2022 NLSC 126, 2022 NLSC 126

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION In Bankruptcy and Insolvency Citation : Roman Catholic Episcopal Corporation of St. John's (Re) , 2022 NLSC 126 Date : August 1, 2022 Docket : 20220124092 In The Matter of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 , as amended (the “ BIA ” ); AND IN THE MATTER OF the Notice of Intention to Make a Proposal of the Roman Catholic Episcopal Corporation of St. John’s Before: Justice Garrett A. Handrigan Place of Hearing: St. John’s, Newfoundland and Labrador Dates of Hearing: July 18 and 21, 2022

Summary: The Claimants filed an Interlocutory Application for an Order requiring the Newfoundland and Labrador English School Board and the Government of Newfoundland and Labrador, Department of Education to provide them with documents relating to Agreements that the Roman Catholic Episcopal Corporation of St. John’s entered into with the School Board for schools under the auspices of the Corporation. The School Board and the Government offered some assistance but generally resisted the Application, citing irrelevance, privilege, and concerns about proportionality.

The Court allowed the Application overall, relying on Rule 32.07 of the Rules of the Supreme Court, 1986 , the Bankruptcy and Insolvency Act /the Companies’ Creditors Arrangement Act and its inherent jurisdiction. It deferred any order on costs until it hears the Main Application. Appearances: Geoffrey Budden, Q.C. Clifton P. Prophet, Paul A. Kennedy and Jennifer Helleur Appearing on behalf of the Applicant, John Doe (G.E.B. #26) and other anonymous claimants/creditors of the Corporation

Geoffrey L. Spencer Appearing on behalf of the Roman CatholicEpiscopal Corporation of St. John’s (the“Corporation”)Maurice Chiasson, Q.C., Joseph J.Thorne Appearing on behalf of Ernst & Young Inc., theproposed Trustee of the CorporationJoe Fiorante, Q.C. Appearing on behalf of BC claimantsG. Todd Stanley, Q.C. and LauraBrocklehurst Appearing on behalf of the Government ofNewfoundland and LabradorRodney J. Zdebiak Appearing on behalf of the Newfoundland andLabrador English School District Authorities Cited: CASES CONSIDERED: Carter v.

Municipal Construction Ltd. (2001), (NL SC), 204 Nfld. & P.E.I.R. 112, 2001CarswellNfld 222 (S.C. (T.D.)); Carter v. Municipal Construction Ltd., 2001 NFCA 58; Donovan Homes Ltd. v. Modern PavingLimited, 2012 NLTD(G) 73; Canada v. Canada North Group Inc., 2021 SCC 30; Bradford (Re), (ON SC), [2003]O.J. No. 1299, 2003 CarswellOnt 1784 (Sup. Ct. J.); Cook v. Ip et al., 1985 CarswellOnt 586, 11 O.A.C. 171; John Doe (G.E.B. #25) v.The Roman Catholic Episcopal Corporation of St. John’s, 2018 NLSC 60, rev’d 2020 NLCA 27, leave to appeal refused [2020]S.C.C.A.

No. 309, 2021 CarswellNfld 12; Roman Catholic Episcopal Corporation of St. John’s (Re), 2022 NLSC 81 STATUTES CONSIDERED: Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36; Bankruptcy and Insolvency Act, R.S.C.1985, c. B-3; Statutes of Newfoundland 1997, c. S-12.2 (St. John’s: Queen’s Printer, 2000); Schools Act, 1997, S.N.L. 1997, c. S-12.2 RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D OTHER: Jenny Higgins, “The Collapse of Denominational Education”

(2011) Heritage Newfoundland and Labrador REASONS FOR JUDGMENT Handrigan, J.: INTRODUCTION [1] John Doe (G.E.B. #26) and the other applicants in this matter (the “Claimants”) filed an Interlocutory Application (the “MainApplication”) in this Court on April 19, 2022 asking alternatively for four grounds of relief against the Newfoundland and LabradorEnglish School Board (the “School Board”) and the Government of Newfoundland and Labrador, Department of Education (the“Government”).

I set the matter for hearing, to start on November 22, 2022. [2] On June 8, 2022 the Claimants served a Documentary Production Request on the School Board and the Government.Differences arose over the documents the School Board and the Government must provide to the Claimants. Thus, on June 30, 2022 theClaimants issued a second Interlocutory Application (the “Second Application”), ancillary to the one they issued on April 19, 2022. Inthe Second Application, the Claimants asked for an order specifying the documents the School Board and the Government must provideto them.

I heard the Second Application over two days starting on July 18, 2022, finishing on July 21, 2022 and reserved my judgmentuntil now. The Issue [3] What documents must the School Board and Government provide to the Claimants? The Law [4] The Claimants say that this Court gets authority to make the order they are looking for from three sources: • Rules of the Supreme Court, 1986 • Bankruptcy and Insolvency Act/Companies’ Creditors Arrangement Act.

• Inherent Jurisdiction The Rules of the Supreme Court, 1986 Statute [5] The Claimants rely in particular on Rule 32.07 of the Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D. Itprovides, as relevant here: 32.07.

(1) The Court may order the production, for inspection by any party or the Court, of any document relating to any matter inquestion in a proceeding at such time, place and manner as it thinks just …. 32.07.

(3) An order for the production of any document for inspection by a party or the Court shall not be made unless the Court is of theopinion that the order is necessary for disposing fairly of the proceeding or for saving costs and is not injurious to the public interest. Case Law [6] Green, C.J.T.D. (as he was then) reviewed the law that applies to Rule 32.07 in Carter v. Municipal Construction Ltd. (2001), (NL SC), 204 Nfld. & P.E.I.R. 112, 2001 CarswellNfld 222 (S.C. (T.D.)), and stated, apropos of this matter: 7. For the court to exercise its discretion to order production under this Rule, at least three things must be satisfied:

(1) The documents in question must “relate” to a matter in question in the proceeding.

