Alberta Permit Pro Inc. (Re), 2011 ABQB 141

Court of Queen ’ s Bench of Alberta Citation: Alberta Permit Pro Inc. (Re), 2011 ABQB 141 Date: 20110307 Docket: BK03 115349 Registry: Edmonton In the Matter of the Division I Proposal of Alberta Permit Pro Inc. _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice J.B. Veit _______________________________________________________

Summary [ 1 ] Wood Buffalo and CNRL each appeal decisions denying them voting rights at the adjourned first meeting of creditors called to approve a proposal from Alberta Permit Pro Inc. Wood Buffalo and CNRL also each appeal the subsequent decisions to disallow their claims in their entirety. [ 2 ] At the appeal hearing, the court held, with reasons to follow, that appeals pursuant to ss. 108 and 135 of the BIA should be held by way of a re-hearing rather than on the record. Those reasons are provided herewith.

The reasoning in Galaxy Sports Inc. does not apply in Alberta: there is no binding Alberta decision requiring “appeal” to be interpreted as “appeal on the record”. On the contrary, Alberta has a long tradition of interpreting “appeal” as “appeal de novo ”: see former rules 299 and 500. Moreover, a purposive

interpretation of the word “appeal” in the BIA leads to the conclusion that business efficacy requires a re-hearing which will produce a substantive decision rather than merely a decision to return the issue to the Chair or the Trustee for renewed consideration. In any event, in the circumstances of this particular case, it is appropriate to allow an appeal by way of re-hearing in order to achieve fairness for the parties: San Juan Resources Inc.

Finally, if this appeal had to be on the record, then the circumstances here would allow the calling of “fresh evidence”: Galaxy Sports Inc. [ 3 ] On the re-hearing, the Proposal Trustee argues that the Chair’s decision to deny Wood Buffalo the right to vote at the meeting was correct because Wood Buffalo, having had adequate notice of the meeting, had not provided a proxy or voting letter to its agent law firm.

Moreover, the Proposal Trustee argued that, in any event, Wood Buffalo’s proof of claim - filed prior to the meeting - did not disclose any claim because: it did not comply with s. 124(4) of the BIA ; was contingent; and, was unliquidated. [ 4 ] The court concludes that, in the circumstances here, which include the relative size of Wood Buffalo’s claim, Wood Buffalo`s clear intention to vote on the proposal, the specific information provided by Wood Buffalo about its address for service, the size of the law firm which represents Wood Buffalo, the authority structure of Wood Buffalo, and the physical distance between Wood Buffalo and its agent: Wood Buffalo was not properly served with notice of the adjourned first meeting of creditors, the lack of notice improperly deprived Wood Buffalo of the opportunity of voting against APPI’s proposal, and, the lack of notice to Wood Buffalo impugned the meeting as a whole.

[ 5 ] Moreover, the court concludes that the Proposal Trustee wrongly decided that Wood Buffalo’s claim did not comply with s. 124(4) of the Act since the Trustee had failed to ask Wood Buffalo for production of additional documents to substantiate its claim or to otherwise make inquiries about Wood Buffalo’s claim: Northstone Power Corp. [ 6 ] Also, the court concludes that the Proposal Trustee was wrong in law in characterising Wood Buffalo’s claim as contingent and unliquidated: the debt owing by APPI has already come into existence and was therefore not contingent, and the debt is a figure that is readily computed, and therefore liquidated. [ 7 ] Although these failure would, in other circumstances, have impugned the results of the first meeting and required the calling of a new meeting, the Trustee used the non-statutory mechanism of recording the vote of Wood Buffalo.

That recorded vote should now be recognized as a vote against the proposal. The value of that vote is discussed hereunder. [ 8 ] The Proposal Trustee argues that the Chair’s decision to deny CNRL the right to vote was correct because CNRL’s proof of claim did not satisfy the requirements of s. 124(4) of the BIA. [ 9 ] The court concludes that although CNRL was improperly denied the opportunity of voting at the adjourned meeting of creditors on the basis then advanced by the Chair, CNRL did not thereby suffer any substantive injury since CNRL’s claim is unliquidated and not yet valued and was recorded.

However, CNRL has proved that it now has the right to have its claim valued by the Trustee with a view to allowing CNRL to vote at any subsequent meeting called to approve another proposal or a distribution. [ 10 ] The Proposal Trustee also argues that the post-first meeting decisions to disallow the Wood Buffalo and CNRL claims, thereby preventing those putative creditors from participating in the distribution approved at the proposal meeting, were correct. [ 11 ] The court concludes that the post-meeting decision to disallow Wood Buffalo’s claim was wrong.

First, in relation both to Wood Buffalo and to CNRL, it is imperative, when a defence of limitations is advanced, to assess discoverability: Peixero . The Trustee’s failure to consider that key element of the limitations issue infirms the Trustee’s decision. Also, specifically in relation to Wood Buffalo, the court concludes that the Trustee erred in rejecting Wood Buffalo’s claim because Wood Buffalo had failed to provide a satisfactory breakdown as to how its claim had been derived.

Finally in relation to Wood Buffalo, it is clear that the APPI’s proof of payments made to Wood Buffalo covered less than 20 remittances out of over 2,000 receipts of fees; therefore, APPI’s own evidence, far from undermining Wood Buffalo’s claim, supports it. [ 12 ] The court concludes that the post-meeting decision to disallow CNRL’s claim was wrong. CNRL provided clear evidence of an agreement between itself and APPI to provide permits for work in the Fort McMurray area.

Copies of invoices to CNRL from APPI and cheques from CNRL to APPI confirm the existence of an agreement between the two parties in relation to obtaining permits. The evidence from APPI opposing CNRL’s claim is unpersuasive, mainly because APPI does not tender the issued permits that resulted from the over $10 million spent by CNRL. [ 13 ] The Proposal Trustee and APPI argue that the court should approve the proposal despite the problems relating to Wood Buffalo and CNRL.

The Trustee and APPI argue that the court should prefer the positions of the 21 employees of APPI, the municipalities that rely on APPI to provide permit services, and the other creditors of APPI. [ 14 ] The court concludes that it cannot approve the proposal presented by the Proposal Trustee. Parliament’s intention was clearly to respect business decisions concerning proposals; those business decisions must, however, reflect the opinion of all of APPI’s creditors who, having been given a fair opportunity to vote on the proposal, have expressed their opinion in their vote.

Such a vote did not take place in the circumstances here. Moreover, in my view, even if it were true that the creditors who were not given a fair opportunity to vote would not do better in a bankruptcy, that would not be a reason to approve the proposal; if comparison to bankruptcy had been the standard, Parliament would have said so. Parliament chose to allow creditors to exercise their business judgment, and so should the courts. Cases and authority cited

[15] By the appellant, Regional Municipality of Wood Buffalo: Black's Law Dictionary (9th ed.) definition of "liquidatedamount"; Houlden and Morawetz' Bankruptcy and Insolvency Law of Canada, page 5-72, p. 5-85; Re Central Capital Corp. (1995), (ON SC), 29 CBR (3d) 33; Diewold v. Diewold (1940), (SCC), [1941] SCR 35, 22 CBR 329; ReBearcat Explorations Ltd. (2004), 2004 ABQB 601 , 3 CBR (5th), 173; Re Muller (1986), (BC SC), 62CBR 194 (BCSC); Re Mister C's Ltd. (1995), 32 CBR (3d) 242 (Ont. C.J. in Bankruptcy). [16] By the appellant, Canadian Natural Resources Limited: San Juan Resources Inc., [2009] A.J.

