The Queen v. Guaranteed Homes Ltd., 79 DTC 5136, [1979] CTC 190 (FCTD)

Smith, DJ:—This is a motion by the defendant for an order granting an extension of time for appeal, pursuant to subsection 27(2) of the Federal Court Act, from a judgment of the Trial Division, dated September 1, 1978, wherein the plaintiff’s appeal from the decision of the Tax Review Board, dated January 31, 1977 was allowed.

The relevant parts of section 27 of the Federal Court Act read:

(1) An appeal lies to the Federal Court of Appeal from any

(a) final judgment,

(D) . ..,

(c) interlocutory judgment,

of the Trial Division.

(2) An appeal under this section shall be brought by filing a notice of appeal in the Registry of the Court,

(a) in the case of an interlocutory judgment, within ten days, and

(b) in the case of any other judgment within thirty days .. .,

from the pronouncement of the judgment appealed from or within such further time as the Trial Division may, either before or after the expiry of those ten or thirty days, as the case may be, fix or allow.

In this case the judgment of the Trial Division was a final Judgment. As it was pronounced on September 1, 1978, the thirty day period for bringing an appeal as of right, without an extension of time being granted by the Court, expired on October 1, 1978. No notice of appeal was filed during those thirty days, or since. The notice of the motion before me was filed on January 5, 1979.

The power of the Court to grant an extension of time to appeal is discretionary. There are no rigid rules for determining when the extension should be granted. The decision is always to be made on the circumstances of the particular case, but there are guides to assist the Court in reaching the right decision. Thus in a number of cases it has been stated that the fundamental principle is to see that justice is done. See, for examples:

1. Regina v Toronto Magistrates, Ex parte Tank Truck Transport Ltd, [1960] OWN 549. In this case McGillivray, JA after referring to several earlier Ontario cases, said, at page 550, that:

While these latter cases showed that no precise rules could be laid down as to the exact circumstances which called for the exercise of the discretion of the Court the underlying principle to be extracted from them was that an extension of time for appeal should be granted if justice required it.

2. Ross v Robertson (1904), 7 OLR 464. In this case Osler, JA quoted, obviously with approval, from Holmested and Langton, 531:

The older cases have been gradually departed from. Each case depends upon its own circumstances, and discretion is to be exercised so as to do what justice requires in the particular case.

Beginning at the bottom of page 465 Osler, JA said:

Therefore, in considering what justice requires in such a case as the present, regard is usually to be had, (1) to the bona tides of the applicant: Smith v Hunt (1902), 5 OLR 97; (2) to the delay, whether great or trifling, as affecting the question of prejudice to the opposite party; and (especially when the application is made after default) (3) whether there is reason to say that the appeal is apparently groundless or frivolous.

3. Sinclair v Ridout and Moran, [1955] OWN 633. In this case Hogg, JA said, at 635:

I think that the underlying principle in applications of this nature, to be gathered from the authorities when considered as a whole, in compliance with which the discretion of the Court should be exercised, is that an extension of time for appeal should be granted if justice requires it.

4. Re Manchester Economic Building Society (1883), 24 Ch D 488. In this older case, in England, Brett MR, referring to extensions of time to bring an appeal, said:

I know of no rule other than this, that the court has power to give the special leave, and exercising his judicial discretion is bound to give the special leave, if justice requires that leave should be given.

In a slightly older English case than the one from which I have just quoted, viz: International Financial Society v City of Moscow Gas Company (1877), 7 Ch D 241, a view was expressed by James, LJ, on an application to enlarge the time of appeal, that to my mind differs from that of Brett, MR. He said, at 247:

I am of opinion that we cannot give time. The Respondents here say they are within the rule, and they have a right (and I think it is as valuable a right as anything which a subject has in this country) to know when they can rely upon the decree of order in their favour. The limitation of the right to appeal is a right given to a person in whose favour a judge has decided. I think we ought not to enlarge that time unless under some very special circumstance indeed.

As instances of special circumstances. James, LJ mentioned misleading by the other side, or by an officer of the Court, or a mistake made in the office of the Court, or a sudden death. In the International Financial Society case the rule allowed one year to bring an appeal. A mistake was made as to the date from which the year began, in consequence of which the application was late. His Lordship said:

But simply where a man says, ‘I looked at the order, and I bona fide came to the conclusion that I had up to a particular day, and I determined to take the last day I could,’ then he has taken upon himself to calculate the last day, and if he has made a mistake in calculating the last day he must abide by the consequences of that mistake. Beyond all question, in this case there was abundance of time to have brought the appeal if it was intended really and bona fide to appeal from the order as pronounced.

