefore, has the benefit of the Release with respect to pre-2017 historical contamination; no liabilities from June 30, 2017 when the EFA was originally entered into by LandCo; and all of the benefits that the EFA provides to it from the time it was assigned in June 5, 2018 up until LandCo sells the property to DGAP as per Article 3.1(c).

[186] I therefore do not accept Stelco’s argument that waiver of the MOECC Consent to assign the EFA causes any prejudice whatsoever to Stelco. Once the Reconveyance Parcel is returned to the Land Vehicle, Stelco will no longer own the property and will not need a clear delineation of rights.

[187] For these reasons, Stelco will not be prejudiced by LandCo’s waiver of the aforementioned covenants and conditions precedent concerning the waiver of MOECC Consent. In short, it will have the benefit of the Release, thereafter the EFA and ultimately no liability once the Reconveyance Parcel is conveyed to the LandCo Vendor.

[188] For all of these reasons, LandCo is entitled to waive the MOECC Consent set out in the Reconveyance Agreement.

[189] I now turn to the issue of remedy.

SPECIFIC PERFORMANCE IS THE APPROPRIATE REMEDY

The Positions of the Parties

The Monitor’s Position

[190] The Monitor seeks specific performance. I agree that this is the appropriate remedy.

[191] The Monitor submits that the Reconveyance Agreement was not terminated according to its terms and is valid and subsisting. Moreover, the parties’ obligations thereunder remain in effect.

[192] The Monitor therefore submits that Stelco’s failure to take further steps under Article 4.1(a) to obtain the severance and take any steps under Article 4.1(h) demonstrates that Stelco has failed to perform the contract honestly and in good faith as articulated by the caselaw: see Bhasin; C.M. Callow Inc. v. Zollinger 2020 SCC 45, 452 D.L.R. (4th) 44; Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7, 44 B.C.L.R. (6th) 215. I note, however, that I have previously rejected allegations of lack of good faith.

[193] In these circumstances, the Monitor argues that specific performance is appropriate as damages would not be adequate in the circumstances. In this regard, the Monitor characterizes the Reconveyance Parcel as unique with no readily available substitute.

[194] It points out that the Reconveyance Parcel consists of approximately 2,000 acres of land that DGAP has agreed to purchase along with 13 other adjacent and nearby parcels, totaling approximately 4,200 acres. Further, since that transaction was entered into, DGAP has agreed to purchase five additional properties for residential and industrial development, subject to obtaining the necessary approvals. Combined with the adjacent properties, the southern end of the Reconveyance Parcel abuts Lake Erie and provides a unique development opportunity.

[195] In support of the fact that the land is unique, the Monitor relies upon the Court of Appeal for Ontario’s decision in Erie Sand and Gravel Ltd. v. Seres’ Farms Ltd., 2009 ONCA 709, 97 O.R. (3d) 241, at paras. 116, 118, citing 1252668 Ontario Inc. v. Wyndham Street Investments Inc. (1999), 27 R.P.R. (3d) 58 (Ont. S.C.), at para. 39:

[116] In order to establish that a property is unique the person seeking the remedy of specific performance must show that the property in question has a quality that cannot be readily duplicated elsewhere. This quality should relate to the proposed use of the property and be a quality that makes it particularly suitable for the purpose for which it was intended.

[118] Land is unique if there is no readily available substitute property.

[196] The Monitor submits that this is exactly the case in this situation. Further, the Monitor points out that the Reconveyance Parcel forms part of the other properties contained in the Sales Agreement and that DGAP has informed the Land Vehicle that it will not complete the Sales Agreement without the Reconveyance Parcel. As such, without the completed severance, the Sales Agreement will be frustrated.

[197] In all of these circumstances, the Monitor submits that an order for specific performance directing Stelco to complete its existing obligations under the Reconveyance Agreement, some of which have already been completed, is appropriate.

DGAP’s Position

[198] As noted, DGAP relies on the provisions of the CCAA that provide this court with broad jurisdiction to make “any order that it considers appropriate in the circumstances”. Alternatively, DGAP submits that the equitable remedy of specific performance is available.