No. 79 at para 30;Business Development Bank of Canada v. Pinder, Bueckert & Associates Inc., [2009] S.J. No. 696 at para. 23; Able Automotive Ltd. v.Cameron Okolita Inc., [2009] SKQB 476 at paras. 25-26, aff’d [2010] SJQB 34; Mamczasz Electrical Ltd. v. South Beach Homes Ltd.,[2010] SKQB 182; Charlestown Residential School [2010] O.J. No. 3140; Oppenheim v. J.J. Lacey Insurance Ltd., [2008] N.J.

No.18. [17] By Alberta Permit Pro Inc.: Abou-Rached, Re, 2002 CarswellBC 1642, 2002 BCSC 1022, [2002] B.C.W.L.D. 861, 35C.B.R (4th) 165 (S.C.); Canadian Triton International Ltd., Re, (ON SC), 1997 CarswellOnt 3745, 49 C.B.R (3d)192 (C.J.); Claude Resources Inc. (Trustee of) v. Dutton, (SK KB), 1993 CarswellSask 26, 22 C.B.R (3d) 56, 115Sask.

R. 35 (Q.B.); Farrell, Re, (ON SC), 2003 CarswellOnt 1015, 40 C.B.R (4th) 53 (S.C.J.); Galaxy Sports Inc.,Re, 2004 CarswellBC 1112, 2004 BCCA 284, 240 D.L.R (4th) 301, 20 R.P.R (4th) 1, 1 C.B.R (5th) 20, 29 B.C.L.R. (4th) 362, 200B.C.A.C. 184 (C.A.); McCoubrey, Re, (AB KB), 1924 CarswellAlta 69, 5 C.B.R. 248, [1924] 3 W.W.R. 587, [1924] 4D.L.R 1227 (S.C.); Roman Catholic Episcopal Corp. of St.

George's, Re, 2005 CarswellNfld 238, 2005 NLTD 150, 14 C.B.R. (5th)211, 250 Nfld. &P.E.I.R. 179, 746 A.P.R. 179 (S.C.T.D.); Stone, Re, 1976 CarswellOnt 56, 22 C.B.R. (N.S.) 152 (S.C.); Wandler, Re,2007 CarswellAlta 482, 2007 ABQB 153, [2007] A.W.L.D. 2170, 73 Alta. L.R. (4th) 48, [2007] 7 W.W.R. 371, 32 C.B.R. (5th) 292,418 A.R. 55, [2008] A.W.L.D. 2228 (Q.B.); Northstone Power Corp. v. R.J.K.

Power Systems Ltd., 2002 CarswellAlta 536, 2002 ABQB 405, 33 C.B.R. (4th) 261, 314 A.R. 169(Q.B.); aff'd at 2002 CarswellAlta 1111, 2002 ABCA 201, 36 C.B.R. (4th) 272, 317 A.R. 192, 284 W.A.C. 192 (C.A.); TransglobalCommunications Group Inc., Re, 2009 CarswellAlta 464, 2009 ABQB 195, [2009] A.W.L.D. 2005, 4 Alta. L.R. (5th) 157, 53 C.B.R.(5th) 122, [2009] 9 W.W.R. 165, 473 A.R. 167 (Q.B.). [18] By the Proposal Trustee: Bankruptcy and Insolvency Act, R.S.C. 1985 c.

B-3, 102(1), 104(1), 108, 109(1), 109(2) and 124; Re Port Chevrolet Oldsmobile Ltd. (2004), 2004 BCCA 37 , 49 C.B.R. (4th) 146; Re LondonBridge Works Ltd. (1926), 8C.B.R. 73 (Ont. Sup. Ct.); Re Galaxy Sports Inc. 2004 BCCA 284; Re Canadian Triton International Ltd. (1997), (ON SC), 49 C.B.R. (3d) 192 (Ont. Ct. Justice); Re Lofchik, [1998] O.J. No. 332, 1 C.B.R. (4th) 245 (O.C.J. - G.D.); Re Arthur Fuel Co.(1926), (MB KB), 8 C.B.R. 46; Re Morton (1922), (SK KB), 3 C.B.R. 114; Claude Resources Inc.(Trustee of) v. Dutton, (SK KB), 1993 CarswellSask 26, 22 C.B.R. (3d) 56, 115 Sask.

R. 35 (Q.B.). [19] By the court: R. v Sheppard 2002 SCC 26, [2002] S.C.J. No. 30; Reform Party of Canada v Canada (Attorney General)[1995] A.J. 212 (C.A.); Peixeiro v Haberman (SCC), [1997] 3 S.C.R. 549, [1997] S.C.J. No. 31 1. Background

a) Factual [20] Alberta Permit Pro Inc., is an Alberta corporation which is an accredited inspection agency, authorized by municipalities toreview applications for, and issue, permits within the building, electrical, fire, gas, and plumbing trades. APPI became insolvent as aresult of a recent re-assessment by Canada Revenue Agency which, according to APPI, was attributable to previous ownership. APPIthen sought to restructure its business and financial affairs through a proposal to creditors under Division 1 of

Part 111 of the BIA. [21] Meyers Norris Penny Limited was appointed Proposal Trustee of APPI. [22] The Regional Municipality of Wood Buffalo is one of the municipalities which delegated its permit-granting authority toAPPI; it did so in exchange for a 30% share of the payments received by APPI from its permit operations.

[ 23 ] CNRL is an oilsands development company which paid APPI millions of dollars for permits for buildings in the Wood Buffalo regional municipality.

i) First (re-scheduled) meeting of creditors [ 24 ] The first meeting of APPI creditors was scheduled for June 29, 2010 but was adjourned at the request of CRA to July 13, 2010. [ 25 ] The Division 1 proposal advanced at the July 13 th meeting was for the distribution to APPI’s creditors of $150,000.00 in full satisfaction of the claims against it. MNP had proxies from five creditors, (Canada Revenue Agency, Town of Beaumont, County of Vermillion River, Airways Business Plaza Ltd. and Shelbra International) whose claims totalled $767,755.50, voting in favour of the proposal.

There were five potential votes against the proposal, whose claims initially totalled approximately $19,000,000.00. None of the creditors intending to vote against the proposal was allowed to vote. [ 26 ] On July 13, 2010, the Chair of the meeting denied Wood Buffalo the right to vote at the meeting. On June 23, 2010, Wood Buffalo had filed a proof of claim in the amount of $6,202,159.16. The Proposal Trustee has reviewed the claim, found it deficient, but had not alerted Wood Buffalo to the perceived deficiencies prior to the first rescheduled meeting.

At the rescheduled meeting, Wood Buffalo informed the Chair that it had not provided its agent with a proxy or voting letter because its agent had just learned about the date of the rescheduled meeting on July 12, 2010, i.e. one day prior to the meeting, and had not had time to prepare the required document. Wood Buffalo is located in North East Alberta, in the region of Fort McMurray, and Wood Buffalo’s agent was located in Edmonton.

