Lechcier-Kimel (Re), 2011 ONCA 590

CITATION: Lechcier-Kimel (Re), 2011 ONCA 590

DATE: 20110913

DOCKET: M40253 (C53831)

COURT OF APPEAL FOR ONTARIO

Weiler J.A. (In Chambers)

In the Matter of the Bankruptcy of Jack Lechcier-Kimel, of the City of Toronto, in the Province of Ontario

Counsel: Jonathan H. Wigley, for the moving party/responding party by way of cross-motion, HSBC Bank Canada Cameron Wetmore, for the responding party/moving party by way of cross-motion, Jack Lechcier-Kimel

Heard: August 24, 2011

On appeal from the order of Justice David M. Brown of the Superior Court of Justice dated March 24, 2011, and on a motion and cross-motion for directions.

Weiler J.A. (in chambers):

[1] HSBC Canada Bank (HSBC) brought a motion to be added as a creditor in the bankruptcy application of Jack Lechcier-Kimel (JLK). HSBC’s motion was granted. JLK filed a notice of appeal from that decision. HSBC brought a motion for an order that JLK requires leave of this court to pursue an appeal pursuant to s. 193(e) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended (BIA). In the event that leave is required, HSBC submits that I should refuse to grant leave on the basis that JLK’s appeal has no merit. Finally, and in the alternative, if leave is granted, HSBC seeks an order expediting the appeal and security for costs.

[2] JLK argues that leave is not required but, if leave is required, JLK has now brought a cross-motion requesting leave. JLK also submits that, if leave is required, a panel of three judges should decide the leave application as opposed to a single judge sitting in chambers. JLK further submits that it has a good, arguable appeal and would agree to an order expediting the hearing of the appeal.

[3] I must first deal with the question of whether leave is required and whether a single judge can grant leave.

[4] The relevant portions of s. 193 of the BIA provide 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;

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

[5] The original bankruptcy application was brought with respect to both JLK and his spouse, Mahavash Lechcier-Kimel (MLK). By consent order, there are now two separate proceedings. In the proceeding involving MLK, on the question of whether an appeal from an order adding an applicant creditor requires leave, Gillese J.A. held that leave is necessary and that adding a party does not raise a point involving future rights. I agree with her. In Elias v. Hutchison (1981), 1981 ABCA 31, 121 D.L.R. (3d) 95 (Alta. C.A.), the court dealt with whether leave was required to appeal an order dismissing an application to sue the trustee. The court held that there was no appeal as of right. The appeal did not involve future rights since future rights are those rights that are not asserted at the present time but that will come into existence at a future time. The issue was whether a present right to sue the trustee existed. The definition of future rights in Elias was approved by this court in Ravelston Corp. (Re), 2005 CanLII 63802 (ON CA), at para. 19. As in Elias, the case before me does not involve future rights since the issue is HSBC’s present right to be added as a creditor.

[6] Since the decision of Gillese J.A., counsel for MLK has brought a further motion before Armstrong J.A. to set aside her order on the basis that the notice of motion did not clearly indicate that a motion for leave to appeal was to be heard and for that reason responding counsel did not appear. Armstrong J.A. has dismissed that motion.

[7] The issue of leave and whether leave should be granted was fully argued before me.

[8] On the question of whether a single judge can grant leave or whether the decision ought to be made by a panel, I note that s. 193 specifically states that leave can be granted by “a judge” of the Court of Appeal. Thus, leave is required and a single judge of this court can grant leave.

[9] I now turn to the question of whether leave should be granted. On an application for leave to appeal under s. 193(e) of the BIA, one factor that is considered in all cases is whether the appeal is prima facie meritorious. In this regard, while not assessing or deciding on the ultimate merits of the proposed appeal, the applicant must convince the court that the appeal raises arguable points that create “a realistic possibility of success on the appeal”: see Ravelston Corporation Limited (Re), 2007 ONCA 268, at paras. 11-12.

[10] Before me, JLK advances two primary grounds of appeal. The first is that the motions judge erred in finding that the applicant creditor, Community Trust Company (CTC), was not prosecuting the proceedings with due diligence and effect as required by s. 43(13) of the BIA. At para. 21 of his reasons, the motions judge observed that, during the cross-examination of Tara Rolston on her affidavit, counsel for CTC stated that CTC was not seeking to pursue either of the applications for bankruptcy at that point (which was over a year from the bankruptcy application). The motions judge held, at para. 22, “Mr. Reininger, as counsel for a party, made a clear statement binding on the applicant, CTC, which is admissible as evidence of CTC’s intentions regarding these applications.” JLK submits that counsel’s statement cannot be relied upon and treated as evidence as the statement is unsworn and was not specifically adopted by the affiant being cross-examined.

[11] This first ground of appeal does not meet the test. The statement by CTC’s counsel was an admission by counsel on behalf of his client. Counsel for JLK has provided no authority to suggest that the motions judge made a palpable and overriding error in relying on this admission.

[12] Moreover, this ground of appeal advanced by JLK is the same ground advanced in the MLK proceedings. In MLK, Gillese J.A. held that she would refuse to grant leave as the purported appeal from the decision adding a party “is without merit and the issue it raised is not of significance to the practice or the MLK bankruptcy application, as paragraph 2 of the order of 24 March 2011 specifically preserves all of Ms. Lechcier-Kimel’s rights and defences on the MLK bankruptcy application.” Those comments are equally applicable here.

[13] The second ground of appeal is that the motions judge erred in not exercising his discretion to decide a question of law and in leaving that question to the hearing of the bankruptcy application. The question of law is whether the entire bankruptcy proceedings are a nullity. Inasmuch as the original application for bankruptcy was brought with respect to both JLK and MLK, as opposed to a separate application against each of them, JLK submits that the entire proceedings are a nullity and not a defect that can be cured under the BIA. JLK submits that the motion judge’s deferral of the question of law offends the principle that proceedings should be conducted in the least expensive manner and that the motions judge erred in principle in adjourning the question to the trial of the bankruptcy, which was scheduled for a month later.

[14] This ground of appeal also does not meet the test. No authority has been provided to me to support the submission that it is an error in principle for a judge to adjourn a question of law to the trial of the bankruptcy. Indeed, important issues of law are often decided based on a full factual record. While the parties would often like to know the outcome of an important legal issue to assist them in preparing for trial - thus potentially saving time and money - that goal alone does not trump the judge’s exercise of discretion and force him or her to decide the question of law before the trial of the bankruptcy application.

[15] Accordingly, I would refuse leave to appeal. In view of my decision, it is unnecessary for me to deal with the alternative relief requested.

[16] Costs of this motion are to HSBC and, on consent, are fixed in the amount of $5,000, inclusive of disbursements and all applicable taxes.

RELEASED: September 13, 2011

“KMW” “Karen M. Weiler J.A.”