[199] With respect to the CCAA, DGAP submits that ss. 11 or 18.6(2) give this court the authority to make an order requiring Stelco to reconvey the Planning Act Lands. DGAP relies on the Supreme Court of Canada in Callidus, at paras. 49-52. In Callidus, the court identified three baseline considerations for exercising discretionary authority conferred by the CCAA: (1) that the order sought is appropriate in the circumstances, (2) that the applicant has been acting in good faith, and (3) with due diligence. DGAP also relies upon the decision of the Supreme Court in Century Services, at para. 70, wherein the court held:

Appropriateness under the CCAA is assessed by inquiring whether the order sought advances the policy objectives underlying the CCAA. The question is whether the order will usefully further efforts to achieve the remedial purpose of the CCAA – avoiding the social and economic losses resulting from liquidation of an insolvent company. I would add that appropriateness extends not only to the purpose of the order, but also to the means it employs. Courts should be mindful that chances for successful reorganizations are enhanced where participants achieve common ground and all stakeholders are treated as advantageously and fairly as the circumstances permit.

[200] DGAP therefore submits that the remedy of specific performance is appropriate as it is the only way to put DGAP and the Monitor in the position they would have been in had the Reconveyance Agreement been performed. In other words, they ought to receive the very thing that they bargained for rather than a monetary estimate of its worth which would be complicated, cumbersome and adversely affect the employees, pensioners and retirees: see Robert J. Sharpe, Injunctions and Specific Performance, loose-leaf (2020-Rel. 29), 4th ed. (Toronto: Thomson Reuters, 2012) at para. 7.50, cited in Lucas v 1858793 Ontario Inc. (Howard Park), 2021 ONCA 52, 25 R.P.R.(6th) 177, at para. 68.

[201] Like the Monitor, DGAP also submits that specific performance is appropriate given the unique nature of the Reconveyance Parcel. In this regard, Empire’s President and Chief Executive Officer, Daniel Guizzetti, swore an affidavit setting out the qualities of the Reconveyance Parcel and the surrounding lands that have been purchased by DGAP.

[202] Mr. Guizzetti deposes that the Reconveyance Parcel, by far, represents the largest contiguous parcel of the purchased properties and is fundamental to Empire’s planned development for the area. Attached to Mr. Guizzetti’s affidavit is a map of the totality of all the properties purchased by DGAP, including the five additional parcels abutting Lake Erie. It submits that the Reconveyance Parcel in and of itself is a unique property, but is specifically so given the contiguous nature of the other properties purchased by DGAP and the nature of the development.

[203] Of interest is the fact that Mr. Guizzetti also deposes that Empire’s proposed development would not be “directly beside” or “in close proximity” to Stelco’s current operations as deposed by Mr. Kestenbaum. As demonstrated in Exhibit “C” to his affidavit, Mr. Guizzetti deposes that there would be at least 380 to 720 metres of separation between the proposed residential communities and the Stelco site which exceeds the Government of Ontario’s minimum requirements.

[204] For all these reasons, DGAP submits that the remedy of specific performance is appropriate. It is the only way to put DGAP and the Monitor in the position they would have been in had the Reconveyance Agreement been performed

Stelco’s Position

[205] I begin by noting that Stelco argues the CCAA does not apply and therefore, if it is in breach of the Reconveyance Agreement, a remedy should be granted under the well-established principles of common law and equity. As noted, I have rejected Stelco’s submissions in this regard. I am of the view that the CCAA does apply, and this court can invoke its jurisdiction under s. 11.

[206] Stelco submits that if it is in breach of the Reconveyance Agreement, damages are an adequate remedy for LandCo and therefore specific performance is unavailable.

[207] First, Stelco denies that the property in question is suitably unique to justify an award of specific performance, describing it as a fairly ordinary piece of rural farmland available for purchase. It points to Semelhago v. Paramadevan, 1996 209 (SCC), [1996] 2 S.C.R. 415, at para. 22, for the requirement that land must be unique to support the remedy of specific performance.

[208] Second, Stelco also relies on the decision of the Supreme Court of Canada in Asamera Oil Corporation Ltd. v. Sea Oil & General Corporation et al., 1978 16 (SCC), [1979] 1 S.C.R. 633, at p. 644, wherein the court held that “[t]he jurisdiction to award specific performance of contractual obligations is ordinarily exercised only where damages would be inadequate to compensate a plaintiff for [their] losses”. Stelco submits that the proper calculation of damages for breach of contract should be applied and that LandCo, through an award of damages, could be placed in the same position it would have enjoyed had the breach not occurred: see Asamera, at p. 655.