The Chair refused Wood Buffalo’s agent’s request for an adjournment, stating that the Trustee’s obligation was only to serve notice on the creditor and that obligation had been satisfied. Wood Buffalo’s Proof of Claim contained the following information about service: Form 31 Proof of Claim

Section 50.1, subsections 65.2(4), 81.2(1), 81.3(8), 81.4(8), 102(2), 124(2), 128(1), and paragraphs 51(1)(

e) and 66.14(

b) of the Act All notices or correspondence regarding this claim must be forwarded to: Kimberley D. Wakefield, Q.C./ Shauna N. Finlay Fraser Milner Casgrain LLP 2900 Manulife Place 10180 - 101 Street Edmonton, AB T5J 3V5 Fax: (780) 423-7276 Notice of the rescheduled meeting was served by the Trustee on the Fraser Milner Casgrain law firm but not to the attention of either lawyer identified in the Proof of Claim.

Fraser Milner Casgrain is a large law firm. [ 27 ] Although the issue was moot because of the absence of a proxy or a voting letter, the Chair of the meeting also denied Wood Buffalo the right to vote because Wood Buffalo’s claim: failed both to meet the requirements of s. 124(4) of the BIA and to set out the particulars of any claim that APPI had against Wood Buffalo; was contingent; and, was unliquidated and had not yet been valued. The Trustee added:

Specifically the proof of claim does not contain a detailed statement of account showing the particulars of the proof of claim, nor does it set out the vouchers or other evidence by which the proof of claim can be substantiated. Further, the proof of claim does not set out the particulars of any claim that Alberta Permit Pro Inc. has against RMWB, which is critical, since creditors who owe the debtor more than what is allegedly owed to them cannot vote.

In addition, the proof of the claim is contingent or a proof of claim for unliquidated damages, and is only a provable proof of claim for the amount which it has been valued by the trustee pursuant to section 135(1.1) of the Act.

A creditor with a proof of claim for unliquidated damages has no right to vote until his or her proof of claim has been valued, and at this time, the trustee has not had sufficient opportunity to value the proof of claim. [ 28 ] The Chair denied CNRL the right to vote stating that the latter’s proof of claim, in the amount of $12,293,516.84 did not comply with s. 124(4) of the BIA as it did not contain a detailed statement of account showing the particulars of the claim, nor the vouchers or other evidence by which the claim could be substantiated. [ 29 ] It was suggested on behalf of both Wood Buffalo and CNRL that the votes for those claimants be allowed, but marked as objected.

The Chair declined to take that course of action, deciding, instead, that the Trustee would record the votes, so advise the court, and that the votes could potentially affect later decisions. The Trustee added: A letter outlining the deficiencies will be sent as is our protocol, and if the deficiencies are resolved to the trustee’s satisfaction the vote may have an impact on the results of today’s meeting. If the deficiencies are not resolved to the trustee’s satisfaction then a notice of disallowance will be issued wherein a protocol in the Act is prescribed to have this matter heard by the Court.

In any event, as the trustee is the representative of the Court, all information will be disclosed to the Court by the trustee so that the Court can make informed decisions. [ 30 ] It was then argued, on behalf of APPI, that s. 108(1) of the BIA did not require a formal disallowance of a claim. The Trustee responded: [That] is correct. The Proof of Claim could take months to review which would delay the entire process.

From what you’re suggesting, a creditor could attend the meeting with their Proof of Claim in hand and the Trustee would not be able to reject for voting purposes and would be obligated to adjourn the meeting to fully review the Proof of Claim and provide notice of a disallowance. ii) Denials of claims [ 31 ] By letter dated October 7, 2010, Wood Buffalo provided the Trustee with additional information concerning its claim.

When cross-examined, the representative of the Trustee stated that, at least this additional information if not the information originally supplied by Wood Buffalo, satisfied the requirements of s. 124(4) of the Act. That information was forwarded by the Trustee on November 26, 2010 to APPI for its comments. On December 3, counsel for APPI sent to the Trustee letters setting out the reasons why APPI felt that Wood Buffalo’s claims were not valid. The Trustee’s application to approve APPI’s proposal and the Report to Court on Proposal were also filed and served on December 3, 2010.

The December 3 letter concerning Wood Buffalo’s claim was not forwarded by the Trustee to Wood Buffalo until January 28, 2011. The Trustee denied Wood Buffalo’s claim for the following reasons: First, approximately $2,424,839.36 of the claim advanced against APPI by RMWB is derived from transactions and events which occurred prior to April of 2008. As a result of the application of the standard two-year limitation period, such claims are statute-barred.

Second, the first component of the claim advanced against APPI by RMWB is a claim for $3,102,159.16 alleged to be comprised of unsubmitted remittances to RMWB, supposedly comprising RMWB’s 30% share of safety code permit fees collected by APPI. This aspect of RMWB’s claim does not stand up to scrutiny, insofar as: (

a) RMWB has failed to provide a satisfactory (or any) breakdown as to how these numbers were derived or calculated; and (

b) APPI has randomly audited a sample of select entries on the supporting spreadsheet provided by RMWB and has determined that

many of these entries pertain to permits in respect of which APPI has in fact remitted payments to RMWB.

By way of example only, each of items 56445-b, 59365-b, 57079-b, 58680-e, 58858-b, 59052-p, 56367-b, 56445-b, 56454-b, 56488-b, 56636-b pertain to permits in respect of which APPI remitted the appropriate portion of safety code permit fees to RMWB on various dates in 2007 and 2008 (supporting documentation is available upon request). [ 32 ] After the first rescheduled meeting of creditors, CNRL also provided additional information to the Trustee concerning its claim; the Trustee shared that information with APPI but did not share APPI’s response with CNRL, and then disallowed CNRL’s claim on the following grounds: (

a) Most of the items set out in the Proof of Claim are not sustainable as they are in respect of debts that were statute barred at the time the Proposal was filed; (

b) With respect to the remaining items, the information reviewed by the Trustee does not substantiate a debt owing by APPI to CNRL; and (

c) There is no evidence of a contractual relationship between APPI and CNRL that would establish a debt owing by APPI to CNRL.

b) Legislative [ 33 ] An appeal from the denial of the right to vote is set out in s. 108(1) of the BIA : Chair may admit or reject proof 108.

