2014 MBCA 13, 2014 MBCA 13

Citation: Puratone et al., Re, 2014 MBCA 13 Date: 20140127 IN THE COURT OF APPEAL OF MANITOBA Docket: AI 13-30-08010 BETWEEN : ) THE PURATONE CORPORATION, ) J. M. Lee, Q.C. PEMBINA VALLEY PIGS LTD. and ) for the Applicant NIVERVILLE SWINE BREEDERS LTD. ) Farm Credit Canada ) (Applicants) Respondents ) ) G. B. Taylor and - and - ) J. J. Burnell ) for the Applicant FARM CREDIT CANADA ) Bank of Montreal ) (Respondent) Applicant ) ) R. W. Schwartz and - and - ) J. S. Harvey ) for the Respondents Docket: AI 13-30-08011 ) ITB Claimants BETWEEN : ) ) ) R. A.

McFadyen THE PURATONE CORPORATION, ) on a watching brief PEMBINA VALLEY PIGS LTD. and ) for Deloitte & Touche Inc. NIVERVILLE SWINE BREEDERS LTD. ) ) (Applicants) Respondents ) Chambers motion heard: ) November 27, 2013 - and - ) ) BANK OF MONTREAL ) Decision pronounced: ) January 27, 2014 (Respondent) Applicant ) MacINNES J.A. [ 1 ] Farm Credit Canada (FCC) and Bank of Montreal (BMO) each move for leave to appeal the order made July 8, 2013, (the lift stay and holdback order) in proceedings under the Companies’ Creditors Arrangement Act (the CCAA ).

Background [ 2 ] The Puratone Corporation, Pembina Valley Pigs Ltd., and Niverville Swine Breeders Ltd., each of whom carried on business as part of the Puratone Group of Companies (Puratone), ran a commercial hog production business, which included the breeding, farrowing, finishing and marketing of hogs. [ 3 ] Puratone was experiencing serious financial difficulties, and on September 12, 2012, it commenced proceedings under the CCAA to obtain protection from its creditors and to enable it to continue business operations while it attempted a financial restructuring or, failing that, a sale of the business. [ 4 ] An order (the initial order) was made that day, which granted a stay of proceedings by creditors against Puratone and its officers and directors.

As well, the initial order appointed Deloitte & Touche Inc. monitor of Puratone (the monitor). Further, the judge who granted the initial order became the supervising judge (the judge) for all matters arising thereafter in the CCAA proceedings. [ 5 ] By order made November 8, 2012 (the approval and vesting order), the judge approved the sale of substantially all of Puratone’s assets, including its hogs, to Maple Leaf Foods Inc. The sale closed December 17, 2012. [ 6 ] By the approval and vesting order, all of Puratone’s rights, title and interest in and to the assets sold vested absolutely in

Maple Leaf, free and clear of all encumbrances including security interests of Puratone’s creditors. The order also provided that, for thepurpose of determining the nature and priority of encumbrances (including security interests) the net proceeds from the sale of the assetswould stand in the place of the assets sold. [7] Puratone’s primary secured lenders were FCC and BMO. FCC’s primary security consisted of Puratone’s real propertyand the operating assets. As at the date of the initial order, FCC was owed approximately 40.3 million dollars.

BMO’s primary securityconsisted of the sow and hog inventory, as well as the book debts (or accounts receivable) of Puratone. As at the date of the initial order,BMO was owed approximately 40.9 million dollars. [8] The ITB claimants are a group of 17 farmers represented by Interlake Turkey Breeders Ltd. who, in the approximatetwo-week period preceding the granting of the initial order, supplied feed to Puratone for its hogs.

The value of the feed suppliedtotalled $903,250.50. [9] By motion dated March 7, 2013, the monitor sought an order (the interim distribution order) authorizing the interimdistribution of the sale proceeds to each of FCC, BMO and Manitoba Agricultural Services Corporation (MASC), another securedcreditor, subject to a general holdback of five million dollars pending completion of the CCAA proceedings.

The monitor’s motion wasaccompanied by a report that stated that FCC, BMO and MASC each had valid and enforceable security interests in the assets ofPuratone, and that such security interests ranked in priority to all other claims that could be made to Puratone’s assets.

