



COURT OF APPEAL FOR ONTARIO

CITATION: Essar Steel Algoma Inc. (Re) 2016 ONCA 138

DATE: 20160219

DOCKET: M46093 & M46104

Brown 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 Essar Steel Algoma Inc., Essar Tech Algoma Inc., Algoma Holdings
    B.V., Essar Steel Algoma (Alberta) ULC, Cannelton Iron Ore Company, and Essar
    Steel Algoma Inc. USA

Markus Koehnen and Jeffrey Levine, for the moving parties/responding
    parties by way of cross-motion, The Cleveland-Cliffs Iron Company, Cliffs
    Mining Company and Northshore Mining Company

Eliot Kolers and Maria Konyukhova, for the responding parties/moving
    parties by way of cross-motion, Essar Steel Algoma Inc., Essar Tech Algoma
    Inc., Algoma Holdings B.V., Essar Steel Algoma (Alberta) ULC, Cannelton Iron
    Ore Company and Essar Steel Algoma Inc. USA

Nicholas Kluge and Delna Contractor, for the Monitor, Ernst
    & Young Inc.

Heard: February 16, 2016

ENDORSEMENT

I.

THE
MOTIONS

[1]

Essar Steel Algoma Inc., and certain related
    companies (collectively, Essar), are under the protection of the
Companies
    Creditors Arrangement Act
, R.S.C. 1985, c. C-36, as
    amended (
CCAA
).  The Cleveland-Cliffs Iron
    Company, Cliffs Mining Company, and Northshore Mining Company (collectively,
    Cliffs), move for directions as to whether they require leave to appeal from
    the order of the
CCAA
judge, Newbould J.,
    dated January 25, 2016 (the Order).  Whether leave to appeal is required or
    not, Cliffs seeks a stay of the contract dispute motion Essar has brought
    against Cliffs before the
CCAA
judge pending
    Cliffs exercise of its appeal rights in respect of the Order.

[2]

Essar brings a cross-motion for an order expediting
    the hearing of Cliffs motion for leave to appeal, or its appeal.

[3]

At the hearing of the motions, I released an
    endorsement (the Endorsement) in which I concluded that Cliffs required leave
    to appeal the Order and its leave to appeal motion should be expedited.  I also
    granted a stay of Essars contract dispute motion pending the determination of
    Cliffs leave to appeal motion.  These are my reasons for so ordering.


II.

Background

[4]

Essar manufactures steel in Sault Ste. Marie,
    Ontario.  Iron ore pellets are a key input in its manufacturing process. In
    2002, Essars predecessor entered into a long-term iron ore pellet supply
    contract with Cliffs (the Contract).    The Contract obliged Essar to
    purchase iron ore pellets exclusively from Cliffs until 2016 and to purchase a
    portion of its pellets from Cliffs from 2017 until 2024.

[5]

In recent years the business relationship
    between Essar and Cliffs has been a rocky one, with disputes arising over the quantities
    of iron ore pellets Essar was obliged to order and take up under the Contract.

[6]

In January 2015, Cliffs filed a complaint in the
    United States District Court for the Northern District of Ohio (Eastern
    District) (the Ohio Court) alleging that Essar had breached the Contract by
    failing to take timely delivery of iron ore pellets in the requisite amounts. 
    In late July 2015, Cliffs brought a motion for partial summary judgment. The
    motion was decided on October 7, 2015. The Ohio Court dismissed Cliffs motion
    for summary judgment for breach of contract relating to Essars 2014 quantity nomination,
    but granted its motion to dismiss Essars counterclaim with respect to moisture
    content. A trial of all the issues in the Ohio litigation was scheduled to
    commence on December 7, 2015.

[7]

On October 5, 2015, Cliffs terminated the
    Contract alleging multiple material breaches by Essar.

[8]

On November 9, 2015, Essar sought and obtained
    an initial order under the
CCAA
. On November
    10, 2015, Essars foreign representative sought and obtained orders under
    Chapter 15 of the U.S. Bankruptcy Code, 11 U.S.C (2010) recognizing and
    enforcing in the United States the orders granted in the
CCAA
proceeding, which was recognized as the foreign main proceeding.

[9]

On November 11, 2015, Essar filed with the Ohio
    Court a notice that the Ohio litigation was automatically stayed in respect of
    Essar.  On December 3, 2015, the Ohio Court dismissed Cliffs action without
    prejudice.  As a result, the scheduled trial of Cliffs action did not proceed.
    Cliffs has moved to vacate that dismissal, but no decision has been rendered on
    its motion.

