Court File and Parties

Court of Appeal for Ontario Date: 20230517 Docket: COA-23-OM-0122

Before: Simmons J.A. (Motions Judge)

Between: Dr. Gillian Stanley Responding Party (Plaintiff)

And: Fabrizio Lucchese, Fabco Holdings Inc., 2501500 Ontario Inc., Jaymor Securities Ltd., N. Dwayne Gray Jr. A.K.A. Dwayne Gray, and Zimmerman, Kiser & Sutcliffe, P.A. Moving Party (Defendant)

Counsel: Yonatan Lipetz, for the moving party Jayson Thomas, for the responding party

Heard: May 12, 2023 by video conference

Endorsement

[1] The moving party requests an extension of time to commence an appeal.

[2] The circumstances underlying this request are somewhat unusual. The responding party (the “lender”) obtained partial summary judgment against the moving party (the “guarantor”) on a “Guaranty” of a $1.8 million loan by way of an endorsement typed on the back of a motion record (the “motion judge’s endorsement” or the “endorsement”). The record is unclear, but it appears the partial summary judgment motion was heard on either August 3 or 4, 2021. The motion judge’s endorsement is dated August 4, 2021.

[3] For reasons that are not explained, counsel for the lender first obtained a copy of the motion judge’s endorsement on March 2, 2023, more than 18 months after the date of the endorsement. On March 3, 2023, counsel for the lender sent the motion judge’s endorsement to the guarantor’s counsel on the summary judgment motion (not Mr. Lipetz).

[4] Newly retained counsel for the guarantor (Mr. Lipetz) advised counsel for the lender of his retainer by email on Thursday, March 30, 2023 and requested the lender’s consent to “an extension of time to appeal to allow us to file the Notice of Appeal next week.” The lender’s counsel responded by email the same day, requesting that the guarantor’s counsel prepare a draft order and also stating:

I will seek instructions and get back to you likely over the weekend. In the meantime, please … serve your client’s notice of appeal without delay.

[5] The next communication between counsel was 12 days later, on April 11, 2023, again by email. On that day, counsel for the guarantor forwarded a notice of appeal to counsel for the lender and requested the lender’s position on consent to an extension of the time for appealing.

[6] The lender’s counsel again responded by email the same day, noting that the notice of appeal was being served 39 days after receipt of the endorsement and that the requested draft order had not been sent. Counsel for the lender also stated:

My client does not consent to extending the time beyond the thirty day period in which your client received the endorsement. She reserves her right to oppose any motion to extend the time to file the Notice of Appeal.

[7] This motion for an extension was brought 21 days later, on May 2, 2023, returnable May 12, 2023.

[8] For the reasons that follow, I grant a brief extension of time to file the notice of appeal on strict terms concerning future compliance with deadlines.

Discussion

[9] The test for obtaining an extension of time is well-established. In general, the court considers five factors when exercising discretion to grant or deny an extension of time:

i) whether the appellant formed an intention to appeal within the relevant time period; ii) the length of and explanation for the delay; iii) prejudice to the respondent; iv) the merits of the appeal; and v) as an overarching consideration, whether “the justice of the case” supports an extension.

For example, see Echelon Environmental Inc. v. Glassdoor Inc., 2021 ONCA 763, at paras. 9-10.

[10] Here the timelines under consideration are set out in rule 61.04 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”). They require that an appellant serve a notice of appeal within 30 days “after the making of the order appealed from” and file the notice of appeal within 10 days after service.

(i) Intention to appeal

[11] The guarantor submits his counsel’s March 30, 2023 email meets the first factor because it demonstrates his intention to appeal within 30 days from receipt of the endorsement.

[12] The lender submits the guarantor does not meet the first factor because the guarantor’s failure to serve the notice of appeal within the 30-day period from receipt of the endorsement, after being notified to serve his notice of appeal “without delay”, demonstrates a lack of a bona fide intention to appeal within the appeal period.

[13] I reject the lender’s argument and find the guarantor meets the first factor. The guarantor’s March 30, 2023 email shows an intention to appeal within what I conclude must be treated as the relevant timeline for serving a notice of appeal in the circumstances of this case (30 days from receipt of the endorsement).

[14] In my view, the fact that the guarantor did not serve his notice of appeal within 30 days of receipt of the endorsement is not determinative of the bona fide intention issue on the facts of this case.

[15] The guarantor was prevented from serving a notice of appeal within the time prescribed by rule 61.04 (within 30 days after the making of the order appealed from) because he did not receive the motion judge’s endorsement until more than 18 months after it was made. However, he expressed his intention to appeal in writing within 30 days of receiving the endorsement.

[16] Moreover, because of the requirements of rule 61.04, the unexplained late delivery of the endorsement from the court below presented an obvious potential challenge to filing any notice of appeal without the lender’s consent or a court order.

