COURT
OF APPEAL FOR BRITISH COLUMBIA

Citation:

West Bay SonShip Yachts Ltd. (Re),

2009
  BCCA 31

Date: 20090130

Docket: CA035080

IN THE MATTER OF THE
COMPANIES
CREDITORS ARRANGEMENT ACT
,

R.S.C. 1985, c. C-36

and

IN THE
MATTER OF THE
BUSINESS CORPORATIONS ACT
, S.B.C. 2002, c. 57

Between:

West Bay SonShip Yachts Ltd.

Respondent

(
Petitioner
)

And

Gerald Esau

Appellant

(
Respondent
)

Before:

The
  Honourable Madam Justice Rowles

The
  Honourable Madam Justice Levine

The
  Honourable Mr. Justice Groberman

S.
   Kent

Counsel for the Appellant

R.A.
  Millar

Counsel for the Respondent

Place
  and Date of Hearing:

Vancouver
, British Columbia

October 8, 2008

Place
  and Date of Judgment:

Vancouver
, British Columbia

January 30, 2009

Written Reasons by
:

The
  Honourable Madam Justice Levine

Concurred in by:

The
  Honourable Madam Justice Rowles

The
  Honourable Mr. Justice Groberman

Reasons for Judgment of the Honourable Madam Justice Levine:

Introduction

[1]

The
appellant, Gerald Esau, appeals from the order of a Supreme Court chambers
judge made May 3, 2007, in the course of proceedings involving the respondent,
West Bay SonShip Yachts Ltd., under the
Companies Creditors Arrangement Act
,
R.S.C. 1985, c. C-36

(
CCAA
).  Mr. Esau claims, among
other grounds of appeal, that the chambers judge erred in ruling that he was a
creditor subject to the terms of the Plan of Arrangement (the Plan).

[2]

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

Background

Facts

[3]

On
December 16, 2005, West Bay filed for protection under the
CCAA
.  Mr.
Esau had been an employee of West Bay since 1991.  On January 17, 2006, he
received notice that his employment in the position of Vice President,
Production, would be terminated, effective June 6, 2006.  Mr. Esau sued West Bay for damages for wrongful dismissal, but did not file a Proof of Claim in the
CCAA
restructuring.  West Bay sought a declaration that Mr. Esaus claim was
compromised by the Plan, and an order that the wrongful dismissal action be
stayed.

The CCAA Proceedings

[4]

In
the initial order in the
CCAA
proceedings, made on December 16, 2005
(the Filing Date), the court imposed a stay of proceedings against West Bay,
including any proceeding pursuant to labour or employment standards legislation
(s. 2(c)).  The initial order provided for West Bay to continue to pay
obligations incurred by it after the Filing Date, including wages and other
monies owing to or in respect of its employees, but expressly prohibited the
payment of any amounts that are due on account of severance pay arising at law
or under Statute (s. 5).  The order permitted West Bay to downsize its
operations and terminate its employees.  The financial consequences of
downsizing were to be dealt with in the Plan to be filed (s. 6):

5.            THIS
COURT FURTHER ORDERS that
all obligations incurred by the Petitioner after
the Filing Date
, including without limitation, all obligations to persons
who advance or supply goods or services to the Petitioner after the Filing Date
(including those under purchase orders outstanding at the Filing Date but
excluding any interest on the Petitioner's existing obligations incurred prior
to the Filing Date)
shall be paid or otherwise satisfied
by the
Petitioner and, without limiting the generality of the foregoing, that
the
Petitioner shall pay all wages, source deductions, benefits (including long and
short term disability payments), expenses, omissions, vacation pay, and other
monies owing to or in respect of its employees
(including any independent
contractor providing employment related services to the Petitioner)
irrespective of whether such obligations arose
or
were
earned before or after the Filing
Date
but not including any amounts that are due on account of severance pay
arising at law or under Statute (hereinafter collectively referred to as
"Wages").