[10]

In mid-November, Essar served a motion under s.
    11.4 of the
CCAA
seeking an order declaring Cliffs a critical supplier;
    the motion did not proceed because Essar was able to find short-term alternate
    suppliers.

III.

PROCEEDINGS UNDER APPEAL

[11]

On December 8, 2015, Essar moved in the
CCAA
proceeding for a declaration that Cliffs purported termination of
    the Contract was not effective and Cliffs must supply Essar with iron ore
    pellets at the Contract price (the Contract Dispute Motion).  Essar also
    sought orders directing Cliffs to comply with the Contract and to pay damages
    resulting from the purported termination of the Contract.

[12]

On December 23, 2015, Cliffs served a motion seeking
    an order dismissing Essars Contract Dispute Motion on the ground that the Ontario
    court lacks jurisdiction to grant the relief sought or, alternatively, Ontario is
    not the convenient forum in which to adjudicate the dispute.

[13]

Cliffs motion was heard on January 14, 2015 by
    Newbould J., the judge conducting the
CCAA
proceedings in respect of
    Essar. The
CCAA
judge dismissed Cliffs motion
    in an Order and Endorsement dated January 25, 2016.  He held that the Ontario
    court has jurisdiction over Essars Contract Dispute Motion and Cliffs had not
    demonstrated that a clearly more appropriate forum than Ontario existed in
    which to adjudicate the dispute.

IV.

ISSUES

[14]

Cliffs moves in this court for directions and
    for a stay of the Order pending Cliffs exercise of its appeal rights. Cliffs
    argues that it is not required to obtain leave to appeal the Order. 
    Alternatively, Cliffs submits that in the event leave is granted from a
    portion of the decision of the
CCAA
judge,
    that appeal should be consolidated with the other aspects of the appeal which
    Cliffs has as of right.

[15]

Essar has brought a cross-motion seeking an
    order expediting the hearing of Cliffs leave to appeal motion, if required, or
    the hearing of the appeal.


V.

Whether
Cliffs Requires Leave to Appeal the
    Order

[16]

Section 13 of the
CCAA
requires that
    any person dissatisfied with an order or a decision made under this Act
    obtain leave to appeal. The sole issue on Cliffs motion for directions is
    whether the Order of the
CCAA
judge was made
    under the
CCAA.


[17]

The Order resulted from a motion brought in the
    Essar
CCAA
proceeding, before the judge seized with hearing all
    matters in the Essar
CCAA
proceeding, with the judge explaining, in
    his reasons, how he was exercising his powers as a
CCAA
judge.  The
    Order bears a style of cause stating that it was made In the Matter of the
Companies
    Creditors Arrangement Act
 in respect of a Plan of
    Compromise or Arrangement of Essar Steel Algoma Inc. and other companies.

A.

Positions of the Parties

[18]

Nevertheless, Cliffs submits that the Order was
    not made under the
CCAA
, for two reasons.  First, the fact that an
    order is made in a
CCAA
proceeding does not necessarily mean that it
    was made under the
CCAA
.  Second, an order is not made under the
CCAA
if it is one that could have properly been made in a normal civil action
    without any regard to the
CCAA
or the
CCAA
proceeding. According
    to Cliffs, to constitute an order made under the
CCAA
, the order
    must rely upon or be grounded in a specific section of the
CCAA
. In
    support of its submissions, Cliffs relies on decisions made by Tysoe J.A. in
Sandvik
    Mining & Construction Canada Inc. v. Redcorp Ventures Ltd.
, 2011 BCCA
    333, 94 C.B.R. (5th) 53, and OBrien J.A. in
Monarch Land Ltd. v. Sanderson
    of Fish Creek (Calgary) Developments Ltd.
, 2014 ABCA 143, 575 A.R. 46.

[19]

Essar submits that
CCAA
proceedings have a wide scope.  Consequently, if
CCAA
considerations inform the decision and exercise of discretion of
    the judge, the decision can fairly be said to be made under the
CCAA
. Such considerations informed the making of the Order, so leave to
    appeal is required.

B.

