COURT OF APPEAL FOR ONTARIO

CITATION: Ernst & Young Inc. v. Essar Global Fund
    Limited, 2017 ONCA 1014

DATE: 20171221

DOCKET: C63581/C63588

Blair, Pepall and van Rensburg JJ.A.

BETWEEN

Ernst
    & Young Inc. in its capacity as Monitor

of all
    of the following: Essar Steel Algoma Inc.,

Essar
    Tech Algoma Inc., Algoma Holdings B.V.,

Essar
    Steel Algoma (Alberta) ULC,

Cannelton
    Iron Ore Company and

Essar Steel Algoma Inc.
    USA

Plaintiff (Respondent)

and

Essar
    Global Fund Limited
, Essar Power Canada Ltd.,

New
    Trinity Coal, Inc.
,
Essar Ports Algoma Holding Inc.
,

Algoma
    Port Holding Company Inc.
,
Port of Algoma Inc.
,

Essar Steel Limited
and
Essar Steel Algoma Inc.

Defendants (
Appellants
/
Respondent
)

Patricia D.S. Jackson, Andrew D. Gray, Jeremy Opolsky,
    Alexandra Shelley and Davida Shiff, for the appellants Essar Global Fund
    Limited, New Trinity Coal, Inc., Essar Ports Algoma Holding Inc., Essar Ports
    Canada Holding Inc., Algoma Port Holding Company Inc., Port of Algoma Inc., and
    Essar Steel Limited

Clifton P. Prophet, Nicholas Kluge and Delna Contractor,
    for the respondent Ernst & Young Inc. in its capacity as Monitor of Essar
    Steel Algoma Inc. et al.

Eliot N. Kolers and Patrick Corney, for the respondent Essar
    Steel Algoma Inc.

Peter H. Griffin, Monique Jilesen and Kim Nusbaum, for
    the appellants GIP Primus, L.P. and Brightwood Loan Services LLC

Heard: August 15-17, 2017

On appeal from the judgment of Justice Frank Newbould of
    the Superior Court of Justice, dated March 15, 2017, with reasons reported at
    2017 ONSC 1366, 137 O.R. (3d) 438 and from the costs order, dated June 29, 2017,
    with reasons reported at 2017 ONSC 4017, 50 C.B.R. (6th) 148.

Pepall J.A.:

[1]

This appeal concerns a successful oppression
    action brought pursuant to s. 241 of the
Canada Business Corporations Act
,
R.S.C. 1985, c. C-44 (the
CBCA
).
    It involves the
Companies Creditors Arrangement Act
, R.S.C. 1985, c. C-36 (the
CCAA
)
restructuring proceedings of the
    respondent, Essar Steel Algoma Inc. (Algoma)

[1]
,
    one of Canadas largest integrated steel mills and the
respondent,
Ernst & Young Inc., the
    court-appointed Monitor.

[2]

The supervising
CCAA
judge authorized the
    Monitor to commence an action for oppression against Algomas parent, the
    appellant Essar Global Fund Limited (Essar Global), and the remaining
    appellants, other companies owned directly or indirectly by Essar Global (the Essar
    Group).  The action arose in the context of a recapitalization of Algoma and a
    transaction between Algoma and Port of Algoma Inc. (Portco), two companies indirectly
    owned by Essar Global, in which Algomas port facilities in Sault Ste. Marie
    (the Port) were conveyed to Portco.

[3]

Portco is a single purpose company established
    by Essar Global.  As Portcos name suggests, it currently controls the Sault
    Ste. Marie Port. Portco obtained control in November 2014 in a transaction
    between Algoma, Portco, and Essar Global (the Port Transaction).  The Port Transaction
    effectively provided Portco with the ability to veto any change in control of
    Algomas business.  The interveners below and appellants on appeal, GIP Primus,
    L.P. and Brightwood Loan Services LLC (collectively GIP), are arms length lenders
    who loaned Portco US$150 million to effect the transaction.

[4]

The trial judge found the Port Transaction and
    other conduct of Essar Global to be oppressive and granted a remedy that was designed
    to address that oppression.  Essar Global and some of the members of the Essar
    Group, together with GIP, appeal from that judgment.  The appellants advance a
    number of arguments, many of them factual, in support of their appeal.  The
    appellants two principal legal submissions are first, that the Monitor lacked
    standing to bring an oppression claim and second, that the alleged harm was to
    Algoma and that therefore the appropriate redress was a derivative action.

[5]

For the reasons that follow, I would dismiss the
    appeal.

A.

Facts

(1)

Algomas Operations

[6]

The City of Sault Ste. Marie sits on the shore
    of St. Marys River, a waterway that links Lake Superior to Lake Huron at the
    heart of the Great Lakes, close to the Canada/U.S. border. The steel production
    operations that are owned by Algoma have been the primary employer and economic
    engine of the City since construction of the steel mill in 1901.  Not
    surprisingly, the Citys Port, which is situated next to Algomas buildings and
    facilities, is integral to the steel operations.  Indeed, Algoma is the Ports
    primary customer and its employees have traditionally run the Port operations.
    Raw materials used to produce steel are shipped to the Port and the steel that is
    produced is shipped to market from the Port.  The relationship is one of mutual
    dependence.

[7]

Unfortunately, Algoma was in and out of
CCAA
protection proceedings both in 1991 and in 2001.  In late 2013, Algoma faced
    another liquidity crisis and restructured under the
CBCA
in 2014. The
    recent
CCAA
filing occurred on November 9, 2015.

(2)

The Essar Group

[8]

Essar Global is a Cayman Islands limited
    liability company and the ultimate parent of the respondent Algoma, which it
    acquired through its subsidiaries in 2007.  Essar Global is also the parent of
    the appellants Portco, Essar Power Canada Ltd., New Trinity Coal Inc., Essar
    Ports Algoma Holding Inc., Algoma Port Holding Company Inc., and Essar Steel
    Limited.  Its investments are managed by Essar Capital Limited (Essar
    Capital), which is based in London, England.  These companies are part of the
    Essar Group, a multinational conglomerate that was founded in India by two
    brothers, Sashi and Ravi Ruia.  Members of the Ruia family are the beneficial
    owners of the Essar Group.

(3)

Algomas Recapitalization

[9]

In late 2013, Algoma was facing a liquidity
    crisis.  Algoma anticipated being unable to meet a coupon payment due to
    unsecured bondholders in June 2014, and its US$346 million term loan was to
    mature in September 2014.  Although Essar Global had been injecting substantial
    funds into Algoma, it was hesitant to advance further cash to Algoma. Algoma
    decided to consider mechanisms to restructure and reduce its debt and therefore
    embarked on a recapitalization project.

[10]

At the time of the discussions relating to the
    recapitalization, Algomas  Board of Directors consisted of five appointees
    affiliated with the Ruia family or the Essar Group, and three independent
    directors.  In early January 2014, the Board of Directors placed responsibility
    for Algomas recapitalization efforts in the hands of Essar Global and Essar
    Capital employees.  Algoma personnel had no day-to-day control over the
    recapitalization project.

[11]

Although the three independent directors had
    begun expressing concerns about their roles on the Board as early as the fall
    of 2013, in the face of Algomas serious financial challenges, their concerns
    became more acute. Specifically, they were concerned that their requests for
    timely, full disclosure of information and full participation in the strategic
    decisions of the Board had not been properly taken into account by the other
    Board members.  On January 19, 2014, the three sent a memo to the Board
    proposing the establishment of an independent committee to work with outside
    financial advisors to evaluate options and alternatives for Algomas recapitalization.
    The Board held a meeting on February 11, 2014, and rejected this proposal by a
    vote of four to three, the three being the independent directors.  In response,
    one of the three independent directors resigned.  The other two initially remained
    on the Board.

[12]

On February 17, 2014, one of the remaining
    independent directors, Thomas Dodds, wrote to Prashant Ruia seeking a meeting. Prashant
    Ruia was then the vice-chair of Algomas Board, the son of one of the founders
    of Essar Group, and a director of Essar Capital.  Mr. Dodds wrote:

If your expectation of [the Algoma] Board is
    to simply be a formality and our role as independent directors is to
    essentially rubberstamp shareholder and management decisions, we are not
    prepared to continue serving as directors.

As you know, Directors and particularly
    independent directors have a legal, fiduciary responsibility to all the
    stakeholders of the Company starting with the Company first, followed by the
    shareholders, employees, community and others.  This Director responsibility
    may on occasion conflict with the objectives of the shareholder who may,
    understandably, be more interested in matters of import to themselves.  Most of
    the time there will be no conflict between the responsibilities of the
    Directors, objectives of the shareholder and that of the Company stakeholders
    as broadly defined.  However, there are other occasions when they do.

What we as independent directors have
    experienced in the last few Board meetings is a complete disregard for any
    discussion or wholesome debate on alternatives to re-financing or contingency
    planning at [Algoma].

In addition when we ask questions, or propose
    alternatives, we are asked to wait a while for additional information and told
    that everything will work out.

We cannot discharge our responsibilities under
    such an environment.

[13]

The two remaining independent directors resigned
    on February 21 and May 5, 2014, respectively.  In his resignation letter, Mr.
    Dodds explained his rationale, stating:

I lacked confidence that I was receiving
    information and engaged in decision-making in the same manner as those Board
    members who are directly affiliated with the company or its parent.

[14]

The trial judge found, at para. 15 of his
    reasons, that the four directors who voted against the independent committee
    were Essar-affiliated directors, that it was clear that the Ruia family did
    not want an independent committee, and that the Essar-affiliated directors
    voted accordingly.

[15]

The trial judge also found that the
    recapitalization and the Port Transaction were run by Joe Seifert, Chief
    Investment Officer of Essar Capital.  The trial judge rejected the contention
    that Mr. Seifert was merely an advisor to the Board that independently made all
    of the critical decisions.  Rather, Essar Global and Essar Capital, led by Mr.
    Seifert, directed and made decisions relating to the recapitalization and the
    Port Transaction.  As the trial judge noted at para. 49, the evidence was
    overwhelming that Essar Global and Essar Capital were calling the shots.

(4)

Restructuring Support Agreement

[16]

Essar Global engaged Barclays Capital, an
    investment bank, to pursue alternative financing structures for Algoma on
    behalf of Essar Global.  Barclays introduced GIP to Mr. Seifert of Essar
    Capital.  In May 2014, representatives of Essar Global, GIP, and Barclays met
    to discuss Algomas infrastructure assets and potential asset disposition
    transactions.  They discussed the possibility of a transaction in which Algoma
    might sell its Port assets to a new corporate entity to generate cash proceeds,
    but not for the purpose of recapitalizing Algoma.  Rather, the proceeds would
    flow upstream to Essar Global.  In light of Algomas prior insolvencies, GIP
    thought it important that a separate corporate entity distinct from Algoma be
    established to hold the Port assets.  By the end of June 2014, Algoma had an
    exclusivity agreement with GIP regarding GIPs loan to finance the Port Transaction.

[17]

Soon after entering into the exclusivity agreement
    with GIP, on July 24, 2014, Algoma entered into a Restructuring Support
    Agreement (the RSA) with Essar Global and an
ad hoc
committee of
    Algomas unsecured noteholders.  The RSA set out the principal terms of a
    restructuring.  It provided for a reduction of Algomas debt through the
    exchange of the unsecured notes in return for the payment of a percentage of
    their original principal amount and the issuance of new notes.  The note
    restructuring would be implemented through a court-approved
CBCA
Plan of
    Arrangement.  As a condition of the RSA and pursuant to an Equity Commitment
    Letter dated July 23, 2014, Essar Global agreed to acquire equity in Algoma for
    cash in the minimum amount of US$250 million and subject to a maximum of US$300
    million.  The trial judge found that Essar Global never intended to honour this
    obligation.

[18]

The Equity Commitment Letter provided a remedy
    in the event of a breach.  The Plan of Arrangement contained a release of any
    claim arising out of the Equity Commitment Letter in favour of Essar Global,
    the noteholders, and the other corporations participating in the Arrangement.

[19]

It was a condition of the proposed Plan of
    Arrangement that Essar Global would comply with its RSA obligation to provide
    the aforementioned cash equity infusion.  However, as early as March 28, 2014,
    representatives of the Ruia family had made it clear that they did not have US$250
    million for equity.  Efforts were made to reduce Essar Globals contribution.
    In late July 2014, one of the Ruia representatives wrote that ideally the
    equity contribution would be kept to US$150 to US$160 million.

[20]

Nonetheless, an application for approval of the
    Plan of Arrangement was made to the court.  The recapitalization contemplated
    by the RSA was approved as an arrangement under s. 192 of the
CBCA
on
    September 15, 2014.

[21]

Beginning in October 2014, roadshow
    presentations were made to market the securities being offered through the
    recapitalization.  However the transaction marketed did not accord with the
    transaction contemplated by the RSA.  First, the roadshow presentation
    described an Essar Global cash equity contribution in Algoma of less than
    US$100 million, not the US$250 to US$300 million described in the RSA.  Second,
    the presentation provided for the cash to be generated from the sale of the Port
    by Algoma.  The RSA did not allow for such a sale absent the noteholders consent.
    No such consent had been obtained.  In addition, the proceeds of any sale were
    to be used to reduce Algomas debt.

[22]

The roadshow was unsuccessful and investors
    failed to subscribe for the securities marketed.  The lead bookrunner
    attributed this failure to the perception among investors that the transaction described
    in the roadshow presentation contemplated an insufficient contribution of
    equity into Algoma by Essar Global.

[23]

And so it was that Algoma was left without the
    cash to repay or refinance its debt.

[24]

Ultimately, the RSA was amended on November 6,
    2014, such that Essar Global contributed US$150 million rather than the cash
    contribution of between US$250 and US$300 million originally contemplated by
    the Equity Commitment Letter.  The amended RSA went on to provide that upon
    fulfillment of this revised contribution, Essar Global was deemed to have
    satisfied all of its obligations under the Equity Commitment Letter.  The
    releases contained in the original filing were repeated in the amended Plan of
    Arrangement.

[25]

As subsequently discussed, in light of the
    amended RSA, an amended Plan of Arrangement was approved on November 10, 2014.

(5)

Port Transaction

[26]

The Port Transaction closed on November 14, 2014.
     In summary, Algoma sold to Portco the Port assets consisting of the Port
    buildings, the plant, and machinery, but not the land.  Algoma leased the
    realty to Portco for a term of 50 years.  Portco agreed to provide Port cargo
    handling services in return for a monthly payment from Algoma to Portco.
    Algoma agreed to provide to Portco the services necessary to operate the Port
    in return for a monthly payment from Portco that would be less than the monthly
    payment paid by Algoma to Portco for cargo handling services.

[27]

Turning to the details of the Port Transaction, Algoma
    and Portco entered into a Master Sale and Purchase Agreement (MSPA). Under the
    MSPA:

(i)  Algoma conveyed to Portco all of the
    fixed assets owned and used by Algoma in relation to the Port, and agreed to
    lease the realty to Portco;

(ii)   Portco agreed to pay Algoma US$171.5
    million to be satisfied by:

-    a cash payment by Portco of US$151.66
    million; and

-    the issuance of an unsecured
    promissory note in the amount of US$19.84 million payable in full on November
    13, 2015.

