Smithies Holdings Inc. v. RCV Holdings Ltd.

2016 BCCA 311 Smithies Holdings Inc. v. RCV Holdings Ltd.

COURT OF APPEAL FOR BRITISH COLUMBIA Citation: Smithies Holdings Inc. v. RCV Holdings Ltd., 2016 BCCA 311 Date: 20160712 Docket: CA43569; CA43570; CA43589; 43590 CA43569; CA43589 Between: Smithies Holdings Inc. E.M. Smithies Investments Inc. 0704824 B.C. Ltd. Appellants (Plaintiffs) And RCV Holdings Ltd. Respondent (Defendant) - and - Docket: CA43570; CA43590 Between: Smithies Holdings Inc. E.M. Smithies Investments Inc. 0704824 B.C. Ltd. Appellants (Plaintiffs) And RCV Holdings Ltd. Linnell Taylor Lipman & Associates Ltd. Ian Pritchard Respondents (Defendants) And Smithies Holdings Inc. E.M. Smithies Investments Inc. 0704824 B.C. Ltd. Spearpoint Holdings Ltd. Defendants by Counterclaim Corrected Judgment: The text of the judgment was corrected in paras. 2 and 3 on August 12, 2016 Before: The Honourable Madam Justice Saunders (In Chambers) On appeal from: an order of the Supreme Court of British Columbia, dated March 8, 2016 (Smithies Holdings Inc. v. RCV Holdings Ltd., 2016 BCSC 396, Vancouver Registry No. S125995) Oral Reasons for Judgment Counsel for the Appellant: R. Josephson Counsel for the Respondent: F. Lamer Place and Date of Hearing: Vancouver, British Columbia July 8, 2016 Place and Date of Judgment: Vancouver, British Columbia July 12, 2016 Summary: In ongoing litigation in the Supreme Court of British Columbia, which has produced already, after trial, one order on

a substantive issue, the parties addressed three further issues in one proceeding: special costs up to the date of the substantive order; a valuation issue; and a contribution issue. This resulted in three separate sets of reasons for judgment issued about a week apart, and three separate orders. The appellants have filed separate appeals in respect to each order. One appeal addresses only the special costs order. One addresses the valuation order. One addresses only the cost disposition on the contribution issue order. The respondents contend the appeals relating only to the costs orders require leave to appeal: Rule 2.1(f) of the Court of Appeal Rules. Held: leave to appeal the costs orders require leave to appeal because in respect to the three orders in the Supreme Court of British Columbia, the only aspect sought to be contested in the Court of Appeal is costs; notwithstanding all three issues could have been the subject of one order, they were not. [1] SAUNDERS J.A.: The applicant, RCV Holdings Ltd., the respondent on these appeals, applies for an order striking appeal nos. CA43569, CA43570, CA34589, CA34590 on the basis they are appeals as to costs only, for which leave to appeal is required under Rule 2.1 of the Court of Appeal Rules. [2] The litigation, two actions S12595 and S123328, in the Supreme Court of British Columbia is ongoing. It concerns a joint venture

agreement for development of lands in Alberta. By reasons for judgment given on September 5, 2014, Mr. Justice Butler, resolved one major issue that involved an appraisal process to establish value. He decided that issue against the position of the appellants, Smithies Holdings Inc., E.M. Smithies Investments Inc. and 0704824 B.C. Ltd. The resulting order has not been appealed. That order left unresolved substantial issues, one of which was the costs disposition of the proceeding up to and including September 5, 2014, and another was the valuation of property by a new court appraisal process in which, failing agreement, the court would make the decision on valuation. In addition the appellants claimed contribution from the respondents in respect to alleged operational costs. [3] These matters appear to have been advanced by motions, subsequent to September 2014, although strictly speaking the litigation was still mid-trial. In any event, these three issues were heard in one five-day hearing. What happened next has led to this application. The three issues just mentioned were the subject of three sets of reasons for judgment, issued roughly one week apart, and rather than one order being entered in respect to all three issues that had been heard at the same time, three separate orders were entered. The first, on costs of the proceedings to September 2014, held that the

