



COURT OF APPEAL FOR ONTARIO

CITATION: Romspen Investment Corporation v. Courtice Auto
    Wreckers Limited, 2017 ONCA 301

DATE: 20170413

DOCKET: C62103

Doherty, MacPherson and Lauwers JJ.A.

In the Matter of section 243(1) of
    the
Bankruptcy and Insolvency Act
, R.S.C. 1985, c. B-3, as amended, and section
    101 of the
Courts of Justice Act
, R.S.O. 1990 c. C.43, as amended, and section
    68 of the
Construction Lien Act
, R.S.O. 1990, C.30, as amended

BETWEEN

Romspen Investment Corporation

Applicant

and

Courtice Auto Wreckers Limited, Northwood
    Recycling & Energy Inc., 800619 Ontario Limited, Power Grow Systems Inc.,
    Courtice Energy Corp., Les Rebuts De Pates et Papiers De LOutaouais Ltee.,Les
    Amenagements Guirard Inc., Courtice Industries Inc., 2254066 Ontario Inc., and
    Lakes Terminals & Warehousing Ltd.

Respondents

Mark Zigler and James Harnum, for the appellant
    International Union of Operating Engineers, Local 793

Lisa S. Corne and David P. Preger, for the respondent Rosen
    Goldberg Inc., in its capacity as court-appointed Receiver

Heard: December 6, 2016

On appeal from the order of Justice Herman J.
    Wilton-Siegel of the Superior Court of Justice, dated April 13, 2016, with
    reasons reported at 2016 ONSC 1808, 36 C.B.R. (6th) 141.

MacPherson J.A.:

A.

introduction

[1]

The appellant International Union of Operating Engineers, Local 793 (the
    union) appeals from the decision of Wilton-Siegel J. (the motion judge) of
    the Superior Court of Justice (Commercial List). The motion judge dismissed the
    unions motion seeking leave to proceed with matters relating to certification
    and unfair labour practices before the Ontario Labour Relations Board (the
    OLRB). The issue on the appeal is whether the motion judge erred in so doing.

B.

facts

(1)

The parties and events

[2]

On the application of Romspen Investment Corporation as secured
    creditor, and pursuant to an order of Penny J. of the Superior Court of Justice
    on October 19, 2015, Rosen Goldberg Inc. (the Receiver) was appointed Receiver
    of several corporations (together, the Ambrose Group). One of those
    corporations is Courtice Auto Wreckers Limited (the employer). Paragraphs 7
    and 8 of the receivership order provide that no proceeding can be commenced or
    continued in any court or tribunal against the Receiver or the debtors except
    with the consent of the Receiver or with leave of the court.

[3]

On December 9, 2015, the union applied to the OLRB for certification,
    seeking to represent a bargaining unit comprised of six employees at the
    employers Harmony Road location in Oshawa (also known as Ontario Disposal).

[4]

The union asserts that two days later, on December 11, the Receiver
    dismissed four of the six employees in the proposed bargaining unit and, on
    December 14, hired new workers to perform duties substantially similar to those
    performed by the dismissed employees. The Receiver offers business reasons for
    the dismissals and denies hiring replacement workers.

[5]

On December 14, the OLRB stayed the unions certification application,
    holding that the stay imposed by the receivership order applied.

[6]

On December 18, the union filed an unfair labour practice (ULP)
    complaint with the OLRB, alleging that the Receiver dismissed the employees at
    least in part as a result of anti-union animus.

[7]

In light of the OLRBs decision on December 14, the union sought leave
    of the court to proceed with its certification application and ULP complaint at
    the OLRB.

(2)

The motion judges decision

[8]

The motion judge dismissed the unions motion in its entirety.

[9]

The motion judge framed the inquiry in this fashion:

[23]    The Unions motion raises two separate, but related,
    issues. The Union seeks an order lifting the stay of proceedings under
    paragraphs 8 and 9 of the Receivership Order to allow it to proceed with the
    Certification Application against the Debtor. In addition, as the ULP Complaint
    will also require an inquiry into the conduct of the Receiver, the Union seeks
    an order lifting the stay of proceedings under paragraph 7 of the Receivership
    Order, as well as an order granting leave to proceed against the Receiver under
    section 215 of the
BIA
, in respect of the ULP Complaint.

[10]

With respect to the first issue  the certification issue  the motion
    judge considered whether he should make an order validating the commencement of
    the certification application on a
nunc pro tunc
basis. He framed the
    issue in this fashion:

[
43
]    In considering the Unions request
    for an order lifting the stay of proceedings in respect of the Certification
    Application on a
nunc pro tunc
basis, the Court must first address
    whether such an order would have been granted if it had been sought prior to
    commencement of the Certification Application.

[11]

The motion judge concluded that the court would not have granted leave
    at the relevant time. He offered four reasons in support of this conclusion:

·

The effect of the certification application is to increase the
    rights of the members of the proposed bargaining unit relative to other
    creditors of the Ambrose Group. This would be contrary to the policy and
    purpose of the stay of proceedings, which effectively freezes the rights and
    remedies of all creditors of the debtor as of the date of the receivership order.

·

Recognition of the proposed bargaining unit could impact the sale
    of Ontario Disposal and the proceeds that can be realized therefrom. It is inequitable
    to require creditors to accept a potential diminution in the value of the
    assets in circumstances where employees assert rights not previously in
    existence while the rights and remedies of the remaining stakeholders are
    frozen.

·

The fact that there may be purchasers who are willing to take
    Ontario Disposal assets subject to the proposed bargaining unit does not
    support the case for lifting the stay. In such circumstances, the union will be
    able to pursue the certification application against the purchaser as soon as a
    sale is completed. Accordingly, the union is not prejudiced by the stay.

·

There is no certainty that the proposed bargaining unit would be
    meaningful after the completion of any sale of Ontario Disposal assets. There
    is no guarantee what form the sale of Ontario Disposal assets will take.

[12]

Turning to the question of whether leave should be granted to permit the
    union to proceed with its ULP complaint, the motion judge again provided a
    negative answer. The core of his reasoning on this issue was:

[57]    [U]nless the Certification Application was validly
    commenced, the Union cannot assert that the employees were terminated in
    response to such action. Therefore, unless the Certification Application was
    validly commenced, there can be no ULP Complaint. Given the determinations
    above that the Certification Application is null and void, and that there is no
    basis for an order lifting the stay in respect of the Certification Application
    on a
nunc pro tunc
basis, it follows that there is no basis for the
    ULP Complaint.

[13]

The union appeals from the motions judges order.

[14]

The Receiver moves to quash the appeal on the basis that the motion
    judges order does not fall within the meaning of s. 193(a) through (c) of the
Bankruptcy
    and Insolvency Act
, R.S.C. 1985, c. B-3 (the 
BIA
). Accordingly,
    the appeal cannot proceed without leave of a judge of this court. The union did
    not seek the required leave when it filed its notice of appeal.

[15]

The union resists the Receivers motion to quash. The union asserts that
    there is an automatic right of appeal under s. 193(a) and (c) for appeals
    involving future rights and property in excess of $10,000 and that its appeal
    implicates these categories.