[17] In these circumstances, if the lender intended to strictly enforce compliance with a 30-day timeline from the guarantor’s receipt of the endorsement for service of the notice of appeal, the lender should have communicated her intention explicitly. While I acknowledge that this alternative timeline may seem to be the obvious appropriate alternative timeline, it is not a timeline prescribed by the Rules. Asking that the guarantor serve his notice of appeal “without delay” was not a sufficient warning in the circumstances. The guarantor could not comply with the timeline prescribed under the Rules for either serving or filing a notice of appeal because of circumstances beyond his control. In these circumstances, the lender should have explicitly warned the guarantor if she expected him to comply with an alternative timeline she was adopting.

[18] In reaching my conclusion, I have also taken account of the fact that the lender’s counsel stated on a Thursday that he would seek instructions regarding the request for an extension of the filing deadline, and respond “likely over the weekend”. However, the lender’s counsel did not respond to the request for an extension until 12 days later, immediately after receiving the guarantor’s counsel’s next communication enclosing the guarantor’s notice of appeal. This unexplained delay by the lender’s counsel in responding to the guarantor’s counsel does not support strictly enforcing an uncommunicated alternative deadline imposed by the lender.

(ii) The length of and explanation for the delay

[19] The guarantor’s delay in serving the notice of appeal is nine days from the expiry of the 30-day appropriate deadline (April 2, 2023 to April 11, 2023) and his delay in bringing this motion is 22 days from receipt of advice that the lender would not consent to an extension (April 11, 2023 to May 2, 2023). He relies on the fact that an extension would be required to file the notice of appeal to support his delay in serving the notice of appeal, essentially asserting there was no effective deadline in the circumstances. His delay in bringing this motion is unexplained.

[20] Although the guarantor’s total overall delay is not well-explained, I nonetheless view it as a neutral factor, or even, given its relative brevity and the delay acquiesced in by the lender, a factor slightly favouring the guarantor.

[21] Looking at the big picture, it is difficult to understand why the lender apparently acquiesced in the delay by the court below in releasing the motion judge’s endorsement. The timelines for delivery of decisions are set out in s. 123 of the Courts of Justice Act. At most, the relevant timeline in this case was six months from August 4, 2021 [1]. Counsel are entitled to inquire of the court when the prescribed timelines are not met. While the lender cannot be blamed for the court’s failure to deliver the endorsement to the parties for more than 18 months after it was made, the record is silent on what efforts the lender made to obtain the endorsement prior to March 2, 2023.

[22] Further, as I have said, I consider that the lender should have put the guarantor on explicit notice had the lender intended to rely strictly on a 30-day timeline from receipt of the motion judge’s endorsement to serve a notice of appeal. Instead, having suggested he would likely respond quickly to the guarantor’s request for an extension of the filing deadline, the lender’s counsel did not respond until immediately after the notice of appeal was served.

[23] Although the guarantor provided no explanation for his delay in bringing this motion after being told the lender would not consent to an extension, when considered in context, that delay is relatively brief. Given the lender’s acquiescence in the delay in receiving the motion judge’s endorsement, overall, I conclude that the guarantor has acted with reasonable promptness.

(iii) Prejudice

[24] The summary judgment awards the lender $1.8 million on a guarantee of a loan on which nothing has apparently been paid. However, given that the lender apparently acquiesced in the court’s delay in delivering the motion judge’s endorsement, I fail to see how the comparably brief delays by the guarantor have prejudiced her.

(iv) The merits of the appeal

[25] The motion judge notes in her endorsement that the guarantor admitted that the lender loaned $1.8 million to his [the guarantor’s] companies, that he personally guaranteed the loans and that nothing had been repaid to the lender. The motion judge also clearly explains why she did not accept any of the arguments put forward on the motion:

• the fact that the guarantor was not represented by counsel when entering the transaction – the guarantor is an educated, sophisticated party and his lack of legal representation did not impact his obligations on the guarantee;
• the fact that there is a companion action in Florida involving the same parties (i.e., the lender and the borrowers, which are companies of which the guarantor is an officer and director) that may give rise to inconsistent findings – given the guarantor’s role with the borrowers, it is difficult to see how that could occur, moreover, the guarantor adduced no evidence to support such a possibility;
• the fact that the lender did not pursue the borrowers before pursuing him – the Guaranty [2] specifies the lender is not required to do so;
• the fact that there were defects in the loan – deficiencies in the loan arrangements between the lender and the borrowers does not affect the guarantor’s obligations or liability under the guarantee.

[26] Rather than explicitly attacking any of these findings on this motion, the guarantor argues that the motion judge erred in failing to consider or apply the test for determining whether partial summary judgment is appropriate. He relies on Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561; and Malik v. Attia, 2020 ONCA 787.

