



COURT OF APPEAL FOR ONTARIO

CITATION:

Canada
    (Superintendent of Bankruptcy) v. 407 ETR Concession Company Limited, 2012 ONCA 569

DATE: 20120905

DOCKET: M40742 & M40925 (C54560)

Weiler, Blair and Rouleau JJ.A.

In the Matter of the Bankruptcy of Matthew David
    Moore, of the City of Brampton in the Regional Municipality of Peel, Province of
    Ontario

BETWEEN

The Superintendent of Bankruptcy

Respondent/Applicant (Appellant)

and

407 ETR Concession Company
    Limited
and Matthew David Moore

Moving
    Party/Respondent (
Respondents
)

J.T. Curry and Andrew Parley, for the respondent 407 ETR
    Concession Company Limited

Liz Tinker, for the appellant

Heard: May 16, 2012

Rouleau
    J.A.:

Introduction

[1]

The court is being called upon to rule on two motions.  The first is a
    motion by 407 ETR Concession Company Limited (407 ETR) to quash the notice of
    appeal delivered by the Superintendent of Bankruptcy (Superintendent) on the
    basis that the Superintendent does not have the standing necessary to appeal
    the decision.

[2]

In the event that 407 ETRs motion to quash is successful, the
    Superintendent seeks leave to appeal and an extension of time to bring the
    motion for leave.

[3]

407 ETR opposes leave being granted on the basis that the Superintendent
    was not a party to the underlying dispute, a dispute that has since settled,
    and there is no basis in law for granting such leave.

[4]

The outcome of these motions turns on the proper interpretation of ss.
    5(4)(a) and 193(e) of the
Bankruptcy and Insolvency Act
, R.S.C. 1985,
    c. B-3 (
BIA
).

Facts

[5]

Matthew David Moore (Moore) made an assignment in bankruptcy in November
    2007.  At the time he had accumulated a debt to 407 ETR of approximately
    $35,000 in unpaid toll charges.

[6]

On June 21, 2011, Deputy Registrar Donaldson made an order granting Moore an absolute discharge from bankruptcy.  Moore then sought to obtain valid vehicle
    permits for two cars.    Section 22(4) of the
Highway 407 Act, 1998
,
    S.O. 1998, c. 28, prevents the Registrar from validating or issuing permits
    where 407 tolls remain unpaid. Accordingly, the Registrar of Motor Vehicles
    refused to validate or issue the permits because of the unpaid tolls

[7]

Moore brought a motion returnable before a registrar in bankruptcy
    seeking a declaration that his debt to 407 ETR was released pursuant to his
    absolute discharge from bankruptcy.  Both 407 ETR and the Superintendent were
    served with notice of the motion.

[8]

Registrar Mills heard the motion on September 8, 2011.  Through
    inadvertence 407 ETR did not appear. Nor did the Superintendent.  The
    Superintendent explained that, based on past experience, such motions were usually
    granted or settled.

[9]

The registrar allowed Moores motion granting an order that: (i) Moores discharge on June 21, 2011 released him from all claims provable in bankruptcy,
    including the debt of 407 ETR; and (ii) directing the Ministry of Transportation
    to issue licence plates to Moore upon payment of the usual licensing fees.

[10]

Upon
    becoming aware of the registrars order, 407 ETR took steps to have it set
    aside.  It brought a motion in the Superior Court, rather than before a
    registrar in bankruptcy.
[1]
407 ETR did not give the Superintendent notice of its motion.  Moore consented to the motion, which was granted by the motion judge on October 6, 2011.

[11]

Moore subsequently amended his motion and filed it with the Superior Court. He moved for
    the same relief he had sought before the registrar. He also sought a
    declaration to prevent 407 ETR from using s. 22(4) of the
Highway 407 Act
to stop him from obtaining a vehicle permit.

