Nova Scotia Court of Appeal
Citation: Can*Sport Incorporated v. HarbourEdge Mortgage Investment Corporation, 2022 NSCA 8
Date: 20220120
Docket: CA 509960
Registry: Halifax
Between:
Can*Sport Incorporated and Lee Adamski
Applicants
v.
HarbourEdge Mortgage Investment Corporation
Respondent
|
Judge: |
Bourgeois J.A. |
|
Motion Heard: |
January 13, 2022, in Halifax, Nova Scotia in Chambers |
|
Held: |
Application for leave to appeal dismissed |
|
Counsel: |
Christopher I. Robinson, for the applicants Robert G. MacKeigan, Q.C. and Sara L. Scott, for the respondent Stephen Kingston and Colin Boyd, for the receiver, MNP Ltd. |
Decision:
[1] The respondent HarbourEdge Mortgage Investment Corporation (“HarbourEdge”) is a commercial lender. In 2014, it extended funding to Can*Sport Incorporated (“Can*Sport”) for the construction of a multi-sport, multi‑pad ice surface development in Bedford, Nova Scotia. Can*Sport’s obligations were personally guaranteed by the applicant Lee Adamski.
[2] Although the parties disagree as to why, the lending relationship soured. Litigation ensued and is ongoing. On June 17, 2021, HarbourEdge filed a Notice of Motion seeking the appointment of a Receiver and Manager of the assets, collateral and undertakings of Can*Sport. The motion was brought pursuant to s. 243 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”) and s. 43(9) of the Judicature Act, R.S.N.S. 1989, c. 240.
[3] The motion was heard by Justice John P. Bodurtha. In an oral decision delivered October 13, 2021, he gave reasons for granting the motion. An issued order followed the next day.
[4] The applicants filed a Notice of Application for Leave to Appeal and Notice of Appeal (Interlocutory) on October 25, 2021. Although applications for leave to appeal are routinely heard by a panel of this Court, as I will note below, the BIA contemplates the issue of leave being resolved by a judge in chambers.
[5] The application for leave was heard on January 13, 2022. After reviewing all of the material before me, and considering the submissions advanced by the parties and the Receiver, I would dismiss the motion. My reasons for doing so follow.
The motion judge’s decision
[6] The motion judge’s decision is unreported. To address the arguments advanced before me, it is necessary to set out certain aspects of the reasons. The motion judge started his decision with a factual review:
Can*Sport is indebted to HarbourEdge in the amount of four million two hundred and eight thousand seven hundred and thirty-eight dollars and thirty-six cents ($4,208,738.36) as of March 31, 2021 with interest accruing. It has property tax arrears in excess of three hundred twenty thousand dollars ($320,000). And has been unable to secure alternate financing to date. HarbourEdge brings this motion arguing it is just and convenient for this Court to appoint MNP as receiver of the assets, collateral and undertakings of Can*Sport to address the outstanding property tax issues and to ensure the security held by HarbourEdge is addressed in a timely, fair and transparent manner.
Facts: By way of a commitment letter accepted on November 25, 2014 HarbourEdge extended funding to Can*Sport. We’ll call this the credit facilities. The credit facilities were extended to Can*Sport in relation to the construction of a multi-sport, multi-pad ice surface development. The development is located at Verdi Drive in Bedford, Nova Scotia.
As of March 31, 2021 Can*Sport was indebted to HarbourEdge in the amount previously mentioned. And as of March 29, 2021 the amount of property tax arrears was three hundred and twenty-nine thousand nine hundred and seventy dollars and ninety-six cents ($329,970.96). On March 7, 2017 HarbourEdge sent letters to Can*Sport and Lee Adamski demanding repayment of the credit facilities and the related guarantee (the “demand letters”), and issued a Notice of Intention to Enforce Security under section 244 of the BIA.
Since the spring of 2020, Can*Sport has not provided HarbourEdge with any plan as to how it intends to meet its financial obligations, nor any update on the status of its potential re-financing. MNP has agreed to act as receiver of the assets, collateral and undertakings of Can*Sport.
[7] The motion judge then turned to consider the applicable legal principles. He noted s. 243(1) of the BIA, which permits the appointment of a receiver and proceeded to consider the applicable test as established in the case authorities. In particular, he articulated the factors relevant to the appointment of a receiver, quoting from Bank of Montreal v. Linden Leas Limited, 2018 NSSC 82. In Linden Leas, Justice Rosinski wrote:
[20] The bank relies particularly on the following two cases: Enterprise Cape Breton Corp. v. Crown Jewel Resort Ranch Inc., 2014 NSSC 128; and the decision of Justice Morawetz, in Bank of Montréal v. Sherco Properties Inc., 2013 ONSC 7023, which is cited with approval in the Crown Jewel decision, at paras. 27-28.