[16]

In the alternative, if this court determines that s. 193(a) and (c) of the
BIA
do not support its direct appeal, the union makes a cross-motion
    seeking leave to appeal pursuant to s. 193(e) of the
BIA
.

C.

issues

Preliminary issues

(1)

Is the appeal as of right pursuant to ss. 193(a) or 193(c) of the
BIA
?

(2)      If the answer to (1) is No, should the union be           granted
    leave to appeal pursuant to s. 193(e) of       the
BIA
?

The appeal

(3)      Did the motion judge err by not granting the union           leave
    to continue its certification application at the   OLRB?

(4)      Did the motion judge err by not granting the union           leave
    to continue its ULP complaint at the     OLRB?

D.

ANALYSIS

Preliminary issues
[1]

(1)

Motion to quash

[17]

The union says that its appeal is as of right under either s. 193(a) or (c)
    of the
BIA
:

193. Unless otherwise expressly provided, an appeal
    lies to the Court of Appeal from any order or decision of a judge of the court
    in the following cases:

(a) if the point at issue involves future rights;



(c) if the property involved in
    the appeal exceeds in value ten thousand dollars;

(a)

BIA
s. 193(a)

[18]

The union asserts that in this case there are legal rights at issue that
    qualify as inchoate future rights. These future rights include the unions
    right to bargain collectively for its members (which only exists if the certification
    application is successful) and the employees right to be represented by a
    union of their choice in their dealings with their employer.

[19]

I do not accept this submission. The leading case dealing with the
    interpretation of s. 193(a) of the
BIA
is
Business Development
    Bank of Canada v. Pine Tree Resorts Inc.
, 2013 ONCA 282, 115 O.R. (3d) 617
    (
Pine Tree Resorts
), where Blair J.A. defined future rights, at
    para. 15:

Future rights are future legal rights, not procedural rights
    or commercial advantages or disadvantages that may accrue from the order
    challenged on appeal. They do not include rights that presently exist but that
    may be exercised in the future. [Citations omitted.]

[20]

In this proceeding, the right at issue before the motion judge was the
    unions existing right to apply for certification at a time when a stay is in
    place. Accordingly, it cannot reasonably be said that the unions right to
    apply for certification depended on a future event that had not yet occurred.

(b)

BIA
s. 193(c)

[21]

The union contends that the rights at issue in its ULP complaint exceed
    $10,000. In addition to reinstatement of the four terminated employees, the
    union will seek back pay and damages that will exceed $10,000.

[22]

I am not persuaded by this submission. The right of appeal without leave
    under s. 193(c) must be narrowly construed and limited to cases where the
    appeal directly involves property exceeding $10,000 in value:
Enroute
    Imports Inc. (Re)
, 2016 ONCA 247, 35 C.B.R. (6th) 1, at para. 5. In my
    view, the unions proposed appeal involves a procedural matter  can the union
    proceed at this time with its certification application and ULP complaint at the
    OLRB? The appeal does not involve directly any quantum of money.

(c)

Conclusion

[23]

The union cannot appeal as of right from the motion judges decision.
    The Receivers motion to quash the appeal is
prima facie
valid.

(2)

Cross-motion for leave to appeal

[24]

In order to avoid its appeal being quashed, the union brings a
    cross-motion seeking leave to appeal pursuant to s. 193(e) of the
BIA
:

193. Unless otherwise expressly provided, an appeal lies to the
    Court of Appeal from any order or decision of a judge of the court in the
    following cases:



(e) in any other case by leave of a judge of the           Court
    of Appeal.

[25]

The test for granting leave to appeal under this provision was set out
    by Blair J.A. in
Pine Tree Resorts
, at para. 29:

Beginning with the overriding proposition that the exercise of
    granting leave to appeal under s. 193(e) is discretionary and must be exercised
    in a flexible and contextual way, the following are the prevailing
    considerations in my view. The court will look to whether the proposed appeal,

a)

raises an issue
    that is of general importance to the practice in bankruptcy/insolvency matters
    or to the administration of justice as a whole, and is one that this Court
    should therefore consider and address;

b)

is
prima
    facie
meritorious, and

c)

would unduly
    hinder the progress of the bankruptcy/insolvency proceedings.

[26]

The central issue in this appeal is the relationship between, and
    intersection of, federal bankruptcy law and general provincial labour relations
    law. The factual context for the intersection of these laws in this case is the
    Receivers legitimate attempt to sell a large failing company and the important
    labour rights of some of the companys employees, including their right to seek
    to join a union and their right not to be fired unfairly. In my view, it is
    obvious that this issue is one of general importance to the practice in
    bankruptcy/insolvency matters and to the administration of justice generally.

[27]

The resolution of this appeal requires careful consideration of whether
    the motion judges decision is consistent with the leading case in this domain
    involving the intersection of the
BIA
and provincial labour law,
    namely, the Supreme Court of Canadas decision in
GMAC Commercial Credit
    Corporation  Canada v. T.C.T. Logistics Inc.
, 2006 SCC 35, [2006] 2 S.C.R. 123 (
GMAC
)
. I cannot say that the proposed appeal
    appears to be unmeritorious.

[28]

Finally, I am satisfied that this appeal will not unduly hinder the
    progress of these insolvency proceedings. The issues on appeal are narrow and
    the record is modest. Moreover, the Receiver did not move to quash the appeal
    until almost six months after the union filed its notice of appeal and three
    months after the hearing date was set. As a result, the Receivers motion to
    quash and the unions cross-motion for leave were argued as part of the appeal
    proper. It cannot be said that granting leave in these circumstances would
    unduly hinder the progress of these proceedings.

[29]

For these reasons, I would grant the union leave to appeal from the
    motion judges order.

The appeal

(3)

The certification application

[30]

In determining whether to lift a stay of proceedings imposed by a
    receivership order, a court should consider the totality of the circumstances
    and the relative prejudice to both sides:
Peoples Trust Co. v. Rose of
    Sharon (Ontario) Retirement Community
, 2012 ONSC 7319, 97 C.B.R. (5th) 303
    (S.C.), at para. 5. While not strictly applicable, a court may take guidance
    from the jurisprudence addressing the lifting of stays under s. 69.4 of the
BIA
:
    see
Peoples Trust Co.
, at para. 5 and Lloyd W. Houlden, Geoffrey B.
    Morawetz & Janis P. Sarra,
The 2016-2017 Annotated Bankruptcy and
    Insolvency Act
(Toronto: Carswell, 2016), at p. 1085. While the motion
    judge correctly identified these principles, in my view each of the four
    reasons he relied on to support his decision not to lift the stay presents
    problems. I will address those reasons in turn.

[31]

First, the motion judge reasoned that leave ought to be refused because
    the certification application would in effect increase the rights of the
    members of the proposed bargaining unit relative to other creditors of the
    Ambrose Group.

