Black v. Ernst and Young Inc.

Black v. Ernst and Young Inc. Court Court of Appeal Date 1994-10-26 Citation 1994 NSCA 171 Docket CA 107528 Judge/Registrar/Adjudicator Pugsley, Ronald N. (Honourable Justice) Document Type Decision Decision Content C.A. No. 107528 NOVA SCOTIA COURT OF APPEAL Cite as: Black v. Ernst and Young Inc. 1994 NSCA 171 BETWEEN: FREDERICK W. L. BLACK ) The Appellant appeared ) in person Appellant ) ) ) ) - and - ) ) ) Tim Hill ) for the Respondent ) ERNST & YOUNG INC., Trustee of the ) David G. Coles Estate of NsC Diesel Power Incorporated ) for ABN Amro Bank Canada ) ) Respondent ) Robert W. Wright, Q.C. ) for Ersnt & Young, Inc. ) ) D. Bruce Clarke ) for the Superintendent ) in Bankruptcy ) ) Thomas M. MacDonald ) for Krupp Mak Maschinenbau ) Gmbh and Krupp Mak Diesel Inc. ) ) ) Application Heard: ) October 20, 1994 ) ) Judgment Delivered: ) October 26, 1994 BEFORE THE HONOURABLE JUSTICE RONALD N. PUGSLEY, IN CHAMBERS PUGSLEY, J.A.: (In Chambers) Applications have been brought by Robert Wright, Q.C., counsel for Ernst & Young Inc., in its personal capacity, and David Coles as counsel for ABN Amro Bank Canada, pursuant to Rule 49 under the Bankruptcy and Insolvency Act, as well as Civil Procedure Rule 62.13, for orders for security for costs of an appeal filed by Frederick L. Black. The appeal is from an order of Palmeter, A.C.J. dated August 3rd, 1994 which provides: IT IS ORDERED that all applications presently before this Court by the bankrupt NsC Diesel Power Incorporated, Nsc Consultants Limited and Nova Scotia Commonwealth (NsC) Consultants Limited, or by Frederick W. L. Black as an officer of any of the said companies, be and the same are hereby stayed until such time as NsC Diesel Power Incorporated, NsC Consultants Limited and Nova Scotia Commonwealth (Nsc) Consultants Limited, or Frederick W.L. Black as an officer of any of the said companies shall be represented by counsel authorized to carry on the practice of law in the Province of Nova Scotia, or until further order of this Court. AND IT IS FURTHERED ORDERED that all further applications relating to the Bankruptcy of NsC Diesel Power Incorporated shall be made to the case management Judge of the Court assigned to this matter, rather than to the Registrar in Bankruptcy, until further order of this Court. It is to be noted that the order was "upon motion of the Court" and not at the instance of any party, or interested party, to the litigation. The grounds of appeal allege that the order was issued "without notice, without evidence, without argument, and without service" contrary to certain rules of the Bankruptcy Court, as well as contrary to the Charter of Rights and Freedoms. Mr. Black describes himself in the notice of appeal as "Frederick W.L. Black as the Officer of the Bankrupt" (i.e., NsC Diesel Power Incorporated). Mr. Black applied to Chief Justice Clarke, in Chambers, on August 4th. After lengthy argument, the Chief Justice granted an order providing that the order of Palmeter, A.C.J. dated August 3rd, 1994 "be referred to a panel of the Nova Scotia Court of Appeal on December 1st, 1994 to hear an application by Frederick W.L. Black, on behalf of the appellant, for leave to appeal, and, if granted, to hear the appeal." A supplementary order was issued by the Chief Justice on September 13th providing that Mr. Black be deemed to be the "applicant" and that he be "entitled to the carriage of the application" on December 1st. Since late 1989, a multitude of applications relating to the bankrupt have been brought before the Supreme Court of Nova Scotia and this Court, primarily by Mr. Black. While Mr. Black is not a lawyer, he has substantial experience and familiarity with the Bankruptcy and Insolvency Act and Rules promulgated thereunder, and the Civil Procedure Rules of this Province. (See my comments in a decision filed on even date, relating to the amended notice of motion dated October 4th, 1994.) In support of their motion for security for costs, counsel points out that: 1. Mr. Black resides in Ottawa; 2. Mr. Black is not possessed of sufficient property within the jurisdiction to pay costs if the appeal is unsuccessful; 