The British Columbia Court of Appeal has sent a clear message that it is necessary to file as well as serve a notice of appeal in bankruptcy matters within the prescribed 30-day time limit. The recent decision of Friedland (Re), 2012 BCCA 381, establishes a crucial practice point for insolvency practitioners.
In Friedland (Re), the appellant claimed as a secured creditor in a bankruptcy. The trustee disallowed the claim, holding that the appellant was an unsecured creditor only. Thirty days after receiving the notice of disallowance, the appellant served an unfiled notice of application (appealing the disallowance) and supporting material on the trustee. The following day, the appellant filed the application and supporting material with the court. The trustee brought an application for directions respecting the timeliness of the appeal filings, and the appellant sought an order validating its appeal. The chambers judge concluded that the appeal had not been effectively bought within the prescribed 30-day time limit, as the appellant had failed to both serve and file the notice, as is required under the B.C. Supreme Court Civil Rules. It dismissed the appellant’s claim as a secured creditor.
On appeal to the BCCA, the appellant asserted that the process for launching an appeal was that prescribed by the Bankruptcy and Insolvency General Rules, namely that service of a motion is sufficient. It also argued that the failure to file an appeal within 30 days was a procedural error that could be cured under section 187(9) of the Bankruptcy and Insolvency Act.
In considering the issue, the BCCA noted that two out-of-province decisions have reached opposite conclusions on the point: Pachal’s Beverage’s Ltd., (Re) (1972), 31 D.L.R. (3d) 620 (Sask. Q.B.) and Dorval Air Transport Ltd., (Re) (1962), 4 C.B.R. (N.S.) 105 (Que. Q.B.) The Court concluded that the local Supreme Court Civil Rules apply, requiring that an applicant both file and serve a notice of application; the effect of section 135(4) Bankruptcy and Insolvency Act is that this must be done within 30 days of a disallowance. Since this did not occur, the Court ruled it did not have jurisdiction to hear the appeal. Relying on Tamglass American Inc. v. Ritcher, Allen & Taylor, Inc., 2005 ABCA 341, the Court also rejected the submission that the error was purely procedural and could therefore be cured under section 187(9) Bankruptcy and insolvency Act.
The decision of Friedland (Re) clarifies the position in British Columbia, confirming that the Supreme Court Civil Rules govern how appeal applications are to be launched.