[28]

To fund these obligations, Portco obtained a
    US$150 million term loan from GIP.  GIP Primus, L.P. lent US$125 million, while
    Brightwood Loan Services LLC lent US$25 million.  This term loan was secured by
    all of Portcos current and future real and personal property and supported by two
    guarantees in favour of GIP: one from Essar Global, and another from Algoma Port
    Holding Company Inc., Portcos direct parent.

[29]

Pursuant to the MSPA, Algoma and Portco executed
    five additional documents: a promissory note, a lease, a Shared Services
    Agreement, an Assignment of Material Contracts Agreement, and a Cargo Handling
    Agreement.

(i)

Promissory Note

[30]

The promissory note was for US$19.84 million
    payable by Portco to Algoma.  Portco immediately assigned its obligations under
    the promissory note to Essar Global. Essar Global therefore became the obligor
    under the note and Algoma released Portco from its obligation.  As of the date
    of the trial, the promissory note remained unpaid.  At para. 27 of a subsequent
    decision released on June 26, 2017, the trial judge granted a declaration that any
    amounts owing to Algoma under the promissory note given by Portco to Algoma
    have been set-off against amounts owing by Algoma to Portco under the Cargo
    Handling Agreement: 2017 ONSC 3930, 53 C.B.R. (6th) 321.  The decision allows
    for set-off against Portco, but preserves GIPs right to repayment.

(ii)

Lease

[31]

Under the lease, Portco leased from Algoma the Port
    lands, roads, and outdoor storage space for a 50-year term. Portco prepaid
    Algoma the rent for the entire 50-year period.  The present value of this
    leasehold interest was stated to be US$154.8 million.  Algoma maintained
    responsibility for all maintenance, repairs, insurance, and property taxes.

(iii)

Shared Services Agreement

[32]

Under the Shared Services Agreement, Algoma was
    to be responsible for providing all the services necessary for Portco to
    fulfill its obligations under the Cargo Handling Agreement.  These services were
    to be provided by Algoma employees, not Portco employees.  Portco agreed to pay
    Algoma US$11 million annually subject to escalation at the rate of 3 percent
    per annum beginning in 2016.

(iv)

Assignment of Material Contracts

[33]

Under the Assignment of Material Contracts Agreement,
    Algoma provided a covenant in favour of GIP, which precluded Algoma from
    selling or assigning any material contract relating to the Port, including the
    Cargo Handling Agreement except by way of security granted to its other third
    party lender.

(v)

Cargo Handling Agreement

[34]

Under the Cargo Handling Agreement, Portco
    agreed to provide Algoma with cargo handling services for an initial 20-year
    term with automatic renewal for successive three-year periods unless either
    party gave written notice of termination to the other.  Algoma agreed to pay
    Portco based on tonnage with a minimum monthly assured volume of US$3 million.
    In other words, Algoma was obliged to pay a minimum of US$36 million annually
    to Portco for 20 years subject to an escalation in price of 1 percent per annum
    commencing in 2016.  Therefore, while Algoma was entitled to US$11 million
    annually under the Shared Services Agreement, it had to pay Portco at least
    US$36 million annually under the Cargo Handling Agreement, such that Portco
    would receive an annual revenue stream from Algoma of US$25 million.  This
    amount was intended to service GIPs term loan at US$25 million a year.
    However, GIPs loan had a term of eight years, and therefore Portco would have
    the full benefit of the US$25 million for at least 12 years of the initial
    20-year term of the Cargo Handling Agreement, and potentially for 42 years if
    the Agreement was not terminated.

[35]

Section 15.2 of the Cargo Handling Agreement
    also contained a change of control clause that stated that the Agreement may
    not be assigned by either Party without the prior written consent of the other
    Party.  This provision became particularly contentious because it effectively
    gave Portco  and therefore Portcos parent, Essar Global  a veto over any
    party acquiring Algoma in the
CCAA
proceedings.

[36]

Although inclusion of the change of control
    provision in the Cargo Handling Agreement was driven by GIP, the trial judge
    found that it was effectively for the benefit of Essar Global, as it gave
    Portco a veto.  Furthermore, the trial judge noted at para. 117 that Essar
    Global had in fact relied on s. 15.2 to its benefit, by holding out its change
    of control rights to dissuade competing bidders for Algoma in the restructuring
    process while Essar Global continued to express its own interest as a
    prospective bidder.

[37]

In discussing the financial ramifications of the
    Shared Services Agreement and the Cargo Handling Agreement, the trial judge
    observed at para. 26 of his reasons:

When the costs of operating the Port (shared services) are
    netted from the cargo handling charges, the result is that Algoma will pay
    approximately $25 million per year to Portco, which is the amount required by
    Portco to service the Term Loan each year.  That amount of $25 million for 20
    years comes to $500 million, far more than the amount needed to repay the $150
    million GIP loan.

[38]

Duff & Phelps assessed the fair value of the
    Portco Transaction as ranging between US$150.9 million and US$174.2 million
    with a midpoint of US$161.7 million.  However, this assessment failed to take
    into account the change of control provision in the Cargo Handling Agreement.  Deloitte
    LLP reviewed Duff & Phelps assessment and concluded it was reasonable.
[2]

(6)

Final Recapitalization

[39]

Ultimately the recapitalization of Algoma consisted
    of the following transactions:

(a)  Algoma issued US$375 million in senior
    secured notes pursuant to an offering memorandum;

(b)  Algoma entered into a new US$50 million
    senior secured asset-based revolving credit facility and a new US$375 million
    term loan;

(c)  Algomas unsecured noteholders were paid
    a portion of their principal and were issued new junior secured notes;

(d)  Algoma completed the Port Transaction;

(e)  Essar Global contributed US$150 million
    in cash in exchange for common equity, and also contributed US$150 million in
    debt forgiveness; and

(f)  All
    other Algoma lenders were repaid in full.

[40]

In addition, GIP entered into a secured term
    loan for US$150 million with Portco, secured by a GSA over all of Portcos
    assets.  It also received guarantees  one from Essar Global and one from
    Algoma Port Holding Company Inc.  guaranteeing Portcos liabilities.  In
    November 2014, the transactions in furtherance of Algomas recapitalization,
    including the Port Transaction, were approved unanimously by Algomas Board of Directors
    after receiving advice and on the recommendation of Algomas management.  By
    this time, the Board consisted of four directors:  Mr. Kishore Mirchandani, who
    became a director on June 23, 2014; Mr. Naresh Kothari, who became a director
    on August 24, 2014; the Boards chair, Mr. Jatinder Mehra of Essar Global; and
    Algomas CEO, Mr. Kalyan Ghosh. Mr. Ghosh, and Mr. Rajat Marwah, Algomas CFO, both
    testified that they supported the Port Transaction not because it was ideal,
    but because there was no other option given Essar Globals failure to
    capitalize Algoma as it had committed to do.

[41]

As mentioned, the approved Plan of Arrangement that
    included the original RSA had to be amended in light of the revised equity
    contribution.  A
CBCA
Plan of Arrangement incorporating the
    recapitalization and authorizing the amendment of the September 2014 approval
    order was granted by Morawetz J. on November 10, 2014.

[42]

Based on the materials before this court, it
    would appear that the Port Transaction was not mentioned or brought to Morawetz
    J.s attention.  In this regard, the trial judge found that there was no
    reference to the Port Transaction in the affidavits filed in support of the
    amendment to the Plan of Arrangement.  The Port Transaction is not mentioned in
    that order or in any endorsement.

[43]

The outcome of the Port Transaction was that all
    Port assets were transferred from Algoma to Portco, the Port lands were leased
    to Portco for 50 years, and Portco obtained change of control rights.  Portco
    paid Algoma US$151,660,501.50 in cash, provided the US$19,840,000 promissory
    note, and was obliged to pay Algoma US$11 million per annum under the Shared
    Services Agreement.  In turn, Algoma was obliged to pay Portco US$36 million
    per annum for an initial term of 20 years under the Cargo Handling Agreement,
    subject to renewal, netting Portco US$25 million per annum as against the Shared
    Services Agreement payments.  Meanwhile, under the revised RSA, Essar Global
    contributed cash of US$150 million to Algoma rather than the original cash
    commitment of US$250 to US$300 million.

(7)

Insolvency Protection Proceedings

[44]

On November 9, 2015, Newbould J. granted an
    order placing Algoma, Essar Tech Algoma Inc., Algoma Holdings B.V., Essar Steel
    Algoma (Alberta) ULC, Cannelton Iron Ore Company, and Essar Steel Algoma Inc.
    USA (the
CCAA
Applicants) under
CCAA
protection.  As mentioned,
    he appointed Ernst & Young Inc. as the Monitor.  The order contained
    various paragraphs addressing the rights and obligations of the Monitor,
    including a direction to perform such duties as were required by the Court.  On
    November 20, 2015, Morawetz J. granted an Amended and Restated Initial Order
    that, among other things, directed the Monitor to review and report to the
    Court on any related party transactions (expressly including the Port
    Transaction).

[45]

During the
CCAA
proceedings, on
    February 10, 2016, a sales and investment solicitation process (SISP) for
    Algomas business and property was approved by the Court. Essar North America,
    a subsidiary of Essar Global, submitted a bid but was disqualified in April
    2016 under the terms of the SISP because it failed to provide sufficient
    evidence of financial ability to purchase.  In May and July of 2016, Essar
    Global persisted in its efforts to be the purchaser of the
CCAA
Applicants.
    On May 10, 2016, counsel to Portco, who was also counsel to Essar Global, wrote
    to counsel for Algoma to highlight matters of particular concern in connection
    with the
CCAA
process. The letter stated that any prospective bidder
    was to be told of the consent or veto right:

Portco and [Algoma] are party to a Cargo
    Handling Agreement pursuant to which [Algoma] has committed to long-term use of
    the port.  Portco, has, of course, a keen interest in any successor to [Algoma]
    as counterparty to that agreement and would like it to be clear to prospective
    bidders that, pursuant to the terms of the Cargo Handling Agreement, Portco has
    a consent right in the event of any assignment by [Algoma] of the agreement or
    a change of control of [Algoma].

Again please confirm that this has been made
    clear to prospective bidders.

[46]

On June 20, 2016, the Monitor filed its
    Thirteenth Report, which described the Portco Transaction and indicated that
    there may be grounds for further review of that transaction. The Monitor noted
    that the renegotiated equity commitment resulted in Essar Global contributing
    the sum of US$150 million in equity rather than US$250 to US$300 million, and
    that the Portco Transaction transferred control of one of Algomas most
    critical assets, the Port, to Essar Global.  The Monitor stated that it
    remained particularly concerned about the effect on the completion of a
    restructuring transaction of the restrictions on assignment in the Portco
    Transaction documents.

[47]

On September 26, 2016, Deutsche Bank AG, who led
    the Debtor-in-Possession (DIP) Lenders of Algoma and also represented the
    interests of potential bidders in the
CCAA

process, applied for
    an order empowering the Monitor to commence certain proceedings and make
    certain investigations.
[3]
On September 26, 2016, Newbould J. granted an order authorizing the Monitor to
    commence and continue proceedings under s. 241 of the
CBCA
in relation
    to related party transactions, including but not limited to the Port Transaction.

[48]

The action proceeded on an accelerated timetable
    due to the progress of the
CCAA
restructuring.
[4]
On October 20, 2016, the
    Monitor commenced proceedings claiming oppression pursuant to s. 241 of the
CBCA
against Essar Global and others in the Essar Group including Portco.  It
    pleaded that by reason of its role as a court officer directed to commence the
    oppression proceedings and to oversee the interests of all stakeholders of
    Algoma, it was a complainant within the meaning of ss. 238 and 241 of the
CBCA
.

[49]

It alleged that since June 2007, the Essar Group
    had exercised
de facto
control over Algoma and had engaged in a course
    of conduct that consistently preferred the interests of the Essar Group and in
    particular, Essar Global, to those of Algoma and its stakeholders.  This
    included the transfer to the Essar Group of long-term control over, and a
    valuable equity interest in, Algomas Port facilities, an irreplaceable and
    core strategic asset of Algoma.  The value of control over the Port to Algoma
    and its stakeholders was immeasurable, since Algomas business could not
    function without access to the Port.

[50]

The Monitor pointed out that the Essar Group
    obtained its control and equity interest in the Port through a cash contribution
    of less than US$4.7 million.  It pleaded that the US$150 million raised as part
    of the Port Transaction came from third party lenders, namely GIP, and was
    money raised against the security and value of the Port facilities, an asset of
    Algoma, as well as a promissory note that remained unpaid, and a guarantee from
    Essar Global.  The Monitor also stressed that the control obtained by the Essar
    Group was not only over the Port facilities, but extended to any sale of the
    Algoma business such that Essar Global had an indirect veto on transactions
    involving Algomas enterprise.  Essar Global also obtained a right to
    substantial payments under the Cargo Handling Agreement.

[51]

The oppression occasioned was exacerbated by the
    fact that the borrowed monies raised through the transaction were a substitution
    for monies Essar Global had promised to contribute as equity in Algoma.

[52]

The Monitor also argued that s. 15.2 of the Cargo
    Handling Agreement itself constituted oppression, because it was for the long-term
    benefit of Essar Global and not in the interests of Algomas non-shareholder
    stakeholders.  The Monitor took the position that the provision gave Portco and
    Essar Global a veto over any party acquiring Algoma in the
CCAA
process, thus negatively affecting the sales process.  The Monitor also argued
    that the change of control provision was not necessary for the protection of
    GIP because it had its own change of control rights under its credit agreement.

[53]

In addition, the Monitor pleaded that the
    oppression and prejudice to creditors was continuing as Essar Global and other
    related companies had insisted that bidders for Algomas business under the
    SISP, which was approved by the court on February 11, 2016, be advised of
    Portcos consent rights under the change of control clause in the Cargo
    Handling Agreement.

[54]

Essar Global and the remaining defendants filed
    their defence rejecting the Monitors allegations, describing the action as an
    improper and ill-conceived leverage tactic.  They asserted that the litigation
    was an attempt to attack the Port Transaction for the benefit of other bidders
    under the sales process, including the DIP Lenders.  They pleaded that the
    Monitor had no standing, the claim was improperly pleaded, an oppression remedy
    seeking to unwind or claim damages in respect of the Port Transaction was
    unavailable at law, and in any event there was no oppression, prejudice, or
    unfairness.

[55]

Portcos lenders, GIP, were granted intervener status
    as parties on December 22, 2016.  They noted that they were
bona fide
,
    arms length, and independent commercial parties and no cause of action or
    wrongful conduct was asserted by the Monitor against them.  Nonetheless, the
    Monitor was seeking remedies that eviscerated the security held by them.  They
    asserted that the Monitor did not have standing and could not establish any
    oppressive conduct in any event.  Moreover, the structure of the Port
    Transaction was transparent to all of Algomas stakeholders.  Lastly, even if
    the court granted a remedy to the Monitor, it had no jurisdiction to prejudice
    the interests of GIP.  The Monitor subsequently amended its statement of claim
    to modify the language on the relief claimed relating to the indebtedness and
    security interests in favour of GIP.

[56]

Various procedural motions were brought.  Others
    who are not before this court intervened: Deutsche Bank AG; the Ad Hoc
    Committee of Algoma's Noteholders; Algoma Retirees; and two locals from the union
    United Steelworkers, Locals 2724 and 2251. The Essar Group and GIP brought
    motions to strike on the basis that the Monitor lacked standing and later also sought
    an order for particulars.  On December 1, 2016, Newbould J. ordered that the standing
    motions be dealt with at the trial scheduled for January 30, 2017.  On January
    5, 2017, he urged the Monitor to give as many particulars as it could regarding
    the relief it might seek.