[12]

Additionally,
    he served 407 ETR and the Attorneys General of Canada and Ontario with a notice
    of constitutional question.  He maintained that the refusal to validate or
    issue a vehicle permit under the provincial legislation engaged four conflicts
    with the
BIA
and that s. 178(2) of the
BIA
provides that
    an order of discharge releases the bankrupt from all claims provable in
    bankruptcy.

[13]

On
    October 25, 2011, the motion judge dismissed Moores motion.  He concluded that
    there was no operational conflict between s. 22 of the
407 Highway Act
and s. 178(2) of the
BIA
.  As a result, he declined to grant the
    relief sought by Moore.

[14]

The
    Superintendent did not receive notice of any of the proceedings before the motion
    judge, including the constitutional question.  It learned of these proceedings
    after the motion judges decision dismissing Moores motion on its merits.

[15]

On
    November 4, 2011, the day before the end of the appeal period, the
    Superintendent intervened in this proceeding by serving and filing a notice of
    appeal.  It relied on ss. 5(4)(a) and 193(c) of the
BIA
as its
    authority to do so. Later that day, Moore advised the Superintendent that he no
    longer intended to appeal the decision as he had received a very, very
    attractive offer to settle from 407 ETR.

[16]

On
    November 17, 2011, 407 ETR brought a motion to quash the Superintendents notice
    of appeal.  It took the position that the Superintendent lacks standing to
    bring an appeal as it was not a party to the proceeding below.  Further, if the
    Superintendent were to request leave, leave should not be granted.

[17]

The
    Superintendent took the position that leave was not required to appeal the
    motion judges decision.  However, out of an abundance of caution, it brought a
    motion requesting leave pursuant to s. 193(e) of the
BIA
and/or the courts
    inherent jurisdiction and sought an extension of time to do so.

Issues

[18]

The
    issues raised by these motions are as follows:

1.

Does the
    Superintendent have standing to appeal the order of the motion judge as of
    right?; and

2.

If the
    Superintendent does not have standing as of right:

(a)
    Can the Superintendent appeal the motion judges decision with leave of the
    court?

(b)
    Should an extension of time for serving and filing a notice of motion
    requesting leave to appeal be granted?; and

(c)
    Should leave to appeal be granted?

Analysis

(1)

Does the Superintendent have
    standing to appeal the order of the motion judge as of right?

[19]

An
    appeal from a decision or order made in proceedings instituted under the
BIA
is governed by the
BIA
and the
Bankruptcy and Insolvency General Rules
,
    C.R.C., c. 368 (
BIA
rules), not by the
Courts of Justice Act
,
    R.S.O. 1990, c. C-43, and the
Rules of Civil Procedure
, R.R.O. 1990,
    Reg. 194.

[20]

BIA
rule 31(1) provides that an appeal to a court of appeal referred to in s.
    183(2) of the
BIA
(which includes the Court of Appeal for Ontario) must be made by filing a notice of appeal at the office of the Registrar of the
    court appealed from.  In the case of Ontario, the court appealed from is the
    Superior Court of Justice.  The appeal must be filed within ten days of the
    order or decision appealed from.

[21]

The
    Superintendent relies on the broad power granted by s. 5(4)(a) of the
BIA
,
    as providing it with a right of appeal to this court even where it did not
    participate in the proceedings at the first instance and none of the original
    parties are appealing. I do not agree that s. 5(4)(a) grants the Superintendent
    that right.

[22]

The
    section allows the Superintendent to intervene in any matter or proceeding in
    court, where the Superintendent considers it expedient to do so, as if the
    Superintendent were a party thereto.  Although the section gives the
    Superintendent a broad power to intervene, the ability to do so is restricted
    to a proceeding in court.

