



COURT OF APPEAL FOR ONTARIO

CITATION: Laurentian University of Sudbury (Re), 2021 ONCA
    199

DATE: 20210331

DOCKET: M52287

Hoy, Pepall and Zarnett JJ.A.

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 Laurentian
    University of Sudbury

Murray Gold and James Harnum, for the moving party the Ontario
    Confederation of University Faculty Associations

Susan Philpott and Charles Sinclair, for the moving
    party the Laurentian University Faculty Association

Miriam Martin, for the moving party the Canadian Union
    of Public Employees

D.J. Miller, Scott McGrath and Derek Harland, for the
    responding party Laurentian University of Sudbury

Ashley Taylor, Elizabeth Pillon and Zev Smith,
    for the responding party Ernst & Young Inc., acting as the Monitor

Heard: in writing

Motion for leave to appeal from the order of Chief Justice
    Geoffrey B. Morawetz of the Superior Court of Justice, dated February 26, 2021.

REASONS FOR DECISION

[1]

Laurentian University of Sudbury (Laurentian)
    is a publicly funded, bilingual and tricultural post-secondary institution,
    serving domestic and international undergraduate and graduate students. Due to
    recurring operational deficits, it has encountered a liquidity crisis and is
    insolvent.

[2]

Laurentian sought and obtained protection under
    the
Companies Creditors Arrangement Act
,
    R.S.C. 1985, c. C.36 (CCAA), to permit it to restructure, financially and
    operationally, in order to emerge as a sustainable university for the benefit
    of all stakeholders.
Among the stated reasons for Laurentians CCAA application
    was what it described as unsustainable academic costs, which Laurentian attributes
    in part to the terms of its collective agreement with its faculty members.

[3]

Two unions representing Laurentian employees - the Laurentian
    University Faculty Association (LUFA) and the Canadian Union of Public
    Employees (CUPE) -  and the Ontario Confederation of University Faculty
    Associations (OCUFA), an umbrella organization representing faculty
    associations, seek leave to appeal the decision of the CCAA judge, dated
    February 26, 2021, which continues a sealing order over two documents that Laurentian
    filed on its application for CCAA protection.

[4]

Having reviewed the written submissions of the parties and the
    sealed documents, we refuse leave for the reasons that follow.

Background

[5]

On  February 1, 2021, the CCAA judge made an order (the  Initial
    Order),  granting Laurentian initial relief under the CCAA.

[6]

Four days later, on February 5, 2021, the CCAA judge made an
    order appointing Dunphy J. as mediator to conduct a confidential mediation
    among Laurentians key stakeholders. The mediation is intended to address
    various issues concerning Laurentians restructuring, including a new
    collective agreement with LUFA, which represents 612 Laurentian faculty,
    accounting for 60% of the universitys payroll. LUFA supported the appointment
    of the mediator.

[7]

The Initial Order contained a sealing provision.
    At the comeback hearing, there was opposition to it. The CCAA judge continued the
    sealing provision in the Amended and Restated Order, dated February 11, 2021,
    on an interim basis, pending a supplementary endorsement.

[8]

The sealing provision, which was identical in both orders, covers
    two exhibits (Exhibits EEE and FFF) to the
affidavit by
    Dr. Robert
Haché,
which was filed in support of Laurentians request for the Initial Order. Dr.
    Hach
é is the President, Vice-Chancellor
    and CEO of Laurentian.

[9]

The sealing provision states that
the Exhibits
    are herby sealed pending further order of the Court, and shall not form part
    of the public record. Both the Initial Order and the Amended and Restated
    Order provide that any interested party may apply on seven days notice to vary
    or amend the order.

[10]

The sealed Exhibits consist of two letters. Exhibit
    EEE is a letter from the Ministry of Colleges and Universities (Ministry) to
    Laurentian, dated January 21, 2021. Exhibit FFF is a letter from Laurentian
    to the Ministry, dated January 25, 2021. Laurentian has described the letters
    as containing information with respect to [Laurentian] and certain of its
    stakeholders, including various rights or positions that stakeholders or
    [Laurentian] may take either inside or outside of these CCAA proceedings, the
    disclosure of which could jeopardize [Laurentians] efforts to restructure.