[209] In this regard, Stelco submits that, LandCo simply wants money for the Land Vehicle Stakeholders; it has no interest in the land itself. Stelco submits that if an award of damages is made, the Sales Agreement with DGAP would not proceed and DGAP has no privity of contract with respect to the Reconveyance Agreement. Therefore, damages will be paid by Stelco to LandCo for the loss. Stelco also contends that because a remedy is meant to place the plaintiff in the same position it would have enjoyed had the breach not occurred, LandCo will not be prejudiced by damages. LandCo, through the Land Vehicle, is not going to use the land and its only interest in it is generating value for the Land Vehicle Stakeholders. Therefore, if Stelco pays the Failed Consent Lands Purchase Price, LandCo will be in the same position as if the breach had not occurred, and thus damages are an adequate remedy.

[210] Third, Stelco submits that it is not possible to order partial specific performance which it argues I would be doing in this case if I granted the Monitor’s motion.

[211] In this regard, Stelco first submits that if the court is to order specific performance of Article 4.1, it must order specific performance of all its parts, including its three covenants. It submits that the court cannot pick parts of the contract and order specific performance of only those parts since this would result in the court amending the contract, which it cannot do. It further submits that ordering partial specific performance of the three specific covenants as identified, would require the court to engage in the supervision of a complex series of acts, which it also cannot do.

[212] In support of this argument, Stelco relies upon the comments of the Honourable Robert J. Sharpe that it is inappropriate to grant specific performance where the court would be in effect required to constantly supervise the activities mandated to be performed: at para. 7.450. In this paragraph, Sharpe states:

Where performance of the defendants’ obligation would require a complex series of acts or the maintenance of an ongoing relationship, the remedy of specific performance would ordinarily be refused. The reason usually given is that the court will not make an order which will require it to watch over and supervise performance.

[213] Stelco therefore argues that ordering specific performance would require that the court become involved in an interpretation of Article 4.2 to determine what “commercially reasonable efforts” are required by Stelco and LandCo to obtain consent from the MOECC (although I have already found MOECC Consent can be waived). This would raise all sorts of problems in defining those efforts and determining how long they should last. Stelco also submits that with respect to Article 4.1(m), the court would have to supervise the negotiation of the Reciprocal Agreements. Again, Stelco submits that this is inappropriate and not a remedy available to this court.

[214] Fourth, Stelco submits that DGAP has no privity of contract with respect to the Reconveyance Agreement and is not a third-party beneficiary; therefore, DGAP’s purpose for acquiring the land is irrelevant and the only entities relevant to the question are LandCo and Stelco. In these circumstances, damages are fully adequate as a remedy for the breach.

[215] Last, Stelco has agreed to pay LandCo the price per acre DGAP has agreed to pay. Stelco therefore submits that there is no prejudice to LandCo or the Land Vehicle Stakeholders.

[216] Stelco therefore argues that any discussion on the appropriate remedy for a breach of the Reconveyance Agreement must be grounded in well-established principles of common law and equity and dictate that damages, not specific or partial specific performance, is the appropriate remedy.

Analysis

[217] For the reasons that follow, I find that Stelco ought to be bound to complete its obligations under the relevant provisions of the Reconveyance Agreement and complete the severance of the Reconveyance Parcel as per the provisions of Article 4.2.

[218] Pursuant to s. 11 of the CCAA, this court retains broad jurisdiction to grant “any order that it considers appropriate in the circumstances”. Given the fact that the CCAA has a broad remedial purpose, the court, in this circumstance, should take advantage of the flexible and greater judicial discretion provided and oversee the completion of the severance and reconveyance of the Reconveyance Parcel.

[219] In the event that I have erred in concluding that the CCAA applies, I am also of the view that the principles of equity support a finding of specific performance given my findings above and the analysis to follow.

[220] An order of specific performance is appropriate for a number of reasons. I begin with Stelco’s submission that this court cannot order partial specific performance.

[221] In my view, I can order specific performance with respect to those portions of the Reconveyance Agreement that are required to complete the reconveyance of the Reconveyance Parcel to the LandCo Vendor.

[222] While I concede that partial specific performance ought to be exercised with caution, it is not prohibited: see Sharpe, at para. 7.340.

[223] As Sharpe further explained at para. 11:6:

There are, in fact, many situations in which specific relief will be granted in respect of only part of a contract and where the court will in effect order piecemeal performance. The essential criterion here is again that the remedies selected should foster rather than frustrate the reasonable expectations of the parties. In certain cases, specific relief in respect of part of the contract may distort what was intended and will on that account be refused. In other cases, specific relief of one aspect of the agreement may safely be ordered notwithstanding the appropriateness of specific relief of other aspects.