[32]

In my view, this reasoning rests on supposition. A successful
    certification application does not guarantee employees better wages; it simply
    allows employees to combine their bargaining power and rely on the unions
    assistance in negotiating their terms and conditions of employment. While it is
    true that upon certification certain rights and obligations crystallize that
    would not otherwise (e.g. the employers duty to recognize the union and
    bargain with it in good faith), certification does not have the effect of
    automatically increasing the rights employees have
as creditors
, thereby prejudicing
    other creditors. It is simply conjecture at this point to assume that the union
    will be successful in negotiating a more financially favourable contract for bargaining
    unit employees. Moreover, at this juncture, allowing the unions certification
    application to proceed merely entitles the union to a representation vote, not
    to certification.

[33]

The motion judge next reasoned that recognition of the proposed
    bargaining unit could negatively impact a sale of Ontario Disposal and that, in
    the circumstances, it would be inequitable to require creditors to accept such
    an outcome.

[34]

In my view, this line of reasoning is speculative.
While some purchasers may be dissuaded by recognition of the proposed
    bargaining unit, it may also be that a set collective agreement, with its
    clarity of terms, would be attractive to a prospective purchaser. The union, on
    behalf of its members, has an interest in the business being sold as a going
    concern and therefore has an incentive to act in a manner that would promote
    such an outcome.


[35]

More fundamentally, however, there is simply no concrete evidence
    that recognition of the proposed bargaining unit would negatively impact a
    sale. The Receivers statement
in its first report that it has
    serious concerns that certification could negatively impact a sale amounts to
    little more than self-serving speculation. Without having concrete evidence
    before him to ground the Receivers apparent concern, the motion judge erred in
    denying the union leave to proceed with its certification application on this
    basis. Further, even if there was some evidence to substantiate the Receivers
    concern, the union has indicated its willingness to delay bargaining a
    collective agreement for up to a year should the Receiver produce such evidence.

[36]

The motion judge also reasoned that the union will be able to pursue its
    certification application against the purchaser as soon as a sale is completed
    and that, therefore, the union faces no prejudice as a result of the
    continuation of the stay.

[37]

I am not persuaded by this point. Interfering with employees ability to
    exercise their statutory labour rights, particularly in circumstances where
    employees were allegedly terminated for exercising those rights, causes clear
    prejudice. The right to form and join a union of ones choosing is a
    fundamental right under the
Labour Relations Act
, 1995, S.O. 1995, c.
    1, Sched. A (the 
LRA
). While flexibility is required to address the
    challenges in any particular insolvency proceeding, courts should not unduly
    inoculate insolvency proceedings against the legitimate exercise of labour
    rights simply because the assertion of those rights represents an inconvenience
    to the receivership process:
GMAC
, at paras. 50-51.

[38]

Further, maintaining the stay and delaying the representation vote risks
    undermining the legitimacy of the vote. As the Board itself noted in this case,
    the scheme of the [
LRA
] is premised on quick votes. Quick votes at
    once minimize the possibility of undue influence and maximize the validity of
    the vote as a reflection of employee wishes. Delaying the vote prejudices these
    important objectives.

[39]

Moreover, at present, there is nothing on the record that suggests that
    a suspension of these employees labour rights will be a short-lived, stop-gap
    measure. On the motion, the Receiver offered no specifics of a planned sale or
    prospective purchaser. As of the appeal hearing, the Receiver had been running
    the business for over a year with no definite end in sight. In my view, it is
    unreasonable to characterize as entirely non-prejudicial what amounts to an
    indefinite suspension of the unions and employees ability to exercise labour
    rights they otherwise enjoy at law, especially where, as here, employees have
    allegedly faced retribution for so doing.

[40]

Finally, the motion judge reasoned that leave ought to be refused given that
    there is no certainty that the proposed bargaining unit would be meaningful
    after the completion of any sale of Ontario Disposal assets.

[41]

Again, this is speculative. Whatever the results of the sale, the
    employees have presently existing rights, established under the
LRA
,
    to organize themselves and select a collective bargaining agent. The fact that
    a court may speculate as to the ultimate efficacy of their decision to organize
    in this manner does not diminish the prejudice suffered now by preventing
    employees from exercising those rights.

[42]

In light of the above, I am of the view that the motion judge erred in
    refusing to lift the stay. It therefore falls to this court to determine afresh
    whether the union ought to be granted leave to proceed with its certification
    application.

[43]

I turn, then, to consider the relative prejudice to both sides.

[44]

On the one hand, the Receiver can point to little material prejudice
    should the stay be lifted. For the reasons discussed above, I do not accept
    that a sale will be prevented or that sale proceeds will be diminished should the
    union be granted leave to proceed with its certification application. And while
    I am willing to accept that certification proceedings inevitably involve some
    legal costs, I do not accept that these costs would be significant in this
    case. The unions certification application is an especially simple one. There
    are six employees in the proposed bargaining unit. The union applied for a unit
    at a specific street address (rather than a municipal-wide unit) and it appears
    from the record that there is only one classification of employees on-site. As
    the unions in-house counsel, a labour lawyer who has been involved in many
    certification applications, swore in her affidavit in support of the unions
    motion, this [certification application] is as straightforward as any I have
    seen. It is also important to recognize that the employer is only one of a
    number of corporations within the Ambrose Group and that the
the
    Ontario Disposal location, for which the union seeks certification, represents
    only one of the employers two operations (the other operation has been
    unionized for some time). In these circumstances, I am simply not persuaded
    that allowing the unions certification application to proceed would cause any
    more than
de minimis
prejudice to Ambrose
    Group creditors.

[45]

On the other hand, a lot is at stake for the union and the employees.
    Maintaining the stay prejudices the important objectives quick votes are
    designed to serve, unduly interferes with employees ability to exercise their
    statutory labour rights, and, particularly where employees have allegedly been
    dismissed for exercising those rights, undermines employee confidence in the
    efficacy of core labour rights and protections.

[46]

Labour rights do not end when insolvency proceedings begin. Indeed, s.
    72(1) of the
BIA
provides:

72 (1)
The provisions
    of this Act shall not be deemed to abrogate or supersede the substantive
    provisions of any other law or statute relating to property and civil rights
    that are not in conflict with this Act
, and the trustee is
    entitled to avail himself of all rights and remedies provided by that law or
    statute as supplementary to and in addition to the rights and remedies provided
    by this Act. [Emphasis added.]

[47]

As the Supreme Court of Canada explained in
GMAC
, at para. 47:
    [t]he effect of s. 72(1) is that the
Bankruptcy and Insolvency Act
is
    not intended to extinguish legally protected rights unless those rights are in
    conflict with the
Bankruptcy and Insolvency Act
. There is no such
    conflict here.

[48]

In light of the above, on weighing the relative prejudice to both
    sides, I am satisfied that there are sound reasons in this case to lift the
    stay and allow the union to proceed with its certification application.

(4)

The unfair labour practice complaint

[49]

The threshold for granting leave to proceed against a receiver is not a
    high one and is designed to protect a receiver against only frivolous or
    vexatious actions or actions that have no basis in fact:
GMAC
, at
    para. 55. Given the timing of the dismissals, the
prima facie
merit of
    the ULP complaint is, in my view, obvious.