Analysis

The Purpose of s. 13 of the
CCAA

[20]

The analysis must start with an examination of the
    legislative purpose underlying the leave requirement contained in s. 13 of the
CCAA
.  In
Hurricane Hydrocarbons Ltd. v. Komarnicki
, 2007 ABCA 361, 425 A.R. 182, the Alberta Court of Appeal observed
    that the requirement for leave to appeal furthers the objects and purpose of
    the
CCAA
.  At paras. 14 and 15, the court
    stated:

To further the goal of enabling a company to deal with
    creditors in order to continue to carry on business, the
CCAA
proceedings
    seek to resolve matters and obtain finality without undue delayThe requirement
    for leave to appeal similarly reinforces the finality of orders made under
    a
CCAA
proceeding
    and prevents continuing litigation where there are no serious and arguable
    grounds of significance to the parties. As noted by numerous courts, delay and
    uncertainty caused by appeals is a matter of concern in a
CCAA
proceeding:
Luscar
    Ltd. v. Smoky River Coal Ltd.
,
1999 ABCA 62
, [1999]
    A.J. No. 185 at para. 22, citing
Re Pacific National Holding
    Corp.
(1992), 15 C.B.R. (3d) 265 (B.C.C.A.).

The scope of
CCAA
proceedings
    has been interpreted expansively by the courts and may even include
    non-judicial proceedings because the objective is to include proceedings that
    may  work against the interests of creditors and render impossible the
    achievement of effective arrangements:
Luscar Ltd. v. Smoky
    River Coal Ltd.
,
1999 ABCA 179
, 237
    A.R. 326 at para. 31.

[21]

More recently, in
Re AbitibiBowater
    Inc.
, 2010 QCCA 965, 68 C.B.R. (5th) 57, at para. 26,
    Chamberland J.A. described the purpose of the leave to appeal requirement in s.
    13 of the
CCAA
:

This requirement stems from a clear intention of Parliament to
    restrict appeal rights having regard to the nature and object of CCAA
    proceedings; an appeal court should be cautious about intervening in the CCAA
    process.   This is not to say that leave will never be granted but it
    should be so only "sparingly" (
In Re Pacific National Lease
    Holding Corp.
(1992), 15 C.B.R. (3d) 265 (B.C.C.A. [In Chambers]), at
    272).

[22]

That legislative purpose for the leave
    requirement supports an expansive interpretation of the term made under the
    Act in s. 13:
Re Smoky River Coal Ltd.
, 1999
    ABCA 62, 237 A.R. 83, at para. 20. Such an expansive interpretation was adopted
    by Paperny J.A. in
Re Concrete Equities Inc.
,
    2012 ABCA 91, [2012] A.W.L.D. 2836, at para. 16, where she held that when 
CCAA
considerations informed the decision of and the exercise of
    discretion by the chambers judge  it can be fairly said that the order was
    made under the
CCAA
in accordance with
    section 13 of the Act.

The Decisions in
Sandvik Mining
and
Monarch Lands

[23]

Cliffs submits that the interpretation given to
    made under the Act in
Concrete Equities

should
    be limited to the facts of that case, where there was no dispute that the
    notices of disallowance dealt with by the chambers judge resulted from a claims
    process ordered under the
CCAA
.  Cliffs argues
    that the
Sandvik Mining
and
Monarch
    Lands
decisions employed different interpretations of
    made under the Act which are more appropriate for the present case.

[24]

I agree that both the
Sandvik Mining
and
Monarch Lands
decisions offer
    guidance on the meaning of made under the
CCAA
, but I do not accept Cliffs submission that the principles
    emerging from those cases would lead to the conclusion that Cliffs is not
    required to seek leave to appeal from the Order.  Both cases involved
    exceptional fact situations that lay beyond the boundaries of the usual
CCAA
proceeding.

[25]

Dealing first with the
Sandvik Mining
decision,
    Tysoe J.A.
concluded that the decision of the judge below
    regarding the ownership of some equipment was not an order made under the
CCAA
,
    notwithstanding that the order resulted from an application styled as brought
    in a
CCAA
proceeding involving Redcorp and related companies. Tysoe
    J.A. wrote, at para. 9: it does not follow from the fact that the order was
    made in the
CCAA

proceeding that it was
    necessarily an order made under the
CCAA
.

    He continued by observing the judge below 
did not rely on any
    provision of the
CCAA
, and the determination of the issue in question was not incidental
    to any order made under the
CCAA
.  Tysoe J.A. went on to state, at para. 11:

It was a decision made under general law and
    the
Sale of Goods Act
, and while the decision may have been made within the
CCAA

proceeding as a matter of
    convenience, it was a decision that was made independently of the provisions of
    the
CCAA
and the
BIA
and of any order previously made under the
CCAA
.