(2) The court must be of the opinion that an order of production is “necessary for disposing fairly of the proceeding or for saving costs”and is not injurious to the public interest.

(3) The document is not privileged from production. [7] In Carter v. Municipal Construction Ltd., 2001 NFCA 58, our Court of Appeal endorsed both Green, C.J.T.D.’s statement ofthe law in Carter v. Municipal Construction and how he applied it: 11. We see no error on the part of the applications judge in his statement of the law nor in his application of the law to the issuesbefore him. As counsel for the respondent pointed out in his submissions, to the extent that these documents are covered by Rule32.01 they must be produced. To the extent that they are covered by Rule 32.07, we see no error in principle on the part of theapplications judge, given the liberal

interpretation of the Rule. Further, Green C.J. made reasonable provision for the limitation of thedissemination of the information in the documents. [8] Faour, J. also considered Rule 32.07 in Donovan Homes Ltd. v. Modern Paving Limited, 2012 NLTD(G) 73. He expanded onthe meaning of the phrase “relating to” in the first of the three factors that Green, C.J.T.D. identified in Carter v. MunicipalConstruction. As Faour, J. noted: 25. In a determination of whether the documents “relate” to the questions to be determined in the trial, the authorities cited abovesuggest I must consider four factors: 1. Notwithstanding the need for a broad and liberal

interpretation of the Rules, there is not an unlimited right to seek disclosure, and therequest must be in keeping with the pleadings and the issues raised; 2. There must be evidence, not necessarily of relevance to the issues raised by the pleadings, but certainly that what is sought relates tothe issues raised by the pleadings; 3. The scope of production sought must be proportionate to the issues at stake, essentially a reality check on requests for disclosure; and, 4. The request for disclosure must be balanced with prejudice to private interests, especially the interests of third parties in possession ofthe documents where there is only a peripheral connection with the issues.

Bankruptcy and Insolvency/Companies’ Creditors Arrangement Act Statute [9] The Claimants rely first on the general authority this Court has by

section 11 of the Companies’ Creditors Arrangement Act,R.S.C. 1985, c. C-36 (the “CCAA”). It reads: 11. Despite anything in the Bankruptcy and Insolvency Act or the Winding-up and Restructuring Act, if an application is made under thisAct in respect of a debtor company, the court, on the application of any person interested in the matter, may, subject to the restrictions setout in this Act, on notice to any other person or without notice as it may see fit, make any order that it considers appropriate in thecircumstances. [10] They note the discretion that

section 11 confers and point to these comments from the majority decision in Canada v. CanadaNorth Group Inc., 2021 SCC 30 as to its scope: 21. The most important feature of the CCAA — and the feature that enables it to be adapted so readily to each reorganization — isthe broad discretionary power it vests in the supervising court (citation omitted).

Section 11 of the CCAA confers jurisdiction on thesupervising court to “make any order that it considers appropriate in the circumstances”. This power is vast. … [Emphasis added] [11] Then, for its application to this matter, the Claimants tie

section 11 of the CCAA to section 163 (2) of the Bankruptcy andInsolvency Act, R.S.C. 1985, c. B-3 (the “BIA”). Section 163 (2) reads: 163

(2) On the application to the court by the Superintendent, any creditor or other interested person and on sufficient cause beingshown, an order may be made for the examination under oath, before the registrar or other authorized person, of the trustee, thebankrupt, an inspector or a creditor, or any other person named in the order, for the purpose of investigating the administration of theestate of any bankrupt, and the court may further order any person liable to be so examined to produce any books, documents,correspondence or papers in the person’s possession or power relating in all or in part to the bankrupt, the trustee or any creditor, thecosts of the examination and investigation to be in the discretion of the court. [Emphasis added] Case Law [12] The Claimants refer to these comments from Deputy Registrar Nettie of the Ontario Superior of Justice in Bradford (Re), (ON SC), [2003] O.J.

No. 1299, 2003 CarswellOnt 1784 (Sup. Ct. J.), for how to apply the section: 3. Section 163(2) of the Act requires the applicant to show "sufficient cause" to warrant an Order by the Court permitting anexamination which will be very broad in scope by someone other than the Trustee. What will constitute "sufficient cause"? This will,necessarily, vary from case to case, but in NsC Diesel Power Inc., Re (1997), (NS SC), 49 C.B.R. (3d) 213 (N.S.

S.C.[In Chambers]) it was held that "There must be some demonstrated connection between the evidence, if any, of something being amissand the ability of the named person to shed some light on it as it relates to the administration of the Estate." The evidence must show thatsomething more than a fishing expedition is being sought. This is consistent with the principle that, as the applicant, usually a creditor, isseeking to exercise a power usually reserved to the Trustee, there must be some level of confidence by the Court that the applicant seeksto exercise that power for a proper purpose.

It has been held, and I certainly agree, that an examination under s. 163(2) is not intended tobe used to further the private interests or proceedings of the applicant. In this regard see: Assaf, Re (1976), 23 C.B.R. (N.S.) 14 (Ont.S.C.). The threshold is also a fairly low one: see Hartland Pipeline Services Ltd. (Trustee of) v. Bennett Jones (2000), 2000 ABQB 412, 18 C.B.R. (4th) 28 (Alta. Q.B.), at 33. However, it exists, and the evidence must surpass it in order for the Court's discretion tobe properly exercised in favour of the applicant.

Inherent Jurisdiction [13] Finally, the Claimants rely on the “inherent jurisdiction” of this Court; and they point to, amongst other authorities, Green,C.J.T.D.’s comments in Carter v. Municipal Construction Ltd: 8. In passing, it should also be noted that, in addition to the specific provisions of Rule 32, the court has inherent jurisdiction toensure that all relevant documents are before it in order to determine properly and fairly the issues between the parties.See Frenette v.