6.
THIS COURT FURTHER ORDERS that, subject to the terms of
this Order, the Petitioner shall remain in possession of its undertaking,
property and assets, wherever situate (collectively, the "Assets")
with full power and
authority to relocate
to British Columbia
those Assets
currently situated within
other jurisdictions
including, without limitation, the State of California, the State of Florida
and the State of Washington and shall continue to carry on its business in the
ordinary course, provided that:

(b) it shall have the right without further Order of this Court, but
subject to the consent of the Monitor, to proceed with an orderly disposition
of such of its Assets outside of the ordinary course of its business as it
deems appropriate in order to facilitate the downsizing of its business and
operations (Downsizing), including:

(i)
terminating the employment of
such of its employees or temporarily laying off such of its employees, as it
deems appropriate;

all without interference of any kind from third parties,
including its landlords and notwithstanding the provisions of any lease,
mortgage other instrument or law affecting or limiting the rights of the
Petitioner to move or liquidate Assets from leased premises, and may take any
Downsizing steps at any time after the Filing Date irrespective of whether or
not payments have been made subsequent to the Filing Date under any lease or
mortgage,
provided that the financial obligations, if any, of the Petitioner
to creditors affected by such Downsizing shall be provided for and dealt with
in the Plan of Arrangement to be filed by the Petitioner.

[Emphasis added]

[5]

By final
order in the
CCAA
proceedings, pronounced June 23, 2006, the court
approved West Bays Plan.  All claims falling within the definition of Claim
in Article 1.1 of the Plan were compromised as against West Bay and others:

Claim
means a claim for an amount alleged
by a person to be owed to it by the Company, or
a claim in relation to any
obligation, enforceable right, duty or liability, contingent, accrued, vested
or otherwise,
(including any claim whether contingent or accrued on behalf
of Her Majesty the Queen in right of the Dominion of Canada or any Province or
any municipality)
against the Company which was in existence in whole or in
part as of the Filing Date
, including any claim in relation to any
liability, loss or damage arising from any such claim after the Filing Date, or
any cause of action against the Company or its assets and property calculated
either as at the Filing Date,
or, in the case of claims under executory
contracts arising subsequent to the Filing Date as a result of the termination
of such contracts in accordance with an order of the Court made prior to the
date of the Meeting, as at the date of such termination
,
either:

(a)  as set forth in a Proof of Claim which
has either:

(i)  been admitted by the Company pursuant
to the Plan for all purposes; or

(ii)  been determined by a Court of
competent jurisdiction to be a proper obligation of either or both of the
Company; or

(b)  for which a valid Proof of Claim could
have been filed with the Company, but which Proof of Claim was not so filed
prior to the Claims Bar Date;

provided
that a Claim shall not include the amount due or accruing due to a Post Filing
Creditor in respect of Post Filing Creditor Claims, nor shall the Claim include
interest for the period subsequent to the Filing Date.

[Emphasis added]

The Reasons of the Chambers Judge

[6]

The
chambers judge held that Mr. Esaus claim for damages for wrongful dismissal was
a contingent liability at the Filing Date, and, as such, fell within the
definition of Claim in the Plan.  She relied on two superior court decisions,
British Columbia (Director of Employment Standards) v. Eland Distributors
Ltd. (Trustee of)
(1996), 21 B.C.L.R. (3d) 91 (S.C.), and
Rizzo and
Rizzo Shoes Ltd. (Re)
(1991), 6 O.R. (3d) 441 (Gen. Div.), affd. (on other
grounds), [1998] 1 S.C.R. 27, in concluding that the claim for damages for
breach of Mr. Esaus employment contract accrued from the outset of his
employment, and was therefore a liability of West Bay at the Filing Date.

[7]

The
chambers judge ordered
that

Mr. Esaus claim
was a pre-filing claim and was compromised by the Plan.  She permanently
stayed the action, and refused to grant Mr. Esau an extension of time to file a
Proof of Claim.

[8]

Her
reasons may be found at
West Bay SonShip Yachts Ltd. (Re)
, 2007 BCSC
1553, 37 C.B.R. (5th) 253.

Issues on Appeal

[9]

On
appeal, the parties joined issue on two alternative interpretations of the
definition of Claim in the Plan, under which Mr. Esaus claim for damages for
wrongful dismissal may be considered to be a pre-filing claim: if it was a
contingent liability at the Filing Date, or it was a claim under an executory
contract.

