IN BANKRUPTCY IN THE MATTER OF the Bankruptcy and Insolvency Act AND IN THE MATTER OF the Bankruptcy of Thomas Blair Drummie BETWEEN: THE ROYAL BANK OF CANADA (a.k.a. Royal Bank Financial Group), Applicant - and - GRANT THORNTON, in its capacity as Trustee in Bankruptcy of the Estate of Thomas Blair Drummie, Respondent - and - THE SOCIETY OF LLOYD'S, Intervenor
[Indexed as: Royal Bank of Canada v. Drummie (Trustee of)]
File No. NB 8881
New Brunswick Court of Queen's Bench (Trial Division)
2002 A.C.W.S.J. LEXIS 9434; 2003 A.C.W.S.J. 19631; 122 A.C.W.S. (3d) 10
 
July 25, 2002, Decided
KEYWORDS:
 [*1]   


BANKRUPTCY AND INSOLVENCY -- Administration of estates -- General --Bank requested extension of appeal period within 30-day period -- Trustee consented to Bank's request to extend appeal period -- Registrar in bankruptcy dismissed Bank's appeal against trustee's notice of disallowance because appeal was not filed within 30-day period -- Bank argued that trustee's consent amounted to waiver of 30-day period -- Appeal was dismissed -- Registrar did not err in principle or in exercise of discretion -- There was no inherent jurisdiction to extend time for appeal where it was set by statute



COUNSEL: Amanda J. Frenette, solicitor for the Applicant
Gary Faloon, Q.C., solicitor for the Respondent
Bruce S. Russell, solicitor for the Intervenor


JUDGES: Smith C.J.Q.B.


 
David D. Smith  
 
 [**1]  This is an appeal pursuant to subsection 192(4) of the  Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 ( BIA ) of a decision of the Registrar in Bankruptcy dismissing the Royal Bank of Canada's (RBC) appeal against a trustee's Notice of Disallowance on the ground that the appeal had not been filed within the 30-day period pursuant to subsection 135(4) of the  BIA  and therefore he did have the competence to [*2]  hear the matter. 
 
 [**2]  The relevant facts of this matter are outlined below. 

 1. Mr. Thomas Blair Drummie filed an Assignment in Bankruptcy on March 29, 2001. The Respondent, Grant Thornton Limited (the "Respondent Trustee") was appointed the Trustee of the Estate of Bankrupt by the Official Receiver. The first meeting of creditors was held on April 19, 2001. 

 2. In April 2001, The Society of Lloyd's (the Respondent Lloyd's) proof of claim for an unsecured claim of $637,557.39 and a proxy appointing Mr. Bernard F. Miller in the matter of the Estate of Thomas Blair Drummie, iin Bankruptcy was delivered to the Trustee in Bankruptcy of Thomas Blair Drummie, Mr. V.L. Duff, Grant Thornton Limited (the "Trustee"). 

 3. The Royal Bank of Canada (the "RBC") also filed with the Trustee, Mr. Duff, a proxy and a proof of claim, both dated May 14, 2001, for a claim of $310,801.00 which it claimed was partially secured and estimated the value of the security at $200,000.00. 

 4. A Section 170 Report dated December 10, 2001, prepared by the Trustee, indicates a secured claim in the amount of $200,000 and unsecured claims in the amount of $838,359.29, including the Lloyd's [*3]  claim of $637,557.39. 

 5. The Trustee disallowed the RBC's security on the property in whole pursuant to subsection 135(2) of the  Bankruptcy and Insolvency Act , R.S., 1985, c. B-3 (The "BIA") and issued a Notice of Disallowance dated January 31, 2002 under subsection 135(3) of the BIA stating, in part: 
The security given related to a specific loan in the amount of $150,000.00 and that loan was repaid in full prior to the date of bankruptcy. 

 6. On February 14, 2002, the Trustee informed Lloyd's that the solicitor representing the Royal Bank Financial Group had requested the Trustee to agree to an extension of time to March 29, 2002 to appeal the Trustee's decision to disallow its secured position, to which request the Trustee consented. 

 7. On March 13, 2002, Mr. George Benchetrit, agent and counsel of The Society of Lloyd's (the Intervenor) and the only inspector of the Estate of Thomas Blair Drummie in Bankruptcy, questioned the legal validity of the Trustee's consent to the late filing of an appeal from a notice of disallowance. In his letter dated March 13, 2002, he stated: 
According to the wording in section 135(4) of the BIA, the trustee's disallowance of the  [*4]  claim by Royal Bank of Canada ("RBC") to a security interest is final and conclusive unless, within 30 days after service of the notice of disallowance, RBC appeals the trustee's decision or makes a court application to extend the 30-day period. 
It is my understanding that the extension to March 29, 2002 mentioned in your letter was granted by you to counsel for RBC verbally. As I read the above-noted section of the BIA, it is the court (not the trustee) which can grant an extension of time for appealing the disallowance, and the court can only do so if the appellant applies for such an extension within the 30-day period. 
Please let me know and when the trustee served the notice of disallowance on RBC. Also, please let me know if you have any reason to believe that the consent of a trustee to the late filing of an appeal from a notice of disallowance is legally valid. 

 8. On March 20, 2002, the RBC filed an appeal with Michael Bray, the Registrar of the Court of Queen's Bench in Bankruptcy in the Judicial District of Fredericton (the "Registrar in Bankruptcy"), of the Trustee's decision. 