Metropolitan Life Insurance Co., (SCC), [1992] 1 S.C.R. 647; 134 N.R. 169; 46 Q.A.C. 161; 89 D.L.R.(4th) 653, at p. 689 [S.C.R.]. [14] One of the leading cases on the production of documents in the possession of third parties is Cook v. Ip et al., 1985CarswellOnt 586, 11 O.A.C. 171. In a personal injury claim, the plaintiff authorized the defendant to obtain medical records held by theOntario Health Insurance Plan.

OHIP refused to release the records to the defendant, which brought a motion to order OHIP to do so. [15] A master of the Ontario Superior Court of Justice granted the defendant access to some of the plaintiff’s records but withheldothers. The defendant appealed to a Justice of the Superior Court who referred the issue on the appeal to the Ontario Court of Appeal.Cory, J.A. (as he then was) allowed the appeal and ordered OHIP to provide the defendant with the records that it was seeking. [16] He commented: 11.

There can be no doubt that it is in the public interest to ensure that all relevant evidence is available to the court. This is essentialif justice is to be done between the parties. …

14. There is an inherent jurisdiction in the court to ensure that all relevant documents are before it. The court requires this jurisdiction in order to determine properly and fairly the issues between the parties. … [Emphasis added] [ 17 ] The Supreme Court of Canada refused leave to appeal from this decision on May 26, 1986. [ 18 ] This is the law I will apply to the issue I stated above. I turn now to analyze that issue, starting with the background to it. Analysis Background [ 19 ] The Roman Catholic Episcopal Corporation of St.

John’s (the “Corporation”) was incorporated by a special act of the legislature of the Province of Newfoundland on May 12, 1897. The Corporation is the legal owner of all property, both real and personal, of the Archdiocese of St. John’s which administers thirty-four parishes on the Avalon and Burin Peninsulas, in eastern and southeastern Newfoundland. [ 20 ] Four Claimants sued the Corporation in December 1999 for damages because of the harm they suffered while living at Mount Cashel Orphanage in the 1940s and 1950s.

The Christian Brothers operated the Orphanage at the time and members of the Order abused the Claimants both physically and sexually. The Newfoundland and Labrador Court of Appeal found that the Corporation vicariously liable for the actions of the Christian Brothers, and the Supreme Court of Canada confirmed that the Corporation was liable in January 2021 by dismissing its application for leave to appeal ( John Doe (G.E.B. #25) v. The Roman Catholic Episcopal Corporation of St. John’s, 2018 NLSC 60 , rev’d 2020 NLCA 27 , leave to appeal refused [2020] S.C.C.A.

No. 309, 2021 CarswellNfld 12 ). [ 21 ] This Court, from whose decision the Corporation appealed, assessed the damages of the four Claimants who sued the Corporation even though it dismissed their claims. It quantified the total at $2,611,113.96 for all of them. The Court of Appeal modified the Claimants ’ damages slightly by adjusting the prejudgment interest the Claimants received, but otherwise confirmed this Court’s award.

On April 15, 2021, the four Claimants filed a judgment at the Sheriff’s Office for $2,395,312.45. [ 22 ] Filing the judgment triggered two other actions: Four other law firms notified the Corporation that they represent more than one hundred other former residents of Mount Cashel Orphanage, and the Corporation anticipates that their claims, based on the damages awarded to the first four Claimants , may exceed $50,000,000; and a class action proposed in the Supreme Court of British Columbia, against the Christian Brothers, named the Corporation as a co-defendant in that proceeding. [ 23 ] The Corporation, faced with overwhelming claims, filed a Notice of Intention to Make a Proposal under

section 50.4 (1) of the BIA at the Office of the Superintendent of Bankruptcy on December 21, 2021. I stayed proceedings against the Corporation under

section 50.4 (9) of the BIA on January 20, 2022, and extended that stay three times after that, so it would have expired on May 27, 2022, unless extended again. [ 24 ] However, because the stay under the BIA could not be extended beyond June 20, 2022, the Corporation would be deemed to have made an assignment in bankruptcy unless it made a proposal to its creditors before then, as it declared it would do when it filed its Notice of Intention on December 21, 2021.

The Corporation agreed that it was unlikely it could make a proposal before June 20, 2022, so it applied on April 14, 2022 to convert the proceedings to the CCAA and to seek protection under that legislation while it evaluated and liquidated its assets and the Claimants completed a claims process. [ 25 ] I allowed the Corporation’s conversion application on May 10, 2022 and granted an order moving the proceedings from the BIA to the CCAA ; and then I stayed the Claimants ’ proceedings against the Corporation under the CCAA .

I directed that the order take effect on May 17, 2022 and further that the matter would return to Court on May 27, 2022 to consider the continuation of the proceedings under the CCAA . My reasons for that decision may be found at Roman Catholic Episcopal Corporation of St. John’s (Re), 2022 NLSC 81 .

On May 27, 2022 I extended the stay of proceedings to July 31, 2022 and on July 18, 2022 I again extended the stay, now to December 9, 2022. [ 26 ] In the meantime, Ernst & Young, formerly Trustee of the Corporation and now its Monitor, has been cataloguing and gathering in the Corporation’s assets and advertising them for sale. On July 18, 2022 I granted the Monitor approval to sell 42 properties for which the Monitor received bids through the Tender Process that I approved on March 4, 2022.

That Process resulted in 71 bids, 37 which the Monitor recommended for acceptance, 6 which the Monitor asked for permission to solicit further bids from the interested parties and 18 which the Monitor recommended for rejection. The Monitor noted that the aggregate sales value of the properties for which it recommended accepting the bids was $20,622,332. [ 27 ] Meanwhile, there is another asset of the Corporation that the Claimants want to sell but its status is more complex.

Let me explain. [ 28 ] The Newfoundland and Labrador English School Board (as noted earlier, the “School Board”) oversees all English-speaking students and schools in the Province of Newfoundland and Labrador. Thirty-five of those schools are within the geographical area served by the Corporation and they occupy land to which the Corporation holds the legal title. [ 29 ] This circumstance harkens back to when education for grade school students in this Province was delivered on a denominational model.