That report alsoindicated that each of FCC, BMO and MASC would incur significant shortfalls on their outstanding indebtedness. [10] By motion dated March 11, 2013, the ITB claimants sought an order lifting the stay of proceedings to allow the ITBclaimants to sue the officers and directors of Puratone, and directing that $903,250.50 of the sale proceeds be imposed with aconstructive trust in favour of the ITB claimants, or otherwise be withheld from distribution. [11] Both motions were dealt with on March 12, 2013.

The judge granted the interim distribution order sought by the monitorand declined to hold back any additional sale proceeds (other than the general holdback). The judge adjourned the ITB claimants’motion for hearing to April 11, 2013. [12] The ITB claimants filed a second motion on April 10, 2013. An appendix was attached to the second motion outlining,very generally, the proposed action which would be commenced by the ITB claimants against the officers and directors of Puratone, andas well, possibly against FCC and BMO. [13] Both the second motion and the adjourned motion were heard on April 11, 2013.

The judge reserved decision and onJuly 8, 2013, ordered (the lift stay and holdback order) that the stay of proceedings be lifted, thus permitting the ITB claimants to sue theofficers and directors of Puratone, and that $903,250.50 from the general holdback be dedicated to the proposed claim of the ITBclaimants and not be paid out without further order of the court. [14] It is from that decision that the motion for leave to appeal has been brought pursuant to ss. 13 and 14(1) of the CCAA,which provide: Leave to appeal 13.

Except in Yukon, any person dissatisfied with an order or a decision made under this Act may appeal from the order or decision onobtaining leave of the judge appealed from or of the court or a judge of the court to which the appeal lies and on such terms as to securityand in other respects as the judge or court directs. Court of appeal 14.

(1) An appeal under

section 13 lies to the highest court of final resort in or for the province in which the proceeding originated. The Test for Granting Leave to Appeal [15] In Winnipeg Motor Express Inc. et al., Re, 2008 MBCA 133, 236 Man.R. (2d) 3, Monnin J.A. wrote (at paras. 13-14): Prior to dealing with the merits of the leave application itself, it is useful to briefly review the underlying principles of the CCAA. Suchguidance can be found in the Alberta Court of Appeal decision of Smoky River Coal Ltd. et al., Re (1999), 1999 ABCA 179 ,237 A.R. 326; 197 W.A.C. 326; 175 D.L.R. (4th) 703; 1999 ABCA 179 (C.A.). Writing for the court, Hunt, J.A., said (at paras. 51-53): “This

interpretation is supported by the legislative objectives underlying the CCAA. The purpose of the CCAA and the properapproach to its

interpretation have been described as follows: ‘The CCAA is intended to facilitate compromises and arrangements between companies and their creditors as an alternative tobankruptcy and, as such, is remedial legislation entitled to a liberal

interpretation. It seems to me that the purpose of the statute is to

enable insolvent companies to carry on business in the ordinary course or otherwise deal with their assets so as to enable plan ofcompromise or arrangement to be prepared, filed and considered by their creditors and the court.

In the interim, a judge has greatdiscretion under the CCAA to make order [sic] so as to effectively maintain the status quo in respect of an insolvent company while itattempts to gain the approval of its creditors for the proposed compromise or arrangement which will be to the benefit of both thecompany and its creditors. [Per Farley, J., in Lehndorff General Partner Ltd. (Re) (1993), 17 C.B.R. (3d) 24 (Ont. Ct. (Gen. Div.)) at31.]’ “As has been noted often, the CCAA was enacted by Parliament in 1933 during the height of the Depression.

At that time, corporateinsolvency led almost inevitably to liquidation because that was the only option available under legislation such as the Bankruptcy Act,R.S.C. 1927, c. 11, and the Winding-Up Act, R.S.C. 1927, c. 213. In the result, shareholder equity was destroyed, creditors receivedvery little, and the social evil of unemployment was exacerbated. The CCAA was intended to provide a means of enabling the insolventcompany to remain in business: Hongkong Bank of Canada v.

Chef Ready Foods Ltd. (1990), (BC CA), 4 C.B.R.(3d) 311 (B.C.C.A.); Quintette Coal, [(1991), (BC SC), 7 C.B.R. (3d) 165 (B.C.S.C.)]. “The courts have underscored that the CCAA requires account to be taken of a number of diverse societal interests. Obviously, theCCAA is designed to ‘provide a structured environment for the negotiation of compromises between a debtor company and its creditorsfor the benefit of both’: Lehndorff General Partner Ltd., Re, supra, at 31.