[50]

The motion judge, however, reasoned that, given that the commencement of
    the certification application forms the core factual basis for the ULP
    complaint, [i]n this particular case, there can be no ULP complaint independent
    of the prior commencement of the certification application.

[51]

The union argues that the motion judge erred in holding that the union
    was not entitled to bring a ULP complaint without a valid prior commencement of
    a certification application.

[52]

I do not accept this argument. On my reading of his reasons, the motion
    judge was not holding that, as a matter of law, ULP complaints cannot exist
    independently of certification applications. He was simply of the opinion that,
    in the particular circumstances of this case, given its factual basis, the ULP complaint
    could not stand independently of the certification application.

[53]

Even on this more narrow interpretation, however, the motion judges
    reasoning is flawed. The fact that the certification application may be an
    irregularity (unless and until leave is granted
nunc pro tunc
) does
    not erase the
fact
that the
    application was filed. I see no sound basis upon which to preclude the union
    from relying on this fact to establish how and when the employer became aware
    of the unions organizing campaign. It would not only be unfair but also a
    triumph of form over substance to prevent individuals who have lost their jobs
    from asserting basic protections otherwise available to them under law because
    of a technical defect in a legally distinct proceeding. In any event, I would
    hold that the certification application ought to proceed and, as such, so too should
    the ULP complaint.

E.

disposition

[54]

I would grant the appellant leave to appeal, allow the appeal, set aside
    the order of the motion judge, and grant the appellant leave to proceed with its
    certification application and unfair labour practice complaint before the
    Ontario Labour Relations Board.

[55]

The appellant is entitled to its costs of the appeal which I would fix
    at $12,000, inclusive of disbursements and HST.

J.C.
    MacPherson J.A.

I
    agree. Doherty J.A.




Lauwers J.A.: (Dissenting)

[56]

Like my colleague, and for the reasons he gives, I would grant leave to
    appeal from the bankruptcy judges order. The issues raised are undoubtedly
    important to the practice of insolvency law.

[57]

However, I would dismiss the appeal of the bankruptcy judges refusal to
    lift the stay with respect to both the union certification process, and the
    unfair labour practice complaint.

[58]

The bankruptcy judge is owed deference regarding the exercise of his
    discretion, and I am not persuaded that he erred in law or in principle, as I
    will explain.

A.
The
    Organization of These reasons

[59]

I begin with an overview of the insolvency system, make several
    preliminary observations, and then turn to describe the governing principles
    for this appeal. After setting out the bankruptcy judges reasoning, I apply
    the governing principles to the facts as he found them, taking into account my
    colleagues reasoning.

B.
An Overview of
    the Insolvency Regime

[60]

The insolvency regime in Canada is intricate and the way it addresses
    the interests of debtors, creditors and others is carefully calibrated. The
    regime includes the
Bankruptcy and Insolvency Act
, R.S.C. 1985, c. B-3
    (
BIA
), the
Companies Creditors Arrangement Act
, R.S.C.
    1985, c. C-36 (
CCAA
), and the
Courts of Justice Act
, R.S.O.
    1990, c. C.43 (
CJA
). See generally the decision of Deschamps J. in
Century
    Services Inc. v. A.G. (Canada)
, 2010 SCC 60, [2010] 3. S.C.R. 379, at
    paras.12-24.

C.
Preliminary
    Observations

[61]

There is no doubt that 
creditors include unionized
    employees,
as Abella J. states in
GMAC Commercial Credit
    Corporation  Canada v. T.C.T. Logistics Inc.
, 2006 SCC 35, [2006] 2
    S.C.R. 123, at para. 2.
Indeed, creditors include all of the
    debtors employees, unionized or not.

[62]

The intersection of insolvency law and labour relations law has occupied
    much judicial time in recent years. Judges have struggled to find the right
    balance between the interests of employees on the one hand, including the
    importance of maintaining an effective mechanism for rescuing distressed
    companies if possible, and, on the other hand, for efficiently and fairly
    liquidating them in the interests of all the creditors including the employees,
    if it is not possible.

[63]

Some instructive contextual comments are made in the paper delivered in
    a 2017 National Judicial Institute program entitled From Deterrence to
    Detente: Overview of the Intersection of Labour Law and the CCAA, authored by
    Massimo Starnino, Debra McKenna, Lauren Pearce and Glynnis Hawe, members of the
    Paliare Roland Rosenberg Rothstein LLP law firm. The authors begin the
    discussion with this observation, at p. 2:

Experience tells us that in practice the singular focus of
    creditors is to use leverage in the CCAA process, and sometimes to manufacture
    leverage through the CCAA process, to extract the biggest piece of an economic
    pie that, no matter how expanded, is inevitably perceived to be inadequate.

[64]

The authors note that increasingly the battle for value  has often
    been between lenders  on the one side, and organized labour on the other (at
    p. 2). The complaint is made, at p. 3, that the court is inclined to accept
    arguments that the rights and obligations created by provincial labour
    legislation are in conflict with the restructuring objective of the CCAA and
    therefore subordinate to the broad discretionary authority afforded to the
    court. As union counsel did in this case, they urge bankruptcy and CCAA judges
    to take into account how their jurisdiction might be affected by s. 2(d) of the
Canadian Charter of Rights and Freedoms
.

[65]

The effort in this case to certify the union after the receivers
    appointment represents a new front in the battle the authors describe between
    employees and the other creditors of an insolvent business, and requires
    careful scrutiny. Even if the effect is limited in this particular case because
    some of the other units in the debtors business are unionized already, my
    colleagues decision would be a critical precedent of broader application. It
    is necessary to step back and consider the larger context.

D.
The Governing
    Principles

[66]

There are several avenues into the insolvency regime. An insolvent
    persons creditor can apply for a bankruptcy order (
BIA
, s. 43), or
    the insolvent person can make an assignment (
BIA
, s. 49). An insolvent
    person can make a proposal (
BIA
, s. 50) and if it fails, the result is
    bankruptcy (
BIA
, s. 57). As in this case, a secured creditor can apply
    to the court for the appointment of a receiver (
BIA
, s. 243). A
    qualified debtor corporation can make an application under the
CCAA
,
    which aims at restoring the health of the debtor company, if possible, as a
    going concern. However, if the company cannot be restored as a going concern,
    then the
CCAA
or the
BIA
can be used to liquidate the company
    and, once ordered into bankruptcy, the priorities of the creditors are
    determined under the
BIA
: see
Grant Forest Products Inc. v. The
    Toronto-Dominion Bank
, 2015 ONCA 570, 387 D.L.R. (4th) 426.

[67]

While each of these avenues into the insolvency regime has unique
    features, they also have several interlocking common elements that reflect
    important underlying principles.