Formerly, Term 17 of this province’s Terms of Union with Canada, set at Confederation in 1949, guaranteed the Churches the right to administer education in the Province in perpetuity.

However, with ongoing pressure on the provincial government during the 1990’s to end denominational education, the Province sought and received permission from the Government of Canada to amend Term 17 so that it would read: “In and for the Province of Newfoundland, the legislature shall have exclusive authority to make laws in relation to education, but shall provide for courses in religion that are not specific to a religious denomination”.

[ 30 ] The Government of Newfoundland then passed legislation to create a uniform, publicly funded non-denominational school system and it assumed full responsibility for education in the province. The Province successfully adopted the non-denominational system for the school year 1998-1999. (See Jenny Higgins, “The Collapse of Denominational Education”

(2011) Heritage Newfoundland and Labrador). [ 31 ] The constitutional amendment and the legislative reforms that the Province introduced, removed all Churches, including the Roman Catholic Church from the governance of education in the Province; but the reforms did not sever the Churches’ connections with the properties in which they had formerly delivered religious education. The Statutes of Newfoundland 1997 , c. S-12.2 (St. John’s: Queen’s Printer, 2000) which received Royal Assent on December 19, 1997, addressed the ownership of school properties previously owned by the denominational school boards. [ 32 ]

Section 84 of that statute is substantially the same as the current

section 84 of the Schools Act, 1997 , S.N.L. 1997, c. S-12.2 (the “ Schools Act ”), except that sections 84 (4.1) to 84 (4.4) were added by

An Act to Amend the Schools Act, 1997 , which received Royal Assent on June 14, 2007. I note that section 84 (4) required the denominational authority which owned the schools to “…as soon as practicable, enter into an agreement with the board relating to (

a) all matters necessary for the board to manage, maintain, use, equip and improve the property while the property is required by the board for the purpose of education; and (

b) disposition of the property, where the board no longer requires the property for an educational purpose”. Subsections 84 (4.1) to 84 (4.4) simply provided the legislative apparatus to establish those agreements. [ 33 ] The Corporation entered into two agreements for schools under its jurisdiction: An agreement dated May 2000 with the Avalon East School Board, called the “Avalon Agreement”; and an agreement with the Burin Peninsula School Board, also dated May 2000, called the “Burin Agreement”.

These agreements run to 27 pages and explain in detail the “how-to’s” of the ownership of the school properties they refer to, their interim usage and their ultimate disposition. [ 34 ] I note the following provisions in particular from those Agreements: • “Recital D: “Whereas the Corporation is the owner of, inter alia, the properties on which are situated the schools listed in

Schedule ‘A’ annexed hereto (the ‘Properties’), which Properties were used for the purpose of education by the Board immediately before Section 84 (1) of the Act came into force”. • “1.1. This Agreement applies only to those properties where the Corporation is vested with title in fee simple”. • “11.1. The Board agrees to provide the Corporation with six months notice in respect of any property subject to this Agreement no longer required by the Board for the purpose of education”. • “11.2. When a property in

Schedule ‘A’ is no longer required by the Board for the purpose of education, the building or buildings and improvements on the property (the ‘Buildings’) shall revert to the Corporation, subject to the terms hereinafter set out”. • Clauses 11.3-11.14 then provide “the terms hereinafter” for the disposition of the ‘Buildings’. • “14.1.

The Agreement and any Sub-Agreements entered into pursuant to this Agreement are subject to approval of the Minister [of Education] in accordance with the provisions of the [Schools] Act, and shall have no effect until the Minister [of Education] has given approval in writing”; and • “18.2 Notwithstanding anything else contained herein, this Agreement will not be binding on the Corporation or the Board should a Court of competent jurisdiction determine the [Schools] Act or Section 84 (1), (2) or (4) of the [Schools] Act is ultra vires the Province or otherwise of no force and effect” . [Emphasis added] [ 35 ] I set out the substantive portions of section 84 (4) earlier and for completeness add the other two sections referred to in Clause 18.2: 84

(1) All real and personal property used for the purpose of education by a board immediately before this

section comes into force shall continue to be used for the purpose of education by the board. 84

(2) The use of all real and personal property by a board under subsection (1) shall be without compensation to the person or association of persons in which the title to the property is vested. [ 36 ] In the Main Application the Claimants filed on April 19, 2022 they asked in the alternative for: • An Order declaring that

Section 84 of The Schools Act, 1997, S.N., C. S-12.2 (as amended, the “Schools Act”) is inoperative to the extent of its conflict with Section 67 (1) of the Bankruptcy and Insolvency Act (Canada) (the “ BIA ”) as well as the underlying

purpose of the BIA , pursuant to doctrine of federal paramountcy; • An Order in the alternative declaring that the School Board’s interest in the RCECSJ School Lands…constitutes a licence and not a lease within the meaning and for the purpose of the BIA and is capable of being disclaimed pursuant to

Section 65.11 of the BIA ; • An Order in the alternative declaring that the School Board’s interest in the RCECSJ School Lands can be vested out by way of an approval and vesting order issued in these proceedings; and • An Order in the alternative declaring that the RCECSJ’s interest in the RCECSJ School Lands can be marketed and sold by the RCECSJ as part of these proceedings including without limitation by way of a tender process. [ 37 ] In effect, the Claimants are trying by these various means to unshackle the Corporation’s interests in the School Properties from the 2000 Agreements between the Corporation and the two School Boards (and by extension the Government of Newfoundland and Labrador) so that those interests are marketable assets.

As I noted earlier in these reasons, I will hear the Claimants ’ Main Application in which they seek that relief, starting on November 22, 2022. [ 38 ] In the meantime, on June 8, 2022 when preparing for the November hearing, the Claimants served a documentary disclosure/production request (the “Documentary Production Request”) on the School Board and the Government.