It is intended to ‘prevent any manoeuvers for positioningamong creditors during the interim period which would give the aggressive creditor an advantage to the prejudice of others who wereless aggressive and would further undermine the financial position of the company making it less likely that the eventual arrangementwould succeed’: Meridian, [(1984), (AB KB), 52 C.B.R. (N.S.) 109 (Alta. Q.B.)], at 114. But the CCAA alsoserves the interests of a broad constituency of investors, creditors and employees: Chef Ready, supra, at 320; Quintette Coal, supra, at314.

These statements about the goals and operation of the CCAA support the view that the discretion under s. 11(4) should beinterpreted widely.” Within the general context just described, the test to be applied on a leave application under the CCAA is a narrow one and, as will bedemonstrated, it is to be applied selectively and sparingly. Wittmann, J.A., of the Alberta Court of Appeal sets out the test in CanadianAirlines Corp., Re (2000), 2000 ABCA 149 , 261 A.R. 120; 225 W.A.C. 120; 80 Alta.

L.R. (3d) 213; 2000 ABCA 149, in thesewords (at paras. 6-7): “The criterion to be applied in an application for leave to appeal pursuant to the CCAA is not in dispute. The general criterion isembodied in the concept that there must be serious and arguable grounds that are of real and significant interest to the parties: MultitechWarehouse Direct Inc., Re (1995), 1995 ABCA 304 , 32 Alta. L.R. (3d) 62 (Alta. C.A.), at 63; Smoky River Coal Ltd., Re(1999), 1999 ABCA 62 , 237 A.R. 83 (Alta. C.A.); Blue Range Resource Corp., Re (1999), 1999 ABCA 255 , 244A.R. 103 (Alta.

C.A.); Blue Range Resource Corp., Re (2000), 2000 ABCA 3 , 15 C.B.R. (4th) 160 (Alta. C.A. [InChambers]); Blue Range Resource Corp., Re (2000), 2000 ABCA 16 , 15 C.B.R. (4th) 192 (Alta. C.A. [In Chambers]). “Subsumed in the general criterion are four applicable elements which originated in Power Consolidated (China) Pulp Inc. v. BritishColumbia Resources Investment Corp. (1988), 19 C.P.C. (3d) 396 (B.C.C.A.), and were adopted in Med Finance Co. S.A. v. Bank ofMontreal (1993), (BC CA), 22 C.B.R. (3d) 279 (B.C.C.A.).

McLachlin, J.A., (as she then was), set forth the elementsin Power Consolidated as follows at p. 397: (1) whether the point on appeal is of significance to the practice; (2) whether the point raised is of significance to the action itself; (3) whether the appeal is prima facie meritorious or, on the other hand, whether it is frivolous; and (4) whether the appeal will unduly hinder the progress of the action. …. [16] Clearly, and as a general rule, leave to appeal a decision given by a judge under the CCAA is to be granted sparingly. Butthat is not to say that leave cannot be granted.

The application of the general rule will depend upon the circumstances of a given case,

and particularly, the state of the CCAA proceedings. [17] In Edgewater Casino Inc. et al., Re, 2009 BCCA 40, 265 B.C.A.C. 274, Tysoe J.A. considered the general rule in light ofcomments made by MacFarlane J.A. in Pacific National Lease Holding Corp. et al., Re, (1992), (BC CA), 19 B.C.A.C.134 at paras. 30-32, and the four factors to be considered on a leave application under the CCAA. He wrote (at paras. 18-22): This is not to suggest that I disagree with the above comments of Macfarlane, J.A., in Pacific National Lease.

To the contrary, I agreewith his comments, but I do not believe that he established a special test for CCAA orders. Rather, his comments are a product of theapplication of the usual standard used on leave applications to orders that are typically made in CCAA proceedings and a recognition ofthe special position of the supervising judge in CCAA proceedings. In particular, a consideration of the third and fourth of the abovefactors will result in leave to appeal from typical CCAA orders being given sparingly. The third of the above factors involves a consideration of the merits of the appeal.

In non-CCAA proceedings, a justice will be reluctantto grant leave where the order constitutes an exercise of discretion by the judge because the grounds for interfering with an exercise ofdiscretion are limited: see Silver Standard Resources Inc. v. Joint Stock Co. Geolog et al., [1998] B.C.A.C. Uned. 140; [1998] B.C.J.No. 2298 [QL] (C.A. Chambers). Most orders made in CCAA proceedings are discretionary in nature, and the normal reluctance togrant leave to appeal is heightened for two reasons alluded to in the comments of Macfarlane, J.A.