[68]

First, the root principle is that creditors in the same class, including
    employees, are to be treated equally in relation to the distribution of the
    remaining assets of the estate. This is also known as the
pari passu
principle. It is reflected in s. 141 of the
BIA
and elsewhere: see
Vachon
    v. Canada Employment and Immigration Commission
, [1985] 2 S.C.R. 417;
R.
    v. Fitzgibbon
, [1990] 1 S.C.R. 1005, [1990] S.C.J. No. 45, at para. 22
    (QL).

[69]

Second, the date on which the respective rights of creditors are to be
    determined is the effective date of the bankruptcy, or the date of the
    appointment of the receiver, or the making of a
CCAA
order. As an
    incident of the
pari passu
principle, after the effective date no
    creditor is to be permitted to advance its position over that of similarly
    situated creditors.

[70]

Third, the administration of the debtors assets is to be orderly.
    Central to the courts insolvency work is the ability to impose order on what
    would otherwise be a fractious and expensive free-for-all among the creditors
    intent on taking as much of the debtors assets as soon as they could through
    self-help or litigation. To this end, the trustee or receiver is responsible
    for establishing a summary procedure for determining the validity and the value
    of the creditors interests. This is to avoid exhausting a debtors assets in
    defending a multiplicity of lawsuits, and to avoid distracting the trustee or
    receiver from the orderly administration of the estate. Hence, the single
    proceeding model for administrating claims expeditiously: see
Century
    Services
, at para. 22;
Alberta (Attorney General) v. Moloney
,
    2015 SCC 51, [2015] 3 S.C.R. 327, at paras. 33-34. In bankruptcy there is a
    public interest in the expeditious, efficient and economical clean-up of the
    aftermath of a financial collapse, as Binnie J. noted in
Sam Lévy &
    Associés Inc. v. Azco Mining Inc.
, 2001 SCC 92, [2001] 3 S.C.R. 978, at
    para. 27.

[71]

For example, in
Essar Steel Algoma Inc
.
(Re)
, 2016 ONSC
    1802, 35 C.B.R. (6th) 89, the
CCAA
judge approved an expedited
    grievance arbitration process that was substantively the same as, but
    procedurally different from, the grievance arbitration process in the
    collective agreement. He did this over the objection of the union, relying on
    several cases including
Nortel Networks Corp. (Re)
(2009), 55 C.B.R.
    (5th) 68 (Ont. S.C.) per Morawetz J.,
White Birch Paper Holding Companies
,
    2010 QCCS 2590, 65 C.B.R. (5th) 186,
AbitibiBowater Inc.

(Arrangement
    relatif à)
, 2010 QCCS 1064, per Gascon J., as he then was, and
Canwest
    Global Communications Corp. (Re)
, 2011 ONSC 2215, 75 C.B.R. (5th) 156 per
    Pepall J., as she then was, at paragraph 33. The union sought leave to appeal
    to this court in
Essar Steel
, which was rejected by Gillese J.A.:
Essar
    Steel Algoma Inc. (Re)
, 2016 ONCA 274, 36 C.B.R. (6th) 56. She considered
    the bankruptcy courts ability to expedite the grievance process to be
    wellsettled law (at para. 33). I return to this case below in discussing the
    lurking constitutional issues.

[72]

The imposition of a stay of proceedings against the debtor is the
    insolvency regimes primary tool for establishing order. The stay is intended
    to preserve the status quo; it is crucial to the orderly administration of the
    estate and ensures that a creditor will not benefit or improve his or her
    position at the expense of other creditors: F. Bennett,
Bennett on
    Bankruptcy
, 19th ed. (Toronto: LexisNexis Canada Inc., 2016), at p. 377.
    See also R. J. Wood,
Bankruptcy and Insolvency Law
(Toronto: Irwin
    Law, 2009), at p. 152; J. P. Sarra,
Rescue! The Companies Creditors
    Arrangement Act
, 2nd ed. (Toronto: Carswell, 2013), at p. 57.

[73]

A stay is imposed directly by ss. 69-69.3 of the
BIA
in defined
    circumstances, or by court order in conjunction with a receivership order under
    s. 243 of the
BIA
and s. 101 of the
CJA
, as in this case: see
    Wood, at p. 334. In
CCAA
proceedings, the stay is court-imposed under
    s. 11
et seq.
of the
CCAA
: see e.g.
Sproule v. Nortel
    Networks Corporation
, 2009 ONCA 833, 99 O.R. (3d) 708, leave to appeal
    refused, [2009] S.C.C.A. No. 531, at para. 16;
Nortel Networks Corp. (Re)
,
    at para. 47; Wood, at pp. 333-34; Sarra, at pp. 51-52.

[74]

Order is also ensured by the courts ongoing supervision of the
    insolvency. Receivers appointed by court order under s. 243 of the
BIA
,
    and monitors appointed under s. 11.7 of the
CCAA
, are also supervised
    by the court in accordance with the terms of the appointing order:
Ma (Re)
(2001),
    143 O.A.C. 52 (C.A.). Finally, order is ensured by the prospect of lawsuits for
    misconduct, with leave of the court, against the trustee specifically under s.
    37, and against the trustee or interim receiver under s. 215 of the
BIA
.

[75]

The fourth common element to each of the avenues into the insolvency
    regime is the existence of a process for managing exceptions. The court has
    discretion to lift the stay in circumstances where it is necessary. This is
    provided for in s. 69.4 and in s. 215 of the
BIA
. There is a
    difference in approach. Under s. 69.4 of the
BIA
, a person seeking
    leave need not prove a
prima facie
case, only that there are sound
    reasons, consistent with the scheme of the
BIA
to relieve against the
    automatic stay, whereas under s. 215 of the
BIA
the applicant must
    establish a
prima facie
case: Contrast
Ma
,

at paras.
    2-3, with
GMAC
, at para. 59.

[76]

With respect to receivers appointed by court order under the
BIA
,
    and monitors appointed under the
CCAA
, since the stay flows from the
    courts order, the court must be persuaded to lift the stay, and applies the
    same principles.

[77]

In discussing the appropriate analysis under s. 215 of the
BIA
,
    the Supreme Court noted in
GMAC
that the test involves a balancing of
    the protection of trustees and receivers from the distraction and delay
    inherent in frivolous or merely tactical suits, and the preservation to the
    maximum extent possible of the rights of creditors and others as against a
    trustee or receiver (at para. 61).

[78]

Whatever the applicable test, lifting the automatic stay is far from a
    routine matter, as this court noted in
Ma
, at para. 3. I point out
    that the insolvency regime does not contemplate that each creditor will proceed
    by separate litigation after getting leave of the court. Indeed, even if a creditor,
    suing with leave, succeeds in getting judgment, it is still caught by the stay
    in respect of recovery. It must be kept in mind that the lifting of a stay is
    exceptional, in view of the expectation that most creditors claims will be
    resolved through the summary procedure, and not through ongoing court or
    administrative law proceedings: see e.g.
Moloney
, at paras. 33-34;
    Bennett, at p. 378;
Sun Indalex Finance, LLC v. United
    Steelworkers
, 2013 SCC 6, [2013] 1 S.C.R. 271, at para. 71.

[79]

These governing principles have a role to play in the exercise of a
    bankruptcy judges discretion and in the proper disposition of this appeal.

