COURT OF APPEAL FOR ONTARIO
CITATION: Bell (Re), 2014 ONCA 568
DATE: 20140801
DOCKET: C57921
Laskin, MacFarland and Lauwers JJ.A.
BETWEEN
IN THE MATTER OF THE PROPOSAL OF
THOMAS ALBERT BOTLY BELL
OF THE CITY OF TORONTO, IN THE PROVINCE OF ONTARIO
Arlindo Aragao, for the appellant, Your Legal Business Partner Inc.
Sean N. Zeitz, for the respondent, msi Spergel Inc.
Heard: June 25, 2014
On appeal from the decision of Justice D. M. Brown of the Superior Court of Justice, dated January 31, 2013.
MacFarland J.A.:
[1] Dr. Thomas Bell signed a proposal under the Bankruptcy and Insolvency Act on February 21, 2012. That proposal was sent by his Trustee, msi Spergel Inc., to his creditors on February 24, 2012.
[2] Your Legal Business Partner Inc. (YLBP) filed two proofs of claim with an affidavit of Calin Lawrynowicz in support thereof on March 13, 2012. The amounts claimed are $1,237,624 and $425,747.20 and relate to loans purportedly made to Dr. Bell by YLBP.
[3] In the proof of claim filed it is stated:
All matters or correspondence regarding this claim must be forwarded to the following address: Lawrynowicz and Associates c/o A. Arago 2592 Weston Road, Toronto, Ont M9N 2A9.
[4] The registered head office address for YLBP is 2596 Weston Road, Suite 200.
[5] On April 13, 2012 the trustee sent two Notices of Disallowance in respect of the claims of YLPB by registered mail. The Notices and the envelopes containing them were both addressed to:
Your Legal Business Partner Inc.
2596 Weston Road, 2nd Floor
Toronto, ON M9N 2A9
[6] The Notices also provided:
And further take notice that if you are dissatisfied with our decision in disallowing our claim in whole (or a right to rank or your security or valuation of your claim), you may appeal to the court within the 30-day period after the day on which this notice is served, or within any other period that the court may, on application made within the same 30-day period, allow.
[7] Although the Proof of Claim indicated on its face that Notices were to be sent to Lawrynowicz and Associates the Trustee sent the notice to the creditor at its head office address.
[8] Subsection (3) of s. 135 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B.3 provides:
Where the trustee makes a determination under subsection (1.1) or, pursuant to subsection (2), disallows, in whole or in part, any claim, any right to priority of any security, the trustee shall forthwith provide, in the prescribed manner, to the person whose claim was subject to a determination under subsection (1.1) or whose claim, right to a priority or security was disallowed under subsection (2), a notice in the prescribed form setting out the reasons for the determination or disallowance.
[9] On April 17, 2012 the envelope containing the notice was in fact delivered to Lawrynowicz and Associates at 2592 Weston Road Toronto although it was addressed to YLBP at 2596 Weston Road, Toronto.
[10] Ms. Ruttan, an employee of the law firm, on the instruction of Mr. Arago, a principal of the firm, received the envelope from “a courier” who sought to deliver it there. Mr. Argago’s initials appear on the envelope with the notation:
Received
April 17, 2012
@ 2:30 A.A.
[11] The Bankruptcy and Insolvency General Rules, C.R.C., c. 368 provide:
113 The notice of disallowance or notice of valuation provided by a trustee under subsection 135(3) of the Act to a person whose claim, right to a prior rank, or security has been disallowed or on which a valuation has been made in whole or in part, must be served, or sent by registered mail or courier. [Emphasis added.]
[12] The important fact in this case is that while the Notice of Disallowance was addressed to the creditor, YLBP at its head office address, the Notice was in fact delivered to the law firm referred to in the proof of claim.
[13] The creditor filed its Notice of Appeal on May 18, 2012. On June 20, 2012 counsel for the Trustee advised that the trustee would take the position that the Notice of Appeal was out of time in that it had been filed one day late.
[14] The trustee takes the position that service was effected on April 17, 2012 the date the letter was delivered to Lawrynowicz and Associates.
