2023 NLSC 5, 2023 NLSC 5

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Roman Catholic Episcopal Corporation of St. John’s (Re ) , 2023 NLSC 5 Date : January 12, 2023 Docket : 20220124092 In The Matter of an application of the Roman Catholic Episcopal Corporation of St. John’s; AND IN THE MATTER OF the Companies’ Creditors Arrangement Act , R.S.C. 1985, c. C-36 , as amended (the “ CCAA ”) Before: Justice Garrett A. Handrigan Place of Hearing: St. John’s, Newfoundland and Labrador Dates of Hearing: November 28 and 29, 2022

Summary: The Claimants and the RCECSJ applied by interlocutory application to approve a claims procedure order and a claims protocol, as well as ancillary documents supporting the process each promotes. The Claimants filed their Interlocutory Application on September 13, 2022, and RCECSJ filed its Application a day later, on September 14, 2022. The Court heard their applications together over two days, starting November 28, 2022, and reserved judgment until now. The Court considered and answered four questions from the parties: 1. Question : In valuing abuse claims, may the Claims Officer apply pre-determined tiers of damages?

Answer: In valuing abuse claims, the Claims Officer may not apply pre-determined tiers of damages to them. 2. Question: In valuing abuse claims, may the Claims Officer apply an averaging protocol? Answer: In valuing abuse claims, the Claims Officer may not apply an averaging protocol. 3. Question: How shall pre-judgment interest be calculated on the economic loss portions of abuse claims?

Answer: In calculating pre-judgment interest, the Claims Officer shall calculate it on compensation for past economic loss, regardless ofwhether those damages are determined on a detailed or a lump-sum basis; and for other damages, the Claims Officer has a discretion toaward or withhold pre-judgment interest, but if so, how much. 4. Question: What damages may the estates of deceased Claimants seek? Answer: The estates of deceased Claimants are limited in their recoveries to damages that have resulted in actual monetary losses to theestates. Appearances: Geoffrey L.

Spencer and Appearing on behalf of the Applicant, the Meghan M. King Roman Catholic Episcopal Corporation of St. John’s (the “RCECSJ”) Clifton P. Prophet Representative Counsel appearing on Geoffrey E. Budden, K.C. Behalf of Claimants, Anonymous Thomas Gertner Claimants / Creditors of the RCECSJ Paul A. Kennedy (the “Claimants”) Robert W. Buckingham and Joe Fiorante, K.C. Maurice Chiasson, K.C. and Appearing on behalf of Ernst & Young Joseph J. Thorne Inc., Monitor of the RCECSJ Authorities Cited: CASES CONSIDERED: John Doe (G.E.B. #36) v. Roman Catholic Episcopal Corporation of St.

John’s, 2015 NLTD(G) 81; John Doe(G.E.B. #25) v. The Roman Catholic Episcopal Corporation of St. John’s, 2018 NLSC 60; John Doe (G.E.B. #25) v. The Roman CatholicEpiscopal Corporation of St. John’s, 2020 NLCA 27; Roman Catholic Episcopal Corporation of St. John's (Re), 2022 NLSC 81; TedLeroy Trucking [Century Services] Ltd., Re, 2010 SCC 60; Canada v. Canada North Group Inc., 2021 SCC 30; Hislop v. Canada(Attorney General) (2004), (ON SC), 124 C.R.R. (2d) 1, 234 D.L.R. (4th) 465 (Ont. C.A.); Canada (AttorneyGeneral) v. Hislop, 2007 SCC 10 , [2007] 1 S.C.R. 429; Price Estate v.

Howse Estate, 2002 NFCA 60; Harvey v. Harte (1999), (NL CA), 176 Nfld. & P.E.I.R. 279, 540 A.P.R. 279 (Nfld. C.A.); John Doe (G.E.B. #47) v. Roman CatholicEpiscopal Corporation of St. John’s, 2007 NLTD 51 STATUTES CONSIDERED: Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3; Companies’ Creditors Arrangement Act, R.S.C.1985, c. C-36; Judgment Interest Act, R.S.N.L. 1990, c. J-2; Survival of Actions Act, R.S.N.L. 1990, c. S-32 REASONS FOR JUDGMENT Handrigan, J.: INTRODUCTION [1] In 1999, thirty-nine men, former residents of Mount Cashel Orphanage in St. John’s, NL (the “Claimants”) filed statements of

claim in this Court claiming they were abused during the 1940s, 1950s, and 1960s by Irish Christian Brothers who ran the Orphanage then. The Claimants named the Christian Brothers Institute Inc., the corporate body that owned and operated the Orphanage as Second Defendant and the Roman Catholic Episcopal Corporation of St. John’s as First Defendant (RCECSJ). [ 2 ] The Christian Brothers Institute filed for bankruptcy in the United States in April 2011. Ultimately, the Institute liquidated its assets in both Canada and the United States to satisfy claims against it in both countries, like those before this Court. It took no

part in these proceedings. The Claimants based their actions against the RCECSJ in tort. In effect, they said the RCECSJ was either directly responsible for the abuse they suffered at the Orphanage or that it was vicariously liable. [ 3 ] Adams, J. of this Court case-managed the thirty-nine claims from 2003 until 2015. He dismissed an application by the RCECSJ on April 27, 2015, “to sever the issue of liability from causation and damages on the trial of this action” ( John Doe (G.E.B. #36) v. Roman Catholic Episcopal Corporation of St. John’s , 2015 NLTD(G) 81 (at para. 1).

In his decision at para. 37, Adams, J. found that “[b]ifurcation of [t]he trial could…lead to considerable prejudice to the plaintiff.” He based his conclusion largely on an agreement between the plaintiffs and the defendant RCECSJ to “choose six cases from those in which statements of claim had already been issued which were roughly representative of the range of claims being made by all or at least most of the known claimants,” and he described them as “’the ‘Representative Actions’” (at para. 5). [ 4 ] Two of the six plaintiffs whose actions were chosen as “representative” died before trial, so that only four claims were tried.

On March 16, 2018, Faour, J. of this Court, dismissed the claims, when he found that the RCECSJ was neither negligent nor vicariously liable to the plaintiffs: John Doe (G.E.B. #25) v. The Roman Catholic Episcopal Corporation of St. John’s , 2018 NLSC 60 .

However, at the request of the parties and despite finding that the RCECSJ was not liable, Faour, J. assessed damages for each of the four representative plaintiffs. [ 5 ] The plaintiffs appealed Faour, J.’s decision on liability and on July 28, 2020, the Newfoundland and Labrador Court of Appeal reversed him and found the RCECSJ vicariously liable: John Doe (G.E.B. #25) v. The Roman Catholic Episcopal Corporation of St. John’s , 2020 NLCA 27 . The RCECSJ also cross-appealed various aspects of Faour, J.’s findings on damages.

The Court of Appeal generally upheld those findings, except they concluded that “[he] erred respecting…pre-judgment interest” (at para. 581). [ 6 ] On January 14, 2021, the Supreme Court of Canada dismissed the RCECSJ’s application for leave to appeal from the Newfoundland and Labrador Court of Appeal finding that the RCECSJ was vicariously liable to the Claimants.

Thus ended the decades- long litigation and the focus shifted to quantifying the Claimants’ damages and liquidating the RCECSJ’s assets to pay them. [ 7 ] Following the Supreme Court of Canada’s refusal to grant leave to the RCECSJ to appeal the Court of Appeal’s decision, the Representative Claimants filed a judgment at the Office of the High Sheriff for Newfoundland and Labrador for $2,395,312.45, the damages that the Court of Appeal awarded to them after it adjusted Faour, J’s findings at trial for pre-judgment interest.

The parties generally believe claims will exceed $50,000,000 and the number of claimants will exceed 100. In fact, the potential pool of claimants may be larger than those who were abused by Christian Brothers to include others who were also abused by clergy and members of lay religious orders for which the RCECSJ is also responsible. [ 8 ] On December 21, 2021, the RCECSJ filed a Notice of Intention at the Office of the Superintendent of Bankruptcy to Make a Proposal in Bankruptcy (NOI) to the Claimants. The RCECSJ had six months from the date it filed its NOI to make its proposal.