[26]

Those statements must be understood in the
    specific factual context in which they were made.  In
Sandvik Mining
,
    the debtor companies had secured an initial order under the
CCAA
in
    March 2009. Two months later, a judge lifted the stay of proceedings against
    certain creditors, appointed an interim receiver over some of the debtors
    assets, and discharged the monitor from most of its duties.  A month after
    that, the debtors were assigned into bankruptcy.  Almost two years later, the
    receiver brought its application seeking a declaration regarding the ownership
    of the equipment and styled the application as one brought in the
CCAA
proceeding.  It was against that background that Tysoe J.A. stated, at para. 8:

In my opinion, the order or decision of [the
    judge below] was not made under the
CCAA
.  The efforts to reorganize Redcorp had come to an end, and
    there was no ongoing attempt to have Redcorp file a plan of arrangement. 
    [The receiver] simply filed its application in the
CCAA
proceeding as a matter of convenience.  The fact that
    [the receiver] was appointed in the
CCAA

proceeding did not require the
    application to be filed in that proceeding.  [The receiver] could have,
    and more properly should have, commenced a separate proceeding.  [The
    receiver] was not appointed as interim receiver or receiver pursuant to
    the
CCAA
, but rather pursuant to the
BIA
and the
Law and Equity Act
, R.S.B.C. 1996, c.
    253
(while the order lifting the stay
    undoubtedly had to be made within the
CCAA
proceeding, there is a question in my mind about the
    appropriateness of appointing receivers within
CCAA

proceedings after the reorganization
    attempt has failed).

[27]

Sandvik Mining
,
    therefore, involved a case where the
CCAA
proceedings had run their
    course and failed, but the
CCAA
court file had not yet been closed.
    The receiver, as a matter of convenience, took advantage of that state of
    affairs to bring its application in the
CCAA
court file. The message
    from the
Sandvik Mining
decision is that where the
CCAA
proceedings have come to an end for all intents and purposes, an order made
    several years later in a dormant
CCAA
court file may well not be an
    order made under the
CCAA
.

[28]

Cliffs also relies on the decision in
Monarch
    Land
, which considered
whether an order resulting
    from a trial of issues was made under the
CCAA
, and therefore
    required
leave to appeal.  Again, the context of that case explains
    its result.

[29]

Sanderson was one of a group of companies that
    obtained an initial order under the
CCAA
.  In those proceedings, a
    trial of issues was directed. Prior to the trial, the list of issues was
    expanded.  As a result, the trial judge considered two issues: (i) an
    accounting for sale proceeds as between two of the secured creditors of the
    debtors; and (ii) the ownership of parking stalls pursuant to an agreement
    between the debtor and a secured creditor.

[30]

In respect of the first part of the trial order
     dealing with the accounting between two secured creditors  OBrien J.A.
    stated, at para. 11:

It is common ground that the accounting issue
    arises out of a Postponement and Priority Agreement, a separate and distinct
    agreement between CMI and Monarch. Monarch concedes that this determination,
    including the limitations issue, could properly have been made in a normal
    civil action between Monarch and CMI without any regard to the CCAA, and
    accordingly that no leave is required with respect to that part of the
    judgment.

[31]

However, OBrien J.A. concluded that the part of
    the trial order disposing of the second issue concerning the ownership of the
    parking stalls was made under the
CCAA
.  Distinguishing the case
    from
Sandvik Mining
, he wrote, at paras. 7 and
    8:

Here the order of Horner J., the supervising
    judge in the CCAA proceedings, granted a trial of an issue ... to determine
    whether the Purchase and Sale Agreement of December 1, 2010, between
    [Sanderson] and [Monarch] included parking stalls for the development of phase
    3 of the Sanderson project. She lifted the stay in the CCAA proceedings
    specifically for that purpose. It is common ground that the subject Purchase
    and Sale Agreement was approved by an order made in the CCAA proceedings

In my view, it cannot be said, as it was
    in
Sandvik
, that the determination of the issue in question was
    not incidental to any order made in the CCAA. To the contrary, the issue
    Horner J directed to trial required the interpretation of an agreement that the
    court had expressly approved in the CCAA proceedings, and involved the need to
    interpret the order approving the sale. Both interpretations had a potential
    impact upon other Sandersons other creditors in addition to CMI and Monarch.