[57]

On January 30, 2017, Essar Capital served a
    motion for an order re-opening the SISP and to make information available to Essar
    Global to allow it to consider submitting a bid.  Newbould J. dismissed the
    request.  At para. 114 of his reasons, the trial judge found that Essar Global was
    still interested in purchasing the assets of Algoma.

[58]

The action proceeded to a five-day trial before
    Newbould J. commencing on January 31, 2017.

B.

Trial Judgment

[59]

The trial judge organized his reasons for
    decision under six principal headings: the Monitors standing; who directed the
    recapitalization and the Port Transaction; reasonable expectations and were they
    violated; the business judgment rule; and the appropriate remedy.  I will
    summarize his conclusions on each issue.

(1)     Monitors Standing

[60]

As mentioned, both Essar Global and GIP
    challenged the Monitors standing as a complainant under the oppression provisions
    of the
CBCA
.  They also argued that only persons directly damaged by
    the oppressive conduct could bring the action and that this action was in
    substance a derivative claim by Algoma.  The trial judge rejected these
    arguments.

[61]

He found that the stakeholders harmed were
    Algomas trade creditors, pensioners, retirees, and employees.  At para. 32, he
    noted that Algoma owed CDN$911.9 million as of the date of the Port Transaction
    to a group of creditors including trade creditors, pensioners, retirees, and
    the City of St. Sault Marie.

[62]

The trial judge acknowledged at para. 34 that
    normally a monitor, who is a court officer, is to be neutral and not take
    sides.  However, there are exceptions.  Under s. 23(1)(k) of the
CCAA
,
    a monitor must carry out any function in relation to the debtor that the court
    may direct.  At para. 35, the trial judge also pointed to the
CCAA

proceedings
    of Nortel Networks Corp.

as a precedent:
Nortel Networks Corp., Re
(3 October 2012), Toronto, 09-CL-7950 (Ont. S.C.J. [Commercial List]).

In those proceedings, a monitor was
    authorized to act as a litigant after all of Nortels directors and senior
    executives had resigned.

[63]

Moreover, the trial judge observed that determining
    whether someone is a complainant under s. 238 of the
CBCA
is a
    discretionary decision.

In
Olympia & York Developments Ltd.
    (Trustee of) v. Olympia & York Realty Corp.
(2003), 68 O.R. (3d) 544 (C.A.)
, this court confirmed
    that a trustee in bankruptcy acting on behalf of the creditors of a bankrupt
    estate could be a complainant within the meaning of s. 238.  In so doing, the
    court noted the need for flexibility to ensure that the remedial purpose of the
    oppression provisions is achieved.  The trial judge saw no reason why the
    principle of collective action  which posits that it is more efficient for
    creditors to pursue their claims in a bankruptcy collectively with a trustee
    acting as their representative rather than individually  should not be followed
    in the present
CCAA
proceeding.  At para. 37, he concluded that the
    Monitor had taken the action as an adjunct to its role in facilitating a
    restructuring and was therefore a proper complainant.

[64]

To respond to Essar Global and GIPs arguments
    that the claim was properly a derivative action and that no person had been
    personally harmed beyond Algoma, at para. 40 the trial judge relied on
Rea
    v. Wildeboer
, 2015 ONCA 373, 126 O.R. (3d) 178, at para. 27.  There, Blair
    J.A. commented that the derivative action and the oppression remedy are not
    mutually exclusive.  Although on the facts of
Wildeboer
, Blair J.A.
    had struck out a statement of claim pleading the oppression remedy, the trial
    judge distinguished
Wildeboer

on the basis that the relief
    sought was for the benefit of the corporation and there was no allegation that
    individualized personal interests were affected by the alleged wrongful
    conduct.

(2)     Essar Global Directed the Recapitalization
    and the Portco Transaction

[65]

The trial judge observed that in some respects,
    it did not matter who made the decisions regarding the recapitalization and the
    Port Transaction  if the conduct was oppressive, relief could be granted.  Nonetheless,
    he found at para. 49, that the evidence was overwhelming that Essar Global
    and Essar Capital were calling the shots.

[66]

At para. 52, he accepted the evidence of Mr.
    Ghosh and Mr. Marwah that they did not negotiate the economic terms of the
    refinancing or the Port Transaction.  Nor was either involved in the
    renegotiation of the RSA.

[67]

The trial judge relied on other evidence,
    including Algomas annual Business Plan dated February 3, 2014, to support his
    factual findings.  He also considered evidence of the witnesses.  He found at paras.
    56-57 that some of the witnesses had been evasive, including: Rewant Ruia, the
    Ruia familys lead in the Essar Groups North American operations; Mr.
    Seifert,; and Rajiv Saxena, the Executive Director of Essar Steel India Ltd.

[68]

After reviewing the evidence, the trial judge noted
    at para. 58 that he was satisfied that Mr. Seifert, who represented the Essar
    Groups interests, had primary responsibility for pursuing the recapitalization
    negotiations and Algomas refinancing via the Port Transaction.  He concluded
    at para. 60:

I am satisfied
    that representatives of Essar Global including Essar Capital carried out the
    Recapitalization and Portco Transaction negotiations and made the critical
    decisions.  Algoma management were handed the economic terms of the
    Recapitalization and Port Transaction and implemented them from an operational
    perspective.  Algoma management did not negotiate the terms.  Their role was to
    support the negotiations with regard to non-economic, primarily operational,
    issues.

(3)     Reasonable Expectations and their Violation

[69]

The trial judge identified the two-step process
    to determine whether a violation of reasonable expectations has occurred under
    s. 241 of the
CBCA
,

which is described at para. 68 of
BCE Inc. v. 1976
Debentureholders
,
    2008 SCC 69, [2008] 3 S.C.R. 560: (i) does the evidence support the reasonable
    expectation asserted by the complainant; and (ii) does the evidence establish
    that the reasonable expectation was violated by conduct that is oppressive,
    unfairly prejudicial, or unfairly disregards a relevant interest?

[70]

He described the reasonable expectations
    asserted by the Monitor as relating to the loss by Algoma of a critical asset
    and the change of control clause in the Cargo Handling Agreement.  He stated at
    para. 64:

The Monitor contends that the
    reasonable expectations of the creditors of Algoma, including the trade
    creditors, employees, pensioners and retirees, were that Algoma would not deal
    with its core assets like the Port in such a way as it would lose long-term
    control and value over those assets to a related party on terms that permitted
    the related party to veto or thwart Algomas ability to do significant
    transactions or restructure, as was done in this case.

[71]

At para. 67, the trial judge did not accept that
    the expectations of creditors such as the employees, pensioners, and retirees
    were governed only by their agreements with Algoma.  Furthermore, the evidence,
    including the inferences drawn from the circumstances that existed at Algoma in
    2014, supported the expectations relied upon by the Monitor.  He noted at para.
    73 that stakeholders have a reasonable expectation of fair treatment and this
    was particularly so in Sault Ste. Marie, where Algoma is of critical importance
    to the local economy and relied upon greatly by trade creditors and employees.

[72]

He concluded at para. 75 that:

[T]he reasonable expectations of
    the trade creditors, the employees, pensioners and retirees of Algoma were that
    Algoma would not deal with a critical asset like the Port in such a way as to
    lose long-term control over such a strategic asset to a related party on terms
    that permitted the related party to veto and control Algomas ability to do
    significant transactions or restructure and which gave unwarranted value to the
    third party.

[73]

The trial judge held that the reasonable
    expectations of the trade creditors, employees, pensioners, and retirees were
    violated in two principal ways: first, the Port Transaction itself; and second,
    the change of control veto provided to Portco, and thus Essar Global, in the
    Port Transaction.

[74]

The Port Transaction was caused by Essar
    Globals breach of both the RSA and the Equity Commitment Letter.  Because the
    lease of the land from Algoma to Portco was for 50 years and Essar Global was
    in a position to terminate the Cargo Handling Agreement after 20 years, Algoma
    would be at Essar Globals mercy for the duration of these agreements.  The
    trial judge found at para. 78 that the transfer of the Port assets to Portco
    was driven by GIPs desire for a bankruptcy remote special purpose vehicle.
    GIP was aware of Algomas previous insolvencies and would only lend to a new
    entity that held the Port assets and that was separate from Algoma.

[75]

The Port Transaction and the GIP secured loan to
    Portco would not have been necessary had Essar Global lived up to its
    obligations under the RSA and the Equity Commitment Letter under which Essar
    Global had pledged a cash investment of US$250 to US$300 million.  The trial
    judge found at para. 82 that Essar Global had no intention of living up to its
    promises and had acted in bad faith in this regard.  The content of the
    roadshow presentations reflected the discordance with the RSA. The alternative
    transaction in the roadshow presentations contemplated cash being contributed
    to the recapitalization through the sale of the Port.  That these presentations
    failed was partially attributable, as the trial judge found at para. 82, to
    Essar Globals insufficient contribution of cash equity into Algoma.

[76]

The trial judge concluded that Essar Globals
    decision not to fund Algoma according to the terms of the Equity Commitment
    Letter made it necessary to carry out the Port Transaction.  GIPs loan of US$150
    million reduced the amount of cash equity Essar Global promised to advance to
    Algoma.  Essar Globals failure to inject cash equity into Algoma as agreed was
    the root cause of the Port Transaction and the transfer of control.  This was,
    as the trial judge concluded at para. 89, an exercise in bad faith.  Had an
    independent committee of Algomas Board of Directors been struck, Essar may
    have been held to its bargain rather than looking to third party financing from
    GIP under the Port Transaction structure.  The Boards failure to examine
    alternatives to effect Algomas recapitalization indicated a lack of regard for
    the interests of Algomas stakeholders.

[77]

Additionally, the long-term value given to Essar
    Global by the Port Transaction was itself oppressive (although in stating this,
    the trial judge noted that the Monitor did not pursue its claim that the Port
    assets were transferred to Portco at an undervalue).

[78]

As for the release in the amended RSA, the trial
    judge observed that it was a release of any claim arising out of the Equity
    Commitment Letter.  The trial judge found at para. 100 that the Monitor was not
    making a claim under that Letter, nor was it asking that Essar Global provide
    the equity it had promised in that commitment.  Rather, Essar Globals failure to
    live up to its commitment was part of the factual circumstances to be taken
    into account in considering whether Algomas stakeholders were treated fairly
    under the Port Transaction.

[79]

The trial judge also observed that when the
    court approved the amended Plan of Arrangement under the amended RSA, it did
    not have knowledge of the Port Transaction.  There was no reference to the Port
    Transaction in the affidavits filed in support of the amendment to the Plan of
    Arrangement; there was no finding relating to the release of Essar Global; the
    trade creditors, the employees, pensioners and retirees were not parties to the
    motion approving the amended RSA; and the order was obtained without
    opposition.

[80]

Ultimately he concluded that the Port
    Transaction was itself unfairly prejudicial to, and unfairly disregarded, the
    interests of Algomas trade creditors, employees, pensioners, and retirees.

(4)     Change of Control Provision

[81]

The trial judge determined at para. 104 that the
    change of control provision gave effective control to Portco (
i.e.
Essar Global) over who may acquire the Algoma business.  Any buyer of Algoma or
    its business would need to be assigned the Cargo Handling Agreement so that it
    could operate the steel mill.  Therefore the veto under this clause was
    effectively a veto over any change of control of the Algoma business.

[82]

Although the evidence indicated that the change
    of control provision was included for GIPs protection, the trial judge found
    that this end could have been achieved in other ways.  For example, as the
    trial judge pointed out at para. 110, the parties could have included a
    provision in the Assignment of Material Contracts Agreement that prevented a
    change of control of Algoma without GIPs explicit consent.  Such an
    alternative might have been considered had there been a committee of
    independent directors with advisors independent of Essar Global.  But, as the
    trial judge concluded at para. 111, the reality was that there was no pushback
    on the change of control provision that was implemented, and which gave
    Portco/Essar Global a veto.

[83]

The trial judge concluded at para. 113 that the
    change of control provision was of considerable value to Essar Global.  Furthermore,
    as mentioned, the trial judge stated at para. 117 that Essar Global had in fact
    relied on s. 15.2 to its benefit by holding out its change of control rights to
    dissuade competing bidders for Algoma in the restructuring process while Essar
    Global continued to express its own interest as a prospective bidder.

[84]

The May 10, 2016 letter from Portcos counsel,
    which sought confirmation from Algomas counsel that prospective bidders would
    be advised of Portcos rights, exemplified this.  In the letter, Essar Global
    effectively held out its consent to any change of control right to dissuade
    competing bidders for Algoma in the restructuring process while it continued to
    express its own interest as a prospective bidder. The trial judge observed at
    para 115 that: [I]t is clear that the dictate of Portco through its solicitors
    that prospective purchasers should be made aware of the change of control
    provision was successful.

[85]

The trial judge also observed that the evidence
    established that Portcos right to refuse assignment of the Cargo Handling
    Agreement was a material impediment to restructuring Algoma as Algoma could not
    survive without access to the Port.  He concluded that the change of control
    provision in favour of Portco in the Cargo Handling Agreement was unfairly
    prejudicial to, and unfairly disregarded, the interests of Algomas trade
    creditors, employees, pensioners, and retirees.

(5)     The Business Judgment Rule

[86]

The trial judge also determined that the
    business judgment rule, which accords deference to a business decision of a
    Board of Directors so long as the decision lies within a range of reasonable
    alternatives, did not provide a defence to Essar Global.  The Board had not
    followed advice that it insist Essar Global comply with its commitments under
    the RSA and the Equity Commitment Letter.  As the trial judge stated at para.
    123, the result of this was the Port Transaction, which was:

[A]n exercise in self-dealing in
    that Algomas critical Port asset was transferred out of Algoma to a wholly
    owned subsidiary of Essar Global with a change of control provision that
    benefitted Essar Global at a time that a future insolvency was a possibility.

[87]

Moreover, there was no evidence that the Board
    even considered whether protection to GIP could be provided in the absence of
    the change of control provision in favour of Portco and hence Essar Global.
    This failure was unreasonable.

(6)     Remedy

[88]

The trial judge stated at para. 136 that if
    there were no less obtrusive way to remedy the oppression, he would have
    ordered that Portcos shares be transferred to Algoma.  However, mindful that a
    remedy for oppression should be approached with a scalpel, he instead relied on
    s. 241(3) of the
CBCA
to order a variation of the Port Transaction.
    He accordingly deleted s. 15.2 of the Cargo Handling Agreement and inserted a
    provision in the Assignment of Material Contracts Agreement, which provided
    that, if GIP becomes the equity owner of Portco, its consent would be required
    for a change of control of Algoma.  He rejected the suggestion that either GIP
    or Essar Global were taken by surprise by this relief.

[89]

He also addressed the imbalance created by the
    50-year term of the lease between Algoma and Portco as against the 20-year term
    of the Cargo Handling Agreement (with automatic renewal for successive three
    year periods, barring either partys termination).  As the Port was critical to
    Algomas operation and survival, Algomas ability under the Cargo Handling
    Agreement to refuse an extension after 20 years was illusory and, in reality, the
    renewal provision was one-sided in favour of Essar Global.