[11]

None of the moving parties sought to
    cross-examine Dr. Hach
é
on his affidavit or the communications between Laurentian and the
    Ministry.

[12]

The CCAA judge released his supplementary endorsement on February
    26, 2021, continuing the sealing provision. The effect of the sealing provision
    is that both the broader public and the parties to the CCAA proceeding are
    prevented from accessing the Exhibits.

[13]

The CCAA judge held that the sealing provision was authorized
    under s. 137(2) of the
Courts of Justice Act
, R.S.O. 1990, c. C.43,
    and by the application of the principles in
Sierra Club of Canada v. Canada
    (Minister of Finance)
, 2002 SCC 41, [2002] 2 S.C.R. 522. According to
Sierra
    Club
, at para. 53, a confidentiality or sealing order should only be
    granted when:

(a) such an order is necessary in order
    to prevent a serious risk to an important interest, including a commercial
    interest, in the context of litigation because reasonably alternative measures
    will not prevent the risk; and

(b)

the
    salutary effects of the confidentiality order, including the effects on the
    right of civil litigants to a fair trial, outweigh its deleterious effects,
    including the effects on the right to free expression, which in this context
    includes the public interest in open and accessible court proceedings.

[14]

The CCAA judge summarized the evidence in Dr.
    Hach
é
s affidavit
    and noted that he had reviewed the Exhibits in detail. He indicated that the
    evidence, as contained in Dr. Hach
é
s affidavit, outlines that there has been continuous communication
    between Laurentian and the Ministry with respect to Laurentians financial
    crisis, and that the government is well aware that a real-time solution must be
    found if Laurentian is to survive. He noted that the role, if any, that the
    Ministry will play is at this moment uncertain.

[15]

Considering the first branch of the
Sierra
    Club

test, he concluded that disclosure of the Exhibits,
    
at this time
, could be
    detrimental to any potential restructuring of [Laurentian] (emphasis added).
    Accordingly, the risk in disclosing the Exhibits is real and substantial and
    poses a serious risk to the future viability of [Laurentian]. He also noted
    that it is speculative to conclude that the Exhibits contain information that
    is not helpful to [Laurentians] position.

[16]

He found that the commercial interest was that
    of the entire Laurentian community, including the faculty, students, employees,
    third-party suppliers and the City of Greater Sudbury and the surrounding area;
    that it is of paramount importance to these groups that all efforts to
    restructure Laurentian be explored; and that it is necessary to maintain the
    confidentiality of the Exhibits in order to do so. He reiterated that [t]he
    disclosure of the Exhibits,
at this time,
could undermine the restructuring efforts being undertaken by
    [Laurentian] (emphasis added).

[17]

He was not satisfied that there were any
    reasonable alternatives to a sealing order over the Exhibits. Stakeholders were
    involved in the mediation and the negotiations could or could shortly be at a
    sensitive stage. It would not be appropriate to implement any alternative to a
    confidentiality order. To do so could negatively impact the mediation efforts.

[18]

Turning to the second branch of the
Sierra
    Club

test, the CCAA judge was also satisfied, based on
    the evidence, that the salutary effects of the sealing provision outweighed its
    deleterious effects, including the public interest in accessing the Exhibits.

Leave Test

[19]

Section 13 of the CCAA provides that any person
    dissatisfied with an order or a decision made under the CCAA may appeal from
    the order or decision with leave.
Leave to appeal in CCAA proceedings is
    to be granted sparingly
and only where there are serious and
    arguable grounds that are of real and significant interest to the parties.
This cautious approach is a function of several factors.

[20]

First, a high degree of deference is owed to discretionary
    decisions made by judges supervising CCAA proceedings, who  are steeped in the
    intricacies of the
CCAA
proceedings they oversee.  Appellate
    intervention is justified only where the supervising judge erred in principle
    or exercised their discretion unreasonably:
9354-9186 Qu
é
bec inc. v. Callidus Capital Corp.
, 2020
    SCC 10, 78 C.B.R. (6th) 1, at paras. 53 to 54.