 9. In response to Mr. Benchetrit's letter, the Trustee clarified his position as follows in [*5]  a letter dated April 5, 2002: 
By letter dated February 13, 2002, our solicitor received a request from the solicitor of the Bank for an extension of the time to file an appeal. This request was not unreasonable in our opinion nor could we see any prejudice to our consenting to the request, therefore we instructed our solicitor to consent to the extension to and including March 29, 2002. 
It is now our understanding that the Bank's solicitor did not obtain a formal order from the Registrar extending time. we are advised that he will raise the issue with the Registrar at the hearing, which has been scheduled for May 13, 2002. If requested for input at the hearing by the Registrar we will confirm our knowledge of the events and advise that both the inspector of the Estate and a major unsecured creditor strongly object to the hearing of the appeal since a formal order extending the time was not obtained. It will then be the Registrar's decision as to whether or not the hearing is proceeded with. 

 10. The Society of Lloyd's requested by Notice of Motion dated May 6, 2002 that it be heard either as an added party or a friend of the Court on the issues which, according to the Trustee's [*6]  April 5, 2002 letter, were to be raised at the hearing by the parties; that is the application of subsection 135(4) of the  BIA  and the Registrar in Bankruptcy's lack of jurisdiction to hear the appeal. 

 11. At the hearing of the RBC's appeal held on May 13(*th), 2002, the Registrar in Bankruptcy rendered three decisions, two of which are relevant to the present appeal: 

  a) right of The Society of Lloyd's to intervene - the motion of The Society of Lloyd's to intervene was granted insofar as The Society was permitted, as a friend of the Court, to make submissions on the issue of subsection 135(4) of the  BIA , which issue the Registrar had previously stated would be addressed regardless of the outcome of the motion. 

  b) application of subsection 135(4) of the  BIA  to include the appeal of RBC because it did not fall within the 30-day period prescribed by the subsection. 
 
 [**3]  The issue is whether the Trustee had the authority to waive the prescribed 30-day period in which an appeal may be made pursuant to subsection 135(4) of the  BIA  by consenting to the RBC's request to extend said appeal period. 
 
 [**4]  Subsection 135(4) of the  BIA : 
Determination or disallowance [*7]  final and conclusive - A determination under subsection (1.1) or a disallowance referred to in subsection (2) is final and conclusive unless, within a thirty day period after the service of the notice referred to in subsection (3) or such further time as the court may on application made within that period allow, the person to whom the notice was provided appeals from the trustee's decision to the court in accordance with the General Rules. 
 
 [**5]  The 2002 annotated  BIA  by Houlden & Morawetz at page 548 states that "the application for an extension must be made within the 30-day period; there is no jurisdiction in the court to extend the time after the 30-day period has expired". 
 
 [**6]  There is no question that the RBC requested an extension of time within the 30-day period from the Trustee and that it was consented to. The Trustee confirmed the consent in a letter dated April 5, 2002 in which he also states: "It is now our understanding that the Bank's solicitor did not obtain a formal order from the Registrar extending time". The RBC argues that the Trustee's consent amounts to a waiver of the 30-day appeal period in subsection 135(4). In other words, it states that [*8]  a trustee can act in the stead of the court and without the necessity of a formal motion, extend the appeal period. The Appellant, the RBC, cites  Re Norbert  (1924) C.B.R. 586 (Que. K.B. - Appeal) as authority that the court may extend the period of appeal if the Trustee does not object to the delay. This case is obscure and I find it neither pursuasive nor binding on this court. See  Wolf v. R  [1975] 2 S.C.R. 107, and  Reid v. Sigordson  17 B.C.L.R. 117. The leading case in New Brunswick regarding the extension of statutory appeal periods is  K.C. v New Brunswick (Minister of Health and Community Services)  [1998] N.B.J. No. 311 (C.A.) in which Drapeau, J.A. of the New Brunswick Court of Appeal states at para. 5: 
There is no inherent jurisdiction to extend the time for appeal where it is set by statute. See  OK Builders Supplies Ltd. v. British Columbia (Minister of Finance) , [1983] B.C.J. No. 828 (B.C.S.C.). The power to extend the time for appeal must be found in the Act itself or in some other statute. 

  This case disposes of grounds one and two of the appeal. 
 
 [**7]  The third ground of  [*9]  appeal is that the Registrar erred in allowing the intervenor (Lloyd's) to raise non-compliance as a defense when the intervenor was not a party to the proceedings and was not a party to the consent to waive and extend time. 
 
 [**8]  This ground is without merit as the Registrar stated at the commencement of the hearing at page 219 of the Record on Appeal that "the question of subsection 135(4) will be addressed prior to the substantive issues of disallowance, regardless of the outcome of this motion" (the motion of Lloyd's to intervene). 
 
 [**9]  The fourth ground of appeal is that the intervenor was estopped from raising the limitation period in subsection 135(4). The appellant argues that Lloyd's should have given notice to it that strict compliance with the  BIA  would be sought after the 30-day appeal period. I find no authority which supports this ground. 
 
 [**10]  The fifth ground is that the Registrar erred in not exercising his equitable jurisdiction and dismissing the intervenor's objection to the Trustee's waiver of compliance with the 30-day period considering all the circumstances. The court clearly cannot exercise its' equitable jurisdiction contrary to statute.  [*10]   
 
 [**11]  For the above reasons, I find that the Registrar in Bankruptcy has not erred in principle nor in the way in which he has applied or exercised his discretion. The appeal is dismissed with costs of $500.00 payable by the appellant to each to the respondents, The Society of Lloyd's and Grant Thornton Limited. 

CLB-NO: 003111075

LOAD-DATE: July 11, 2003