Koroluk v KPMG Inc., 2022 SKCA 57

Court of Appeal for Saskatchewan Docket: CACV3678 Citation: Koroluk v KPMG Inc. , 2022 SKCA 57 Date: 2022-05-11 Between: Randy Koroluk Appellant (Representative Plaintiff) And KPMG Inc. in its capacity as and liquidator of PrimeWest Mortgage Investment Corporation Respondents (Applicants) And Dan Anderson, Tom Archibald, Francis Bast, Doug Frondall, Mike Hough, Wilson Olive, Tom Robinson, Irene Sieferling and Ernst & Young Inc. Respondents (Defendants) And Director of Corporations, Canada Revenue Agency, P.I.

Financial, Donald Zealand, Granite Enterprises and Debbie Gloria Burwash Non-Parties (Non-Parties) Before: Richards C.J.S., Ottenbreit and Leurer JJ.A. Disposition: Appeal allowed Written reasons by: The Honourable Mr. Justice Leurer In concurrence: The Honourable Chief Justice Richards The Honourable Mr. Justice Ottenbreit On appeal from: QBG 1455 of 2019, Saskatoon Appeal heard: December 1, 2021 Counsel: E.F.

Anthony Merchant, Q.C. for Randy Koroluk Nicolas Conlon and Michael Russell for KPMG Inc. in its capacity as and liquidator of PrimeWest Mortgage Investment Corporation Amanda Quayle, Q.C. for Dan Anderson, Tom Archibald, Francis Bast, Doug Frondall, Mike Hough, Wilson Olive, Tom Robinson and Irene Sieferling (observing) Douglas Hodson for Ernst & Young LLP (observing) Leurer J.A. I.

Introduction [ 1 ] The issue in this appeal is whether the appellant, Randy Koroluk, can prosecute a proposed class action without proving it as a claim within the liquidation of PrimeWest Mortgage Investment Corporation [PrimeWest]. [ 2 ] Mr. Koroluk is an investor in PrimeWest. His claim is against PrimeWest’s directors and auditor for duties alleged to have been owed by them to that corporation’s shareholders. [ 3 ] PrimeWest is in voluntary liquidation. PrimeWest’s liquidator, KPMG Inc., says that, although Mr. Koroluk has not sued PrimeWest, he must prove his claim through the liquidation process.

A Court of Queen’s Bench judge sitting in Chambers has agreed with the liquidator: KPMG Inc. v Koroluk (7 July 2020) Saskatoon, QBG 1455 of 2019 [ Chambers Decision ]. [ 4 ] Mr. Koroluk now appeals from the Chambers Decision . In my respectful view, Mr. Koroluk’s appeal must be allowed. His claim is not against PrimeWest, nor will any judgment he may obtain be directly payable from PrimeWest’s assets. He is not therefore required to prove that claim through the process established for the liquidation of that company. My further reasons for reaching this conclusion follow. II. Background A.

Facts [ 5 ] PrimeWest was incorporated in 2005 under The Business Corporations Act , RSS 1978, c B-10 [ BCA ]. Its business was the “investing in and managing [of] a diversified portfolio of commercial and residential mortgages” ( Chambers Decision at para 2). PrimeWest’s shares were publicly traded, and Mr. Koroluk became a shareholder. [ 6 ] In June 2016, PrimeWest dismissed its chief executive officer. Thereafter, the corporation conducted a review of its mortgage

portfolio. It came to light that some of PrimeWest’s lending guidelines and polices had not been followed and that many of its loans were under-secured. The company stopped paying dividends. It was also later determined that the company’s financial statements for 2014 and 2015 contained errors and the company was worth much less than what people had invested in it.

In this regard, according to the evidence of PrimeWest’s chief financial officer and interim chief executive officer, as of March 31, 2018, the company’s mortgage portfolio consisted of 27 mortgage loans with a gross value of $14,219,431 and a realizable value of only $6,224,067. [ 7 ] On June 12, 2018, Mr. Koroluk issued a statement of claim [Proposed Class Action] under The Class Actions Act , SS 2001, c C-12.01 .

It alleges that the present and former directors of PrimeWest – Dan Anderson, Tom Archibald, Francis Bast, Doug Frondall, Mike Hough, Will Olive, Tom Robinson and Irene Seiferling [Directors] – breached various duties owed to Mr. Koroluk and other shareholders. [ 8 ] Mr. Koroluk’s statement of claim was later amended to add Ernst & Young Inc. [E&Y] as a defendant.

The amended statement of claim refers to Ernst & Young Inc. [1] as the auditor of PrimeWest at relevant times and alleges that E&Y breached duties owed to PrimeWest’s shareholders. [ 9 ] Overall, the Proposed Class Action seeks unquantified general and special damages and other relief against the Directors and E&Y. PrimeWest is not a party to the Proposed Class Action. No relief is requested against it or sought on its behalf in that lawsuit. [ 10 ] Through the latter part of 2018 and into 2019, PrimeWest’s board of directors pursued a sale of the company’s assets.

When this proved to be impossible, its board approved a plan for the corporation’s voluntary liquidation and dissolution under the supervision of KPMG Inc. as liquidator [Liquidation Plan]. [ 11 ] The Liquidation Plan directs the liquidator to “pay or otherwise satisfy all Proven Claims from the Assets [of PrimeWest] in accordance with the Claims Process and any orders of the Court”.

It also provides the liquidator with the power to “settle or compromise any Claims by or against the Corporation in accordance with the Claims Process and any orders of the Court”. [ 12 ] Two terms defined in the Liquidation Plan relating to the liquidator’s obligations and powers feature in this appeal.

Article 1.1 of the Liquidation Plan provides the following definition of the term “Claim”: 1.1

Definitions In this Liquidation Plan: … “ Claim ” means: (

a) any right of any Person against the Corporation in connection with any indebtedness, liability or obligation of any kind of the Corporation and any interest accrued thereon or costs payable in respect thereof, whether liquidated, unliquidated, reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, unsecured, present, future, known or unknown, by guarantee, surety or otherwise, and whether or not such right is executory or anticipatory in nature, including any claim made or asserted against the Corporation through any affiliate or associate or any right or ability of any Person to advance a claim for contribution or indemnity or otherwise with respect to any matter, action, cause or chose in action, whether existing at present or commenced in the future with respect to any matter, action, cause or chose in action; and (

b) any existing or future right of any Person against any one or more of the Directors which arose or arises as a result of such Director’s position, supervision, management or involvement as a Director or otherwise in any other capacity in connection with the Corporation, whether such right, or the circumstances giving rise to it, arose before or after the Effective Date and whether enforceable in any civil, administrative or criminal proceeding, but does not include an Equity Claim[.] [ 13 ]

Article 1.1 of the Liquidation Plan defines “Proven Claim”, to mean “a Claim finally determined or accepted in accordance with the provisions of the Claims Process”.

In the latter regard, the Liquidation Plan contemplates that the liquidator would establish a “Claims Process” for the identification and resolution of “Claims”. [ 14 ] The Liquidation Plan was approved by PrimeWest’s shareholders on September 24, 2019. [ 15 ] On October 31, 2019, a Court of Queen’s Bench judge sitting in Chambers made an order that the Liquidation Plan, a copy of which is attached to that order, is “affirmed and approved” [Liquidation Order]. Among its other terms, the Liquidation Order provides the following additional direction with respect to the definition of “Claim”: 2.

For greater certainty, the definition of “Claim” in the Liquidation Plan and this Order includes but is not limited to: (

a) the following Court of Queen’s Bench actions in which the Corporation is named as a defendant or defendant-by-counterclaim, as the case may be: (

i) QB No. 1559 of 2017; (ii) QB No. 1889 of 2018; (iii) QB No. 1395 of 2018; (

b) the Court of Queen’s Bench action commenced against certain current and former directors of the Corporation in QBG No. 1727 of 2018.