First, one of the principal functions of the judge supervising the CCAA proceeding is to attempt to balance the interests of the variousstakeholders during the reorganization process, and it will often be inappropriate to consider an exercise of discretion by the supervisingjudge in isolation of other exercises of discretion by the judge in endeavouring to balance the various interests. Secondly, CCAAproceedings are dynamic in nature and the supervising judge has intimate knowledge of the reorganization process.

The nature of theproceedings often requires the supervising judge to make quick decisions in complicated circumstances. These considerations arereflected in the comment made by Madam Justice Newbury in New Skeena Forest Products [(2005), 2005 BCCA 192 , 210B.C.A.C. 247] that “[a]ppellate courts also accord a high degree of deference to decisions made by Chambers judges in CCAA mattersand will not exercise their own discretion in place of that already exercised by the court below” (para. 20). The fourth of the above factors relates to the detrimental effect of an appeal on the underlying action.

In most non-CCAA cases, theevents giving rise to the underlying action have already occurred, and a consideration of this factor involves the prejudice to one of theparties if the trial is adjourned or if the action cannot otherwise move forward pending the determination of the appeal. CCAAproceedings are entirely different because events are unfolding as the proceeding moves forward and the situation is constantly changing- some refer to CCAA proceedings as “real-time” litigation.

The fundamental purpose of CCAA proceedings is to enable a qualifying company in financial difficulty to attempt to reorganize itsaffairs by proposing a plan of arrangement to its creditors. The delay caused by an appeal may jeopardize these efforts.

The delay mayalso have the effect of upsetting the balance between competing stakeholders that the supervisory judge has endeavoured to achieve. [18] Tysoe J.A. continued (at para. 24): As a result of these considerations, the application of the normal standard for granting leave will almost always lead to a denial of leaveto appeal from a discretionary order made in an ongoing CCAA proceeding. However, not all of the above considerations will beapplicable to some orders made in CCAA proceedings.

Thus, in Westar Mining [(1993), (BC CA), 22 B.C.A.C.106], McEachern, C.J.B.C., while generally agreeing with the comments made in Pacific National Lease, believed that theconsiderations mentioned by Macfarlane, J.A., were not applicable in that case because the CCAA proceeding had effectively come toan end with the sale of the principal assets of the debtor company.

Madam Justice Newbury made a similar point in New Skeena ForestProducts at para. 25 (which was a hearing of an appeal, not a leave application), although she found it unnecessary to decide the appealon the point. [19] In the circumstances here, it is my view that the judge’s decision, being a discretionary decision, should be accordedconsiderable deference, but it is also my view that it need not be given the very substantial or special deference normally accorded adecision of a CCAA judge, as the CCAA proceedings are virtually at an end and it is conceded by all parties that an appeal, if granted,will not unduly hinder the progress of the CCAA proceedings. [20] In their respective motions for leave to appeal, FCC and BMO advanced various grounds, including as regards thatportion of the lift stay and holdback order lifting the stay so as to permit the ITB claimants to sue the officers and directors of Puratone.

Both advised, however, that they were not seeking leave to appeal that portion of the lift stay and holdback order and, accordingly, I donot propose to deal with it.

[21] Rather, I will address only the actual issue which both FCC and BMO propose to appeal, if leave is granted; namely, thatportion of the lift stay and holdback order which required that, out of the general holdback monies, the sum of $903,250.50 be dedicatedto the proposed claim of the ITB claimants and segregated in an interest-bearing account, not to be paid out without further order of thecourt. Argument [22] FCC asserts that the judge proceeded on the erroneous assumption that, were he to grant an order lifting the stay, an orderto hold back the funds would automatically follow.

It argues that whether to lift a stay of proceedings to permit litigation to proceed, andwhether to withhold from distribution the amount claimed in that litigation, are two separate and distinct issues. [23] FCC submits that the judge erred by awarding the ITB claimants a prejudgment remedy as part of the lift stay andholdback order, without any consideration of whether such a remedy was appropriate. [24] It says that the effect of dedicating $903,250.50 from the general holdback to the proposed claim of the ITB claimants isto improperly reorder priorities in the CCAA proceedings.

This, it argues, is a point of significance to CCAA practice, as such an order isunprecedented in the CCAA jurisprudence and will create a heightened level of uncertainty for secured creditors who may, thus, be lessinclined to support a company seeking either to reorganize or to sell its assets as a result of financial difficulties. It says that withoutsupport from their secured creditors, debtor companies will be unable to restructure under the CCAA. [25] FCC also asserts that the proposed appeal with respect to the order for holdback of the funds is a point of significance tothe action itself.

