Performance Factory Inc. v. Atlantic Insurance Company Limited

Date: 20120229 Docket: 12/06 Citation: Performance Factory Inc. v. Atlantic Insurance Company Limited, 2012 NLCA 15 IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR COURT OF APPEAL BETWEEN: PERFORMANCE FACTORY INC. APPELLANT AND: ATLANTIC INSURANCE COMPANY LIMITED RESPONDENT Coram: Hoegg J.A. Application Heard: February 21, 2012 Decision Rendered: February 29, 2012 Counsel for the Appellant: Rosellen Sullivan Counsel for the Respondent: John Dawson and John Taylor-Hood Page: 2 Hoegg J.A.: [1] Performance Factory Inc. (“Performance”) applies pursuant to rule 57.20(8) of the Rules of the Supreme Court, 1986 for reinstatement of its appeal, which was deemed abandoned. Background [2] Performance operated a recreational vehicle dealership in New-Wes- Valley, Newfoundland and Labrador in the late 1990’s and 2000. On October 20, 2000, its business premises and their contents were destroyed by fire. Performance claimed for its loss from its insurers, Atlantic Insurance Company Limited (“Atlantic”). Atlantic refused payment. Performance filed suit, and Atlantic defended the claim on grounds of arson. A trial took place in the Supreme Court of Newfoundland and Labrador in November, 2009, and a decision in favour of Atlantic was filed on March 3, 2010. Performance filed an appeal of the decision on March 16, 2010. [3] On January 21, 2011, the trial transcript was filed with this Court, and on January 25, 2011 the CDs of the transcript were filed. No other court action has been taken to advance the appeal. On January 25, 2012, Performance’s appeal was deemed abandoned pursuant to rule 57.20(4). On February 1, 2012, Performance applied for reinstatement. The Law [4] Rule 57.20(4) stipulates that if no steps are taken on a pending appeal for 12 months, the appeal shall be deemed abandoned. Rule 57.20(8) provides that an appeal can be reinstated by the court on just terms. [5] In Fahey v. Newfoundland (The Law Society of), 2003 NLCA 8, 221 Nfld. & P.E.I.R. 79, Chief Justice Wells stated that the decision to be made on a reinstatement application is whether “it is in the interest of justice that the appeal be reinstated or left abandoned.” He identified at paragraph 13 a list of factors to be judicially considered in determining the “interest of justice” in the case: 1. Whether the appeal can be said to be frivolous or vexatious, in the sense that there is no arguable case; 2. Whether, prior to its deemed abandonment, the appellant had a bona fide intention to proceed with the appeal; Page: 3 3. Whether there is a reasonable excuse for the failure to proceed with the appeal prior to the deemed abandonment; 4. Timeliness of the application for reinstatement after receipt of notice of deemed abandonment; and 5. The presence of any exceptional or special circumstances justifying or working against the fairness of reinstatement. Governing Principles Burden and Standard [6] The onus for reinstatement rests upon the applicant. As deemed abandonment results from administrative action rather than judicial determination, the standard an applicant must meet is relatively low unless the reinstatement involves prejudice to another party or the applicant has been engaged in deliberate delaying tactics. (See Fahey at paragraph 14.) [7] This standard was further explained by Chief Justice Green in J.F. v. T.P.S., 2011 NLCA 70, 313 Nfld. & P.E.I.R. 112 at paragraph 12: The theme running through the jurisprudence in this Court relating to re- instatement issues is that the Court should attempt to achieve “procedural fairness to and between the parties” (Fahey, para. 8) and that because deemed abandonment results from administrative action rather than judicial determination, a “low threshold” in respect of “any factor that did not involve prejudice to another party” or “did not include demonstrably deliberate delaying tactics by the applicant” would be indicated (Fahey, para. 14). Where, on the other hand, injustice to a party would result from re-instatement, the threshold should be much higher and could well be insurmountable. Prejudice [8] An important consideration in reinstatement applications is prejudice, considered under the “special circumstances relating to fairness” factor. This consideration was identified by Chief Justice Wells in Fahey at paragraphs 13 and 14 and emphasized by Chief Justice Green in J.F. at paragraph 12, in L.T. v. Director of Child, Youth and Family Services, No. 2, 2011 NLCA 1, 304 Nfld. & P.E.I.R. 134 at paragraphs 28 to 30, and in Stacey v. Stacey, 2009 NLCA 50, 289 Nfld. & P.E.I.R. 180 at paragraph 13. Prejudice can take many forms, and it could affect any party to the matter before the court as well as third parties (see J.F. at paragraph 13). Accordingly, an applications judge must carefully consider the prejudice Page: 4 issue in relation to the prosecution of the appeal on its merits, which is the qualified right of the appellant and which would occur but for the deemed abandonment. Balancing [9] The analytical result of any one of the Fahey factors does