[10]

Thus,
there are two issues in this appeal:

1.

Is a
wrongful dismissal claim a contingent liability prior to the termination of
employment?

2.

Is an
employment contract an executory contract?

Analysis

Contingent Liability

[11]

Mr. Esau
takes the position that his claim for damages for breach of his employment
contract did not accrue throughout his employment, but only arose when he was
terminated.  Thus, he argues, West Bay had no liability, contingent or
otherwise, until the termination of his employment, which occurred after West Bay filed for protection under the
CCAA
.  Thus, he says, his claim for damages
is not compromised by the Plan.

[12]

West
Bay argues that while Mr. Esaus right to bring an action for damages for
wrongful dismissal may not have crystallized until notice of termination was
given, West Bays obligation to pay severance was in existence in whole or in
part as of the filing date.  Thus, Mr. Esaus claim for damages for wrongful
dismissal is a pre-filing claim and is compromised by the Plan.

[13]

Both
Eland
Distributors
and
Rizzo and Rizzo Shoes
, relied on by the chambers
judge and West Bay, dealt with severance under employment standards legislation.
The present case, however, involves a common law claim for damages for wrongful
dismissal.  As explored in three recent decisions of the British Columbia
Employment Standards Tribunal, citing the decision of the Supreme Court of
Canada in
Barrette v. Crabtree Estate
,
[1993] 1 S.C.R. 1027, this distinction is
significant.

[14]

In
Sitter
(
Re)
, [2000] B.C.E.S.T.D. No. 515 at paras. 11 and 14, the
adjudicator drew the following distinction between statutory and common law
claims:

Compensation for length
of service payable under section 63 of the [
Employment Standards
]
Act
is a form of deferred contingent compensation that is intended to compensate
long-serving employees for their years of service and investment in the
employer's business and for the special losses they suffer when their
employment ends
(see
Re Rizzo & Rizzo Shoes Ltd.

[1998] 1 S.C.R. 27
). Consistent with it being a service-based benefit, the
amount of compensation for length of service payable by an employer increases
in lockstep with an employee's tenure.
However, an amount payable in lieu
of [contractual] notice does not flow from services performed for the
corporation, but rather from the damage arising from non-performance of a
contractual obligation to give sufficient notice
(see
Barrette v.
Crabtree Estate
,
[1993] 1 S.C.R. 1027
).

Wages, as defined in section 1 of the
Act, includes monies payable as compensation for length of service. Since
compensation for length of service represents compensation for years of
service (see
Rizzo
, supra.) it is, in fact, deferred compensation that
is paid for work (see definition, section 1). On the other hand, damages for
breach of a contractual notice provision are not paid for work but, rather,
are paid (subject to mitigation) for non-performance of a contractual obligation
to give sufficient notice (
Barrette
, supra.). An employee's right to
sue for damages for breach of contract, even though the proper amount of
compensation for length of service has been paid to the employee, is preserved
by section 118 of the Act.

[Emphasis
added]

[15]

This
view was affirmed in
Rupert Title Search Ltd. (Re)
, [2003] B.C.E.S.T.D.
No. 70 at paras. 25 and 32, and in
Taylor
(Re)
, [2003]
B.C.E.S.T.D. No. 82 at para. 11.  In
Rupert Title Search
, the Tribunal
described the statutory liability of an employer as
an
'earned' benefit to the employee that accumulates as the length of service of
the employee increases, and distinguished this length of service
compensation from common law damages for wrongful dismissal.

[16]

Sitter
,
Rupert Title Search
,
and
Taylor
were recently approved by this Court in
Colak v. UV
Systems Technology Inc.
, 2007 BCCA 220, 66 B.C.L.R. (4th) 373 at paras.
5-7.  Madam Justice Huddart, for the Court, held that the Tribunals
understanding of the
Employment Standards Act
, R.S.B.C. 1996, c. 113,
and the distinction between statutory compensation payments and reasonable
notice under an employment contract merits respect.  Common law claims for damages
for wrongful dismissal are distinguishable from statutory claims for severance
under employment standards legislation in terms of how they arise and are
calculated.

