



COURT OF APPEAL FOR ONTARIO

CITATION: Krawczynski v. Ralph Culp and Associates Inc., 2019
    ONCA 399

DATE: 20190514

DOCKET: M50180 & M50387

Benotto J.A. (In Chambers)

In the
    Matter of the Bankruptcy of Mark Jack Krawczynski,
of the City of Hamilton, in the Province of Ontario

BETWEEN

Mark Jack
    Krawczynski

Moving Party (Applicant)

and

Ralph
    Culp and Associates Inc.

Responding Party (Respondent)

R. Klotz, for the applicant Mark Jack Krawczynski

A. Fogul, for the respondent Ralph Culp and Associates
    Inc., trustee of the estate of Mark Jack Krawczynski

Heard: May 6, 2019

REASONS
    FOR DECISION

[1]

The applicant moves for an order extending the time to perfect his
    motion seeking leave to appeal the dismissal of an order for security for
    costs.

Background

(1)

Facts

[2]

The applicant filed an assignment for the general benefit of his
    creditors in November 2009. At the date of his bankruptcy, he was the owner of
    real property at 54 Oakland Drive, Hamilton. The property vested in the respondent
    Trustee pursuant to ss. 67(1)(c) and 71 of the
Bankruptcy and
    Insolvency Act,
R.S.C. 1985, c. B-3 (
BIA
)
. At the time the property was listed
    as fully encumbered. It has since gone up in value.

[3]

The Trustee was discharged on April 17, 2016. Following the discharge,
    this court released its decision in
Lepage (Re),
2016 ONCA 403, 36
    C.B.R. (6th) 207. That decision dealt with the increase in equity of property as
    an after-acquired asset that could be realized for the benefit of creditors.
    Consequently, the Trustee sought re-appointment and possession of the property
    so that he could proceed to realize on the current equity of the property for
    the benefit of creditors. There are no funds in the estate.

(2)

Motion for security for costs

[4]

The applicant moved for security for costs against the Trustee. He argued
    that the Trustee is akin to a plaintiff in a civil suit and, as a nominal
    plaintiff or applicant, there is good reason to believe that the Trustee has
    insufficient assets in Ontario to pay the costs of the defendant or respondent
    in accordance with r. 56.01(d) of the
Rules of Civil Procedure,
R.R.O.
    1990, Reg. 194.

[5]

The motion was heard by Chiappetta J. who concluded that r. 56.01(d) did
    not apply for two reasons. First, the Trustee is not a nominal plaintiff or a
    corporation acting in a personal capacity. Rather, the Trustee is seeking
    recovery of the appreciation of an asset for the benefit of others. Second, in
    any event, the justice of the case does not warrant the order.

[6]

Chiappetta J. concluded:

In my view, a full hearing on the
    merits including an assessment of the conduct [of the Trustee] with a full
    evidentiary record, in the context of the
Re Lepage
case, is required
    to determine if the Trustee shall be personally liable for any costs awarded
    that are not covered by the estate. This assessment is more appropriately
    conducted at the conclusion of the hearingTo [conduct it] effectively by this
    motion would not be just.

(3)

The appeal and request for extension

[7]

The order of Chiappetta J. dismissing the motion for security for costs was
    dated January 15, 2019. After counsel for the applicant indicated that he had
    received instructions to seek leave to appeal the order, the Trustee consented
    to an extension of time for the applicant to file his Notice of Motion for
    Leave to Appeal. The Notice of Motion was eventually filed on February 8, 2019.
    Pursuant to r. 61.03.1(6), the applicant was required to perfect his motion for
    leave to appeal by serving and filing his motion record and factum by March 10,
    2019. He did not meet this deadline.

[8]

On April 16, 2019, the Registrar of the Court of Appeal for Ontario
    issued a Notice of Intention to Dismiss for Delay. This Notice indicated that
    if the applicant did not perfect his motion for leave to appeal by April 26,
    2019, it would be dismissed. The applicant again failed to perfect by this deadline.
    Instead, on April 26, 2019, the applicant filed a motion for an extension of time
    to perfect his motion for leave to appeal. In support of this motion for an
    extension of time, the applicant filed an affidavit of a law clerk explaining
    the delay as follows:

·

The applicant had difficulty funding the matter;

·

The law clerk was ill on April 25;

·

The feeder mechanism on the office copier was malfunctioning;

·

Additional research on the law is required and research that has
    already been done has gone missing.

Discussion

(1)

Test on a motion for an extension of time

[9]

Pursuant to r. 3.02(1), this court may extend any time limit prescribed
    by the
Rules of Civil Procedure
on such terms as are just. In
Issai
    v. Rosenzweig
, 2011 ONCA 112, 277 O.A.C. 391, at para. 4, Weiler J.A. identified
    the following five factors as relevant in determining whether to grant an
    extension of time to perfect an appeal:

(1) whether the appellant formed an intention to appeal within
    the relevant period;

(2) the length of the delay and explanation for the delay;

(3) any prejudice to the respondent;

(4) the merits of the appeal; and

(5) whether the justice of the case requires it.

[10]

A
    motion to extend the time for leave to appeal in the bankruptcy context was
    discussed by Strathy J.A (as he then was) in
Ontario
    Wealth Management Corporation v. Sica Masonry and General Contracting Ltd
.,
    2014 ONCA 500, 17 C.B.R. (6th) 91, at paras. 2 and 26:

Rule 31(1) of the
Bankruptcy
    and Insolvency General Rules
, C.R.C., c. 368, provides that a notice of
    appeal must be filed within ten days after the day of the order appealed from
    or within such further time as a judge of this court stipulates.

