Winnipeg Motor Express Inc. et al., Re, 2009 MBCA 110

• Judge: Freedman, J.A.
• Court: Court of Appeal (Manitoba)
• Case Date: October 06, 2009
• Jurisdiction: Manitoba
• Citations: 2009 MBCA 110;(2009), 245 Man.R.(2d) 274 (CA)

Winnipeg Motor Express Inc., Re (2009), 245 Man.R.(2d) 274 (CA);

      466 W.A.C. 274

MLB headnote and full text

Temp. Cite: [2009] Man.R.(2d) TBEd. NO.017

In The Matter Of The Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, As Amended

And In The Matter Of A Proposed Plan Of Compromise Or Arrangement Of Winnipeg Motor Express Inc., 4975813 Manitoba Ltd. and 5275634 Manitoba Ltd.

(AI 09-30-07191; 2009 MBCA 110)

Indexed As: Winnipeg Motor Express Inc. et al., Re

Manitoba Court of Appeal

Freedman, J.A.

November 10, 2009.

Summary:

Winnipeg Motor Express Inc. and its related companies (WME) were granted protection under the Companies' Creditors Arrangement Act, to permit WME to try to restructure its business operations. A stay of proceedings was granted and debtor-in-possession financing was authorized. The monitor recommended that the court-ordered charges incurred since the initial order (some $1.85 million) be allocated among the secured creditors based on pro rata recovery of the amounts of their claims, using actual or estimated recovery. Paccar Financial Services Ltd., which had leased certain equipment to WME, opposed the recommendation. It argued that Heller Financial Canada Holding Co. and GE Canada Leasing Services Co. (collectively, Heller), which had a multi-million dollar loan outstanding with WME at the time of the initial order, had suffered virtually no loss and should pay a larger proportion of the charges. Some other creditors opposed while some supported the monitor's recommendation.

The Manitoba Court of Queen's Bench, in a decision reported at (2009), 243 Man.R.(2d) 31; 2009 MBQB 204, upheld the monitor's proposed allocation as equitable. All the secured creditors received real and meaningful benefit as a result of the proceedings. Paccar sought leave to appeal. Heller did not dispute that the appeal would be significant to the action itself, and that the appeal would not delay the proceedings, which were complete except for this matter (an order of bankruptcy against WME was made on July 2, 2009).

The Manitoba Court of Appeal, per Freedman, J.A., denied the application for leave. First, the proposed appeal lacked merit. There was no flaw in the judge's reasoning or in her analysis, no misdirection by the judge and no injustice in the result. Second, the point on appeal was of no significance to the related practice. The judge's decision raised no issues of general application and thus had little, if any, precedential value. Assessing the matter in its entirety, the court was satisfied that, if leave were granted, Paccar would be very unlikely to succeed on an appeal.

Editor's Note: For related cases between the parties, see (2008), 233 Man.R.(2d) 267; (2008), 236 Man.R.(2d) 3; 448 W.A.C. 3; and (2009), 240 Man.R.(2d) 8; 456 W.A.C. 8.

Creditors and Debtors - Topic 8583

Debtors' relief legislation - Companies' creditors arrangement legislation - Setting aside or varying order - [See second Creditors and Debtors - Topic 8599 ].

Creditors and Debtors - Topic 8599

Debtors' relief legislation - Companies' creditors arrangement legislation - Appeals (incl. leave to appeal) - The Manitoba Court of Appeal, per Freedman, J.A., referred to the principles governing decisions by judges on leave applications under s. 13 of the Companies' Creditors Arrangement Act - The court noted that leave was to be granted sparingly, and referred to the jurisprudence holding that the following four applicable elements were subsumed in the general criterion: (1) whether the point on appeal was of significance to the practice; (2) whether the point raised was of significance to the action itself; (3) whether the appeal was prima facie meritorious or, on the other hand, whether it is frivolous; and (4) whether the appeal would unduly hinder the progress of the action - See paragraph 14.

Creditors and Debtors - Topic 8599

Debtors' relief legislation - Companies' creditors arrangement legislation - Appeals (incl. leave to appeal) - The applicant, one of several secured creditors, sought leave to appeal an order allocating liability to pay certain court-ordered charges - The proposed appeal sought a lesser participation in the burden of the charges - The Manitoba Court of Appeal, per Freedman, J.A., noted that, if leave were to be granted, the court would apply a standard of review which would vary depending on the nature of the issue under consideration - The court would only modify or set aside the order if one or more of three circumstances existed - First, applying a standard of correctness, the court would have to conclude that the judge erred in law (not argued or at issue here) - Second, applying a standard of palpable and overriding error, the court would have to conclude that the judge made such an error on a factual matter (not argued or at issue) - Finally, applying a standard of considerable deference, the court would have to conclude that in exercising her discretion the judge misdirected herself, or the order was so clearly wrong as to amount to an injustice - The applicant argued, in effect, that this is what had occurred - In the result, the court concluded that the proposed appeal lacked merit, as there was no basis on which the court would act to upset the judge's exercise of discretion - See paragraphs 25 and 26.