E.
The
    Application Judges Reasons

[80]

Drawing on the principles set out above, the bankruptcy
    judge correctly sets the normative context in his decision, at para. 44:

A receiver is a court-appointed officer whose role ideally is
    to take possession of the property of a debtor, to put the business of the
    debtor on a viable financial basis with a view to maintaining it in the short
    term, and to sell the business on a basis which maximizes the proceeds of sale
    available to satisfy the liabilities of the debtor to its creditors. To this
    end, a receiver is typically granted extensive powers, including the power to
    terminate the employment of employees who the receiver determines are not
    reasonably necessary for the conduct of the business to be sold.
The stay of proceedings typically granted is designed to
    prevent particular creditors from improving their position relative to other
    creditors.
It is also intended to permit the receiver to concentrate on
    its principal functions, all without the time and expense of litigation outside
    of any court-ordered claims process that is required within the receivership
    proceedings.
In a broader sense, the stay therefore
    freezes the rights and remedies of creditors as they existed as of the date of
    the receivership order.
Any motion to lift a stay of proceedings should
    be assessed in relation to the extent that it furthers the purposes of
    receivership proceedings. [Emphasis added.]

[81]

In explaining why he refused leave to the union to commence the
    certification application before the Ontario Labour Relations Board, the bankruptcy
    judge states, at para. 46, that the debtors creditors must not be able to
    improve their relative positions, and reiterates that the date for determining
    the relative positions of the creditors is the date the receiver is appointed:

First,
the effect of the Certification
    Application is to increase the rights of the members of the proposed bargaining
    unit relative to other creditors of the Debtor.
I accept that, if the
    Certification Application were granted, the Union has agreed, subject to its discretion,
    to postpone negotiation of a collective agreement under certain conditions for
    a certain period of time.
Nevertheless, the effect of the
    Certification Application is to create rights in favour of employees that did
    not exist at the date of the Receivership Order.
As the proposed
    bargaining unit had not been certified by the OLRB, the employees of the
    Ontario Disposal division did not have the right to bargain for a collective
    agreement.
Commencement of the Certification Application
    would therefore be contrary to the policy and purpose of the stay of
    proceedings, which, as mentioned, effectively freezes the rights and remedies
    of all creditors of the Debtor as of the date of the Receivership Order.
[Emphasis added.]

[82]

The bankruptcy judge also refers to a practical reason for refusing to
    lift the stay based in the purpose and policy of receivership proceedings (at
    para. 47). He points out that recognition of the proposed bargaining unit by
    the Labour Relations Board could impact the sales proceeds (at para. 48). In
    his view: it is inequitable to require creditors to accept a potential
    diminution of the value of the assets in circumstances where employees assert
    rights not previously in existence while the rights and remedies of the
    remaining stakeholders are frozen (at para. 48).

[83]

Finally, with respect to the unions unfair labour practice claim, the
    bankruptcy judge finds, at para. 57: unless the Certification Application was
    validly commenced, the Union cannot assert that the employees were terminated
    in response to such action. Since he would not have lifted the stay to permit
    the certification application to proceed
nunc pro tunc
, there was no
    factual basis for the unfair labour practice claim.

F.
The Principles
    Applied

[84]

As a commercial list judge with long experience in insolvency, the
    bankruptcy judge would be fully alive to the relevant law and to the business
    realities faced by the debtor, the creditors and the receiver. Moreover, he
    would be intimately familiar with the particular facts of the case. That is why
    it is important for this court, from the viewpoint of the standard of review,
    to defer to the bankruptcy judge in the exercise of his discretion under s. 215
    of the
BIA
or the terms of the
    receivership order
: see e.g.
Royal Crest Lifecare Group Inc. (Re)
(2004), 181 O.A.C. 115 (C.A.), leave to appeal refused, [2004] S.C.C.A. No.
    104, at para. 23;
Grant Forest
, at paras. 97-99.

[85]

Did the bankruptcy judge err in principle or exercise his discretion
    unreasonably? My colleague says that he did. I disagree.

[86]

In this part of my reasons I begin with the
Charter
issue,
    continue with the doctrine of paramountcy, and then attend to the
    reconciliation of the
BIA
and labour law, specifically the
Labour
    Relations Act, 1995
, S.O. 1995, c. 1, Sched. A (
LRA
), the
pari
    passu
principle, the effect of certification on sale proceeds, and the
    issue of prejudice.

(1)

The
Charter
Issue

[87]

More atmospherically than substantively, in aid of its argument that s.
    72 of the
BIA
obliges the bankruptcy court to give full effect to the
LRA
bargaining rights and process, the union enlists the 2015 labour trilogy
    of the Supreme Court of Canada:
Mounted Police Association of Ontario v.
    Canada (Attorney General)
, 2015 SCC 1, [2015] 1 S.C.R. 3 ("
MPAO
");
Meredith v. Canada (Attorney General)
, 2015 SCC 2, [2015] 1 S.C.R.
    125;
Saskatchewan Federation of Labour v. Saskatchewan
, 2015 SCC 4,
    [2015] 1 S.C.R. 245. The appellant quotes para. 58 of
MPAO
in which
    the court states that the purpose of the
Charter
s. 2(d) guarantee of
    associational rights is: to protect individuals against more powerful
    entities. The court stated: By banding together in the pursuit of common
    goals, individuals are able to prevent more powerful entities from thwarting
    their legitimate goals and desires. The court added: In this way, the
    guarantee of freedom of association empowers vulnerable groups, including
    employees, and helps them work to right imbalances in society.

[88]

The appellants factum simply asserts that: Given the constitutional
    protection afforded to this process, the court should be wary of allowing the
    existence of a receivership to frustrate the certification application. Fair
    enough, but the union had the entire life of the business before insolvency
    within which to pursue certification.

[89]

In oral argument, counsel for the union expanded on this brief allusion.
    He asserted that the
MPAO
decision constitutionalized bargaining
    rights, and argued that the right of employees to unionize should supersede
    any concern in relation to the sale of the business.  He added that there is no
    empirical evidence that unionization will reduce the sale value of the asset,
    but even if that were to be the outcome of the employees exercise of their
    rights under the labour legislation: So be it.

[90]

However, counsel for the union did not take the position that the
    constitutionalization of labour rights takes away entirely the bankruptcy
    courts discretion under s. 215 of the
BIA
or the order appointing the receiver
to refuse to lift the
    stay where labour rights are in issue. He acknowledged that sometimes the
    discretion must be exercised and cited
Hawkair Avation Services Ltd. (Re)
,
    2006 BCSC 669, 22 C.B.R. (5th) 11.

[91]

In
Hawkair,
the union sought to certify just before the company
    was to bring forward its reorganization plan under the
CCAA
. The
CCAA
court concluded that in the context the prejudice to the union was minimal
    while the prejudice to the creditors was great. By contrast, the union points
    out that in this case there is no imminent reorganization and there is no
    empirical evidence of prejudice.