It argues that the practical effect of the holdback portion of the lift stay and holdback order is to elevate the unprovenunsecured claim of the ITB claimants ahead of the proven secured claim of FCC and BMO. It says that the judge found that FCC andBMO were prima facie entitled to all of the sale proceeds.

However, having done so, he then effectively denied each of them access tonearly one million dollars by effectively elevating the unsecured claim of the ITB claimants to a status ahead of, or at least equal to, theproven secured claims of FCC and BMO. [26] FCC submits that, if leave to appeal were granted, the appeal to follow is prima facie meritorious by reason of the factthat the judge made the holdback portion of the lift stay and holdback order without giving any consideration to whether there was alegal basis for so doing, which it asserts there was not, on the evidence before the judge.

Lastly, it says that the proposed appeal will notunduly hinder the progress of the CCAA proceedings, which are at an end. Thus, there are no ongoing restructuring efforts that would beput at risk. [27] BMO also argues that the point on the proposed appeal is of great significance to the CCAA. It says that there is nonecessary connection between the two orders, that is, the lifting of the stay of proceedings and the holding back of proceeds.

It assertsthat the two matters require consideration of quite separate issues and factors, and the conduct of distinct parties; namely, Puratone andits officers and directors on the one hand, and BMO and FCC on the other. [28] BMO submits that the lifting of the stay of proceedings did not involve it or FCC, as there was never a stay ofproceedings against either of them. The ITB claimants could have sued them at any time.

But, it says the matter of the holdbackrequired independent consideration by the judge of the factors relevant to the exercise of his discretion as regards the holdback of fundsfrom BMO and FCC. [29] BMO asserts that the judge’s reasons for judgment demonstrate no separate consideration of the proper circumstancesunder which the proven and accepted interest of a secured creditor ought to be interfered with in the context of a motion for such relief byan unsecured or subordinate creditor; no reference to a test of any kind to be applied to a motion for such relief from a subordinate orunsecured creditor to justify interference with the established rights of a secured creditor in receiving the proceeds of its security; and noconsideration of any of the elements of such a test. [30] BMO argues that the judge’s decision is important to the CCAA practice for its precedential value.

It says that, on thebasis of the decision, it appears open for any subordinate or unsecured creditor that has supplied goods or services in some periodreasonably proximate to the CCAA filing, to obtain an order that funds, to which a secured creditor has proven its prior ranking andentitlement, be held back and not distributed to the secured creditor pending action over an indeterminate period. [31] BMO asserts that without the application of a qualifying test of some substance, there is the meaningful risk that thesupervisory function of the CCAA court could be overwhelmed by creditors trying to position themselves for settlement. [32] BMO argues that the point of the intended appeal is significant to this CCAA proceeding as the holdback of funds delaysdistribution to BMO and FCC, whose prima facie entitlements were accepted by the judge, and delays, for an indeterminate period, thecompletion and winding up of the CCAA process, all in circumstances where both BMO and FCC are capable of funding judgmentsagainst them should the ITB claimants succeed in an action against them. [33] BMO submits that an order to hold back funds from a party prima facie entitled to such funds, is not one which ought tobe made lightly.

It refers to Queen’s Bench Rule 45.02, which provides: 45.02 Where the right of a party to a specific fund is in question, the court may order the fund to be paid into court or otherwise securedon such terms as are just. [34] BMO refers to Manning v. Chornoboy and Dunlop (1994), (MB KB), 96 Man.R. (2d) 274 at para. 8(Q.B.), where the court considered the four criteria in arriving at its decision on a motion for the preservation of funds under Rule 45.02,

namely:

a) whether there is a serious issue with regard to the entitlement of the funds;

b) whether it is reasonably possible that the funds would otherwise be put beyond the reach of this court should the plaintiff succeed;

c) the hardship that may be suffered by the parties; and

d) the balance of convenience. [ 35 ] BMO argues that while Manning was not decided in the context of a CCAA application, the criteria ought to be the same. Parties prima facie entitled to their property ought not to be deprived of that property unless (1) there is a serious issue as to entitlement; (2) there is some reasonable risk that the property will be dissipated or otherwise inaccessible should the moving party be successful at trial; and (3) there should be a consideration of the hardship to each party.

