Edgewater Casino Inc. et al., Re, (2009) 265 B.C.A.C. 274 (CA)

• Judge: Levine, Tysoe and D. Smith, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: January 07, 2009
• Jurisdiction: British Columbia
• Citations: (2009), 265 B.C.A.C. 274 (CA);2009 BCCA 40

Edgewater Casino Inc., Re (2009), 265 B.C.A.C. 274 (CA);

    446 W.A.C. 274

MLB headnote and full text

Temp. Cite: [2009] B.C.A.C. TBEd. FE.021

In The Matter Of the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended

In The Matter Of the Business Corporations Act, S.B.C. 2002, c. 57, as amended

In The Matter Of Edgewater Casino Inc. and Edgewater Management Inc.

Canadian Metropolitan Properties Corp. (appellant/applicant) v. Libin Holdings Ltd., Gary Jackson Holdings Ltd. and Phoebe Holdings Ltd. (respondents/respondents)

(CA035922; CA035924; 2009 BCCA 40)

Indexed As: Edgewater Casino Inc. et al., Re

British Columbia Court of Appeal

Levine, Tysoe and D. Smith, JJ.A.

February 6, 2009.

Summary:

Canadian Metropolitan Properties Corp. (CMPC) and Edgewater Casino Inc. entered into a lease agreement. Litigation ensued. Edgewater commenced Companies' Creditors Arrangement Act (CCAA) proceedings. CMPC filed a proof of claim. The CCAA judge directed that the litigation be determined summarily. The CCAA judge made two orders concerning the lease. CMPC's application for leave to appeal was dismissed by a chambers judge. CMPC applied under s. 9(6) of the Court of Appeal Act to vary or discharge the order of the chambers judge.

The British Columbia Court of Appeal allowed the application, discharged the order of the chambers judge and granted CMPC leave to appeal.

Creditors and Debtors - Topic 8599

Debtors' relief legislation - Companies' creditors arrangement legislation - Appeals - Leave to appeal - The British Columbia Court of Appeal discussed the application of the test to be utilized when leave to appeal was sought from an order made in proceedings under the Companies' Creditors Arrangement Act (CCAA) - The requirement for leave to appeal was found in s. 13 of the CCAA - The court stated that "it does not follow from the fact that the statute itself is the source of the requirement for leave that the test or standard applicable to applications for leave to appeal orders made in CCAA proceedings is different from the test or standard for other leave applications. It is my view that the same test applicable to all other leave applications should be utilized when considering an application for leave to appeal from a CCAA order. In British Columbia, the test involves a consideration of the following factors: (a) whether the point on appeal is of significance to the practice; (b) whether the point raised is of significance to the action itself; (c) whether the appeal is prima facie meritorious or, on the other hand, whether it is frivolous; and (d) whether the appeal will unduly hinder the progress of the action." - See paragraphs 16 and 17.

Creditors and Debtors - Topic 8599

Debtors' relief legislation - Companies' creditors arrangement legislation - Appeals - Leave to appeal - The British Columbia Court of Appeal discussed the application of the test to be utilized when leave to appeal was sought from an order made in proceedings under the Companies' Creditors Arrangement Act (CCAA) - The third factor of the test (whether the appeal was prima facie meritorious or, on the other hand, whether it was frivolous) involved a consideration of the merits of the appeal - In non-CCAA proceedings, a court would be reluctant to grant leave where the order constituted an exercise of discretion by the judge because the grounds for interfering with an exercise of discretion were limited - Most orders made in CCAA proceedings were discretionary in nature, and the normal reluctance to grant leave to appeal was heightened for two reasons - First, one of the functions of the CCAA judge was to attempt to balance the interests of the various stakeholders during the reorganization process, and it would be inappropriate to consider an exercise of discretion by the CCAA judge in isolation of other exercises of discretion by the judge in endeavouring to balance the various interests - Secondly, CCAA proceedings were dynamic in nature and the CCAA judge had intimate knowledge of the reorganization process - The nature of the proceedings often required the CCAA judge to make quick decisions in complicated circumstances - Consequently, CCAA judges were accorded a high degree of deference - See paragraphs 19 and 20.

Creditors and Debtors - Topic 8599

Debtors' relief legislation - Companies' creditors arrangement legislation - Appeals - Leave to appeal - The British Columbia Court of Appeal discussed the application of the test to be utilized when leave was sought from an order made in proceedings under the Companies' Creditors Arrangement Act (CCAA) - The fourth factor of the test (whether the appeal would unduly hinder the progress of the action) related to the detrimental effect of an appeal on the underlying action - In most non-CCAA cases, the events giving rise to the underlying action had already occurred, and a consideration of this factor involved the prejudice to one of the parties if the trial was adjourned or if the action could not otherwise move forward pending the determination of the appeal - CCAA proceedings were entirely different because events were unfolding as the proceeding moved forward and the situation was constantly changing - The fundamental purpose of CCAA proceedings was to enable a qualifying company in financial difficulty to attempt to reorganize its affairs by proposing a plan of arrangement to its creditors - The delay caused by an appeal could jeopardize these efforts - The delay could also have the effect of upsetting the balance between competing stakeholders that the CCAA judge had endeavoured to achieve - Consequently, CCAA judges were accorded a high degree of deference - See paragraphs 21 to 23.