[21] Significantly, Justice Edwards in Crown Jewel, also cited with approval:
26 In The 2013-2014 Annotated Bankruptcy and Insolvency Act, Lloyd W. Houlden, Geoffrey B. Morawetz & Janis P. Sarra (Carswell:Toronto, Ontario 2013-2014) the authors set out at p. 1018 the factors I consider in determining whether it is appropriate to appoint a receiver. These are:
(a) Whether irreparable harm might be caused if no order were made, although it is not essential for a creditor to establish irreparable harm if a receiver is not appointed;
(b) The risk to the security holder taking into consideration the size of the debtor's equity in the assets and the need for protection or safeguarding of the assets while litigation takes place;
(c) The nature of the property;
(d) The apprehended or actual waste of the debtor's assets;
(e) The preservation and protection of the property pending judicial resolution;
(f) The balance of convenience to the parties;
(g) The fact that the creditor has the right to appoint a receiver under the documentation provided for in the loan;
(h) The enforcement of rights under a security instrument where the security holder encounters or expects to encounter difficulty with the debtor and others;
(i) The principle that the appointment of a receiver is extraordinary relief that should be granted cautiously and sparingly;
(j) The consideration of whether a court appointment is necessary to enable the receiver to carry out its duties more efficiently;
(k) The effect of the order on the parties;
(l) The conduct of the parties;
(m) The length of time that a receiver may be in place;
(n) The cost to the parties;
(o) The likelihood of maximizing return to the parties; and
(p) The goal of facilitating the duties of the receiver.
27 The authors further note that a court can, when it is appropriate to do so, place considerable weight on the fact that the creditor has the right to instrument - appoint a receiver. In Bank of Montreal v. Sherco Properties Inc., 2013 ONSC 7023 (S.C.J.) the court granted the application of the Bank of Montreal for the court-appointment of a receiver over the assets of Sherco Properties Inc., finding at paragraph 42 that:
[42] Where the security instrument governing the relationship between the debtor and the secured creditor provides for a right to appoint a receiver upon default, this has the effect of relaxing the burden on the applicant seeking to have the receiver appointed. While the appointment of a receiver is generally regarded as an extraordinary equitable remedy, courts do not regard the nature of the remedy as extraordinary or equitable where the relevant security document permits the appointment of a receiver. This is because the applicant is merely seeking to enforce a term of an agreement that was assented to by both parties. (citations removed)
(Emphasis added)
[8] The motion judge further said:
Can*Sport argues that the fact that the mortgage documents provide for a right to appoint a receiver upon default is an important consideration but not the only consideration. I agree with this assessment and so does counsel for HarbourEdge. Where they disagree is whether the status quo should remain. Can*Sport argues that the appointment of a Court appointed receiver is unnecessary and the status quo should remain.
I find that the amount of weight to be placed on any one factor will be determined by the facts of the specific case. Some factors may have no application while others will be determinative. What is necessary is to apply the relevant factors in the specific case to determine whether it is just and convenient to appoint a receiver.
[9] In considering Can*Sport’s argument that the status quo ought to be maintained and the request for a court-appointed receiver be rejected, the motion judge noted:
Can*Sport argues that HarbourEdge has not expeditiously prosecuted the lawsuit and therefore its remedy is to proceed quickly with the lawsuit. That is how HarbourEdge protects itself, not appointing a receiver but by maintaining the status quo and expediting the litigation.
However, the status quo has not been fine. I am persuaded by counsel for HarbourEdge that Can*Sport has not been forthcoming with its financials. This is not surprising given Can*Sport’s position that HarbourEdge is not entitled to them. What choice does HarbourEdge have in this situation?
There is evidence that Can*Sport has received revenue yet there is no clarity around what the revenue was from and how the revenue is being applied. There is no doubt that Can*Sport is not making any payments to HarbourEdge, one of their secured creditors. In addition, there is evidence that Can*Sport is not paying HRM [its] full amount of property taxes.
And further:
I see value in having a Court-appointed receiver because of the fiduciary duty of the receiver to all interested parties. The work of the receiver would be performed under the guidance and direction of the Court where appropriate.
Can*Sport can still obtain re-financing or work with the receiver to pursue its alternative plan regarding a potential condominium build. There’s nothing before the Court to suggest that the only option a Court-appointed receiver would choose in these circumstances is to sell the property. I concur with the comments of the court in Romspen at paragraph 19 previously mentioned.
To date Can*Sport has been unable to obtain financing. They essentially want HarbourEdge to continue to wait on its security while at the same time providing no information to HarbourEdge about its revenues. This is untenable to HarbourEdge and they argued correctly that a receiver does not prevent Can*Sport from continuing to try to obtain financing or complete current negotiations regarding financing. HarbourEdge should not be required to wait indefinitely before exercising its available remedies. It demanded payment in 2017 and has not received one payment.
