



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 Partys 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.


