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Port Capital Development (EV) Inc. (Re), 2022 BCSC 1655

Will an extension to file an appeal be granted when the late filing arose from a small procedural issue?

On July 22, 2022, the Court approved a sale of the petitioners’ unfinished development property to Solterra (the “Sale Order”). One of the secured creditors (“129”), who was not present with counsel at that hearing, nor present at the hearings leading to that decision, later indicated its intention to appeal the Sale Order. The deadline to file and serve a notice of appeal/notice of application for leave to appeal the Sale Order was within 21 days of the Sale Order, or August 12, 2022. However, 129 filed and served its leave to appeal on August 18, 2022, and sought an order granting an extension of the time to file an appeal/leave to appeal to August 18, 2022. The first and second secured creditors, Soleterra and the Monitor all opposed any extension.

On August 12, 2022, just before 4:00 p.m., 129’s counsel began uploading its appeal materials to the Court of Appeal’s website, but encountered problems and ultimately failed to file the materials prior to 4:00 p.m. In the morning of August 15, 2022, the Court of Appeal registry advised 129’s counsel that under the Rules of Civil Procedure, a notice of appeal had to be filed as an initiating document referencing the fact that the party is also seeking leave to appeal. These procedural issues were not resolved until August 18th.

Since 129 failed to perfect its appeal within 21 days, it fell on the lower court to consider whether any extension of time should be granted. Any extension application must be assessed within the context of the circumstances that apply in insolvency matters. Certain factors serve as a guide to the exercise of the court’s discretion on an extension application:

  1. Was there an intention to apply for leave before the expiry of the time for doing so?
  2. Did the appellant communicate the intention to the respondents?
  3. Was the delay lengthy?
  4. Did the appellant act expeditiously to seek an extension of time?
  5. Is there an explanation for the delay?
  6. Is there prejudice to the respondents consequent on the delay?
  7. Is there merit to the application for leave?
  8. Is it in the interests of justice that the extension be granted?

None of the stakeholder disputed that 129 satisfied the first four factors. 129 formed the intention to seek leave to appeal within the appeal period and its counsel communicated that to other counsel. The delay (August 12 to 18, 2022) was not lengthy. Finally, 129 moved expeditiously to seek an extension of the time to appeal in late August 2022. These factors favoured an extension.

As to the fifth factor, the late filing of the appeal resulted from an error by 129’s counsel, which typically favours an extension, but does not obviate the need to consider all of the relevant factors. Similarly, concerning the issue of prejudice, the Court found that the three-day window between the appeal date (August 12, 2022) and the time when the appeal was perfected (August 18) did not give rise to any prejudice on the part of the respondents, and favoured granting of an extension.

However, the Court was not persuaded that 129’s application for leave was meritorious. It was of the view that there was little prospect that a chambers appeal judge would view 129’s appeal grounds as sufficiently meritorious to justify the matter proceeding to an appeal of the Sale Order, as the Court viewed the appeal as frivolous and vexatious. Accordingly, this factor did not favour granting an extension.

Finally, the Court considered whether the interests of justice called for granting an extension. The interests of justice are the overarching consideration in terms of whether an extension should be granted, with the prior factors informing that question. A consideration of the interests of justice requires that the Court balance those respective interests toward arriving at a just and fair conclusion.

129’s appeal did not raise any issue of significance to the practice. While the issue was significant to the proceeding, the Sale Order was not “sprung” on 129 without warning. Further, the property that is the subject of the Sale Order was a wasting asset. While the Court had approved an unconditional offer, the sale had yet to close. No fund was created for the stakeholders. The secured stakeholders had not yet received any recovery of the amounts owing to them. Payment of amounts owed to professionals under the administration charge had yet to occur. 129’s attempts to appeal were driven solely by its wish to delay this proceeding so that it could keep its “hopes” of completing the development itself alive. However, these attempts came at the expense of the other stakeholders who bore the significant costs and risk of any further delay. There was no money to allow further time to see another sales process fully unfold in either this proceeding or a receivership.

Under the existing status quo, 129 would garner a small recovery from the Solterra sale but any delay from an appeal would eliminate that. On the other hand, the costs and risks to the other stakeholders far outweighed whatever hopes 129 still held for the development. The delays and uncertainties inherent in any leave application and possible appeal had the real chance to sink the Solterra deal and create the likely result that the stakeholders would suffer losses. In the circumstances, the Court deemed it unlikely that a chambers appeal judge would grant leave to appeal as doing so was manifestly not in the interests of justice. Accordingly, the Court dismissed 129’s application for an extension of time to appeal the Sale Order.

Judge: Justice Fitzpatrick

Counsel: Ritchie Clark, K.C. of BHL Vancouver for 1296371 B.C. Ltd.; Peter Bychawski of Blakes for EY as Monitor; Scott Stephens of Owens Bird for Domain Mortgage Corp.; William Roberts and Sarah Hannigan of Lawson Lundell for Aviva Insurance Company of Canada; and Kibben Jackson and Tom Posyniak of Fasken for Solterra Acquisitions Corp.

Fullcase: https://canlii.ca/t/js257

By Matilda Lici