(the “Actions”) The action referred to in subparagraph 2(

b) is the Proposed Class Action. [ 16 ] Mr. Koroluk objected to this term of the Liquidation Order. His counsel, and counsel for PrimeWest, filed a consent order removing subparagraph 2(b). In the result, on November 25, 2019, an Amended and Restated Order issued that was otherwise identical to the original Liquidation Order [Amended Liquidation Order]. [ 17 ] On January 10, 2020, the Chambers judge granted an order approving a claims process, as contemplated by the Liquidation Plan [Claims Process Order]. The Claims Process Order adopts and uses the same

definitions as are contained in the Liquidation Plan. It requires that all persons having a “Claim” file a proof of it with the liquidator on or before a March 10, 2020, or such later date as the liquidator may agree in writing or the court may otherwise direct, failing which that person shall “be and is hereby forever barred, estopped and enjoined from asserting or enforcing any Claim, and all such Claims shall be forever extinguished”. [ 18 ] On January 15, 2020, the liquidator wrote to Mr.

Koroluk stating that he had been identified by the Liquidator as a creditor of PrimeWest and had to file a proof of claim or his claim would be extinguished. The Directors and E&Y also filed proofs of claim with copies of Mr. Koroluk’s amended statement of claim in the Proposed Class Action. [ 19 ] Against this background, two applications came before the Chambers judge. In the first, Mr. Koroluk requested an order that the Proposed Class Action “is excluded from the within liquidation proceedings”.

In the second, the liquidator sought an order for “advice and directions of the Court in the discharge of its powers pursuant to the Liquidation Order and the Claims Process Order” and declaring that the allegations made in the Proposed Class Action “constitute a Claim pursuant to and subject to the Claims Process Order, and that all matters and issues in regard to the [Proposed Class Action] shall be determined in the Liquidation Proceedings”. B.

The Chambers Decision [ 20 ] After recounting the history of the proceedings, including the various orders he had made, the Chambers judge identified five questions that required his answer, as follows (at para 24): 1. What is the purpose of the liquidation and the role of the liquidator? 2. What are the duties of the liquidator? 3. Was the class action included in the Claims Process Order? 4. What is the effect of the removal of the word “directors” from paragraph 14 of the liquidation plan? 5. What is the effect of the removal of paragraph 2(

b) from the definition of “claim” in the liquidation plan referred to [in] the Amended and Restated Order of November 25, 2019? [ 21 ] With respect to the first of these issues, the Chambers judge determined the “primary purpose of the liquidation is to convert the assets of the corporation to cash, to pay off the debts of the corporation, and to distribute the residual property to the shareholders and other persons entitled to it” (at para 25).

He concluded that the purpose of the liquidation also guides the liquidator’s role, and noted that the liquidator is “bound to wind up the corporation and to act in the place of the directors” (at para 26). [ 22 ] The second issue addressed by the Chambers judge related to the duties of the liquidator. In this regard, the Chambers judge recognized that the liquidator had “determined that the claim brought by the representative plaintiff against the directors of the corporation was included within the definition of ‘claim’ included in

Article 1.1 of the liquidation plan” (at para 32). Based on this, he found that the liquidator had “the power and the duty to consider the claim brought against the directors and PrimeWest in carrying out the liquidator’s duties” (at para 33). He then stated the following conclusion: [34] I am satisfied therefore that the liquidator had a duty to apply to the Court for direction in respect to the liquidation plan and the Claims Process Order.

Neither the orders, nor the plan of liquidation specifically stated that the class action would not be included in the Claims Process Order. [ 23 ] In respect of the third issue – whether the Proposed Class Action is included in the Claims Process Order – the Chambers judge quoted from the definition of “Claim” as found in

Article 1.1 of the Liquidation Plan. He stated that the “liquidator is bound to follow the Liquidation Plan and the Claims Process Order” (at para 36). On this basis, he found that the Proposed Class Action “is included in the Liquidation Plan pursuant to

Article 1.1(

b) and the Claims Process Order” (at para 37). [ 24 ] The fourth issue identified by the Chambers judge related to a difference between the form of liquidation order requested by PrimeWest and the Liquidation Order he had approved. In this regard, PrimeWest had, in its originating application, requested an order for a stay of proceedings against its former or current directors or officers. Mr. Koroluk had objected to this term because it would prevent the continued prosecution of the Proposed Class Action. The Chambers judge recorded that Mr.

Koroluk’s counsel had suggested that “the class action was not brought against PrimeWest and that any reference to the class action should be removed from the liquidation order” (at para 39). The Chambers judge described how this objection was resolved at the time, and what the change to the order meant in the context of the applications before him: [40] The Court proposed to the parties that the order be amended to remove the word “ directors” from para . 14 [of the Liquidation Order] and all parties at the hearing advised that the order could then issue.

The order excluded the reference to a proceeding against the directors being barred. That would not mean that the planned liquidation would not take place. [ 25 ] The final issue identified by the Chambers judge was the effect of the subsequent removal of paragraph 2(

b) from the definition of “Claim” through the grant of the Amended Liquidation Order. The Chambers judge rejected Mr. Koroluk’s contention that the doctrine

of issue estoppel prevented the liquidator from maintaining that this amendment did not remove the Proposed Class Action as a claim to be proven within the liquidation proceedings: [43] I am not satisfied that issue estoppel applies in the circumstances of this case. It is not clear why the reference to the class action was removed from the amended and restated order. Also the parties to the consent order were not the same as the parties in this action.

KPMG, the liquidator appointed by the Court, did not appear as a party in the liquidation plan or the order which confirmed the liquidation plan; neither did the directors of PrimeWest or Ernst & Young. Furthermore, KPMG is bound to follow the Claims Process Order dated January 10, 2020 and the

definitions that are found within the Claims Process Order. Neither [Mr. Koroluk’s counsel] or PrimeWest objected to or appealed the Claims Process Order. [ 26 ] The Chambers judge then noted that “the liquidator has identified the class action as well as the claim for contribution and indemnity by the directors in respect to the class action as potential claims against the assets of PrimeWest”.

For this apparent reason, he found that the “liquidation order would be meaningless as far as determining the issues necessary for the winding up of PrimeWest if it could be held up until final adjudication on the class action” and the “question of priority as between any judgment or settlement in the class action and the directors or the auditor can be determined by the liquidator or by court order at a later date” (at para 44). [ 27 ] After addressing the five issues he had identified, the Chambers judge ordered that Mr.

Koroluk “and the members of the class action he represents are not excluded from the liquidation proceedings” and are “required by the terms of the Claims Process Order to file with KPMG a proof of claim within 30 days of the date of this order” (at para 45). III. Issues [ 28 ] Mr. Koroluk’s principal argument is that the Proposed Class Action is not a claim that is provable in the liquidation because it is not brought against PrimeWest, but instead seeks damages only against the Directors and E&Y for duties alleged to have been owed by them directly to PrimeWest’s shareholders.

He advances several other arguments, including that, if the Chambers judge had the authority to include his claim within the liquidation, the Chambers judge erred in so ordering. [ 29 ] The liquidator opposes Mr. Koroluk’s appeal. It denies that the Chambers judge erred as Mr. Koroluk alleges. In addition, it asserts that Mr. Koroluk’s appeal has been rendered moot by the filing by him of proofs of claim. [ 30 ] In this context, the outcome of Mr. Koroluk’s appeal is determined by the answers to the following two questions: (

a) Is the Proposed Class Action a “Claim” that is subject to proof within the liquidation proceedings? (

b) Is this appeal moot? IV. Analysis A. Is the Proposed Class Action a “Claim” that is subject to proof within the liquidation proceedings? 1. The issue [ 31 ] Relevant to an understanding of this first issue is that a proposed class action is subject to case management by a judge who is appointed to hear and determine an application for certification of that action as a class action [certification judge] ( Class Actions Act , s. 4(2) ). If the action is certified, the certification judge manages and supervises it until settlement or a common issues trial is held ( inter alia , ss. 14 and 16).

As part of this, the certification judge will also generally identify the process for determination of individual issues. [ 32 ] Also important to an understanding of this first issue is that the Chambers Decision changes the procedure that Mr. Koroluk must follow to prove the claims made by him in the Proposed Class Action.

