COURT OF APPEAL FOR ONTARIO

CITATION: Jewish Foundation of Greater Toronto (Re), 2022 ONCA 581

DATE: 20220809

DOCKET: M53654 (C70564)

Gillese J.A. (Motion Judge)

In the Matter of the Bankruptcy of the Jewish Foundation of Greater Toronto, of the City of Toronto, in the Province of Ontario

Wojtek Jaskiewicz and Michael Ly, for the moving party/appellant the Joseph Lebovic Charitable Foundation

Matthew P. Gottlieb, Paul Fruitman and Xin Lu (Crystal) Li, for the responding party/respondent the Jewish Foundation of Greater Toronto

Heard: August 4, 2022 by video conference

ENDORSEMENT

I. OVERVIEW

[1] The Joseph Lebovic Charitable Foundation (the “JLCF”) brought an application pursuant to s. 43 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”), for an order adjudging the Jewish Foundation of Greater Toronto (the “Jewish Foundation”) bankrupt. In the application, the JLCF claimed that the Jewish Foundation was indebted to it and had failed to meet its obligations to the JLCF when they became due.

[2] By reasons dated April 6, 2022, the bankruptcy application was dismissed (the “Decision”): see Bankruptcy of the Jewish Foundation of Greater Toronto, 2022 ONSC 2120. In the Decision, the application judge ordered the JLCF to pay the Jewish Foundation costs of $100,000, made on a substantial indemnity basis (the “Costs Order”).

[3] On April 14, 2022, the JLCF served a notice of appeal of the Decision and, on April 21, 2022, it filed that notice of appeal (the “Appeal”).

[4] On June 27, 2022, the Jewish Foundation moved to have the Appeal dismissed for delay. On July 7, 2022, the JLCF filed the documents necessary to perfect the Appeal but, through inadvertence, did not include an issued and entered copy of the application judge’s order (the “Order”). On Friday, July 8, 2022, this court sent the JLCF an email advising that it had not accepted the appeal book and compendium for filing because it did not include a copy of the Order. However, due to the Rogers outage that day, the JLCF did not get that email until Monday, July 11, 2022. By order dated July 11, 2022, Acting Registrar D. Murphy of this court dismissed the appeal for delay (the “Registrar’s Order”).

[5] The JLCF brings this motion, pursuant to r. 61.16(5) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), to set aside the Registrar’s Order and extend the time to perfect its appeal (the “Motion”).

[6] For the reasons that follow, the Motion is granted.

II. ADDITIONAL BACKGROUND INFORMATION

[7] In addition to the summary above, additional information of two sorts is necessary to understand this Motion and the parties’ positions on it. The first relates to the application judge’s reasons for the Decision. The second is an amplification of what transpired between the release of the Decision and the issuance of the Registrar’s Order. I will set out both types of information, followed by a summary of the parties’ positions on this Motion.

The application judge’s reasons

[8] The JLCF took the position on its bankruptcy application that the Jewish Foundation was indebted to it for approximately $16,000,000 and had failed to meet its obligations to the JLCF when they became due. The application judge found that the JLCF made a series of gifts of the monies in question to the Jewish Foundation. As such, there was no debtor-creditor relationship and the application could not succeed. She rejected the JLCF’s contention that there were special circumstances that would permit it to apply for a bankruptcy order as a single creditor because there was no evidence of any demands for payment and neither fraud nor suspicious circumstances existed in this case. She concluded that there was no act of bankruptcy, there was no debtor-creditor relationship between the parties, and the Jewish Foundation was “clearly able” to meet its financial obligations as they become due.

[9] The application judge then considered whether, if the JLCF had proved the alleged facts, she should exercise her discretion and dismiss the application as an abuse of process. Relying on Dallas/North Group Inc. (Re) (2001), 2001 CanLII 3636 (ON CA), 148 O.A.C. 288 (C.A.), and La Scala Bakery Ltd., Re (1984), 54 C.B.R. (N.S.) 194 (Ont. S.C.), she said that a finding of abuse of process may be made where the court is persuaded that the application is brought for a collateral purpose. She then stated that the bankruptcy application had been brought for a collateral purpose, namely, “to put pressure on the [Jewish] Foundation to pay out the amounts demanded by Wolf [Lebovic] on behalf of the JLCF when such amounts are not debts and where the JLCF has no actual authority to direct such payments.” On that basis, she again concluded that the bankruptcy application should be dismissed.

