BOOK of AUTHORITIES of the APPLICANTS (Response to Motion of Genstar US Pension Plan Beneficiaries)
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Court File No. CV-19-616077-00CL 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 OF IMPERIAL TOBACCO CANADA LIMITED AND IMPERIAL TOBACCO COMPANY LIMITED Applicants BOOK OF AUTHORITIES OF THE APPLICANTS (Response to Motion of Genstar US Pension Plan Beneficiaries) April 24, 2019 OSLER, HOSKIN & HARCOURT LLP P.O. Box 50, 1 First Canadian Place Toronto, ON M5X 1B8 Deborah Glendinning (LSO# 31070N) Marc Wasserman (LSO# 44066M) John A. MacDonald (LSO# 25884R) Craig Lockwood (LSO# 46668M) Tel: (416) 362-2111 Fax: (416) 862-6666 Lawyers to the Applicants, Imperial Tobacco Canada Limited and Imperial Tobacco Company Limited INDEX Tab Case 1. Caterpillar Financial Services Ltd. v. 360networks Corp., 2004 BCSC 1066, aff’d 2007 BCCA 14 2. Re Collins and Aikman Automotive Canada Inc., 2007 CarswellOnt 7014 3. Re Fraser Papers Inc., 2009 CarswellOnt 4469 (Sup Ct [Comm List]) 4. Re Nortel Networks Corporation et al, 2017 ONSC 700 5. Re United Air Lines Inc., 2005 CarswellOnt 1078 (Sup Ct [Comm List]) 6. Re US Steel Inc., 2015 ONSC 5990 7. Reference re ss. 193 & 195.1(1)(c) of the Criminal Code, [1990] 1 SCR 1123 8. Reference re Public Service Employee Relations Act (Alberta), [1987] 1 SCR 313 9. Siemens v Manitoba (Attorney General), 2003 SCC 3 TAB 1 COURT OF APPEAL FOR BRITISH COLUMBIA Citation: Caterpillar Financial Services Corporation v. Boale, Wood & Company Ltd., 2014 BCCA 419 Date: 20141031 Docket: CA041207 In the Matter of the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended and 2014 BCCA 419 (CanLII) In the Matter of the Canada Business Corporations Act, R.S.C. 1985, c. C-44 and the Business Corporations Act, S.B.C. 2002, c. 57 and In the Matter of Worldspan Marine Inc., Crescent Custom Yachts Inc., Queenship Marine Industries Ltd., 27222 Developments Ltd. and Composite FRP Products Ltd. Between: Caterpillar Financial Services Corporation Appellant (Applicant) And Boale, Wood & Company Ltd. Respondent (Respondent) Before: The Honourable Mr. Justice Chiasson The Honourable Madam Justice Neilson The Honourable Madam Justice Garson On appeal from: An order of the Supreme Court of British Columbia, dated September 3, 2013 (Worldspan Marine Inc. (Re), 2013 BCSC 1593, Vancouver Docket S113550). Counsel for the Appellant: A.H. Brown Counsel for the Respondent: G.H. Dabbs Caterpillar Financial Services Corporation v. Boale, Wood & Company Ltd. Page 2 Place and Date of Hearing: Vancouver, British Columbia June 3, 2014 Place and Date of Judgment: Vancouver, British Columbia October 31, 2014 Written Reasons by: The Honourable Mr. Justice Chiasson Concurring Reasons by: The Honourable Madam Justice Garson (page 16, para. 44) Concurring in both: The Honourable Madam Justice Neilson 2014 BCCA 419 (CanLII) Caterpillar Financial Services Corporation v. Boale, Wood & Company Ltd. Page 3 Summary: Worldspan Marine Inc. designed, manufactured and sold luxury yachts. The Supreme Court granted an order under the Companies’ Creditors Arrangement Act (“CCAA”) providing protection to Worldspan and appointing the respondent as Monitor. The court also provided for an Administrative Charge in favour of the Monitor ranking in priority to the security of Worldspan’s creditors. The appellant was a secured creditor with a mortgage on a vessel in Washington State, U.S.A. The Monitor was granted a Recognition Order by a Washington court. There was no specific reference to the Administrative Charge in the Washington proceedings or in the Recognition Order. That order recognized the CCAA proceedings as a foreign main proceeding and directed that the administration and realization of Worldspan’s assets in the United States was entrusted to the Monitor acting in the CCAA case. The vessel was sold and the proceeds paid into court in the CCAA proceedings. 2014 BCCA 419 (CanLII) The court rejected the appellant’s contention that the Monitor’s Administrative Charge did not apply because the vessel was in the United States when the charge was imposed on the basis that the Administrative Charge attached to the vessel in Washington. Held: appeal dismissed. The Administrative Charge was an in rem order that did not have extra-territorial effect and did not attach to the vessel in Washington when it was made. The property over which the Administrative Charge had priority included proceeds. The Recognition Order vested the realization of the assets of Worldspan in the CCAA court. Insofar as the security on the vessel was realized in the CCAA proceedings, the Administration Charge attached to the proceeds of sale and had the priority given to it by the CCAA court. Reasons for Judgment of the Honourable Mr. Justice Chiasson: Introduction [1] This appeal concerns the relationship between Canadian and United States insolvency proceedings. Background [2] Worldspan Marine