However, the liquidator’s precise position as to what this change in procedure entails has evolved during the course of these proceedings. [ 33 ] The affidavit filed by the liquidator in support of the Liquidation Order stated that it was requesting an order that, if granted, would mean that the Proposed Class Action “would be dealt with as part of the claims process to be established by the Liquidator pursuant to the mandatory obligation set out in

Section 4.3(

k) of the Liquidation Plan and any further orders of the Court”.

Section 4.3(

k) requires the liquidator to “establish and implement a Claims Process”. The process approved by the Claims Process Order requires that, in first instance, the liquidator “ shall review all Proofs of Claim received on or before the Claims Bar Date and shall accept, revise or reject each Claim ” (Claims Process Order at para 18, emphasis added). The Claims Process Order further contemplates that a claimant who is dissatisfied with the liquidator’s decision can file a notice of dispute.

If a notice of dispute is filed, the judge supervising the liquidation can “issue a fiat prescribing the evidentiary and procedural parameters for such hearing or make an order prescribing such evidentiary and procedural parameters at such hearing” (at para 20(b)). [ 34 ] From all of this, the liquidator’s initial position was that the designation of the Proposed Class Action as a claim within the liquidation meant that, in first instance at least, the liquidator was responsible for evaluating that claim. Thereafter, Mr.

Koroluk could dispute any finding it made with the court. [ 35 ] The liquidator advanced this understanding of the Chambers Decision at the hearing of an application brought by it for an order striking Mr. Koroluk’s appeal. The application to strike the appeal was based on the idea that the order made by the Chambers judge was interlocutory and leave to appeal from it was required but had not been obtained. This Court rejected this argument: Koroluk v KPMG Inc. , 2021 SKCA 10 [ Koroluk No. 1 ]. Justice Ottenbreit, who authored the Court’s decision on that occasion, explained that the liquidator had

argued that, if Mr. Koroluk was dissatisfied with any determination it might reach regarding the merits of his claim, “he could apply to the Court of Queen’s Bench to have that decision reviewed”. He then stated that the liquidator later pulled back from that position and indicated that it would make no decision about the merits of the representative plaintiff’s claim.

Ultimately, in Koroluk No. 1 , this Court did not describe the precise effect of the Chambers Decision , but it did express the view that it “terminated the Class Action in its current form and recasts it within the very different procedural context of the liquidation proceedings” (at para 40). [ 36 ] The liquidator’s position as to the effect of the Chambers Decision evolved even further during the hearing of this appeal.

The liquidator maintained the new position it had taken in the context of the motion to strike the appeal – that is, that while it would not itself adjudicate the claims advanced in the Proposed Class Action, the judge supervising PrimeWest’s liquidation would determine how this would occur. However, the liquidator also suggested that the supervising judge might allow the Proposed Class Action to proceed in the regular fashion before a certification judge, but that ultimately this would be up to the judge supervising the liquidation.

In essence, although the liquidator was unable to explain how this would occur, other than by referring generally to the need for case management, I understood its position to be that the judge supervising the liquidation would have final procedural control over the Proposed Class Action, including as to whether it would follow the procedures set out in the Class Actions Act . [ 37 ] Against this background, the first issue is whether the Amended Liquidation Order and the Claims Process Order have the effect described by the liquidator. 2. Standard of review [ 38 ] The “proper

interpretation of a court order is, like a statute, a question of law” ( Onion Lake Cree Nation v Stick , 2020 SKCA 101 at para 61 , [2021] 2 WWR 614 [ Onion Lake ]). This Court is, therefore, required to review the

interpretation given by the Chambers judge to the orders at issue in this appeal and substitute its own

interpretation if it disagrees with the Chambers judge. 3. The definition of “Claim” and how it is used in the Amended Liquidation Order and Claims Process Order [ 39 ] As already stated, the Amended Liquidation Order affirms and approves the Liquidation Plan. Paragraph 2 of that order, quoted earlier, specifies “[f]or greater certainty” that three different civil proceedings are included in the definition of “Claim” within the Liquidation Plan.

These three civil proceedings are defined to be “Actions”. [ 40 ] Paragraph 8 of the Amended Liquidation Order directs that these three “Actions shall be resolved by the Liquidator in accordance with the Claims Process to be implemented by further order of the Court or, alternatively, the terms of any agreed upon settlement, as the case may be”. The Amended Liquidation Order does not contain a specific direction as to the administration or resolution of claims other than these three actions. This is left to paragraph 5 of that order, which states as follows: 5.

Pursuant to section 204(8) of The Business Corporations Act , RSS 1978, c B-10 (the “ SBCA ”), the liquidation of the Corporation shall be continued under the supervision of the Court as provided in Division XVI of the SBCA, and in accordance with the Liquidation Plan and any further orders of the Court. [ 41 ] As can be seen, this paragraph requires that PrimeWest’s liquidation continue under the court’s supervision “and in accordance with the Liquidation Plan and any further orders of the Court”.

Paragraph 7 of the Amended Liquidation Order creates the requirement that the liquidator seek approval for “Court approval of the Claims Process contemplated by the Liquidation Plan”. Of course, this was done through the grant of the Claims Process Order. The Claims Process Order adopts the definition of “Claim” used in the Liquidation Plan. All this invites consideration of the Liquidation Plan. [ 42 ] Subparagraph (

a) of the definition of “Claim”, found in

Article 1.1 of the Liquidation Plan, quoted earlier, states that it includes “any right or ability of any Person to advance a claim for contribution or indemnity or otherwise with respect to any matter, action, cause or chose in action”. This would seem to capture the request by the Directors and E&Y that they be indemnified against the Proposed Class Action, but not the relief claimed in the Proposed Class Action itself. On the other hand, subparagraph (

b) of the definition of “Claim” is broader. It states that “Claim” includes “any existing or future right of any Person against any one or more of the Directors [of PrimeWest] which arose or arises as a result of such Director’s position, supervision, management or involvement as a Director or otherwise in any other capacity in connection with the Corporation” (emphasis added). These words, if read in isolation, encompass the Proposed Class Action. [ 43 ] However, the

interpretation of a court order, or for that matter a document approved by a court order or which a court order directs be implemented, involves more than simply reading its words in isolation. Like other law-making instruments, court orders are to be interpreted wholistically and purposively. The

interpretation of specific provisions must take into account other parts of the order. A court interpreting an order should consider the authority to render it, since it should be assumed that a court would not grant an order it had no power to make. Finally, consideration must also be given to the broader context in which the order was made, including the pleadings and litigation events leading to the order. Warde v Slatter Holdings Ltd. , 2016 BCCA 63 , 394 DLR (4th) 513 [ Warde ] and Onion Lake provide two recent examples of the application of these principles. [ 44 ] Warde involved the

interpretation of an order made pursuant to British Columbia’s Business Corporations Act , SBC 2002, c 57 . At paragraph 65 of that decision, Goepel J.A. quoted from Sutherland v Reeves , 2014 BCCA 222 at para 31 , 61 BCLR (5th) 308, where Bauman C.J.B.C. described the “correct approach” to interpreting of a court order to be “to examine the pleadings of the action in which it is made, the language of the order itself, and the circumstances in which the order was granted”.

Justice Goepel later added that the order “must be read and considered in light of the statutory regime set out in [the British Columbia Business Corporations Act ], particularly the interplay between ss. 301, 228(2) and 228(3) of [it]” (at para 66). [ 45 ] In Onion Lake , this Court heard the appeal from a finding of contempt based on the breach of what was described to be a “plain and unambiguous” order ( Stick v Onion Lake Cree Nation , 2019 SKQB 178 at para 11 ).