3. Mr. Black's companies have several unsatisfied orders for costs made against them in Nova Scotia. Indeed Mr. Black was ordered to personally pay costs amounting to $5,000.00 in June of 1993. No payment on account has been made by him. 4. Mr. Black's appeal is frivolous and vexatious. Mr. Black did not file any material with the Court suggesting that he was impecunious, or that an order for security for costs against him, would in any way inhibit his ability to prosecute his appeal. Further, he did not offer any explanation why an order of this Court for payment of costs has remained unsatisfied since June of 1993. His submissions were confined to the following two points: 1. The respondents, Ernst & Young Inc., and ABN Bank, were not respondents in the appeal and hence had no status to apply for an order for costs; 2. He was not acting in his personal capacity but only in his capacity as an officer of the bankrupt. Civil Procedure Rule 62.13(1) provides that: 62.13 (1) A Judge on application of a party to an appeal may at any time order security for the costs of the appeal to be given as he deems just. While it is accurate to suggest that Ernst & Young Inc. and ABN Bank are not described as parties in the style of action, they are, in any meaningful respect, "parties" to the appeal as is borne out by the following facts: 1. At all material times throughout the case management process, the applicants have been treated as "parties". 2. Mr. Black wrote to Palmeter, A.C.J. on January 6th, 1994, advising in part: "From our point of view, initially the parties to this case management process should be: 3) Ernst & Young Inc., and its many interests, including its capacity as trustee of the state . . . 4) The solicitor for Ernst & Young Inc., Robert W. Wright, Q.C., of Daley, Black and Moreira . . . 7) The present solicitor for the petitioning creditor, ABN Amro Bank, David G. Coles." 3. On July 13th, 1994 Mr. Black filed a notice of motion advising that he would apply for an order to remove Ernst & Young Inc. as trustee of the bankrupt and also to claim damages from that firm. 4. The orders of Chief Justice Clarke of August 4th and September 13th recognize Messrs. Wright and Coles as acting on behalf of interested parties to the appeal. In short, Ernst & Young Inc. in its personal capacity and ABN Amro Bank have at all times been treated, by all parties including Mr. Black, as interested parties in all the proceedings relating to the bankrupt. With respect to the second argument advanced, Mr. Black at all times has acted as the amanuensis and controlling persona in these matters since this labyrinth of litigation was commenced almost five years ago. I do not accept the submission that it is only in the capacity of an officer of the bankrupt that he has launched this appeal. MacDonald, J.A. of this Court on commenting on C.P.R. 62.13 stated in Frost v. Herman (1976), 18 N.S.R. (2d) 167 at 168: "In my view, however, the discretion given a judge on the present Rule 62.13 to order security 'as he deems just' should not be exercised in favour of any applicant unless special circumstances exist for doing so." In my opinion, the applicants have established that "special circumstances" do exist in this case in the light of : 1. the history of these proceedings; 2. the background information disclosed in the case management communications placed before me; 3. the failure of Mr.Black to honour an order of this Court when costs were awarded against him; 4. the absence of any information before me to suggest that Mr. Black's ability to prosecute the appeal will be inhibited in the event this order is made. This Court follows the English practice wherein the amounts set for security are intentionally less than the amounts that may probably be taxed (L.E. Powell and Company Limited v. Canadian Railway Company et al. (1975), 11 N.S.R. (2d) 532). An order shall be issued requiring Mr. Black personally to post security with the Registrar of the Court of Appeal in the amount of $1,000.00 respecting each application, the security to be posted on or before November 15th, 1994. Costs of this application shall be left to the panel hearing the appeal. J.A.