[224] Relying on a number of cases, Sharpe went on to state that if the portion of the defendant’s obligation which is appropriate for specific relief can be seen as independent of, and severable and separate from the portion of the obligation which cannot, then specific relief can be ordered.[^7] Sharpe went on to reiterate that a careful examination is required before partial specific performance can be granted.

[225] I have carefully considered the issue of partial specific performance and given all the circumstances and the fact that I continue to supervise this matter pursuant to the auspices of the CCAA, it is appropriate to grant specific performance where the ongoing acts can remain under court supervision.

[226] Stelco concedes that the Planning Act Consent is not difficult to complete but states that obtaining consent from the MOECC and entering into a Reciprocal Agreements creates difficulties. By way of example, Stelco submits that, insofar as the MOECC Consent is concerned, it would need to exert what constitutes “commercially reasonable efforts” to obtain it. With respect to the Reciprocal Agreements, Stelco submits the court would end up supervising the negotiation of those agreements.[^8]

[227] I do not believe that either one of these submissions has merit. As noted, the court remains in its supervisory capacity and is well suited to perform such a role. This court has previously overseen much more complex and difficult negotiations in CCAA proceedings.

[228] It is particularly important that Stelco has reaped the benefits of the CCAA restructuring and of the orders concerning the Reconveyance Agreement made in the context of its restructuring. Here, it is fair and reasonable that the court stay on and see the reconveyance completed where Stelco has breached the Reconveyance Agreement.

[229] It is specifically important to the Land Vehicle Stakeholders that structure remain in place with respect to the Reconveyance Agreement. As previously noted, the employees, retirees and pensioners want to see a fair and reasonable conclusion to this dispute. The Reconveyance Parcel can be reconveyed and sold with the benefit passed on to them. It is the simplest and fairest way forward.

[230] While I understand why Stelco may be upset with respect to Empire’s subdivision plans, this CCAA proceeding is not the forum in which that dispute ought to be entertained. Stelco will have the opportunity under the Planning Act to oppose whatever rezoning efforts Empire makes that it finds to be unpalatable.

[231] In the circumstances of this CCAA proceeding, however, the court is interested with the orderly conduct of the CCAA process and compliance with orders made. This process includes ensuring that Stelco, which took advantage of the tools provided by the CCAA to restructure, now lives up to the obligations it took on in that regard. This includes, in my view, completion of the portions of the Reconveyance Agreement necessary to convey the Reconveyance Parcel to the LandCo Vendor.

[232] Further, the uniqueness of the Reconveyance Parcel justifies the remedy of specific performance. I accept that the Reconveyance Parcel has a quality that cannot be readily duplicated elsewhere and that there is no readily available substitute property.

[233] As noted, the Reconveyance Parcel is approximately 2,000 acres and represents an enormous property that will be combined with several others, totaling over 4,100 acres. The entire property will create a mixed-used, residential and industrial community with 15,000 homes for at least 40,000 new residents. It abuts Lake Erie and as Exhibit “A” to Mr. Guizzetti’s affidavit clearly shows, the Reconveyance Parcel is a very unique property and forms the keystone of Empire’s developments plans when combined with the other contiguous properties. Essentially, the development is designed to create a significant community on the shores of Lake Erie for a mixed-use development. I accept that there is no readily acceptable substitute property for the Reconveyance Land.

[234] Given the unique nature of the land, damages are an inadequate remedy for the Reconveyance Parcel. Where a plaintiff establishes that the land is unique, damages will often be inadequate, as is the case here: see Erie Sand, at paras. 111, 118.

[235] If specific performance is not ordered, the Monitor would have to pursue an action in damages against Stelco. Stelco argues that LandCo would suffer no damages vis à vis since DGAP has no legal remedies against LandCo if LandCo cannot complete the Reconveyance Agreement.

[236] In my view, this is a very convenient argument for Stelco, and self-serving.

[237] If specific performance is not ordered, DGAP will not close the Sales Agreement and the purchase of the other properties connected to the Reconveyance Parcel. What Stelco fails to address is the fact that LandCo has an interest in maintaining its contractual obligations with DGAP. There is nothing to suggest that DGAP will not commence an action against LandCo should LandCo fail to secure a reconveyance of the Reconveyance Parcel. This was specifically addressed at the motion.