[27] This action consists of two main components. First, a claim by the lender against the guarantor on his guarantee. Second, a claim by the lender against the guarantor and counsel for the borrowers on the loan asserting that she (the lender) was fraudulently induced to enter the loan. Further, as I have said, there is also related litigation taking place in Florida where the loan was made and was supposed to be secured by mortgages on specified properties. The lender moved for and obtained partial summary judgment against the guarantor solely on the Guaranty.

[28] The guarantor argues that, in the circumstances, granting partial summary judgment did not serve the objectives of achieving proportionate, timely and affordable justice. Further, it leaves open the possibility of inconsistent verdicts. The guarantor submits that the motion judge erred by failing to ask the three questions of counsel set out at para. 62 of Malik, and by failing to conclude that they militated against granting summary judgment:

• demonstrate that dividing the determination of this case into several parts will prove cheaper for the parties;
• show how partial summary judgment will get the parties’ case in and out of the court system more quickly;
• establish how partial summary judgment will not result in inconsistent findings by the multiple judges who will touch the divided case.

[29] The guarantor does not dispute that this argument about the propriety of granting partial summary judgment was not raised in the court below. However, he maintains that it is nonetheless for the court to apply the proper test before granting partial summary judgment.

[30] The lender points to the fact that even the case law on which the appellant relies confirms that the fact that a motion judge acquiesced in hearing a motion for partial summary judgment that will add cost and delay to litigation is not a ground for appellate intervention: Malik, at para. 67. The lender further submits that, as was pointed out by the motion judge, it was for the guarantor to lead evidence demonstrating any realistic possibility of inconsistent verdicts.

[31] Based on the foregoing submissions, I conclude that the guarantor’s chances of success on appeal are remote. Even assuming bringing the partial summary judgment motion added to the cost and length of the overall proceedings, that is not a defence to the claim on the Guaranty and does not justify appellate intervention. As I see it, the only issue that raises any scintilla of merit is the prospect of some inconsistency in the findings or verdicts in the other part of this litigation or in the related Florida litigation on the loans themselves.

(v) The Interests of Justice

[32] In relation to this factor, the lender points to the fact that she holds what she submits is an enforceable guarantee in relation to a $1.8 million debt that has remained totally unpaid since it matured in May 2019. The guarantor requires an indulgence from the court to proceed with his appeal and should not be afforded one where he did not comply with basic timelines, his appeal is patently lacking in merit and allowing him to pursue it will do nothing but add to the expense and delay of the proceeding.

[33] Although I have concluded that the guarantor’s chances of success on appeal are remote, I am not satisfied that the interests of justice favour depriving him of his right to have an appeal heard by three judges in all the circumstances of this case.

[34] A litigant’s absolute right of appeal is an important right not to be interfered with lightly. In this case, the guarantor had no opportunity to comply strictly with the deadlines for service and filing imposed by the Rules apparently as a result of an error by the court below. As such, the extension he seeks is less of an indulgence than might otherwise be the case.

[35] As I have said, the lender seems to have acquiesced in the error by the court below in not releasing the motion judge’s endorsement in a timely way. The lender then sought to hold the guarantor to a strict 30-day deadline for delivery of a notice of appeal without warning him explicitly of her intention to do so. This is not conduct that should be encouraged. Overall, I consider that the guarantor moved with reasonable promptness once an extension was denied and I cannot conclude that the lender will be in any way prejudiced by the further modest delay caused by an appeal if the guarantor is required to adhere strictly to all customary deadlines. While the guarantor’s chances of success on appeal may be slim at best, in all the circumstances, I conclude that the interests of justice favour granting an extension. The lender has other remedies if there are concerns over costs.

Disposition

[36] Based on the foregoing reasons, I make the following orders on the following terms:

i) the time for the moving party to serve his notice of appeal is extended to April 11, 2023 and, if required, service on counsel for the responding party by email is validated, all of the foregoing nunc pro tunc; ii) the time for the moving party to file his notice of appeal is extended to the date which is seven days following the date of release of these reasons; iii) subject to further order of the court, in the event the moving party fails to perfect his appeal within the time specified in the Rules, the responding party may move without notice to have the appeal dismissed provided that, if necessary, the moving party shall be entitled to perfect his appeal without the formal order if it has not been issued by the perfection deadline but shall deliver a supplementary appeal book including the formal order forthwith after it is issued.

Partial indemnity costs of this motion are fixed at $4,000 inclusive of HST and are payable by the responding party to the moving party in the cause of this appeal.

Footnotes:

[1] Nothing in these reasons should be taken as criticizing the motion judge for the delay in delivery of the endorsement. The motion judge appears to have acted promptly.

[2] In the endorsement, the motion judge appears to have referred mistakenly to the Guaranty as a promissory note.

“Janet Simmons J.A.”