However, when it became clear to the RCECSJ that it could not comply with that timeline, it applied to this Court on April 14, 2022, to convert the NOI proceedings it started under the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 (the “ BIA ”) to proceedings under

section 11.6 of the Companies’ Creditors Arrangement Act , R.S.C. 1985, c. C-36 (the “ CCAA ”). [ 9 ] I heard the RCECSJ’s Application on April 29, 2022, and on May 10, 2022, I allowed the RCECSJ to convert the NOI proceedings under the BIA to a restructuring process under the CCAA : Roman Catholic Episcopal Corporation of St. John's (Re) , 2022 NLSC 81 . I stayed all proceedings against the RCECSJ when it filed its NOI under the BIA , and I continued the stay under the CCAA , extending it just recently, with the Claimants’ concurrence, to May 31, 2023. [ 10 ]

Section 20 of the CCAA provides for the “Determination of amount of claims” against a debtor seeking to restructure under the legislation. It provides in section 20 (1)(a)(iii), as is relevant here: 20(1) For the purposes of this Act , the amount represented by a claim of any secured or unsecured creditor is to be determined as follows: (

a) the amount of an unsecured claim is the amount… (iii) in the case of any other company, proof of which might be made under the Bankruptcy and Insolvency Act , but if the amount so provable is not admitted by the company, the amount is to be determined by the court on

summary application by the company or by the creditor. [Underlining mine] [ 11 ] I note for completeness that the RCECSJ has other creditors than the Claimants. However, their claims, which I believe are mostly for liquidated amounts, are not beset with the difficulties of proof of the latter. For the Claimants, their claims against the RCECSJ are unsecured, contingent liabilities as yet, for undetermined amounts; except, of course, for the four plaintiffs that Faour, J. dealt with in John Doe (G.E.B. # 25) v. The Roman Episcopal Corporation of St John’s , as generally affirmed by the Newfoundland and Labrador Court of Appeal on damages. [ 12 ]

Section 20 of the CCAA provides for a “summary application” to the court to decide “the amount of an unsecured claim” if the debtor (the RCECSJ) and the creditors (the Claimants) do not agree. This introduces the next stage of these proceedings: establishing a claims process for deciding on the RCECSJ’s liability for and the values of the claims that the Claimants have against it.

[ 13 ] To that end, both the Claimants and the RCECSJ applied by interlocutory application to approve a claims procedure order and a claims protocol, as well as ancillary documents supporting the process each promotes. The Claimants filed their Interlocutory Application on September 13, 2022, and RCECSJ filed its Application a day later, on September 14, 2022.

I heard their applications together over two days, starting November 28, 2022, and reserved my judgment until now. issues [ 14 ] The parties want me to give them directions on several points that they disagree about in their respective visions of an appropriate claims process; and with the benefit of my directions, they are confident they can agree on a practicable process. Those points are: 1. In valuing abuse claims, should the Claims Officer be required to apply pre-determined tiers of damages? 2. In valuing abuse claims, should the Claims Officer apply an averaging protocol? 3.

How should pre-judgment interest be calculated on the economic loss portions of abuse claims? 4. What damages may the estates of deceased Claimants seek? the law Companies’ Creditors Arrangement Act Statute [ 15 ] I set out section 20(1)(a)(iii) above and need not repeat it. Suffice it to say that this

section of the Act is critically important to defining an appropriate claims process, particularly because it provides that disagreements between a debtor (the RCECSJ) and creditors (the Claimants) on the amount of a claim can be resolved on a “summary application” to the Court; but more about that later. [ 16 ]

Section 11 of the Act is also relevant: Despite anything in the Bankruptcy and Insolvency Act or the Winding-up and Restructuring Act , if an application is made under this Act in respect of a debtor company, the court , on the application of any person interested in the matter, may, subject to the restrictions set out 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 the circumstances . [Underlining mine] [ 17 ]

Section 11 provides a residual authority for this Court to take all steps that are reasonably necessary to achieve the objectives of the Act. Case Law [ 18 ] Ted Leroy Trucking [Century Services] Ltd., Re , 2010 SCC 60 is the seminal Canadian decision on the scope of the discretion that courts have under the CCAA .

In the words of Deschamps, J. who wrote for six other justices of the Supreme Court of Canada, Ted Leroy addresses “the scope of a court’s discretion when supervising reorganization” and was the “first time this Court is called upon to directly interpret the provisions of the [ CCAA ]” (at para. 1) [ 19 ] What follows are some quotations from that decision that are pertinent to this matter: • Judicial discretion must of course be exercised in furtherance of the CCAA ’s purposes. The remedial purpose I referred to in the historical overview of the Act is recognized over and over again in the jurisprudence.

To cite one early example: The legislation is remedial in the purest sense in that it provides a means whereby the devastating social and economic effects of bankruptcy or creditor-initiated termination of ongoing business operations can be avoided while a court-supervised attempt to reorganize the financial affairs of the debtor company is made. ( Nova Metal Products Inc. v. Comiskey (Trustee of) (1990), 41 O.A.C. 282 (Ont.

C.A.), at para. 57 , per Doherty J.A., dissenting) (at para. 59). • Judicial decision making under the CCAA takes many forms… the court must often be cognizant of the various interests at stake in the reorganization, which can extend beyond those of the debtor and creditors to include employees, directors, shareholders, and even other parties doing business with the insolvent company ...

In addition, courts must recognize that on occasion the broader public interest will be engaged by aspects of the reorganization and may be a factor against which the decision of whether to allow a particular action will be weighed (at para. 60, references deleted). [underlining mine] • Having examined the pertinent parts of the CCAA and the recent history of the legislation, I accept that in most instances the issuance of an order during CCAA proceedings should be considered an exercise in statutory

interpretation. Particularly noteworthy in this regard is the expansive

interpretation the language of the statute at issue is capable of supporting (at para. 66). [underlining mine] [ 20 ] The Supreme Court of Canada revisited the CCAA more recently in Canada v. Canada North Group Inc. , 2021 SCC 30 . For the majority of the Court, Côté, J said at paragraph 21:

The most important feature of the CCAA — and the feature that enables it to be adapted so readily to each reorganization — is the broaddiscretionary power it vests in the supervising court (Callidus Capital, at paras. 47-48).

Section 11 of the CCAA confers jurisdiction onthe supervising court to “make any order that it considers appropriate in the circumstances”. This power is vast. As the Chief Justice andMoldaver J. recently observed in their joint reasons, “On the plain wording of the provision, the jurisdiction granted by s. 11 isconstrained only by restrictions set out in the CCAA itself, and the requirement that the order made be ‘appropriate in thecircumstances’” (Callidus Capital, at para. 67).

Keeping in mind the centrality of judicial discretion in the CCAA regime, ourjurisprudence has developed baseline requirements of appropriateness, good faith, and due diligence in order to exercise this power. Thesupervising judge must be satisfied that the order is appropriate, and that the applicant has acted in good faith and with due diligence(Century Services, at para. 69). The judge must also be satisfied as to appropriateness, which is assessed by considering whether theorder would advance the policy and remedial objectives of the CCAA (para. 70).

For instance, given that the purpose of the CCAA is tofacilitate the survival of going concerns, when crafting an initial order, “[a] court must first of all provide the conditions under which thedebtor can attempt to reorganize” (at para. 60). [21] From these authorities, I draw the following: • Supervising courts should rely first on the statutory authority that the CCAA provides before they resort to their inherentjurisdiction. • The CCAA confers broad discretionary powers on them. • They must exercise those powers remedially so as to minimize the social and economic impacts of bankruptcy and insolvency. • They may consider interests beyond those of the parties before the court when fulfilling their remedial mandates. • Approving a claims process falls squarely within the discretion that

section 11 of the CCAA confers. • The hallmarks of sound decision-making are appropriateness, good faith, and due diligence. • Appropriateness is measured by how decisions provide the conditions under which the debtor may try to reorganize. • The meanings of good faith and due diligence are more obvious, but it is axiomatic that both creditors and debtors display them. [22] I will focus on the discretionary aspect of decision-making under the CCAA because resolving the claims here will requireexercising a robust discretion.

That is because the claims process that each party promotes deals both with the RCECSJ’s liability to theClaimants and then their damages. Both issues are rooted in tort law but in this case, neither liability nor damages are amenable to theusual standards of proof that would govern if the claims were being tried in bona fide tort proceedings. [23] That said, and as I will show more clearly later in these reasons, it is fortuitous that the Claimants may prove their claims by the“summary application” process that the CCAA provides.