(1) The chair of any meeting of creditors has power to admit or reject a proof of claim for the purpose of voting but his decision is subject to appeal to the court. Accept as proof

(2) Notwithstanding anything in this Act, the chair may, for the purpose of voting, accept any letter or printed matter transmitted by any form or mode of telecommunication as proof of the claim of a creditor. In case of doubt

(3) Where the chair is in doubt as to whether a proof of claim should be admitted or rejected, he shall mark the proof as objected to and allow the creditor to vote subject to the vote being declared invalid in the event of the objection being sustained. R.S., 1985, c. B-3, s. 108 ; 1992, c. 27, s. 45 ; 2005, c. 47, s. 123(E) . [ 34 ] An appeal from the denial of a claim is set out in s. 135(4) of the BIA : Trustee shall examine proof

(1) The trustee shall examine every proof of claim or proof of security and the grounds therefor and may require further evidence in support of the claim or security. Determination of provable claims

(1.1) The trustee shall determine whether any contingent claim or unliquidated claim is a provable claim, and, if a provable claim, the trustee shall value it, and the claim is thereafter, subject to this section, deemed a proved claim to the amount of its valuation. Disallowance by trustee

(2) The trustee may disallow, in whole or in part, (

a) any claim; (

b) any right to a priority under the applicable order of priority set out in this Act; or (

c) any security. Notice of determination or disallowance

(3) Where the trustee makes a determination under subsection (1.1) or, pursuant to subsection (2), disallows, in whole or in part, any claim, any right to a priority or any security, the trustee shall forthwith provide, in the prescribed manner, to the person whose claim was subject to a determination under subsection (1.1) or whose claim, right to a priority or security was disallowed under subsection (2), a notice in the prescribed form setting out the reasons for the determination or disallowance. Determination or disallowance final and conclusive

(4) A determination under subsection (1.1) or a disallowance referred to in subsection (2) is final and conclusive unless, within a thirty day period after the service of the notice referred to in subsection (3) or such further time as the court may on application made within that period allow, the person to whom the notice was provided appeals from the trustee’s decision to the court in accordance with the General Rules. Expunge or reduce a proof

(5) The court may expunge or reduce a proof of claim or a proof of security on the application of a creditor or of the debtor if the trustee declines to interfere in the matter. R.S., 1985, c. B-3, s. 135 ; 1992, c. 1, s. 20 , c. 27, s. 53; 1997, c. 12, s. 89 . 2. Appeals pursuant to s. 108 of the Act from the Chair’s decision denying voting rights and pursuant to s. 135 of the Act from the Trustee’s decision disallowing claims are both by way of re-hearing or hearing de novo rather than by way of appeals on the record [ 35 ] Unhampered by any binding decision on the meaning of “appeal”, this court determines that a purposive

interpretation of ss.

108 and 135 of the BIA leads to the conclusion that appeals pursuant to those sections should be by way of rehearing, or hearing de novo,rather than by way of appeal on the record. Moreover, even if such appeals should normally be on the record, in the circumstances here,fairness requires a rehearing.

Finally, even if appeals had to be on the record, in the circumstances here the court would allow freshevidence to be called on the validity of the claims. [36] As opposed to the situation in British Columbia, where the Galaxy Sports court was perhaps bound, or at least guided, byearlier appellate decisions stating that the word “appeal”, without more, in a statute meant “appeal on the record”, this court does notface any such precedential hurdle. On the contrary, in this province, Rules 499 and 500 which referred simply to “appeal” wereconsistently interpreted to mean “appeal by way of hearing de novo”.

Therefore, in Alberta, it is still open to a court to conclude that astatutory reference to “appeal” must be interpreted contextually and could mean any one of a true appeal, or a hearing de novo, or even,presumably, a review of the type envisaged by Parliament in the Canadian Criminal Code with respect to bail where a reviewing courtcan reconsider bail if either the bail court made an error of law or if there are material new circumstances. [37] I am not certain if my view of the flexibility in Alberta accords with that of Yamauchi J., as expressed by him in TransglobalCommunications Group where he stated, at para. 36, that “ordinarily, an appeal is on the record”, and gave as authority for thatproposition Reform Party of Canada at pp 185-186.

With respect, I don’t interpret the referenced passages in the same way. Themajority in the latter case stated: VI. FRESH EVIDENCE APPLICATION 95 The Respondents seek to introduce fresh evidence at the re-hearing of this appeal. At the trial and at the first hearing of this appeal,counsel for the Attorney General of Canada argued that the Respondents had failed to establish a factual base for their action in that theyhad failed to prove that the legislation had the effect of restricting their freedom of expression.

The Respondents now seek to introduceevidence relating to the Reform Party's radio and television advertising and broadcasting campaign leading up to the election held inOctober, 1993. 96 In Palmer v. The Queen, (SCC), [1980] 1 S.C.R. 759, the Supreme Court of Canada set out the following criteria forthe admission of fresh evidence (at p. 775):

(1) The evidence should generally not be admitted if, by due diligence, it could have been adduced at trial provided that this generalprinciple will not be applied as strictly in a criminal case as in civil cases.

(2) The evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in the trial.

(3) The evidence must be credible in the sense that it is reasonably capable of belief, and

(4) It must be such that if believed it could reasonably, when taken with the other evidence adduced at trial, be expected to have affectedthe result. 97 The evidence which the Reform Party seeks to introduce deals with its actual expenditures during the 1993 election campaign. Thisevidence was not available at the trial which was held before the commencement of the election campaign. Such evidence is relevant. Idoubt that it is decisive or practically conclusive.

However, I need not decide the issue here as I have already dealt with the factual basisand have decided that issue in favour of the Reform Party without reference to the new evidence. In my view, that extract merely reminds us of the basic principles regarding the introduction of fresh evidence on appeal when the appealis on the record. [38] Similarly, while one cannot help but applaud the concern expressed by Farley J. in Canadian Triton about “coopering up” aclaim for voting rights with information provided after the fact, in my view that concern does not automatically lead to an appeal on therecord.

Several points must be made: first, Farley J. was dealing only with the appeal pursuant to s. 108, not with the appeal pursuant to s.135. Part of the difference between those two sections is that s. 108 involves an assessment of relatively narrow issues - relating tocompliance with certain basic formalities. Even then, as Farley J. noted, an appeal should take into account “material then available tothe Chair”.

In the circumstances here, what was available to the Chair on July 13, 2010 was the information provided by Wood Buffaloabout its address for service; clearly that information should be available to the court, as part of the record, when deciding whether theChair properly denied Wood Buffalo the right to vote on July 13, 2010. Moreover, as was established by Urquart J. in 1940, making the

best possible assessment of a claim in a timely manner is part of a Proposal Trustee`s obligation, even if satisfaction of the obligation involves giving the opportunity to a creditor to “cooper up” its claim; in the long run, investment at that stage of the proceedings is more efficacious than waiting for a court to overturn a decision. In any event, in practice, at least in Alberta, Chairs and Trustees do not prepare a “record” of what was available to the Chair in relation to a decision on voting.

Indeed, it is possible that Wood Buffalo’s proof of claim, which contained the address for service, was not produced and exhibited at the meeting on July 13. The notion of appeal on the record fails when established practice does not establish a record. [ 39 ] What did Parliament intend in ss. 108 and 135? I agree with Galaxy Sports to the extent that it stated that slightly different considerations apply in respect of each of those sections because of the privative clause which attaches to the latter but not to the former.

Overall, however, given the tight time lines imposed by Parliament in respect of the proceedings, the limited resources of the Trustee, the cost of providing “records”, and, most importantly, the considerable delay and additional expense caused by returning matters to the Trustee for reconsideration in every case where either the Trustee did not give sufficient reasons to allow an appeal court to adequately assess the Chair or the Trustee’s reasons, or where the Trustee made an error of law on which correctness would be the standard of review, I have concluded that Parliament intended that the appeals be heard by way of re-hearing so that, at the conclusion of the hearing by the court, an answer would be provided to all the parties.