[17]

It is
not necessary for the purpose of this appeal to determine whether a statutory
claim for severance is properly characterized as a contingent liability prior
to termination of employment.  For present purposes, it is sufficient to
conclude that
Eland Distributors
and
Rizzo and Rizzo Shoes
do not
assist in the analysis of Mr. Esaus claim.

[18]

The
first step in determining whether Mr. Esaus claim for damages for breach of
his employment contract represents a contingent liability is to consider the meaning
of that term.  This was recently discussed by the Supreme Court of Canada in
Canada
v. McLarty
, 2008 SCC 26, [2008] 2 S.C.R. 79 at paras. 17

18, where Rothstein
J. for the majority referred to the well-accepted test for a contingent
liability as that described by Lord Guest in
Winter v. Inland Revenue
Commissioners
,

[1963] A.C. 235
at
262 (H.L.):

I should define a contingency as an event which may or may
not occur and a contingent liability as a liability which depends for its
existence upon an event which may or may not happen.

[19]

Similarly,
Blacks Law Dictionary
, 8
th
ed. 2004, defines contingent
liability as a liability that will occur only if a specific event happens; a
liability that depends on the occurrence of a future and uncertain event.

[20]

For
financial reporting purposes, threatened and pending litigation are considered
to be contingent liabilities of a company:
Institute of Chartered
Accountants Handbook
, looseleaf (Toronto: Canadian Institute of Chartered
Accountants, 1981) at s. 3290; Errol C. Soriano,
Understanding
Financial Analysis in Litigation
(Scarborough: Carswell, 2004) at 64-65;
Levy-Russell
Ltd. v. Shieldings Inc.
(2004), 48 B.L.R. (3d) 28 at para. 126 (Ont. S.C.J.
[Commercial List]).  That is, threatened or pending litigation is characterized
as a contingent liability.  Actual liability will arise only when there is a judgment
against the company.

[21]

The
question that arises in this case is whether the existence of a contractual
obligation, and the corresponding potential for a claim for damages for its
breach, is a contingent liability of the party who may commit the breach.  I
conclude that, although there is the potential of a claim for damages, there
can be no liability, contingent or otherwise, where there is no present cause
of action.  That is, until there is a breach of contract, there is no legal
basis for any claim or any corresponding liability.

[22]

This
conclusion finds support in the following definition of liability from
Royal
Trust Co. v. H.A. Roberts Group Ltd.
, [1995] 4 W.W.R. 305 at para. 119 (Sask. Q.B.):

These statutory provisions [s. 125(1) and (3) of
The
Land Titles Act
] envisage three kinds of obligations that can be secured by
a registrable mortgage: a debt, a loan, or a liability that is future or
contingent. No case was cited to me that clarifies what is meant by these terms
used in s. 125.
The term liability is a broad term and is most often used
to describe an unliquidated or unspecified legal obligation which arises due to
negligence, breach of contract, etc.
The term debt is a narrower term and
means a specific kind of obligation for a liquidated or certain sum incurred
pursuant to an agreement. The term loan is even narrower and means a specific
type of debt. [emphasis added]

[23]

Further
support can be found in the American case of
Grant-Howard Associates v.
General Housewares
, 472 N.E.2d 1 at 3-4 (N.Y. 1984), approved in
Climatrol
Industries Inc. v. Fedders Corp.
, 501 N.E.2d 292 at 294-295 (Ill.App. 1
Dist. 1986), in the context of a product liability claim:

An uninjured party simply is not a
contingent liability in the usual sense of that term (see, e.g., Blacks Law
Dictionary [5
th
ed.], p. 291 [A potential liability; e.g. pending
lawsuit]).  There is no liability or claim before injury occurs.
Granted
that contingency invokes uncertain events, the uncertainty should be
restricted to the success of asserting an existing claim, rather than expanding
it to include the altogether unpredictable event that an injury will occur.
[emphasis
added]

[24]

I
conclude that the liability to pay damages if an employment contract is
breached for failing to give reasonable notice of termination is not a
contingent liability within the ordinary meaning of that term.  Until the termination
of employment without adequate notice, there is no injury.  The possibility of
a breach of contract is not sufficient to give rise to a contingent liability.