This Court concluded that, when the statutory context for the making of the original order, the pleadings and other litigation circumstances surrounding the making of the order were all

examined, the order could not bear the allegedly self-evident

interpretation adopted by the judge of first instance in that case. 4. The power to make the orders [46] In this case, as is stated in paragraph 5 of the Amended Liquidation Order, the authority for the grant of that order, like theoriginal Liquidation Order, is found in s. 204(8) of the BCA, although s. 210(

a) also authorizes the court to make “an order to liquidate”.As I will explain, s. 204(8) directs that the Liquidation Plan be carried out under supervision of the court. In doing this, the court would beexercising authority given to it under s. 210. I will reproduce these provisions later in these reasons. [47] I frame my consideration of these statutory provisions with reference to first principles.

Section 2-10 of The Legislation Act, SS2019, c L-10.2, states as follows: Acts and regulations remedial 2-10(1) The words of

an Act and regulations authorized pursuant to

an Act are to be read in their entire context, and in their grammaticaland ordinary sense, harmoniously with the scheme of the Act, the object of the Act and the intention of the Legislature.

(2) Every Act and regulation is to be construed as being remedial and is to be given the fair, large and liberal

interpretation that bestensures the attainment of its objects. [48]

Section 2-10 codifies the modern approach to statutory

interpretation endorsed by the Supreme Court of Canada in Rizzo &Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 SCR 27 at 40–41. While the modern approach is often invoked to argue for abroad

interpretation of a statute, a key feature of it is that the words of a statute must be interpreted harmoniously with the statute in whichthey appear, that is, in a fashion that is consistent with the broader statutory scheme. [49] Sections 204(8) and 210 of the BCA are within Division XVI of that statute, entitled “Liquidation and Dissolution”, whichapplies to the liquidation and dissolution of solvent corporations.

Beyond the basic requirement that a corporation be solvent in order to beliquidated under Division XVI, the BCA contemplates the possibility of liquidation and dissolution of a corporation in a number of distinctsituations.

In this case, PrimeWest’s board of directors asked shareholders to approve a proposal for the voluntary liquidation anddissolution of the corporation in accordance with s. 204(1), which provides as follows: Proposing liquidation and dissolution 204(1) The directors may propose, or a shareholder who is entitled to vote at an annual meeting of shareholders may, in accordance withsection 131, make a proposal for, the voluntary liquidation and dissolution of a corporation. [50] PrimeWest’s shareholders approved the board’s proposal.

A certificate of intent to dissolve was issued by the Director ofCorporations in accordance with s. 204(5). The effect of this certificate was that PrimeWest was required to “cease to carry on businessexcept to the extent necessary for the liquidation, but its corporate existence continues until the Director [of Corporations] issues acertificate of dissolution” (s. 204(6)). Section 204(7) of the BCA also imposes several duties on PrimeWest associated with the issuance ofthe certificate of intent to dissolve, as follows: Liquidation

(7) After issue of a certificate of intent to dissolve, the corporation shall: (

a) immediately cause notice thereof to be sent to each known creditor of the corporation; (

b) forthwith publish notice thereof in the Gazette and once in a newspaper published or distributed in the place where the corporation hasits registered office and take reasonable steps to give notice thereof in every jurisdiction where the corporation was carrying on business atthe time it sent the statement of intent to dissolve to the Director; (

c) proceed to collect its property, to dispose of properties that are not to be distributed in kind to its shareholders, to discharge all itsobligations and to do all other acts required to liquidate its business; and (

d) after giving the notice required under clauses (

a) and (

b) and adequately providing for the payment or discharge of all its obligations,distribute its remaining property, either in money or in kind, among its shareholders according to their respective rights. (All emphasis added) [51] I have underlined the phrases “creditor of the corporation” and “discharge [of] all its obligations”, as I will later emphasizeseveral phrases that indicate that the liquidation process is concerned with the identification and payment of the corporation’s liabilities,because this idea permeates the statutory scheme and informs how to properly interpret the orders made in this case.

As I will explain, thisincludes the direction given in paragraph 5 of the Amended Liquidation Order that the liquidation is to continue under the court’ssupervision “in accordance with the Liquidation Plan and any further orders of the Court”. [52] The statutory process I have described does not require the court’s involvement in all circumstances. However, the BCA allowsfor it. In this regard, s. 204(8) states as follows: Supervision by court

(8) The Director or any interested person may, at any time during the liquidation of a corporation, apply to a court for an order that theliquidation be continued under the supervision of the court as provided in this Division, and upon such application the court may so orderand make any further order it thinks fit.

[ 53 ] In this case, PrimeWest’s application under s. 204(8) was approved by the court through the grant of the Liquidation Order and the Amended Liquidation Order. As I have noted, both orders specifically state that they were made pursuant to s. 204(8) . The court’s approval brought with it two other statutory requirements, namely, that the liquidation continue under court supervision and that a liquidator be appointed.

The requirement that the liquidation continue under the court’s supervision is found in s. 208(2), which directs that if a court makes an order under s. 204(8) , “the liquidation and dissolution of the corporation shall continue under the supervision of the court in accordance with” the BCA . The requirement that a liquidator be appointed is found in s. 212(1) , which states as follows: Cessation of business and powers 212

(1) If a court makes an order for liquidation of a corporation: (

a) the corporation continues in existence but shall cease to carry on business, except the business that is, in the opinion of the liquidator, required for an orderly liquidation; and (

b) the powers of the directors and shareholders cease and vest in the liquidator, except as specifically authorized by the court. [ 54 ] As can be seen, in accordance with s. 212(1)(b), when a court makes a liquidation order, “the powers of the directors and shareholders cease and vest in the liquidator, except as specifically authorized by the court”. Because the first level responsibility for the liquidation is given to the liquidator, and the court’s role is supervisory, it is appropriate to begin by considering the powers of the liquidator. [ 55 ]

Section 215 identifies specific additional powers given to a liquidator. These include the power to defend civil proceedings “in the name and on behalf of the corporation ” (s. 215(1)(b), emphasis added) and to “settle or compromise any claims by or against the corporation ” (s. 215(1)(g), emphasis added). The BCA gives no power to the liquidator to compromise or litigate a claim which is not by or against the corporation, such as the Proposed Class Action. [ 56 ] I would reach the same conclusion with respect to the authority of the court when acting pursuant to its supervisory authority in relation to the liquidation of the corporation.

Section 210 enumerates the supervisory powers that the court may exercise. I will reproduce the parts of that

section most relevant in this appeal: Powers of court 210 In connection with the dissolution or the liquidation and dissolution of a corporation, the court may, if it is satisfied that the corporation is able to pay or adequately provide for the discharge of all its obligations, make any order it thinks fit including, without limiting the generality of the foregoing: (

a) an order to liquidate; (

b) an order appointing a liquidator, with or without security, fixing his remuneration and replacing a liquidator; … (

e) an order determining the validity of any claims made against the corporation; (

f) an order, at any stage of the proceedings, restraining the directors and officers from: (

i) exercising any of their powers; or (ii) collecting or receiving any debt or other property of the corporation, and from paying out or transferring any property of the corporation, except as permitted by the court; (

g) an order determining and enforcing the duty or liability of any present or former director, officer or shareholder: (

i) to the corporation; or (ii) for an obligation of the corporation; (

h) an order approving the payment, satisfaction or compromise of claims against the corporation and the retention of assets for such purpose, and determining the adequacy of provisions for the payment or discharge of obligations of the corporation, whether liquidated, unliquidated, future or contingent; … (

n) upon the application of any director, officer, security holder, creditor or the liquidator: (

i) an order staying the liquidation on such terms and conditions as the court thinks fit; (ii) an order continuing or discontinuing the liquidation proceedings; or (iii) an order to the liquidator to restore to the corporation all its remaining property; (

o) after the liquidator has rendered his final account to the court, an order dissolving the corporation. Three of the powers set out in s. 210 require further comment. [ 57 ]

Section 210(

e) permits the court to make “an order determining the validity of any claims made against the corporation ”

(emphasis added). The plain wording of s. 210(

e) suggests that, at least when acting under this provision, the court’s sole authority is todetermine the validity of claims against the corporation under liquidation. The Proposed Class Action is not such a claim. [58]

Section 210(

h) allows the court to approve the payment and satisfaction of claims, but only those that are “against thecorporation”. Again, the Proposed Class Action is not such a claim. [59]

Section 210(

g) entitles the court to make “an order determining and enforcing the duty or liability of any present or formerdirector, officer or shareholder”. However, this is only in respect to duties or liabilities owed “to the corporation” or “for an obligation ofthe corporation” (emphasis added). The breaches of duty alleged in the Proposed Class Action meet neither of these requirements. [60] Although the specific powers given to the Court under s. 210 would not allow the court to make an order relating to theProposed Class Action, I recognize that the powers set out in that

section are not exhaustive. Under s. 210, when making an order inconnection with the dissolution or the liquidation and dissolution of a corporation, the court may “make any order it thinks fit”, including,but not limited to, those that are specifically enumerated, such as the three that I have reviewed. This language parallels that found in s.204(8), which provides that the court not only may direct that the liquidation continue under its supervision but that it may “make anyfurther order it thinks fit”. [61] However, no grant of statutory power is unlimited.