As one of the parties on this hearing stated, albeit in connection with another issue, the nature of this process is such that it cannot bear the time and cost of fulsome review. With respect, the only time when the Galaxy Sports approach would operate to provide an efficacious result would be where the court denies the appeal and upholds the Chair or Trustee.

Almost inevitably in an appeal on the record system as we know from our own Courts of Appeal, when an appellant succeeds in objecting to a Trustee’s decision, the matter would have to be returned to the Trustee for re-assessment, thereby causing delay and additional expense.

A system that automatically punishes a successful appellant cannot have been within Parliament’s contemplation for the disposition of commercial matters where time is often of the essence. [ 40 ] However, if I were wrong in that analysis, then I would adopt the reasoning in San Juan Resources Inc. and state that, in the circumstances here, an injustice would result from the denial of a hearing de novo . In relation to Wood Buffalo’s right to vote at the meeting, since Wood Buffalo’s proof of claim gave a precise address for service, the Trustee should have served Wood Buffalo at that address.

Service is like horseshoes: close is often good enough. A court would have the ability to deem service good and sufficient even if it did not formally comply with the requirements; were we dealing with a relatively small law firm, and a creditor/client with no unique authority issues as arise where a municipality must approve a certain course of conduct, and where the authority-granting individuals resided in the same city or town as the law firm agent, even a notice that had not been sent to the address for service specified may have been deemed sufficient.

However, in this case, given the nature of the client, the size of the law firm, and the distance which separated the two, coupled with the clear knowledge that the creditor intended to file a claim, in fairness the requested adjournment should have been granted. [ 41 ] Even more important reasons than lack of adequate service ground a conclusion that it would be unfair to deal with this matter on the record: those relate to the substantive treatment by the Trustee of the Wood Buffalo and CNRL claims.

In that context, APPI relies on Northstone Power Corp. which it cites for the proposition that the position of a major creditor need not always be taken into account, and should not be taken into account where the Trustee has disallowed that creditor’s claim. However, within that decision we find the following citation from an earlier Ontario case where Urquhart J. stated: Counsel for R.J.K. referred to the case of McCrie v.

Gray, Ontario Supreme Court in Bankruptcy, (1940) 22 C.B.R. 390 , where Urquhart J. was dealing with an appeal by a creditor from a notice of disallowance served on him of his claim against the estate of the debtor. Particular reference was made to his comments where Urquhart J. said, at p. 4: "Not only did the trustee give no reasons for rejection but it did not, as I think it was its duty to do, ask the creditor for production of vouchers, receipts or other documents substantiating his claim, nor make any inquiries. If it had, many of the items disputed would have been admitted.

I think I must lay down the rule, which is to be followed by trustees, that notices of disallowance must set forth, so far as is humanly possible, the grounds of rejection and must follow at least some semblance of investigation by the trustee. . . ." 18 I would first note that I am not dealing with an appeal of the Trustee's decision to disallow the claim. I have no quarrel whatsoever with the comments made by Urquhart J. in that case. (Emphasis added)

The provisions of s. 135(1) appear to be a statutory implementation of Urquart J’s outline of the duty of Trustees when examining claims. [ 42 ] On the facts here, not only did the Proposal Trustee not ask the creditors for explanations prior to the first rescheduled meeting of creditors after it had obtained some criticism of the proposals and while there was still 4 days left prior to the meeting during which additional information could have been supplied, but after the first meeting, when additional information was provided, the Trustee not only denied the creditors the opportunity of responding to APPI’s position, but, given that APPI’s letter was dated December 3 and that the Trustee’s Report was dated December 3, appears to have failed to make any semblance of independent investigation of the positions taken by APPI. [ 43 ] Parenthetically, it is to be noted that Urquhart J. was prescient about the need to give reasons: although he spoke in 1940, it was only in 2002, in Sheppard , that the Supreme Court of Canada issued its leading decision on the need for judges to give reasons: The trial judge erred in law in failing to provide reasons that were sufficiently intelligible to permit appellate review of the correctness of his decision.

The requirement of reasons is tied to their purpose and the purpose varies with the context. The present state of the law on the duty of a trial judge to give reasons, in the context of appellate intervention in a criminal case, can be summarized in the following propositions: 1. The delivery of reasoned decisions is inherent in the judge's role. It is part of his or her accountability for the discharge of the responsibilities of the office. In its most general sense, the obligation to provide reasons for a decision is owed to the public at large. 2.

An accused person should not be left in doubt about why a conviction has been entered. Reasons for judgment may be important to clarify the basis for the conviction but, on the other hand, the basis may be clear from the record. The question is whether, in all the circumstances, the functional need to know has been met. 3. The lawyers for the parties may require reasons to assist them in considering and advising with respect to a potential appeal. On the other hand, they may know all that is required to be known for that purpose on the basis of the rest of the record. 4.

The statutory right of appeal, being directed to a conviction (or, in the case of the Crown, to a judgment or verdict of acquittal) rather than to the reasons for that result, not every failure or deficiency in the reasons provides a ground of appeal. 5. Reasons perform an important function in the appellate process. Where the functional needs are not [page871] satisfied, the appellate court may conclude that it is a case of unreasonable verdict, an error of law, or a miscarriage of justice within the scope of s. 686(1) (

a) of the Criminal Code , depending on the circumstances of the case and the nature and importance of the trial decision being rendered. 6. Reasons acquire particular importance when a trial judge is called upon to address troublesome principles of unsettled law, or to resolve confused and contradictory evidence on a key issue, unless the basis of the trial judge's conclusion is apparent from the record, even without being articulated. 7. Regard will be had to the time constraints and general press of business in the criminal courts. The trial judge is not held to some abstract standard of perfection.

It is neither expected nor required that the trial judge's reasons provide the equivalent of a jury instruction. 8. The trial judge's duty is satisfied by reasons which are sufficient to serve the purpose for which the duty is imposed, i.e., a decision which, having regard to the particular circumstances of the case, is reasonably intelligible to the parties and provides the basis for meaningful appellate review of the correctness of the trial judge's decision.

9. While it is presumed that judges know the law with which they work day in and day out and deal competently with the issues of fact, the presumption is of limited relevance. Even learned judges can err in particular cases, and it is the correctness of the decision in a particular case that the parties are entitled to have reviewed by the appellate court. 10. Where the trial decision is deficient in explaining the result to the parties, but the appeal court considers itself able to do so, the appeal court's explanation in its own reasons is sufficient. There is no need in that case for a new trial.

Such an error of law at the trial level, if it is so found, would be cured under the s. 686(1) (b)(iii) proviso. In the circumstances of this case, the majority of the Court of Appeal correctly concluded that the reasoning of the trial judge was unintelligible and therefore incapable of proper judicial scrutiny on appeal. There were significant inconsistencies or conflicts in the evidence. The trial judge's reasons were so "generic" as to be no reasons at all.

The absence of reasons prevented the Court of Appeal from properly reviewing the correctness of the [page872] unknown, unexpressed pathway taken by the trial judge in reaching his conclusion and from properly assessing whether he had properly addressed the principal issues in the case.

