DATE: 20010215

DOCKET: M26771

(C35168)

COURT OF APPEAL FOR ONTARIO

RE: RICHARD EARL LEVY (Plaintiff/Appellant) –and– SIDNEY STARKMAN, YETTA STARKMAN, YITZCHAK MARCO, ELANA DASCAL and RENA DASCAL (Defendants/Respondents)

BEFORE: FINLAYSON J.A. (in chambers)

COUNSEL: Bruce Hutchison, for the appellant

Paul N. Feldman, for the respondents Elana and Rena Dascal

John I. Zeiler, for the respondents Yitzchak Marco and Sidney and Yetta Starkman

HEARD: February 13, 2001

Motion to set aside the Order of the Registrar dated December 12, 2000 dismissing the appeal from the decision of Justice Frances P. Kiteley made September 14, 2000, and to restore the said appeal.

E N D O R S E M E N T

[1] This is a motion by the appellant Richard Earl Levy (“Levy”) for an order setting aside the Order of the Registrar dismissing this appeal because of the failure of the appellant to perfect the appeal in the time provided by the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Before discussing the merits of this motion, it is necessary to review the chronology of events.

Facts

[2] On November 24, 1998, Registrar Ferron considered a motion brought by Levy under s. 38 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3. Registrar Ferron ordered that Levy, a creditor of the bankrupt Moshe Dascal, be authorized to commence and prosecute proceedings in his own name and at his own expense and risk for the purpose of setting aside certain conveyances and agreements entered into by and relating to the bankrupt. Pursuant to the provisions of the Act, the court order contained other stipulations relating to the commencement of proceedings by Levy in the place of the trustee in bankruptcy.

[3] On January 9, 1999, Levy issued a statement of claim which named as defendants Sidney Starkman, Yetta Starkman, Yitzchak Marco, Elana Dascal and Rena Dascal. This action, 99-CV-161742 (the “main action”), was commenced pursuant to the s. 38 order of Registrar Ferron and sought declaratory relief declaring that certain transactions were fraudulent and void.

[4] The main action proceeded under case management together with two earlier actions, 97-CV-132528CM/A and 98-CV-151522CM (the “companion actions”). The companion actions raised similar issues to those contained in the main action and concerned allegedly fraudulent conveyances that related to several properties and parties in common with the main action. In companion action 97-CV-132528CM, Levy is named as a defendant, cross-claimant and counter-claimant.

[5] On September 14, 2000, Madam Justice Kiteley found that an assignment agreement dated October 3, 2000 between Royal Trust Corporation of Canada and Levy was champerous and, therefore, invalid. This is significant since in s. 38 proceedings, the participant creditors are able to give instructions to the plaintiff creditor, and where a vote is taken in response to a dispute, the result is based upon the pro rata amount of the claim of each creditor. Each creditor has one vote for each dollar of the proof of claim filed by the creditor with the trustee. Based on the decision to invalidate the agreement, under which Mr. Levy was to acquire the cause of action interest of Royal Trust, Levy’s personal claim against the bankrupt would constitute only a minority interest.

[6] By motion dated October 18, 2000, the defendants Sidney Starkman and Yetta Starkman brought a further motion before Kiteley J. That motion sought an order, inter alia, amending the order of Registrar Ferron and transferring carriage of the main action to Sidney and Yetta Starkman as plaintiffs.

[7] By endorsement dated October 23, 2000, Kiteley J. dismissed the motion to substitute Sidney and Yetta Starkman as plaintiffs, suspended the order of Registrar Ferron dated November 24, 1998 and stayed the trial of the main action. Furthermore, Kiteley J. ordered that another creditor may bring a motion to be substituted in the main action as plaintiff, as long as certain conditions were met, including that the motion be brought before November 30, 2000. In the event that such a motion was not brought, Kiteley J. stated that she would deal with the costs of the main action.

[8] On October 13, 2000, counsel for Levy served on the defendants, within the required time period, a Notice of Appeal relating to the September 14, 2000 decision of Kiteley J. This Notice of Appeal was filed with the Registrar of the Court of Appeal on October 17, 2000.

[9] On November 21, 2000, the Registrar of the Court of Appeal issued a Notice of Intention to Dismiss the Appeal for Delay, which indicated that if the appeal was not perfected before December 12, 2000, it would be dismissed.

[10] On December 19, 2000, the Registrar of the Court of Appeal issued an Order Dismissing the appeal on the basis that Levy had not perfected the appeal in a timely manner.

[11] The October 23, 2000 decision of Kiteley J. has not been appealed and no other creditor brought a motion to be substituted as plaintiff in the main action prior to November 30, 2000.

[12] The trial date in the companion actions has not yet been fixed. All three actions were previously scheduled to proceed to trial in November 2000.

Analysis

[13] In bringing this motion, counsel for Levy requests that the December 12, 2000 order of the Registrar of the Court of Appeal be set aside and the appeal of the September 14, 2000 decision of Justice Kiteley be restored. In support of this motion, it is submitted that the appeal was not perfected as a result of the busy schedule of Levy’s solicitor, his mistaken impression as to the nature of the order in appeal and the late delivery of the draft order to the respondents’ counsel and their failure to return same. Furthermore, it is submitted that the issues in this action are of substantial importance to the appellant and that granting this motion would not cause any prejudice to the respondents.

[14] As to the importance of the matter to Levy, I note that his counsel conceded to me in argument that the only live issue was who was to have the carriage of the s. 38 litigation: Levy or Sidney Starkman and Yitzchak Marco, the plaintiffs in one of the companion actions. There is no dispute that the pleadings in that companion action cover the issues raised by Levy in the main action. If counsel for Levy thought otherwise, he should have been more diligent in ensuring that the appeal was perfected in a timely manner. Having received the Registrar’s notice of intention to dismiss for delay dated November 21, 2000, counsel for Levy, regardless of the busy schedule of the parties involved, should have acted immediately to take steps to perfect the appeal or to move for an order extending the time for perfection.

[15] Secondly, I am not persuaded that allowing this motion would not prejudice the respondents. If the appeal of the September 14, 2000 decision is allowed to proceed, the trial of the companion actions will likely be delayed significantly. Alternatively, if the companion actions proceed while litigation surrounding the main action labours its way through the court system, it would create the possibility of duplication and inconsistent verdicts in trials dealing with similar issues.

[16] Finally, the effect of Kiteley J.'s October 18, 2000 decision must be considered. Recall that by endorsement, Kiteley J. stayed the trial of the main action, presumably until a new plaintiff could be approved, and that decision has not been appealed by this appellant. Given Kiteley J.’s October 23, 2000 decision, I am not disposed to excuse the appellant’s failure to comply with the Rules and allow him to now appeal Kiteley J.’s previous ruling relating to the assignment agreement. If the appeal were to proceed without a stay of the later decision of Kiteley J., this would surely result in confusion with respect to the conduct of the companion actions. I regard the two proceedings before Kiteley J. as integral components of her case management responsibility and I do not think that the appellant should receive any indulgence in what is basically the resolution of a contest to determine which creditor should control the conduct of the s. 38 litigation.

[17] In all the circumstances of this litigation, I am not prepared to exercise my discretion by granting the appellant an indulgence. Accordingly, the moving party’s motion is dismissed with costs.

Signed: “G.D. Finlayson J.A.”