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Are fairness opinions admissible on a plan of arrangement hearing?

By Jacob Kaufman

Differing viewpoints have recently arisen in the Ontario Superior Court of Justice (Commercial List) as to whether fairness opinions are admissible during court approval of plans of arrangement. In Champion Iron Mines Ltd (Re), 2014 ONSC 1988, Justice Brown held that in order for a fairness opinion to be considered by the court, it must meet the requirements for the admission of expert evidence. By contrast, in Bear Lake Gold Ltd (Re), 2014 ONSC 3428, and in Re Patents Royal Host Inc, 2014 ONSC 3323, Justices Wilton-Siegel and Justice Newbould, respectively, concluded otherwise.

Champion Iron related to a plan of arrangement involving a third party acquiring all the outstanding common shares of the company in exchange for shares of the third party. As is customary, the applicant submitted a fairness opinion (which had been included in the management proxy circular). While Justice Brown approved the plan of arrangement, he placed no weight on the fairness opinion, holding that for the fairness opinion to be admissible, it needed to satisfy the applicable requirements regarding the admissibility of expert evidence set out in the Rules of Civil Procedure. The fairness opinion simply contained the usual conclusory statement as to fairness and did not include the ‘expert’s reasons for his or her opinion’, as required by the rules…

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