Justice Brown (Brown J.) of the Ontario Superior Court of Justice (Commercial List) heard an application brought pursuant to s. 182 of the Ontario Business Corporations Act for approval of a plan of arrangement involving Champion Iron Mines Limited (Champion). The purpose of the arrangement was to effect a securityholder-approved arrangement of Champion with an Australian listed mining company, Mamba Minerals Limited.
Brown J. approved the arrangement, finding the proposal was both fair and reasonable. However, he made two noteworthy observations and conclusions.
In BCE Inc v 1976 Debentureholders, the Supreme Court of Canada observed that indicia of fairness of a transaction can include “the presence of a fairness opinion from a reputable expert.” Historically, fairness opinions have been used primarily by boards and special committees as part of their own analysis and due diligence concerning the proposed transaction. It is often the case that fairness opinions are also accompanied by presentations to the board or special committee that do contain further financial analysis.
In his reasons, Justice Brown appeared focused on the utility of the fairness opinion as part of the court's (and securityholders') process in analyzing the transaction. Brown J. expressed some concern with the level of detail presented in the fairness opinion included in the applicant's materials.
Based on the summary nature of the fairness opinion presented in this case, Brown J. declined to place any weight on that opinion in reaching his determination that the arrangement was fair and reasonable, finding that the fairness opinion did not meet the requirements for admissible opinion evidence required by the Rules of Civil Procedure.
The second issue Brown J. addressed was the court's role in approving arrangements. Observing that the court is not a boardroom, he stated that, “Although the law-makers have injected the courts into the approval process for corporate transactions such as plans of arrangement, that does not alter the fact that the courts play a judicial role in the process, not an agenda checklist-type role.”
Brown J. expressed concern that filing materials a day before the hearing places undue stress on the court, stating that, “Counsel on final order applications must adopt a scheduling approach which affords judges adequate time to review and weigh evidence and arguments put before them.”
Champion was represented by Marc Kestenberg and Andrew McCoomb of Norton Rose Fulbright Canada LLP.
Mamba Minerals Limited was represented by Ellen Snow of Stikeman Elliott LLP.