They will benefit measurably from the latitude that will be permitted them toprove by that means, both that the RCECSJ is liable for their losses and the damages that they are entitled to. [24] Most, if not all of the Claimants are of advanced years, and/or are of poor health; and as well their memories of events mayhave been compromised by the time that has elapsed since they were abused. Because they are also susceptible to re-traumatization whenrecounting the horrendous deeds that their abusers did to them, measures may also be taken to lessen the impact of their retellings.

Pre-judgment Interest Judgment Interest Act, R.S.N.L. 1990, c. J-2 [25] Section 3(1) of the Act provides for pre-judgment interest. It reads: 3(1) Where a person obtains a judgment for the payment of money or a judgment that money is owing, the court shall award interest onthe judgment calculated in accordance with this Act. [26] Nevertheless, section 3(3) of the Act allows the court in its discretion to award or withhold interest.

It reads, in part as: 3(3) Where it is proven to the satisfaction of the court that it is just to do so having regard to the circumstances, the court may, withrespect to the whole or a part of the amount for which judgment is given, (

a) refuse to award interest under this Act; or (

b) award interest under this Act at a rate or for a period or both other than a rate or period determined under

section 4. Case Law [27] In Hislop v. Canada (Attorney General) (2004), (ON SC), 124 C.R.R. (2d) 1, 234 D.L.R. (4th) 465 (Ont.C.A.), the Ontario Court of Appeal offered this rationale for pre-judgment interest: As the trial judge recognized, an award of pre-judgment interest is a natural extension of the underlying damages award. Such an awardrecognizes that the successful litigant has not had the use of the money to which it was entitled. Pre- judgment interest puts that litigant inthe position it would have been in had it received the moneys when it was entitled to do so.

It neither benefits a successful party unfairlyby providing that party with a windfall, nor punishes an unsuccessful party. It merely deprives the unsuccessful party of the financialbenefit it received from holding funds to which it was, in the result, never entitled. Accordingly, pre-judgment interest is compensatory,not punitive (at para. 145).

[28] In Canada (Attorney General) v. Hislop, 2007 SCC 10 , [2007] 1 S.C.R. 429, the Supreme Court of Canada affirmed“[f]or the reasons given by the Court of Appeal, [that] we reject the government’s contention that pre-judgment interest is not availablein the instant case” (at para. 135). Survival Actions Statute – Survival of Actions Act [29]

Section 2(

a) of the Survival of Actions Act, R.S.N.L. 1990, c. S-32 provides, as relevant here: 2. Actions and causes of action (

a) vested in a person who has died shall survive for the benefit of…his or her estate. [30]

Section 4 provides, again as relevant here: 4. Where a cause of action survives under this Act for the benefit of the estate of a deceased person, only damages that have resulted inactual monetary loss to the estate are recoverable and the damages recoverable (

a) shall be calculated in the same manner as if that person were living and had brought the action; (

b) shall not include punitive or exemplary damages; ... (

d) where the death of that person has been caused by the act or omission which gives rise to the cause of action, shall be calculatedwithout reference to a loss or gain to his or her estate consequent on his or her death, except that a sum in respect of funeral expensesmay be included. [31] Finally,

section 9 provides: 9. The rights conferred by this Act for the benefit of the estate of a deceased person are in addition to and not in derogation of rightsconferred by the Fatal Accidents Act and so much of this Act as relates to causes of action against the estate of a deceased person appliesin relation to causes of action under that Act as it applies in relation to other causes of action not expressly excepted from the operation ofthis Act. Case Law [32] Our Court of Appeal addressed, albeit tersely, the Survival of Actions Act, RSNL 1990, c. S-32 in Price Estate v. HowseEstate, 2002 NFCA 60.

Roberts, J.A. stated for the Court: Loss of a deceased’s future income is not an actual “actual monetary loss to the estate”. Considering the history of the Survival ofActions Act, RSNL 1990, c. S-32 and the Fatal Accidents Act, RSNL 1990, c. F-6, and the

interpretation of similar statutes in otherjurisdictions…the most sensible, just, and reasonable

interpretation is to exclude such losses from recovery under s. 4 of the Survival ofActions Act (at para.1). [33] Gushue, J.A. said this about the Act in Harvey v. Harte (1999), (NL CA), 176 Nfld. & P.E.I.R. 279, 540A.P.R. 279 (Nfld. C.A.): The Survival of Actions Act, the reasons for which are well known, preserves actions already commenced by or against a deceasedperson, as well as causes of action which may have existed in or against a deceased person at the time of his or her death.

Although"action" is not defined in the Judicature Act of this province, it is clearly understood, on the civil side, to mean a proceeding commencedby an originating document in the manner prescribed by the Rules of Court. A "cause of action" is the vested right to commence anaction. ... If the accident in which Mr. Harvey was injured had occurred, but no proceeding had been commenced, or even if one had beencommenced and the matter had not proceeded to judgment, I would agree with the position taken by counsel that the intervention of theSurvival of Actions Act was necessary.

However, in my view, the matter having been tried and judgment entered against Ms. Harte, thejudgment debt was an asset of Mr. Harvey at the time of his death, and of his estate thereafter. A judgment is neither a cause of actionnor an action, but became, when obtained, a proprietary interest of Mr. Harvey.

There can be no question that the Survival of Actions Actwas not needed to preserve the right to that interest in his personal representative or beneficiaries after his death (at paras. 10 & 11). analysis Background [34] I set out some of the background to these proceedings in earlier applications in which I extended stays of execution, both underthe BIA and the CCAA, converted the proceedings from one to the other, appointed Representative Counsel, ordered documentproduction and otherwise.

Presently, I address the competing visions the parties have for the claims process they will apply to decide forwhom the RCECSJ is liable in damages and how much it should pay them. Each has presented several restatements of the process, andthen revised them as they modified their positions leading up to and during the interlocutory applications. I draw from their most recentsubmissions.

Claimants’ Proposed Claims Process [ 35 ] These are key features of the claims process the Claimants propose for Abuse Claims: • A Claims Officer is appointed to decide the validity and amount of each Abuse Claim. • Claimants file a Proof of Claim and no more than 15 additional pages with the Monitor. • The Monitor assigns the Claimant a pseudonym and remits the Proof of Claim to the Claims Officer for review. • The Claims Officer decides the extent to which the RCECSJ is liable to the Claimant. • If the RCECSJ is liable, the Claims Officer decides the value of the claim, considering, as applicable, general damages, economic loss, future care, and pre-judgment interest. • The Claims Officer deducts from the total any prior distributions or payments the Claimant received. • As to general damages, the Claims Officer places the Claimant in one of four tiers, ranging from $60,000 to $325,000, subject to placing the Claimant in a higher tier after considering the nature of the abuse. • The Claims Officer, assisted by the Monitor, may adjust general damages by a positive or negative deviation of no more than 20% from the $187,500 average the Court of Appeal awarded. • As to economic loss, the Claims Officer places the Claimant in one of four tiers, ranging from $0 to $993,000. • The Claims Officer, assisted by the Monitor, may adjust economic loss by a positive or negative deviation of no more than 20% from the $201,617.38 average the Court of Appeal awarded. • As to future care, the Claims Officer places the Claimant in one of four tiers, ranging from $10,000 to $50,000. • The Claims Officer, assisted by the Monitor, may adjust future care by a positive or negative deviation of no more than 20% from the $27,500 average the Court of Appeal awarded. • As to pre-judgment interest, the Claimant receives it on economic loss for each year of eligibility from 2000 to 2021, by rates prescribed in the Judgment Interest Act . • When the Claims Officer decides on liability and/or damages, the Monitor delivers the Claims Officer’s Notice of Determination of the Claim to the Claimant and the RCECSJ. • To dispute the Determination, either must deliver a Notice of Dispute to the Monitor within 21 days. • The Monitor may attempt to resolve the dispute and failing to do so, the Monitor on notice to the Claimant, the RCECSJ, and Representative Counsel schedules a hearing for directions from the Court. • The Monitor may deal with the other claims against the RCECSJ, described as General Claims. [ 36 ] There are two features that dominate the Claimants’ claims process for general damages, economic loss, and future care: relying on tiers and averaging the resultant damages by a positive or negative deviation of no more than 20%.

Both features are rooted in Faour, J.’s findings on damages, as reviewed by the Court of Appeal. [ 37 ] I note these comments from the interlocutory application the Claimants filed seeking approval of their claims process: 17. Under the Proposed Claims Process…the Court of Appeal Decision establishes “goal posts” for the quantification of claims. These goals posts are incorporated in the Proposed Claims Process by way of a tier system for the valuation of claims within each of the following heads of damages: (

a) Non-Pecuniary General Damages; (

b) Economic Loss; and (

c) Future Care… 18. With respect to non-pecuniary general damages and future care, the tier values are adopted directly from the Court of Appeal Decision. With respect to economic loss, the range of economic awards in the Court of Appeal Decision is broadly distributed (from $0 to $899,500 + pre-judgment interest), with only one mid-range observation.

