Scotia Capital Inc. - MRRS Decision

Headnote

MRRS - Mutual Reliance Review System for Exemptive Relief Applications - Issuer is a "connected issuer" but not a"related issuer" of registrants that are to act as underwriters in a proposed distribution of securities of the Issuer - Issueris not a "specified party" as defined in Draft Multi-Jurisdictional Instrument 33-105 Underwriter Conflicts - Registrantunderwriters exempted from independent-underwriter requirements, provided that, at the time of the distribution, theissuer is not a "specified party" as defined in the Instrument, and is not a "related issuer" of the registrant underwritersas defined in the Instrument.

Applicable Ontario Statutes

Securities Act, R.S.O. 1990, c.S.5, as am.

Applicable Ontario Regulations

Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015, as am., 219(1), 224(1)(b), 233.

Rules Cited

Proposed Multi-jurisdictional Instrument 33-105 - Underwriting Conflicts (1998) 21 OSCB 781.

IN THE MATTER OF

THE SECURITIES LEGISLATION

OF BRITISH COLUMBIA, ALBERTA, ONTARIO,

QUEBEC AND NEWFOUNDLAND

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

SCOTIA CAPITAL INC., TD SECURITIES INC.,

CIBC WORLD MARKETS INC. AND RBC DOMINION SECURITIES INC.

MRSS DECISION DOCUMENT

WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of BritishColumbia, Alberta, Ontario, Québec and Newfoundland (the "Jurisdictions") has received an application from ScotiaCapital Inc., TD Securities Inc., CIBC World Markets Inc. and RBC Dominion Securities Inc. (collectively, the"Applicants") for a decision under the securities legislation of the Jurisdictions (the "Legislation") that the requirementcontained in the Legislation which restricts a registrant from participating in a distribution of securities of a connectedissuer shall not apply to the Applicants in connection with the proposed offering (the "Offering") of subscription receipts(the "Subscription Receipts") by Superior Propane Income Fund (the "Issuer") to be made by means of a short formprospectus (the "Prospectus");

AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal jurisdiction for this application;

AND WHEREAS the Applicants have represented to the Decision Makers that:

1. The Applicants are registrants under the Legislation, whose head offices are located in the Province of Ontario.

2. The Issuer is a trust governed by the laws of the Province of Alberta.

3. The Issuer was established as a limited purpose trust and its activities are restricted to owning, acquiring,holding and transferring the securities of Superior Propane Inc. ("Superior"), a national retailer of propane gasand services, and other ancillary purposes. Superior is a wholly-owned Subsidiary of the Issuer.

4. The Issuer is a reporting issuer under the securities legislation of each of the provinces of Canada. The Issuer'soutstanding trust units are listed on The Toronto Stock Exchange.

5. The Issuer has a market capitalization in excess of $700 million.

6. The Issuer intends to enter into an underwriting agreement with a syndicate of underwriters including theApplicants and BMO Nesbitt Burns Inc., Merrill Lynch Canada Inc. and National Bank Financial Inc. (collectivelythe "Underwriters") whereby the Issuer will agree to issue and sell, and the Underwriters will agree topurchase, as principals, the Subscription Receipts.

7. The Issuer will file a preliminary short form prospectus (the "Preliminary Prospectus") and the Prospectus withthe securities regulatory authorities in each of the provinces of Canada in order to qualify the SubscriptionReceipts for distribution in those provinces.

8. Superior currently has credit facilities (collectively, the "CreditFacilities") with Canadian chartered banks (the "Banks")of which the Applicants are subsidiaries. As at the date hereof,the following amounts are outstanding under the Credit Facilities:

In addition, Superior has available to it a credit facility of up to $25 million with Royal Bank of Canada. As atthe date hereof, the Issuer has a nil outstanding balance under this credit facility.

9. The proceeds of the Offering, before deducting the Underwriters' fees and expenses of the Offering, arecurrently expected to be approximately Cdn. $97 million. The proceeds will be used by the Issuer to subscribefor a subordinated promissory note to be issued by Superior. Superior will use these funds in part to repay aportion of the Credit Facilities.

10. Accordingly, the Issuer may be considered a "connected issuer" (or equivalent) (within the meaning of theLegislation and Proposed Multi-Jurisdictional Instrument 33-105 -- Underwriting Conflicts ("Proposed Instrument33-105")) of the Applicants. The Issuer is not a "related issuer" (or equivalent) (within the meaning of theLegislation or Proposed Instrument 33-105) of the Applicants.

11. The proportionate percentage share of the Offering to beunderwritten by each of the Applicants is as follows:

12. The Underwriters, in connection with the Offering, do not comply with the proportional requirements of theLegislation.

13. The nature and details of the relationship between the Issuer, the Applicants and the Banks will be describedin the Preliminary Prospectus and the Prospectus as prescribed by Proposed Instrument 33-105, including,without limitation, the information specified in Appendix "C" of Proposed Instrument 33-105. The PreliminaryProspectus and the Prospectus will further contain a certificate signed by each Underwriter in accordance withItem 21.2 of Form 44-101F3 to National Instrument 44-101.

14. The Applicants will receive no benefit relating to the Offering other than the payment of their fees in connectiontherewith.

15. The decision to issue the Subscription Receipts, including the determination of the terms of the distribution, wasmade through negotiations between the Issuer and the Underwriters without involvement of the Banks.

16. The Applicants advise that the Issuer is in good financial condition and that it is not a "specified party" asdefined in Proposed Instrument 33-105.

AND WHEREAS under the System, this MRSS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that providesthe Decision Maker with the jurisdiction to make the Decision has been met;

IT IS THE DECISION of the Decision Makers under the Legislation that the requirement contained in theLegislation which restricts a registrant from participating in a distribution of securities of a connected issuer shall notapply to the Applicants in connection with the Offering by the Issuer to be made by means of the Prospectus providedthat:

1. The Prospectus contains the information required by Appendix C to Proposed Instrument 33-105; and

2. At the time of the Offering:

(a) the Issuer is not a specified party (as defined in Proposed Instrument 33-105); and

(b) the Issuer is not a related issuer (as defined in the Legislation and in Proposed Instrument 33-105)of any of the Underwriters.

January 24, 2001.

"Howard I. Wetston"       "Theresa McLeod"