appellants are liable to the respondent for special costs. The second is an order contrary to the position of the appellants, in respect to the appraisal and valuation issue. The third is an order concerning contribution which includes an order each party bears its own costs on that issue. [4] The appellants on each of the two actions filed three notices of appeal, one from the order of special costs, one from the valuation order and one from the costs order on the contribution issue only. This made six appeals. [5] The respondents contend on these applications that the appeals from the costs order (two times two equals four appeals) are from limited appeal orders and so require leave to appeal under Rule 2.1(f): an order granting or refusing costs, or granting or refusing security for costs, if the only matter being appealed is that grant or refusal. [6] Although Rule 2.1(f) is part of the 2012 enacted leave to appeal provision, it is consistent with the longstanding rule in this court that an appeal engaging only costs required leave to appeal. This applied even to a costs order made ancillary to a substantive order that was appealed, where the appeal on the substantive issue was abandoned. It is said this rule reflects the discretionary nature of a costs order and the deference this court must show trial judges on orders made in the exercise of the judge's discretion. In

other words, the rule reflects the high hurdle to success that the appellant must navigate. [7] The circumstances on this application have not been the subject of decision by a judge in chambers, to my knowledge. Circumstances in two cases I have been referred to, straddle the issue posed by this application. On one side is Bradshaw v. Stenner, 2012 BCCA 481, in which the appeal was from an order for special costs made separately from the substantive order. The main appeal was already heard when the issue of leave came before the court. Mr. Justice Hinkson held that leave to appeal was required. A division of this court, on a review, concluded he was correct. [8] On the other side is Popat v. MacLennan, 2015 BCCA 198, in which the respondent brought a cross-appeal on costs before the main appeal was heard. Mr. Justice Harris concluded the order of special costs was related to the conduct of the petition that led to the order appeared as of right. He said: [10] I take the view that the general rule in Leroux [Leroux v. Canada Revenue Agency, 2014 BCCA 355] should apply in these circumstances. It would be unwise, I think, to invite chambers applications in which the primary issue becomes to what degree costs orders are related or unrelated to the main proceedings out of which they arose. Inviting those kinds of applications would be unhelpful to the practice. I think there needs

to be a bright line so parties know where they stand. I would apply the Leroux case in this instance. [9] The situation in this case is unlike Bradshaw because there is an appeal extant that was brought as of right. It is unlike Popat because neither costs order relate to a substantive issue that has been appealed - the special costs order because it concerns the proceedings that lead to the first substantive order that was not appealed, and the second because it relates only to the contribution order that has not been appealed. [10] Had all three orders emanating from the single hearing been joined in one comprehensive order, I would consider these costs appeals to come as of right, but then there would not have been six appeals filed, only two - one for each action. [11] This court has taken a strict approach with respect to Rule 2.1. See for example, although now overtaken by a new rule 2.1(g), Royal Bank of Canada v. Miller, 2012 BCCA 419. See also Bentley v. The Police Complain Commissioner, 2012 BCCA 514, Do Process LP v. Infokey Software Inc., 2014 BCCA 470. [12] I conclude that, the costs orders being unrelated to substantive orders that are under appeal as of right, having been made on separate days, and having been entered separately as distinct orders, Rule 2.1(f) applies to require leave to appeal. [13] What should be done? I am told the respondent will contest the

applications for leave to appeal. [14] It is, however, not unknown that the wrong originating document is filed, notwithstanding Civil Practice Directive 19. In my view, it is in the interests of justice that the matter whether leave should be granted should be dealt with itself on its merits by this court and for that reason I am not dismissing the appeals right now. [15] The test for an extension of time engages certain questions. One of them is whether the appellants formed the intention to appeal within the proper time frame and advised the other side know. Clearly that happened here. Another question is the question of the merits of the appeal. That hurdle has to be overcome by the appellants anyway on the leave application. So I see no prejudice at all to extending the time and moving the parties and the court straight to the question of whether leave to appeal should be given in respect to these costs appeals. [16] I would grant an extension of time as necessary to allow the appellants to file notices of application of leave to appeal in respect to each of the four costs orders we are talking about today and serve them on the respondents, and to serve the notices of motion for leave to appeal and the motion book which I think can be a singular one, to bring on the application for leave to appeal. [17] With that I think I have answered the questions that I need to address. [18] I would say the respondent RCV Holdings Ltd. is entitled to costs of this application in any event of the cause. [discussion with counsel re. filings and filing dates] "The Honourable Madam Justice Saunders"