[10] In support of the motion, HarbourEdge argued the lack of financial transparency regarding Can*Sport’s revenue and expenses was detrimental to their security interest in the property. The motion judge observed:
Clearly the facility has earned revenue and not an insignificant amount when not shut down due to Covid. But there is no transparency as to where the revenue is going, what expenses are being paid, how much, and why. There is no information forthcoming.
For instance, HarbourEdge did not know about the tax arrears of Can*Sport until reviewing the information appended as an exhibit to Mr. Adamski’s affidavit for this hearing. This is not an insignificant oversight given that the tax arrears go back as far as 2015 and under the Municipal Government Act there could be no right of redemption regarding a tax sale of the property under section 152.
The evidence before me is that Can*Sport has reached an agreement regarding partial payment of the arrears, but that does not detract from HarbourEdge’s point that this is another example of HarbourEdge being unaware of Can*Sport’s financial situation and support’s HarbourEdge’s request for a Court-appointed receiver under the “just or convenient” test.
[11] After reviewing the relevant provision of the Judicature Act, the motion judge concluded:
Section 243 of the BIA and section 43(9) of the Judicature Act both allow the court to appoint a receiver if it’s considered by the Court to be just or convenient.
The factors I considered in determining whether it is appropriate to appoint a receiver are the balance of convenience to the parties, the fact that the creditor has the right to appoint a receiver under the documentation provided for in the loan, the enforcement of rights under a security instrument where the security holder encounters or expects to encounter difficulty with the debtor and others, the consideration of whether a Court appointment is necessary to enable the receiver to carry out its duties more efficiently, the effect of the order on the parties, the conduct of the parties, the likelihood of maximizing return to the parties and the goal of facilitating the duties of the receiver.
And the facts supporting the appointment of a receiver are HarbourEdge holds first priority security over the property. There has been a failure by Can*Sport to fulfill the terms of its loan pursuant to the credit facilities. The credit facilities provide for the appointment of a receiver. HarbourEdge has made demand for the payment on Can*Sport and issued Notice of Intention to Enforce the Security pursuant to the BIA. Both the demand letters and the Notice of Intention to Enforce the Security have expired without payment being made. HarbourEdge is in a position to enforce the security against Can*Sport. There have been no firm offers received despite Can*Sport having ample opportunity to complete the transaction. The inability of Can*Sport to address the significant real property tax arrears has put the security held by HarbourEdge in issue.
I’ve also taken into consideration the balance of the convenience to the parties and the fact that the creditor has the right to appoint a receiver under the documentation provided for in the loan.
Conclusion: Can*Sport is in default under the credit facilities and security agreements and has failed to secure alternate financing or sell assets sufficient to retire its outstanding debts. Due to accruing expenses, property taxes and interest, Can*Sport’s property continues to erode.
[12] The motion judge found it was just and convenient to appoint a receiver. The applicants now seek leave to appeal that determination.
Legal Principles
[13] The parties are in agreement regarding the legal principles governing this motion. Section 193 of the BIA contemplates appeals to this Court. It provides:
193 Unless otherwise expressly provided, an appeal lies to the Court of Appeal from any order or decision of a judge of the court in the following cases:
(a) if the point at issue involves future rights;
(b) if the order or decision is likely to affect other cases of a similar nature in the bankruptcy proceedings;
(c) if the property involved in the appeal exceeds in value ten thousand dollars;
(d) from the grant of or refusal to grant a discharge if the aggregate unpaid claims of creditors exceed five hundred dollars; and
(e) in any other case by leave of a judge of the Court of Appeal.
(Emphasis added)
[14] In their written and oral submissions, the applicants submit only s. 193(e) applies in the present instance and, as such, leave to appeal is required. All parties are of the view the above provision clearly places the responsibility for assessing leave with a single judge of this Court. I agree.
[15] The BIA does not provide a statutory test for assessing whether leave should be granted. All parties, however, cite a decision of the Ontario Court of Appeal as setting out the relevant considerations. In Business Development Bank of Canada v. Pine Tree Resorts Inc., 2013 ONCA 282, Justice Blair said:
[29] Beginning with the overriding proposition that the exercise of granting leave to appeal under s. 193(e) is discretionary and must be exercised in a flexible and contextual way, the following are the prevailing considerations in my view. The court will look to whether the proposed appeal,
a) raises an issue that is of general importance to the practice in bankruptcy/insolvency matters or to the administration of justice as a whole, and is one that this Court should therefore consider and address;
b) is prima facie meritorious, and
c) would unduly hinder the progress of the bankruptcy/insolvency proceedings.
