In the CCAA proceeding of
Timminco Limited, on April 27, 2012, Justice Morawetz of the
Ontario Superior Court of Justice denied, for the time
being, a motion brought by the plaintiff in the securities class
action Pennyfeather v. Timminco Limited to lift the stay
of proceedings against Timminco and the other defendants to allow
the class action to continue.
Timminco consented to a partial lifting of the stay to allow the
plaintiff to apply to the Supreme Court of Canada for leave to
appeal a recent decision of the Court of Appeal for Ontario
relating to limitation period issues under Part XXIII.1 of the
The plaintiff, however, sought a full lifting of the stay to
allow him to proceed with further steps in the class action,
including motions for certification and leave to bring the Part
XXIII.1 action. The plaintiff contended that there would be no
prejudice to lifting the stay because the plaintiff would limit his
potential recovery to proceeds from D&O insurance (which would
not have been available to other creditors in any event) or, if
necessary, the directors and officers themselves.
Justice Morawetz agreed with Timminco that the sales process
currently underway as part of the CCAA proceeding must take
priority to the class action, and accepted Timminco's evidence
that its small executive team should not be distracted from the
sales process by the ongoing class action. Justice Morawetz ordered
that the plaintiff could bring back the motion to lift the stay
before the court no earlier than 75 days from the date of the
decision, at which time the parties would have a better sense of
when the sales process would be complete.
Of note, Justice Morawetz found that the stay of proceedings
under the Initial Order in the CCAA proceeding not only applied to
Timminco and its present and former directors and officers, but
also to expert defendants (the Photon Defendants) who are third
parties to Timminco. Justice Morawetz found it would be unfair to
Timminco if issues in the class proceeding are determined without
its involvement, and unfair to the Photon Defendants to have to
proceed without access to the documents and information of
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