Restraining interference in a sale process

Roman Catholic Episcopal Corporation of St. John's (Re), 2025 NLSC 77
What is the test for a permanent injunction in a CCAA proceeding?

Summary: In this case, the Court considered an application seeking a permanent injunction in a CCAA proceeding. The Roman Catholic Episcopal Corporation of St. John’s filed for insolvency protection after it was found liable for abuse perpetrated against young boys at Mount Cashel Orphanage in St. John’s, NL. It has been selling church properties and other assets to raise funds to pay creditor claims, but has been unable to sell Holy Rosary Church in Portugal Cove South due to a campaign by certain residents to prevent the sale. The Court granted the permanent injunction sought and declared that the Roman Catholic Episcopal Corporation of St. John is entitled to sell Holy Rosary Church. The Court found that the residents had essentially “taken the law into their own hands” in seizing control of Holy Rosary Church. They were neither the legal owners of the property, nor did they have an equitable interest in it. Changing the locks on the doors and warning people to stay away were breaches of the peace and amounted to trespass, nuisance and interference with the economic relations.

On December 21, 2021, the Roman Catholic Episcopal Corporation of St. John’s (the “RCECSJ”) filed a Notice of Intention at the Office of the Superintendent of Bankruptcy to make a proposal to its creditors. Its creditors are overwhelmingly men who were abused while young persons living at Mount Cashel Orphanage in St. John’s, NL, as well as other persons who were abused by clergy or members of lay religious orders for which the RCECSJ was responsible.

In May 2022, the bankruptcy proceedings were converted to the Companies' Creditor Arrangement Act (the “CCAA”). In anticipation of settling the claims against it, the RCECSJ began to gather in its assets and sell them off to raise funds. In time, the RCECSJ sold most of its assets and raised approximately $44 million. One outstanding property was Holy Rosary Church in the Town of Portugal Cove South, NL. Some residents of the town and representatives of the PCS Historical Corporation (the “Historical Corporation”) resisted the RCECSJ’s efforts to sell the property.

On March 14, 2025, the RCECSJ applied for an order declaring that it was entitled to sell the church and an injunction restraining the Historical Corporation and others from preventing it from entering, possessing or selling the church. It relied on section 11 of the CCAA and the inherent jurisdiction of the Court to grant such relief.

The Court was satisfied that the RCECSJ was the legal owner of the property on which Holy Rosary Church sits. The Historical Corporation and the residents of Portugal Cove South claimed to have an equitable interest in it given the efforts they expended between 2015 and 2019 to raise funds for and to assist in the renovations of Holy Rosary Church. However, neither the residents nor the Historical Corporation offered any evidence that supported a trust being created for any of the money, goods or services they contributed to Holy Rosary Church over the years. Nor did they show that the RCECSJ was unjustly enriched by the contributions that they made.

The Court went on to consider the proper approach to determining whether a perpetual injunction should be granted as a remedy for a claimed private law wrong:

1. Has the claimant proven that all the elements of a cause of action have been established or threatened? (If not, the claimant’s suit should be dismissed);

2. Has the claimant established that the wrong(s) that have been proven are sufficiently likely to occur or recur in the future that it is appropriate for the court to exercise the equitable jurisdiction of the court to grant an injunction? (If not, the injunction claim should be dismissed);

3. Is there an adequate alternate remedy, other than an injunction, that will provide reasonably sufficient protection against the threat of the continued occurrence of the wrong? (If yes, the claimant should be left to reliance on that alternate remedy);

4. If not, are there any applicable equitable discretionary considerations (such as clean hands, laches, acquiescence or hardship) affecting the claimant’s prima facie entitlement to an injunction that would justify nevertheless denying that remedy? (If yes, those considerations, if more than one, should be weighed against one another to inform the court’s discretion as to whether to deny the injunctive remedy);

5. If not (or the identified discretionary considerations are not sufficient to justify denial of the remedy), are there any terms that should be imposed on the claimant as a condition of being granted the injunction?

6. In any event, where an injunction has been determined to be justified, what should the scope of the terms of the injunction be so as to ensure that only actions or persons are enjoined that are necessary to provide an adequate remedy for the wrong that has been proven or threatened or to effect compliance with its intent?

The Court found that the residents and the Historical Corporation had essentially “taken the law into their own hands” in seizing control of Holy Rosary Church. They were neither the legal owners of the property, nor did they have an equitable interest in it. Changing the locks on the doors and warning people to stay away were breaches of the peace and amounted to trespass, nuisance and interference with the economic relations of the RCECSJ.

The residents of Portugal Cove South and the Historical Corporation made it clear that they would not cease and desist in their efforts to block the sale of Holy Rosary Church. There was, therefore, no other remedy than an injunction to return control of Holy Rosary Church to the RCECSJ and to allow some normalcy to prevail. A monetary award against the residents and the Historical Corporation would be difficult to enforce and the critical requirement was to enable the RCECSJ, its representatives and potential buyers to recover access to Holy Rosary Church and to visit it without harassment. Neither laches, acquiescence, clean hands, nor hardship are relevant considerations in this case, as the RCECSJ submits. The RCECSJ was not acting of its own imitative but was following the directions of this Court by disposing of its assets to generate funds to settle the outstanding claims against it.

The Court granted the entire relief sought.

Judge: Justice Garrett A. Handrigan

Professionals involved:

• Geoffrey Spencer, K.C. and Chris Layte of McInnes Cooper for the Roman Catholic Episcopal Corporation of St. John’s

• Kyle Rees of O’Dea Earle for the Portugal Cove South Historical Corporation

• Jennifer Helleur of Budden Law and Thomas Gertner of Gowling WLG, co-representative counsel for Claimants / Anonymous Claimants / Creditors of the RCECSJ

• Robert Buckingham of Buckingham Law for Claimants