[238] Additionally, there are the rights of the employees, retirees and pensioners to consider. They may be drawn into lengthy and costly litigation to determine issues of LandCo’s liability to DGAP and damages.

[239] Sharpe, at para. 7:10, outlines that “[w]here confining the plaintiff to damages will require bringing a succession of suits, the remedy in damages may be considered inadequate and provide a basis for specific relief.” Therefore, he notes, equity acts to prevent the trouble and expense of a multiplicity of actions: see Beswick v. Beswick, [1968] A.C. 58 (H.L.), at p. 97. The same considerations apply in considering my broad jurisdiction under the CCAA.

[240] For all of these reasons Stelco is to reconvey the Reconveyance Parcel to the LandCo Vendor.

CONCLUSION

[241] For the reasons above, I am of the view that Stelco breached the Reconveyance Agreement, that the Monitor can waive MOECC approval and that the Monitor is entitled to the remedy of specific performance.

Disposition

[242] Based on the foregoing, the following orders shall go:

i. Stelco is and remains bound to complete the severance of the Reconveyance Parcel;

ii. Stelco shall forthwith complete the severance of the Reconveyance Parcel and complete the transfer of title to the LandCo Vendor, as nominee for LandCo;

iii. neither Stelco nor LandCo shall have any further obligations pursuant to Article 4.1(h) of the Reconveyance Agreement and Stelco is not required to assign the EFA, nor shall the transfer of the Reconveyance Parcel be conditional upon obtaining MOECC Consent;

iv. Stelco’s cross-motion is dismissed; and

v. the Monitor is entitled to the ancillary relief sought: the approval of the Fifty-fourth Report and other relief sought as per its draft order. All of the relief sought is fair and reasonable.

[243] I end by noting that although the parties on the motion referred to the Reconveyance Parcel as a single parcel of land, the Monitor in its draft order seeks an order requiring Stelco to complete the severance and transfer of the “Lake Erie Planning Act Lands”. The filed documents suggest that this may include two other smaller parcels. If the Monitor seeks any further orders in this regard, I can be spoken to.

[244] I can also be spoken to at a 15-minute case conference on the issue of costs if the parties cannot come to some form of agreement.

McEwen J.

Released: December 19, 2022

[^1]: I will refer to the Monitor and the LRO collectively as the “Monitor”. [^2]: Note that the Minister and Ministry of Environment and Climate Change (“MOECC”) was renamed as the Minister and Ministry of Environment, Conservation and Parks (“MOECP”). I will use the term MOECC throughout these Reasons. [^3]: Hereinafter the Environmental Framework Agreement will be referred to as the “EFA”. [^4]: As a point of clarification, Stelco argues that Empire does not have standing on the motion and cross-motion. For ease of reference, since Empire did not appear on the motion and DGAP filed materials, I will refer to this dispute as being between Stelco and DGAP. [^5]: The Monitor’s submissions were supported and supplemented by DGAP which I have subsumed into the Monitor’s submissions. [^6]: Stelco stresses that there is an important distinction between covenants and conditions. An analysis regarding this issue will be conducted below in these Reasons. [^7]: Elmore v. Pirrie (1887), 57 L.T.R. 333; Soames v. Edge (1860), Johns. 669, 70 E.R. 588; Odessa Tramways Co. v. Mendel (1877), 8 Ch. D. 235 (C.A.); Wilkinson v. Clements (1872), 8 Ch. App. 96; Rigby v. Great Western Ry. Co. (1846), 15 L.J. Ch. 266; Lewin v. Guest (1826), 1 Russ. 325, 38 E.R. 126. Cf. Brett v. East India and London Shipping Co. (Ltd.) (1864), 2 H. & M. 404, 71 E.R. 520; Treadgold v. Rost (1912), 1912 617 (YK TC), 7 D.L.R. 741, 22 W.L.R. 300 (Yukon Terr. Ct.); Stocker v. Wedderburn (1857), 3 K. & J. 393, 69 E.R. 1162; Lytton v. Great Northern Ry. Co. (1856), 2 K. & J. 394, 69 E.R. 836. See also Kochar v. Gadhri Holdings Ltd., 2019 BCSC 1704, at paras. 25-28. [^8]: Again, this assumes that I am in error concerning my analysis of waiver of MOECC Consent.