[90]

He concluded at para. 144 that the payments
    under the Cargo Handling Agreement were an unreasonable benefit in favour of
    Essar Global.  If the Agreement lasted only the initial 20-year term,
    Portco/Essar Global would receive US
$300 million

after GIPs loan was paid off.  If the
    Agreement was not terminated before the end of its 50 year life, Portco/Essar
    Global would receive an additional US$750 million for the last 30 years.

[91]

Accordingly, the trial judge ordered that the
    lease, the Cargo Handling Agreement, and the Shared Services Agreement be
    amended to provide Algoma with the option to terminate any of these three agreements
    once GIPs loan matured and was paid.  If Portco elected not to renew after 20
    years, or any of the three-year extensions, those three agreements would
    terminate, and Algoma would then owe Portco US$4.2 million plus interest.

[92]

The trial judge decided at para. 147 that the
    appropriate place for Portco to assert its claims for a declaration that the US$19.8
    million promissory note had been paid as a result of set-off and for amounts
    owing under the Cargo Handling Agreement was in the ongoing
CCAA
proceedings.

(7)     Costs

[93]

Lastly, following the release of the judgment,
    Essar Global agreed to pay costs of CDN$1.17 million to the Monitor.  The trial
    judge then ordered Essar Global to pay Algoma CDN$1.5 million in costs and ordered
    that no costs be payable by the Monitor or by or to GIP.

C.

Issues

[94]

There are eight issues to be addressed:

1.

Did the Monitor lack standing to be a complainant under s. 238 of
    the
CBCA
?

2.

Could the claim of the Monitor only be brought as a derivative
    action under s. 239 of the
CBCA
rather than an
    oppression action under s. 241 of the
CBCA
?

3.

Did the trial judge err in his analysis of reasonable expectations?

4.

Did the trial judge err in his analysis of wrongful conduct and
    harm?

5.

Did the trial judge err in tailoring a remedy?

6.

Was there procedural unfairness?

7.

Should the fresh
    evidence be admitted?

8.

Should leave to
    appeal costs be granted to GIP and the costs award varied?

D.

Analysis

(1)

Standing
    of the Monitor

[95]

Essar Global submits that the Monitor is not a
    proper complainant given the conflict between it and the stakeholders it
    represents. The trial judge failed to consider whether the Monitor could avoid
    conflicts.

[96]

GIP supports the position of Essar Global.  It
    states that the trial judge erred in assuming that the courts broad
    jurisdiction under the
CCAA
could be combined with the equally broad
    jurisdiction under the
CBCA
to create a super remedy that would
    interfere with the contractual rights of non-offending third parties.  A
    trustee in bankruptcy is a representative of the creditors of the bankrupt.  A monitor
    owes duties to all stakeholders, not just creditors.  Its duty to Essar Global
    as sole shareholder of Algoma cannot be reconciled with the Monitors
    oppression claim against it.  Also, Algoma can be directed to make the Cargo
    Handling Agreement payments to GIP directly and therefore the Monitor owed a
    fiduciary duty to GIP.

[97]

In addressing this issue, I will first discuss the
    evolution of the role of a monitor.  I will then discuss who can be a
    complainant under the
CBCA
oppression provisions.  Lastly, I will
    consider whether in the particular circumstances of this case, the trial judge
    was correct in concluding that the Monitor could have standing to bring an
    oppression action.

(a)

The Purpose of
CCAA
Restructurings

[98]

As has been repeatedly described, the
CCAA
was originally enacted in 1933 to respond to the ravages of the Great
    Depression and to allow large corporations with outstanding bonds and
    debentures to restructure their debt in a court-supervised process through
    plans of arrangement or compromise negotiated with their creditors.

[99]

As outlined by Deschamps J. in
Ted Leroy
    Trucking [Century Services] Ltd
.
, Re, 2010 SCC 60, [2010] 3 S.C.R.
    379, the
CCAA
fell into disuse after amendments in 1953 that limited its
    application to companies issuing bonds.  Courts breathed new life into the
    statute in the early 1980s in response to an economic recession, and the
CCAA
became the primary vehicle through which major restructurings were
    attempted.  Amendments to the
Bankruptcy and Insolvency Act
, R.S.C.
    1985, c. B-3 (the
BIA
), introduced in 1992, allowed insolvent
    debtors to make proposals to creditors under that statute, and were expected to
    supplant the
CCAA
.  However, the
CCAA

continues to be
    employed as the vehicle of choice to restructure large corporations,
    particularly where flexibility is needed in the restructuring process: Roderick
    J. Wood,
Bankruptcy & Insolvency Law
, 2nd ed. (Toronto: Irwin Law,
    2015), at pp. 336-337; and
Century Services
,

at para. 13.

[100]

The corporate restructuring process at the heart of the
CCAA
provide[s] a constructive solution for all stakeholders when a company has
    become insolvent:
Indalex Ltd., Re
, 2013 SCC 6, [2013] 1 S.C.R. 271,
    at para. 205.  There are a number of justifications for why such a process is
    desirable. The traditional  justification for
CCAA
-enabled
    restructurings, as explained by Duff C.J. shortly after the statutes
    enactment, was to rescue financially-distressed corporations without forcing
    them to first declare bankruptcy:
Reference Re Constitutional Validity of
    the Companies Creditors Arrangement Act (Dom.)
, [1934] S.C.R. 659, at p.
    661.

[101]

The restructuring process can also allow creditors to obtain a
    higher recovery than may otherwise be available to them through bankruptcy or
    other liquidation proceedings, by preserving the corporate entity or the value
    of its business as a going concern: Wood, at pp. 338-339.  Additionally,
    restructuring proceedings can provide an opportunity to evaluate the root of a
    corporations financial difficulties, and develop strategies to achieve a
    turnaround, whether the best option be a full restructuring, or a liquidation
    of the corporation within the restructuring regime: Wood, at p. 340.

[102]

The benefits of the restructuring process are not limited to
    creditors.  Even early commentary lauded restructurings as promoting the public
    interest by salvaging corporations that supply goods or services important to
    the economy, and that employ large numbers of people: see Stanley E. Edwards,
    Reorganizations Under the Companies Creditors Arrangement Act (1947), 25 Can.
    Bar Rev. 587, at p. 593.  This view remains applicable today, with
    restructurings justified in terms of rehabilitating companies that are key
    elements in a complex web of interdependent economic relationships in order to
    avoid the negative consequences of liquidation:
Century Services
, at
    para. 18.

[103]

To summarize, by enabling the restructuring process, the
CCAA

can achieve multiple objectives.  It permits corporations to rehabilitate
    and maintain viability despite liquidity issues.  It allows for the development
    of business strategies to preserve going-concern value.  It seeks to maximize
    creditor recovery.  It can serve to preserve employment and trade
    relationships, protecting non-creditor shareholders and the communities within
    which the corporation operates: see Janis P. Sarra,
Rescue! The Companies
    Creditors Arrangement Act
, 2nd ed. (Toronto: Thomson Reuters, 2013), at
    pp. 13-17.  The flexibility inherent in the restructuring process permits a
    broad balancing of these objectives and the multiple stakeholder interests
    engaged when a corporation faces insolvency.

[104]

It is against this background that the role of a monitor must be
    considered.

(b)

The Role of the Monitor

[105]

Originally, the
CCAA
was a very slim statute and made no
    mention of a monitor.  Born of the courts inherent jurisdiction, the term monitor
    was first used in
Re Northland Properties Ltd.

(1988), 29
    B.C.L.R. (2d) 257 (S.C.).  In that case, an interim receiver was appointed
    whose role was described at p. 277 as that of a monitor or watchdog.  As a
    watchdog, the monitor could observe the conduct of management and the
    operation of the business while a plan was being formulated: A.J.F. Kent and
    W. Rostom, The Auditor as Monitor in CCAA Proceedings: What is the Debate? (2008),
    online: Mondaq <www.mondaq.com>.  The monitor was thus a court-appointed
    officer.

[106]

The 1997 amendments to the
CCAA
gave legislative
    recognition to the role of the monitor and made the appointment mandatory.  The
    2007 amendments to the
CCAA
expanded the description of the monitors
    role and responsibilities. In essence, its minimum powers are set out in the
    Act and they may be augmented through the exercise of discretion by the court,
    typically the
CCAA
supervising judge.  This framework is reflected in
    s. 23 of the
CCAA
,
which enumerates certain duties and functions of a monitor.  Paragraph 23(1)(k)
    directs that a monitor shall carry out any other functions in relation to the
    company that the court may direct.  Its express duties under s. 23(1)(c)
    include making, or causing to be made, any appraisal or investigation that the monitor
    considers necessary to determine with reasonable accuracy the state of the
    companys business and financial affairs and the cause of its financial
    difficulties or insolvency.  It is then to file a report on its findings.

[107]

Not surprisingly, as with the
CCAA
itself, the role of the monitor
    has evolved over time. As stated by David Mann and Neil Narfason in their
    article entitled The Changing Role of the Monitor (2008) 24 Bank. & Fin. L.
    Rev. 131, at p. 132:

Born out of invention, the role has developed
    from one of passive observer to one of active participant.  The monitor has
    enhanced communication, mediated disputes, provided input into plans of
    reorganization, and provided expert advice in complex affairs.  As the business
    community has become more sophisticated and global, so too has the monitortaking
    on larger mandates, often times involving complex, cross-border restructurings.

[108]

Examples of the use of expanded powers for a monitor are found in
Philips
    Manufacturing Ltd., Re
(1991), 67 B.C.L.R. (2d) 385 (C.A.), where the British
    Columbia Court of Appeal ordered a monitor to report on the causes of financial
    problems of the company and report on improper payments made to management,
    shareholders and directors, and in
Woodwards Ltd., Re
(1993), 77
    B.C.L.R. (2d) 332 (S.C.), where Tysoe J. (as he then was) held that a monitor
    was to review all transactions and conveyances for fraud, preferences, or other
    reviewable features and act in a similar manner to a trustee in bankruptcy.

[109]

Under s. 11.7(1) of the
CCAA
, a monitor must be a licensed
    trustee in bankruptcy, and as such, under s. 13 of the
BIA
,
is subject to the supervision of the
    Office of the Superintendent of Bankruptcy.  The monitor is to be the eyes and
    the ears of the court and sometimes, as is the case here, the nose.  The monitor
    is to be independent and impartial, must treat all parties reasonably and
    fairly, and is to conduct itself in a manner consistent with the objectives of
    the
CCAA
and its restructuring purpose.  In the course of a
CCAA
proceeding, a monitor frequently takes positions; indeed it is required by
    statute to do so.  See for example s. 23 of the
CCAA
that describes certain duties of a monitor
.

[110]

Of necessity, the positions taken will favour certain stakeholders
    over others depending on the context.  Again, as stated by Messrs. Kent and
    Rostom:

Quite fairly, monitors state that creditors and the Court
    currently expect them to express opinions and make recommendations.  [T]he
    expanded role of the monitor forces the monitor more and more into the fray.
    Monitors have become less the detached observer and expert witness contemplated
    by the Court decisions, and more of an active participant or party in the
    proceedings.

(c)

A Monitor as Complainant in an Oppression Action

[111]

Turning to the issue of a monitor and an oppression action, there is
    some difference in academic opinion on the suitability of the oppression remedy
    in insolvency proceedings. Professor Stephanie Ben-Ishai has argued that the
    remedy should be unavailable for use once the debtor has entered a court-supervised
    reorganization under the
BIA
or the
CCAA
.
[5]
Professor Janis Sarra has countered that the oppression remedy continues to be
    an important corporate law remedy that should be available in such proceedings.
[6]
I do not understand the
    appellants to be taking the former position; rather they simply argue that the
    Monitor has no standing.

[112]

Section 238 of the
CBCA
defines a complainant as:

(a)
a registered holder or beneficial owner, and a former registered
    holder or beneficial owner, of a security of a corporation or any of its
    affiliates,

(b)
a director or an officer or a former director or officer of a
    corporation or any of its affiliates,

(c)
the Director, or

(d)
any
    other person who, in the discretion of a court, is a proper person to make an
    application under this Part.

For the purposes of this analysis, s.
    238(d) is the relevant subsection.

[113]

Section 241of the
CBCA
describes the oppression remedy:

(1)
A complainant may apply to a court for an order under this
    section.

(2)
If, on an application under subsection (1), the court is
    satisfied that in respect of a corporation or any of its affiliates

(a)
any act or omission of the corporation or any of its affiliates
    effects a result,

(b)
the business or affairs of the corporation or any of its
    affiliates are or have been carried on or conducted in a manner, or

(c)
the powers of the directors of the corporation or any of its
    affiliates are or have been exercised in a manner

that is oppressive or
    unfairly prejudicial to or that unfairly disregards the interests of any
    security holder, creditor, director or officer, the court may make an order to
    rectify the matters complained of
.

[114]

The question here is whether the trial judge erred in concluding
    that the Monitor had standing to be a complainant.  There are two elements to
    this analysis: can a monitor be a complainant under the
CBCA
; and
    should the Monitor have been a complainant in this case?  I would answer both questions
    affirmatively.

[115]

As is clear from s. 238(d) of the
CBCA
, a court exercises
    its discretion in determining who may be a complainant, and this discretion is
    broad.  There has been much jurisprudence on who qualifies as a complainant.
    In
Olympia & York
, a trustee in bankruptcy, acting on behalf of
    the creditors of the bankrupt estate, was entitled to be a complainant in an
    oppression action involving an oppressive agreement between the debtor and a
    non-arms length party.  As this court said in that case at para. 45:

the trustee is neither automatically barred from being a
    complainant nor automatically entitled to that status.  It is for the judge at
    first instance to determine in the exercise of his or her discretion whether in
    the circumstances of the particular case, the trustee is a proper person to be
    a complainant.

[116]

Admittedly, a monitor differs from a trustee in bankruptcy in that
    the latter represents the interests of the creditors whereas the monitor has a
    broader mandate.  However, like a trustee in bankruptcy, a monitor is neither
    automatically barred from being a complainant nor automatically entitled to
    that status.

[117]

Section 241 speaks of
a
proper person, not
the
proper person, therefore allowing for discretion to be exercised in the face of
    more than one proper person.  The appellants did not direct us to any authority
    saying that a monitor could not be a complainant.  Paragraph 23(1)(k) of the
CCAA
expressly provides that a monitor shall carry out any functions in relation to
    the company that the court may direct.  Moreover, s. 23(1)(c) directs a monitor
    to conduct any investigation that the monitor considers necessary to determine
    the state of the companys business and financial affairs.  It does not strain
    credulity that this responsibility will frequently place a monitor at odds with
    the shareholders or other stakeholders.

[118]

Additionally, there is nothing in the
CCAA
itself to suggest
    that a monitor cannot be authorized to act as a complainant.  Indeed, the broad
    language of s. 11 of the
CCAA
,

which

permits a supervising
    court to make any order it considers appropriate in the circumstances, is
    permissive of such orders.  As this court and the Supreme Court have made
    clear, the broad language of s. 11 should not be read as being restricted by
    the availability of more specific orders:
U.S. Steel Canada Inc., Re
,
    2016 ONCA 662, 39 C.B.R. (6th) 173, at para. 79, citing
Century Services
,
    at para. 70.  Courts can, and sometimes should, make creative orders in the
    context of
CCAA
proceedings:
U.S. Steel
, at paras. 80, 86-87.