[32]

Accordingly,
Sandvik Mining
and
Monarch
    Land
involved circumstances which lay beyond the boundaries of the usual
CCAA
proceeding: in
Sandvik Mining
,
the
CCAA
proceeding
    had run its course long before the order was made, and in
Monarch Land
an issue between two secured creditors was tacked on, as a matter of procedural
    convenience, to a trial of an issue in the
CCAA
proceeding. Consequently,
    I do not think that
Sandvik Minings

distinction
    between an order made in a
CCAA
proceeding and one made under the
CCAA
or
Monarch Lands
reference to orders that
    could properly have been made in a normal civil action
offers general guidance for considering whether leave to appeal is required
    under s. 13 of the
CCAA
.

A Purpose-Focused Approach to s.
    13 of the
CCAA


[33]

The inquiry, instead, should be purpose-focused.
    When asked to determine whether an order requires leave to appeal under s. 13
    of the
CCAA
, an appellate court should ascertain whether the order was
    made in a
CCAA
proceeding in which the judge was exercising his or her
    discretion in furtherance of the purposes of the
CCAA
by
supervising an attempt to reorganize the financial affairs of the
    debtor company, either by way of plan of arrangement or compromise, sale, or
    liquidation:
Century Services Inc. v. Canada (Attorney General)
, 2010
    SCC 60, at para. 59. If the order resulted from such an exercise of judicial
    decision-making, then it is an order made under the
CCAA
for
    purposes of s. 13.

[34]

To aid that purpose-focused inquiry, the case
    law has identified some indicia about when an order is made under the
CCAA
.
In
Sandvik Mining
, Tysoe J.A. stated a court should
    ask whether the order was necessarily incidental to the proceedings under the
CCAA

    or incidental to any order made under the
CCAA
: at paras. 9 and 10. 
    In
Monarch Land
, OBrien J.A. looked at whether the order required the
    interpretation of a previous order made in the
CCAA
proceeding or
    involved an issue that impacted on the restructuring organization of the
    insolvent companies: at paras. 8 and 15. As mentioned, in
Concrete
    Equities
,
Paperny J.A.
stated that s. 13 of
    the
CCAA
would apply if 
CCAA
considerations informed the decision of and the
    exercise of discretion by the chambers judge or if a claim is being
    prosecuted by virtue of or as a result of the
CCAA
: at paras. 16 and 17. Finally, additional indicia
    were identified by this court in
Re Hemosol Corp.
, 2007 ONCA 124, at para. 3:

In our view, the proceeding before the motion judge and the
    decision under appeal were conducted and rendered under the
CCAA
within
    the meaning of
s. 13
and
    therefore leave to appeal is required.  The notice of motion and the
    reasons of the motion judge explicitly state that the matter is a
CCAA
proceeding.
     Directions were sought, amongst other things, to determine rights and
    requirements of voting in relation to the proposed plan of arrangement.
     There was no independent originating process to justify any other
    conclusion.  The order determined rights arising under an agreement that
    arose out of and that was related entirely to the
CCAA
proceeding.

Application of the Purpose-Focused Approach

[35]

Applying those principles to the present case, I
    conclude that the Order was made under the
CCAA
. It was made by the
    judge supervising an active
CCAA
proceeding in furtherance of the
    purposes of the
CCAA
. The evidence before the
CCAA
judge disclosed that what, if any, rights Essar possesses under the
    Contract, which Cliffs purported to terminate on October 5, 2015, is an issue
    in the
CCAA
proceeding.
In
its Sixth Report
    dated January 11, 2016, the Monitor stated that Essar is preparing a business
    plan that will form part of the information made available to potential
    purchasers or investors in its Sale and Investment Solicitation Process
    (SISP) recently approved under the
CCAA
.  The Monitor reported: A
    key component of the Business Plan is Algomas raw material supply strategy,
    and in particular its strategy for the supply of iron ore pellets In
    canvassing the iron ore pellet market and finalizing its supply strategy,
    Algoma needs certainty concerning the status of the Cliffs Contract. Based on
    that and other evidence, the
CCAA
judge concluded,
    at para. 31, that the 
claim of Essar Algoma against Cliffs is an asset
    of the applicants to be dealt with in this Court.  See also,
Re Montréal,
    Maine & Atlantic Canada Co.,
2013 QCCS 5194 (Que. S.C.), at paras. 17
    and 19.