It submits that the judge ought to have demonstrably considered and applied a test at least as stringent as the aforementioned in the exercise of discretion to hold back funds from BMO and FCC and that, had he done so, the ITB claimants would have wholly failed, on the record, to meet this test. [ 36 ] BMO argues that the fundamental basis upon which the money was held back was the judge’s determination that when he scrutinized the proposed claim of the ITB claimants against Puratone, he concluded that its dismissal was not a foregone conclusion. However, argues BMO, in the circumstances here, that is not enough.

While the ITB claimant’s might be entitled to establish a constructive trust vis-à-vis Puratone, which BMO denies, in order to have an entitlement to the monies held back, the ITB claimants must also displace the priority interests of BMO and FCC. [ 37 ] To that end, BMO argues that, in order to succeed in a claim for unjust enrichment, the ITB claimants will need to establish:

a) an enrichment;

b) a corresponding deprivation; and

c) an absence of any juristic reason for the enrichment. [ 38 ] It notes, in particular, that with respect to criterion c), a two-stage test is to be employed.

First, the ITB claimants must establish that no juristic reason for the enrichment, from an “established category” existed to deny recovery, but even if they were able to meet that hurdle, it creates only a presumption of unjust enrichment which, at the second stage of the test, is rebuttable. [ 39 ] BMO asserts that it and FCC, on the record before the judge, would be able to rebut the presumption in stage two of the analysis, as both BMO and FCC are arm’s-length parties with first ranking prior, registered security interests. BMO says that the juristic reason referred to in criterion

c) for the establishment of an unjust enrichment is not limited to the person enriched and the person deprived, that is Puratone and the ITB claimants. Rather, the juristic reason may arise out of a relationship between the person enriched and some other person, and need not be tied to the person who asserts the unjust enrichment. That is, in this case, the juristic reason may be found in the pre-existing legal rights held by BMO and FCC to the ITB claim money.

This, argues BMO, was a point never averted to or considered by the judge in making the holdback portion of the lift stay and holdback order and in failing to do so, it submits that he erred. [ 40 ] The ITB claimants agree that the test articulated in Winnipeg Motor Express (at para. 14) is the relevant test to be applied when considering whether to grant leave to appeal a decision of a supervising judge in a CCAA proceeding.

It argues that the test is a narrow one to be applied selectively and sparingly, and that great deference is to be provided to the CCAA supervising judge. [ 41 ] The thrust of their argument pertains to the judge’s decision that the dismissal of the proposed claim of the ITB claimants against Puratone was not a foregone conclusion.

But the ITB claimants agree that the holdback portion of the lift stay and holdback order is a distinct issue from the decision to lift the stay, and concede that the judge did not embark upon any separate analysis of whether or when it would be appropriate to hold back any such proceeds from distribution.

They assert that, in the circumstances of this case, and once the stay was lifted, it naturally followed that the value of ITB claimants’ claim would continue to be held back, while the rest of the general holdback money would be distributed accordingly. [ 42 ] They also acknowledge that an appeal of the judge’s decision would not hinder the CCAA application. Analysis and Decision [ 43 ] I am prepared to grant leave to FCC and BMO.

I must, therefore, be circumspect in the comments which I make, as the case will now proceed to appeal before a panel of this court. [ 44 ] As I stated previously, this is a discretionary decision of the judge and the starting point for review is, and on appeal will be, one of considerable discretion. [ 45 ] Nonetheless, it is agreed by all parties that the issue of holdback is a discrete issue from that of the lifting of the stay. In my view, the issue whether to grant a holdback in respect of the ITB claimants’ claim raises a question of law.

And, it is agreed that the judge did not expressly address that issue. Nor does it appear that he considered the issue. [ 46 ] For purposes of this leave application, I am satisfied that FCC and BMO have met the criteria for leave as enunciated by Monnin J.A. in Winnipeg Motor Express (and by other judges in other cases arising under the CCAA ).

[ 47 ] I am of the view that the leave application raises a question of importance to the practice, and of significance to the action and the parties. As well, I am satisfied that the appeal is not frivolous, and I note that all parties agree, given the state of the instant proceedings, that an appeal will not hinder their progress. [ 48 ] Thus, I am prepared to grant leave on the following question: Did the judge err in ordering that the sum of $903,250.50, being the ITB claimants’ claim, be segregated within the general holdback money and withheld from distribution to FCC and BMO? [ 49 ] FCC and BMO will have their costs of this motion. J.A.