A conclusion otherwise would be inconsistent with the rule of law. In thiscase, the question becomes whether the general grants of authority extended in ss. 204(8) and 210 authorize the court to take control of theprocess over a claim like the Proposed Class Action. [62] Pierre-André Côté, The

Interpretation of Legislation in Canada, 4th ed (Toronto: Thomson Reuters, 2011) at 329–30,emphasizes the need for broad grants of power to be interpreted in the statutory context in which they appear: General expressions are particularly sensitive to their legal environment. As sweeping as the terms may be, harmony of the text maydictate an

interpretation that limits their scope. If, for example, the legislature grants a power in broad terms, then limits its exercise through specific provisions, an interpreter may feeljustified in limiting the scope of the general provision to conform to the specific powers provided: verba generalia restringuntur adhabilitatem rei vel personæ.

To protect enactments from this restrictive approach, drafters sometimes declare that application of generalprovisions should not be limited simply because specific ones follow: “… and for greater certainty, but not so as to restrict the generalityof the foregoing terms…” Some decisions show such clauses to be effective, but this is not always the case. (Footnotes omitted) [63] These principles are illustrated in North Central Health District v Saskatchewan Government Employees Union (1999), (SK CA), 180 Sask R 81 (CA) [North Central Health District].

In that case, this Court was tasked with determiningwhether the Saskatchewan Labour Relations Board had exceeded its jurisdiction by making a particular order.

Section 10(2) of The HealthLabour Relations Reorganization Act, SS 1996, c H-0.03, s 10(2) provided that, subject to another provision within the statute, theSaskatchewan Labour Relations Board could “make any order that it considers appropriate respecting any matter arising out of thereorganization of labour relations between health sector employers and employees that is not addressed in the regulations”.Justice Cameron, writing for the Court, emphasized that this authority supplemented the specific powers given to the labour relationsboard: [17] Having regard for this, s. 10(2) may be seen to address the Board’s powers more specifically than does s. 10(1).

It enables theBoard, subject to s. 8, to “make any order” that it considers appropriate. Subsection (2) may also be seen to supplement the power to“make orders” conferred by s. 5 of The Trade Union Act [RSS 1978, c T-17] or otherwise. The reference in s. 8 to clauses 5(

a) and (

b) ofThe Trade Union Act, along with the structure of ss. 10(1) and (2) and the means by which the Board exercises its various powers, is alsosuggestive of this. [64] However, Cameron J.A. did not interpret the grant of authority as being unbounded, or as having been made without referenceto the purpose for which it was granted: [19] This is not to say that s. 10(2) constitutes a free-standing provision, entrusting otherwise limitless powers to the Board, but it is tosay that it is difficult to conceive of the Board not having the power to make an order of the nature it made in this instance. Thecommissioner might have made a regulation to the same effect, acting on the powers of ss. 6(2)(

g) and (i), or might have chosen todelegate his authority do so to [sic] the Board, acting on the power of s. 6(2)(h). He did not do so, meaning the matter placed before theBoard had not been addressed in the regulations and suggesting this is the very sort of order the legislature had in mind when enacting s.10(2), in addition to s. 10(1). (Emphasis added) [65] On the facts in North Central Health District, the statutory context dictated a more liberal

interpretation than might haveotherwise been afforded to the provision in question. However, Cameron J.A. emphasized that the provision in question was not a free-standing provision that granted unlimited power. Instead, it needed to be interpreted in light of the

section and statute in which it appeared: [20] Some of this bears emphasis. Since the matter placed before the Board arose out of “the reorganization of labour relations betweenhealth sector employers and employees,” as contemplated by s. 10(2), and since it had not been “addressed in the Regulations,” in theconcluding words of the subsection, the Board enjoyed the power to “make any order that it considered appropriate.” On the face of it,this is an extraordinarily broad power, limited only by these two prerequisites and the constraints of s. 8.

It might be interpreted morenarrowly, having regard for the need to construe [it] in context. But the whole of the context is itself extraordinary, beginning with theobjects of the Act, continuing with its scheme, and ending with the powers conferred upon each of the commissioner and the Board. This isespecially so of the powers bestowed upon the commissioner, some of which account for the powers bestowed in turn upon the Board.Indeed the Board’s powers may be seen as complementary.

All of this only goes to suggest that the power of s. 10(2), entrusted to theBoard for the purpose of achieving the peculiar and limited objects of this enactment, falls to be construed rather more literally than might

otherwise be the case. (Emphasis added) [ 66 ] These authorities, like many others, require that ss. 204(8) and 210 be interpreted in light of the liquidation and dissolution scheme that the BCA establishes. Although the language of these provisions is broad, orders made under their authority must still be consistent with that scheme. In s. 204(8) of the BCA , the words “the court may so order and make any further order it thinks fit” are limited by the words that the order must be made “at any time during the liquidation of a corporation”.

The non-exhaustive set of orders that the court may make under s. 210 must be in “connection with the dissolution or the liquidation and dissolution of a corporation”.

It is my conclusion that the general ability given to the court to make any order it thinks fit should not be interpreted as conferring upon the court the power to order that a claim against a person be proven in the liquidation simply because the defendant to that claim happens to have a right to seek contribution or indemnity from the corporation in liquidation. [ 67 ] Such an order, if it were to be granted, goes far beyond the purpose for which the liquidation scheme was established.

In the context of a voluntary liquidation of a solvent corporation, Division XVI of the BCA is designed to ensure that the liabilities of the corporation are identified and paid, and that the value of any remaining assets of the corporation are distributed to its shareholders. The process established under Division XVI is not suited to the administration and resolution of claims that are made against persons other than the corporation under liquidation, such as a claim by a person against someone who can claim against the company in liquidation.

This is illustrated by the orders made in this case and the difficulty that the liquidator has had in explaining how the orders would be implemented if they were to operate as it suggests. [ 68 ] As I have explained, the Claims Process Order contemplates that when a proof of claim is filed, the liquidator is required to either accept, revise or reject the claim. This makes sense when the claim is against the corporation under liquidation. However, the liquidator has no bona fide role in assessing the validity of a claim against a party other than the company under liquidation.

In this case, the liquidator eventually accepted this when, during the hearing of the motion to quash Mr. Koroluk’s appeal, it disavowed undertaking such a task in relation to the Proposed Class Action. [ 69 ] On the other hand, just as the directors of a corporation had the power to do before a liquidation order is made, the BCA gives to the liquidator the power to defend, or even settle, an indemnity claim against the corporation . In this case, this would allow the liquidator to defend or settle the indemnity claims of E&Y or the Directors.

If, for example, the Directors or E&Y advance their respective claims for contribution or indemnity against PrimeWest as a third-party claim in the Proposed Class Action, the liquidator would have the power to represent the company in those proceedings. However, I can see no proper role for the liquidator, or the court in supervising the liquidator, in the defence or settlement of claims made against the Directors or E&Y by Mr. Koroluk in the Proposed Class Action.

