2014 QCCA 1787, 2014 QCCA 1787

Industries Cover inc. (Syndic des) 2014 QCCA 1787 COURT OF APPEAL CANADA PROVINCE OF QUÉBEC REGISTRY OF MONTRÉAL No: 500-09-024731-143 (500-11-047250-143) MINUTES OF THE HEARING DATE : September 26, 2014 THE HONOURABLE MR. JUSTICE NICHOLAS KASIRER, J.A IN THE MATTER OF THE BANKRUPTCY OF INDUSTRIES COVER INC. PETITIONERS COUNSEL GUARDIAN INDUSTRIES CANADA CORP., AN ONTARIO CORPORATION GUARDIAN INDUSTRIES CANADA CORP., A DELAWARE CORPORATION Mtre MICHEL LA ROCHE Mtre STEPHAN H. TRIHEY ( Miller Thomson SENCRL / LLP ) RESPONDENTS COUNSEL GESTION J&N BOUDREAULT INC. Mtre SUZANNE GAGNÉ ( Létourneau & Gagné ) Mtre WILLIAM NOONAN ( Gestion Hickson Noonan inc. ) IMPLEADED PARTIES COUNSEL

SYNDIC PRICEWATERHOUSECOOPERS INC. LA BANQUE DE NOUVELLE ÉCOSSE BUREAU DE SURINTENDANT DES FAILLITES RAYMOND CHABOT INC. Mtre JEAN- BERTRAND GIROUX ( BCF s.e.n.c.r.l. ) Mtre JEAN-FRANÇOIS CARPENTIER ( Kugler, Kandestin s.e.n.c.r.l., l.l.p. ) DESCRIPTION : Motion by the appellants for stay of the provisional execution and, if need be, for leave to appeal (Art. 550 C.p.c. or s. 195 B.I.A. and, subsidiarly, art. 26(5), 29(2) & 511 C.p.c. or s. 193(

e) B.I.A.) Clerk : Asma Berrak Courtroom : RC.18 HEARING 15 :16 Beginning of hearing, Identification of counsel. Comments by the Judge. Discussion between the Judge and the parties. 15 :17 Mtre Gagné presents her position. 15 :19 Comments by the Judge. 15 :21 Submission by Mtre La Roche with respect to the urgent character of the matter presented today. 15 :24 Mtre Giroux and Mtre Carpentier have nothing to add.

Submission by Mtre Gagné with regard to the urgent character of the matter. 15 :29 Discussion between the Judge and Mtre La Roche. 15 :31 Submission by Mtre La Roche. 15 :34 Submission by Mtre Gagné. 15 :37 Reply by Mtre La Roche. 15 :38 Discussion between the Judge and Mtre Gagné. 15 :39 Submission by Mtre La Roche. 15 :46 Mtre Giroux and Mtre Carpentier have nothing to add. Submission by Mtre Gagné. 16 :04 Reply by Mtre La Roche. 16 :15 Reply by Mtre Giroux. 16 :22 Comments by Mtre Carpentier.

Discussion between the Judge and Mtre Gagné. 16 :22 Reply by Mtre Gagné. 16 :27 Reply by Mtre La Roche. 16 :31 End of submission by counsel. Comments by the Judge. Suspension. 17 :30 Resumption.

Judgment-see page 3. 17 :37 Conclusion of hearing. Clerk BY THE JUDGE JUDGMENT [ 1 ] Having filed an inscription in appeal from a judgment of the Superior Court, District of Montreal (the Honourable Michel Pinsonneault), rendered September 23, 2014 (with written reasons deposited on September 24, 2014), Guardian Industries Canada Corp. and Guardian Industries Corp. (hereinafter “Guardian”) have asked for leave to appeal from that same judgment in the event leave is necessary.

In the same proceeding, Guardian has also asked for a stay from the judge's order that the judgment is subject to provisional execution notwithstanding appeal. [ 2 ] The motions were filed in the registry of this Court today.