[10] After this, the application judge struck the claim pursuant to r. 21.01 of the Rules. She stated that the claim in the bankruptcy application had no reasonable chance of success and allowing it to proceed would be futile. She struck the claim as an exercise of the court’s inherent power to prevent the misuse of its procedure in a way that would bring the administration of justice into disrepute.

[11] The application judge concluded by making the Costs Order.

The parties’ actions between June 27 and July 11, 2022

[12] As previously explained, while the JLCF promptly served and filed the notice of appeal, it failed to perfect the Appeal within the 30-day prescribed period.

[13] On May 24, 2022, counsel for the Jewish Foundation informed counsel for the JLCF that, since the JLCF had not perfected the Appeal, it was deemed abandoned. He also asked that the JLCF promptly pay the Costs Order. Counsel for the JLCF responded that same day and said they would perfect the Appeal “in short order”. The following day, counsel for the JLCF said their client was waiting for a settlement offer from the Jewish Foundation and was under the impression that the Jewish Foundation would not require the JLCF to incur the costs of perfecting the appeal in the interim.

[14] Counsel for the Jewish Foundation promptly responded, confirming there had been no agreement allowing the JLCF to not perfect in time. In further communications between counsel for the parties, each continued to reiterate their respective positions and ultimately, on June 27, 2022, the Jewish Foundation moved to have the Appeal dismissed for delay.

[15] On July 7, 2022, in order to perfect the Appeal, the JLCF filed its factum, appeal book and compendium, book of authorities, and exhibit books. However, through inadvertence of counsel, JLCF had failed to get the Order issued and entered. Consequently, the appeal book and compendium did not contain the Order.

[16] On the afternoon of Friday, July 8, 2022, this court sent an email to counsel for the JLCF advising that the court had not accepted the appeal book and compendium for filing because it did not include a copy of the Order. Unfortunately, due to the Rogers outage that day, counsel for the JLCF did not receive the email until Monday, July 11, 2022. The JLCF did not have time to obtain the Order, which it had inadvertently failed to obtain earlier, and later that day the Registrar’s Order was made.

The parties’ positions on the Motion

[17] The JLCF says that it has had a bona fide intention to appeal throughout, it has a reasonable explanation for its delay in failing to perfect, and its Appeal is “not completely devoid of merit”. It says the application judge committed three reviewable errors: she erred in her interpretation of the tests on the bankruptcy application; she erred in relying on the Rules to strike the claim; and she erred in making the Costs Order on a substantial indemnity scale and in the quantum of costs assessed.

[18] The Jewish Foundation submits the Motion should be dismissed because the Appeal is meritless; it is a tactic by the JLCF to delay having to pay the Costs Order; and, it is being used for leverage in a broader dispute over the JLCF’s claimed right to direct donations it made to the Jewish Foundation. It also says that granting the Motion would significantly prejudice the Jewish Foundation because it would be forced to shoulder a baseless but serious charge of bankruptcy and incur further costs in resisting a meritless appeal – funds that would otherwise be used for charitable purposes.

III. THE GOVERNING LEGAL PRINCIPLES

[19] The law is well-settled that the court is to consider the following factors on a motion to set aside a registrar’s dismissal order and extend the time to perfect:

1. whether the appellant formed an intention to appeal within the relevant period and maintained that intention;

2. the length of the delay and explanation for it;

3. any prejudice to the respondent caused by the delay;

4. the merits of the appeal; and

5. whether the “justice of the case” requires it.

See, for example, Issasi v. Rosenzweig, 2011 ONCA 112, at paras. 4-5.

IV. ANALYSIS

[20] Intention to appeal within the relevant time – There is no question that the JLCF formed the intention to appeal within the relevant time. The Reasons were released on April 6, 2022, and the JLCF served its notice of appeal on April 14, 2022. Thereafter, in communications with counsel for the Jewish Foundation, counsel for the JLCF reiterated its continuing intention to appeal, thus satisfying the requirement that it maintained its intention to appeal (Issasi, at para. 5).