Inc. (“Worldspan”) designed, manufactured and sold luxury yachts. On June 6, 2011, the Supreme Court granted an initial order under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (“CCAA”). The chambers judge described the situation at that time (2013 BCSC 1593): Caterpillar Financial Services Corporation v. Boale, Wood & Company Ltd. Page 4 [3] … This Court, in its Reasons for Judgment granting the initial order, indexed as Sargeant v. Worldspan Marine Inc., 2011 BCSC 767, found that the petitioners collectively owned assets worth approximately $30.7 million. The petitioners’ principal assets then consisted of the real property in Maple Ridge, British Columbia, owned by 27222 Developments Ltd. and appraised at $8.9 million, where the petitioners’ shipyard was located, and a partially completed 142-foot Queenship motor yacht bearing hull number QE0142226C010, then valued at $15.1 million. [3] The judge provided useful background to this appeal: [4] The petitioner, Worldspan Marine Inc. (“Worldspan”) had entered into a vessel construction agreement with Mr. Harry Sargeant III for the construction of the 142-foot yacht, which has been referred to throughout 2014 BCCA 419 (CanLII) these proceedings as the Sargeant yacht. A dispute arose between Worldspan and Mr. Sargeant concerning the cost of construction. Mr. Sargeant ceased making payments under the vessel construction agreement, which led to the insolvency of the petitioners and ultimately, to the initiation of these proceedings. [5] This Court’s initial order included an Administration Charge, not to exceed $500,000, as security for the fees and disbursements of the Monitor [Boale, Wood & Company Ltd.], counsel to the Monitor, and counsel to the petitioners that charged the “Non-Vessel Property” as defined in the initial order. Under the terms of the initial order, the Administration Charge ranked in priority to all other security in the Non-Vessel Property. [4] “Non-Vessel Property” is all of Worldspan’s property other than the Sargeant yacht. In the initial order, property is defined as “including all proceeds”. The judge continued: [6] At the time of the initial order, the applicant, CAT [Caterpillar Financial Services Corporation], held a mortgage charging another vessel, the Queenship 70’ yacht with hull identification number A129 (the “A129”). In May 2011, CAT brought foreclosure proceedings against the A129 in Seattle, Washington. [7] The A129, a Canadian vessel, was owned by the petitioner Worldspan. … Worldspan had moved the A129 to Seattle, and was attempting to sell it there. [8] The issues arising on this application are whether the Administration Charge attaches to the A129, or the proceeds of sale of that vessel, and if so, whether the Administration Charge ranks in priority to the mortgage charging the A129 held by CAT. [5] On May 10, 2011, on the application of Caterpillar Financial Services Corporation (“CAT”), the court in Washington State exercised its maritime jurisdiction Caterpillar Financial Services Corporation v. Boale, Wood & Company Ltd. Page 5 and issued an in rem warrant for the arrest of the A129. The CCAA court was aware of the initiation of the Washington State proceedings, the arrest of the A129 were noted in the court’s reasons granting the initial order in the CCAA proceedings. [6] At para. 20, the judge observed: [20] Following the pronouncement of the initial order, on June 8 and June 27, 2011, counsel for CAT wrote to counsel for Worldspan advising that if the petitioners did not apply to the United States Bankruptcy Court for the Western District of Washington at Seattle (the “U.S. Bankruptcy Court”) for an order pursuant to Chapter 15 of the U.S. Bankruptcy Code recognizing the CCAA proceedings, CAT would continue to execute against the A129. 2014 BCCA 419 (CanLII) [7] On June 28, 2011, CAT applied to the Washington Court for an order of default. Worldspan was served with the application, but did not respond. The order was granted on July 1, 2011. [8] Further proceedings in the Washington Court were described by the chambers judge at paras. 24 and 27: On September 11, 2011, on the application of the petitioners and the Monitor, the U.S. Bankruptcy Court granted an order recognizing these proceedings as a “Foreign Main Proceeding” under Chapter 15 of the U.S. Bankruptcy Code (the “Recognition Order”). … Although CAT put evidence before the U.S. Court that the petitioners were seeking to increase the Administration Charge from $500,000 to $1 million, neither CAT nor Grand Banks Yacht Sales LLC opposed the grant of the Recognition Order on the ground that the Administration Charge would have priority over their claims respecting the A129. [9] The chambers judge quoted at length from the Recognition Order: D. This Chapter 15 case was properly commenced pursuant to §§1504 and 1515 of the United States Bankruptcy Code (the “Code”) and the petition on file in this case meets all requirements of §1515 of the Code; E.