Guardian asked that the time limits imposed by law be abridged by reason of what it describes as the urgency of the situation, in particular that respondent Gestion J&N Boudreault inc. had commenced with execution of the judgment. [ 3 ] I agree to abridge the time limit in the circumstances. [ 4 ] In light of this situation of urgency, the parties agreed that the motion for leave should be argued on Tuesday, September 30, 2014, before the designated judge in chambers. [ 5 ] In the circumstances, and given my conclusion herein, I am nevertheless able to decide on the motion for a stay based on the inscription in appeal. *** [ 6 ] Where a judge orders provisional execution notwithstanding appeal, as in the present instance, the party asking for a stay must show 1) an apparent weakness in the judgment under review; 2) the risk of serious harm if the order for provision execution is not stayed; and 3) that the balance of inconvenience favours the stay.

That burden – often described as a heavy one [1] – falls to Guardian in this case. [ 7 ] In addition, it is generally understood that a judge in chambers owes a degree of deference to the judge in first instance who exercised his or her discretionary authority – if indeed the judge had that power – to order provisional execution notwithstanding appeal. [2] *** [ 8 ] Does the judgment suffer from an inherent weakness? [ 9 ] Guardian argues that the judge erred in law in deciding he had the power to make the interim order based on his inherent jurisdiction, especially in view of the fact that, as he himself noted, no provision of the Bankruptcy and Insolvency Act appears to empower him to do so (see paras. [64] et seq . of his reasons). [ 10 ] Without in any way seeking to bind my colleagues who will hear further proceedings in this case, I am of the view that the judge’s decision that he had the power to pronounce the interim order suffers from no apparent weakness. [ 11 ] Guardian emphasizes the serious character of the matter in making its case for the weakness of the judgment.

I note that counsel for the respondent herself characterized the issue faced by the judge as a serious one. The fact that the question is a serious one provides no necessary insight into whether the manner in which it was decided reflects weakness or not. As my colleague Morissette, J.A. wrote in Droit de la famille—081957 , "[b]eaucoup de moyens peuvent être plaidables sans pour autant équivaloir à la démonstration d'une faiblesse apparente dans un jugement". [3]

[ 12 ] In the present case, the reasons given by the judge for his sense that he had jurisdiction to make the interim order, especially in light of the analogy one might make to a safeguard order, are not weak reasons, even if the issue is one that is susceptible of debate.

On the basis of the materials presented to me in the setting of this hearing, I conclude that Guardian has not shown a weakness in the judgment that would justify a stay. [ 13 ] I would add that Guardian has not demonstrated that the other alleged errors of fact and mixed fact and law set forth in the motion are overriding errors, or ones that would likely give rise to an intervention by the Court. *** [ 14 ] As to the serious harm alleged by Guardian in its motion, I am of the view that the judge's explanations, at paragraphs [73] and [78] of his reasons, justify the conclusion that no serious harm has been made out by Guardian.

The injection of funds are intended to allow the debtor company to continue in business on an interim basis; the judge explains his view that this is the best way of avoiding harm, including for ordinary creditors, such as suppliers. Guardian will itself benefit, it would seem, from this short-term injection of funds.

In my estimation, Guardian has not made out the kind of serious harm that would justify a stay. *** [ 15 ] As to the balance of inconvenience, here again the judge explained specifically at paras. [36], [44] and [45] why, in the absence of provisional execution of his judgment, the debtor company would suffer significant harm and would likely have to cease current operations in the short term. In my view the reasons he gives are convincing, including the anticipated impact on 300 workers (para. [60]).

Thus, the balance of inconvenience militates in favour of provisional execution and against a stay. [ 16 ] To conclude, assuming without deciding that the inscription in appeal is valid, I decline to order a stay of the interim order rendered by the judge of the Superior Court. Guardian has failed to demonstrate that the criteria for a stay have been satisfied here. [ 17 ] As a final note, it bears mentioning that the urgent circumstances in which the motion was pleaded were taxing for all concerned, including the staff of the Court.

Counsel on all sides should nevertheless be commended for their courtesy at the hearing. FOR THE FOREGOING REASONS , the undersigned: [ 18 ] ABRIDGES the time limit for the filing of the motion; [ 19 ] DISMISSES the motion for a stay, with costs; [ 20 ] FIXES the hearing of the motion de bene esse for leave to appeal on Tuesday, September 30, 2014, before the judge in chambers in courtroom RC-18 at 9:30 a.m. NICHOLAS KASIRER , J.A.