In the much later case of The Queen v E and A Leduc Limitée, [1955] Ex CR 286 Ritchie, J, in the Exchequer Court of Canada, referred at page 288 to the rules stated by Brett, MR and James, LJ, saying the two cases were complementary. This seems to mean that unless there are special circumstances justice does not require that the time to appeal should be extended. Ritchie, J, referred at page 289 to the case of Nicholson v Piper (1907), 24 TLR 16, in which, he said, the English Court of Appeal “refused an application for an extension of time in which to appeal and emphasized the general rule that where an action has been adjudicated upon the successful litigant had, upon the termination of the time allowed for appealing, a vested interest in his order of which he ought not, in the absence of special circumstances, to be deprived.”

I note here that so far back as 1904, in Poss v Robertson, Osler, JA stated that an appeal is now a step in the cause so that a party has no longer what used to be described as a vested right in the judgment.

In relaxation to the question of bona tides of the applicant for an extension of time to appeal the Courts have frequently stated that the Applicant must show a bona fide intention to appeal while the right of appeal existed. Thus, in Cairns v Cairns, [1931] 3 WWR 335, McGillivray, JA, for the majority of the Alberta Court of Appeal, said, at 343:

Turning again to a consideration of the affidavit, I think it was uncumbent upon the applicant to show a bona fide intention to appeal while the right to appeal existed and that the failure to appeal was by reason of some very special circumstance which serves to excuse of justify such failure.

The Saskatchewan cases of Geek v Geek, [1944] 3 WWR 607 and Clay Products Worker’s Union v Dominion Fire Brick and Clay Products Limited, [1946] 3 WWR 798, are to the same effect with respect to the Applicant having a bona fide intention to appeal, while the right to do so existed. In the Clay Products case Anderson, J said, beginning near the bottom of page 803:

During the time the union had the right to appeal but with a full knowledge and appreciation of their right to appeal and of the attendant facts appertaining thereto they deliberately allowed the time for appealing to expire without taking any steps to appeal. It was a deliberate decision not to appeal when they knew all the facts and were advised as to the law appertaining thereto. The accepted judgments seem to indicate that where a party who has a full knowledge and appreciation of his rights and the attendant circumstances appertaining thereto deliberately allows the time for appeal to go by, he cannot, when subsequent events prove it would have been advantageous to him to have appealed, then obtain the indulgence of the Court to extend the time of appealing.

So far as the merits of an application for an extension of time to appeal are concerned, it must be at least arguable that the judgment appealed from is wrong.

Some additional facts should now be referred to and considered. Evidence for the Defendant (Applicant) is contained in the affidavit of its president, H E J Bergman. Paragraphs 2, 3, 4, 5 and 6 of this affidavit read as follows:

2. That in the first week of September, 1978, upon receiving notice from my solicitor, Mr Nathan Nurgitz, of the law offices of Pollock, Nurgitz, Skwark, Bromley and Myers, in the City of Winnipeg, Province of Manitoba, that the Plaintiff succeeded in their appeal on the Federal Court level, I intended to appeal the said Judgment upon receiving support from interested members of the housing development industry in Western Canada.

3. That I was further informed by my solicitor herein that the appeal period was 30 days whereupon I immediately began to confer with interested parties in the Development Industry of Western Canada to gain support for the appeal.

4. During this period and at all times during that period I, on behalf of the Defendant, had the continuing desire to appeal the decision herein but felt that I could not instruct a Notice of Appeal to be issued until I had received the backing from interested and affected parties for what I understood to be an expensive process.

5. That I correspond in September 1978 with Mr Roy Wilson, President of Carma Development Co Ltd of Calgary, Alberta, and also Chairman of the Residential Council of the Housing and Urban Development Association (HUDA) of Canada of which I am immediate past President, and Mr Wilson indicated that he would be prepared to support an appeal upon receiving confirmation that other companies would be interested. By the time his reply was forthcoming at the end of September, the time limits to file Notice of Appeal had passed.

6. That at that time, I attempted to obtain the support and assistance of various other companies including Ladco Developments Limited of Winnipeg, Manitoba and Qualico Construction Co Limited of Winnipeg, Manitoba. In support of my application to these companies for assistance, I forwarded to them copies of the Judgment of His Lordship C R Smith, District Judge for the Federal Court of Canada for their perusal. Upon receiving notice of their decision to support an appeal in the above matter in the week of December 11th, 1978, I notified my said solicitor to make an application to extend time to appeal the Judgment herein.