[36]

Cliffs advances two additional reasons about why
    the Order was not made under the
CCAA
. I do
    not accept either.

[37]

First, Cliffs submits that the
CCAA
judge did not, on the face of his reasons, rely on a specific section
    of the
CCAA
to assume jurisdiction. In
Sandvik
    Mining
,
Tysoe J.A. commented that the judge below
    had not relied on any provision of the
CCAA
. However,
it does not follow, as Cliffs submits, that an order is not made
    under the
CCAA
unless the judge expressly relies on a section of the
    Act in granting the order. In
Century Services,
the Supreme Court of
    Canada recognized that a judge supervising a
CCAA
proceeding will draw
    on both statutory authority under the
CCAA
and the courts residual
    authority under its inherent and equitable jurisdiction in order to decide
    specific issues that arise during the
CCAA

proceeding.
    Deschamps J. stated, at para. 65:

I agree with Justice Georgina R. Jackson and
    Professor Janis Sarra that the most appropriate approach is a hierarchical one
    in which courts rely first on an interpretation of the provisions of the
CCAA
text before turning to inherent or equitable jurisdiction to anchor
    measures taken in a
CCAA
proceeding

[38]

In any event, the
CCAA
judge
    expressly relied on s. 11 of the
CCAA
in his
    decision on jurisdiction.  He stated, at para. 28:

The CCAA provides in section 11 that a court has jurisdiction
    to make any order that it considers appropriate in the circumstances. A CCAA
    court clearly has the power as per
Century Services
to make
    the procedural orders of the kind sought by Essar Algoma in this case. See
    also
Smokey River Coal Ltd., Re,
(1999), 12 C.B.R.
    (4th) 94 (Alta. C. A.) at paras. 60 and 67 per Hunt J.A. in which he
    held that a judge has the discretion under the CCAA to permit issues to be
    decided in another forum (in that case arbitration) but is under no obligation
    to do so. [Footnotes omitted.]

[39]

Whether or not the
CCAA
judge was
    correct at law in reaching that conclusion is a matter for consideration by the
    leave to appeal panel, but is not relevant to the inquiry into the proper route
    Cliffs must follow to appeal the Order.  The
CCAA
judge purported to rely on s. 11 of the
CCAA
in making the Order, so the Order was made under the
CCAA
.

[40]

Second, Cliffs argues that because the contractual claim Essar seeks
    to assert against Cliffs could properly have been made in a normal civil action
    without regard to the
CCAA
, the Order was not
    made under the
CCAA
. I do not accept this
    submission. To decide the appeal route Cliffs must follow, the issue is not
    what claims Essar could have asserted in some hypothetical proceeding; the
    issue is how to characterize the Order  was it made under the
CCAA
? The purpose-focused inquiry under s. 13 of the
CCAA
must look at the order actually made, not at some order that could
    have been made in a hypothetical proceeding.

Conclusion

[41]

For these reasons, I concluded that the Order was made under the
CCAA
,
    and Cliffs therefore required leave to appeal under s. 13 of the
CCAA
.

VI.

Order Expediting Leave to Appeal

[42]

Cliffs motion for leave to appeal will be heard
    by a panel of this court on an expedited basis. In the Endorsement, I gave
    directions that the parties serve and file the completed leave materials no
    later than Wednesday, February 24, 2016, so that the materials could be placed
    before the panel on February 25, 2016.


VII.

Stay Pending Appeal

[43]

Cliffs seeks a stay of Essars Contract Dispute
    Motion before the
CCAA
judge pending its leave
    to appeal motion.  Essar opposes the request for a stay.

[44]

As set out in
RJR-MacDonald Inc. v.
    Canada (Attorney General)
, [1994] 1 S.C.R. 311, 111
    D.L.R. (4th) 385, at p. 334, the three-part test for obtaining a stay pending
    appeal requires the moving party to demonstrate (a) there is a serious question
    to be determined on the appeal, (b) the moving party will suffer irreparable
    harm if the stay is not granted, and (c) the balance of convenience favours
    granting the stay:
Yaiguaje v. Chevron Corp.
,
    2014 ONCA 40, 315 O.A.C. 109, at para. 3.

A.      Serious Question

[45]

Cliffs has demonstrated that its leave to appeal
    motion raises a serious question to be determined. Essar conceded as much in
    its factum when it stated that this was, at best, a neutral factor. And, at
    the hearing, Essar advised it was not contesting that the serious question
    factor had been satisfied. In my view, that was a proper concession to make
    given the low threshold to meet on this factor.  Cliffs stay motion turns on
    the other two factors.