The trial judge's failure to deliver meaningful reasons for his decision was an error of law within the meaning of s. 686(1) (a)(ii) of the Criminal Code . [ 44 ] What is interesting about Sheppard in relation to the obligation of a Proposal Trustee to give reasons is that, until that SCC decision, there had been no necessity for judges to give reasons for their decisions. However, there had always been a duty, based in natural justice, on administrative tribunals to give reasons for their decisions.

One way of looking at the Sheppard decision is that it merely imposed on judges the obligation that already existed on administrative tribunals. [ 45 ] The comments by Urquart J. therefore support the conclusion that an “appeal” in the context of ss. 108 and 135 should not be an appeal on the record but a re-hearing: to make an appeal “on the record” would impose on the Trustee or Chair an extremely onerous duty - including the duty to give reasons - without providing to the Trustee the resources or the time to satisfy the duty. [ 46 ] In any event, however, in circumstances where the Trustee had not exercised its power under s. 135(1) of the Act to ask for additional information from Wood Buffalo, even after the Trustee had received submissions from APPI on the claim without having discussed those with Wood Buffalo, it would be unfair to hear an appeal on the record.

The only way in which Wood Buffalo can have a fair opportunity to argue its case is to have a hearing de novo . A further argument in favour of the fairness of a rehearing in the circumstances here is the Trustee’s own position at the first meeting that it would record Wood Buffalo’s vote and put all relevant information before the court in full satisfaction of its obligation as a court-appointed official; that approach is best enabled by a rehearing. [ 47 ] As a third alternative, if an appeal on the record were the only permissible

interpretation of the word “appeal”, then I would have allowed the appellants to have introduced new evidence: it is clear from the Trustee’s own position that it did not give either Wood Buffalo or CNRL the opportunity to learn what the objections were to the claims before the denials were issued. Therefore, the appellants could not, even with reasonable effort, have provided timely responses to the Trustee, and the responses are potentially material.

Moreover, the Trustee has taken the position throughout that the court was entitled to have all of the pertinent information and to make its decisions based on that information; the only way in which that state of information could be achieved was by a re-hearing. [ 48 ] In light of the various judicial comments on the type of appeal envisaged by the statute, clarification of its intention by Parliament might be useful. 3.

The treatment of Wood Buffalo’s claims: at the first meeting, Wood Buffalo should have been granted an adjournment; at the first meeting, Wood Buffalo should have been given the right to vote, even if the vote had been marked “objected” ; after the first meeting, Wood Buffalo’s claim should not have been rejected by the Trustee

a) Wood Buffalo should have been granted an adjournment [ 49 ] In addition to the comments made above about the lack of notice of the first meeting to Wood Buffalo as an aspect of fairness requiring a hearing de novo , the court holds that Wood Buffalo was entitled to notice of the rescheduled meeting by notice given to the address for service which Wood Buffalo had clearly provided to the Trustee. With respect, the decision in Lofchik does not detract from

that conclusion. The only evidence available to the court in the latter case was that the trustee there had done “what was mechanically required of them and particularly that such notice was mailed to all creditors of the debtor”. Here, the evidence is clear that Wood Buffalo had provided an explicit address for service, and the Trustee itself acknowledged that it did not mail the notice to Wood Buffalo at that address. [ 50 ] It is perhaps also important to underline the importance of voting at a first meeting of creditors; that importance cannot be overestimated and is well illustrated by this case.

Because Wood Buffalo was denied the right to vote on the proposal, the most that it could achieve now if the Chair’s voting decision were upheld is that Wood Buffalo could participate in the proposed distribution. Given the size of Wood Buffalo’s relative interest, which swamps that of all of the creditors who voted in favour of the proposal, such a result is not only undemocratic, but a result which skews the assessment of business wisdom in the situation.

Although Wood Buffalo might have been given the right to participate in a subsequent distribution, that is meager comfort for the largest creditor who wanted to vote against the proposal. [ 51 ] Indeed, the very relative importance of Wood Buffalo amongst the creditors puts its situation in a unique light.

One can well understand a situation where one minor creditor’s position might be overlooked if one had the strong sense that all other creditors were of one mind and that the missing creditor - even if it had voted against the tide - could not have influenced the vote. [ 52 ] APPI takes the view that Northstone Power Corp. stands for the proposition that the failure of one creditor to vote should not be weighed against the decision of the majority of the shareholders. With respect, I disagree.

Rather, I am of the view that the decision stands for the proposition that where all of the appropriate parties have been given the required notice, and where the Trustee has made the required assessment of all of the proofs of claim, the eligible votes then decide what should be done next.

That case simply has no application here, where, for a start, one major creditor was not given notice of the meeting and was therefore placed in the position where it could not vote. [ 53 ] APPI argues that the Chair’s decision to refuse an adjournment should be upheld because Wood Buffalo did not explain why it did not attend the first meeting of creditors, at which it was decided that a re-scheduled meeting would be held on a specific future date. This argument must be rejected on the facts here.

In coming to that conclusion, I have taken the following into account: - although there is no evidence on the point, because the argument was not raised prior to the hearing, the court accepts the submission of counsel for Wood Buffalo that the lawyers for Wood Buffalo had been informed, prior to the first meeting, that the meeting would be adjourned.

They therefore did not attend the first meeting, and were not aware of the information provided to those who attended the meeting about the date on which the meeting was re-scheduled.; - in those circumstances, Wood Buffalo and its agents were entitled to rely on being given proper notice of the meeting; - I accept the representation of counsel that they did not receive notice of the meeting until July 12, 2010; [ 54 ] In

summary, therefore, Wood Buffalo was entitled to an adjournment of the first meeting of creditors in order to formalize its voting position. In all the circumstances here, the failure to grant an adjournment impugned the meeting as a whole and requires that a meeting to consider APPI’s proposal be rescheduled. [ 55 ] However, in light of the fact that Wood Buffalo’s vote was recorded by the Trustee, it will not be necessary to call a further meeting of creditors to discuss this proposal.

b) At the first meeting of creditors, Wood Buffalo’s vote should have been taken, even it was marked “objected” [ 56 ] Before interpreting the “objected” mechanism, the Court reviews the Proposal Trustee’s rejection of Wood Buffalo’s claim at the initial meeting. That rejection was based on three grounds: Wood Buffalo had not provided sufficient information about its claim to meet the standards of s. 124(4) of the Act, the claim was contingent and the claim was unliquidated. [ 57 ] The first ground for rejection, incompleteness, is, in my view, answered by Urquart J.’s outline of a “duty” of a Trustee, i.e.

to ask for clarification if the Trustee cannot come to a decision on the material filed. Here, Wood Buffalo’s original claim set out that a resolution of the municipal council approved an agreement between Wood Buffalo and APPI for the provision of safety code services for the period January 1, 2006 to Dcember 31, 2008. The claim stated that APPI would collect fees, issue permits and remit 30% of those fees to the municipality.

Wood Buffalo claimed that APPI failed to remit 30% of the fees collected, failed to provide safety code services and failed to maintain proper paperwork that would allow the municipality to confirm which safety code permits had been applied for and which fees were outstanding. The claim went to quantify the cost of rectifying deficiencies in APPI’s work and the shortfall in remittances. The claim also attached the pleadings filed in the litigation between Wood Buffalo and APPI in relation to these matters.