[21]

Second, CCAA proceedings are dynamic. It is often inappropriate
    to consider an exercise of discretion by the supervising judge in isolation of
    other exercises of discretion by the judge in endeavouring to balance the
    various interests:
Edgewater Casino Inc. (Re)
, 2009 BCCA 40, 51
    C.B.R. (5th) 1, at para 20.

[22]

Third, CCAA restructurings can be time sensitive. The existence
    of, and delay involved in, an appeal can be counterproductive to a successful restructuring.

[23]

In addressing whether leave should be granted,
    the court will consider four factors, specifically whether:

(a)

the
    proposed appeal is
prima facie
meritorious or frivolous;

(b)

the
    points on the proposed appeal are of significance to the practice;

(c)

the
    points on the proposed appeal are of significance to the action; and

(d)

whether the proposed appeal will unduly hinder the progress of
    the action.

See:
Nortel Networks Corp.
    (Re)
, 2016 ONCA 332, 130 O.R. (3d) 481, at para. 34.

Leave is Not Warranted

[24]

As we will explain, we refuse to grant leave
    because the proposed appeal is not
prima facie
meritorious, granting leave would unduly hinder the progress of the action, and
    the proposed appeal is not of significance to the action. This is not an
    appropriate case for this court to explore issues of significance to the
    practice relating to the granting of sealing orders in the CCAA context.

Leave Not
Prima Facie
Meritorious

[25]

The moving parties raise three questions for determination on
    their proposed appeal, which we paraphrase as follows:

1. Did the CCAA judge err in focussing
    solely on Laurentians assertion of an important commercial interest without
    balancing the various competing interests applicable to a sealing order?

2. Did the CCAA judge err in granting
    the sealing provision without a sufficient evidentiary foundation?

3. Did the CCAA judge err in concluding
    that the sealing provision was justified as a result of speculative concerns
    about the impact that disclosure of the Exhibits that were sealed would have on
    the CCAA restructuring process?

[26]

A significant plank of the moving parties argument is that the
    sealing provision denies access to the sealed documents to parties to the CCAA
    process on the ostensible ground that the documents might have an impact on the
    positions those parties choose to take vis-
à
-vis the
    restructuring. They argue that the importance of the documents to the
    formulation of their positions is the exact reason why they should have access
    to the documents, not a justification for denying access to them.

[27]

We note that one of the moving parties, OCUFA, is not a creditor
    of Laurentian and is apparently not participating in the court-ordered mediation,
    the aim of which is a consensual restructuring. It is not clear in what sense
    OCUFA is a party to the CCAA proceeding or is in any different position than
    any other member of the public who may be interested in the court-filed
    materials. Yet the moving parties do not differentiate, in their proposed
    appeal questions or in the relief they propose to seek, between the
    entitlements of OCUFA to obtain the documents and those of the other moving
    parties. In other words, although reference is made to the denial of access to
    litigants, the underlying theory of the moving parties actually starts and
    stops with the proposition that there should be no sealing order at all.

[28]

We are not persuaded that the proposed appeal, challenging what
    is a discretionary order, is
prima facie
meritorious.

[29]

The CCAA judge set out the
Sierra
    Club
test in his reasons. Contrary to the submissions of
    the moving parties, he was well aware that
Sierra Club

required him to balance the deleterious effects of the sealing order.

[30]

In earlier reasons, the CCAA judge noted that if
    the restructuring is to be successful, it will have to be largely completed by
    the end of April 2021. The timeline is exceptionally short. In exercising his
    discretion, the CCAA judge concluded that the risk to the potential
    restructuring of Laurentian within this extremely tight timeframe if the
    Exhibits were disclosed outweighed other relevant interests.

[31]

The moving parties were (and are) concerned that
    they understand the Ontario governments position in relation to the
    restructuring, yet they did not seek to cross-examine Dr. Hach
é
. The CCAA judge, who
    reviewed the Exhibits, strove to address that concern, carefully signaling that
    the role, if any, that the Ministry will play is at this moment uncertain. Alive
    to concerns about fairness, he also signaled to the parties that it would be
    speculative to conclude that the Exhibits contain information that is not
    helpful to [Laurentians] position.