Tier values for economic loss are therefore adjusted for greater mid-range observation, while preserving the upper and lower limits as goal posts. [ 38 ] And this from the Memorandum of Fact and Law that the Claimants filed to support their interlocutory application: 81. The tier system proposed in the R[epresentative]C[laimants’] Claims Protocol draws its values from the damage awards in the Court of Appeal Decision.

As Test Cases, the [four] Mount Cashel Plaintiffs were intended to be a representative sample of the range of claims being made by all or at least most of the known claimants with similar claims. [ 39 ] As to averaging, the Claimants said this in the same Memorandum: 88. Representative Counsel submits that the great practical challenges and consequent manifest unfairness of importing, as the Debtor [RCECSJ] advocates, a trial standard of evidentiary proof in the Claims Process calls for an innovative approach.

Representative Counsel therefore has developed an approach that is derived from the damages awarded in the Mount Cashel Action, and further informed by a comprehensive review of all relevant sexual abuse awards made by Canadian courts from 2010 to the present time. [ 40 ] The Claimants offer two sets of criteria to calculate their damages: the damages awarded by Faour, J. and/or the Court of

Appeal in this matter and then what the Claimants gathered from a “comprehensive review of all relevant sexual abuse awards made by Canadian courts from 2010 to the present.” To that end they provided a

Schedule 1 to their Claims Process in which they offer a “statistical analysis…to calculate a representative economic loss for the…Claimants. This statistical analysis resulted in the establishment of a representative economic loss average of $201,617.38” (at para. 5.1.4 of the Claims Protocol the Claimants filed on December 2, 2022). [ 41 ] As part of

Schedule 1, the Claimants then submit Table 1, which they describe as a “Representative Sample” of 36 decisions from Superior Courts across Canada, including in this Province, from which they extract data for awards of economic loss, both past and future and general damages, with the award amounts shown and their values adjusted to 2022. They also include Faour, J.’s awards, as generally affirmed by the Court of Appeal. [ 42 ] Overall, the Claimants submit as to their Proposed Claims Process: 115. In effect, the R[epresentative]C[laimants’] Claims Protocol represents an integrated whole. Recognizing the necessary

summary nature of the process, and the impossibility (or at least prohibitive difficulty) of tendering trial-type expert evidence, the use of tiers is the most just approach. Given these same factors, to ensure justice in the aggregate for the Claimant group, averaging is necessary as a safety mechanism for the results of the process. This is true no matter how well and how thoroughly the Claims Officer performs their task (Memorandum of Fact and Law of the Claimant Representatives, filed on November 19, 2022).

RCECSJ’s Proposed Claims Process [ 43 ] These are key features of the claims process the RCECSJ proposes for Abuse Claims: • A Claims Officer is appointed to decide the validity and amount of each Abuse Claim. • Claimants file a Proof of Claim and no more than 15 additional pages with the Monitor. • The Monitor assigns the Claimant a pseudonym and remits the Proof of Claim to the Claims Officer for review, deeming the RCECSJ liable in defined circumstances. • If the Monitor does not initially deem the RCECSJ liable it will consider stated criteria and decide if the RCECSJ is liable in fact; if so, it remits the Claim to the Claims Officer to consider damages. • If the Monitor does not find the RCECSJ liable in fact, it issues a Notice of Revision or Disallowance, and the Claimant may apply to Court to appeal the Notice of Revision or Disallowance. • If the Court finds that the RCECSJ is liable in fact, it remits the Claim to the Claims Officer to consider damages or disallows the Claim if it finds that the RCECSJ is not liable in fact. • If the RCECSJ is liable, the Claims Officer decides the value of the claim, considering, as applicable, general damages, economic loss, future care, and pre-judgment interest. • The Claims Officer deducts from the total any prior distributions or payments the Claimant received. • As to general damages, the Claims Officer considers identifiable indicia of the impact of abuse on the Claimant, as well as the nature of the abuse. • As to economic loss, the Claims Officer considers stated criteria, but Claimants need not provide actuarial evidence. • As to the cost of future care, the Claims Officer considers evidence provided by Claimants of ongoing psychological and interpersonal impairments linked to the sexual misconduct, as well as other stated criteria; an award for future care is final. • As to pre-judgment interest, the Claims Officer may only award it on pecuniary, calculable past losses of income. • After the Monitor’s initial review of Claims, the Monitor submits them to the Claims Officer for review. • The Claims Officer reviews Claims, guided by the parameters set by Faour, J. and the Court of Appeal. • Representative Counsel may make representations on theories of liability and damage calculation within 15 days of a Claims Procedure Order being issued, and if Counsel does the RCECSJ has 15 days to respond. • When the Claims Officer values a Claim, the Officer delivers a Notice of Determination to the Claimant and the RCECSJ. • The Claimant and/or the RCECSJ may dispute the determination by delivering a Notice of Dispute to the Monitor within 10 days. • If the Monitor receives a Notice of Dispute, it may attempt to resolve the dispute by consulting with the RCECSJ, the Claims Officer, and the Claimant. • If the dispute is not resolved, the Monitor in consultation with the RCECSJ and with notice to the Claimant, schedules an appointment with the Court to determine the disputed Claim. • A similar process, as for Abuse Claims applies to the General Claims. [ 44 ] Absent, of course, from the RCECSJ’s proposed claims process is any reference either to tiers for calculating general damages, economic loss, and the cost of future care, or averaging those amounts positively or negatively by up to 20%; two facets of the

Claimants’ Proposed Claims Process that the RCECSJ resolutely opposes. [ 45 ] This is the background to the two Interlocutory Applications. I turn now to discuss the parties’ proposal against this background and the law that applies to the issues that I stated earlier. discussion Issue #s 1 & 2 : In valuing abuse claims, should the Claims Officer be required to apply pre-determined tiers of damages? And, in valuing abuse claims, should the Claims Officer apply an averaging protocol? [ 46 ] John Doe (G.E.B. #25) filed his statement of claim in this Court on December 29, 1999.

He named the RCECSJ and The Christian Bothers of Ireland Inc. as First and Second Defendants respectively, he alleged that both were responsible for the harm he suffered at Mount Cashel Orphanage and he claimed special, general, aggravated, punitive, and exemplary damages, as well as interest under the Judgment Interest Act and costs. [ 47 ] The Court assigned John Doe’s statement of claim File No. 199901T3223 and issued it the same day as he filed it. John Doe was, as I noted earlier, one of thirty-nine former residents of Mount Cashel Orphanage in St.

John’s who filed statements of claim in this Court claiming they were abused during the 1940s, 1950s and 1960s by Irish Christian Brothers who ran the Orphanage. [ 48 ] On August 14, 2003, Green, C.J., then of this Court, issued a Case Management Order (CMO), naming Adams, J. to case manage all proceedings, and O’Regan, J. as his alternate.

The following portions of the CMO reflect the representative qualities of the nominal plaintiff, John Doe (G.E.B. #36) and the RCECSJ and the Christian Brothers Institute Inc. as representative defendants in the representative causes: • AND WHEREAS the Plaintiff in this proceeding is one of at least forty (40) men who have issued separate but substantially similar Statements of Claim out of this Court (the “Related Proceedings”); • AND WHEREAS by Order of the Honourable Mr.

Justice Hall made on the 19th day of May, 2000, it was ordered that all documentation and orders filed with respect to a certain application in respect of this proceeding be deemed to have been filed with respect to the Related Proceedings…; • 3. All subsequent applications in this proceeding shall: … (

c) unless otherwise ordered, be deemed to have been made with respect to each of the Related Proceedings identified in the Related Proceedings Order and any orders resulting from any such applications shall be deemed to have been made in the Related Proceedings . [Underlining mine] [ 49 ] By that order, Adams, J. case-managed the thirty-nine actions from 2003 to 2015, when he heard an application by the RCECSJ to bifurcate the issues of causation and damages at trial.

He dismissed the RCECSJ’s bifurcation application ( John Doe (G.E.B. #36) ) on June 11, 2015. [ 50 ] In his reasons, Adams, J. noted that “[d]ue to the number of claimants, the parties agreed to have the plaintiff’s counsel choose six cases from those in which statements of claim had already been issued which were roughly representative of the range of claims being made by all or at least most of the known claimants ” (at para. 5; underlining mine).