not necessarily determine the application, unless the appeal is entirely devoid of merit, in which case the application may fail for that reason. The non- exhaustive Fahey factors provide a lens through which the court can view the merits of the application so as to come to a just decision. Applicability of any one of these criteria will not determine the application. Rather, the analytical results of the Fahey factors are to be weighed and balanced against each other in consideration of the ultimate question. [10] In L.T., Chief Justice Green explained it this way: [21] It is important to appreciate that the existence of potential merit, and the degree of its potential strength, is a “factor” to be considered and balanced against the other considerations in the case; it is not a hurdle of a fixed height which, if cleared, will render its further consideration unnecessary in the determination of whether there ought to be an extension. The stronger the apparent merit of the case, the greater effect it may have in assessing the other considerations in the case; conversely, the weaker the apparent merit, the more likely it may be for other factors to be determinative. Analysis of Factors 1. Is there an arguable case on appeal? [11] Performance’s Notice of Appeal contains seven grounds. Some of the grounds allege that the trial judge made legal errors, and other grounds relate to factual errors. Performance asserts that its grounds are meritorious and that it intends to fully prosecute them. Atlantic maintains that Performance’s grounds of appeal are frivolous and vexatious, and that Performance has no arguable case. [12] Both Performance and Atlantic were prepared to argue their respective positions on each of the grounds of appeal by adverting to the trial evidence and the applicable law to justify their positions. While it is useful and necessary to have some context of the case, my task as an appellate judge deciding a reinstatement application is not to delve into the legal issues of the appeal for the purpose of determining the likelihood of their Page: 5 success. This would be inappropriate, for assessment of the grounds of appeal properly belongs to an appeal panel and can only be determined after a full hearing. [13] In a reinstatement application, consideration of the merits of the appeal is more akin to considerations at play in an action to strike pleadings. The trial judgment, the grounds of appeal and the parties’ positions are to be considered with a view to deciding whether the grounds of appeal have discernable merit. If they are frivolous and vexatious on their face, or if they fail to disclose any prospect of success, then the matter may end. But if the grounds of appeal have discernable merit, or if the judgment displays clear error (Fitzgerald v. Foote, 2003 NLCA 25, 225 Nfld. & P.E.I.R. 64), the appellant should have the opportunity to prosecute the appeal with the benefit of the evidentiary record and full legal argument, unless this opportunity is lost for other reasons. [14] On my review of the Notice of Appeal, the trial judge’s decision, and the filings on this application, I am unable to identify any clear error in the decision. However, I am also unable to say that Performance’s grounds of appeal have no discernable merit. They are not frivolous and vexatious on their face, nor are they obviously devoid of merit. Whether the appeal will be successful is not for me to say at this juncture. 2. Did the appellant have a bona fide intention to proceed with the deemed abandonment? [15] Atlantic asserts that the appellant’s failure to comply with the procedural requirements in the rules shows that Performance did not have a bona fide intention to appeal. Atlantic emphasizes that the appeal book was not filed within the time period stipulated in the rules and that the appeal has not been brought on for hearing. [16] Counsel for Performance swears that Performance has always fully intended to prosecute its appeal, and that much legal work has been done by her firm and the firm of her co-counsel to that end during the past twelve months. In particular, she swears that she prepared the factum and forwarded it to co-counsel in September 2011, that since then co-counsel has been actively engaged in preparing the appeal book, and that the two firms have spent hundreds of hours at considerable expense preparing for the appeal during the past year. Counsel for Atlantic takes no issue with this evidence. Page: 6 [17] While Performance’s failure to file the complete appeal book in accordance with the rules is unsatisfactory, that is but one aspect of bona fides. The undisputed evidence from Performance’s counsel that considerable work has been done on the matter during the past year is evidence of bona fides. That evidence, combined with the fact that there is no indication of any attempt to deliberately delay the appeal, satisfies me that Performance had a bona fide intention to proceed with its appeal. 