Because of the differences over the documents the School Board and the Government should provide to the Claimants , the Claimants issued the Second Application on June 30, 2022, asking for an order specifying the documents the School Board and the Government must provide to them. The Second Application is the one I am dealing with now. [ 39 ] The Documentary Production Request the Claimants served on the School Board and the Government listed 11 classes, or kinds of documents the Claimants wanted from them. The list appears in paragraph 14 of the Second Application and reads as follows: 1.

All correspondence between representatives of the Government and/or a Board and/or the Debtor [Roman Catholic Episcopal Corporation of St. John’s] pertaining to any filings in Court File 2022 012 4092, being the Notice of Intention to Make a Proposal filed by the Debtor on December 21, 2021, and related proceedings under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c C-36 , as amended. 2. All correspondence between representatives of the Government and/or a Board and/or the Debtor pertaining to Abuse Claims. 3.

All correspondence between members or representatives of the Government and Denominational Authorities, including the Debtor, regarding the development, drafting and passage of the Schools Act or Schools Agreement. 4. All communications, or notes, or work product of the current Minister of Education in any of his capacities and at any time after 1996 pertaining to

section 84 of the Schools Act, the

Section 84 Agreement Modification Regulations, and the Schools Agreements. 5. All communications, notes, or work product prepared by the Department regarding the development, drafting and passage of

section 84 of the Schools Act, the

Section 84 Agreement Modification Regulations, and the Schools Agreements. 6. A certified copy of the fully executed Schools Agreement pertaining to Schools in the “Burin Peninsula” school district. 7. All minutes and records of deliberations of a Board pertaining to

section 84 of the Schools Act, the

Section 84 Agreement Modification Regulations, and the Schools Agreements. 8. All instruments of title in the possession or control of the Government or a Board in relation to the Schools. 9. All land surveys and legal descriptions in the possession or control of the Government or a Board in relation to the Schools. 10. All records in respect of investment in or improvement of the Schools by Government or a Board, including cost ledgers and project

specifications. 11. Copies of insurance certificates for all insurance policies maintained in respect of the Schools. [ 40 ] Both the School Board and the Government responded to the Claimants ’ Documentary Production Request with ambivalence, not enthusiasm. For example, G. Todd Stanley, Q.C., counsel to the Government wrote to Geoffrey E. Budden, Q.C. for the Claimants , on June 21, 2022 about the Request and noted a “preliminary matter”: “…I have to highlight that the documentary disclosure process contemplated by the

schedule which the parties agreed to for the provision of documents to your client is a voluntary process ” (See a copy of the letter attached as Exhibit “C” to the Interlocutory Application filed June 30, 2022) [Emphasis added]. [ 41 ] Then Stanley, Q.C. advised Budden, Q.C. that “…Government will not be providing documentation in response to questions 1- 5”. He cited various reasons for withholding it, including “litigation privilege”, “vagueness”, “difficulty in retrieving it because of its age” and “irrelevance”.

As to questions 6 to 11, Stanley, Q.C. also noted “issues of relevance” but said that “…Government is prepared to provide information as follows”. Then he refers to each question separately and says what is or is not on offer. [ 42 ] Overall, Stanley, Q.C. characterized the issue that the Claimants would address in their Interlocutory Application in November, 2022 as a “constitutional challenge” and relied on that

interpretation to significantly limit the scope of production. (All references in these last two paragraphs are to a copy of the letter attached as Exhibit “C” to the Interlocutory Application the Claimants filed on June 30, 2022.). [ 43 ] When the Government filed its Brief on the Second Application on July 12, 2022 it maintained its position that the “… information requested in the Questions…[is] simply unrelated to the issues raises in the…[Main Application], which is a paramountcy application relating to the interaction of

section 84 of the Schools Act and the CCAA ”.

Nonetheless, Government stated what it would or would not provide or what it had already provided: • No information “…under Questions 1-5 on the basis that as a whole the information requested is not relevant to the proceeding and, in respect of the individual information requested, there are issues with privilege, scope and vagueness, along with Government simply not having the information requested”. • A copy of the Burin Agreement in response to Question 6 (provided). • For questions 8-10, “…[information] as stated in…[Stanley, Q.C.’s] letter of [June 21, 2022 to Budden, Q.C.] and as detailed in the Affidavit of Robyn Hayes respecting its ongoing efforts…”. • “…such information in respect of questions 8-11 it has at its disposal, without prejudice to its position that such information is not relevant to the Main Application”. (All references to the Reply Brief of the Government of Newfoundland and Labrador, filed July 12, 2022.) [ 44 ] The School Board’s response to the Claimants ’ Request while mixed, also leaned towards withholding most of what the Claimants asked for.

Rob Zdebiak, counsel to the School Board shared Stanley, Q.C.’s views that disclosure was “voluntary” and that the Claimants ’ Main Application was focused on a “…determination of whether or not

section 84 of the Schools Act, 1997, SNL 1997, c. S- 12.2 is inoperative in respect of school properties where title is vested in the Roman Catholic Episcopal Corporation of St. John’s…”.

Counsel also raised concerns about “relevance”, “litigation privilege”, “solicitor and client privilege”, and “proportionality” when he discussed the requests. [ 45 ] Then he addressed at length the logistical problems that the School Board anticipated it would encounter if it acted on the Request: The District anticipates that it could take months going through old, archived documents in an effort to locate all documents (if any exist) meeting the Applicants’ criteria. The District also raises the proportionality principle.