He referred to the six “cases” as the “Representative Actions” throughout his reasons and acknowledged that “one of the Representative Plaintiffs has already died” (at para. 37). [ 51 ] Adams, J. also considered potential prejudice to the plaintiffs and the “burden” that “multiple trials” might place on the “court system”: If the issue of liability were to be severed from the other issues, any outcome would be open to and would likely lead to appeals, which could lengthen the trial and perhaps deprive some of the plaintiffs from testifying due to illness or death. This would be most unjust.

Severance could also lead to multiple trials and become a burden on the court system. The purpose of selecting the Representative Actions to be litigated was to determine all issues in respect of them in the hope that the decisions, if liability were to be found against the R.C.E.C., would provide a template which might lead to settlement of the remaining over one hundred claims. This would obviate the need for trials in those cases and thus save the Plaintiffs, the Defendants and the court system enormous time and costs . (John Doe (G.E.B. #36, at para. 38 ) [Underlining mine] [ 52 ] In J ohn Doe (G.E.B. #47) v.

Roman Catholic Episcopal Corporation of St. John’s , 2007 NLTD 51 , Adams, J. heard an application by the Christian Brothers Institute for particulars of the statement of claim in that proceeding. In his judgment, this is how Adams, J. described the scope of the application: “This is a representative application and relates to over thirty similar actions.

The parties have agreed that the results of this application will apply to the other matters unless there are individual issues arising from factors which are unique to any particular action” (at para. 2; Underlining mine). [ 53 ] Faour, J. also focused on the representative quality of the claims that were before him in John Doe (G.E.B. #25) 2015. He considered claims by only four of the six Representative Plaintiffs that Adams, J. referred to in his judgment, since two of the plaintiffs had died by then. Of those four claims, Faour, J. noted:

There are also several other actions before this court involving men who were abused during the same period. Those actions have been held in abeyance pending the outcome of this proceeding. While this is not a formal representative, or class action, these four cases were put forth as being somewhat representative of the issues and damages which would arise in all of them.

The outcome of this case may provide a precedent for resolution of the other outstanding actions (at para. 19). [Underlining mine] [ 54 ] Ultimately, Faour, J. dismissed the claims finding that “[t]he Archdiocese is … not liable for the abuse suffered by the Plaintiffs” ( John Doe (G.E.B. #25) 2015), at para. 301).

He then considered the damages the four plaintiffs might have been entitled to, while he dismissed their claims for liability: “Notwithstanding my finding that there is no liability, I have been asked to assess damages on behalf of each of the Plaintiffs” (at para. 302). [ 55 ] The Claimants appealed Faour, J.’s dismissal of their claims to the Newfoundland and Labrador Court of Appeal and the RCECSJ cross-appealed on aspects of his damage awards ( John Doe (G.E.B. #25) 2015).

The Court of Appeal overturned Faour, J.’s dismissal of liability and generally dismissed the RCECSJ’s cross appeal on damages, except as to the pre-judgment interest that he awarded them. [ 56 ] Then the Court of Appeal also considered whether it should order a new trial or decide if the RCECSJ was vicariously liable. It chose the latter and noted that the “solidity” of the trial record, the credibility of the witnesses, and the absence of conflict in the evidence enabled it to make its own determination of liability: The evidentiary record in the case is solid, and it is not controversial.

The controversy in this case relates to how the evidence should be interpreted, and whether it supports or does not support the imposition of vicarious liability on the Archdiocese. This Court is well positioned to apply the correct legal standard for vicarious liability to the evidence and arguments made by the parties. As a practical consideration, this litigation was commenced over 20 years ago.

Insofar as a decision from this Court could expedite a conclusion to this ongoing litigation, we believe it would benefit all parties, namely, the Archdiocese and the appellants who are advanced in age. (at paras. 122 &123) [Underlining mine] [ 57 ] The Court of Appeal also acknowledged the imperative of dealing with these matters promptly because of the long history of the litigation and the precarious circumstances of many of the claimants. [ 58 ] I highlight the importance of the representative character of the four claims that Faour, J. and the Court of Appeal dealt with because it relates to how decisions will be reached about the liability of the RCECSJ and about assessing damages for the remaining claimants.

As yet, only the RCECSJ’s liability to the Representative Plaintiffs and the damages it will pay them have been determined in these proceedings. But it is clear from the preceding discussion that the findings in those two judgments are a template for what follows here. [ 59 ] Their typicality is also tied directly to the discretion that this Court has under the CCAA and how I apply that discretion to decisions I will take on liability and damages for the remaining claimants. Let me examine now how that discretion applies here.

Discretion under the CCAA [ 60 ] On April 14, 2022, the RCECSJ filed an Interlocutory Application to convert proceedings it had started under the Bankruptcy and Insolvency Act to the CCAA and to seek protection under the CCAA while it evaluated its status and liquidated its assets, and the Claimants completed their claims process. I allowed that application on April 29, 2022, and recently stayed all proceedings against the RCECSJ until May 31, 2023. [ 61 ] Presently, only the four Claimants Faour, J. dealt with in 2018, whose judgment the Court of Appeal dealt with in 2020, are judgment creditors of the RCECSJ.

The remaining Claimants, whose numbers are as yet uncertain, are still contingent, unsecured creditors of the RCECSJ. It falls to those Claimants now to prove both that the RCECSJ is liable to them and for how much. [ 62 ] Both the Claimants and the RCECSJ recommend resolving liability and their damages through a

summary process, quite unlike the trial process that the Plaintiffs followed before Faour, J. In the Memorandum of Fact and Law of the Claimant Representatives, which they filed November 15, 2022, the Claimants say that their protocol “seeks to streamline the determination of liability, by recognizing clear applicable types of cases where liability has already been established at law.

Where liability has not been established … [the Claimants call] for a co-operative and consent-based approach in keeping with the balancing of stakeholder interests that has been a central feature of these CCAA proceedings” (at para. 53). [ 63 ] For its part, the RCECSJ says that “the Claims Officer shall determine the validity and the extent to which an Abuse Claimant with a Proven Claim shall be entitled to compensation” (at para. 2.1.1 of the Claims Protocol filed on December 9, 2022). Mount Cashel Plaintiffs are deemed to have a Proven Claim (at para. 2.1.2.1 of the Claims Protocol).

A Claimant who does not have a Proven Claim submits a Proof of Claim to the Monitor for review and if the Monitor is satisfied that the Claimant was abused and the RCECSJ is liable, the Monitor submits the claim to the Claims Officer for consideration. [ 64 ] Each of the parties’ claims protocols, as I noted earlier, is much more detailed than this; and I include those comments here only to demonstrate how the parties contemplate proving the claims of all other Claimants than the four that Faour, J. dealt with.

Suffice it to say that each supports a “summary application” like that contemplated by section 20(1) (b)(iv) of the CCAA , which provides for how creditors both present and prove their claims in CCAA proceedings. [ 65 ] It is useful to look more closely at the structure of section 20(1) . It provides the following steps for a creditor to follow: • Present a claim to the debtor;

• The debtor reviews the claim, and admits or denies it; • If the debtor admits the claim, it is proven; but • If the debtor denies the claim, either creditor or debtor may apply to court for a determination. [ 66 ] It is the court then that decides the claim on “summary application by the company or the creditor.” The parties here have used the phrase “summary application” more loosely than that, to describe the whole exercise the Claimants may follow to prove their claims. I accept their expanded process, but more importantly, I also agree with them that the CCAA generally and section 20(1) of the Act , particularly (buttressed by

section 11 of the CCAA ), confers sufficient discretion on them and this Court to act thus. Let me explain. [ 67 ] It is clear from my review of the CCAA earlier in these reasons that the Act provides a broad discretion for this court to make orders that are “appropriate in the circumstances.” The only limiting factors are the propriety of the orders and whether the parties, both debtor and creditors, are duly diligent and acting in good faith. I am satisfied that both parties here, have acted diligently and in good faith. [ 68 ] The Claimants started these proceedings over two decades ago.

The trial before Faour, J. took 35 days; he filed his judgment about 15 months later.

