Commercial Considerations As Ontario Reopens: Key Takeaways From CLUC Education Day 2021 – Corporate/Commercial Law – Canada – Mondaq News Alerts


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Commercial Considerations As Ontario Reopens: Key Takeaways From CLUC Education Day 2021

09 June 2021

Lenczner Slaght LLP

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As vaccine rollouts quicken and Ontario looks forward to a
loosening of COVID-19 restrictions, the Ontario Bar Association and
the Commercial List Users' Committee (CLUC) convened its annual
Education Day on June 2, 2021.

Co-chaired by Brendan Bissell of Goldman Sloan Nash & Haber
LLP and Ken Pearl of Fuller Landau LLP, this virtual seminar was
moderated by the Honourable Geoffrey B. Morawetz, Chief Justice of
the Superior Court, and Commercial List judges Justice Barbara
Conway, Justice Cory Gilmore, and Justice Thomas McEwen.

The CLUC is hopeful that fall 2021 will see a gradual increase
to the total hearing volume, with an increase in in-person hearings
combined with the now-familiar virtual proceedings.

Despite the unforeseen challenges posed by the pandemic, the
rapid adoption of virtual tools like Zoom hearings and electronic
filing through the Court's CaseLines platform has resulted in
over 130,000 virtual hearings since March 2020. The Commercial List
remains the gold standard for the conduct of virtual

The economic impact of the COVID-19 pandemic has highlighted the
importance of the Commercial List as a specialized venue for
complex commercial matters and the Chief Justice stressed the
importance of meaningful and timely access to the Commercial List
during Ontario's economic recovery.

Benjamin Tal, Deputy Chief Economist for CIBC World Markets
Inc., illustrated the cautiously optimistic view for a speedy
economic recovery. While economists are quick to remind us that
there is "no free lunch", there is ample reason to
believe that the economic impact of COVID-19 will be a short-term
event rather than a chronic condition.

Hopeful that a familiar post-pandemic economy will soon greet
Canadians as pandemic restrictions ease, the OBA and the CLUC
highlighted areas of commercial practice where clients and their
counsel are likely to face pandemic-related challenges as the
economy reopens. The ongoing focus on diversity and inclusion in
the profession was also highlighted.

Current Issues in M&A Transactions

Panellists highlighted key considerations for assessing who owns
the post-closing deal advice privilege in an increasing wave of
M&A litigation as well as important changes to the model orders
under the Canada Business Corporations Act and
Ontario Business Corporations Act.

Within the shifting matrix of parties and legal representation
inherent to commercial acquisitions, the question of privilege is a
critical issue.

In navigating the relationships between buyer, seller, target,
and management both pre-and-post closing, counsel should
continuously assess what communications and advice are privileged,
when that privilege may be waived, which parties to a deal might
share a common interest, and the fiduciary duties owed to the

The question of privilege over deal advice and who controls it
has not been squarely dealt with by the Ontario courts, but
guidance may be found in recent cases arising from the Alberta
Court of Queen's Bench and appellate courts throughout the
United States.

When the question is eventually addressed in Ontario, courts
will surely be guided by Section 179(b) of the OBCA which provides
amalgamated corporations with all the property, rights, privileges,
and franchises of the amalgamating corporations.

Commercial parties and their counsel should consider the

  • Jurisdiction of potential future litigation. Rules of privilege
    will vary particularly where cross-border transactions are at
    issue; and
  • Mitigating litigation risk by negotiating at the outset who
    will possess the privilege post-transaction.

The model interim order for proceedings under the CBCA and OBCA
was refreshed to better accommodate near-insolvency proceedings.
Notably, preliminary orders for a stay of proceedings should be
limited to 30 days and may be extended further by order of the
Court and sought on notice to the parties.

Third-party releases remain the exception rather than the rule,
but recommended language is now incorporated into the schedule to
the model order and guidance on this issue (and others) has come
from recent decisions of the Alberta courts:

  • The Canada Business Corporations
    Companies' Creditors Arrangement
     and the Bankruptcy and Insolvency
     share the common purpose of facilitating
    restructuring in a manner that is fair and with regard to the
    broader goal of restructuring a company to the benefit of all
  • Courts will retain jurisdiction under s 192 of the CBCA to
    order a waiver or a release if the absence of a waiver would
    frustrate the restructuring efforts or give rise to the potential
    for a collateral attack on the arrangement; and
  • Concepts from the anti-deprivation rule – allowing
    clauses intended to remove value from an insolvent company to be
    found void and unenforceable – can be read into CBCA plans of
    arrangement where this is an expectation by the parties of debt

Real Estate Concerns in Restructuring

Panellists provided an overview of key issues facing commercial
landlords and their tenants arising from the impact of COVID-19 on
the use of commercial properties.

Government programs (like the Canada Emergency Commercial Rent
Assistance program) will eventually expire and the obligations of
both landlords and tenants under commercial leases will be the
subject of much litigation as the lasting impact of COVID-19 on
consumer behaviour asserts itself. Many leases will not contain
express provisions allocating the risk of events like a

Unlike prior disruptive events (e.g., SARS and the 2008 mortgage
crisis), COVID-19 has been unique in both its scope and duration.
As a result, courts will look to sophisticated parties and their
counsel to exhaust every alternative to dramatic legal remedies
like tenant lockouts or urgent proceedings for injunctive

Counsel to both landlords and tenants should give due
consideration to section 20 of the Ontario Commercial
Tenancies Act 
which permits lessees, either on an action
or application, or within an action brought by the lessor, to seek
equitable relief against landlords seeking to enforce rights of
re-entry or forfeiture.

This section has not been extensively litigated in Ontario's
courts, but this powerful tool is sure to receive increased
judicial consideration as COVID-era tenancy disputes play out.

Counsel should also be mindful of lease provisions imparting
positive obligations on landlords to provide access to and
exclusive use of first-class premises in the face of government
closure orders.

Recent cases suggest that "use" of a leased premises
may not arise if a tenant is deprived of the economic benefit that
they intended to receive under the lease. Tenants who have not
disclaimed a lease, however, may be deemed to have obtained value
from the premises and the timely payment of rent is likely to be a
precondition for any entitlement to quiet enjoyment.

Diversity in the Practise of Law

Shara Roy of Lenczner Slaght along with
her fellow panellists discussed industry-leading diversity
initiatives and shared best practices as the profession continues
to implement the recommendations of the CLUC D&I

  • D&I initiatives must be proactive and deliberate,
    reflecting intentional effort and a will to improve;
  • Individuals can make a difference, but sustainability requires
    broader institutional support;
  • Unconscious bias must be addressed during the initial hiring
    and recruitment process; and
  • Once a diverse pool of applicants has been recruited, an
    increased focus on retention is required to support and empower
    those members of the profession.

When members feel that they belong and their contributions are
valued, they grow into more engaged and productive advocates. The
Commercial List also continues to work towards providing advocacy
opportunities for the participation of younger counsel.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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