[23]

Court
    is defined in s. 2 of the
BIA
. Except in certain noted sections, it 
means a court referred to in subsection 183(1) or
    (1.1).
Sections. 183(1) and (1.1) list the provincial and territorial
    trial courts, including the Superior Court of Ontario. The Court of Appeal for Ontario, or any other appellate court for that matter, is notably absent from the list.  The
    scope of intervention by the Superintendent contemplated by s. 5(4)(a)is thus limited
    to the trial courts, and not the courts of appeal.

[24]

The
    Superintendent further argues that even if s. 5(4)(a) only allows interventions
    in the Superior Court, technically, its intervention in this proceeding was
    filed in the Superior Court within the requisite ten day appeal period. Pursuant
    to
BIA
rule 31(1), the notice of appeal is to be filed with the
    Superior Court, not the Court of Appeal. After filing it is transmitted to the
    Court of Appeal.  As a result, the Superintendent contends that the intervention
    was made before the matter had left the Superior Court.

[25]

I
    would not give effect to this submission.  Although
BIA
rule 31(1) provides
    for the filing of the notice of appeal in the Superior Court, the appeal is taken
    to the Court of Appeal for Ontario.  For all intents and purposes, it is a
    proceeding taken in the Court of Appeal.  It is the Court of Appeal and not the
    Superior Court that has authority over the proceeding, including the
    appropriate parties and any proposed interveners.

[26]

The
    Superintendent, therefore, has no standing to bring an appeal to this court as
    of right. However, that does not dispose of the matter. The Superintendent
    argues that it has standing to appeal the motion judges decision with leave of
    the court.

(2)(a) Can the Superintendent appeal the motion judges
    decision with leave of the court?

[27]

Section
    193 of the
BIA
provides for statutory rights of appeal and reads as
    follows:

Unless otherwise expressly provided, an appeal lies to the
    Court of Appeal from any order or decision of a judge of the court in the
    following cases:

(a) if the point at issue involves
    future rights;

(b) if the order or decision is likely
    to affect other cases of a similar nature in the bankruptcy proceedings;

(c) If the property involved in the
    appeal exceeds in value ten thousand dollars;

(d) From the grant of or refusal to
    grant a discharge if the aggregate unpaid claims of creditors exceed five
    hundred dollars; and

(e) In any other case by leave of a
    judge of the Court of Appeal.

[28]

The
    Superintendent argues that s. 193(e) is a catch all provision allowing for the
    possibility of an appeal in any case that does not otherwise fall under s.
    193(a) to (d).  Section 193(e) is, therefore, broad enough to permit this court
    to grant leave and allow the Superintendent to appeal from the motion judges
    decision even though it was not a party thereto.

[29]

407
    ETR argues that absent a statutory right of appeal, there is no inherent
    jurisdiction in this court to hear the appeal.  407 ETR submits that s. 193(e)
    of the
BIA
, does not give this court jurisdiction to grant the leave
    to appeal sought and has no application in this case.

[30]

I
    agree with the Superintendents submission.  Subsections 193(a-d) grant
    automatic rights of appeal.  Subsection (e), however, is distinct from the
    preceding sections in that it is discretionary.  The wording gives the court
    broad discretion.  It provides that in any case where leave is granted, other
    than those listed in (a-d), an appeal lies to the Court of Appeal from any
    order or decision of a judge of the court.

[31]

Although
    we have not been referred to a reported case where a court of appeal granted
    leave to the Superintendent where it was not a party in the lower court
    proceedings, I see nothing in the section that prevents us from doing so.
    Indeed, reading the provision in the context of the statutory scheme and, in
    particular, the unique position of the Superintendent, necessitates this
    conclusion.

[32]

Even
    where the Superintendent does not intervene as a party in the Superior Court, its
    statutory position is such that it is not a true stranger to the proceedings.
    The Superintendent holds a unique position with respect to bankruptcy
    proceedings.  It is the chief government official appointed by the Governor in
    Council charged with supervising the administration of all estates and matters
    to which this Act [the
BIA
] applies:
BIA
, s. 5(2).