While the information requested in item 10 [All records in respect of investment in or improvement of the Schools by Government or a Board, including cost ledgers and project specifications] would be relevant if the inquiry was to determine the respective financial interests of the District and RCECSJ in a particular School, the information does not seem either relevant or helpful in determining what is essentially a pure question of law. In other words, the District is concerned about spending substantial human resources trying to locate documents that are of little or no assistance in determining whether

Section 84 is inoperative by virtue of the operation of the CCAA . (All references in these last two paragraphs, including the quotation, are to a copy of a letter attached as Exhibit “D” to the Interlocutory Application the Claimants filed on June 30, 2022.) [Emphasis added] [ 46 ] When the School Board filed its Reply Brief on July 13, 2022 it agreed to provide the information requested in Question # 7 (All minutes and records of deliberations of a Board pertaining to

section 84 of the Schools Act , the

Section 84 Agreement Modification Regulations, and the Schools Agreements), but as to the other 10 questions it claimed variously: that they did not relate to the School

Board; that the information the Claimants sought was irrelevant to the paramountcy issue; or that the Claimants ’ Request was simply irrelevant as the Board had already claimed. [ 47 ] The School Board also alleged that the Claimants were on a “fishing expedition”, and suggested that they intended to use some of the information they asked for to support a separate cause of action against the Province which they intended to file. I offer this from paragraph 52 of the School Board’s Reply Brief to support this observation: 52.

By way of example, at paragraph 9 of the Affidavit of James Foran, filed in support of the Paramountcy Application, Mr. Foran states it is his belief that Claimants may also have a cause of action against the Province based on the theories of negligence, and that he anticipates that actions will be commenced against the Province in the near future. Potential claims against the Province in negligence have nothing whatsoever to do with the issue of whether or not the BIA / CCAA overrides

section 84 of the Schools Act, 1997 . With respect, the Production Application is not the appropriate means of obtaining evidence to determine whether or not one of more of the Applicants has a cause of action against the Province. (All references to the Reply Brief of the School Board, filed July 13, 2022.) [ 48 ] This is the background to the issue I stated above. I turn now to discuss that issue.

Discussion Rule 32.07 of The Rules of the Supreme Court, 1986 [ 49 ] I begin with the obligations that flow from Rule 32.07 of The Rules of the Supreme Court, 1986 to produce documents. [ 50 ] It is clear from Green, C.J.T.D.’s decision in Carter v. Municipal Construction that this Court may compel production of documents if they “relate” to a matter in question in the proceeding, if their production is “necessary for disposing fairly of the proceeding or for saving costs” and is not injurious to the public interest and if the document is not privileged from production.

The party seeking production must meet a relatively low threshold to show that the documents it asks for “relate to” an issue in the proceeding. [ 51 ] In this case, the Claimants attack

section 84 of the Schools Act under which the Agreements between the Corporation and School Boards were made, because it conflicts with the BIA . [ 52 ] But the Claimants do not limit the relief they are seeking to declaring

section 84 invalid as legal authority for the Schools Agreements. They also ask for: a declaration that the School Board’s interest in the School Lands is a “licence not a lease” and may be disclaimed under the BIA ; a declaration that the School Board’s interest in the School Lands “can be vested out by way of an approval and vested order”; and a declaration that the Corporation’s interest in the School Lands “can be marketed and sold… [by the Corporation] … by way of a tender process”. [ 53 ] The Claimants offer a broad perspective about the documents they want and how those documents may assist them in challenging

Section 84 of the Schools Act and the Schools Agreements that the Corporation and the Boards ratified on its authority; or in freeing the Corporation’s interest in the School Lands from the restrictions the Agreements place on them so the Corporation may sell them. Thus, they argue: • Their Interlocutory Application engages issues of fact and law and mixed fact and law, so that a fulsome factual matrix is necessary for addressing the impact of the Schools Agreements. •

Section 84 of the Schools Act and the Agreements that it fostered and supports make it necessary to examine the social and legal context at the time when the Agreements were made, as well as the intentions of the parties when they entered into them and how the Agreements might be applied if the Corporation, as has happened, became insolvent. • Documents that the School Board and/or Government may have in their possession may assist in understanding the nature of the Corporation’s interest in the School Lands so that they can decide whether the interest can be sold and, if so, to whom and for how much . [ 54 ] I agree with the Claimants that the information they asked for in Questions 3, 4, 5, 6, 7, 8, 9, 10 and 11 “relate to” issues they have raised in their Main Application; but I do not see how the documents requested in Questions 1 and 2 “relate to” those issues. [ 55 ] I am also satisfied that the Claimants need to have those documents to dispose of the Main Application and that no apparent injury to the public will occur if they receive them.

As to such “injury”, appropriate measures may be taken to reduce or eliminate it, such as redacting private information. The same may be said of privilege: where the holder of document believes it is privileged it may put forward the claim and the basis for it and have its claim of privilege addressed. [ 56 ] The School Board and Government, particularly the former, are concerned about the principle of proportionality and the impact that exhaustive searching of their records may have on the limited human resources available to them to do the searching.

I am not oblivious to that concern, but both the School Board and Government may have anticipated that most of the documents the Claimants are asking for now would be required of them, at some point in the future to reconcile their respective interests in the properties, under the Schools Agreement. [ 57 ] I note, for example, paragraph 11 of the Burin Schools Agreement. It contains 14 subparagraphs which are directed to

“Disposition” of the School Lands when the Board no longer required them. In that event, the subparagraphs map out the optionsavailable to Government and the School Board and to serve them the parties must draw upon the kinds of documents that may be in theirpossession that the Claimants are looking for now.

If the Corporation’s interests in those properties are available to the Claimants, theymay refer to the same documents to value the Corporation’s interests when they seek to sell them. [58] I also note that the Claimants have been engaged on this process since December 1999, when they started the claim thatresulted in the judgment which is now driving this process.

The two decades it has taken the Claimants to get to this point coincideroughly with the currency of the Schools Agreements and it is safe to assume the Claimants have expended vast resources of their own,financially, mentally, and even physically to get here.