Creditors and Debtors - Topic 8599

Debtors' relief legislation - Companies' creditors arrangement legislation - Appeals (incl. leave to appeal) - Winnipeg Motor Express Inc. and its related companies (WME) were granted protection under the Companies' Creditors Arrangement Act - The monitor recommended that the court-ordered charges be allocated among the secured creditors based on pro rata recovery of the amounts of their claims - Paccar, which had leased certain equipment to WME, opposed the recommendation, arguing that Heller, which had a multi-million dollar loan outstanding with WME at the time of the initial order, had suffered virtually no loss and should pay a larger proportion of the charges - The trial judge upheld the monitor's proposed allocation as equitable - The effect of the order was to allocate about 15.5% of the charges to Paccar and about 65.6% to Heller - The Manitoba Court of Appeal, per Freedman, J.A., denied Paccar leave to appeal - Of the four factors applicable, two were at issue, and Paccar failed on each - First, the proposed appeal lacked merit - There was no flaw in the judge's reasoning or in her analysis, no misdirection by the judge and no injustice in the result - Second, the point on appeal was of no significance to the related practice - The judge's decision raised no issues of general application and thus had little, if any, precedential value - Assessing the matter in its entirety, the court was satisfied that, if leave were granted, Paccar would be very unlikely to succeed on an appeal - See paragraphs 21 to 43.

Cases Noticed:

Hunters Trailer & Marine Ltd., Re (2001), 305 A.R. 175; 30 C.B.R.(4th) 206; 2001 ABQB 1094, refd to. [para. 8].

Hickman Equipment (1985) Ltd. (Receivership), Re (2004), 241 Nfld. & P.E.I.R. 294; 716 A.P.R. 294; 5 C.B.R.(5th) 56; 2004 NLSCTD 164, refd to. [para. 8].

Hunjan International Inc. et al., Re, [2006] O.T.C. 422; 21 C.B.R.(5th) 276 (Sup. Ct.), refd to. [para. 8].

Western Express Air Lines Inc. et al., Re, [2005] B.C.T.C. 53; 10 C.B.R.(5th) 154; 2005 BCSC 53, refd to. [para. 8].

Winnipeg Motor Express Inc. et al., Re (2008), 236 Man.R.(2d) 3; 448 W.A.C. 3; 2008 MBCA 133, refd to. [para. 14].

Edgewater Casino Inc. et al., Re (2009), 265 B.C.A.C. 274; 446 W.A.C. 274; 2009 BCCA 40, refd to. [para. 14].

Canadian Airlines Corp., Re (2000), 261 A.R. 120; 225 W.A.C. 120; 80 Alta. L.R.(3d) 213; 19 C.B.R.(4th) 33; 2000 ABCA 149, appld. [para. 14].

Stomp Pork Farm Ltd., Re (2008), 311 Sask.R. 186; 428 W.A.C. 186; 43 C.B.R.(5th) 42; 2008 SKCA 73, refd to. [para. 15].

Power Consolidated (China) Pulp Inc. v. British Columbia Resources Investment Corp. (1988), 19 C.P.C.(3d) 396 (B.C.C.A.), appld. [para. 16].

Towers Ltd. v. Quinton's Cleaners Ltd. et al. (2009), 245 Man.R.(2d) 70; 466 W.A.C. 70; 2009 MBCA 81, appld. [para. 25].

Elsom v. Elsom, [1989] 1 S.C.R. 1367; 96 N.R. 165; 37 B.C.L.R.(2d) 145, refd to. [para. 26].

Stelco Inc. et al., Re (2005), 196 O.A.C. 142; 9 C.B.R.(5th) 135 (C.A.), refd to. [para. 35].

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. 38].

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. 38].

Stomp Pork Farm Ltd., Re (2008), 311 Sask.R. 186; 428 W.A.C. 186; 2008 SKCA 73, refd to. [para. 39].

Statutes Noticed:

Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, sect. 13 [para. 13].

Counsel:

R.A. McFadyen, for Paccar Financial Services Ltd.;

H.G. Chaiton, for Heller Financial Canada Holding Co. and GE Canada Leasing Services Co.;

D.G. Ward, Q.C., for Business Development Bank of Canada;

D.R.M. Jackson, for Ernst & Young;

K.A. McCandless, on a watching brief for RamWinn Diesel Inc.

This application for leave to appeal was heard on October 6, 2009, by Freedman, J.A., of the Manitoba Court of Appeal, in Chambers, who pronounced the following decision on November 10, 2009.