Flight (Re)

Flight (Re) Collection Decisions of the Court of Appeal Date 2022-01-26 Neutral citation 2022 ONCA 77 Docket numbers C69594, M53087 Judges Simmons, Janet M. Subject Civil Decision Content COURT OF APPEAL FOR ONTARIO CITATION: Flight (Re), 2022 ONCA 77 DATE: 20220126 DOCKET: M53087 (C69594) Simmons J.A. (Motions Judge) In the Matter of the Bankruptcy of Brian Wayne Flight, of the City of London, in the Province of Ontario Nicholas Kluge and C. Haddon Murray[1], for the moving parties/appellants, Adamson & Associates Inc. and John Adamson Tara Vasdani, for the responding party/respondent, Brian Wayne Flight Jacob Pollice, for the intervener Superintendent of Bankruptcy[2] Heard: January 20, 2022 by video conference ENDORSEMENT A. Introduction [1] The appellants moved in writing for an order permitting them to amend their notice of appeal dated June 24, 2021, to add a request, in the alternative, for leave to appeal under s. 193(e) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B‑3 (the "BIA"). [2] The order under appeal declares that Mr. Flight and his spouse do not require leave under s. 215 of the BIA to commence and continue their action against Mr. Adamson for declaratory relief and damages in connection with his administration as trustee of Mr. Flight's estate in bankruptcy. As originally framed, the appellants relied in their notice of appeal on ss. 193(b) and (c) of the BIA, which do not impose a leave requirement. [3] I required counsel to attend to speak to this motion because of serious allegations made by the responding party and concerns I had about the admissibility of some of the material filed on the motion. [4] Following submissions from counsel, I struck the second sentence of para. 19 of the moving parties' factum and the moving parties' letter to the court dated January 11, 2022. [5] In addition, I struck the following portions of the responding party's affidavit filed on the motion: paras. 2, 8, the first sentence of paras. 9 and 11, para. 13, the heading over para. 14, paras. 15-20, the heading over para. 21, paras. 21 and 22, para. 31 (subject to treating paras. 31 a. and c. as being included in the responding party's factum), paras. 33-35, paras. 37-39, and paras. 41-44. [6] After I struck the foregoing material, the parties agreed that the motion should proceed in writing and also confirmed that, if the motion is granted, the leave issue should be dealt with by the panel hearing the appeal without the necessity of any additional material being filed. [7] For the reasons that follow, the motion to amend is granted. I will also explain below my reasons for striking the foregoing material and declining the responding party's request to call oral evidence to replace certain paragraphs of the responding party's affidavit filed on the motion if they were struck. B. Discussion (1) The Materials (a) The Moving Parties’ material [8] My concern with respect to the second sentence of para. 19 of the moving parties' factum was that it lacked an evidentiary foundation for asserting that the first date the responding party took the position that the moving parties required leave to appeal under s. 193(3)(e) of the BIA was upon filing the respondent's factum. [9] As for the letter dated January 11, 2022, I expressed concern that letters from counsel are not an appropriate way to make submissions on a motion. Although the moving parties submitted that the January 11, 2022 letter (with enclosures) was sent in an effort to fulfill counsel's duty to ensure submissions are accurate (in this case, the second sentence of para. 19 of the factum), ultimately they did not oppose striking the specified material. (b) The Responding Party’s material [10] The responding party's affidavit was sworn by a law student. My concerns with respect to the listed paragraphs were, variously, that they constituted inadmissible opinion; were inaccurate on their face; in violation of rule 39.01(4) of the Rules of Civil Procedure; argumentative; or a combination of some or all of the foregoing. [11] Ultimately, the responding party opposed striking only paragraphs 15 to 20 and 31 of the student's affidavit. My concern with respect to those paragraphs was primarily that they violated rule 39.01(4). Counsel submitted that there was no real violation, in effect, as the source of the information should be obvious. Moreover, and in any event, case law and various rules support admitting non-contentious statements premised on information and belief even if there is a minor violation of the rule. Counsel also asked to call oral evidence from the responding party, who was present via videoconference, to cure any defects. [12] I did not accept these submissions or permit oral evidence. [13] The responding party alleges that the moving parties' motion "is brought in patent bad faith" and that the moving parties, and by implication their counsel, are misleading the court. Where such serious allegations are made, the evidence to support them must comply strictly with both the laws of evidence and the rules. Evidence proffered on information and belief to support such allegations may be subject to questions of weight in any event. Such questions could include when and by what method the information was communicated, whether notes were taken and other similar matters. However, the failure to comply with even the basic requirements of rule 39.01(4) of specifying from whom the information was communicated and that the deponent believes the information is true requires that the specified paragraphs be struck. [14] As for the request to call oral evidence, paragraphs 15 to 20 of the affidavit relate to communications between counsel. Evidence from the responding party could not reasonably be expected to cure a defect in rule 39.01(4) except by double hearsay. In any event, permitting oral evidence on a procedural motion in this court would be out of the ordinary and could only be justified in exceptional circumstances. Curing a failure to comply with basic requirements of the rules does not qualify as an exceptional circumstance. (2) The Merits of the Motion (a) The Test [15] At paras. 