Posts

Characterization of Unfunded Pension Liability Claims

In Re Walter Energy Canada Holdings, Inc, 2017 BCSC 709 (available here) the British Columbia Supreme Court had to consider the validity of a large claim (over $1 billion) filed in restructuring proceedings underway in the province under federal legislation.  The claim was for unfunded pension liabilities and was based on an American statute, the Employee Retirement and Income Security Act of 1974, 29 U.S.C. § 1001.  So the court had to consider whether that statute could apply to a claim in British Columbia against entities organized in Canada (mostly in British Columbia).

Starting at para. 93 the court considered whether the claim against the entities being restructured was governed by Canadian or American law (in each case the relevant law was either federal rather than provincial or state or did not vary as between provinces).  This is a choice of law question which raises the issue of the characterization of the claim.  Canadian courts do not often analyze characterization in detail, but the court did so in this case, making the decision notable.  The claimant argued that the claim was one in the law of obligations and sought to identify the proper law of the obligation.  The entities being restructured in contrast argued the claim went to a point of corporate law, namely their separate existence from other entities in an international corporate group.  The court referred to several of the main general authorities about the characterization process but considered the specific issue before it to be one of first instance.  It sided with the entities being restructured – the claim went to the issue of separation of corporate personality and status.  The American statute was imposing liability by “lifting the corporate veil” (paras. 137-38) between international corporate entities.

Supreme Court of Canada Allows Courts to Sit Extraterritorially

In Endean v British Columbia, 2016 SCC 42 (available here) the Supreme Court of Canada has held that “In pan-national class action proceedings over which the superior court has subject-matter and personal jurisdiction, a judge of that court has the discretion to hold a hearing outside his or her territory in conjunction with other judges managing related class actions, provided that the judge will not have to resort to the court’s coercive powers in order to convene or conduct the hearing and the hearing is not contrary to the law of the place in which it will be held” (quotation from the court’s summary/headnote).

The qualifications on the holding are important, since some of the earlier lower court decisions had been more expansive in asserting the inherent power of the superior court to sit outside the province (for example beyond the class proceedings context).  I am concerned about any extraterritorial hearings that are not expressly authorized by specific statutory provisions, but I do appreciate the utility (from an efficiency perspective) of the court’s conclusion in the particular context of this dispute.  It remains to be seen if attempts will be made to broaden this holding to other contexts.

New Book on Court Jurisdiction and Proceedings Transfer Act

Thomson Reuters Carswell has just published Statutory Jurisdiction: An Analysis of the Court Jurisdiction and Proceedings Transfer Act by Vaughan Black, Stephen G.A. Pitel and Michael Sobkin.  More information is available here.
 
The Court Jurisdiction and Proceedings Transfer Act puts the important topic of the jurisdiction of Canadian provincial courts in civil and commercial cases on a clearer statutory footing.  It is in force in British Columbia, Saskatchewan and Nova Scotia.  The approach to jurisdiction adopted under the CJPTA is different in several respects from the common law approach, and so provinces that have adopted it are undergoing a period of transition.  One of the key issues for courts in applying the CJPTA is interpreting its provisions and explaining how they operate.  Statutory Jurisdiction: An Analysis of the Court Jurisdiction and Proceedings Transfer Act examines the growing body of cases and provides a comprehensive account of how the CJPTA is being interpreted and applied by the courts. 
 
The Supreme Court of Canada has, in its April 2012 decisions on jurisdiction, indicated a willingness to develop the common law in a way that is highly mindful of the approach taken under the CJPTA.  As a result, the analysis of the CJPTA will also be of use to those in Canadian common law provinces and territories that have not enacted the CJPTA. 
 
The book may also appeal as a comparative law resource on conflict of laws, especially to those interested in how traditional rules can be affected, directly and indirectly, by statutory reform.