The fact that the Proposed Class Action is a proceeding in the same court, and conceivably could be managed by the same judge who is responsible for supervising the liquidation process, opens the door to coordination and case management. However, it does not mean that the Proposed Class Action is to be determined in accordance with a process established pursuant to Division XVI of the BCA . 5.

Interpretation of the orders [ 70 ] The Amended Liquidation Order and the Claims Process Order are readily interpreted as being consistent with the statutory scheme as I have described it. [ 71 ] The Amended Liquidation Order contains a specific direction only with respect to the three actions identified in paragraph 2 of it. Otherwise, as I have explained, the Amended Liquidation Order directs that the liquidation continue “in accordance with the Liquidation Plan and any further orders of the Court”.

This indicates that not all matters of process, or indeed substance, will be necessarily finally fixed by the terms of the Liquidation Plan.

In contrast to the three actions identified in paragraph 2 of the Amended Liquidation Order, there is no specific direction contained in that order that all claims are to be “resolved by the Liquidator in accordance with the Claims Process to be implemented by further order of the Court”. [ 72 ] As I would interpret the Amended Liquidation Order, where, as here, there is a disagreement as to whether a claim is within the scope of the liquidation process, that issue remains to be resolved by the court acting in accordance with the powers given under Division XVI of the BCA .

In other words, in the event of a dispute, paragraph 5 of the Amended Liquidation Plan preserves the authority of the court to decide, on a case-by-case basis, whether a particular claim is provable in the context of liquidation proceedings. [ 73 ] As I explained earlier, the Claims Process Order, contemplated in paragraph 7 of the Amended Liquidation Order, establishes a process to resolve claims that are subject to the liquidation. These are claims that, according to

Article 4.3(

q) of the Liquidation Plan, the liquidator is “expressly directed, empowered and authorized” to “pay or otherwise satisfy” from PrimeWest’s assets. However, because Mr. Koroluk’s claim is not against PrimeWest, any judgment that may result from it is not payable by that corporation.

Some or all of it may be satisfied from PrimeWest’s assets, but only in an indirect way, and to the extent to which the Directors and E&Y can prove their entitlement to contribution and indemnity from the corporation and there are proceeds available from sale of corporate assets to satisfy this entitlement. [ 74 ] Pursuant to paragraph 23 of the Claims Process Order, a “Claim shall not be a Proven Claim unless and until the Claim has been allowed or otherwise finally determined in accordance with paragraph 16 or paragraphs 18–22”. Paragraph 16 is clearly inapplicable.

It provides a process by which the liquidator can initiate the valuation of a claim that a creditor “has against the Corporation according to the books and records of the Corporation”. [ 75 ] Paragraphs 18 to 21 set out the process I have described earlier by which the liquidator is to make a first instance determination of a claim, and by which a creditor dissatisfied with that determination can have it reviewed by the court.

As I have explained, the liquidator itself disavowed taking the first step in this process. [ 76 ] Paragraph 22 governs when the liquidator is “unable to accept, revise or reject a Claim summarily”. In that circumstance, the liquidator can seek direction from the court. Not only does paragraph 22 of the Claims Process Order authorize the court to prescribe matters of process but, when there is a dispute as to whether a claim is subject to proof within the liquidation, like paragraph 5 of the

Amended Liquidation Order, it confirms the court’s authority to determine, on a case-by-case basis, whether a particular claim is even provable in the context of the liquidation proceedings. [ 77 ] I do not see the fact that the Liquidation Plan contemplates that some claims against directors are “Claims” to be inconsistent with this

interpretation of the Amended Liquidation Order. The inclusion of claims against directors is easily understood to relate to the personal responsibility that directors face in respect to corporate liabilities. For example, a corporation’s directors “are jointly and severally liable, in accordance with

Part II of The Saskatchewan Employment Act , to employees for wages” ( BCA , s. 114 ).

Section 2 -68(1) of The Saskatchewan Employment Act , SS 2013, c S-15.1 , provides that, subject to some limitations, “notwithstanding any other provision of this Act or any other Act, the corporate directors of an employer are jointly and severally liable to an employee for all wages due and accruing due to the employee but not paid while they are corporate directors”.

To give an example from the sphere of federal responsibility, a director may be held personally liable for a corporation’s failure to remit source deductions from employee wages to Canada Revenue Agency: Income Tax Act , RSC 1985, c 1 (5th Supp ), s 227.1.

There are many other statutes that impose liability on directors for the liabilities of a corporation. [ 78 ] The existence of these types of liabilities provides an immediate reason for the inclusion within the definition of “Claim” found in the Liquidation Plan of claims against directors “which arose or arises as a result of such Director’s position, supervision, management or involvement as a Director or otherwise in any other capacity in connection with the Corporation”. These are claims that are to be satisfied from the assets of the corporation under liquidation.

Because these are in first instance corporate liabilities, it is both logical and consistent with the statutory scheme that the party making such a claim present them to the liquidator for the purposes of their valuation and payment out of the corporation’s assets. [ 79 ] In

summary, I am satisfied that the powers given in the Amended Liquidation Order and the Claims Process Order to the liquidator to wind-up PrimeWest’s affairs, and the power of the court to supervise that liquidation, do not extend to establishing the process to adjudicate the Proposed Class Action. I am also satisfied that the Amended Liquidation Order and Claims Process Order do not purport to grant authority that the Legislature did not intend to give to the liquidator or the court supervising the liquidation. [ 80 ] The Chambers judge’s contrary

interpretation of the orders was influenced by a concern that the exclusion of the Proposed Class Action from the liquidation process would result in a delay of the final wind-up of PrimeWest. This appears from his statement that the “liquidation order would be meaningless as far as determining the issues necessary for the winding up of PrimeWest if it could be held up until final adjudication on the class action” (at para 44).

However, I do not share the view that interpreting the orders the way I have renders them meaningless, since there is much else for the liquidator to do. [ 81 ] Moreover, even if the Proposed Class Action is not prosecuted under the Class Actions Act , if it is not settled or discontinued, it must be adjudicated following a procedure that is fair to Mr. Koroluk, the class he proposes to represent and the defendants. There are undoubtedly alternative dispute resolution procedures that could be constructed to achieve this.

However, the liquidator has not explained what those would be or how this would result in a more rapid adjudication of the Proposed Class Action. I am not convinced that changing the procedural direction of the Proposed Class Action will move it along to a speedier resolution, if that was what the Chambers judge meant by the statement that the Amended Liquidation Order would be “meaningless” if PrimeWest’s winding-up is delayed until there is a final adjudication on the Proposed Class Action.

I would add that, although the experience in this province has been that many class actions move slowly, the court is not without tools to limit delay in such proceedings. [ 82 ] I would make three final points about all of this. [ 83 ] First, Mr. Koroluk has a right to have his claim adjudicated in accordance with the procedure prescribed by law. I would reiterate that Mr. Koroluk has not sued PrimeWest in liquidation.

The liquidator has referred to no case in which a plaintiff has been required to abandon the prosecution of a claim against a defendant and proceed through a liquidation or analogous procedure, such as winding-up or bankruptcy, simply because the defendant has a claim for indemnity. I would be very slow to interpret the BCA or the orders made in this case in a way that would see Mr. Koroluk deprived of this right, particularly where to do so would seem inconsistent with the BCA ’s overall statutory scheme. [ 84 ] Second, I return to the fact that this is a voluntary liquidation. I see no reason to subordinate Mr.

Koroluk’s procedural rights against the Directors and E&Y simply because PrimeWest’s shareholders decided – in their own self-interest – to wind-up that company’s affairs. [ 85 ] Third, I agree with the view that it may become necessary to value the claims made in the Proposed Class Action to resolve the Directors’ and E&Y’s claims for indemnity. In this regard, the Directors and E&Y took the position before the Chambers judge that the liquidation proceedings cannot therefore be concluded until the indemnity issues are decided.

Directly related to this is the previously mentioned statutory requirement that a voluntary liquidation and dissolution can only be pursued if the corporation is able to meet all of its liabilities. If the value of all of the claims against PrimeWest, including those made by the Directors and E&Y, exceeds the value of the assets of the corporation, an issue may arise as to whether the voluntary liquidation can continue.