What they are now asking from the School Board and the Government to helpthem end it, can hardly be disproportionate to what they have already endured to get here. [59] By applying Rule 32.07 of The Rules of the Supreme Court, 1986, to the Claimants’ Document Production Request, I directwhat the School Board and the Government will provide to them for Questions 3-11, in the following Table: Question Party to Provide Restrictions on Information To be Provided3 Government None4 Government Limited to the work product of whoever wasMinister of Education between 1996 andAugust 15, 2001 (when the then Ministerapproved the Agreements)5 Government None6 Government Already complied with by Government7 School Board None8 Government; School Board None9 Government; School Board None10 Government; School Board None11 Government None Bankruptcy and Insolvency Act/Companies’ Creditors Arrangement Act [60] It is widely accepted that the CCAA offers a “vast power” to the Court to make any order it considers necessary whenreorganizing a corporation.

Section 11 of the CCAA provides, in part, “…if an application is made under this Act in respect of a debtorcompany, the court, on the application of any person interested in the matter, may, subject to the restrictions set out in this Act, on noticeto any other person or without notice as it may see fit, make any order that it considers appropriate in the circumstances” [Emphasisadded]. [61] Section 163 (2) of the BIA also provides, and again in part, that “…the court may further order any person liable to be…examined [under this section] to produce any books, documents, correspondence or papers in the person’s possession or power relating inall or in part to the bankrupt, the trustee or any creditor, the costs of the examination and investigation to be in the discretion of thecourt” [Emphasis added]. [62] The Claimants rely on both sections 11 of the CCAA and 163 (2) of the BIA to support the Request they make of the SchoolBoard and the Government.

Their reliance in this matter on that legislation is well-placed. Let me explain. [63] The RCECSJ began the current process by filing a Notice of Intention to Make a Proposal in Bankruptcy. It intended to makethat proposal to the Claimants, its largest and predominant creditor. The Corporation anticipates that more than 100 claimants willpresent claims to it and the value of those claims may exceed $50,000,000. The Corporation does not have sufficient cash to meet thoseclaims, so it is gathering in and liquidating its assets to convert them into cash.

That process is proceeding apace for its real propertieswith more than $20,000,000 presented in bids for sales that this Court has approved. [64] It appears to have fallen to the Claimants to determine whether the Corporation also has exigible interests in the School Landsthat it might sell. To that end the Claimants filed an Interlocutory Application which I will hear in November 2022 to look at all aspectsof the School Lands and decide whether they may be marketable assets of the Corporation.

The Claimants were not involved in thenegotiating the Agreements, nor in administering those Agreements over the last two decades. [65] In attacking them, the Claimants are left with what the Agreements offer on their faces. Neither the School Board nor theGovernment have filed their replies to the Main Application, but they appear to be generally adverse to it, judging by their responses tothe Second Application.

The Claimants ought to have as much information as possible when they challenge the Agreements. [66] In Bradford, Re, Deputy Registrar Nettie of the Ontario Superior Court offered this assistance in how to apply section 163 (2)of the BIA: 3. Section 163(2) of the Act requires the applicant to show "sufficient cause" to warrant an Order by the Court permitting anexamination which will be very broad in scope by someone other than the Trustee. What will constitute "sufficient cause"? This will,necessarily, vary from case to case, but in NsC Diesel Power Inc., Re (1997), (NS SC), 49 C.B.R. (3d) 213 (N.S.

S.C.[In Chambers]) it was held that "There must be some demonstrated connection between the evidence, if any, of something being amissand the ability of the named person to shed some light on it as it relates to the administration of the Estate."… [67] The Claimants have met the onus of showing “sufficient cause” for the order they are seeking. The information they are askingfrom the School Board and the Government will assist them in preparing for the challenge they have launched to the SchoolsAgreements.

In general terms, the process in which the Claimants are engaged is not inherently adversarial: The Corporation is, so tospeak, in “bankruptcy protection” and both the Corporation and the Claimants are interested in inventorying its assets, valuing them, and

then liquidating them to provide funds to settle the debt the Corporation owes to the Claimants . What justification could there possibly be for denying the Claimants the fullest possible record of the origins and operations of the Schools Agreements to assist in deciding whether the Agreements should be sustained or set aside so that the School Lands are available to the Claimants ? [ 68 ] The School Board and the Government will provide the documents the Claimants are seeking from them as specified in the table I provided earlier in these reasons.

Inherent Jurisdiction [ 69 ] As to relying on this Court’s inherent jurisdiction to order production of the documents, I simply defer to these words from Cory, J. in Cook v. IP : “There can be no doubt that it is in the public interest to ensure that all relevant evidence is available to the court.

This is essential if justice is to be done between the parties”. [ 70 ] As authorized by the CCAA /BIA and in exercising the inherent jurisdiction of this Court, I direct that the School Board and the Government provide the documents the Claimants are seeking from them as specified in the table I provided earlier in these reasons. Other Thoughts [ 71 ] On July 28, 2020 our Court of Appeal found the Roman Catholic Episcopal Corporation of St. John’s vicariously liable for the abuse that the Claimants suffered while they lived at Mount Cashel Orphanage in St. John’s.

The Supreme Court of Canada refused the Corporation leave to appeal that finding six months later and in April 2021 the Claimants registered a judgment at the Sheriff’s’ Office against the Corporation for $2,395,312.45. [ 72 ] The Corporation, mindful that the registered judgment represented only about 5% of the damages that it might have to account to the Claimants for, filed a Notice of Intention to Make a Proposal to them under the BIA on December 21, 2021.

The Corporation saw very soon that it was unlikely it could make a proposal within six months of that date, so it applied on April 14, 2022 to convert the proceedings to the CCAA for protection under that legislation while it evaluated and liquidated its assets and the Claimants completed a claims process.