13-15, Yar. v. Yar (2012), 24 R.F.L. (7th) 101, specifies five factors relevant to the determination of whether to grant leave to amend a notice of appeal (in that case, a notice of cross-appeal) after an appeal had been perfected: i. whether the appellant formed an intention to appeal within the relevant period; ii. the length of the delay and any explanation for the delay; iii. any prejudice to the respondent; iv. the merits of the appeal; v. whether the “justice of the case” requires an extension. (b) Application of the Test to this Case [16] As the moving parties' appeal under ss. 193(b) and (c) of the BIA has been perfected, there appears to be no question that they formed an intention to appeal within the relevant period. [17] That said, the moving parties' material is devoid of any reasonable explanation concerning when they recognized the possible requirement to seek leave to appeal under s.193(e) of the BIA and why they failed to do so before now. [18] I reject any suggestion that the explanation for the moving parties’ failure could somehow be that the responding party failed to put the moving parties on notice of the possible requirement to seek leave. Section 193(e) states on its face that leave is a requirement under that subsection. Further, that the requirements of the various subsections of s. 193 can be complex is well known. The moving parties have not explained why they failed to recognize the possible necessity of seeking leave under s. 193(e) when they originally delivered their notice of appeal. [19] However, the absence of an explanation and even the attempted explanation that the responding party failed to adequately put the moving parties on notice that leave may be required does not lead to necessary inferences of bad faith or that the moving parties are attempting to mislead the court. There are many possible reasons, short of bad faith, why the moving parties may have failed to advert to the possibility of requiring leave even in the face of the responding party's suggestion that leave was required. Nonetheless, the bottom line remains, on the record before me, there is no indication that the moving parties formed an intention to seek leave within the relevant period and no reasonable explanation for their delay in failing to request permission to amend before now. [20] That said, I see no prejudice to the responding party if permission to amend is granted. The parties agreed that if permission is granted to amend to seek leave to appeal under s. 193(3) in the alternative, the issue of leave to appeal will simply be dealt with by the panel hearing the already perfected appeal without the necessity for further material. [21] If the panel hearing the appeal determines an appeal as of right is not available under ss. 193(b) or (c) of the BIA, the factors set out in Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, 115 O.R. (3d) 617 may govern the leave issue: i. whether the appeal raises an issue of general importance to the practice in bankruptcy/insolvency matters or to the administration of justice as a whole and whether the issue is one that this court should consider and address; ii. whether the appeal is prima facie meritorious; and iii. whether the appeal will unduly hinder the progress of the bankruptcy/insolvency proceedings. [22] Concerning the last factor, the bankruptcy has been resolved by a consumer proposal. The appeal will not hinder its progress. Further, because there is a pending appeal in any event, granting permission to amend will not hinder the progress of the responding party's action. [23] As for the first two factors, the fact that the Superintendent has been permitted to intervene and the evidence the Superintendent filed on the motion to intervene support the likelihood that the appeal raises an issue of general importance and also the prospect that the panel may choose to address it whatever the level of merit. However, the panel hearing the appeal will also have discretion not to grant leave. [24] In the circumstances, the merits of the leave motion support granting permission to amend. [25] Considering the case overall, permission to amend should be granted. No doubt, the moving parties should have addressed their alternative request earlier. They should also have provided an explanation for their failure to do so and for their delay in applying for leave to amend to this court. However, given the lack of prejudice to the responding party and the merits of the alternative leave request, I am satisfied that the justice of the case warrants granting permission to amend. C. Disposition [26] Based on the foregoing reasons, permission to amend as requested is granted, provided that the amendment should be completed within seven days of the release of these reasons. Given that this disposition amounts to an indulgence, the responding party may make submissions as to costs within seven days of the receipt of these reasons and the moving parties may respond within seven days thereafter. “Janet Simmons J.A.” [1] Mr. Murray prepared the in-writing submissions on behalf of the moving parties/appellants. Due to a conflict, Mr. Kluge appeared for the purposes of oral submissions. [2] Mr. Pollice appeared but made no written or oral submissions on behalf of the intervener.