[32]

The moving parties have expressed particular concern that the
    sealing order creates an informational imbalance that may hurt them in the
    mediation process.
Nothing before us suggests that the moving
    parties who are participating in the court-ordered mediation (which appears to
    be only LUFA) have been hampered by any informational imbalance. The judicial
    mediator, who was appointed by the CCAA judge, is a bulwark against unfair
    treatment in the mediation. Should the judicial mediator have concerns that the
    moving parties have been hampered in the mediation by an informational
    imbalance or a perceived informational imbalance, it is open to him to raise them
    with the CCAA judge within the parameters of the February 5, 2021 order
    appointing the mediator.

[33]

Nor do we see anything in the sealing provision that would
    prevent a party from making a request to the CCAA judge, at the appropriate
    time, for relief on appropriate terms. As noted, the sealing provision is
    expressly subject to further order of the Court. The CCAA judge in his
    reasons of February 26 said only that an alternative to the sealing provision
    was not appropriate at this time.

[34]

In seeking leave, the moving parties have raised
    questions about how s. 2(d) of the
Charter of Rights and Freedoms
comes into play, as one of the purposes of the mediation is to
    conclude a new collective agreement with LUFA. But they do not dispute
    Laurentians submission that this issue was not argued below. It is difficult
    to fault the CCAA judge for not weighing a competing interest that was not asserted
    before him.

[35]

The moving parties also say that the CCAA judge
    failed to advert to the impact his ruling would have on freedom of expression. We
    are satisfied he did take that factor into account, as he mentions it in
    setting out the test and later says that the deleterious effects include the
    public interest in accessing the Exhibits.

[36]

The second and third questions raised by the
    moving parties ask the court to revisit an issue raised before the CCAA judge. He
    described the essence of the submissions made to him by those opposing the
    sealing order as there being no evidence that the sealing order was necessary
    to protect a valid commercial interest.

[37]

The CCAA judge was satisfied that there was a
    sufficient evidentiary basis. He based his conclusion that disclosing the
    Exhibits posed a serious risk to the restructuring on his review of the Exhibits
    and Dr.
Haché
s
    evidence. The moving parties are correct that Dr.
Haché

did not opine in his
    affidavit that disclosure of the Exhibits posed a serious risk to the viability
    of the restructuring. But Dr.
Haché
s evidence describes something of the dynamics at play and is clear
    as to Laurentians dire position and the timeframe within which the
    restructuring must be completed, if it is to be successful. It provided the
    foundation on which the Monitor, an officer of the court, supported Laurentians
    position that disclosure posed a serious risk, and the CCAA  judge, who has
    extensive experience in CCAA restructurings, concluded that disclosure posed a
    serious risk. The CCAA judge exercised his judgment, based on an evidentiary
    record.

[38]

The fact the proposed appeal is not
prima
    facie
meritorious weighs significantly against granting
    leave.

Appeal Would Hinder Progress of the Action

[39]

As we have said, this restructuring is on an exceptionally short
    timeline. We are told that the mediation is ongoing, with sessions occurring
    daily. There is urgency to being able to reach a successful restructuring by
    the end of April, in light of Laurentians financial position and the need for
    certainty regarding the next academic year. There is too great a risk that an
    appeal would be a distraction from restructuring efforts and thus would unduly
    hinder the progress of the action, which also weighs significantly against
    granting leave.

No Significance to the Action

[40]

Given the involvement of a court-appointed mediator and that it
    is open to the CCAA judge to revisit the sealing provision and possibly revoke
    it or limit its impact by allowing the parties to the CCAA proceeding to access
    the sealed documents, the significance of the proposed appeal to the action is
    insufficient to justify leave.

Significance to the Practice

[41]

The
facts of this case highlight some
    novel and interesting questions about the application of the
Sierra Club
test in the CCAA context.
These include questions about
    granting sealing orders over information filed in support of the application
    for protection under the CCAA, the granting of sealing orders where interests
    under s. 2(d) of the
Charter
are arguably at
    play, and about the application of sealing orders  to parties and stakeholders
    involved in the restructuring efforts. However, given our view of the merits of
    the proposed appeal and the other factors, this is not the appropriate case in
    which to explore these issues.

Disposition

[42]

Leave to appeal is refused. In the circumstances, there shall be
    no order as to costs.

Alexandra Hoy J.A.

S.E. Pepall J.A.

B. Zarnett J.A.