3. Does the appellant have a reasonable excuse for failing to proceed with the appeal prior to the deemed abandonment? [18] In this case, counsel for Performance candidly admitted that she mistakenly believed that the deemed abandonment date was March 16, 2012. She says that she also advised her co-counsel to that effect. She accepts full responsibility for the error. Counsel did not seek to excuse her conduct, only to explain it. [19] In this case, the appeal did not proceed prior to its deemed abandonment because Performance did not bring it on. Performance did not bring it on because preparation was not complete. Performance had not completed its preparation because its counsel was working under the mistaken impression that they had approximately two more months in which to do so. [20] While some mistakes may be able to be characterized as unreasonable, I cannot characterize this mistake as unreasonable. While I cannot condone the mistake, it was an inadvertent and honest one. It is therefore understandable that Performance had not applied to have the appeal heard. In this regard, I observe that twelve months is not a long time in the judicial process, as Wells C.J.N.L. noted at paragraph 6 of Fahey. 4. Did the appellant act in a timely manner in applying for reinstatement upon becoming aware of the deemed abandonment? [21] In this case, the appeal was deemed abandoned on January 25, 2012. Counsel for Performance advised the court she received notice of the deemed abandonment on January 28, 2012. On February 1, 2010 she filed the application for reinstatement. There was a weekend in between these two dates. By any reasonable measure, timely application for reinstatement was made. Page: 7 5. Are there any exceptional or special circumstances, including prejudice to a party, justifying or working against the fairness of reinstatement? [22] A key issue for consideration under this factor is prejudice. [23] Atlantic has not asserted that it will suffer prejudice if this appeal is reinstated. Indeed on questioning, counsel for Atlantic candidly admitted that his client’s position was no different today from what it had been a month ago. However, Atlantic argued that there would also be no prejudice to Performance if the court did not reinstate the appeal, because Performance could ultimately collect on a judgment from its counsel’s professional liability insurer if the appeal were to succeed. While this may be so, such a scenario raises issues of representation for Performance, which involve time and expense and which would cause inevitable delay. Accordingly, I am unable to agree that Performance would not suffer prejudice if the appeal were not reinstated. Balancing the factors [24] In this case, the analytical results of the Fahey factors favour reinstatement of the appeal. The most that can be said in favor of the respondent’s position is that the appellant did not file its appeal book in accordance with the rules, and that its counsel made an inadvertent mistake about the date of deemed abandonment. However, this proceeding is about the interest of justice; it is not about punishing counsel for a slip up, or allowing another party to take advantage of such a situation. [25] In summary, Performance’s appeal cannot be said to be without arguable merit. Performance had a bona fide intention to prosecute the appeal and was actively working toward it. Performance made a timely application for reinstatement. And, there would be no prejudice to Atlantic or anyone else if the appeal were to be reinstated. In my view, the interest of justice clearly require the appellant to be permitted to have its appeal heard and determined on its merits. [26] Accordingly, Performance’s application is allowed, and its appeal is hereby reinstated. Page: 8 COSTS [27] Atlantic seeks its solicitor-and-client costs. Rule 57.20(8) provides that solicitor-and-client costs may be awarded to a respondent when the appellant succeeds in having its appeal reinstated. Solicitor-and-client costs are usually awarded only in cases of “reprehensible, scandalous or outrageous conduct” (Young v. Young, [1993] 4 S.C.R. 3 at p. 139), although it is arguable that the specific provision for solicitor-and-client costs in rule 57.20(8) suggests a lower standard for such an award in reinstatement applications. [28] Counsel for Performance objects to an award of solicitor-and-client costs to Atlantic saying that Atlantic could have consented to Performance’s reinstatement application and thereby avoided filing and appearance costs. This is a good point, especially given the fact that the application was made within a very few days of the deemed abandonment. [29] There is no behavioural justification for an award of solicitor-and- client costs in this case. The normal course on a reinstatement application is that the respondent is awarded its taxed party-and-party costs. (Fahey and Canada Bay Lumber Company v. Business Investment Corporation, 2009 NLCA 53, 290 Nfld. & P.E.I.R. 53.) I see no reason to deviate from that course in this case. [30] Accordingly, Atlantic is awarded its costs of this application to be taxed on a party-and-party basis. _____________________________ L. R. Hoegg J.A.