[25]

Therefore,
Mr. Esaus wrongful dismissal claim did not accrue from the outset of his
employment and it did not represent a contingent liability of West Bay at the Filing Date.  Consequently, Mr. Esaus claim is not a pre-filing claim on this
basis.

Executory Contract

[26]

West
Bay
argues in the
alternative that Mr. Esaus contract of employment was an executory contract.
As a result, it maintains that his claim for damages for its termination after
the Filing Date and before the date of the meeting of General Creditors to
approve the Plan on June 12, 2006 (the Meeting), was a Claim within the
meaning of, and compromised by, the Plan.  It says that the characterization of
an employment contract as an executory contract is consistent with the legal
definition of executory contracts and the purpose of the
CCAA
.

[27]

Mr.
Esau submits that when his employment contract was terminated it was not an executory
contract because the only remaining performance to be tendered was the payment
of money.  He cites in support of his argument
re U.S. Metalsource Corp.
,
163 B.R. 260 at 269 (Bankr. W.D. Pa. 1993), in which it was held that where the
only obligation of the debtor was the obligation to pay severance pay to
terminated employees, [t]his type of contractual duty to pay a debt is
insufficient to create an executory contract.

[28]

If
the contract was an executory contract at the Filing Date, however, a claim
arising subsequent to that date as a result of termination of the contract is a
Claim as of the date of termination.  That is, if Mr. Esaus contract of
employment was an executory contract at the Filing Date, his claim for damages
for wrongful dismissal, arising as a result of his termination subsequent to
that date and before the Meeting, became a Claim as of the date of
termination.

[29]

Thus,
the question is whether a contract of employment such as Mr. Esaus, under
which he promised to render services in return for West Bays promise to pay
him, was an executory contract at the Filing Date.

[30]

The
Alberta Court of Appeal recently considered the meaning of executory contract
in
Kary Investment Corp. v. Tremblay
, 2005 ABCA 273 at para. 19, 371
A.R. 339:

A contract is
said to be executory if anything remains to be done under it by any party
, and
executed when it has been wholly performed by all parties:
Halsbury's Laws
of England
, 4th ed. reissue, vol. 9(1) (London: Butterworths, 1998) at 341,
para. 606;
S. W. Mackay & Associates Ltd. v. Park Lane Ventures Ltd.

(1997), 32
B.C.L.R. (3d) 338
at para. 8 (S.C.)
.

[Emphasis added]

[31]

In
A
Joint Report of the Insolvency Institute of Canada and the Canadian Association
of Insolvency and Restructuring Professionals  Joint Task Force on Business
Insolvency Law Reform  March 15, 2002
, the authors cited the following
meanings for executory contract:

What is an executory contract? Neither the CCAA
nor the BIA use the expression, but the United States Bankruptcy Code does in
s. 365 (Code, s. 365). In general contract law, executory contract means a
contract under which one or both parties still have obligations to perform.
However, in U.S. bankruptcy law the expression is normally given a narrower
meaning. According to the most widely accepted definition in the United States, an executory contract for the purposes of Code s. 365 is:

a contract under which both the
obligations of the bankrupt [A] under the contract and the other party to the
contract [B] are so far unperformed that the failure of either to complete
performance would constitute a material breach excusing the performance of the
other.

(Countryman, Executory
Contracts in Bankruptcy (1974) 57
Minnesota Law Review
439 (Part 1), at
460).

[32]

The
authors included an employment contract as an executory contract in this
sense.  See also:
Debtors and Creditors Sharing the Burden: A Review of the
Bankruptcy and Insolvency Act and the Companies Creditors Arrangement Act
,
a Report of the Standing Senate Committee on Banking, Trade and Commerce,
November 2003, at 131, and Janis Sarra,
Rescue!: The Companies Creditors
Arrangement Act
(Toronto:  Carswell, 2007) at 177-178, where employment
contracts were characterized as executory contracts in the context of the discussion
of insolvency laws.  Professor Sarra noted (at 178-179) that damage claims
resulting from termination or repudiation of executory contracts after the
initial order are unsecured claims for damages.

