University of Sudbury backs effort to have sex assault claim removed from LU's insolvency process

Laurentian University sign in Sudbury, Ont. (File)

During a hearing Friday, lawyers for the University of Sudbury supported efforts to have a historic sexual assault claim removed from Laurentian University's insolvency process.

Under the Companies' Creditors Arrangement Act (CCAA), all claims against LU are to be dealt with as a whole.

But Aron Zaltz, lawyer with Preszler Injury Lawyers, argued Friday that a complex claim like this should not be dealt with as part of insolvency.

The $5 million claim dates to 1979 and involves a late professor who worked at the University of Sudbury. Details can be found here.

Zaltz told Superior Court Chief Justice Geoffrey B. Morawetz that a section of the CCAA -- Section 19 (2) -- explicitly mentions sexual assault cases as something that should be dealt with separately from the insolvency process.

"The only just and reasonable result is to apply this exception," Zaltz said.

He said there's also evidence that LU had self-insurance in 1979 that could fund a settlement, so other creditors would be unaffected. He encouraged Morawetz to "make new law" by ruling the case should be severed from the CCAA.

The professor accused of the assault worked for the University of Sudbury. Laurentian is part of the lawsuit because Zaltz argues they are partially liable.

Ronald Caza, lawyer for U of S, supported that argument. He said the victim said she was attacked more than 40 years ago, and the incident has had a negative impact on much of her adult life.

"This is a situation where, in the interests, of justice, the lift should be stayed," Caza said.

Such cases are decided mostly on credibility, he said, something that has to be determined through a full court process, not the shortened proceedings of the CCAA.

"And credibility is about sitting down and listening to all the witnesses," Caza said. "She's alleging that it basically ruined her life."

Otherwise, if the allegations are true, a perpetrator will get away with his actions with no penalty.

"We need a full trial," Caza said. "If we don't have an award, they get away with the reprehensible conduct."

Only validated claims

LU lawyer Andrew Hanrahan said that the section of the CCAA they are relying on only refers to claims that have been validated, not untried claims.

Morawetz then asked whether the act gave him the discretion to decide if the CCAA process is the appropriate way to handle the claim. Hanrahan replied that he does have the discretion, but said he should not sever the claim because it has not been validated and there is no monetary award.

And Maria Konyukhova, lawyer for Ernst & Young, the firm monitoring the process, said the CCAA only applies to validated claims, and how they should be handled at that point.

Hanrahan also said the idea that LU was self-insured in 1979 for liability claims doesn't make sense. He said there is no evidence of insurance available, despite repeated attempts to find documentation.

"We'd be more than happy to locate an insurer," he said, because it would allow them to separate the case and have it handled through that process.

And he said the idea of "self-insurance" is misleading.

"Self-insurance is someone who doesn't buy insurance," he said, adding no funds have been set aside to cover self-insured claims.

Morawetz said it was a complicated case that would take him a few weeks to decide.

"Some very challenging arguments have been made by both sides there," he said.