GMAC v. TCT Logistics Inc., (2004) 185 O.A.C. 138 (CA)

• Judge: Feldman, MacPherson and Cronk, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: January 28, 2004
• Jurisdiction: Ontario
• Citations: (2004), 185 O.A.C. 138 (CA)

GMAC v. TCT Logistics Inc. (2004), 185 O.A.C. 138 (CA)

MLB headnote and full text

Temp. Cite: [2004] O.A.C. TBEd. AP.005

In The Matter Of the Bankruptcy of T.C.T. Logistics Inc. and T.C.T. Warehousing Logistics Inc.

GMAC Commercial Credit Corporation of Canada (applicant/respondent in appeal) v. T.C.T. Logistics Inc., T.C.T. Warehousing Logistics Inc., KPMG Inc., the Interim Receiver and Trustee in Bankruptcy of T.C.T. Logistics Inc. and T.C.T. Warehousing Logistics Inc. (respondents/respondents in appeal)

(C39988)

Indexed As: GMAC Commercial Credit Corp. - Canada v. TCT Logistics Inc. et al.

Ontario Court of Appeal

Feldman, MacPherson and Cronk, JJ.A.

April 2, 2004.

Summary:

T.C.T. Logistics Inc. and related companies (collectively TCT) became insolvent. KPMG Inc. was appointed an interim receiver over TCT's assets and obtained an order giving it broad powers and deeming it not to be a successor employer under the Ontario Labour Relations Act. KPMG filed an assignment in bankruptcy on TCT's behalf. KPMG entered into an asset purchase agreement to sell the assets of TCT's warehousing business to another company (Spectrum). KPMG terminated all unionized employees. Without seeking leave from the bankruptcy court, the union filed applications with the Ontario Labour Relations Board (OLRB) seeking, inter alia, a declaration that Spectrum was the successor employer to TCT and/or KPMG pursuant to s. 69 of the Ontario Labour Relations Act and was therefore bound by the collective agreement between the union and TCT. KPMG brought a motion before the OLRB to stay the proceedings on the basis that the order which appointed it interim receiver and s. 215 of the Bankruptcy and Insolvency Act precluded proceedings against it without leave of the court. The OLRB granted the stay. The union moved in the bankruptcy court for, inter alia, leave to proceed before the OLRB.

The Ontario Superior Court, in decision reported at [2003] O.T.C. 365, inter alia, denied the union leave to commence successor employer proceedings before the OLRB. The union appealed.

The Ontario Court of Appeal, MacPherson, J.A., dissenting, allowed the appeal, set aside the decision below and remitted the matter to the bankruptcy court.

Bankruptcy - Topic 1801

Interim receivers - Actions against - General - The Ontario Court of Appeal stated that s. 215 of the Bankruptcy and Insolvency Act gave the bankruptcy court a gatekeeper function, requiring it to grant leave before any action could be taken against a trustee or interim receiver "with respect to ... any action taken pursuant to this Act." - The court stated, inter alia, that s. 215 was an integral part of the legislative policy that vested control of the entire bankruptcy or receivership in the bankruptcy court - It was for that court to determine the propriety of any proposed proceedings against the interim receiver or trustee - See paragraphs 35 to 39.

Bankruptcy - Topic 1805

Interim receivers - Actions against - As successor employer - An issue in an appeal was whether a bankruptcy judge had jurisdiction under s. 47(2) of the Bankruptcy and Insolvency Act to deny a union leave to apply to the Ontario Labour Relations Board for a declaration that an interim receiver/trustee in bankruptcy became a successor employer to a unionized business and was therefore bound by the collective agreement - The Ontario Court of Appeal stated that s. 47(2) gave the bankruptcy court very broad authority to direct an interim receiver to take action, including whatever power and authority it might need to take possession of and exercise control over the debtor's property and to "take such other action as the court considers advisable" - However, s. 47(2) did not give the bankruptcy court the authority to determine whether a receiver or trustee that carried on the business of a debtor was a successor employer - See paragraphs 22 to 34 and 70.

Bankruptcy - Topic 1805

Interim receivers - Actions against - As successor employer - The Ontario Court of Appeal stated that some bankruptcy courts had refused to grant leave to a union to proceed before the Ontario Labour Relations Board (OLRB) for a successor employer declaration on the basis, in part, that as a matter of bankruptcy law, collective agreements terminated with bankruptcy - The Ontario Court of Appeal stated that a collective agreement was not terminated following bankruptcy or interim receivership - A collective agreement could bind a successor employer who took over the business of the debtor, if the OLRB so declared - See paragraphs 47 to 51 and 70.