If the Trustee was of the opinion that this outline was insufficient, it could have, and should have, asked for more information in support of the claim. [ 58 ] Wood Buffalo’s claim was not contingent. I agree with Wood Buffalo’s definition of “contingent” as reflected in the Houlden and Morawetz text: “A contingent claim is a claim that may or may not ever ripen into a debt according as some future event does or does not happen . . .” Here, there was no future event that determined anything: Wood Buffalo’s claim is that APPI took in permit fees, and that APPI failed to remit 30% of those fees to Wood Buffalo.

That claim is not a contingent claim. [ 59 ] Wood Buffalo’s claim was not unliquidated. Here again, I agree with Wood Buffalo’s definition of “liquidated amount” as reflected in Black’s Law Dictionary : “a figure readily computed, based on an agreement’s terms”.

Here the 30% provision in the agreement between Wood Buffalo and APPI make Wood Buffalo’s claim readily computed based on the total permit fees received by APPI. [ 60 ] Turning now to the issue of what should have been done in relation to the Wood Buffalo claim in light of the ability to characterize a claim as “objected” but allow the claim to vote, the court concludes that that statutory mechanism should have been followed at the first meeting of creditors. [ 61 ] In coming to that conclusion, the court notes that the objective of the statutory scheme of the BIA is to encourage efficacious, but fair, handling of claims. [ 62 ] APPI states that a vote cannot be characterized as “objected” unless the Trustee has made a decision that it is unable to evaluate the claim, and that, in the circumstances here, the Trustee had definitely rejected Wood Buffalo’s claim. [ 63 ] Undoubtedly, some claims are clearly good, and some are clearly bad.

The Trustee must be able to make a

summary determination with respect to such claims. [ 64 ] However, where claims are relatively complicated, it stands to reason that the Trustee would come to the conclusion that it does not have the time, or the means, to assess the claim and that it should resort to the provisions of s. 108(3). It appears to me that a potentially useful guide to a Trustee is the case law which has developed around the issue of

summary judgments: a Trustee is, in effect, called upon to make a

summary judgment in respect of the claims advanced. In circumstances where it is not possible to make a

summary judgment, the Trustee should take advantage of the statutory mechanism offered, mark a claim “objected”, but allow the putative creditor to vote.

In the circumstances here, it is difficult to credit that the Trustee would have had sufficient information to categorically state that Wood Buffalo’s claim was denied; Wood Buffalo should have been allowed to vote, and the vote should have been marked “objected”. [ 65 ] Parliament’s wisdom in developing the “objected” mechanism is apparent here; it may well be that Wood Buffalo’s undeniable claim is only $1,713,407.61 rather than the $6,202,159.16 originally claimed. Working out a claim is part of what is expected to be done between the first meeting of creditors and the distribution.

Here, if the $6 million claim had been noted as objected, the Trustee could still have ended up by approving a firm claim of $1.7 million which still would have swamped the other creditors’ combined vote and determined the fate of the proposal.

In other words, the notion of objection allows forward movement without denying property rights. [ 66 ] In all the circumstances here, the Proposal Trustee should have allowed Wood Buffalo to have voted at the first meeting, but should have marked the vote “objected”. [ 67 ] In the result, however, by “recording” the vote, the Trustee has averted the necessity of calling a new first meeting.

c) After the first meeting of creditors, Wood Buffalo’s claim should not have been rejected by the Trustee [68] One of the grounds on which the Proposal Trustee eventually rejected both Wood Buffalo’s and CNRL’s claims is alimitations defence: a sizeable proportion of each of those claims allegedly fails because claims were not launched by the creditorswithin the standard two year limitation period. [69] I agree with Wood Buffalo’s and CNRL’s response to this ground for rejection.

As was made clear by Wood Buffalo incommunication with the Trustee prior to the first rescheduled meeting of creditors, the issue of discoverability had to be addressed by theTrustee when assessing the effect of limitations. The importance of discoverability in every situation where a limitations defence isadvanced was identified by the Supreme Court of Canada in Peixeiro: : 36 Since this Court's decisions in Kamloops (City of) v.

Nielsen, (SCC), [1984] 2 S.C.R. 2, and Central Trust Co. v.Rafuse, (SCC), [1986] 2 S.C.R. 147, at p. 224, discoverability is a general rule applied to avoid the injustice ofprecluding an action before the person is able to raise it. See Sparham-Souter v. Town & Country Developments (Essex) Ltd., [1976] 1Q.B. 858 (C.A.), at p. 868 per Lord Denning, M.R., citing Cartledge v. E.

Jopling & Sons Ltd., supra: It appears to me to be unreasonable and unjustifiable in principle that a cause of action should he held to accrue before it is possible todiscover any injury and, therefore, before it is possible to raise any action. See also M. (K.) v. M. (H.), supra, at p. 32, and Murphy v. Welsh, supra, at pp. 1079-81. 37 In this regard, I adopt Twaddle J.A.'s statement in Fehr v.

Jacob (1993), (MB CA), 14 C.C.L.T. (2d) 200 (Man.C.A.), at p. 206, that the discoverability rule is an interpretive tool for the construing of limitations statutes which ought to be consideredeach time a limitations provision is in issue: In my opinion, the judge-made discoverability rule is nothing more than a rule of construction. Whenever a statute requires an actionto be commenced within a specified time from the happening of a specific event, the statutory language must be construed.

When timeruns from "the accrual of the cause of action" or from some other event which can be construed as occurring only when the injured partyhas knowledge of the injury sustained, the judge-made discoverability rule applies.

But, when time runs from an event which clearlyoccurs without regard to the injured party's knowledge, the judge-made discoverability rule may not extend the period the legislature hasprescribed. (Emphasis added) [70] The same principle applies to CNRL’s claim. [71] In addition to the limitations defence, the second ground on which the Proposal Trustee rejected Wood Buffalo’s claim wasthat there was no information about how the claim had been derived or calculated.

However, Wood Buffalo had provided at least 6inches of materials supporting its claim; it was entitled to a proportionately detailed explanation of why the material provided did notsatisfy the Trustee.

Indeed, in cross-examination the Trustee’s officer acknowledged that the claim met the standards established by s.124(4) of the Act; therefore, it should have been possible for the Trustee to be explicit about the reasons for rejection of the claim. [72] The third ground on which the Proposal Trustee rejected Wood Buffalo’s claim was that there were certain situations inwhich Wood Buffalo had received its 30% of the permit fee collected by APPI.

However, during cross-examination subsequent to thefirst meeting, APPI acknowledged that the illustrations which it provided of situations in which the 30% had been paid related to lessthan 20 situations of the over 2,000 permit payments that had been reviewed; in other words, the very evidence on which the Trusteerelied demonstrated that payments to Wood Buffalo had not been confirmed in 1,200 to 1,500 separate transactions.

[ 73 ] It is correct, as APPI points out, that Wood Buffalo’s claim has evolved over time; indeed, given the strict time elements of the process, it would be remarkable if there had not been revision to the claim. In any event, Wood Buffalo has stated that, for strategic reasons, it has abandoned those parts of its claim which might be the subject of dispute and has narrowed its claim to an essential nub which is beyond dispute. This approach by a creditor should not be a reason for wholesale disallowance of a claim. 4.