[]

The overarching principle is
    whether the justice of the case requires that an extension be granted. The
    relevant factors may include:

(a) whether the applicant had a
    bona fide intention to appeal before the expiration of the appeal period;

(b) the length of and explanation
    for the delay in filing;

(c) any prejudice to the responding
    parties caused by the delay; and

(d) the merits of the proposed
    appeal.

See
Howard v. Martin
,
    2014 ONCA 309 (CanLII);
Enbridge Gas Distribution Inc. v. Froese
, 2013
    ONCA 131 (CanLII), 114 O.R. (3d) 636. See also
Braich (Re)
, 2007 BCCA
    641 (CanLII).

[11]

This
    approach was adopted by this court in
National Telecommunications Inc
.
v. Stalt Telcom Consulting Inc.
(2018), 64 C.B.R. (6th) 169. At para.
    17 Simmons J. A. stated:

the overriding consideration is
    whether the justice of the case requires an extension and that the enumerated
    factors are both non-exclusive and may vary in importance depending on the
    circumstances.

(2)

Application of the test

Intention to appeal and explanation for the delay

[12]

Since
    this is a motion for an extension of time to perfect a motion for leave to
    appeal, instead of asking whether the appellant formed an intention to appeal,
    I would ask whether the applicant maintained an intention to seek leave to appeal
    within the relevant period. I must also consider whether the applicant has
    provided a reasonable excuse for the delay in perfecting the appeal.

[13]

In
    my view, it is not clear that the applicant maintained an intention to seek
    leave to appeal within the relevant period. The delay from March 10 (when the
    motion for leave was due to be perfected) to April 25 (when the law clerk fell
    ill) is unexplained. In addition, it appears that the applicant took no steps
    to perfect the appeal until the Registrar issued the Notice of Intention to
    Dismiss for Delay on April 16, 2019.

Prejudice to the respondent

[14]

The
    results of the motion for security for costs have no bearing on the merits of
    the Trustees application, and only add costs to the estate which will be borne
    by the creditors. I find there is prejudice to the respondent if the extension
    of time is granted.

Merits of the motion for leave to appeal

[15]

The
    applicant submits that this is not the time to consider the merits and, to the
    extent to which the merits of the leave motion are considered, a flexible approach
    has been adopted by this court and should be followed.

[16]

Indeed,
    there have been two approaches to the test for leave to appeal under s. 193(e)
    of the
BIA
. Both were discussed in
Business Development Bank of
    Canada v. Pine Tree Resorts Inc.
,

2013 ONCA 282, 115 O.R. (3d)
    617, by Blair J.A. In one, the
Power Consolidated
[1]

test, the court considers whether:

1.

the issue is of significance to the practice as a whole;

2.

it is of significance to the action itself;

3.

the appeal prima facie meritorious; and

4.

the appeal unduly hinder the progress of the action?

[17]

A
    second formulation was adopted by this court in
R.J. Nicol
[2]

which seeks to determine whether the decision from which leave to appeal
    is sought:

1.

Appears to be contrary to law;

2.

Amounts to an abuse of judicial power; or

3.

Involves an obvious error, causing prejudice for which there is no
    remedy.

[18]

Blair
    J.A. resolves the two approaches at para. 29 and states that:

The court will look to whether the proposed appeal,

a) raises an issue that is of
    general importance to the practice in bankruptcy/insolvency matters or to the
    administration of justice as a whole, and is one that this Court should
    therefore consider and address;

b) is
prima facie
meritorious,
    and

c) would unduly hinder the
    progress of the bankruptcy/insolvency proceedings.

[19]

The
    applicant submits that he has met this test.

[20]

I
    disagree.

[21]

The
    issue of whether an order for security for costs should have been granted in
    this case is not of general importance to the practice of bankruptcy law. It
    involves a discretionary interlocutory order which does not prejudice the
    applicant whose claim for costs is preserved. The proposed motion for leave to
    appeal would also divert the proceedings away from the real issue  the
    re-appointment of the Trustee  and thus unduly hinder their progress.

[22]

Finally, there is no
prima facie
merit to the appeal. The decision
    of Chiappetta J. was discretionary in nature and thus entitled to deference on
    appeal. In oral submissions, the applicant argued that the decision is clearly
    wrong because Chiappetta J. considered only r. 56.01, and not the
BIA
.
    I reject this submission. The
BIA
does not outline a specific
    procedure to apply on motions for security for costs in bankruptcy proceedings.
    However, s. 3 of the
Bankruptcy and Insolvency General Rules,
C.R.C.,
    c. 368 states that [i]n cases not provided for in the [
BIA
] or these
    Rules, the courts shall apply, within their respective jurisdictions, their
    ordinary procedure to the extent that that procedure is not inconsistent with
    the [
BIA
] or these Rules. Chiappetta J.s reliance on r. 56.01 of the
Rules of Civil Procedure
was therefore entirely appropriate. I note
    that the same conclusion was reached by Monnin J.A. of the Court of Appeal for
    Manitoba in
Moss (Re)
, 2005 MBCA 59, 15 C.B.R. (5th) 123, at para. 12.

The
    justice of the case

[23]

In
    light of the above, I conclude that the justice of the case does not require
    granting the applicant an extension of time to perfect his motion for leave to
    appeal.

Conclusion

[24]

The
    motion for an extension of time is dismissed.

M.L. Benotto J.A.





[1]

Power Consolidated (China) Pulp Inc. v. British Columbia Resources
    Investment Corp
. (1988), 19 C.P.C. (3d) 210.



[2]

R.J. Nicol Construction Ltd. (Trustee of) v. Nicol
(1995), 77 O.A.C. 395 (C.A.).