The Court of Appeal filed its judgment from the appeal and cross-appeal of Faour, J.’s decision almost two and a half years after his decision, and the Supreme Court of Canada finally dismissed the RCECSJ’s application for leave to appeal six months after that. [ 69 ] All told the Claimants waited almost five years from the beginning of the trial in this Court until the legal proceedings were spent; and that process was only finally engaged more than a decade and a half from when they filed their claims to initiate their actions.

It is time to provide the Claimants with the compensation they are entitled to, and the CCAA offers a method to do it. [ 70 ] It is indeed timely to proceed apace with it. Dr. S. Gerald Hann provided an Affidavit in support of a

summary process the Claimants might follow to prove their damages without having to provide expert evidence to help with quantifying them. He noted the obstacles to providing expert evidence in paragraph 32 of an affidavit he filed on October 17, 2022: 32.

Given the associated time, cost, and potential for re-traumatization, coupled with the additional risk that many of the claimants would not be able to complete assessments due to their advanced age and deteriorating health, it is my professional opinion that claimants should not be required to provide expert evidence for proof of damages. [ 71 ] And this from an affidavit filed by the Estate Representative of a Claimant Permitted to Proceed by Way of the Pseudonym, John Doe.

The Estate Representative is 82 years old; she is the widow and executrix of John Doe who died in 2021; and she filed this affidavit to support a

summary process for proving John Doe’s damages. Paragraph 14 pertains: 14.

THAT I have, therefore, instructed my lawyers, Geoff Budden and his colleagues at Budden & Associates, to commence such legal proceedings and make such legal arguments as are necessary to strive to ensure that [John Doe]’s recent death, coming after the Court of Appeal had already imposed liability, not prevent him from receiving the full and fair compensation which he should receive were he still alive; and to, further, commence such legal proceedings as are necessary to try to prevent impossible or onerous burdens being imposed on his Estate in our proving of his claim such full and complete compensation. [ 72 ] I mentioned earlier that it was fortuitous for the Claimants that they were operating under the CCAA and not simply as plaintiffs in diverse tort actions.

They have the status of creditors in these proceedings and are not viewed as plaintiffs, and the processes that apply to the former are available to them here because of that status, the most important being a legislated permission to prove their claims summarily.

I have a broad discretion under the CCAA to approve their process and I accept that and encourage the parties to proceed quickly with it. [ 73 ] I have, however, difficulty with the preferred approach that the Claimants put forward for quantifying their claims: They want to apply tiers to the damage awards and then average them by adjusting them 20% + or –, as may be appropriate. The Claimants justify the tier system in the Memorandum of Fact and Law they filed on November 15, 2022: 79.

Given the complexity of causation in cases of childhood sexual abuse, a tier system to ensure that like claims receive like compensation, at a level consistent with decides cases, is preferable. This approach avoids the time, cost, and risk of a

summary assessment of over 100 individualized damage awards. [ 74 ] To the extent that the Claimants would include tiers in their claims protocol, they want the Claims Officer to place “each of the Abuse Claimants in one … of … four tiers … which reflect the range of general damages awarded in the NL Appeal Division to the Mount Cashel Plaintiffs”: Tier 1 - $60,000; Tier 2 - $125,000; Tier 3 - $240,000; and Tier 4 - $325,000 (at para. 4.1.3 of the Claimants Claims Protocol).

They also offer Tiers 1-4 for Economic Loss and Future Care. [ 75 ] As to averaging, which the Claimants want to apply mainly to their claims for Economic Loss, they offer a “Representative E[conomic] L[oss] Average … calculated to be $201,617.38 (at para. 5 of

Schedule 1 to the Claimants’ Claims Protocol”). [ 76 ] The RCECSJ opposes both applying tiers to damage awards and averaging them. In paragraph 35 of the Memorandum of Fact and Law it filed on November 15, 2022, the RECESJ criticizes the Claimants’ bid to place the damage awards within pre-ordained tiers: The RCECSJ submits that the proposed damage tiers methodology is a restrictive approach which does not allow the Claims Officer to be able to exercise his discretion and best judgment as to the appropriate level of general damages to be awarded to a particular claimant.

Given the significant gaps between each damage tier, there may be instances when the Claims Officer is forced to either under- compensate or over-compensate a particular claimant because the claimant’s claim falls in between the two damage tiers. [ 77 ] Then the RCECSJ opposes averaging. From paragraph 46 of the same Memorandum:

It is submitted that the proposed averaging provision is not supported by any caselaw and is not fair to all of the stakeholders in the claims process, including the claimants themselves. The claimants at the high end of the spectrum should not have their damage claims artificially reduced in order to bring the claim in line with a pre-determined average claim figure.

Rather, the claim values of all claimants should be determined following a careful analysis by the Claims Officer without a fixed allotment. [ 78 ] The RCECSJ also extended its criticism of averaging by noting its impact on other interest groups than the Claimants. This comment from paragraph 48 of the Memorandum pertains: Such an averaging process is ad hoc and not procedurally just. It would not be fair to the RCECSJ and its parishioners, for the court to grant the guaranteed average claim figure sought by Representative Counsel.

Many parishioners have sacrificed their churches and parish halls in an effort to build a pool of funds to address the liabilities facing the RCECSJ. The interests of those parishioners must be considered in the process.

The distribution of the funds raised by the RCECSJ must be carried out in a manner that is based on a fair and transparent adjudication of the merits of the individual claims by the Claims Officer as opposed to a mathematical allocation of funds on a pre-established average claim award. [ 79 ] I agree with the RCECSJ that placing damage awards for the Claimants on tiers and averaging them in some instances is unacceptable. Generally, both proposals are beyond the discretion that is available to me under the CCAA , but they are otherwise also counterintuitive. Let me explain both.

Limiting Discretion under the CCAA to the Appropriate [ 80 ] Precedent makes clear that the discretion a court has under the CCAA is both robust and generous, and the discretion has even been described as “vast,” as Côté, J. of the Supreme Court of Canada said recently in Canada v. Canada North Group Inc.

But the discretion is not limitless and the court’s authority, while clearly extensive, is limited to “any order that it considers appropriate in the circumstances ” (at para. 21; Underlining mine). [ 81 ] In these proceedings, the Claimants are creditors of the RCECSJ, whose claims against it are contingent as to liability and not yet quantified as to damages. The onus is on the Claimants to show that the RCECSJ is liable to them and for how much.

However, the Claimants, on both counts, also have the advantage of an abridged process that applies to proof of both liability and damages. [ 82 ] For example, the Claimants do not have to adduce expert evidence to prove the assaults that they have suffered nor as to the impact those assaults have had on them. They may submit a Proof of Claim and up to 15 pages of supporting material to a Claims Officer who will decide both if the RCECSJ is liable to them and for how much.

If the Claimant or the RCECSJ disagrees with the Claims Officer findings, either may apply to this Court for review. [ 83 ] This process replicates, as closely as possible, how other creditors of a debtor under the CCAA would prove their claims in a restructuring procedure. For the most part, trade creditors of a debtor corporation under the CCAA have no difficulty showing both that the debtor is liable to them and for how much.

In fact, in this case the RCECSJ also has other creditors, albeit few in number, who have liquidated claims for which there is no issue about liability or quantum - we refer to them as the “General Claimants.” [ 84 ] The Claimants are easily the most numerous creditors of the RCECSJ, and the contingency of their liabilities complicates the process somewhat. Fortunately, the Claimants and the RCECSJ agree that their claims process can be streamlined to reduce the time and cost of proving them. The Claims Officer is critical to that streamlining.

The parties agree that the Officer will have a discretion to decide both if the RCECSJ is liable to a Claimant and for how much. [ 85 ] But they differ about the scope of the Claims Officer’s discretion. The Claimants say the Claims Officer should be governed by a “tier system” and they justify using it and averaging the claims this way: In effect, the R[epresentative] C[laimants] Claims Protocol represents an integrated whole. Recognizing the necessary

summary nature of the process, and the impossibility (or at least prohibitive difficulty) of tendering trial-type expert evidence, the use of tiers is the most just approach. Given those same factors, to ensure justice in the aggregate for the Claimant group, averaging is necessary as a safety mechanism for the results of the process. This is true no matter how well and how thoroughly the Claims Officer performs their task. (para. 115 of Claimants’ Memorandum of Fact and Law of the Claimant Representative, filed November 15, 2022) [ 86 ] The RCECSJ criticizes the use of tiers and averaging for several reasons.