[119]

Generally speaking, the monitor plays a neutral role in a
CCAA
proceeding.  To the extent it takes positions, typically those positions should
    be in support of a restructuring purpose.  As stated by this court in
Ivaco
    Inc., Re
(2006), 83 O.R. (3d) 108 (C.A.), at paras. 49-53
,
    a monitor is not necessarily a fiduciary; it only becomes one if the court
    specifically assigns it a responsibility to which fiduciary duties attach.

[120]

However, in exceptional circumstances, it may be appropriate for a monitor
    to serve as a complainant.  In my view, this is one such case.

[121]

Here, in para. 37(c) of the Amended and Restated Initial
CCAA
Order dated November 20, 2015, the Monitor was directed to investigate whether
    there were potential related party transactions that should be reviewed.  It
    then reported back to the supervising
CCAA
judge that there were, and
    on that basis the
CCAA

judge authorized the Monitor to commence
    proceedings under s. 241 of the
CBCA
.  The Monitor proceeded with the
    oppression action in the interests of the restructuring consistent with the
    objectives of the
CCAA
. The trial judge ultimately found that aspects
    of the Port Transaction, such as the change of control clause in the Cargo
    Handling Agreement that gave Essar Global control over who can be a buyer of
    the Algoma business, were oppressive and also harmful to the restructuring
    process.  The Monitor took the action as an adjunct to its role in
    facilitating a restructuring.

[122]

Moreover, it cannot be said that the Monitor was a fiduciary.
    Indeed, the appellants did not say this in their pleadings, opening submissions,
    or closing submissions before the trial judge.  The remedy granted by the trial
    judge was directed at the oppression and removed an insurmountable barrier to a
    successful restructuring.  In addition, it was brought in the face of Essar
    Global demonstrating a continuous desire to acquire Algoma and, as evident from
    the letter sent by its counsel, a desire to discourage others from doing so.

[123]

It will be a rare occasion that a monitor will be authorized to be a
    complainant.  Factors a
CCAA
supervising judge should consider when
    exercising discretion as to whether a monitor should be authorized to be a
    complainant include whether:

(i)  there
    is a
prima facie
case that merits an oppression action or application;

(ii)  the
    proposed action or application itself has a restructuring purpose, that is to
    say, materially advances or removes an impediment to a restructuring; and

(iii) any other
    stakeholder is better placed to be a complainant.

These factors are not exhaustive, and
    none of them is necessarily dispositive; they are simply factors to consider.

[124]

In the circumstances that presented themselves here, the
CCAA
supervising judge was justified in providing authorization.  A
prima facie
case had been established; the Monitor had reviewed and reported to the court
    on related party transactions; the oppression action served to remove an
    insurmountable obstacle to the restructuring; and the Monitor could efficiently
    advance an oppression claim, representing a conglomeration of stakeholders,
    namely the pensioners, retirees, employees, and trade creditors, who were not
    organized as a group and who were all similarly affected by the alleged
    oppressive conduct.

[125]

Quite apart from meeting the aforementioned criteria, I would also
    observe that as the presiding judge in the
CCAA
proceeding and the
    trial judge, Newbould J. had insight into the dynamics of the restructuring and
    was well positioned to supervise all parties including the Monitor to ensure
    that no unfairness or unwarranted impartiality occurred.

[126]

Lastly, I do accept the appellants position that the
Nortel
proceedings relied upon by the trial judge in support of his conclusion were
    quite different from this case.  In
Nortel
, the monitors powers were
    expanded by an order authorizing the Monitor to exercise any powers properly
    exercisable by a Board of Directors of Nortel or its subsidiaries.  But this
    expansion was a response to the resignations of the Boards of Nortel and its
    subsidiaries, not, as here, a response to the results of investigations the
    Monitor had been directed to pursue.  That said, the case does illustrate the
    need to avoid rigid definition of a monitors role and responsibilities.

[127]

In conclusion, I would not give effect to the appellants submission
    that the trial judge erred in granting the Monitor standing to pursue an action
    for oppression.

(2)

Derivative or Oppression Action

[128]

In addition to attacking the standing of the Monitor to bring the
    action, the appellants also submit that the Monitor was precluded from bringing
    the action in the form of an oppression remedy proceeding pursuant to s. 241 of
    the
CBCA
.  In their view, the action could only have been brought as a
    derivative action pursuant to s. 239 of that
Act
.  They say the claim
    asserted is a corporate claim belonging to Algoma, if anyone, and the
    stakeholders, on whose behalf the Monitor asserts the claim, were not harmed
    directly or personally but only derivatively through harm done to Algoma.  I
    disagree.

[129]

In support of their submission, the appellants rely heavily on the
    decision of this Court in
Wildeboer
.  This case is not
Wildeboer
,
    however.

[130]

In
Wildeboer
, insiders who controlled the corporation had
    misappropriated many millions of dollars from the corporation.  The
sole claim
advanced by the
    complainant minority shareholder by way of oppression remedy was for the return
    of the misappropriated funds
to the
    corporation
.  There was
no
    claim
asserted by the complainant, of any kind,
for a personal remedy
qua
shareholder
.  As the court noted at
    para. 45, [t]he substantive remedy claimed is the disgorgement of all the
    ill-gotten gains back to Martinrea [the corporation in question].

[131]

The
Wildeboer
decision must be read in that context.  It
    does not stand for the proposition that in all cases where there has been a
    wrong done to the corporation, the action must be brought as a derivative
    action.  Consistent with a number of other authorities, this court expressly
    re-affirmed the principles that the derivative action and the oppression remedy
    are not mutually exclusive and that there may be circumstances giving rise to
    overlapping derivative actions and oppression remedies where harm is done both
    to the corporation and to stakeholders in their separate stakeholder
    capacities.  This is clear from para. 26:

I accept that the derivative action and the oppression remedy
    are not mutually exclusive.  Cases like
Malata
[
Malata Group (HK) Ltd. v. Jung
, 2008 ONCA 111, 89 O.R. (3d) 36]

and
Jabalee
[
Jabalee v.
    Abalmark Inc
.
, [1996] O.J.
    No. 2609 (C.A.)]

make it clear that there
    are circumstances where the factual underpinning will give rise to both types
    of redress and in which a complainant will nonetheless be entitled to proceed
    by way of oppression.  Other examples include:
Ontario (Securities
    Commission) v. McLaughlin
, [1987] O.J. No. 1247 (Ont. H.C.);
Deluce
    Holdings Inc. v. Air Canada
(1992), 12 O.R. (3d) 131 (Ont. Gen. Div.
    [Commercial List]);

Covington Fund Inc. v. White
, [2000] O.J.
    No. 4589 (Ont. S.C.J.), affd [2001] O.J. No. 3918 (Ont. Div. Ct.);
Waxman
    v. Waxman
, [2004] O.J. No. 1765 (C.A.), at para. 526, leave to appeal
    refused, (2005), [2004] S.C.C.A. No. 291 (S.C.C.).

[132]

Or, as Armstrong J.A. put it in
Malata
, at para. 30:

[T]here is not a bright line distinction between the claims
    that may be advanced under the derivative action section of the Act and those
    that may be advanced under the oppression remedy provisions.

[133]

In short, there will be circumstances in which a stakeholder suffers
    harm in the stakeholders capacity as stakeholder, from the same wrongful
    conduct that causes harm to the corporation.  In my opinion  unlike in
Wildeboer
,
    where the harm alleged was solely harm to the corporation  this case falls
    into the overlapping category.

[134]

For the purposes of this analysis, it is the nature of the claim put
    forward by the claimants, on whose behalf the Monitor was pursuing the
    oppression remedy, that must be examined.  As the trial judge noted at para. 31,
    the Monitor initially cast quite widely the net of stakeholders affected by the
    Port Transaction and on whose behalf it was claiming a remedy.  By the time of
    the hearing, however, the nets reach had been narrowed to Algomas trade
    creditors, employees, pensioners, and retirees.

[135]

In oppression remedy parlance, the nub of the exercise lies in
    determining whether the claimant has identified a reasonable expectation and
    shown that it has been violated by wrongful conduct that is oppressive (in
    the broad sense contemplated by the
Act
)
of the interests of the
    claimant
: see
BCE
.  The Monitor asserted at the hearing, and the
    trial judge found at para. 75:

[T]hat the reasonable expectations of the trade creditors, the
    employees, pensioners and retirees of Algoma were that Algoma would not deal
    with a critical asset like the Port in such a way as to lose long-term control over
    such a strategic asset to a related party on terms that permitted the related
    party to veto and control Algomas ability to do significant transactions or
    restructure and which gave unwarranted value to the third party.

[136]

It was alleged, and the trial judge found, that these reasonable
    expectations had been violated both by aspects of the Port Transaction itself,
    and by the change of control veto provided to Portco, and thus Essar Global, in
    the Port Transaction.

[137]

The appellants argue that the reasonable expectations asserted
    relate only to harm done to Algoma.  The trial judge disagreed, as do I.  As he
    concluded at para. 37:

Aspects of the Port Transaction, such as the change of control
    clause in the Cargo Handling Agreement that gives the parent control over who
    can be a buyer of the Algoma business, are harmful to a restructuring process
and
    negatively impact creditors
. [Emphasis added]

[138]

On this basis, at para. 40, the trial judge distinguished
Wildeboer
because the Monitor was asserting that the personal interests of the creditors
    ha[d] been affected.

[139]

The appellants place considerable emphasis on certain language
    contained in
Wildeboer
to the effect that, in circumstances where
    there may be overlapping derivative and oppression claims, the wrong must both
    harm the corporation and must also affect the claimants individualized
    personal interests.  They interpret these comments as mandating not only that
    each claimant must suffer an identifiable individual harm but also that this
    harm must be different from other individualized personal harms suffered by
    others in their same class.

[140]

For example, the appellants rely on certain aspects of the following
    comments by this court at paras. 29, 32-33 of
Wildeboer
:

On my reading of the authorities, in the cases where an
    oppression claim has been permitted to proceed even though the wrongs asserted
    were wrongs to the corporation, those same wrongful acts have, for the most
    part, also directly affected the complainant in a manner that was different
    from the indirect effect of the conduct on similarly placed complainants.

The appellants are not asserting that their personal interests
    as shareholders have been adversely affected in any way other than the type of
    harm that has been suffered by all shareholders as a collectivity.  Mr. Rea
    the only director plaintiff  does not plead that the Improper Transactions
    have impacted his interest
qua
director.

Since the creation of the oppression remedy, courts have taken
    a broad and flexible approach to its application, in keeping with the broad and
    flexible form of relief it is intended to provide.  However, the appellants
    open-ended approach to the oppression remedy in circumstances where the facts
    support a derivative action on behalf of the corporation misses a significant
    point: the impugned conduct must harm the complainant personally, not just the
    body corporate,
i.e
.
, the collectivity of shareholders as a
    whole.

[141]

While pertinent to the
Wildeboer
context, some of the
    foregoing language, when read in isolation and out of context, may be
    misconceived when it comes to a more general application.  However, I do not
    read
Wildeboer
as precluding an oppression remedy in respect of
    individuals forming a homogenous group of stakeholders  for example, trade
    creditors, employees, retirees, or pensioners  simply because each of them,
    separately, may have suffered the same type of individualized harm.

[142]

Instead, I read the reference at para. 29 to the complainant being
    directly affected in a manner that was different from the indirect effect of
    the conduct on similarly placed complainants to be another way of capturing
    the notion expressed in paras. 32-33 that the individualized harm is to be
    distinct from conduct harming only the body corporate,
i.e.
, the
    collectivity of shareholders as a whole.

[143]

Were the appellants correct in their submissions, as counsel for the
    Monitor points out, this court would not have upheld an oppression remedy on
    behalf of
all
shareholders of a company that had suffered harm as a
    result of a non-market executive compensation contract: see
UPM-Kymmene
    Corp. v. UPM-Kymmene Miramichi Inc
.
(2002), 214 D.L.R. (4th) 496
    (Ont. S.C.J.) [Commercial List], affd (2004), 42 B.L.R. (3d) 34 (Ont. C.A.),
    at para. 153.  Nor would it have upheld an oppression remedy claim on behalf of
a class
of shareholders who were harmed as a
    result of the existence of a transfer pricing regime that was disadvantageous
    to the company, as it did in
Ford Motor Company of Canada v. OMERS
(2006),
79 O.R. (3d) 81

(C.A.).
Wildeboer

contains no suggestion that these authorities are no longer good law; nor
    would it have done.

[144]

The same may be said, in my view, about a group of creditors who
    have suffered similar harm from a corporate wrong that affects both their
    interests as creditors and the interests of the corporation.  While the
    oppression remedy is not available as redress for a simple contractual breach
    (such as the failure to pay a debt), it has long been held to be available, in
    appropriate circumstances, to creditors whose interests have been compromised
    by unlawful and internal corporate manoeuvres against which the creditor cannot
    effectively protect itself:
J.S.M. Corp. (Ontario) Ltd. v. Brick Furniture
    Warehouse Ltd
., 2008 ONCA 183, 41 B.L.R. (4th) 51, at para. 66.  See also:
Fedel v. Tan
, 2010 ONCA 473, 101 O.R. (3d) 481, at para. 56.

[145]

The question is whether the impugned conduct is oppressive (in the
    broad sense contemplated by the
CBCA
) and, if so, whether the
    stakeholder has suffered harm in its capacity as a stakeholder as a result of
    that conduct.

[146]

Moreover, the circumstances that presented themselves emphasize the
    need for flexibility in the availability of the oppression remedy.  The court
    and the Monitor were faced with
prima facie
evidence of oppression
    including bad faith and self-dealing. There was
prima facie
evidence
    of personal harm to the pensioners, employees, retirees, and trade creditors.
    While leave of the court is required for a derivative action, in substance, in
    the context of a
CCAA
proceeding, court supervision is present,
    thereby neutralizing the need for the derivative action procedural safeguard of
    leave.

[147]

I would also note that GIP argues that the decision not to bring
    this action by way of derivative action may have been a strategic decision made
    because Algoma was contractually prohibited from seeking to set aside or vary
    the contracts arising from the Port Transaction, including the Cargo Handling
    Agreement and the lease.  If anything, this argument supports the conclusion
    that it was appropriate for this action to be brought as an oppression claim.

[148]

In conclusion, at law, the Monitor was at liberty to bring an action
    for oppression.  I will now turn to the issue of reasonable expectations.

(3)

Reasonable Expectations

[149]

Essar Global and GIP submit that the trial judge erred in his
    analysis of reasonable expectations.  They argue that there was no evidence of
    any subjectively held expectations, that the trial judge did not consider
    whether the expectations were objectively reasonable, and that he failed to
    consider factors identified in
BCE
.

[150]

The Monitor and Algoma respond by saying that the existence of
    reasonable expectations is a question of fact that can be proved by direct
    evidence or by the drawing of reasonable inferences.  In this case, the trial
    judge properly considered the evidence that was before him to conclude that the
    pensioners, employees, retirees, and trade creditors held expectations that had
    been violated and that those expectations were objectively reasonable.

[151]

In his analysis, the trial judge correctly identified the two
    prongs of the oppression inquiry identified by the Supreme Court at para. 68 of
BCE
: (i) does the evidence support the reasonable expectation asserted
    by a claimant; and (ii) does the evidence establish that the reasonable
    expectation was violated by conduct falling within the terms oppression,
    unfair prejudice, or unfair disregard of a relevant interest?

[152]

In identifying these two prongs, at paras. 58-59, the Supreme Court
    made two preliminary observations:

First, oppression is an equitable remedy.  It seeks to ensure
    fairness  what is just and equitable.  It gives a court broad, equitable
    jurisdiction to enforce not just what is legal but what is fair.  It follows
    that courts considering claims for oppression should look at business
    realities, not merely narrow legalities.