[21] Length of, and explanation for, the delay – The JLCF says that it initially delayed in perfecting the Appeal because it was in ongoing settlement discussions with the Jewish Foundation. The Jewish Foundation says that this explanation is unacceptable because it was never asked to agree to such a delay and it had advised the JLCF a number of times that it expected perfection, failing which it would move to have the Appeal dismissed.

[22] It would have been preferable had the JLCF sought the Jewish Foundation’s consent to hold off perfecting the Appeal while settlement negotiations were ongoing between the parties. That said, I accept as reasonable the JLCF’s explanation for that period of the delay.

[23] I also accept the JLCF’s explanation for the period of delay thereafter. The Jewish Foundation moved to have the Appeal dismissed for delay on June 27, 2022. By July 7, 2022, the JLCF had filed its factum, appeal book and compendium, and other documents required to perfect the Appeal. But for the absence of a signed and entered copy of the Order, that would have been the end of the matter – the Appeal would have been perfected in time. The defect was caused by the inadvertence of JLCF counsel on two occasions: first when it failed to obtain the Order in a timely fashion and then when it attempted to perfect without including the Order in its appeal book and compendium.

[24] The delay associated with remedying the defect in perfecting was exacerbated by the Rogers outage because the JLCF’s legal team only learned that the appeal book and compendium had not been accepted by this court for filing on the day the Registrar’s Order was made.

[25] The delay in attempting to perfect was short. The problem that prevented the JLCF from perfecting was minor and has been remedied. Further, as a general principle, the client “should not suffer the consequences of [its] lawyer’s oversight or inattention”: Kudrocova v. Kronberger, 2021 ONCA 563, at para. 10. For these reasons, I am satisfied with the JLCF’s explanation for the delay.

[26] Possible prejudice to the Jewish Foundation – Prejudice figures largely in determining whether the court should set aside a registrar’s dismissal for delay: MDM Plastics Limited v. Vincor International Inc., 2015 ONCA 28, 124 O.R. (3d) 420, at para. 24. The court must consider any prejudice to the respondent’s ability to defend the appeal that would arise from steps taken following its dismissal or that would result from its restoration: MDM, at para. 25.

[27] The Jewish Foundation makes no claim of prejudice arising from steps it has taken following the Registrar’s Order dismissing the Appeal for delay. Its claim of prejudice is that, if the Motion is granted, it will be forced to incur costs in resisting a meritless appeal, especially because the Costs Order is stayed. However, that claim of prejudice fails to recognize that the JLCF had a right to appeal the Order – that is, it had a right to have the Appeal determined on the merits. But for the inadvertence of counsel described above, the Jewish Foundation would have had to incur the costs of responding to the Appeal and the Appeal would have automatically stayed the Costs Order. Therefore, I see no prejudice to the Jewish Foundation that would result from the restoration of the Appeal.

[28] The merits of the appeal – The JLCF does not need to convince the court that its Appeal will succeed – I need only determine whether the Appeal has so little merit that the court could reasonably deny the important right of an appeal: Issasi, at para. 10. In my view, there are grounds of appeal with sufficient merit to meet that low threshold, including those relating to the application judge’s findings of a collateral purpose and an abuse of process, her reliance on r. 21 of the Rules, and the substantial indemnity scale of costs used to establish the Costs Order as well as the reasonableness of the quantum.

[29] In any event, even where it is difficult to see the merits of a proposed appeal, a party should not be deprived of the right to appeal where there is no real prejudice to the other side: Sabatino v. Posta Ital Bar Inc., 2022 ONCA 208, at para. 20.

[30] The justice of the case – The defect in the appeal book and compendium which prevented perfection was minor and due to the inadvertence of counsel; the delay in attempting to perfect was short and explained to my satisfaction; the Jewish Foundation has suffered no prejudice as a result of the delay; and, the merit of the Appeal passes the threshold. Accordingly, the justice of the case augurs in favour of granting the Motion.

V. DISPOSITION

[31] The Motion is granted and the Registrar’s Order is set aside. I order that the time for perfecting the appeal is extended to Wednesday, August 17, 2022.

[32] If the parties are unable to agree on costs of this Motion, they may make written submissions on that matter, to a maximum of three pages, such submissions to be filed with the court no later than noon on September 1, 2022.

“E.E. Gillese J.A.”