Bankruptcy - Topic 1805

Interim receivers - Actions against - As successor employer - Section 215 of the Bankruptcy and Insolvency Act required a bankruptcy court to grant leave before any action could be taken against a trustee or interim receiver "with respect to ... any action taken pursuant to this Act" - The Ontario Court of Appeal stated that a s. 215 leave application to permit successor employer proceedings before the Ontario Labour Relations Board required the bankruptcy court to go beyond the usual test (Mancini test) for granting leave under s. 215 - The court reviewed a number of important factors which were to be considered - See paragraphs 57 to 59.

Bankruptcy - Topic 1805

Interim receivers - Actions against - As successor employer - Section 215 of the Bankruptcy and Insolvency Act (BIA) required a bankruptcy court to grant leave before any action could be taken against a trustee or interim receiver "with respect to ... any action taken pursuant to this Act" - The Ontario Court of Appeal stated that the bankruptcy court, in the exercise of its supervisory control and based on factors that were relevant to the bankruptcy and in the best interests of all the stakeholders, could use s. 215, in a proper case, to deny leave to bring a successor employer proceeding against a trustee or receiver before the Ontario Labour Relations Board (OLRB) - The denial of leave under s. 215 could preclude the OLRB from exercising its exclusive jurisdiction to declare a person a successor employer under s. 69 of the Labour Relations Act (LRA) - This created an operational conflict between the two statutes and s. 72(1) of the BIA provided that the BIA therefore superseded the LRA - See paragraphs 60 to 69.

Bankruptcy - Topic 2686

Trustees - Liability - General - Action against - Requirement of leave - [See Bankruptcy - Topic 1801 , third and fourth Bankruptcy - Topic 1805 ].

Labour Law - Topic 448

Labour relations boards and judicial review - Boards - Jurisdiction - Successor rights and obligations - An issue in an appeal was whether a bankruptcy judge had jurisdiction under s. 47(2) of the Bankruptcy and Insolvency Act to deny a union leave to apply to the Ontario Labour Relations Board (OLRB) for a declaration that an interim receiver/trustee in bankruptcy became a successor employer to a unionized business and was therefore bound by the collective agreement - The Ontario Court of Appeal stated, inter alia, that the term "successor employer" referred to a status under the Labour Relations Act (Ont.) (LRA) - It was clear that ss. 69(12) and 114(1) of the LRA gave the OLRB the unequivocal exclusive jurisdiction to decide the issue of successor employer for labour relations purposes in every case - See paragraph 28.

Labour Law - Topic 448

Labour relations boards and judicial review - Boards - Jurisdiction - Successor rights and obligations - [See second and fourth Bankruptcy - Topic 1805 ].

Cases Noticed:

Spectrum Supply Chain Solutions Inc., [2002] O.L.R.D. No. 2866, refd to. [para. 14].

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 20].

St. Marys Paper Inc. (Bankrupt), Re (1994), 73 O.A.C. 1; 19 O.R.(3d) 163 (C.A.), refd to. [para. 20].

588871 Ontario Ltd., Re (1995), 33 C.B.R.(3d) 28 (Ont. Gen. Div.), refd to. [para. 20].

Associated Freezers of Canada Inc. (Bankrupt) v. Retail, Wholesale Canada, Local 1015 (Division of United Steelworkers of America) (1996), 151 N.S.R.(2d) 376; 440 A.P.R. 376 (C.A.), affing. (1995), 149 N.S.R.(2d) 385; 432 A.P.R. 385 (S.C. Bktcy.), refd to. [para. 20].

Royal Oak Mines Inc. et al., Re (2001), 143 O.A.C. 75 (C.A.), refd to. [para. 20].

Saan Stores Ltd. v. Labour Relations Board (N.S.) et al. (1999), 173 N.S.R.(2d) 222; 527 A.P.R. 222; 172 D.L.R.(4th) 134 (C.A.), refd to. [paras. 20, 101].

Saan Stores Ltd. v. United Steelworkers of America, Local 596 (Retail Wholesale Canada, Canadian Services Division) - see Saan Stores Ltd. v. Labour Relations Board (N.S.) et al.

Syndicat national de l'amiante d'Asbestos Inc. v. Jeffrey Mines Inc., [2003] R.J.Q. No. 420 (C.A.), refd to. [para. 20].

Big Sky Living Inc. (Bankrupt), Re (2002), 318 A.R. 165; 2002 ABQB 659, refd to. [para. 25].

Royal Crest Lifecare Group Inc. (Bankrupt), Re, [2003] O.T.C. Uned. 157; 40 C.B.R.(4th) 146 (Sup. Ct.), affd. (2004), 181 O.A.C. 115 (C.A.), refd to. [paras. 26, 109, 136].

Robinson v. Countrywide Factors Ltd. - see Kozan Furniture (Yorkton) Ltd. Estate v. Countrywide Factors Ltd.

Kozan Furniture (Yorkton) Ltd. Estate v. Countrywide Factors Ltd., [1978] 1 S.C.R. 753; 14 N.R. 91, refd to. [para. 30].