It says the tiers are rigid and immutable and may result in Claimants being under- or over-compensated; it says further that the number of Claimants is relatively modest so that mechanisms that might apply in class actions with many more claimants are unnecessary; and that Claimants will receive inordinate, perhaps unjustifiably high awards if averaging is applied. [ 87 ] I agree with the RCECSJ’s criticisms of both using tiers and averaging. I fully endorse the

summary process that both parties support and it is appropriate in the circumstances. I also support giving the Claims Officer a broad discretion for how he deals with claims, both as to liability and damages. Assigning the discretion to the Claims Officer mirrors the “summary application” that section 20(1)(a)(iii) of the CCAA contemplates. [ 88 ] But I note that section 20(1)(a)(iii) also contemplates that this Court will deal with disputes between creditors and debtors over damage award claims. Ordinarily, in these matters, there is no Claims Officer to consider the claims of creditors.

Creditors simply submit their claims to the debtors and if the debtors reject them, either may apply to Court to settle the dispute, which the Court does “on

summary application by the company or by the creditor.” [ 89 ] I expect that neither of the parties would argue that this Court should fetter its own discretion by compelling itself to apply tiers or averaging in resolving disputes between the parties about either the RCECSJ’s liability to the Claimants or how much damages it should pay them. Yet, that would be the result of imposing the same strictures on the Claims Officer. If I ordered the Claims Officer to use either or both of these techniques, I would also override my own discretion to change the Claims Officer’s findings if I disagreed with them in a review that either party might undertake. And that I will not do.

[ 90 ] Quite simply, I will not fetter the Claims Officer’s discretion as to how he deals with the Claims that Claimants present to him, nor my own discretion if either disputes the Officer’s findings to this Court. That would be antithetical to the process that section 20(1)(a) (iii) contemplates and it far exceeds the discretion that I might assign to the Claims Officer here. I also believe that it would be most effective to leave those decisions to the Claims Officer.

The parties may appeal the Officer’s findings to this Court for me to review if they disagree with his findings. [ 91 ] Further to that, I believe that the Claims Officer will have ample guidance to direct him in dealing with both liability and damages. Faour, J. made comprehensive findings on damages and the Court of Appeal upheld him, with only slight variation. The Court of Appeal also relied heavily on Faour, J.’s findings of fact at trial to find the RCECSJ liable to the Claimants.

The Claims Officer will have the benefit of both judgments to instruct him in dealing with the claims that he receives. [ 92 ] It is appropriate, of course, for the Claims Officer to rely on those two judgments. I reviewed extensively the “representative” quality of the four plaintiffs whose claims those judgments addressed so that their relevance to this part of the process would be evident.

When Adams, J. dealt with the RCECSJ’s bifurcation application he noted, as I set out earlier in these reasons: The purpose of selecting the Representative Actions to be litigated was to determine all issues in respect of them in the hope that the decisions, if liability were to be found against the R.C.E.C., would provide a template which might lead to settlement of the remaining over one hundred claims.

This would obviate the need for trials in those cases and thus save the Plaintiffs, the Defendants and the court system enormous time and costs ( John Doe (G.E.B. #36, at para. 38 ) [Underlining mine] [ 93 ] Similarly, Faour, J. commented on their representative quality in his judgment: While this is not a formal representative, or class action, these four cases were put forth as being somewhat representative of the issues and damages which would arise in all of them.

The outcome of this case may provide a precedent for resolution of the other outstanding actions ( John Doe (G.E.B. #25) 2015, at para. 19) [Underlining mine] [ 94 ] The Claims Officer will also have a unique and informed perspective on the claims process: He will review all claims, whether they are just the 100 that have been roundly estimated throughout these proceedings or a greater number from the advertising that will be circulated shortly. From his review the Officer will have the “bigger picture” effect and he may scale and apportion the claims as best presents from that review.

Finally, the Claimants’ numbers, whether they are 100 or 150 are relatively modest, so that the Claims Officer may deal with them all, both expeditiously and holistically. Good Faith & Due Diligence [ 95 ] Earlier in these reasons, I mentioned good faith and due diligence, in addition to appropriateness, as factors a Court will consider when examining how discretion is exercised under the CCAA . So, it bears asking, are the parties here, particularly those who will benefit from that exercise acting in good faith, and have they been duly diligent?

Let me deal with the latter first. [ 96 ] The RCECSJ began these proceedings by filing a Notice of Intention to Make a Proposal under the BIA . Subsequently, at the RCECSJ’s request, I converted those proceedings to a restructuring initiative under the CCAA . While a year has elapsed since the RCECSJ first applied, much has been achieved.

It appears that the parties are generally cooperating in the process, but each, not surprisingly has its own vision of the claims process and they clearly disagree on important issues. [ 97 ] However, I also see expressions of goodwill in their filings, and I am encouraged by those comments. I note, for example, this statement from paragraph 13 of the Interlocutory Application the Claimants filed on September 13, 2022, for approval of a claims process: 13.

RCECSJ and E[rnst] Y[oung] have consistently communicated their support for the development of a claims process that is fair, timely, cost-effective, and reduces the evidentiary burden to be placed upon victims of past sexual abuse while ensuring that all claims are properly proven. [ 98 ] Overall, it is clear to me that the parties are fully committed to completing the restructuring and settling the outstanding claims as soon as possible. Each has expressed optimistically, but realistically that it will be done by the end of this calendar year.

I fully support their resolve. [ 99 ] As to good faith, the Claimants have occasionally criticized the RCECSJ and questioned its motivation. For example, in paragraph 9 of the Memorandum of Fact and Law that the Claimants filed on November 15, 2022, to support their proposed claims process, they made this comment: 9.

A cynical (although perhaps justified) view of the Debtor [RCECSJ] Claims Protocol is that it has purposely been designed to suppress claims of the Claimants and minimize recoveries with the intent of preserving the possibility of the RCECSJ emerging from these CCAA proceedings as a viable entity, with some remaining assets.

It is the Representative Claimants’ position that the Court should not countenance such an approach. [ 100 ] The parties have differing objectives for these proceedings: For the Claimants, the goal is to liquidate as many of the RCECSJ’s assets as possible so as to generate the maximum amount of funds to distribute among them. The RCECSJ views the proceedings as a restructuring, not as a liquidation, wherein most of its assets are sold to settle the claims outstanding against it, especially those of the Claimants.

When the RCECSJ settles those claims, it hopes to carry on as a restructured company, however solvent it may be then. [ 101 ] Both objectives can be maintained under the CCAA , although it is predominantly restructuring legislation and not an insolvency

statute per se. I challenged counsel for the RCECSJ during his oral submissions on November 28, 2022, about the RCECSJ’s objective in these proceedings; noting that the RCECSJ began this process under the BIA , which is bankruptcy and insolvency legislation: Mr. Spencer: There’s nothing improper about trying to seek… [to permit the debtor to continue to carry on business and, where possible, avoid the social and economic costs of liquidating its assets] if a company were trying to emerge from this process, that is contemplated and is encouraged by the Court.

The Court: But it’s not the purpose of the Bankruptcy and Insolvency Act though which is where you went first in this process. Mr. Spencer: Well, we went first to make a proposal. That was still the purpose was that we would make a proposal to our creditors under the Bankruptcy Act that would enable us to satisfy our liabilities and carry on and avoid bankruptcy. That was the purpose of the proposal proceedings. Ultimately, we simply ran out of runway and didn’t have enough time to complete that within the six-month restrictive period.

So, transitioning to the CCAA gives us more breathing space, this is what the Court talks about. Gives us more breathing space to see if we can reach an arrangement to emerge from the process as a going concern, that’s very much the purpose. It’s premature at this stage of course to determine whether the RCEC has a chance as a corporate entity to emerge from the proceedings. We don’t know still the total value of our assets. We’re getting a better picture of it, but we don’t know yet. Nor do we know the amount of the liabilities that we’re facing, that’s the whole purpose of this claims process.

Once we conclude this claim process, we’ll certainly have that information as to what are the amounts of liabilities that we’re facing, do we have the necessary assets to deal with those claims that will enable us to emerge from the CCAA process. [ 102 ] I am satisfied of the RCECSJ’s goodwill and I do not believe that its commitment to settling fairly with the Claimants is overridden by its own desire to survive. I note, for example, that the RCECSJ has taken positions adverse to its parishioners on some issues; disposing of the Chase the Ace funds that it held belonging to the Parish of St.