The treatment of CNRL’s claim: CNRL’s claim should be valued [ 74 ] CNRL was not allowed to vote at the first re-scheduled meeting of creditors for a variety of reasons, including the fact that its claim was unliquidated and had not been valued. CNRL acknowledges that its claim was in fact unliquidated.

Therefore, even if there were no s. 124(4) issues, CNRL could not vote until its unliquidated claim was valued; therefore, it suffered no prejudice as a result of the Trustee’s denial of voting rights at the initial meeting. [ 75 ] One of the interesting features of the CNRL claim is that CNRL was not identified by APPI as one of its creditors. It was not surprising, in those circumstances, and given the size of the eventual CNRL claim, that the first information provided by CNRL may not have satisfied the requirements of s. 124(4).

However, that is where Urqhuart J.’s rule would again come into play: the trustee should have made specific inquiries of CNRL about its claim, and, once APPI had had an opportunity to comment on the claim, CNRL should have been given the opportunity of responding to APPI. [ 76 ] CNRL has provided positive evidence of an agreement with APPI, of invoices from APPI to itself for services performed, of payments by way of cheque from itself to APPI, of a regulatory audit commenced in July 2009 to determine if the permits had in fact been issued, and of the conclusion reached by that audit that most permits had not been issued.

CNRL has also retained an outside opinion In opposition to that evidence, APPI’s current president states that, in his view, all of the millions of dollars that CNRL has spent on paying for permits has been satisfied by obtaining the permits for which CNRL was invoiced. The current president was not, however, president when the arrangements were first instituted between CNRL and APPI in 2005.

Moreover, the current president is unable to provide all the permits, or indeed, photocopies of all the permits; he states that Wood Buffalo required APPI to return all of its records to Wood Buffalo and that APPI is not in a position to provide back-up to its assertions. [ 77 ] To the best of its knowledge, CNRL has not yet suffered any prejudice by reason of its failure to obtain permits, but it is presumably at risk both of being shut down because it does not have permits and of inadequate testing of its building operations.

The inspection process itself would have been useful to CNRL in ensuring that its buildings were up to Code. CNRL states that a recent fire at the Horizon site illustrates the seriousness of CNRL’s concern about its permits and Code status. [ 78 ] APPI argues that the person hired by CNRL to review CNRL’s accounts to determine how many permits had been obtained is a competitor of APPI, and that the individual’s evidence should be assessed in light of that caveat.

The last criticism of CNRL’s evidence by APPI is not persuasive: if that approach were taken, APPI’s own evidence would be dismissed as entirely self-serving. [ 79 ] CNRL’s evidence from its own employees is that of 111 buildings which it processed in the Fort McMurray area, only 17 have been completed or closed. The evidence provided by CNRL from an outside assessor, the person whose impartiality was criticized by APPI, found that there were 26 permits rather than 17.

In any event, however, CNRL states that there is a considerable shortfall between the permits that it paid for and the permits it received. [ 80 ] Finally, and going back to the issue of the kind of appeal that is alluded to in s. 135 of the Act, one cannot help but note that the Trustee’s response to CNRL about the disallowance of its claim would, under a pure appeal, be rejected for error of law both in ignoring the discoverability issue and in failing to recognize that the sending of invoices is evidence of a contractual relationship, and also for failure to give adequate reasons in relation to the overall disqualification.

Under an appeal on the record procedure, this court would then have had to send the matters back to the Trustee for the Trustee’s re-assessment of the issues relating to CNRL’s claim. 5. The proposal should be rejected at this time [ 81 ] APPI and the Trustee recommend that the Court should approve the proposal despite the problems described above because:

- 21 employees of APPI risk losing employment if the proposal is not approved; - municipalities that depend on APPI for their inspection programs would find themselves, at least temporarily, without any service provider, and, most importantly, - nobody would do better in a bankruptcy. [ 82 ] Indeed, courts have consistently held that, in determining whether to accept a proposal, the court must be satisfied, first, that its terms are reasonable and that the terms are calculated to benefit the general body of creditors: see para.10 of Lofchik . In the same paragraph,.

Farley J. endorsed the view that courts must, in addition, also consider the “conduct and interests of the debtor, the interests of the public and future creditors and the requirements of commercial morality”. In that articulation, it must be emphasized that the most important factor is the interest of creditors; that is not surprising since it tracks Parliament’s language in s. 59(2). [ 83 ] The interests of the debtor will presumably usually, if not always, be to restructure their affairs without resort to bankruptcy.

Therefore, the remaining factors are presumably the ones which require the most careful consideration. [ 84 ] As to the interests of the debtor and the persons who depend on the debtor in the circumstances here, the need for issuing permits has not ended; therefore, it seems likely that persons who are experienced in assessing permits will find employment with other service providers.

Similarly, assuming that municipalities will still find it more economical to privatize the permit-issuing function, it is likely that someone will recognize that opportunity and provide that service. [ 85 ] As to the interests of the creditors, Parliament’s intention in elaborating the BIA was clearly to respect the business acumen of creditors, weighted overall by the amount which those creditors have at stake. Such business decisions must, however, reflect the opinion of all of APPI’s creditors who, having been given a fair opportunity to vote on the proposal, have expressed their opinion in their vote.

A vote of the type intended by Parliament did not take place in the circumstances here. Moreover, in my view, even if it were true that Wood Buffalo and CNRL would not do better in a bankruptcy, that would not be a reason to approve the proposal; if comparison to bankruptcy had been the standard, Parliament would have said so. Parliament chose to submit proposals to creditors with a view to allowing the creditors to exercise their business judgment; therefore, the courts should also respect that judgment.

Indeed, the Lofchik case cited by the Trustee is authority for the proposition that “if a large majority of creditors, i.e. substantially in excess of the statutory majority, have voted for acceptance of a proposal, it will take strong reasons for the court to substitute its judgment for that of the creditors”: para. 13. The principle is correct whether the majority of creditors vote for or against the proposal. [ 86 ] I accept the opinion of the Trustee that the insolvency in the case here was caused by the previous ownership of APPI rather than by its current ownership.

Therefore, I have concluded that there is no issue relating to commercial morality that must be taken into account in determining whether the proposal should be approved. [ 87 ] In the result, the proposal is not approved. 6. Costs [ 88 ] If the parties are not agreed on costs, I may be spoken to within 30 days of the release of this decision. Heard on the 1 st day of March, 2011. Dated at the City of Edmonton, Alberta this 4 th day of March, 2011.

J.B. Veit J.C.Q.B.A. Appearances: Brian W. Summers and Shauna N. Finlay, Fraser Milner Casgrain LLP, Edmonton for the Appellant, Regional Municipality of Wood Buffalo G. Scott Watson and Brent Mescall, Parlee McLaws LLP, Calgary for the Appellant, Canadian Natural Resources Limited Jeffrey M. Lee, MacPherson, Leslie & Tyerman LLP, Saskatoon for Alberta Permit Pro Inc. Suzanne A. Thomas, Duncan & Craig LLP, Edmonton for the Trustee