[33]

None
of these sources discussed the application of the U.S. definition of executory
contract for bankruptcy purposes to an employment contract.  It is not clear to
me, because of the nature of the employment relationship, that that definition
will generally apply.  As a matter of contract law, if the employee fails to
provide the promised services, or the employer fails to pay for services
rendered, subject to any other terms of the contract, that would ordinarily be
a material breach excusing the performance of the other party.  Whether that conclusion
would ordinarily apply to an employment contract is, however, a question I do
not need to decide for the purposes of this case.  The ordinary legal
definition of executory contract covers these circumstances.

[34]

An ongoing
employment contract, under which an employee has promised to render services in
return for the employers promise to pay for those services, is an executory
contract as there are obligations on both parties that are yet to be
completed.  Thus, Mr. Esaus employment contract was, at the Filing Date, an
executory contract.

[35]

Accordingly,
Mr. Esaus claim against West Bay for damages for wrongful dismissal fell
within the definition of Claim in the Plan.

[36]

That
Mr. Esaus rights arising on termination of his employment contract were
compromised under the Plan is consistent with the purpose of the
CCAA
, as
recently considered by this Court in
Skeena Cellulose Inc. v. Clear Creek
Contracting Ltd.
, 2003 BCCA 344, (sub nom.
Skeena Cellulose Inc. (Re)
)
13 B.C.L.R. (4th) 236 at para. 34:

[C]ourts appear to have given full effect to
the "broad public policy objectives" of the [CCAA], which in the
phrase of a venerable article on the topic (Stanley E. Edwards,
"Reorganizations under the Companies' Creditors Arrangement Act",
(1947) 25
Can. Bar Rev.
587) are
to "keep the company going
despite insolvency" for the benefit of creditors, shareholders and others
who depend on the debtor's continued viability for their economic success
.
As the author commented:

Hon. C.H. Cahan when he introduced the bill into
the House of Commons indicated that it was designed to permit a corporation
through reorganization to continue its business, and thereby to prevent its
organization being disrupted and its goodwill lost. It may be that the main
value of the assets of a company is derived from their being fitted together
into one system and that individually they are worth little. The trade
connections associated with the system and held by the management may also be
valuable. In the case of a large company it is probable that no buyer can be
found who would be able and willing to buy the enterprise as a whole and pay
its going concern value. The alternative to reorganization then is often the
sale of the property piecemeal for an amount which would yield little
satisfaction to the creditors and none at all to the shareholders.

Reorganization
may give to those who have a financial stake in the company an opportunity to
salvage its intangible assets. To accomplish this they must ordinarily give up
some of their nominal rights, in order to keep the enterprise going until
business is better or defects in the management can be remedied. This object
may be furthered by providing in the reorganization plan for such matters as a
shift in control of the company or reduction of the fixed charges to such a
degree as to make it possible to raise new money through new issues of bonds or
shares. It may therefore be in the interest of all parties concerned to give up
their claims against an insolvent company in exchange for new securities of lower
nominal amount and later maturity date.

[Emphasis added]

[37]

The
Plan permitted West Bay to rationalize its business affairs with a view to a
reorganization that would make it viable in the future.  The stated purpose of
the Plan was to allow West Bay to settle payment of its liabilities arising
both before and after the Filing Date and to compromise the indebtedness owed
to Creditors of the Company on a fair and equitable basis (Plan, s. 2.1).  It
needed to retain its employees in order to complete existing orders for the
construction of yachts, and to use the sale proceeds from the yachts to fund
payments to its creditors on a compromised basis, on the basis that all of its
creditors would derive a greater benefit from the Plan than would result from
the bankruptcy of the Company and so as to allow the Company to continue in
business in the future.  West Bays tangible assets were sold to a related
company to provide cash to further fund payments to creditors.  It was intended
that the company would remain in business using a revised production financing
model, using private capital raised after the effective date of the Plan.