Lévy (Sam) & Associés Inc. v. Azco Mining Inc., [2001] 3 S.C.R. 978; 280 N.R. 155, refd to. [paras. 38, 133].

Dominion Trust Co. (liquidator of) v. LePage (1916), 53 S.C.R. 337, refd to. [para. 38].

Page Flooring Enterprises Inc., [2002] O.L.R.D. No. 4262, refd to. [para. 41].

Bell ExpressVu Limited Partnership v. Rex et al., [2002] 2 S.C.R. 559; 287 N.R. 248; 166 B.C.A.C. 1; 271 W.A.C. 1; 2002 SCC 42, refd to. [para. 43].

Mancini (Bankrupt) et al. v. Falconi et al. (1993), 61 O.A.C. 332; 1993 CarswellOnt 1861 (C.A.), refd to. [paras. 44, 109, 133].

Society of Composers, Authors and Music Publishers of Canada v. Armitage (2000), 137 O.A.C. 74; 50 O.R.(3d) 688 (C.A.), refd to. [paras. 44, 109].

Bank of America (Canada) v. Willann Investments Ltd. (1993), 23 C.B.R.(3d) 98 (Ont. Gen. Div.), refd to. [para. 44].

Planet Development Corp. and Lester (W.W.) (1978) Ltd. v. United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry in the United States and Canada, Local 740, [1990] 3 S.C.R. 644; 123 N.R. 241; 88 Nfld. & P.E.I.R. 15; 274 A.P.R. 15; 76 D.L.R.(4th) 389, refd to. [para. 45].

H & S Reliance Ltd., Re, [1998] O.L.R.D. No. 4087 (Lab. Rel. Bd.), refd to. [paras. 46, 95].

Deloitte & Touche, Re, [1993] O.L.R.D. No. 458 (Lab. Rel. Bd.), refd to. [paras. 46, 95].

Maritime Life Assurance Co. v. Chateau Gardens (Hanover) Inc. et al. (1983), 43 O.R.(2d) 754; 2 D.L.R.(4th) 553 (H.C.), refd to. [para. 46].

Vulcan Containers Ltd., Re, [1997] O.L.R.B. 765, refd to. [para. 50].

Husky Oil Operations Ltd. v. Minister of National Revenue et al., [1995] 3 S.C.R. 453; 188 N.R. 1; 137 Sask.R. 81; 107 W.A.C. 81; 128 D.L.R.(4th) 1, refd to. [para. 68].

Ajax (Town) v. National Automobile, Aerospace and Agricultural Implement Workers Union of Canada (CAW-Canada), Local 222 et al. (1998), 113 O.A.C. 188; 41 O.R.(3d) 426 (C.A.), refd to. [para. 93].

Toronto Electric Commissioners v. Snider, [1925] A.C. 396 (P.C.), refd to. [para. 99].

Crystalline Investments Ltd. v. Domgroup Ltd. (2004), 316 N.R. 1; 184 O.A.C. 33 (S.C.C.), refd to. [para. 100].

Syndicat national de l'amiante d'Abestos inc. v. Jeffrey Mines Inc., [2003] Q.J. No. 264 (C.A.), refd to. [para. 101].

Vanderwoude et al. v. Scott and Pichelli Ltd. et al. (2001), 143 O.A.C. 195 (C.A.), refd to. [para. 109].

Reference Re Compulsory Arbitration, [1987] 1 S.C.R. 313; 74 N.R. 99; 78 A.R. 1, refd to. [para. 125].

Reference Re Public Service Employee Relations Act (Alta.) - see Reference Re Compulsory Arbitration.

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 47(2) [para. 22]; sect. 72(1) [para. 29]; sect. 215 [para. 35].

Labour Relations Act, R.S.O., 1990, c. L-2, sect. 69(12), sect. 114(1) [para. 27].

Authors and Works Noticed:

Adams, G.W., Canadian Labour Law (2nd Ed. 2003) (Looseleaf), p. 8.10 [para. 27].

Driedger, Elmer A., Construction of Statutes (1974), p. 67 [para. 43].

Counsel:

Stephen B.D. Wahl and Andrew J. Hatnay, for the appellant, Industrial Wood and Allied Workers of Canada;

Frederick L. Myers and Geoffrey B. Morawetz, for the respondent, KPMG Inc.;

Orestes Pasparakis, for the respondent, GMAC Commercial Credit Corporation.

This appeal was heard on January 28, 2004, before Feldman, MacPherson and Cronk, JJ.A., of the Ontario Court of Appeal. On April 2, 2004, the judgment of the Court of Appeal was delivered and the following opinions were filed:

Feldman, J.A. - see paragraphs 1 to 77;

MacPherson, J.A., dissenting - see paragraphs 78 to 130;

Cronk, J.A., concurring - see paragraphs 131 to 143.