B.      Irreparable harm

Positions of the parties

[46]

Cliffs submits if a stay is not issued, it would
    effectively be deprived of the right to seek leave to appeal because Essars
    Contract Dispute Motion would proceed before the
CCAA
judge in the face of Cliffs jurisdictional challenge.

[47]

The parties provided an update on what has
    transpired in that proceeding since the Order was made. Last week, the parties
    participated in two conference calls with the
CCAA
judge to discuss the procedure by which Essars Contract Dispute
    Motion would be adjudicated in the
CCAA
proceeding. Counsel advised that a further videoconference call was scheduled
    to take place on Wednesday, February 17, 2016 before the
CCAA
judge at which time they expected the judge would render a decision
    on the adjudication procedure. Cliffs stated it was not participating
    voluntarily in those scheduling calls, even though it had been permitted to
    file its procedural proposals with the
CCAA
judge on a without prejudice basis.

[48]

Cliffs submits that although Essar has
    undertaken not to treat Cliffs participation in the scheduling and
    organization of the Contract Dispute Motion as an attornment to the jurisdiction
    of the Ontario court, conflicting decisions from this court create the risk
    that such an undertaking might not be given effect, posing a serious risk to
    Cliffs ability to challenge the Ontario courts jurisdiction.

[49]

In response, Essar argues that a stay is not
    necessary in light of its agreement to expedite the hearing of Cliffs motion
    for leave to appeal and the undertakings it has given on the stay motion.

[50]

Essar filed an affidavit from its Chief
    Financial Officer, Rajat Marwah.  He deposed that Essar wants the parties to
    ready themselves for an adjudication of the Contract Dispute Motion.  To that
    end, Essar has proposed to Cliffs that it deliver its responding affidavit
    evidence on the dispute on an informal, without-prejudice basis outside the
    formal bounds of these court proceedings. Essar, in turn, would complete
    certain documentary disclosure.  Mr. Marwah provided the court with three
    undertakings in order to permit Cliffs to exercise its appeal rights while
    enabling preparation to continue on the Contract Dispute Motion:


(i)

Cliffs would not be required to file in the
CCAA
court any affidavit or other material delivered in preparation for
    the contract dispute hearing;


(ii)

Essar undertakes not to argue that the delivery
    of such materials by Cliffs or the taking of any steps toward a hearing of
    Essars motion would amount to an act of attornment to the jurisdiction of the
    Ontario court; and


(iii)

Essar would not invoke the jurisdiction of the
    Ontario court until Cliffs appeal or motion for leave to appeal has been
    decided.

Analysis

[51]

Over the past decade, judges of this court
    sitting in Chambers on stay motions have expressed different views about whether
    a party risks attorning to the jurisdiction of the Ontario court by performing court-ordered
    procedural steps in the face of the partys on-going challenge to the courts jurisdiction. 
    Some decisions have viewed such participation as risking attornment, thereby
    creating some risk of irreparable harm:
M.J. Jones Inc. v. Kingsway
    General Insurance Co.
(2004), 72 O.R. (3d) 68, 242 D.L.R.
    (4th) 139 (C.A.), at paras. 27-31;
Stuart Budd & Sons Ltd. v.
    IFS Vehicle Distributors ULC
, 2014 ONCA 546, 122 O.R.
    (3d) 472, at paras. 29-36. On the other hand, in
Van Damme v. Gelber
, 2013 ONCA 388, 115 O.R. (3d) 470, at paras. 21-23, the court minimized
    any such risk from court-ordered participation, and in
Yaiguaje v.
    Chevron Corp
., at para. 11, MacPherson J.A. regarded any
    risk as a weak factor in the irreparable harm analysis.

[52]

I need not express a view on the effect of
    court-ordered participation in a proceeding on a partys ability to continue to
    advance a jurisdictional challenge because decisions of this court uniformly
    have held that where the responding party provides the court with undertakings
    of the kind given by Essar in this case, the undertakings significantly reduce
    or remove the risk of irreparable harm.