Second, like many equitable remedies, oppression is
    fact-specific.  What is just and equitable is judged by the reasonable
    expectations of the stakeholders in the context and in regard to the
    relationships at play.  Conduct that may be oppressive in one situation may not
    be in another. [Citations omitted.]

[153]

As also stated in
BCE
at para. 71:

Actual unlawfulness is not required to invoke s. 241; the
    provision applies where the impugned conduct is wrongful, even if it is not
    actually unlawful.  The remedy is focused on concepts of fairness and equity
    rather than on legal rights.  In determining whether there is a reasonable
    expectation or interest to be considered, the court looks beyond legality to
    what is fair, given all the interests at play.

[154]

Evidence of an expectation may take many forms depending on the
    facts of the case:
BCE
, at para. 70. The actual expectation of a
    particular stakeholder is not conclusive:
BCE
, at para. 62.  Furthermore,
    a stakeholders reasonable expectation of fair treatment may be readily
    inferred, because fundamentally all stakeholders are entitled to expect fair
    treatment:
BCE
, at paras. 64, 70.  Once the expectation at issue is
    identified, the focus of the inquiry is on whether it has been established that
    the particular expectation was reasonably held:
BCE
,
at para.
    70.

[155]

The Monitor particularized the reasonable expectations in issue.  It
    stated that the stakeholders had reasonable expectations that the Essar Group
    would not cause Algoma to engage in transactions for their benefit to the
    detriment of Algoma and its stakeholders, cause Algoma to transfer long-term
    control over an irreplaceable and core strategic asset of Algoma (
i.e.
the Port) to the Essar Group, and, among other things, provide the Essar Group
    with a veto.  The source and content of the expectations were stated by the
    Monitor to include commercial practice, the nature of Algoma, and past
    practice.  These particulars would all feed an expectation of fair treatment.

[156]

Based on the reasonable expectations particularized by the Monitor, as
    already noted, the trial judge found at para. 75 that:

[T]he reasonable expectations of the trade creditors, the
    employees, pensioners and retirees of Algoma were that Algoma would not deal
    with a critical asset like the Port in such a way as to lose long-term control
    over such a strategic asset to a related party on terms that permitted the
    related party to veto and control Algomas ability to do significant
    transactions or restructure and which gave unwarranted value to the third
    party.

[157]

There was evidence of subjective expectations before the trial
    judge.  For example, at para. 65 of his reasons, the trial judge considered the
    evidence of subjective expectations of two trade creditors explaining that they
    were unaware of the Port Transaction and would not have expected an outcome in
    which Algoma no longer had full control over the Port facility.

[158]

The trial judge also drew reasonable inferences from the evidence
    and circumstances that existed at Algoma in 2014 in support of the expectations
    relied upon by the Monitor, as he was entitled to do:  see
Ford Motor
,
at para. 65.  In that regard, he noted
    that Algoma had gone through a number of insolvencies and restructurings since
    the early 1990s.  Given the cyclical nature of the steel business, it was
    reasonable for the stakeholders to expect a restructuring in the future.  The
    reasonableness of this restructuring-related expectation was confirmed by GIPs
    insistence on a bankruptcy remote structure for its loan given the
    fluctuating prices of steel and Algomas history of insolvencies, as GIP said
    in its factum.

[159]

Based on the evidence of subjective expectations and the reasonable
    inferences the trial judge drew from the record, it cannot be said that there
    was no evidence supporting the trial judges conclusion that a future
    restructuring was not reasonably foreseeable.

[160]

The trial judge also concluded that it was objectively reasonable
    for the stakeholders to expect, as he noted at para. 73, that Algoma would not
    lose its ability to restructure absent the consent of Essar Global
    particularly in Sault Ste. Marie, where Algoma is the major industry on which
    trade creditors and employees rely.  Put differently, it would not be
    reasonable to expect that the shareholder would have the right to veto any
    restructuring in a
CCAA
proceeding in which it was not an applicant and
    have the right to prefer its own interests over those of others such as the
    retirees, pensioners, trade creditors, and employees.  Contrary to the
    assertions of the appellants, the trial judge expressly considered those
    issues.

[161]

Similarly, Essar Global submits that the foreseeability of another
    insolvency was contradicted by Mr. Marwahs affidavit evidence on the
    application for approval of the Plan of Arrangement, where he deposed that he
    believed that Algoma would be solvent.  I would not give effect to this
    argument, as the trial judges conclusion on the foreseeability of the
    insolvency is a factual finding, based on his review of the record as a whole.
    Essar Global has not demonstrated that this finding is subject to any palpable
    and overriding error.

[162]

The appellants complaint that the trial judge failed to consider
    any of the factors identified in
BCE
is also misplaced.  In that
    decision, the Supreme Court stated at para. 62:

As denoted by reasonable, the concept of reasonable
    expectations is objective and contextual. ... In the context of whether it
    would be just and equitable to grant a remedy, the question is whether the
    expectation is reasonable having regard to the facts of the specific case, the
    relationships at issue, and the entire context, including the fact that there
    may be conflicting claims and expectations.

[163]

Essar Globals argument that the trial judge did not turn his mind
    to the
BCE

factors ignores the trial judges explicit reasons
    on this point.  At para. 68 of his decision, the trial judge referred to the
    factors identified by the Supreme Court as useful in determining whether an
    expectation was reasonable.  These factors include: i) general commercial
    practice; ii) the nature of the corporation; iii) the relationship between the
    parties; iv) past practice; v) steps the claimant could have taken to protect
    itself; vi) representations and agreements; and vii) the fair resolution of
    conflicting interests between corporate stakeholders.

[164]

The trial judge correctly noted that, due to the fact-specific
    nature of the inquiry into reasonable expectations, not all listed factors must
    be satisfied in any particular case.  I agree with his conclusion.  The
BCE
factors are not hard and fast rules, but are merely intended to guide the
    court in its contextual analysis: Dennis H. Peterson and Matthew J. Cumming,
Shareholder
    Remedies in Canada
, 2nd ed. (Toronto: LexisNexis, 2017), at §17.47.

[165]

Nonetheless, the trial judge did consider a number of the
BCE
factors based on the facts before him.  For instance, at para. 68, he concluded
    that Algomas prior sale of a non-critical asset, relating to factor iv), past
    practice, was not helpful in determining reasonable expectations.  This was
    because the sale of a non-critical asset differs from the sale of a critical
    asset, as in the Port Transaction.  Also under the rubric of past practices, he
    considered Algomas prior insolvencies and restructuring proceedings.  He
    concluded that while it was reasonable for stakeholders to expect that significant
    corporate changes might be necessary for Algoma in the future, it was not
    reasonable for them to expect that Algoma would lose its ability to restructure
    without the prior agreement of its parent, Essar Global.

[166]

As the trial judges reasons reveal, he specifically considered the
BCE
factors and made findings on the objective reasonableness of the
    expectations at issue.  I endorse the comments of the Monitor found at para. 80
    of its factum:

In this case, Justice Newbould found that the employees, retirees,
    and trade creditors all had a reasonable expectation that Essar Group would not
    engineer a transaction that deprived Algoma of a key strategic asset, rendering
    it incapable of restructuring or engaging in significant transactions without
    the approval of Essar Global, for minimal cash consideration in circumstances
    where there had been no consideration of alternative transactions.  This was
    entirely supported by the entirety of the record adduced at trial.

[167]

This was essentially a factual exercise.  There was conflicting
    evidence before the triaI judge.  However it was for the trial judge to weigh
    the evidence and make factual findings.  That is what he did. Based on the
    record before him, those factual findings were available to him.  He considered
    both subjective expectations and whether the expectations were objectively
    reasonable.  I see no reason to interfere.

[168]

I therefore reject the appellants submissions on reasonable
    expectations.

(4)

Wrongful Conduct and Harm

[169]

Essar Global also takes issue with the trial judges conclusion that
    Essar Globals conduct was wrongful and harmful.

[170]

First, Essar Global submits that the trial judge inappropriately
    relied on the Equity Commitment Letter.  It argues that the court approved the
    amended Plan of Arrangement that released Essar Global from any claim relating
    to the Equity Commitment Letter, and that reliance on a released obligation in
    connection with the wrongful conduct requirement of oppression was an
    impermissible collateral attack on the approval order.

[171]

I disagree.  I can state no more clearly than the trial judge did at
    para. 100 of his reasons:

The Monitor is not making a claim under the Equity Commitment
    Letter or asking that Essar Global provide the equity it agreed to provide in
    that commitment. Nor is the Monitor asking that the release be set aside. The
    Monitor contends, and I agree, that the failure of Essar Global to fund as
    agreed in the RSA and Equity Commitment Letter is a part of the factual
    circumstances to be taken into account in considering whether the affected
    stakeholders who were not party to the agreements were treated fairly by the
    Port Transaction.

[172]

An amended Plan of Arrangement became necessary when Essar Global
    did not provide the promised equity contribution, the roadshow presentations were
    unsuccessful, and the Port Transaction was the only available means to generate
    sufficient cash for Algoma.

[173]

I also note that the trial judge recognized that the trade creditors,
    the employees, pensioners and retirees were not parties to nor did they play any
    role in the amended Plan of Arrangement proceedings.  Although the release was
    in both the original RSA and the amended RSA, it would appear that there was no
    express reference to the Port Transaction being part of the Plan of Arrangement,
    nor was there any mention of it in any endorsement or the order approving the
    amended Plan of Arrangement.

[174]

In addition, the trial judge did not make his finding of wrongful
    conduct based on Essar Globals breach of the Equity Commitment Letter.
    Rather, he found that the totality of Essar Globals conduct regarding the
    Recapitalization and Port Transaction satisfied the wrongful conduct
    requirement.

[175]

Taken in context, the trial judge made no error in his treatment of
    the release in favour of Essar Global.

[176]

Second, Essar Global submits that the trial judge made factual
    errors relating to Essar Globals cash contributions.  In particular, it
    submits that he erred in concluding that the cash Essar Global did advance in
    the recapitalization, namely US$150 million rather than the US$250 to US$300
    million that was originally promised, was generated by the Port Transaction
    when it was not.  They also complain that he erred in granting an oppression
    remedy when the Equity Commitment Letter provided for a limited remedy in the
    event of a breach.

[177]

The reasons of the trial judge on Essar Globals cash contribution are
    admittedly somewhat confusing.  In para. 20 of his reasons, he states that
    Essar Globals revised cash contribution under the amended RSA was to be
    funded largely not by Essar Global but by a loan from third party lenders to
    Portco of $150 million.  Reading that paragraph in isolation might lend
    credence to the appellants submission.  That said, having regard to the record
    before him and reading the reasons as a whole, I am not persuaded that the
    trial judge misunderstood Essar Globals contribution to the recapitalization.

[178]

The relevant contributions made to Algoma in November 2014 consisted
    of:

·

US$150 million in cash from Essar Global under the amended RSA;

·

US$150 million in debt reduction in the form of loan forgiveness
    for certain loans owed by  Algoma to members of the Essar Group under the
    amended RSA; and

·

US$150 million in cash generated from the Port Transaction.

[179]

Essar Global only provided Algoma with US$150 million in cash
    equity, not the US$250 to 300 million in cash equity it had originally
    promised.  The debt forgiveness would not assist Algoma in addressing its
    impending liquidity issues in the same way a cash injection would.  Additionally,
    as the trial judge noted at para. 88, the US$150 million in debt reduction
    related to loans at the bottom of Algomas capital structure, and therefore
    this reduction was of questionable value to Algoma at the time.

[180]

Algoma, the Monitor and Essar Global all provided the trial judge
    with written submissions describing the cash equity contribution as consisting
    of US$150 million in cash from Essar Global and US$150 million in cash from the
    Port Transaction.  The contributions were also repeatedly referenced in the
    record.  For example, the affidavit of Mr. Seifert  which the trial judge
    considered in great detail  clearly sets out Essar Globals cash contribution
    to Algoma and the US$150 million in cash paid by Portco to Algoma under the
    Port Transaction as separate transactions.  Similarly, these contributions are
    described as separate transactions in the affidavits of Messrs. Marwah and Ghosh.

[181]

The trial judges reasons establish that he understood that there
    were two separate cash payments made to Algoma  one made by Essar Global in
    satisfaction of its commitments under the amended RSA and one made by Portco
    under the Port Transaction.  He also understood that these cash payments were
    made in addition to Essar Globals forgiveness of US$150 million debt owed to
    it by Algoma.

[182]

Specifically, at para. 85, the trial judge noted that in October
    2014, after the original RSA had been executed, Essar Global contemplated
    reducing the amount of its cash contribution promised under the RSA and the
    Equity Commitment Letter.  The roadshow presentation prepared regarding Algomas
    capitalization showed that Essar Global proposed to contribute less than US$100
    million of
cash
rather
    than the US$250-$300 million required.  He obviously understood that there was
    to be a cash component to Essar Globals contribution separate and apart from
    the proceeds of the Port Transaction.

[183]

In addition, at para. 88, the trial judge noted that the Port
    Transaction
reduced
the amount of cash equity previously promised by
    Essar Global to be advanced to Algoma (emphasis added).  This shows that the
    trial judge understood that the proceeds from the Port Transaction were not
replacing
Essar Globals promised
    cash contribution.  The trial judge recognized that the cash equity
    contribution of US$150 million and the debt reduction of US$150 million were
    insufficient to successfully refinance Algoma, and using the Port Transaction
    proceeds was the only way to generate the additional US$150 million in cash
    necessary.  The trial judge highlighted at para. 96 that Algomas CEO, Mr.
    Ghosh, had indicated that he had had to agree to the Port Transaction as it
    was the only way to refinance Algoma, since Essar Globals contribution was
    only bringing in $150 million.

[184]

Even if the appellants were correct in this regard, which I do not
    accept, on their analysis, they themselves admit that Essar Globals
    contribution was short by US$50 million.

[185]

No matter the correct figure, Essar Globals conduct created a
    situation where Algoma had no choice but to accept the Port Transaction.  There
    was no palpable and overriding error in the trial judges understanding of the
    recapitalization requirements.

[186]

In any event, the reduction in Essar Globals cash contribution was
    only one aspect of Essar Globals overall conduct considered by the trial
    judge.  He did not conclude that the cash equity reduction was itself the
    oppressive act.  Accordingly, again, any factual error regarding Essar Globals
    actual cash contribution was not a palpable and overriding error.

[187]

As mentioned, Essar Global also asserts that the remedy for breach
    contained in the Equity Commitment Letter precluded any oppression remedy.  No
    one was suing for breach of the Equity Commitment Letter.  Rather, it formed
    part of the context that included a failure to explore alternatives, the Port
    Transaction itself, control rights that were proffered as a disincentive to
    other bidders and that erased any possibility of a successful restructuring,
    all in disregard of the expectations of the pensioners, employees, retirees,
    and trade creditors.

[188]

Third, although not identified as a ground of appeal nor advanced as
    such in their factum, in oral argument, the appellants submitted that the
    alleged breach of the Equity Commitment Letter did not cause Algoma to enter
    the Port Transaction.

[189]

Essar Global contends that the trial judge made factual errors in
    finding a causal connection between Essar Globals equity commitment and the Port
    Transaction.  It argues that the Port Transaction was a key component of the
    recapitalization before the execution of the Equity Commitment Letter.