[92]

In my view, this constitutional issue was not properly joined before the
    bankruptcy judge, nor before this court. It is not sufficient to simply allude
    to associational rights under s. 2(d) of the
Charter
and to the 2015
    labour trilogy and assert they are dispositive. A similar argument was made in
Essar
    Steel
to the effect that the grievance provisions of the collective
    agreement were not subject to the
CCAA
stay. The constitutional argument
    was more fully developed in that case, and the
CCAA
courts rejection
    of it was approved by this court.

[93]

In my view, giving unions carte blanche to begin certification efforts
    for insolvent enterprises after the date of the appointment of a trustee or
    receiver or the date of an order under the
CCAA
would effect a sea
    change in insolvency law; it would profoundly alter the economic dynamics of
    insolvency, and whether the
CCAA
route is preferable to outright
    bankruptcy. The consensus is that the
CCAA
has been effective in
    salvaging businesses and jobs, including union jobs. It would be unwise for
    this court to sanction such a profound change in the absence of full evidence
    and argument addressing both whether the s. 2(d)
Charter
right of
    employees has been substantially limited in the insolvency context, and whether
    any such limit is demonstrably justified under s. 1 of the
Charter
:
    see
Gordon v. Canada (Attorney General)
, 2016 ONCA 625, 404 D.L.R.
    (4th) 590, leave to appeal refused, [2016] S.C.C.A. No. 444; [2016] S.C.C.A.
    No. 445. The issue is too important to the insolvency regime and too complex
    for the drive-by analysis the union proposes.

[94]

In the article From Deterrence to Détente, the authors specifically
    refer to the acquisition of collective bargaining rights, as one of the new
    fronts in the battle they describe between employees and the other creditors
    of an insolvent business.

(2)

The Role of Paramountcy

[95]

In support of his view that the
Labour Relations Act
must be
    given full operational scope in this case, my colleague relies on the
    underlined words in s. 72 of the
BIA
, which provides:

72 (1)
The provisions of
    this Act shall not be deemed to abrogate or supersede the substantive
    provisions of any other law or statute relating to property and civil rights
    that are not in conflict with this Act
, and the trustee is
    entitled to avail himself of all rights and remedies provided by that law or
    statute as supplementary to and in addition to the rights and remedies provided
    by this Act. [Emphasis added.]

[96]

He draws support from the words of Abella J. who said in
GMAC
that s. 72 of the
BIA
is not intended to extinguish legally protected
    rights unless those rights are in conflict with the
BIA
(at para. 47).
    The appellant also points to para. 51 of
GMAC
, where Abella J. quoted
Crystalline
    Investments Ltd. v. Domgroup Ltd.
, 2004 SCC 3, [2004] 1 S.C.R. 60, at
    para. 43:

[E]xplicit statutory language is required to divest persons of
    rights they otherwise enjoy at law ... So long as the doctrine of paramountcy is
    not triggered, federally regulated bankruptcy and insolvency proceedings cannot
    be used to subvert provincially regulated property and civil rights.

[97]

My colleague concludes that there must be an operative conflict before
    the principle of paramountcy can give the
BIA
priority over the
LRA
,
    and asserts there is no such conflict here.

[98]

I disagree with his construal of paramountcy and his assessment that no
    conflict exists on the facts of this case. Neither
Crystalline
nor
GMAC
is the latest word from the Supreme Court on paramountcy.

[99]

The doctrine of paramountcy must be sensitive to the context in which it
    operates. There are two distinct branches to the test, as explained by Gascon
    J. in
Moloney
, which he echoed in the companion case
407 ETR
    Concession Co. v. Canada (Superintendent of Bankruptcy)
, 2015 SCC 52,
    [2015] 3 S.C.R. 397. At para. 18 of
Moloney
, Gascon J stated:

A conflict is said to arise in one of two situations, which
    form the two branches of the paramountcy test: (1) there is an operational
    conflict because it is impossible to comply with both laws, or (2) although it
    is possible to comply with both laws, the operation of the provincial law
    frustrates the purpose of the federal enactment.

[100]

He explained, at
    para. 25:

In Bank of Montreal v. Hall, [1990] 1 S.C.R. 121, the Court
    formulated what is now considered to be the second branch of the test. It
    framed the question as being "whether operation of the provincial Act is
    compatible with the federal legislative purpose" (p. 155). In other words,
    the effect of the provincial law may frustrate the purpose of the federal law,
    even though it does "not entail a direct violation of the federal law's
    provisions": Western Bank, [Canadian Western Bank v. Alberta, 2007 SCC 22,
    [2007] 2 S.C.R. 3. at para. 73.

[101]

Justice Gascon
    noted, at para. 29, that if it is technically possible to comply with both
    laws, but the operation of the provincial law still has the effect of
    frustrating Parliament's purpose, there is a conflict. He added: Such a
    conflict results in the provincial law being inoperative, but only to the
    extent of the conflict with the federal law (citations omitted). In remedial
    terms, he stated: In practice, this means that the provincial law remains
    valid, but will be read down so as to not conflict with the federal law, though
    only for as long as the conflict exists.

(3)

Reconciling the
BIA
and the
Labour Relations Act

[102]

In this case,
    two distinct regulatory regimes come into contact: the Ontario labour relations
    regime, and the federal insolvency regime. There is no operative
    incompatibility or conflicting language on the facts of this case to engage the
    first branch of the paramountcy analysis. However, in my view the second branch
    is engaged, under which the bankruptcy judge is obliged to consider the
    exigencies of each regime and reconcile them if possible.

[103]

The courts task
    here is not to reconcile statutory language, but to reconcile different
    policies. This is a nuanced, difficult and delicate task informed by the
    bankruptcy judges knowledge both of the law and the operation of the
    marketplace in the context of the specific matter before him, drawing also on
    his experience and wisdom, and his sense of what is commercially reasonable.
    The bankruptcy judge brought just that perspective to this case, as I will
    explain.

[104]

Bankruptcy
    judges have proven to be adept at managing the interface between the two
    regulatory regimes. A good example is
Essar Steel
, where the
CCAA
judge found a way to reconcile grievance arbitration required by the collective
    agreement with the restructuring need for speed, expediency and reduced process
    costs.

[105]

It is worth
    pointing out that s. 33 of the
CCAA
, which came into force in 2009,
    directly addresses collective agreements. Subsection 33(1) provides:

33.(1) If proceedings under this Act have been commenced in
    respect of a debtor company, any collective agreement that the company has
    entered into as the employer remains in force, and may not be altered
except as provided in this section or under the laws of the
    jurisdiction governing collective bargaining
between the company and the
    bargaining agent. [Emphasis added.]

[106]

Can anything be
    drawn from this provision? It plainly assumes a collective agreement is in
    existence at the date proceedings are commenced and does not contemplate a new
    certification. This is a reasonable assumption for insolvency proceedings in
    general, built as they are to preserve the status quo.

(4)

The
Pari Passu
Principle

[107]

In my view, the
    policy contest presented in this case is precisely the kind of conflict between
    provincial regulatory regime for labour relations and the federal insolvency
    regime that the paramountcy doctrine is intended to recognize and accommodate.