Section 201(1) states that Division XVI “does not apply to a corporation that is insolvent within the meaning of the Bankruptcy and Insolvency Act (Canada) [RSC 1985, c B-3 ] or that is a bankrupt within the meaning of that Act”. Where liquidation proceedings have been commenced under Division XVI and the corporation is later found to be insolvent, s. 201(2) requires that the liquidation and dissolution proceedings under the BCA be stayed, stating as follows: Staying proceedings

(2) Any proceedings taken under this Division to dissolve or to liquidate and dissolve a corporation shall be stayed if the corporation is at any time found, in a proceeding under the Bankruptcy and Insolvency Act (Canada) , to be insolvent within the meaning of that Act. [ 86 ] Based on the positions staked by the Directors and E&Y, and this statutory requirement, it may be that PrimeWest’s liquidation cannot be concluded until the Proposed Class Action is dealt with in some way. However, while delay is not to be encouraged, nor is it ideal, it is a possibility that the legislation contemplates.

Section 210 (n)(

i) of the BCA permits the court to make “an order staying the liquidation on such terms and conditions as the court thinks fit” where “any director, officer, security holder, creditor or the liquidator” has

applied for such an order. This provision is statutory recognition that it may be necessary to stay or otherwise delay the liquidation of a corporation in certain situations. [ 87 ] For all of these reasons, I do not see the delay inherent in addressing the Proposed Class Action as a reason to conclude that it must be proven within the liquidation. [ 88 ] In conclusion, I would not interpret the Amended Liquidation Order, or the Claims Process Order, as mandating that the Proposed Class Action be proven as a claim within the liquidation of PrimeWest.

With respect, the Chambers judge erred in concluding otherwise. 6. The proceedings leading to the Amended Liquidation Order [ 89 ] I have reached this conclusion without reference to the events leading to the making of the Amended Liquidation Order. However, I find reinforcement for my

interpretation of that order in the history of these proceedings. [ 90 ] As I noted earlier, as part of its request for the Liquidation Order, PrimeWest had asked for an order that “[n]o proceeding shall be commenced or continued against any of the former or current directors or officers of [PrimeWest] with respect to any Claim except with leave of this Court”. Mr. Koroluk objected to this term because it would have prevented the continued prosecution of the Proposed Class Action. Mr.

Koroluk attaches significance to the fact that, in seeking approval for the Liquidation Plan, PrimeWest withdrew its request for an order staying the prosecution of the Proposed Class Action. It is possible that this change can be explained on the basis that it simply assured that the Proposed Class Action was not immediately stayed. However, this understanding of events attaches limited meaning to this change in the draft order, since it would allow the Proposed Class Action to be prosecuted only to the point that the liquidator directed Mr.

Koroluk to present a proof of his claim under the Claims Process Order. [ 91 ] Of more significance is the change made to the Liquidation Order leading to the removal of the reference to the Proposed Class Action as one of the actions that are specifically indicated to be within the definition of “Claim” found in paragraph 2 of the original Liquidation Order. In this regard, shortly after the Liquidation Order was granted, Mr. Koroluk’s counsel wrote to PrimeWest’s counsel asking for this amendment.

With apparent reference to the fact that the Chambers judge had agreed to remove the term that would have otherwise stayed the Proposed Class Action, counsel stated that the Chambers judge had “in effect decided that [the Proposed Class Action] be excluded from the liquidation proceedings, but it is still included in paragraph 2(

b) of the [Liquidation] Order”. Counsel for PrimeWest replied, indicting that he was “not going to comment further on [this] characterization of the current form of Order … other than to state that we reject it in its entirety”. However, he added that his instructions were to “accommodate your request as it does not appear to be actively harmful to the process”. At the hearing of this appeal, Mr.

Koroluk characterized his letter as indicating that the amendment was requested to remove doubt over whether the Proposed Class Action could proceed without being subject to proof as a claim within the liquidation. [ 92 ] The liquidator’s position is that this change was of no consequence because the definition of “Claim” contained in the Liquidation Plan remained unchanged . However, this leaves it to argue that the amendment was legally meaningless. There may be situations where a court order should be interpreted in a way that has this result. However, where possible, an

interpretation that gives purpose to a court order should be favoured. This is even more so where a meaning can be given to the order that is consistent with the statutory scheme within which it was made. [ 93 ] In this case, a meaning can be given to the amendment made to the Liquidation Order that not only avoids the conclusion that it was granted for no purpose, but that also comports with the statutory scheme within which it was made. The deletion of the Proposed Class Action from paragraph 2 of the Liquidation Order means that paragraph 8 no longer applies to that action.

Accordingly, there is no longer a specific direction that the Proposed Class Action “be resolved by the Liquidator in accordance with the Claims Process to be implemented by further order of the Court or, alternatively, the terms of any agreed upon settlement, as the case may be”. In this context, the change to paragraph 2 of the Liquidation Order renders it even more clear that the Proposed Class Action is not a claim that is subject to proof in accordance with the yet-to-be established claims process. Said more directly, in my respectful view, the removal of paragraph 2 (

b) from the Liquidation Order supports the conclusion that the Proposed Class Action does not need to be proven as a claim within the Claims Process Order. 7. Conclusion on the

interpretation of the orders [ 94 ] For the reasons I have given, in my respectful view, the Chambers judge erred in his

interpretation of the Amended Liquidation Order and the Claims Process Order. These orders do not require that the Proposed Class Action be proven as a claim within the liquidation of PrimeWest, nor would an order to that effect be appropriate given the scheme of the BCA . B. Is this appeal moot? [ 95 ] To this point in my reasons, I have made only passing reference to the liquidator’s argument that, regardless of whether the Chambers judge erred in his

interpretation of the orders, Mr. Koroluk’s appeal is moot. The liquidator’s submission on this point is based on actions taken by Mr. Koroluk after the Chambers Decision was rendered. [ 96 ] The Chambers Decision is dated July 7, 2020. As I have explained, it directed that Mr. Koroluk and members of his proposed class file a proof of claim within 30 days of the Chambers Decision , failing which the claim was to be extinguished. On August 6, 2020, Mr. Koroluk filed two unsigned proofs of claim with the liquidator. The next day, the proofs of claim were resubmitted, signed by Mr.

Koroluk’s legal counsel. [ 97 ] By letter dated August 20, 2020, the liquidator advised Mr. Koroluk as follows: 3) The Liquidator has reviewed the two Proofs of Claim filed by your office, and has determined that it meets the definition of a “Claim” against the Directors.

4) The Liquidator has further determined that it is unable to accept, revise or reject the Claim summarily and, therefore, pursuant toparagraph 22 of the Claims Process Order, the Liquidator is required, in due course, to file and serve upon your office a Notice ofApplication returnable in the Liquidation Proceedings seeking the direction of the Court. 5) This letter constitutes written notice to the Claimant by the Liquidator that it will serve the Notice of Application upon your office atthe earliest possible opportunity. [98] The liquidator has applied for an order, pursuant to Rule 59(1) of The Court of Appeal Rules, to adduce proof of these facts, andits dealings with the proofs of claim, as evidence in this appeal.

Its position is that, by submitting the proofs of claim, Mr. Koroluk is to betaken as acknowledging that the claims made in the Proposed Class Action are properly proven in the liquidation. It says this Court is nowfaced with a situation in which the underlying dispute between the parties has disappeared by virtue of the events leading up to the appeal. [99] The liquidator has correctly identified Borowski v Canada (Attorney General), (SCC), [1989] 1 SCR 342, asthe leading case on principles of mootness.

That case invites this Court to consider whether events have occurred “which affect therelationship of the parties so that no present live controversy exists which affects the rights of the parties” (at 353). Two considerationscompel me to conclude that they have not. First, it is clear to me that Mr. Koroluk did not intend to abandon his position in this appeal byfiling the proof of claim, nor was the liquidator in any way misled into the belief that he intended this result by the filing of the proof ofclaim.