[190]

At trial, the trial judge rejected Essar Globals argument, finding
    at para. 87 that the Port Transaction was contemplated as a possible
    transaction when first introduced in May 2014, but that the transaction was not
    a certainty.  He accurately noted that the first Plan of Arrangement that was
    approved by the Court required Essar Global to comply with its cash funding
    commitment of US$250 to US$300 million pursuant to the Equity Commitment Letter
    and that the Port Transaction was not a part of that plan.  He found that the
    Port Transaction had to be carried out because of Essar Globals decision not
    to fund Algoma according to the terms of the Equity Commitment Letter.

[191]

The causal connection between Essar Globals equity commitment and
    the Port Transaction is a factual matter and the trial judges factual finding
    was supported by the evidence.

[192]

Furthermore, the Port Transaction that was floated in May 2014 was
    an entirely different transaction, in which the proceeds of sale would flow
    upstream to Essar Global and would not be used to recapitalize Algoma.
    Moreover, the RSA prohibited a related party transaction without noteholder
    consent, and the proceeds of any sale in excess of US$2 million had to be used
    to reduce Algomas debt.

[193]

I am not persuaded that the trial judge made any palpable and
    overriding error in his finding.

[194]

Fourth, Essar Global submits that the trial judge erred in
    disregarding the business judgment rule, which should have applied to prevent
    judicial second-guessing of the Boards decisions.

[195]

The trial judge correctly described the business judgment rule relying
    on para. 40 of
BCE
:

In considering what is in the best interests of the
    corporation, directors may look to the interests of,
inter alia
,
    shareholders, employees, creditors, consumers, governments and the environment
    to inform their decisions.  Courts should give appropriate deference to the
    business judgment of directors who take into account these ancillary interests,
    as reflected by the business judgment rule.  The business judgment rule
    accords deference to a business decision, so long as it lies within a range of
    reasonable alternativesIt reflects the reality that directors, who are
    mandated under s. 102(1) of the
CBCA
to manage the corporations
    business and affairs, are often better suited to determine what is in the best
    interests of the corporation.  This applies to decisions on stakeholders
    interests, as much as other directorial decisions.

[196]

Two additional points should be made with respect to the business
    judgment rule.  First, the rule shields business decisions from court
    intervention only where they are made prudently and in good faith:
CW
    Shareholdings Inc. v. WIC Western International Communications Ltd.
(1998), 160 D.L.R. (4th) 131 (Ont. Gen. Div. [Commercial List]), at pp. 150-151.

[197]

Second, the rules protection is available only to the extent that
    the Board of Directors actions actually evidence their business judgment:
UPM-Kymmene
,
    at para. 153.

[198]

In deciding that the rule afforded no defence to Essar Global, the
    trial judge, at para. 123, relied on the fact that the Board did not follow
    advice to go after Essar Global on its cash equity commitment.  The trial
    judge went on to note that had
Algomas Board formed an
    independent committee in February 2014, events may have evolved differently,
    and the Board may have accepted the advice to hold Essar Global to its commitment.

[199]

Essar Global takes issue with this conclusion by asserting that the
    trial judge should not have characterized Algomas Board as lacking
    independence because of its decision not to strike an independent committee.
    Essar Global points out that there was no evidence that Mr. Ghosh  who cast
    the deciding vote in that decision  was not free to vote as he chose.

[200]

Essar Globals argument ignores the trial judges key finding that
    the four directors who voted against the independent committee in February
    2014, including Mr. Ghosh, were not independent.  The trial judge noted at
    para. 15 that he could not overlook that Mr. Ghosh had been with Essar Steel
    India, adding that Algomas CFO, Mr. Marwah, had described these four directors
    as Essar-affiliated directors.  On this basis, it was open for the trial
    judge to find that the Essar-affiliated directors were not free from the
    influence of Essar Global and the Ruia family, particularly when considered
    alongside his extensive comments at paras. 43-60 finding that the critical
    decisions regarding Algomas recapitalization and the Port Transaction were
    made not by Algomas Board, but by Essar Global and Essar Capital as led by Mr.
    Seifert.

[201]

Specifically, the trial judge made findings of fact at paras. 51-53
    regarding the limited role played by Algomas Board and management.  He
    accepted the evidence of
Messrs.
Ghosh and Marwah that
    they did not negotiate the economic terms of the debt refinancing or the Port
    Transaction.  He also accepted the evidence of Mr. Ghosh that the Transaction
    was approved because there was no realistic alternative to generate sufficient
    cash to complete the recapitalization.  He rejected the contradictory evidence
    of Mr. Seifert because the evidence of
Messrs.
Ghosh
    and Marwah was consistent with the documentary evidence.  In my view, the trial
    judge was entitled to weigh the evidence as he did and make these findings of
    fact that were not infected by any palpable and overriding error.

[202]

Essar Global maintained before the trial judge, as they do before
    this court, that the Algoma Boards decisions were nonetheless shielded from
    court intervention because the Board had the benefit of sophisticated advisors
    throughout the recapitalization process.  And yet, the only evidence tendered
    of any such advice was advice that the Board elected not to follow.

[203]

At para. 122, the trial judge described this advice, which was
    provided at least in part by Ray Schrock, described by the appellants as
    Algomas lawyer.  Mr. Schrock told the Board that unsecured noteholders would
    not react well to the Port Transaction and were likely to seek a higher
    infusion of cash from Essar Global, as promised in the Equity Commitment
    Letter.  Mr. Schrock said that the Board should insist that Algoma press Essar
    Global to fulfill its equity commitments.  There was no evidence that steps
    were taken in this regard and the trial judge found that this advice was not
    followed.

[204]

Additionally, the circumstances surrounding the resignation of the
    independent directors from Algomas Board lend support to the trial judges
    conclusion that reliance on the business judgment rule was unavailable.  Mr.
    Dodds letter stated that his decision to resign was driven by his conclusion
    that as an independent director, he lacked confidence that he was receiving
    information and engaged in decision-making in the same manner as those Board
    members who are directly affiliated with the company and/or its parent.  It
    was open to the trial judge to reach the conclusions he did.  In these
    circumstances, the business judgment rule was of little assistance.

[205]

Essar Global also submits that the trial judge should not have gone
    on to censure the activities of the Board in November 2014 (when the Board
    approved the transactions) by relying on the Boards February 2014 decision
    regarding the independent committee.

[206]

The trial judge did not censure the decisions of the Algoma Board
    solely based on the February 2014 meeting.  The February meeting, and the
    events surrounding it, are part of a larger context that included the November
    2014 meeting, all of which the trial judge considered, and all of which
    demonstrated that the Boards decisions regarding the recapitalization were not
    made prudently or in good faith, as found by the trial judge, and thereby failed
    to attract the application of the business judgment rule.

[207]

Specifically, the trial judge found at para. 123 that, if the Board
    had acquiesced to forming an independent committee, or listened to the truly
    independent directors before they resigned in frustration, subsequent steps
    taken in pursuit of the recapitalization transaction may have been taken
    differently. He then went on to say that:

What happened in the Port Transaction was an exercise in self-dealing
    in that Algomas critical Port asset was transferred out of Algoma to a wholly
    owned subsidiary of Essar Global with a change of control provision that
    benefited Essar Global at a time that a future insolvency was a possibility.

[208]

Additionally, the trial judge found that the Board had accepted the
    inclusion of the contentious change of control provision in the Cargo Handling
    Agreement without considering alternatives.  If the provision was truly for the
    benefit of GIP, it could have been accomplished in another way, without providing
    Essar Global with an effective veto over a change of control of Algoma.

[209]

All this evidence speaks to the Boards lack of business judgment and
    good faith, the failure to consider reasonable alternatives, and the Algoma
    Boards limited role in directing the recapitalization.  There is no palpable
    and overriding error in the trial judges conclusion that the Board was
    precluded from relying on the business judgment rule.  His decision was amply
    supported by the record.

[210]

Essar Global makes an additional point relating to the business
    judgment rule: that, in any event, no independent committee was required under
    corporate law.

[211]

It is a contrivance for Essar Global to impugn the trial judges
    conclusion regarding the business judgment rule on the basis that an
    independent committee was not required.  Although it is true that an
    independent committee was not legally or technically required, the Boards
    decision not to strike one, in the circumstances surrounding the November 2014
    restructuring transactions, speaks volumes.  The decision not to strike an
    independent committee must be considered alongside the evidence I have already
    reviewed: the Boards lack of independence, the Boards failure to follow its
    advisors advice, the Boards failure to consider alternatives, and the Boards
    acquiescence to recapitalization transactions that primarily benefited the
    interests of Essar Global over those of Algoma.  Again, the totality of the
    evidence supports the Boards lack of good faith, and renders the business judgment
    rule inapplicable.

[212]

There is one final argument Essar Global raises in invoking the
    business judgment rule.  It claims that it was procedurally offensive for the
    trial judge to criticize the directors for not following Mr. Schrocks advice
    because evidence of the advice was not before him.  It adds that, had the
    directors relied on legal advice from Mr. Schrock in the legal proceedings,
    privilege had not been waived.

[213]

Here, the minutes of the Board meeting held in November 2014 describe
    Mr. Schrock as informing the Board [that] the [unsecured noteholders] would
    not react well to the proposed changes and that they were likely to push [Essar
    Global] for a higher infusion of cash/equity into [Algoma] as set forth in the
    Commitment [L]etter.  Mr. Schrock also commented that the proposed Port
    Transaction was likely to cause concern by the [unsecured noteholders].
    Accordingly, Mr. Schrock advised the Board to insist that [Algoma] should
    press all parties to fully satisfy their  obligations regarding the equity
    contributions.

[214]

To the extent that Mr. Schrocks comments amounted to legal advice,
    I would first note that his advice was only one piece of the evidentiary puzzle
    in the broader factual context.  Even if Mr. Schrocks advice, and the Boards
    failure to implement it, are disregarded, the record still amply supports the
    trial judges conclusions on this issue.

[215]

I would also add that Essar Globals claim that the evidence of Mr. Schrocks
    advice was not before the trial judge is incorrect. The Board minutes were
    included in the record as an exhibit to an affidavit tendered by Essar Global. Finally,
    as for Essar Globals argument that privilege had not been waived, any
    privilege that may have attached to Mr. Schrocks advice belonged to Algoma and
    not Essar Global.

[216]

Fifth, Essar Global submits that the involvement of Algomas
    management and Board in the Port Transaction sanitizes that transaction,
    because the trial judge concluded that
Messrs.
Ghosh
    and Marwah acted in good faith thinking they were doing the best for Algoma in
    the circumstances.  Essar Global also claims that the trial judge erred by
    holding otherwise because the Monitor failed to attack the Boards process in
    its pleading.  I do not accept these arguments.

[217]

Despite Essar Globals argument, this court has established that good
    faith corporate conduct does not preclude a finding of oppression:
Brant
    Investments Ltd. v. KeepRite Inc.
(1991),
3 O.R. (3d) 289 (C.A.).

[218]

Moreover, Essar Globals argument on this point ignores the trial
    judges findings that Algomas Board and management played a limited role in
    the Port Transaction.  It also ignores evidence that indicates that
Messrs.
Ghosh and Marwahs support was only given because there was no
    alternative to address Algomas financial straits.  This factual background
    demonstrates why it was open for the trial judge to conclude that the Port
    Transaction was oppressive, despite the good faith of
Messrs.
Ghosh and Marwah.

[219]

On the pleadings issue, I note that the Monitor pleaded that the
    Port Transaction was the result of Essar Globals
de facto
control of
    Algoma.  In response, Essar Global pleaded that the Port Transaction was in the
    best interests of Algoma, based on the approval of the transaction by Algomas
    Board and senior management, who were acting on an informed basis and with the
    benefit of financial advice.  Given the way in which Essar Global framed its
    defence in its pleadings, it cannot now say that issues related to the Boards
    process were not properly before the trial judge.

[220]

Turning to the appellants last argument relating to wrongful
    conduct and harm, they submitted that the trial judge identified two potential
    harms caused by Essar Global, neither of which is actionable in the oppression
    action: the undervalue of the Port Transaction to Algoma and the impairment of
    Algomas ongoing restructuring.

[221]

In my view, it is inaccurate to characterize the trial judges findings
    and analysis as concluding that harm flowed to stakeholders because the Port
    Transaction did not provide sufficient value to Algoma.

[222]

Specifically, he did not find that the US$171.5 million in
    consideration paid by Portco to Algoma constituted undervalue.  Indeed his
    remedy that GIP be repaid in full suggests the contrary.  Rather, he found that
    Essar Global received an unreasonable benefit from the Port Transaction.

[223]

Moreover, it was an exercise in self-dealing.  As the trial judge
    stated at para. 144:

For the balance of the first 20 years under the Cargo Handling
    Agreement after the GIP loan matures, if that agreement survives only to that
    date, Algoma will pay a further 12 years at $25 million, or $300 million, to
    Portco which will benefit Essar Global after the balance of the GIP loan is
    paid off.  If the Cargo Handling Agreement is not terminated before the end of
    its life of 50 years, that will be another 30 years at $25 million, or $750
    million, paid to Portco/Essar Global.  Taken with the small amount paid by
    Essar Global, the $4.2 million in cash (and the $19.8 million note that it has
    refused to pay), it means that Essar Global will obtain an extremely large
    amount of cash from Algoma for little money.  I realize that if Algoma became
    solvent and able to pay its debts, it would be able to pay a dividend to Essar
    Global (or the appropriate subsidiary) so long as Essar Global remained its
    shareholder.  Whether and when Algoma could become solvent with its pension
    deficits that have existed for some time and be in a position to pay dividends
    to its shareholder is a significant unknown.  But the payments under the Cargo
    Handling Agreement do not require any solvency test and are in the financial
    circumstances Algoma finds itself in, a clear contractual benefit for little
    money.  It is an unreasonable benefit that was prejudicial to, and unfairly
    disregarded, the interests of the creditors on whose behalf this action has
    been brought by the Monitor.

[224]

The trial judge also concluded that the mismatched terms of the
    Cargo Handling Agreement (20 years renewable) and the 50-year lease offered
    Essar Global an additional benefit.  In that regard, he was not bound to accept
    the evidence of the appellants expert.  He reasoned, at para. 142, that the
    Port was critical to Algomas functioning, and therefore that Algoma would not
    be in a position to terminate the Cargo Handling Agreement for the duration of
    the lease:

The other concerns are with respect to the obligations in the
    Cargo Handling Agreement.  I have a concern with the imbalance in the term of
    the lease to Portco for 50 years against the term of the Cargo Handling
    Agreement for 20 years with automatic renewal for successive three year periods
    unless either party gives written notice of termination to the other party.  If
    Essar Global thought that it wanted an increased payment after 20 years, it
    could refuse to continue the Cargo Handling Agreement and put Algoma at its
    complete mercy.  If the market did not support an increased payment, or
    indicated that the payments from Algoma to Portco should be less in the future,
    Algoma would still be at the mercy of Essar Global.  As the Port facilities are
    critical to the operation and survival of Algoma, it would be foolhardy indeed
    for Algoma to refuse to extend the Cargo Handling Agreement.  The language in
    the Cargo Handling Agreement that Algoma can refuse to extend it after 20 years
    is illusory and not realistic.  In reality, it is a provision that is one-sided
    in favour of Essar Global.

