





CITATION: Nortel Networks Corporation (Re), 2011 ONCA 10



DATE: 20110107



DOCKET: M39469



COURT OF APPEAL FOR ONTARIO



Weiler J.A. (in chambers)



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 Nortel Networks Corporation, Nortel Networks Limited, Nortel
          Networks Global Corporation, Nortel Networks International Corporation and
          Nortel Networks Technology Corporation



Joel P. Rochon, Sakie Tambakos and John Archibald, for
          the moving party, the Dissenting LTD Beneficiaries



Derrick Tay and
          Jennifer Stam, for Nortel Networks Corporation et al.



Fred Myers and Gale
          Rubenstein, for Ernst & Young Inc., Monitor



William E. Pepall, for
          the Former Employees Representatives



Fiona Campbell and
          Peter Engelmann, for LTD Beneficiaries Representative



Janice Payne, Steven
          Levitt, Arthur O. Jacques and Thomas McRae, for Nortel Canadian Continuing
          Employees



Barry E. Wadsworth, for
          the CAW-Canada et al.



Heard in-writing



On a motion for leave to appeal
          from the order of the Honourable Justice Geoffrey P. Morawetz of the Superior
          Court of Justice, dated November 9, 2010, with reasons reported at 2010 ONSC
          5584.



ENDORSEMENT



[1]

The moving party has brought a motion in writing seeking leave to appeal
    the order of the motion judge sanctioning the monitors application for
    approval of the methodology for distributing funds in Nortels Health and
    Welfare Trust (HWT), scenario 2 of the Illustrative Allocation Scenarios
    (see: Schedule B of the motion judges decision).

[2]

The test for leave to appeal in proceedings ongoing under the
Companies
    Creditors Arrangement Act,
R.S.C. 1985, c. C-36, as amended, is that there
    be a serious and arguable issue of real and significant interest with reference
    to the following four 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; and

(d)
          whether the appeal will unduly hinder the progress of the action.

[3]

The moving party has not satisfied me in relation to factors a, c, and d
    that the test is met.

[4]

The interpretation of the specific termination clause in issue in the
    HWT, especially when viewed in the context of the unique factual matrix giving
    rise to the dispute, is not of significance to the practice.

[5]

Nor is the appeal
prima facie
meritorious.  The judge at first
    instance did not read words into the termination clause.  He correctly applied
    principles of construction of documents and did not reverse the onus of proof.
    His reasons for rejecting the proffered expert evidence do not disclose any
    error in principle.

[6]

In addition, granting leave to appeal would unduly hinder the progress
    of the action.  In the event that leave to appeal were granted and the appeal
    were to be allowed, the motion judges approval of the distribution in
    accordance with scenario 2 would be overturned. A number of outcomes relating
    to the allocation of the HWT corpus would then be possible. The bondholders and
    the unsecured creditors committee reserved their rights if the distribution
    was not made in accordance with scenario 2. The responding parties all
    requested an opportunity to make submissions respecting the moving partys preferred
    option, scenario 3, as that scenario was not before the motion judge and it was
    acknowledged that a further hearing would be required if scenario 2 was not
    approved. Any subsequent order for distribution of the corpus of the HWT could,
    in turn, become the subject of a further application for leave to appeal. The
    restructuring of Nortel would be unduly delayed.

[7]

For these reasons, the motion for leave to appeal is dismissed with
    costs to the Monitor, the only party requesting costs.  Subject to the Monitor
    and the moving party wishing to make further submissions in writing respecting
    the amount of costs, I would fix those costs in the amount of $2500.

K.M. Weiler
    J.A.