[33]

To
    allow the Superintendent to fulfill this role, the
BIA
gives it the
    power to intervene in any
BIA
proceedings in the Superior Court as if
    it were a party:
BIA
, s. 5(4).  To guide the exercise of that
    authority, the Superintendent has established an intervention program that has,
    as its objective:

identify[ing] those situations in which the Superintendent or a
    representative of the Superintendent should intervene in the administration of
    certain cases by applying to the courts
to ensure that the integrity of the
    insolvency process is maintained.
This may involve cases  where matters
    of public policy are concerned: Frank Bennett,
Bennett on Bankruptcy
,
    14
th
ed. (Toronto: CCH, 2009), at p. 1471. [Emphasis added.]

[34]

Intervention
    at first instance is therefore crucial to the important role of the
    Superintendent in maintaining the integrity of the bankruptcy and insolvency
    system. It follows that in certain exceptional circumstances, for example,
    where a decision is made to which the Superintendent was not a party,
    Parliament must have intended that it be permitted to seek the leave of this
    court to appeal from that decision.

[35]

That
    said, where the Superintendent relies on s. 193(e) to appeal a decision to
    which it was not a party at first instance, leave to appeal should only be
    granted in exceptional circumstances and in accordance with the factors the
    court relies on when exercising its inherent jurisdiction to grant leave to a
    non-party, as set out in
Société des Acadiens du Nouveau-Brunswick Inc. v.
    Assn. of Parents for Fairness in Education, Grand Falls District 50 Branch
,
    [1986] 1 S.C.R. 549, at p. 594. That is, the applicant should be able to show:

(a) that its
    interest was not represented at the proceeding;

(b) that it has an
    interest which will be adversely affected by the decision;

(c) that it is, or
    can be, bound by the order;

(d) that it has a
    reasonably arguable case; and

(e) that the
    interests of justice in avoiding a multiplicity of proceedings would be served
    by the grant of leave.

[36]

In
    my view, these factors provide a helpful guide to determine when the
    Superintendent has established exceptional circumstances justifying the
    granting of leave under s. 193(e) where it has not intervened in the
    proceedings below.

[37]

I
    therefore conclude that s. 193(e) of the
BIA
permits this court to
    grant the Superintendent leave to appeal from a lower court decision to which
    it was not a party where it can establish exceptional circumstances, and meet
    the standard test that any party must meet to obtain leave of the court.

(2)(b) Should an extension of time for serving and filing
    a notice of motion requesting leave to appeal be granted?

[38]

Before
    deciding whether the Superintendent should be granted leave in this case, there
    is the question of the timing of its motion. The decision the Superintendent
    seeks to appeal was issued October 25, 2011. The Superintendents notice of
    appeal was served and filed November 4, 2011.  The notice of motion seeking
    leave to appeal, however, was not filed until January 17, 2012, after the
    Superintendent became concerned that leave may in fact be required.  By this
    time, the motion was out of time.

[39]

In
    my view, the extension of time ought to be granted.  It is well established
    that in deciding whether to extend the time to appeal or seek leave, the court
    will consider:

a)

whether the
    person formed an intention to appeal within the relevant period;

b)

the length of
    the delay and the explanation for the delay;

c)

any prejudice to
    the respondent;

d)

the merits of
    the appeal; and

e)

whether the
    justice of the case requires it.

See
Rizzi v. Mavros
, 2007 ONCA 350, 85 O.R.
    (3d) 401, at para. 16.

[40]

In
    this case, the Superintendent formed the intention to appeal within the
    relevant ten day appeal period, as demonstrated by the timely service and
    filing of its notice of appeal.  It has also provided a satisfactory explanation
    for the delay in bringing the motion for leave.  The Superintendent originally
    believed, and still believes, that it had the right to intervene pursuant to ss.
    5(4)(a) and 193(c) of the
BIA
and did not require leave to appeal 
    After reviewing the respondents factum, it determined that it was prudent to
    request leave as an alternative argument and did so in a timely fashion.

