Woman loses fight to remove her lawsuit from Laurentian's CCAA process

Laurentian University. (Ian Campbell/CTV News)

A woman who says she was a victim of sexual assault decades ago at the University of Sudbury has lost her court battle to separate her case from Laurentian University's insolvency process.

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

The lawsuit was swept up in LU's insolvency filing under the Companies' Creditor Arrangement Act, under which all claims are dealt with as a whole.

But the woman's lawyer, Aron Zaltz of Preszler Injury Lawyers, argued in court last month that a complex claim like this should not be dealt with as part of insolvency.

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 encouraged Morawetz to "make new law" by ruling the case should be severed from the CCAA.

While 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.

But lawyers for Laurentian argued that the exception Zaltz refers to is only for cases in which a claim has been validated.

"The issue of how the claim may be treated in the plan only requires determination if the claimant establishes a valid claim against LU, which (the claimant) has not done yet," the court transcript said.

"Further, s. 19(2) does not come into play because (the claimant) does not have a proven claim that might be considered in a compromise or arrangement. (The claimant) has only filed the proof of claim that has been disallowed by the monitor and a dispute of that disallowance is pending before the claims officer."

In his ruling, Morawetz agreed, saying that previous court decisions have said that such exceptions only apply to cases where a claim has been proven.

"This has not yet occurred," he wrote.

"At this stage, (the claimant) has only filed a proof of claim in the claims process and a plain reading of s. 19(2)(b)(i) makes clear that the section is not engaged by this claim as there has been no award of damages by a court in civil proceedings."

While ruling against removing the claim from the CCAA process, Morawetz said there still needs to be a process to resolve the claim that "provides for a fair and proper adjudication."

"LU has indicated that it wishes to finalize its plan of arrangement for consideration by its creditors in the near future," he wrote.

"These practical concerns were not fully addressed at the hearing, and for this reason, I find it necessary that the parties make further submissions as to the appropriate process to adjudicate (the) claim and the claim of (the University of Sudbury) within the claim process."

Read the full decision here.