We have seen that the judgment from which the defendant now wishes to appeal was pronounced on September 1, 1978, and that the time for appeal ran out on October 1,1978. Paragraphs 2 and 3 of Mr Bergman’s affidavit indicate clearly that he knew these facts in the first week of September, having been so informed by his solicitor.

Paragraphs 2 and 4 are the only paragraphs containing any reference to an intention during the month of September, to appeal from the Judgment. Paragraph 2 simply states: “I intended to appeal the said judgment upon receiving support from interested members of the housing development industry in Western Canada.”

Paragraph 4 states that at all times during that period (in the appeal period) “I, on behalf of the defendant, had the continuing desire to appeal the decision herein, but felt that I could not instruct a notice of appeal to be issued until I had received the backing from interested and affected parties for what I understood to be an expensive process.”

Neither of these paragraphs indicate a firm intention to appeal. They both indicate a conditional interest in appealing. Paragraph 4 does not even use the word “intention”, but only the word “desire”, which has not at all the same meaning. In fact, from the two paragraphs, particularly Paragraph 4, the only conclusion I can draw is that unless he received the financial backing he wanted he had no intention of appealing at all.

From the defendant’s latest income tax return it appears that the company has assets of some $2,000,000 and that its net income for the year was more than $100,000. While I can understand Mr Bergman’s desire for financial assistance for the appeal from others who would probably be affected by its outcome, I cannot believe that the small expense involved in preparing and filing a notice of appeal would create any problem. It would preserve his rights pending the result of his efforts to obtain assistance, and if financial aid did not materialize he could abandon the appeal with relatively little total cost.

During September Mr Bergman’s efforts to obtain financial support were, according to Paragraph 5 of his affidavit, confined to correspondence with one man, the President of a Calgary development company, who was also Chairman of the Residential Council of the Housing and Urban Development Association of Canada. At the end of the month, when the paragraph states the time limits to file notice of appeal had passed, this gentleman indicated that he would be prepared to support an appeal upon receiving confirmation that other companies would be interested. Even at this date support was conditional.

Paragraph 6 relates that Mr Bergman then sought assistance from various other companies. By the week of December 11 he was notified that other companies were prepared to assist. Only then did he instruct his solicitor to apply for an extension of time to appeal. From the evidence it was only then, in my opinion, that he finally formed a definite intention to appeal. As we have seen, the application was not filed until January 5, 1979, a little more than three months after the appeal period had expired. This is a long period of delay. From the beginning of September he knew all the relevant facts. He knew that under the law, if he wished to appeal, he must do so within 30 days after September 1, by filing a notice of appeal in the Registry of this Court. Yet, because he was unwilling to begin an appeal without first obtaining financial assistance for the costs that would be involved, he deliberately let the deadline go by, doing nothing for nearly another two and a half months to indicate to anybody that he definitely intended to appeal.

Paragraph 8 of Mr Bergman’s affidavit states that it is estimated that the judgment he wishes to appeal from will add approximately $10,000,000 to the undeferred tax burden upon the housing development industry in Western Canada. Counsel for the defendant agreed that this figure was no more than a questimate. The source of the estimate is not given, nor on what information it is based. Further we are not told over what period the increase is estimated to occur. We can reasonably expect that it will be substantial, but for all that is said in the paragraph it may greatly exceed or be very much less than the amount stated. Finally no information has been given from which anyone can decide whether the increase, great or small, will have more than minimal effect on the earnings of developers. If they cannot deduct from their income for tax purposes the costs paid to someone else for the installation of services to houses, there is little doubt they will simply add the extra cost to the total capital cost of the development and recover it in the prices at which they sell the houses.

There remains the question whether the appeal, if an extension of time were to be granted, would have at least an arguable chance of success. I have seldom felt, about any of my judgments in a well contested case, that it was so obviously and completely right that a higher court could not come to a different conclusion. From my personal knowledge of this case, gained at the trial, I would think the defendant would have an arguable case on appeal. I must say, however that on this motion there is almost nothing to assist me in deciding whether it is at least arguable that the judgment rendered on September 1, 1978, was wrong. The affidavit of Mr Bergman simply says, in Paragraph 11:

That I have been advised by my solicitor and my accountants that there is every reason to believe that an appeal by the defendant herein would succeed.

A statement of this kind is of very little value.

Counsel for the defendant did not state any point on which he thought the appeal would or might succeed. Nor was any affidavit of an accountant filed, nor any parol testimony offered on this question. Counsel for the plaintiff expressed a totally different view concerning the likelihood of an appeal being successful than that stated in Paragraph 11 of Mr Bergman’s affidavit.

My final conclusion for the reasons stated herein is that the application for an extension of time to appeal must be denied. The plaintiff is entitled to costs.