[41]

There
    is no indication of any prejudice to 407 ETR as a result of the timing of this
    motion.  407 ETR knew early on that the Superintendent was appealing and knew
    the basis of that appeal.  Further, since 407 ETR and Moore have settled their dispute,
    the timing of the appeal does not delay any receipt of funds.

[42]

As
    to the merits of the appeal and the justice of the case, there are a number of
    alleged errors of law raised by the Superintendent.

[43]

The
    Superintendent submits that the motion judge mischaracterized key elements of
    the bankruptcy and insolvency system, and the interplay between section 22(4)
    of the
Highway 407 Act
and s. 178(2) of the
BIA
.  It further
    argues that the motion judges statement that the first goal of the bankruptcy
    system is the equitable distribution of the assets of a bankrupt among the
    estates creditors runs contrary to the Supreme Court of Canadas decision in
Husky
    Oil Operations Ltd. v. Minister of National Revenue,
[1995] 3 S.C.R. 453,
    at para. 7.

[44]

Additionally,
    the Superintendent has an interest that may be adversely affected in the sense
    that the decision has the potential to seriously impact the bankruptcy and
    insolvency system.  Arguably, it creates a new class of debts that can be
    enforced after bankruptcy over and above those set out in s. 178(1) of the
BIA
. 
    With respect to the impact on 407 ETR alone, the Superintendent explains that
    since 2007, the number of bankrupts and proposals debtors in Ontario who list
    407 ETR as a creditor exceeds 6,000.

[45]

These
    issues are significant and at the very least constitute arguable grounds for an
    appeal. There is, therefore, good reason to grant the extension sought by the
    Superintendent.

(2)(c) Should leave to appeal be granted?

[46]

The
    remaining question then, is whether this is an appropriate case in which to
    grant leave to appeal. In my view, even though it was not a party to the
    proceedings below, the Superintendent has demonstrated that the answer must be
    yes.

[47]

Generally
    speaking, the factors to be considered on an application for leave to appeal
    are:

a)

whether the point of
    appeal is of significance to the practice;

b)

whether the point
    raised is of significance to the action itself;

c)

whether the appeal is
prima
    facie
meritorious or, on the other hand, whether it is frivolous; and

d)

whether the appeal
    will unduly hinder the progress of the action.

See
Power Consolidated (China) Pulp Inc. v.
    British Columbia Resources Investment Corp.
(1988), 19 C.P.C. (3d) 396
    (C.A.);
Med Finance Co. S.A. v. Bank of Montreal
(1993), 22 C.B.R.
    (3d) 279, (B.C.C.A.);
Norbourg Groupe financier inc. (Syndic de
)
,
2006 QCCA 752, 33 C.B.R. (5th) 144;
Medical
    International Technologies (MIT Canada) Inc. v. V. & G. International
    Licensing Corp.
, 2010 QCCA 1826, [2010] Q.J. No. 10209;
Re Pope &
    Talbot Ltd.
, 2011 BCCA 326,
21
    B.C.L.R. (5th) 270
.

[48]

However,
    as Armstrong J.A. noted in
SVCM Capital Ltd. v. Fiber Connections Inc.
(2005),
    198 O.A.C. 27, at paras. 19-20, there is no stringent test for determining
    whether to grant leave to appeal pursuant to s. 193(e) of the
BIA
.
    There is a variety of factors to consider depending on the circumstances of the
    case.  Armstrong J.A. highlighted the prominence of two such factors: the
    existence of arguable grounds of appeal and issues of significance to the
    bankruptcy practice that ought to be considered and addressed by the Court of
    Appeal.

[49]

As
    previously discussed, the Superintendent has established that the appeal is not
    without merit and the issues raised are significant to the bankruptcy
    practice.  It has therefore satisfied the standard test for obtaining leave
    applicable to all parties. The second part of the equation is whether the
    Superintendent has demonstrated that this is an exceptional case so as to
    justify granting leave to appeal notwithstanding its absence as a party at
    first instance. In my view, it has.