[38]

In
Skeena
, the issue addressed by the Court was whether the termination of replaceable
forest contracts, which could have disastrous consequences for many
individuals, local governments and communities, supplanted the intent and
purpose of the
CCAA
to stave off a bankruptcy.  The Court upheld the
trial judges decision that terminated employees were not to be placed in a
better position than other creditors (at para. 22), and noted that [i]n the
exercise of their broad discretion under the CCAA, it has now become common
for courts to sanction the indefinite, or even permanent, affecting of
contractual rights (at para. 37).  In considering whether the arrangement
under the
CCAA
, as a whole, was fair, reasonable and equitable, the
Court noted that equity is not necessarily equality and that the courts
looks to all of the creditors to see if rights are compromised in an attempt to
balance interests (at para. 59).  The Court concluded (at para. 60):

As the Chief Justice noted, many individuals and
corporations, as well as the Province, incurred major losses under the Plan.
Each of them might also ask Why me?  However, as he also noted, that is a
frequent and unfortunate fact of life in CCAA cases, where the only upside is
the possibility that bankruptcy and even greater losses will be averted.

Mr. Esaus Claim

[39]

Mr.
Esaus claim was thus subject to the terms of the Plan, which required
creditors to file a Proof of Claim in accordance with the procedure and
before the times set out in the relevant court orders.  Mr. Esau did not file a
Proof of Claim at any time.  He did not receive a Proof of Claim Package, as
did other creditors, providing notice to file a Proof of Claim.  However, West Bay published the notice to creditors, as ordered by the court, in the Vancouver Sun, and
on its website.  Mr. Esau was advised, through his counsel, that he was not
entitled to bring an action against the company because of the stay of
proceedings, that his claim as a creditor was compromised in the Plan, and that
he could apply for an extension of time to file a Proof of Claim.

[40]

In West Bays application that is the subject of this appeal, it sought an order extending the
time for Mr. Esau to file a Proof of Claim.  It was only during the hearing of West Bays application that Mr. Esau took the position that the time should be extended.

[41]

The
chambers judge denied the application for the extension of time, after
considering the factors enumerated in
Blue Range Resources Corp. (Re)
,
2000 ABCA 285, 271 A.R. 138 at para. 26:

1.

Was the delay
caused by inadvertence and if so, did the claimant act in good faith?

2.

What is the
effect of permitting the claim in terms of the existence and impact of any
relevant prejudice caused by the delay?

3.

If relevant
prejudice is found can it be alleviated by attaching appropriate conditions to
an order permitting late filing?

4.

If relevant
prejudice is found which cannot be alleviated, are there any other
considerations which may nonetheless warrant an order permitting late filing?

[42]

She
concluded that the delay was significant, and was not caused by inadvertence.
She further concluded that permitting the claim would result in prejudice that
could not reasonably be alleviated (at paras. 32-36).

[43]

The
chambers judges decision to deny an extension of time to file a Proof of Claim
was discretionary, reviewable by this Court only if it was clearly wrong or has
worked a substantial injustice:  see
Meuller v. Coronation Insurance
(1995), 12 B.C.L.R. (3d) 90 (C.A.).

[44]

Mr.
Esau has not shown that the chambers judges decision was clearly wrong, and
she was in the best position, as the judge supervising the
CCAA
proceedings, to weigh the relative prejudice to all parties if his claim was
allowed to be litigated while all other matters involving West Bays creditors had been finalized.

[45]

I see
no basis to interfere with the chambers judges decision not to extend the time
to file the Proof of Claim.

Conclusion

[46]

Mr.
Esaus claim for damages for wrongful dismissal was a claim under an executory
contract, and as such was stayed and compromised by the
CCAA
proceedings.  There is no basis to interfere with the chambers judges decision
not to extend the time to file a Proof of Claim, nor to consider Mr. Esaus
claim for misrepresentation.

[47]

It
follows that I would dismiss the appeal.

The
Honourable Madam Justice Levine

I AGREE:

The Honourable Madam
Justice Rowles

I AGREE:

The Honourable Mr. Justice
Groberman