Second, the liquidator has taken no action that would suggest that the dispute between the parties is no longer a live one. [100] Dealing with the first of these considerations, the Claims Process Order prescribed the form to be used by a party submitting aproof of claim. This dictated, to some extent at least, how Mr. Koroluk would have to present his proofs of claim. The amended statementof claim of the Proposed Class Action was attached to the proofs of claim. They identify Mr.

Koroluk and the class he proposes torepresent as a “creditor” but also state that he has a claim against PrimeWest “through defendant Ernst & Young’s indemnity” and a claimagainst the directors and officers of PrimeWest. I see nothing in any of this to suggest that Mr. Koroluk was intending to communicate anintention to abandon his position that he should be entitled to prosecute the Proposed Class Action in the ordinary way. [101] I also see nothing that would suggest that the liquidator understood that Mr.

Koroluk was intending to abandon his position thathe should be entitled to proceed with the Proposed Class Action in the usual way. Mr. Koroluk was in an understandable conundrumwhen he submitted the proofs of claim. The Chambers Decision required him to file a proof of claim within 30 days, or his claim wouldbe barred. Mr. Koroluk had filed his notice of appeal from the Chambers Decision prior to filing the proofs of claim. Even without thecontext that this provides, there is simply no evidence that Mr.

Koroluk was abandoning his position that the Chambers Decision waswrong, or that he was foregoing his right of appeal or that the liquidator understood that this was Mr. Koroluk’s intention. [102] I also see no evidence of any action taken by the liquidator that would support an argument that the dispute between the parties isno longer a live one. It has taken no action that was based on this appeal being moot.

Also, although estoppel is not raised, I would addthat there is no evidence that the liquidator has, in any way, acted to its detriment, or perhaps more materially to the detriment of anyperson who has a stake in the assets or liabilities of PrimeWest, as a consequence of the filing of Mr. Koroluk’s proofs of claim. I also seeno basis to suggest that such detriment is likely to have occurred. [103] The only step taken by the liquidator because of the filing of the proofs of claim has been to advise Mr.

Koroluk that the courtsupervising the liquidation will be asked to give directions as to the manner of proving the allegations made in the Proposed Class Actionat some future time pursuant to paragraph 22 of the Claims Process Order.

Given this, I see no basis to find that events have occurred“which affect the relationship of the parties so that no present live controversy exists which affects the rights of the parties” (Borowski at353). [104] In addition to referring to Borowski, and several other cases that discuss general principles, the liquidator relies upon MicrobizCorp. v Classic Software Systems Inc. (1996), (ON SC), 45 CBR (3d) 40 (WL) (Ont SC) [Microbiz], CanlauInternational (Barbados) Corp. v Atlas Securities Inc. (Liquidator of) (2002), (ON SC), 35 CBR (4th) 232 (WL) (OntSC) [Canlau], Christian Brothers of Ireland in Canada (Re) (2004), (ON SC), 49 CBR (4th) 12 (WL) (Ont Sup Ct J)[Christian Brothers] and Kansa General International Insurance Company Ltd. (Liquidation de), (Que Sup Ct (CivDiv)) [Kansa General].

These are all said to be cases in which creditors have been bound, in one way or another, into liquidation orwinding-up proceedings after filing proofs of claim. [105] Taken together, the cases referred to by the liquidator support an argument that a plaintiff cannot pursue a claim in multipleforums. However, that is not what is happening in this case.

Moreover, none of these cases are analogous to the present situation. [106] It was held in MicroBiz that two parties with claims against a bankrupt New Jersey corporation could not both file a proof ofclaim in the bankruptcy proceedings and pursue a civil claim in Ontario. However, there was no suggestion in the decision that the twocreditors were disputing the applicability of the U.S. bankruptcy proceedings to their claim.

Also, the order staying their Ontario actionwas only “until further order of the court” (at para 3). [107] Canlau concerned the ability of a plaintiff to pursue an action in Ontario against the liquidator of a company subject to voluntaryliquidation in the Turks and Caicos Islands. The case was decided by applying conflicts of law principles. Like in MicroBiz, and unlikehere, the action by the plaintiff in Canlau was directly against the company in liquidation.

Moreover, the court took specific note that theplaintiff had “not taken any proceeding in the Turks and Caicos Islands to dispute the manner in which the Liquidator is dealing with itsclaim” (at para 64). [108] Christian Brothers was rendered in the context of the winding-up of the Christian Brothers of Ireland in Canada under theWinding-up and Restructuring Act, RSC 1985, c W-11. The winding-up was necessary because of the liabilities associated with the claimsof victims of sexual assault that it faced.

The government of Newfoundland and Labrador was a creditor of its estate, in part because thegovernment had taken an assignment of the claims of some of the abuse victims. The government also had a claim for contribution andindemnity in relation to ongoing lawsuits commenced against it by some victims. The decision addresses many issues associated with anapplication by the liquidator to approve a methodology for proving and valuing claims against the estate.

The one part of it that theliquidator relies upon in this case related only to the jurisdiction of the Ontario court to determine claims against the estate in liquidation,

and the jurisdiction of the courts of Newfoundland and Labrador to determine the liability of that province’s government to the plaintiffs. I can find no assistance for the liquidator’s position in the discussion of that issue in the case. [ 109 ] I will discuss at a bit more length Kansa General . That case arose after a winding-up order was made against the insurer of that name under the Winding-up and Restructuring Act . The Ontario government, which faced a lawsuit in relation to so-called tainted blood, was insured under a liability policy issued by Kansa General.

The government had submitted a proof of claim to the liquidator, who denied coverage. The winding-up order required leave of the court before any action was commenced against Kansa General. The government sought a declaration that it could “exercise any right or recourse against [Kansa General] under any law of general application or any contract or agreement, without prior authorization” of the court (at para 1). The government relied on the doctrine of Crown immunity, which the court found was lost, in part because the government had filed a proof of claim.

In the appeal in the present case, the liquidator relies on the following passage as supporting its contention that the filing of a proof of claim by Mr.

Koroluk precludes him from now continuing with the Proposed Class Action outside of the liquidation proceedings: [59] Petitioner has filed a proof of claim with the liquidator, expects to share in the distribution of the proceeds of the liquidation and has lost any claim to immunity from the provisions of the Winding-up Act that she might have had. [ 110 ] Although the court in Kansa General found that the filing of the proof of claim prevented the government from asserting that it was not subject to the winding-up, the decision is of no assistance to the liquidator in this case.

Like the other cases that I have reviewed, the claim was one against the company in liquidation. It is for this reason that the court was able to state that the government “expects to share in the distribution of the proceeds of the liquidation”. Mr. Koroluk has no similar expectation. His situation is akin to that of the plaintiffs who sued the government in Kansa General .

Nothing in that decision suggests that those plaintiffs’ claims were provable in the winding-up because the party they were suing was asserting an indemnity claim against Kansa General. [ 111 ] In short, none of the cases referred to by the liquidator support the liquidator’s argument that this appeal is moot.

To the extent that the cases it cites have any relevance at all, they are consistent with my conclusion that it is not appropriate for the liquidator, or the court in its capacity as the supervisor of the liquidation of PrimeWest, to involve itself in the adjudication of the Proposed Class Action. [ 112 ] In conclusion on this issue, this appeal has not been rendered moot by the filing by Mr. Koroluk of proofs of claim. V. Conclusion [ 113 ] For the reasons I have given, I would allow Mr. Koroluk’s appeal. The Proposed Class Action is not a claim to be proven in the liquidation of PrimeWest.

It may proceed in the ordinary way in accordance with the Class Actions Act . [ 114 ] I would give to Mr. Koroluk the costs of this appeal, and of the applications before the Chambers judge, taxed in the usual way. These costs include those for responding to the liquidator’s application to admit new evidence. “Leurer J.A.” Leurer J.A. I concur. “Richards C.J.S.” Richards C.J.S. I concur. “Ottenbreit J.A.” Ottenbreit J.A.