I allowed that application on May 10, 2022, and have now stayed proceedings against the Corporation until December 9, 2022 so that it may restructure itself and liquidate its assets to satisfy the Claimants ’ damages. [ 73 ] There is, of course, nothing new in this brief synopsis of the recent history of this matter; but I provide it as to context to the observations that follow. [ 74 ] When I allowed the Corporation’s application to continue this matter under the CCAA , I appointed Ernst & Young “…to monitor the business and financial affairs of the Company with the powers and obligations set out in the CCAA …” and directed “…that the Company and its shareholders, officers, directors, and Assistants shall advise the Monitor of all material steps taken by the Company pursuant to this Order, and shall co-operate fully with the Monitor in the exercise of its powers and discharge of its obligations and provide the Monitor with the assistance that is necessary to enable the Monitor to adequately carry out the Monitor's functions”. [ 75 ] As well, my Order provided that the Monitor, “…in addition to its prescribed rights and obligations under the CCAA , is hereby directed and empowered to: (

c) have full and complete access to the Property, including the premises, books, records, data, including data in electronic form, and other financial documents of the Company, to the extent that is necessary to adequately assess the Company’s business and financial affairs or to perform its duties arising under this Order; …. (

f) perform such other duties as are required by this Order or by this Court from time to time. (See generally paragraphs 14 & 15 of my Order dated May 11, 2022, that continues to have effect). [ 76 ] I note that the Monitor is actively gathering in the assets of the Corporation, it has developed, it has rolled out and it is supervising the Tender Sale process for properties in the St.

John’s region; and by all appearances the Monitor is developing a protocol to dispose of the remaining properties owned by the Corporation in the other areas served by the Archdiocese of St John’s. [ 77 ] Meanwhile, the Claimants are focused on another asset of the Corporation; what they describe in the Main Application they filed on April 19, 2022 as a “reversionary interest in the RCECSJ School Lands” (Paragraph 15 of the Application). When the Corporation and Ernst & Young (then as Trustee) developed the Tender Package for properties in the St.

John’s region in February, 2022 they included the RCECSJ’s interest in the RCECSJ School Lands, among the assets the Corporation would sell. [ 78 ] However, the School Board and Government, at what the Claimants refer to as “the last minute”, “…unilaterally demanded that ‘any and all references’ to the RCECSJ School Lands be removed from the Draft Tender Package…”. (Paragraph 16 of the Second Application). The Corporation and Ernst & Young yielded to the pressure from the School Board and Government and redrafted the Tender Package to remove all references to the School Lands.

Neither the Corporation nor Ernst & Young, first as Trustee and now as Monitor, now show any interest in what the Claimants refer to as the “RCECSJ School Lands”; and it appears that both have left it to the Claimants to prove that the Corporation’s interest in those properties is also an asset that can and should be sold as part of restructuring the Corporation under the CCAA . [ 79 ] Both the School Board and the Government note that the Corporation is not involved in the discussion and each submits that the Corporation may have information to provide that may assist the Claimants ; except that the Claimants have not joined the Corporation or the Monitor in their Main Application and, to my knowledge are not formally looking for information from them.

[ 80 ] The Claimants are in an awkward place from which to compel disclosure from the School Board and the Government. They were not part of the process that led to the

section 84 agreements between the Corporation and the School Board and/or Government. They were and remain strangers to that process and yet in challenging the Agreements, they must show that the Corporation’s interest in the School Lands should be sold to provide funds to settle their claims. [ 81 ] The School Board and the Government criticize the Claimants ’ Document Production Request for reasons that I set out above.

Some of their objections may be valid but the Claimants have no background with the School Lands that would inform them about what happened between the Corporation, the School Boards and Government.

So, they simply ask for information that parties involved in the process would ordinarily generate and request it, whether it exists or not; and I must assess their requests with some latitude because of this handicap. [ 82 ] Of course, if it was the Corporation that was seeking information from the School Board and the Government, instead of the Claimants , the Corporation would be better informed than the Claimants about what led to the School Agreements and could adapt its production request accordingly.

It follows that the Monitor would have the same basis for seeking production as the Corporation, as by my Order of May 11, 2022, the Monitor will “…have full and complete access to the Property, including the premises, books, records, data, including data in electronic form, and other financial documents of the Company, to the extent that is necessary to adequately assess the Company’s business and financial affairs or to perform its duties arising under this Order”. [ 83 ] I cannot direct how the parties govern themselves in this matter and there may be valid reasons why the Corporation and/or the Monitor do now wish to challenge

section 84 of the Schools Act and the Agreements that flowed from it. However, the reasons are not apparent to me now and fundamentally it seems that the Monitor has a role to play in ascertaining what interest the Corporation has in the School Lands, whether that interest can be marketed and, if so for how much. Even if the Monitor does not intervene in the Main Application, I expect that the Corporation will provide whatever assistance it can to the Claimants to ensure they are as fully informed as possible about the Schools Agreements. Costs [ 84 ] I defer any order for costs until I hear the Main Application.

Summary and Disposition [ 85 ] The Claimants filed an Interlocutory Application for an Order requiring the Newfoundland and Labrador English School Board and the Government of Newfoundland and Labrador, Department of Education to provide them with documents relating to Agreements that the Roman Catholic Episcopal Corporation of St. John’s entered into with the School Board for schools under the auspices of the Corporation.

The School Board and the Government offered some assistance but generally resisted the Application, citing irrelevance, privilege, and concerns about proportionality. [ 86 ] The Court allowed the Application overall, relying on Rule 32.07 of the Rules of the Supreme Court, 1986 , the Bankruptcy and Insolvency Act /the Companies’ Creditors Arrangement Act and its inherent jurisdiction. It deferred any order on costs until it hears the Main Application.

Order [ 87 ] In the result, I order that the School Board and the Government will disclose all documents available to them that relate to the issues between the School Board and the Government in the Main Application, and more particularly as set out in the attached table: Question Party to Provide Restrictions on Information To be Provided 3 Government None 4 Government Limited to the work product of whoever was Minister of Education between 1996 and August 15, 2001 5 Government None 6 Government Already complied with by Government 7 School Board None 8 Government; School Board None 9 Government; School Board None 10 Government; School Board None 11 Government None _____________________________ Garrett A.

Handrigan Justice