[50]

This
    is not a case where the Superintendent made a conscious decision not to
    intervene at first instance. In the present case, the Superintendent was
    deprived of the opportunity to exercise its discretionary power to intervene in
    the Superior Court proceeding because it never received notice of the setting
    aside of the registrars order, or Moores amended notice of motion and notice
    of constitutional question.  All of these issues were before the motion judge
    and would ordinarily have attracted the attention of the Superintendent, who
    would likely have intervened.

[51]

Unaware
    of the proceedings, however, the Superintendent did not intervene. Its
    interests, thus, went unrepresented. And, as discussed above, the unique
    interests of the Superintendent  regarding the integrity of the bankruptcy and
    insolvency system  were, at least arguably, adversely affected. It is worth
    emphasizing that the interests of the Superintendent are not identical to those
    of the bankrupt. They are much broader and of a systemic nature. It is
    therefore no answer to say that the Superintendents interests were represented
    below through the submissions of Moore.

[52]

The
    Superintendent is not bound by the order of the motion judge in that it is
    required to take, or refrain from taking, some action. However, in so far as
    the motion judge made findings that dictate how certain debts are to be treated
    under the
BIA
, the Superintendent is bound by those findings in its
    supervision of the bankruptcy regime. Further, as discussed above, the
    Superintendent has an arguable case that the motion judges decision is the
    product of a misapprehension of the bankruptcy and insolvency system and its
    relationship with the
Highway 407 Act
.  The Superintendent is also
    concerned that the decision appears to run counter to the interpretation given
    to s. 178(2) by the court is Saskatchewan in the recent decision of
Gorguis
    v. Saskatchewan Government Insurance
, 2011 SKQB 132, [2011] 6 W.W.R. 372,
    a decision presently under appeal.

[53]

Finally,
    given the broader importance of the issues raised on this appeal and, specifically
    the concern that the decision of the motion judge may result in a conflict
    between how s. 178(2) of the
BIA
is interpreted in Ontario and in
    Saskatchewan, it is in the interests of justice to allow the Superintendent to
    pursue them before this court, rather than to leave the law in a state of
    uncertainty until such time as the issue arises in another proceeding.

[54]

The
    importance of the arguable issues in the proposed appeal, combined with the
    inability of the Superintendent to respond to them at first instance brings this
    case within the narrow category of exceptional cases where leave to appeal
    ought to be granted to the Superintendent despite that it was not a party at
    first instance. I would therefore grant the Superintendents application for
    leave to appeal.

Conclusion

[55]

The
    Superintendents application for an extension of time to file its notice of
    motion seeking leave to appeal the motion judges decision is granted, as is
    its application for leave to appeal that decision.  Because I agree with 407
    ETRs submission that the Superintendent did not have a right to appeal, I
    would normally grant the relief sought and strike the appeal.  However, as I am
    granting the Superintendents application for leave, no useful purpose would be
    achieved by requiring the filing of a fresh notice of appeal. Costs of both
    motions are reserved to the panel hearing the appeal.

Released: Sept. 5, 2012                                         Paul
    Rouleau J.A.

KMW                                                                I
    agree K.M. Weiler J.A.

I
    agree R.A. Blair J.A.





[1]
The Superintendent suggested that 407 ETR made a deliberate choice
    to move before a judge of the Superior Court instead of a registrar in bankruptcy.
    It referred to the bankruptcy of Dean Robert Oliver where 407 ETR failed to
    appear on a similar motion through inadvertence.  In response to a later
    consent motion brought by 407 ETR to set aside the order obtained, Registrar
    Nettie advised 407 ETR that although he would allow the consent motion to set
    aside the order, such an inadvertence will not be excused in the future.


