SUPERIOR COURT OF JUSTICE – ONTARIO

IN BANKRUPTCY AND INSOLVENCY

COMMERCIAL LIST

RE: IN THE MATTTER OF the Bankruptcy of Zeev Saban

BEFORE: D. M. Brown J.

COUNSEL: Marek Machtinger, creditor in person

Zeev Saban, bankrupt in person

HEARD: January 9, 2012

REASONS FOR DECISION

I. Motion to extend time to appeal Registrar’s conditional discharge decision

[ 1 ] By reasons dated November 15, 2011, but released November 21, 2011, Registrar Mills suspended the discharge of the bankrupt, Zeev Saban, for 36 months on conditions. Three creditors had appeared at the October 5 hearing to oppose the discharge: Marek Machtinger, Richard Breslin, on behalf of himself and certain companies, and Morley Rand. Mr. Machtinger moves for an extension of time to appeal the order of the Registrar. Messrs. Breslin and Rand have filed affidavits stating they wish to join in the appeal. Mr. Saban opposes the motion to extend the time to appeal.

II. Governing principles

[ 2 ] A person dissatisfied with an order or decision of a registrar may appeal therefrom to a judge.[^1] Such an appeal must be made by motion to a judge, and the notice of motion must be served and filed within 10 days after the day of the order or decision appealed from, “or within such further time as the judge stipulates”.[^2] In considering requests to extend the time to appeal from a registrar’s decision courts have applied the same principles relating to appeals to an appellate court – i.e. an applicant for an extension of time must demonstrate:

(i) a bona fide intention, entertained within the time limited for appeal, to take an appeal;

(ii) a reason why, within the time so limited, an appeal was not taken; and,

(iii) that there is an arguable appeal.[^3]

III. Analysis

A. Reason why appeal not taken

[ 3 ] Let me start by considering Mr. Machtinger’s explanation for why he did not appeal within the prescribed 10 day period. This was Mr. Saban’s third insolvency event. Mr. Machtinger opposed the discharge and appeared in person at the October 5 hearing to voice his opposition. So, also, did Messrs. Breslin and Rand.

[ 4 ] The hearing took a full day. Registrar Mills reserved. She then rendered her Decision dated November 15, 2011 suspending the discharge for 36 months subject to certain conditions, including a ban on the bankrupt obtaining any form of credit. She awarded the creditors their costs of the hearing.

[ 5 ] Mr. Machtinger deposed that notwithstanding several calls to the Trustee inquiring whether Registrar Mills had released her Decision, he did not learn of the Decision until December 23 when informed by Mr. Rand, who had contacted the Bankruptcy Court that day and was informed of the Decision. Mr. Machtinger obtained a copy of the Decision that day and filed this motion on January 4, 2012.

[ 6 ] From my review of the court file, it is apparent that the Bankruptcy Court office released Registrar Mills’s Decision on November 21, 2011, almost one week after her reasons are dated. However, instead of faxing a copy of the Decision to all persons whom Registrar Mills had identified in her Decision as appearing at the hearing, including Mr. Machtinger, the Bankruptcy Court office only faxed the reasons to counsel for the bankrupt and counsel for the Trustee. That was an error on the part of the court office. A person identified on a judicial decision as appearing at the hearing of a matter is entitled to receive a copy of the decision. In the present case the court office should have sent copies of the Decision to Messrs. Machtinger, Rand and Breslin. It did not. The creditors did not learn of the Decision until December 23 following Mr. Rand’s contact with the court office. I am satisfied that Mr. Machtinger has demonstrated a legitimate reason why the appeal was not taken within the 10-day appeal period.

[ 7 ] I should note that given the delayed release of the Decision by the Bankruptcy Court office, Mr. Saban brought his own motion to extend the time to appeal. Morawetz J. granted him a 30-day extension to appeal on December 7, 2011. Significantly, Mr. Saban did not give notice of his motion to the creditors who had appeared at his discharge hearing.

B. Intent to appeal

[ 8 ] Messrs. Machtinger, Breslin and Rand filed notices of objection to Mr. Saban’s discharge. They appeared at his discharge hearing to oppose his discharge. Mr. Machtinger brought this motion to extend time as soon as he learned about the decision of Registrar Mills. From that conduct I am satisfied that Mr. Machtinger has demonstrated an intention, entertained within the time limited for appeal, to take an appeal.

C. Arguable appeal

[ 9 ] From a review of Mr. Machtinger’s affidavit in support of the motion to extend, it appears that the following grounds of appeal would be argued if an extension were granted: (i) Mr. Saban committed perjury at the discharge hearing; (ii) Registrar Mills failed to take into consideration “Mr. Saban’s fraud committed towards his creditors”; (iii) Registrar Mills improperly took into account that the creditors had “failed to do any measure of appropriate due diligence when advancing loans to the bankrupt” as “a reason for defrauding his creditors”; and (iv) the decision was “too lenient in light of Mr. Saban’s long standing record of fraud”.

[ 10 ] Mr. Saban opposed the motion to extend on the basis that he had decided not to proceed with his own appeal and therefore the matter should come to an end. In essence, his submission was: “enough is enough”.

[ 11 ] An appeal of a registrar’s discharge order is a true appeal, not a hearing de novo. Accordingly, an appellate court may only interfere with the registrar’s decision if the registrar proceeded on some wrong principle of law, omitted the consideration of or misconstrued some fact, made a palpable or overriding error in the findings of fact, or otherwise acted unreasonably.[^4]

[ 12 ] In the particular circumstances of this case I place less weight on this factor than on the others. First, the court office made a clear error in failing to send the Decision to Mr. Machtinger. Had he received the Decision promptly upon its release, I have no doubt that he would have appealed as of right. Consequently, I think it unfair at this stage to “vet” the merits of his appeal when the position he finds himself in resulted from an error on the part of the court’s administration. Second, the endorsement of Morawetz J. indicated that Mr. Saban took the position before him that “the Registrar did not take all relevant facts into consideration” and the court accepted that argument in granting the bankrupt an extension of time to appeal. In light of that history, I do not think it now lies in Mr. Saban’s mouth to oppose a similar motion by his creditor. Third, the comments made by the courts in the Re Dimant and Re Mitchell decisions, supra., suggesting limiting extensions of time to narrow grounds, such as fraud, in the case of absolute discharges do not apply in the present case in which the discharge was conditional. Finally, I am satisfied that the grounds of appeal advanced by Mr. Machtinger, which I have described above, fall within the category of “arguable”.

D. Conclusion

[ 13 ] For these reasons I grant the motion of Mr. Machtinger. Although Mr. Breslin and Mr. Rand did not file formal motions to extend time, I am satisfied from their affidavits that they too wish to appeal. The three creditors have indicated that their appeal will be a single, joint one. Accordingly, pursuant to Bankruptcy Rule 30(2) I grant them an extension of time in which to file their motion for appeal record, and I order them to do so no later than February 10, 2012.

_______ (original signed by) _____________

D. M. Brown J.

Date : January 9, 2012

[^1]: Bankruptcy and Insolvency Act, s. 192(4).

[^2]: Bankruptcy and Insolvency General Rules, Rule 30(3).

[^3]: Re Diamant (1980), 31 O.R. (2d) 371 (S.C., Bkptcy); Re Mitchell (1991), 9 C.B.R. (3d) 56 (Ont. Gen. Div.).

[^4]: See the cases digested in Houlden, Morawetz and Sarra, The 2012 Annotated Bankruptcy and Insolvency Act, I§54 and I§61.