[15] The creditor takes the position that it was not served with the notices unitl April 18, 2012 and in this respect relies on Rule 16.06(2) of the Civil Rules of Procedure – “the deeming provisions”:
16.06(2) Service of a document by mail, except under subrule 16.03(4), is effective on the fifth day after the document is mailed but the document may be filed with proof of service before service becomes effective.
[16] In this respect the creditor relies on the Bankruptcy and Insolvency General Rules, supra, which provide:
- In cases not provided for in the Act or these Rules, the courts shall apply, within their respective jurisdictions, their ordinary procedure to the extent that the procedure is not inconsistent with the Act or these Rules.
THE COURTS BELOW
[17] The appeal came on before the Registrar in Bankruptcy and he concluded that if service of the Notice of Disallowance was effective it was not effective until April 20, 2012.
[18] In reaching his conclusion, he relied on the deeming provision of the Ontario Rules of Civil Procedure and concluded that the notice was not effective until five days after it was served. Relying on Rule 3.01(2)(a) and (b) he concluded that April 20, 2012 was the effective date of service of the Notice of Disallowance by YLBP and accordingly the appeal from that notice was filed in time.
[19] The Trustee appealed the Registrar’s decision to the Superior Court where that court concluded that in relying on the Civil Rules of Procedure the Registrar had erred in law. The court noted in its decision:
There was no need to resort to Rule 16.06(2) which states that ‘…service of a document by mail … is effective on the fifth day after the document is made but the document may be filed with proof of service before the service becomes effective.’ The evidence showed that the date of actual service took place before the deemed effective date under the Ontario Rules.
The appeal judge found that “Service of the Notices of Disallowance were received by the creditor and its designated contact for correspondence on April 17, 2012 before the occurrence of any effective date of service under the Ontario Rules.” He concluded accordingly that the Notice of Appeal was out of time – by one day.
ANALYSIS
[20] The essential issue then before this court is when, in the unique circumstances of this case, was service of the Notice of Disallowance on the creditor effected, for the purpose of determining the 30 day appeal period.
[21] Here the difficulty the trustee has is that although the Notice was delivered to the law firm the creditor had designated in its Proof of Claim form to receive notices, the notice was addressed to the creditor at its address and not to the creditor in care of the law firm. It is not clear on the record how exactly the letter, which was addressed to 2596 Weston Road came to be delivered to 2592 Weston Road, but it is immaterial.
[22] The receptionist at the law firm received the envelope on April 17 and Mr. Arago`s initials acknowledge receipt on that date.
[23] However, there was no acceptance of service by the law firm – merely an acknowledgement of receipt. Similarly in its letter dated April 23, 2012 to the trustee, the law firm confirmed its receipt of the Notice of Disallowance and notes that the form was received by mail on April 17, 2012. Rule 16.03(2) provides:
Service on a party who has a lawyer may be made by leaving a copy of the document with the lawyer or an employee in the lawyer`s office, but service under this subrule is effective only if the lawyer endorses on the document or a copy of it an acceptance of service and the date of the acceptance.
[24] In my view, because there was no acceptance of service on April 17, 2012 resort must be had to the deeming provisions in order to determine the effective date of service – “the fifth day after the document is mailed.”
[25] The notice was mailed on April 13, 2012 which was a Friday and as the Registrar concluded, accordingly the computation of the five day period begins on Monday, April 16 and ends on April 20. The Notice of Appeal having been filed on May 18, 2012 was in my view, filed within the 30-day period required under s. 135(4) of the Bankruptcy and Insolvency Act.
[26] I would allow the appeal, set aside the order of the Superior Court and restore the order of the Registrar in Bankruptcy.
[27] Costs of the appeal to the appellant fixed in the sum of $10,000 inclusive of costs, disbursements and H.S.T.
[28] Costs in both courts below were fixed in the sum of $20,000 inclusive of both the costs before the Registrar and the Superior Court payable to the respondent trustee.
[29] If counsel are unable to agree that those costs should simply be reversed, in view of the decision of this court, they may make brief written submissions to the court, not to exceed five pages.
[30] The appellant was required to post security for the costs of this appeal in the sum of $12,000. Those funds are presently held in trust by the trustee`s solicitor and should be immediately returned to the appellant.
Released: August 1, 2014 “JMacF.”
“J. MacFarland J.A.”
“I agree John Laskin J.A.”
“I agree P. Lauwers J.A.