[225]

The change of control provision or veto was also an exercise in
    self-dealing.  The consent provision unnecessarily tied Algomas strategic
    options to Essar Global.  The trial judge properly found that the insertion of control
    rights in the Cargo Handling Agreement served no practical purpose to GIP and
    the same rights could have been provided for in the Assignment of Material
    Contracts.

[226]

As the trial judge concluded at para. 138:

In my view, and I so order, the appropriate relief for the
    oppression involving the change of control clause in the Cargo Handling
    Agreement is to delete section 15.2 from that agreement and to insert a
    provision in the Assignment of Material Contracts agreement that if GIP becomes
    the equity owner of Portco, Algoma or its parent cannot agree to or undertake a
    change of control of Algoma without the consent of GIP.

[227]

There was evidence from Messrs. Ghosh and Marwah that supported the
    trial judges conclusion that harm had flowed from the presence of the change
    of control provision and the ensuing letter from counsel.  They were not
    cross-examined and no competing evidence was tendered by the appellants.  It
    was also open to the trial judge to interpret the letter sent by Portcos counsel
    to Algomas counsel as a veto threat to potential bidders while Essar Global
    continued to be interested in being a bidder.  I would not give effect to this argument.

[228]

On the issue of the impairment of Algomas ongoing restructuring,
    the appellants argue that no harm could have flowed from this, as the
    restructuring was not, in fact, impaired.  Specifically, they argue that the
    only evidence of impairment consisted of statements in the affidavits of
Messrs.
Ghosh and Marwah that potential bidders for Algoma were
    concerned about the change of control clause.  I would reject this argument as
    well.  Again, I note that the appellants chose not to cross-examine on these
    affidavits, nor did they object to their admission into evidence.  They cannot
    now, after the fact, impugn the trial judges reliance on these statements.

[229]

Additionally, the appellants argue that it was premature for the
    trial judge to conclude that the control clause impaired the restructuring,
    because Portco/Essar Global was never asked to consent to a new transaction or to
    new owners.  However, at para. 117, the trial judge noted that the change of
    control rights had to be considered alongside Essar Globals holding itself out
    as a prospective buyer in any bidding process for Algoma.  That Essar Global has
    never been asked to consent to a new transaction was immaterial, as it remained
    in Essar Globals interest to dissuade other buyers in order for it to achieve
    the lowest possible purchase price.  In coming to this conclusion the trial
    judge pointed to the letter from counsel for Portco/Essar Global on May 12,
    2016, which sp[oke] volumes by clearly invit[ing] any bidder to understand
    that Essar Global has control rights.

[230]

I see no error in the trial judges conclusion.

(5)

The Remedy

[231]

Turning then to the issue of the remedy.  Essar Global submits that
    the trial judge erred in striking out the control clause in the Cargo Handling
    Agreement and in granting Algoma the option of terminating the Port agreements
    upon repayment of the GIP loan.  They argue that he was only permitted to
    rectify the harm that was suffered.  Deleting the provision was an overly broad
    remedy that was unconnected to the reasonable expectations of the stakeholders
    and instead, he should have considered a nominal damages award.

[232]

GIP supports the submissions of Essar Global.  It argues that the
    remedy awarded was not sought by any party, no evidence had been called in
    respect of that remedy, and no submissions were made.  The practical effect of
    granting Algoma a termination right is that GIP does not have the security for
    which it bargained and it was prejudiced, despite its lack of involvement in
    the oppression found against Essar Global.  GIP also argues that the Monitor
    and Algoma are seeking to set-off amounts owed by Essar Capital to Algoma
    against amounts owed to GIP, which results in additional prejudice.

[233]

I would not give effect to these submissions.  First, trial judges
    have a broad latitude to fashion oppression remedies based on the facts before
    them.  Once a claim in oppression has been made out, a court may grant any
    remedy it thinks fit:
Pente Investment Management Ltd. v. Schneider Corp.
(1998), 42 O.R. (3d) 177 (C.A.), at para. 4.  The focus is on equitable relief,
    and deference is owed to the remedy granted:
Fedel
, at para. 100
.

[234]

Second, the trial judge properly identified the need to avoid an
    overly broad remedy, stating at para. 136 that there were less obtrusive ways
    of remedying the oppression than ordering shares of Portco be transferred to
    Algoma (the remedy the Monitor had originally requested).  Varying the
    transaction as he did was one such way.  The trial judges remedy removes
    Portcos control rights (the main obstacle to a successful restructuring) and,
    after GIP is paid, restores the Port to the ownership of Algoma.  If GIP
    becomes the equity owner of Portco, its consent will be required to any change
    of control.  Unlike a damages award, the remedy was responsive to the
    oppressive conduct.  It served to vindicate the expectations of the
    stakeholders that Algoma would retain long-term control of the Port and that
    Essar Global would not have a veto over its restructuring efforts.

[235]

Third, the remedy granted preserves the security GIP had bargained
    for and therefore GIP has not suffered any prejudice as a result of the remedy.
    The trial judges remedy, as described at para. 145, ensures that GIP is to be
    paid in full.  Until payment in cash of all amounts owing to GIP is made, the
    Port remains in Portcos hands and the contractual remedies held by GIP to
    enforce its security remain in place.  Moreover, Essar Global guaranteed
    Portcos liabilities to GIP under GIPs loan in the Port Transaction, which
    further demonstrates GIPs lack of prejudice.  As GIPs own affiant indicated,
    this guarantee provides GIP with an extra layer of protection in the event the
    debtor is unable to repay the loan.

[236]

Finally, regarding the issue of set-off, I note that the arguments
    made by GIP in support of this ground were made prior to Newbould J.s
    subsequent ruling dealing with this issue.  In that decision, he held that
    Algoma had set-off amounts owed under the promissory note against Essar Global,
    but he preserved GIPs right to repayment.  This decision is a full answer to
    GIPs arguments on this point, and ensures that GIP will not suffer any prejudice
    as a result of the remedy granted in response to Essar Globals oppressive
    conduct.

(6)

Was There Procedural Unfairness?

[237]

Essar Global submits that the trial judge erred in basing his
    decision and relief on bases that were not pleaded.  GIP supports the position
    of Essar Global, with particular focus on the remedy that was ultimately
    imposed.

[238]

As mentioned, the trial judge was the supervising
CCAA
judge and deeply acquainted with the facts of the restructuring.  Of necessity,
    and on agreement of all parties to the oppression action, the timelines for
    pleadings, productions, and examinations were truncated.  Additionally, no
    party objected at trial that the process had been procedurally unfair.  Given
    the context and the complexity of the dispute, the pleadings were not as clear
    as they might have been in a less abbreviated schedule.  That said, on a review
    of the record, I am not persuaded that there was any procedural unfairness with
    respect to the claims or that the appellants did not know the case they had to
    meet.

[239]

The focus of at least GIPs complaint lies in the remedy.  The
    appellants are correct that the precise remedy awarded by the trial judge was
    not pleaded.  A trial judge must fashion a remedy that best responds to the
    oppressive conduct and that is not overly broad.  While it is desirable for a
    party seeking oppression relief to provide particulars of the remedy, a trial
    judge is not bound by those particulars.  Because the discretionary powers
    under the oppression remedy must be exercised to
rectify

the
    oppressive conduct complained of (see:
Naneff v. Con-Crete Holdings Ltd.
(1995), 23 O.R. (3d) 481 (C.A.), at para. 27), it follows that the remedy will,
    by necessity, be linked to the oppressive conduct that was pleaded.  Therefore
    a party against whom a specifically-tailored oppression remedy is ordered
    cannot fairly complain that the remedy caught them by surprise.  This
    conclusion is consistent with
Fedel
, where this court upheld
    oppression remedies imposed by the trial judge where the relief granted had not
    been specifically pleaded or sought in argument.

[240]

Moreover, absent error, a trial judges decision on remedy is
    entitled to deference.  As I have discussed, there is an absence of error.  Furthermore,
    in this case, there is no prejudice to GIP.  Its position is preserved by the
    remedy granted by the trial judge.  At the same time, the remedy is responsive
    to Essar Globals oppressive conduct.

[241]

That said, the trial judge did consider whether Essar Global and GIP
    could fairly argue that they were taken by surprise by his remedy.  At para.
    141, he rejected this position, holding that the issue of the change of control
    clause was pleaded by the Monitor, and affidavit material filed by both Essar
    Global and GIP provided evidence on the provisions significance.  At para.
    146, he concluded that issues relating to the relief he ordered were fully
    canvassed in the evidence and argument, and that the remedy he ordered in fact
    was less intrusive than the remedy originally pled by the Monitor.  And
    although he did not think an amendment was necessary, he nonetheless ordered
    that the Monitor would be granted leave to amend its claim to support the
    relief he granted.

[242]

I would not give effect to this ground of appeal.

(7)

Fresh Evidence

[243]

Essar Global seeks to introduce fresh evidence on appeal that
    addresses the independence of Algomas Board of Directors.  It takes the
    position that the trial judges rejection of the independence of two directors,
    Messrs. Kothari and Mirchandani, played a significant role in his decision.  It
    adds that the lack of independent directors was not pleaded by the Monitor and
    so Essar Global had no reason to adduce this evidence earlier.

[244]

Messrs. Mirchandani and Kothari joined Algomas Board in June and
    August 2014, respectively, after the three independent directors resigned.
    They were therefore on the Board when the Port Transaction was approved in
    November 2014.

[245]

Whether a proper case exists to allow fresh evidence is determined
    by applying the test outlined in
R. v. Palmer
, [1980] 1 S.C.R. 75, or
    the slightly modified test from
Sengmueller v. Sengmueller
(1994), 18
    O.R. (3d) 208 (C.A.).

[246]

As this court has noted, the two tests are quite similar: see
Chiang
    (Re)
, 2009 ONCA 3, 93 O.R. (3d) 483, at para. 77.  Under the
Palmer
test, the party seeking to admit fresh evidence must demonstrate that the
    evidence could not, by due diligence, have been adduced at trial; that the
    evidence is relevant in that it bears on a decisive issue in the trial; that
    the evidence is credible; and that the evidence, if believed, could be expected
    to affect the result.

[247]

Under the
Sengmueller
test, the moving party must
    demonstrate that the evidence could not have been obtained by the exercise of
    reasonable diligence prior to trial; that the evidence is credible; and that
    the evidence, if admitted, would likely be conclusive of an issue on appeal.

[248]

Essar Global has failed to meet either the
Palmer
or the
Sengmueller
test for two main reasons.

[249]

In both its original and its amended statement of claim, the Monitor
    alleged that representatives of Essar Global were members of Algomas Board and
    exercised
de facto
control over Algoma, such that they made decisions for
    the benefit of Essar Global while unfairly disregarding the interests of
    Algomas stakeholders.  Essar Global cannot claim to have been caught by
    surprise by the issue of the Boards independence being in play.  The fresh
    evidence could have been obtained with reasonable diligence prior to trial.

[250]

In any event, the evidence would not have affected the result at
    trial, and is not conclusive of any issue on appeal.  The fresh evidence Essar
    Global asks to proffer consists of the affidavit of Mr. Mirchandani, which
    states that he and Mr. Kothari were determined to be independent Board members
    as a result of a conflict of interest policy and by virtue of the questionnaires
    they each completed.

[251]

However, there was evidence before the trial judge essentially to
    this effect, including Algomas October 2014 offering memorandum, which stated
    that the Board included two independent directors.  Indeed, the trial judge
    commented on this evidence in footnote 7 of his reasons, and rejected it in
    concluding that Messrs. Mirchandani and Kothari were not truly independent of
    Essar Global.

[252]

Additionally, and as I have already discussed elsewhere in these
    reasons, the remainder of the record strongly supported the Boards lack of
    independence.  Even if the trial judge had Mr. Mirchandanis affidavit before
    him, it would not have made a difference.

[253]

I would therefore dismiss the motion for fresh evidence.

(8)

Costs

[254]

GIP claimed costs of CDN$750,156.18 against the Monitor payable on a
    partial indemnity scale.  It claimed it was entirely successful because it
    successfully resisted relief sought by the Monitor that would have prejudiced
    GIP.  The trial judge exercised his discretion and observed that success
    between the Monitor and GIP was divided.  He also relied on GIPs appeal as a
    basis to conclude success was divided.  He therefore did not order any costs in
    favour of or against GIP.

[255]

GIP seeks leave to appeal the trial judges costs award.  Before
    this court, GIP in essence renews the arguments made before the trial judge.  The
    awarding of costs is highly discretionary and leave is granted sparingly.  I
    see no error in principle in the trial judges exercise of discretion nor was
    the award plainly wrong:
Hamilton v. Open Window Bakery Ltd.
, 2004
    SCC 9, [2004] 1 S.C.R. 303, at para. 27.

[256]

At trial, GIP was unsuccessful in challenging both the Monitors
    claim of standing and its claim that the Port Transaction was oppressive.  It
    also seems incongruous for GIP to suggest that it was entirely successful in
    defeating the Monitors claims, while it appeals the trial decision.

[257]

I see no basis on which to interfere with the costs award of the
    trial judge and would refuse leave to appeal costs.

E.

Disposition

[258]

For these reasons, I would dismiss the appeal, the motion for fresh
    evidence and the motion for leave to appeal costs.

[259]

As agreed, I would order that the Monitor and Algoma are entitled to
    costs of the appeal fixed in the amounts of CDN$100,000 and CDN$60,000
    respectively, inclusive of disbursements and applicable taxes on a partial
    indemnity scale.  At the oral hearing, the parties had not agreed on whether the
    award should be payable on a joint and several basis and requested more time to
    consider the matter.  On September 15, 2017, counsel wrote advising that they
    had still not agreed on this issue.  GIP requested the opportunity to make additional
    costs submissions on this issue at the appropriate time.  Under the
    circumstances, I would permit GIP to make brief written submissions on this
    issue by January 10, 2018.  Essar Global shall have until January 17, 2018 to file
    its submissions.  The Monitor and Algoma shall have until January 24, 2018 to
    respond.

Released:

SP                                                   S.E.
    Pepall J.A.

DEC 21 2017                                   I agree
    R.A. Blair J.A.

I
    agree K. van Rensburg J.A.

[1]
Algoma was named in the proceeding below as a defendant, but supports the
    position taken by the respondent, Ernst & Young Inc. It is therefore a
    respondent on this appeal.

[2]

In early 2015, Essar Consulting obtained two additional
    valuations of the Port assets, one in February from Royal Bank of Canada and
    one in April from ICICI Securities.  The RBC valuation, which was an exhibit to
    the affidavit of Joseph Seifert, was between US$165 and US$200 million.  The
    ICICI valuation, which was an exhibit to the affidavit of Anshumali Dwivedi,
    was US$349 million.

[3]

Although Deutsche Bank intervened in the proceedings below, it
    was not involved in this appeal.

[4]

Before this court, no submissions on urgency were advanced.

[5]

Stephanie Ben-Ishai and Catherine Nowak, The Threat
    of the Oppression Remedy to Reorganizing Insolvent Corporations in Janis P.
    Sarra, ed.,
Annual Review of Insolvency Law, 2008
(Toronto: Carswell, 2009) 429, at pp. 430-431 and 436.

[6]

Janis Sarra, Creating
    Appropriate Incentives, A Place for the Oppression Remedy in Insolvency
    Proceedings in Janis P. Sarra ed.,
Annual Review of Insolvency Law,
    2009
(Toronto: Carswell, 2010) 99, at p. 99.