Law Times

Page 4 May 25, 2015 • Law Times www.lawtimesnews.com Lessons from the Nortel case By yamri Taddese Law Times O ne of the lawyers in- volved in the Nortel Net- works Corp. proceed- ings says the biggest les- son to take away from the difficult cross-border trial is the need for an international insolvency adjudica- tion forum. "I think we need some kind of international process or treaty among developed countries — whether it's OECD countries or some other cluster or population of countries — to deal more efficiently with cross-border and worldwide insolvencies," says Ken Rosenberg, a partner at Paliare Roland Rosen- berg Rothstein LLP who acted for the Canadian creditors committee. The long-awaited rulings from the U.S. and Ontario courts this month on how to divvy up Nortel's assets followed an unprecedented 21-day cross-border trial in Toronto and Wilmington, Del., with a live stream- ing feature to allow the two proceed- ings to go on simultaneously. The trial was a procedural feat with two judges sitting in both cities and witness testimony in both To- ronto and Wilmington. The Nortel proceedings under the Companies' Creditors Arrangement Act saw $1.5 billion spent on legal and other pro- fessional fees, according to Diane Urquhart, a Mississauga, Ont., inde- pendent financial analyst who has keeping tabs on the professional bills. The process could have been cheaper and more efficient had there been an international convention that allowed judges in "the country of central interest" to make findings regarding assets in other parts of the world, according to Rosenberg. The lack of such a forum means there's still money trapped in Nor- tel entities across Europe, he notes, adding he hopes the Nortel situa- tion "spurs countries into finding a more efficient system." In the Nortel matter, the lack of an established process for cross-border insolvencies meant "the poor judges and parties had to make it up" at a great cost, says Rosenberg. "That's my learning." If it stands, the ruling seals a bit- ter six-year dispute over the alloca- tion of Nortel's remaining $7.3 bil- lion in assets among creditors. The final outcome is "in some ways surprising and in some ways not," says Lenczner Slaght Royce Smith Griffin LLP insolvency lawyer Monique Jilesen. "Both courts ultimately con- cluded that given the complexity of the case, the pro-rata allocation was the only allocation that could be reached," says Jilesen, who suggests both courts reached "a pragmatic and practical result." Many had begun to lose faith in any kind of resolution, she notes. "I think a lot of observers of the case wondered whether it was go- ing to be achievable just with the trial itself with all of the lawyers, all of the parties, two judges across the jurisdictions." The case showed "we can do a major, complex cross-border trial in- volving billions of dollars in assets," says Jilesen. The parties in Nortel sparred over widely different interpretations of the insolvent company's master research and development agreement. In the end, the Ontario court adopted none of their interpretations, instead find- ing that the agreement didn't govern the insolvency issue. "The agreement in its applica- tion was intended to apply only to Nortel while it operated and not to deal with rights after Nortel and its subsidiaries stopped operating its businesses," wrote Superior Court Justice Frank Newbould. The court had to look beyond the agreement, including how the business operated and the intention of the parties, to arrive at a decision, says Jilesen. "It's continuing on with earlier insolvency cases and just go- ing back to that [principle] that the court will do what's necessary to do justice between the parties so that we can see the insolvency court, the CCAA court, as a court that will exercise its inherit jurisdiction un- der the act to reach the most just re- sult in the particular circumstances of the case." LT NEWS Who are YOUR preferred legal vendors? Visit canadianlawyermag.com/surveys to cast your votes and enter to win an iPad mini WiFi with Retina display! READERS' CHOICE AWARDS 1st annual ADR & Mediation Chambers • Financial Services & Consulting Legal Research • Legal Technology Litigation Support & Consulting • Real Estate Recruiting & Staffing Top Service Providers for: Introducing the First Annual Canadian Lawyer Readers' Choice Awards. 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Untitled-1 1 2015-05-21 10:40 AM family law rules updated to catch up to Hryniak By yamri Taddese Law Times E xpanded powers to make findings on summary judgment are coming to the family law courts as newly amended rules catch up to the Supreme Court of Canada's decision in Hryniak v. Mauldin. The changes to the family law rules, which came into effect this month, apply the broad- er test for summary judgment as outlined in Hryniak. The change will allow for mini-trials instead of full-blown proceedings in the family law context and help reduce costs to litigants, says Toronto family lawyer Ron Shulman. "The mini-trials are new," he says. "We didn't have that in the rules before and judges would not order it. There was no juris- diction for it except on very rare occasions. Many times, what judges do is refer the issue for trial." Shulman calls the changes "a very significant revision" and notes they would reduce some of the costs associated with family litigation, an area that sees more than 70 per cent of parties with- out legal representation. "If we're able to lower costs, then hopefully more people will be represented," says family lawyer Andrew Feldstein. "If one way of achieving that is encouraging lawyers to bring motions for summary judgment, whether it's on the entire case or on [specific] is- sues . . . then maybe you should be making a mo- tion for summary judgment, knock those issues off, and reduce the trial time to a day rather than a five-day trial," he adds. Often, parties in family law matters litigate over one or two specific issues, according to Shulman. "It's just unfortunate that they have to go through the whole process to resolve an issue . . . that could be resolved through a motion," he says. "The key question here is how those [re- vised] rules would be used by the lawyers and how often they will be applied, in which man- ner they will be applied by the judiciary." The changes will also likely help to reduce delays "considerably," says Shulman. "This is a welcome change." Another amendment to the rules expands judges' ability to make procedural orders at any time during the proceedings. "Subrule 1(7.1) provides that unless the rules expressly provide otherwise, a court may make an order under sub- rules (7.2), (8), (8.1) or (8.2) at any time in a case," the notice of the revised rules says. "Subrule 1(7.1) further provides that this power exists in addition to any other power to make an order set out in the rules." The change gives judges more powers over the management of family law cases, according to Shulman. Judges often make procedural orders deal- ing with how a case would proceed at the case conference stage. The recent revision "makes it clear that perhaps the rule expects the judges to make more of those orders or take more con- trol of the cases," says Shulman. Judges often require a motion or authorization from the rules to make proce- dural orders. The amendment essentially removes the require- ment for a motion to make such orders. "The subtle importance of this rule is that it directs judg- es to say that in order to promote the primary objective, they're allowed to make [these orders] any time," says Shulman. Also part of the revisions is a portion describing the specific information parties must pres- ent as part of financial disclo- sure in family law cases. This change will help make the sys- tem more efficient and accessi- ble for self-represented litigants, according to Shulman. "Lawyers who've been practising family law for a long time and have significant experience, they already follow those rules. They're somewhat unwritten rules," he says, adding the new require- ments in the amended rules will help those who come to court without counsel. "It looks like an additional burden, but in reality it's always been done by good counsel." Under the revised rules, lawyers now have tools to get disclosure before a case conference as well, says Feldstein. "Before the amendment to these rules, arguably you couldn't do that because you weren't supposed to bring a motion before a case conference." The change will allow lawyers to focus on the substance of the matter instead of disclo- sure issues at case conferences, he says. "The real message I'm getting from the rules, and I think the message has been laid out by the judiciary for some time before the amendment, is case conferences shouldn't be an opportu- nity to talk about disclosure. Case conferences should be about procedure that needs to be dealt with and perhaps moving the case forward to- ward a resolution of the case." LT 'This is a welcome change,' says Ron Shulman.

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