[53]

In
BTR Global Opportunity Trading
    Ltd. v. RBC Dexia Investor Services Trust
, 2011 ONCA 620,
    283 O.A.C. 321, at para. 14, Laskin J.A. described the undertakings given by
    BTR:

BTR wants to proceed with the Ontario action.  It is
    content to have LBIE deliver a statement of defence without filing it with the
    court.  It undertakes not to argue that delivery of the statement of
    defence or participation in examinations for discovery constitute acts of
    attornment.
BTR also undertakes not to invoke the
    jurisdiction of the Ontario court
, by, for example, a motion for summary
    judgment, while LBIEs leave motion is outstanding. [Emphasis added.]

[54]

Laskin J.A. did not consider the delivery of a
    statement of defence or participation in discoveries outside of the formal
    bounds of the court proceedings as amounting to attornment: at para. 31. Similar
    undertakings given in
Yaiguaje v. Chevron Corp.
, led MacPherson J.A., at paras. 11 and 16, to follow the decision
    in
BTR Global
and conclude that the moving
    parties had made a very weak showing that they would suffer irreparable harm.


[55]

In light of the undertakings given by Essar to
    the court in the present case, I conclude that Cliffs have not demonstrated
    that they would suffer irreparable harm if a stay pending appeal is not
    granted.

C.

Balance of convenience

[56]

Both parties point to some big picture factors
    as tipping the balance of convenience in their favour. Cliffs contends that
    Essar will not suffer any prejudice should a stay not issue because to date it has
    found sufficient quantities of replacement iron ore pellets.  As well, Essar
    did not pursue its critical supplier motion in the
CCAA
proceeding.

[57]

On its part, Essar stresses the need for an
    expedited determination of the contract dispute in light of the end of April
    deadline for bids under the SISP process. Essar also advises that the Chapter
    15 court in Delaware has deferred Cliffs motion to lift the
CCAA
stay until the jurisdiction issue is resolved.

[58]

Although these factors are relevant to the
    determination of which party will suffer the greater harm from the granting or
    refusal of a stay, in my view the most significant factor is much narrower in
    scope.  While the parties did not file on this stay motion the procedural
    proposals they have presented to the
CCAA
judge, Essar advises that neither proposal contemplates Cliffs delivering any
    materials over the next two weeks. Instead, during that time Essar will be
    required to deliver certain productions.

[59]

In those circumstances, the balance of
    convenience favours granting a stay. I have ordered Cliffs leave to appeal
    motion to be expedited.  As a result, within the next two weeks the leave motion
    will be placed before a panel of this court for determination. If leave is not
    granted, the Contract Dispute Motion can proceed on the merits with little
    delay in preparation having occurred. If leave to appeal is granted, then the
    leave panel will consider whether or not to continue the stay.

D.

Conclusion

[60]

In
BTR Global
,
    Laskin J.A. stated, at para. 16, that the three components of the stay test are
    interrelated in the sense that the overriding question is whether the moving
    party has shown that it is in the interests of justice to grant a stay. In my
    view, the most significant factor affecting the interests of justice is the
    balance of convenience.  It favours granting a stay.  I therefore granted a
    stay in the terms set out in para. 3 of the Endorsement:

As to that part of Cliffs motion which seeks a stay of Essars
    contract motion before the
CCAA
judge pending its exercise of appeal
    rights in respect of the Order, I grant a stay of Essars contract motion until
    such time as the panel of this court disposes of Cliffs motion for leave to
    appeal.  If the panel grants leave to appeal, the panel may consider whether or
    not to continue the stay based upon the stay motion materials already filed
    with the court.

[61]

Having granted a stay, I went on to state in
    para. 4 of the Endorsement:

Of course, nothing in this endorsement prevents Cliffs from
    voluntarily taking steps to prepare for an adjudication of the contract dispute
    with Essar, without prejudice to its argument that the Superior Court of
    Justice of Ontario lacks the jurisdiction to adjudicate that dispute. As part
    of such voluntary steps, it is always open to Cliffs to request, on a
    voluntary, without prejudice basis, the informal assistance of the
CCAA
judge on any hearing planning or preparation issues, and it is always open to
    the
CCAA
judge to provide any such requested informal assistance on a
    without prejudice basis.

VIII.

Disposition

[62]

For the reasons set out above, I ordered (i)
    Cliffs to seek leave to appeal the Order under s. 13 of the
CCAA
, (ii) the hearing of the leave to appeal motion be expedited, and
    (iii) the issuance of a stay pending the disposition of the leave to appeal
    motion in the terms set out in para. 3 of the Endorsement.

David Brown
    J.A.