[108]

My colleague
    relies on the Supreme Courts decision in
GMAC
. In that case the issue
    was whether leave should be granted to the union under s. 215 of the
BIA
so that the Labour Relations Board could determine successor employer status.

[109]

However, there
    is a crucial distinction between this case and
GMAC
. The union had
    long been certified in
GMAC
. By contrast, in this case, the
    certification effort followed the appointment of the receiver by several
    months. This distinction is important because it engages one of the fundamental
    policy principles in insolvency law, which is to preserve the status quo among
    the creditors as of the date the receiver was appointed. The bankruptcy judge
    accurately identified that this principle would be violated if the debtor could
    be forced to accept union certification post-bankruptcy.
In my
    view, my colleague does not give due weight to this critical principle.

[110]

In particular,
    my colleague says the bankruptcy judge was wrong to refuse leave on the basis
    that the certification application would effectively increase the rights of the
    members of the post bargaining unit relative to the other creditors. He takes
    the view that certification does not have the effect of automatically
    increasing the rights employees have as creditors, thereby prejudicing other
    creditors.

[111]

I take a
    different view. It seems quite plain that neither the employees nor the union
    would be pursuing certification if it did not provide an advantage in the
    bankruptcy process. While a successful certification application does not
    guarantee employees better wages or working conditions, their enhanced
    bargaining power is surely what unionization is all about: see
MPAO
,
    at para. 70.

[112]

The unions
    offer, as the bankruptcy judge notes, is this: 
subject
    to its discretion
, to postpone negotiation of a collective agreement
under certain conditions for a certain period of time

    (my emphasis), in effect to delay bargaining the first collective agreement for
    up to a year. This offer is plainly tactical, and the fact it was made at all
    simply underlines the force of the point that the union expects enhanced
    bargaining power to be effective in the insolvency.

[113]

In addition to
    the operation of successor rights, and access to unfair labour practice
    remedies, the court must take cognizance of the significant protections given
    to a union seeking to negotiate a first collective agreement, which may include
    the imposition of such an agreement through arbitration ordered by the Labour
    Board under s. 43 of the
Labour Relations Act
. This is distinct from
    the more limited protections provided to the union in subsequent negotiations.

(5)

The Effect of Certification on the Sale Proceeds

[114]

In its first report to the court, the receiver advised:

The Receiver has no long-term business goals or strategic plans
    for the Debtors assets. Given the temporary nature of its appointment and its
    mandate to maximize realizations for the benefit of all stakeholders by,
    ideally, selling the Debtors businesses as going concerns, the Receiver
    (unlike an ultimate purchaser) is fundamentally ill-equipped to evaluate the
    certification application properly nor to bargain collectively. Moreover, the
    Receiver is seriously concerned that any decision it makes or agreement it
    enters into with the Union will be unacceptable to prospective purchasers and
    will suppress realizations.

The collective bargaining process, if permitted to proceed,
    will also add significant professional costs to the Receivers administration.
    The cost of a labour negotiation will, in effect, be a super-priority expense
    that will ultimately be absorbed by and materially prejudice other creditors
    through reduced realizations and distributions.

[115]

My colleague disputes the application judges reasoning that
    certification of the bargaining unit could negatively impact a sale of the
    Harmony Road depot to the prejudice of all the creditors, on the basis that
    this line of reasoning is speculative. He asserts that while some purchasers
    may be dissuaded by recognition of the proposed bargaining unit, it may also be
    that a set collective agreement, with the clarity of terms, would be attractive
    to the perspective purchaser, and adds that:

the receivers
    statement in its first report that it has serious concerns that certification
    could negatively impact a sale amounts a little more than self-serving
    speculation
.

[116]

In my view, the
    bankruptcy judges statement that certification could negatively impact the
    sale of the Harmony Road depot is self-evidently true and falls well within the
    margin of appreciation that is his due, given his knowledge of the commercial
    realities. I would be most reluctant to disparage the advice of the
    court-appointed receiver as mere self-serving speculation. Such an officer
    has no self-interest and owes duties to all the parties and to the court. In my
    view, it was open to the bankruptcy judge to accept the receivers advice.

[117]

If the union
    achieves certification and the Harmony Road depot is sold in such a way as to
    attract successor labour rights, then any prospective purchaser of the depot
    will be faced with the obligation to immediately embark on first collective
    agreement negotiations. This is not a small additional burden on what would
    otherwise be the terms and conditions of the depots sale. It will plainly
    discourage some potential bidders and therefore negatively affect the depots
    market price by reducing the number of buyers who would be willing to engage.
    Any cooling of the interests of potential purchasers in the debtors assets
    would reduce the proceeds of sale to the prejudice of all the creditors. With
    respect, this is more than a mere inconvenience to the receivership process
.


[118]

If the court
    were to permit the post-receivership certification process to continue, it would
    effectively hand one interested group of creditors, the newly unionized
    employees, a tool with which to increase their leverage over the other
    creditors.

(6)

The Role of Prejudice

[119]

I agree with my
    colleague that the bankruptcy judges decision does prejudice the employees and
    the union, at least measured by how certification would work if there were no
    insolvency. But that is not the right measure under the
BIA
.

[120]

While it was
    possible in
GMAC
and
Essar Steel
to give considerable scope
    to the operation of the labour relations regime in relation to
existing collective agreements
, the bankruptcy judge
    concluded it was not desirable in this case because so many essential
    insolvency principles would be violated. This is a valid consideration, as the
    Supreme Court noted in
Moloney
and in
407 ETR
.

[121]

There is limited
    scope for accommodating a certification effort after the receivers
    appointment, because doing so would contradict bedrock insolvency principles.
    In his reasons, the bankruptcy judge identifies the central question as whether
    unions have a right to commence certification applications during
    receiverships (at para. 41). The bankruptcy judges implicit response is that
    there is no universal answer; it is a case-specific issue for the judge to
    determine based on the facts. I agree. I would defer to the bankruptcy judges
    judgment in the context of this case.

(7)

The Unfair Labour Practice Complaint

[122]

The bankruptcy
    judge showed that the unfair labour practice allegation was linked to the
    certification effort. In a factual sense there is no doubt that had the
    certification effort not started, there would have been no basis for an unfair
    labour practice allegation. If the certification effort was misguided, as he
    found, then there is no basis whatever for the complaint. Again, I would defer
    to the bankruptcys judges decision.

G.
Disposition

[123]

I would dismiss
    the appeal respecting the bankruptcy judges refusal to lift the stay both with
    respect to the union certification process, and the unfair labour practice
    complaint.

Released: DD APR 13 2017

P. Lauwers J.A.





[1]
At the appeal hearing, the court heard argument on the two preliminary issues.
    The court determined that the union could not bring its appeal as of right
    under s. 193(a) or (c) of the
BIA
.
    However, the court granted the union leave to appeal pursuant to s. 193(e) of
    the
BIA
. The court announced that
    reasons supporting these two conclusions would follow in the judgment on the
    main appeal.