Kevin’s in Goulds comes foremost to my mind, but there are other examples. Other Concerns [ 103 ] Finally, I have four other concerns about applying tiers to the damage awards and averaging them: 1. I make it clear in these reasons that I support the

summary process which for proving claims that section 20 (1) of the CCAA provides for the creditors of companies that are protected by the legislation while they try and restructure. The parties agree with the process and will begin to work with it soon. I reject the Claimants’ calls for applying tiers to damage awards and for averaging some of them for reasons I have already stated. But I reject those measures also because the Claimants have not shown how those measures flow from the

summary process that section 20 (1) provides. There is a disconnection between a Claimant summarily proving that the RCECSJ is both responsible for his damages and the amount of those damages and also asking for pre-determined damage award and fixed, adaptive measures. It is taking the licence that a

summary process provides too far to also insist that it include minimum damage amounts. 2. Representative Counsel acknowledged that the database on which they relied for averaging and to establish the tiers was relatively modest; as appears in this exchange between me and Representative Counsel during his oral submissions to me on November 28, 2022: THE COURT: So, what are the criteria that you would use then in the absence of the mathematical because that really reflects upon the validity of the tier system that you’ve presented. I mean that kind of – MR.

PROPHET: There’s quite a simple mathematical answer for that. I hope it’s one that will help. It’s a set of, if it was a set of 3,600, we’d have more tiers. We’d be able to have distributions that were more measurable. We had to work with the data that we had . [Underlining mine] 3. Representative Counsel also seemed ambivalent about the validity of the tiers in which they would place the claims, as captured in this comment from Counsel to me during his oral submissions, again on November 28, 2022: MR. PROPHET: You see four tiers there, five if you count the zero tier.

Representative counsel, if there’s a cogent and reasonable approach to introducing a small number of further tiers to maintain the balance between refined outcomes and a possible process, representative counsel is open to discuss any further tiers. And there’s a limit to that because if one goes with too many tiers, you just are replicating individualized determinations and you’re making the claims officer’s job impossible again and you’re throwing away the fairness that the tier system, the averaging and the lack of evidence will all bring together.

But if it was thought that, for example, the last tier was too far, if you could build in mitigating tiers… 4. Finally, I expect the Claims Officer to exercise judgment when he reviews the claims that are presented to him. Exercising judgment may be guided by relevant and applicable criteria, but there are also intuitive and innate qualities to it that are more difficult to measure.

If I direct the Claims Officer to fit the claims first into tiers and then possibly to average them, the intuitive and innate aspects of his judgment may be stultified and overridden by those mechanical processes. [ 104 ] In the result, I reject the Claimants’ submission that I order the Claims Officer to adopt the tiers for assigning damages that they propose and then to average the claims where applicable. Overall, both parts of that order would not, to paraphrase

section 11 of the CCAA , be “appropriate in the circumstances.” Quite simply, those two measures, whether applied separately or in combination, exceed the discretion that is available to this Court, in this case, under that Act . Issue # 3 : How should pre-judgment interest be calculated on the economic loss portions of abuse claims? [ 105 ] Section 3(1) of the Judgment Interest Act provides that “[w]here a person obtains a judgment for the payment of money or a judgment that money is owing , the court shall award interest on the judgment calculated in accordance with this Act ” [Underlining mine].

Section 3(2) of the Act states nine exclusions to that mandate, none of which applies here; and then section 3(3) of the Act authorizes this

Court either to refuse to award interest at all; or to award it at a rate, or for a period, or both, other than prescribed in the Act . [ 106 ] The RCECSJ submitted that awards for economic losses are individualized remedies that should be left to the discretion of the Claims Officer.

During his oral submissions counsel for the RCECSJ reviewed various cases that dealt with pre-judgment interest, and then summed up his client’s position with a similar recommendation for interest on such awards: And while we’ve recognized that the case law is not consistent on the question of prejudgment interest, we acknowledge that. Cases do tend to go a couple of different directions on it and we therefore, my lord, we agree with the Monitor’s comments in his report that it may be appropriate to leave the issue of prejudgment interest in the discretion of the claims officer.

That would be in line with section 3(3) of the Judgment Interest Act which gives the Court the discretion to refuse or to modify an award of pre-judgment interest. [ 107 ] The RCECSJ did resile from the position it previously held that awards for economic loss should not be made without actuarial evidence to support them. This is what counsel for the RCECSJ said in his oral submissions about his client’s reversal of its earlier position: …[W]e wanted to find a way to see if we could avoid the need for actuarial evidence and avoid the extra time and the cost that would be required for that.

So, we’ve made some I think fairly minor revisions to that proof of claim form just to add some additional information that would be provided to the claims officer… … So, it’s the RCEC’s view that if the Court accepts this form of the proof of claim form, we’re prepared to step away from the requirement for actuarial events and we think that will go a long way to promote the objective of a

summary process which we all want. We do want this to be a

summary process. [ 108 ] The Claimants submit that “Canadian courts have taken a flexible approach to the characterization of past economic loss and applicable prejudgment interest” and cite this excerpt from page 23 of Appendix “E” of the Fifth Report of the Monitor, in which counsel for the Monitor reviews cases that apply prejudgment interest to awards for past economic loss: In the review of 38 cases involving claims for damages caused by past sexual abuse, 25 involved an award for past economic loss, and 11 involved PJI [pre-judgment interest] calculated on that award for past economic loss.

In five of those cases in which PJI was awarded, the damages for economic loss were determined on a lump sum basis. (See para. 167 of the Reply Memorandum of the Claimant Representatives filed November 22, 2022) [ 109 ] Counsel for the Monitor provided a detailed and very helpful review of awards of pre-judgment interest on economic loss.

Following that review, counsel summarized it this way: It is certainly open to the parties to come to an agreement regarding how PJI will be calculated for past economic loss clams; however, the case law does indicate that PJI should be calculated for any award compensated (sic) the claimant for past economic loss.

On a principled basis, unless otherwise agreed by the parties, PJI should be calculated on any damages that represent compensation for past economic loss, regardless of whether those damages are determined on a detail or a lump-sum basis, but with the Claims Officer retaining the discretion on whether to award PJI and how much. (Taken from under the heading “Summary on PJI” on page 26 of Appendix “E” to the Fifth Report of the Monitor). [ 110 ] I endorse counsel’s recommendation.

Given the vagueness and uncertainty attendant on calculating awards for economic loss, and by extension, ordering pre-judgment interest on them, it is practical and appropriate here. The recommendation is also consistent with positions I took earlier in these reasons for rejecting pre-determined tiers of damages and averaged awards. I will not fetter the Claims Officer’s discretion unnecessarily, and in the result, the ultimate discretion of this Court.

Issue # 4: What damages may the estates of deceased Claimants seek? [ 111 ] The issue, as the Claimants state it, appears quite broad but it is actually much narrower than it appears.

The Claimants offer a twofold approach to the issue. [ 112 ] First, they submit that I designate and apply a “Cut-Off Date” of July 28, 2020, so that: …Abuse Claimants who pass away…after the [Cut-Off Date] shall be entitled to include in their claim any damages for pain and suffering that the Deceased Abuse Claimant would have been entitled to as at the Cut-Off Date, and such Deceased Abuse Claimants death after the Cut-Off Date shall not be deemed to have invalidated or otherwise barred or prejudiced its ability to recover such damages from the RCECSJ. (at para. 97 of the Memorandum of Fact and Law of the Claimant Representatives, filed November 15, 2022). [ 113 ] Alternatively, the Claimants submit that: if the Court does not accept the implementation of a Cut-Off Date, the Court should find that (

a) any Claimant who dies after December 21, 2021, being the initial Filing Date, should be entitled to include in its Claim any damages for pain and suffering that the Deceased Abuse Claimant would have been entitled to as at the initial Filing Date; and that (

b) their death after the Initial Filing Date shall not be

deemed to have invalidated or otherwise barred, or prejudiced its ability to recover such damages against the RCECSJ. (at para. 105 of the Memorandum of Fact and Law of the Claimant Representatives, filed November 15, 2022). [ 114 ] In each instance, the Claimants submit that this Court may rely on either its inherent jurisdiction to make one of those orders or to the broad discretion that

section 11 of the CCAA provides to take all steps that are reasonably necessary to achieve the objectives of the Act . [ 115 ] The RCECSJ takes a much more restrictive approach. It says that

section 4 of the Survival of Actions Act is clear and unambiguous and …only damages that have resulted in actual pecuniary loss to the estate are recoverable and that the claim for loss of future earnings capacity (or loss of a chance of future earnings) is personal to the deceased and not a special claim by his esta

[…]