Creditors and Debtors - Topic 8599

Debtors' relief legislation - Companies' creditors arrangement legislation - Appeals - Leave to appeal - Canadian Metropolitan Properties Corp. (CMPC) and Edgewater Casino Inc. entered into a lease agreement - Litigation ensued - Edgewater commenced Companies' Creditors Arrangement Act (CCAA) proceedings - CMPC filed a proof of claim - The CCAA judge directed that the litigation be determined summarily - The CCAA judge made two orders concerning the lease - CMPC's application for leave to appeal was dismissed by a chambers judge - CMPC applied under s. 9(6) of the Court of Appeal Act to vary or discharge the order of the chambers judge - The British Columbia Court of Appeal allowed the application, discharged the order of the chambers judge and granted CMPC leave to appeal - The chambers judge did give consideration to the usual factors, but none of those considerations were applicable to the two orders - The CCAA judge was deciding questions of law in each case and was not exercising his discretion - The knowledge gained by the CCAA judge during the reorganization process was not relevant to his decisions, which involved events that occurred prior to the commencement of the CCAA proceeding - The plan of arrangement made by Edgewater had been implemented, and appeals from the two orders would not delay or otherwise jeopardize the reorganization process - There was no prospect that the outcome of the appeals would affect the continuing viability of Edgewater - Although the disputes involved Edgewater in name, the parties with a monetary interest in the disputes were CMPC and Edgewater's former shareholders - In the circumstances, there was no reason to give substantial deference to the CCAA judge - See paragraphs 25 to 30.

Practice - Topic 8871

Appeal - Leave to appeal - Application for - [See all Creditors and Debtors - Topic 8599 ].

Cases Noticed:

Pacific National Lease Holding Corp. et al., Re (1992), 19 B.C.A.C. 134; 34 W.A.C. 134; 72 B.C.L.R.(2d) 368; 15 C.B.R.(3d) 265 (C.A.), refd to. [para. 10].

Pine Valley Mining Corp. et al., Re, [2008] B.C.A.C. Uned. 68; 43 C.B.R.(5th) 203; 2008 BCCA 263, refd to. [para. 10].

Haldorson et al. v. Coquitlam (City) (2000), 149 B.C.A.C. 197; 244 W.A.C. 197; 3 C.P.C.(5th) 225; 2000 BCCA 672, refd to. [para. 12].

Westar Mining Ltd. et al., Re (1993), 22 B.C.A.C. 106; 38 W.A.C. 106; 75 B.C.L.R.(2d) 16; 17 C.B.R.(3d) 202 (C.A.), revd. [1993] 2 S.C.R. 448; 29 B.C.A.C. 43; 48 W.A.C. 43, refd to. [para. 13].

Woodward's Ltd. et al., Re (1993), 23 B.C.A.C. 224; 39 W.A.C. 224; 105 D.L.R.(4th) 517; 22 C.B.R.(3d) 25 (C.A.), refd to. [para. 13].

Repap British Columbia Inc. et al., Re, [1998] B.C.A.C. Uned. 124; 9 C.B.R.(4th) 82 (C.A.), refd to. [para. 13].

Smoky River Coal Ltd. et al., Re (1999), 237 A.R. 326; 197 W.A.C. 326; 175 D.L.R.(4th) 703; 1999 ABCA 179, refd to. [para. 13].

Luscar Ltd. v. Smoky River Coal Ltd. - see Smoky River Coal Ltd. et al., Re.

Blue Range Resource Corp., Re (1999), 244 A.R. 103; 209 W.A.C. 103; 12 C.B.R.(4th) 186; 1999 ABCA 255, refd to. [para. 13].

Canadian Airlines Corp., Re (2000), 261 A.R. 120; 225 W.A.C. 120; 19 C.B.R.(4th) 33; 2000 ABCA 149, refd to. [para. 13].

Skeena Cellulose Inc. et al., Re (2003), 184 B.C.A.C. 54; 302 W.A.C. 54; 13 B.C.L.R.(4th) 236; 2003 BCCA 344, refd to. [para. 13].

Fantom Technologies Inc. - CCAA, Re, [2003] O.A.C. Uned. 77; 41 C.B.R.(4th) 55 (C.A.), refd to. [para. 13].

New Skeena Forest Products Inc. et al. v. Kitwanga Lumber Co., [2005] 8 W.W.R. 224; 210 B.C.A.C. 247; 348 W.A.C. 247; 2005 BCCA 192, refd to. [para. 13].

Algoma Steel Inc., Re (2001), 147 O.A.C. 291; 25 C.B.R.(4th) 194 (C.A.), refd to. [para. 16].

Power Consolidated (China) Pulp Inc. v. British Columbia Resources Investment Corp. (1988), 19 C.P.C.(3d) 396 (B.C.C.A.), refd to. [para. 17].

Silver Standard Resources Inc. v. Joint Stock Co. Geolog et al., [1998] B.C.A.C. Uned. 140 (C.A.), refd to. [para. 19].

Calpine Canada Energy Ltd., Re (2007), 417 A.R. 25; 410 W.A.C. 25; 35 C.B.R.(5th) 27; 2007 ABCA 266, refd to. [para. 23].

Counsel:

J.J.L. Hunter, Q.C., and J.A. Henshall, for the appellant;

J.R. Sandrelli and A. Folino, for the respondents.

This application was heard on January 7, 2009, at Vancouver, B.C., by Levine, Tysoe and D. Smith, JJ.A., of the British Columbia Court of Appeal. The following judgment of the Court of Appeal was delivered by Tysoe, J.A., on February 6, 2009.