…
[31] I have not referred specifically to the three R.J. Nicol criteria in the factors mentioned above. That is because those factors are caught by the “prima facie meritorious” criterion in one way or another. A proposed appeal in which the judgment or order under attack (a) appears to be contrary to law, (b) amounts to an abuse of judicial power, or (c) involves an obvious error causing prejudice for which there is no remedy, will be a proposed appeal that is prima facie meritorious. I recognize that the Power Consolidated “prima facie meritorious” criterion is different than the “arguable point” notion referred to by Osborne J.A. in Baker and by Armstrong J.A. in Fiber Connections. In my view, however, the somewhat higher standard of a prima facie meritorious case on appeal is more in keeping with the incorporation of the R.J. Nicol factors into the test.
[32] As I have explained above, however, the jurisprudence has evolved to a point where the test for leave to appeal is not simply merit-based. It requires a consideration of all of the factors outlined above.
(Emphasis added)
See also Buduchnist Credit Union Limited v. 2321197 Ontario Inc., 2019 ONCA 588.
Analysis
Is the appeal prima facie meritorious?
[16] The bulk of the parties’ submissions are focused on this element. As such, I will address it first. Before considering the arguments advanced on the motion, there are three preliminary points relevant to the determination of whether a proposed appeal is prima facie meritorious.
[17] First, I am in agreement with Blair J.A. in Pine Tree, supra, that a consideration of the prima facie merit of the appeal involves a higher standard than demonstrating grounds that are merely arguable or not frivolous. An applicant should demonstrate its appeal has a real chance of success based upon not only the motion judge’s reasons, but contextually on the entirety of the motion record.
[18] Second, the Court should not undertake a meandering assessment of whether the motion judge possibly erred. Rather, the question of whether the applicant has raised a meritorious assertion of error is anchored in the grounds of appeal pled. In their Notice of Application for Leave to Appeal and Notice of Appeal (Interlocutory), the applicants allege the motion judge erred in the following specific ways:
1. The Learned Judge erred in law as regards the application of the test for the appointment of a receiver and the appropriate weight that ought to have been given to the factors which comprise the balance of convenience, and the determination the appointment was just.
2. The Learned Judge ignored, misapprehended or gave insufficient weight to the evidence of the appellants as it related to the following factors when determining whether the appointment of a receiver was just and convenient:
a. Whether irreparable harm might be caused if no order was made;
b. The risk to the security holder taking into consideration the size of the debtor’s equity in the assets;
c. The nature of the property;
d. The apprehended or actual waste of the debtor’s assets; the preservation and protection of the property pending judicial resolution;
e. The effect of the order on the parties; and
f. The conduct of the parties.
[19] Lastly, in assessing whether the applicants have demonstrated the appeal is prima facie meritorious, one should consider in addition to the grounds pled, the standard of review under which this Court would assess the motion judge’s decision.
[20] The parties have all acknowledged the appointment of a receiver is a discretionary decision. The standard of review this Court applies in reviewing discretionary decisions on appeal is not controversial. In Aliant Inc. v. Ellph.com Solutions Inc., 2012 NSCA 89, Justice Saunders noted:
[27] The standard of review in matters such as this is well settled. We will only intervene if we are persuaded that wrong principles of law have been applied, or that failing to intervene would produce an obvious injustice. The threshold for overturning a discretionary order is considerable and is not easily displaced. As this Court said in A.B. v. Bragg Communications, 2011 NSCA 26:
[31] … Clear error of law or a substantial injustice must be established. …
[33] … appellate courts are restrained in choosing to intervene. Absent an error in law or a manifest injustice we will decline to do so. The threshold for seeking reversal is high. It is not a soft or casual target. Any party seeking to set aside an interlocutory discretionary order has a heavy onus. Litigants should be reminded that it is not a burden which will be satisfied easily. …
[28] Thus, in the absence of a clear error of law or a substantial injustice we will refuse to intervene. Appeals from interlocutory matters create delay, run up costs for the parties, and tie up the court’s own resources while other proceedings in the system wait to be tried. A judge hearing motions in Chambers develops a well-honed proficiency in the exercise of discretion, especially in cases where he or she has heard the witnesses being examined first hand. These are some of the reasons why the standard of review is strictly applied where any party attempts to set aside a discretionary, interlocutory order.
(Emphasis added)
See also National Bank Financial Ltd. v. Barthe Estate, 2015 NSCA 47 and Leyte v. Leyte, 2019 NSCA 41.
[21] Although my role in assessing leave is not to ultimately determine the merits of the proposed appeal, I must, in applying the above, consider the strength of the grounds advanced in light of the highly deferential standard of review.
[22] With the above points in mind, I turn now to the applicants’ arguments that the proposed appeal is prima facie meritorious. In support of the motion, the applicants filed written submissions on November 9, 2021 and December 13, 2021, supplemented by oral argument at the hearing.
[23] In their November 9 submissions, the applicants assert the motion judge erred by not considering and balancing all of the 16 factors enumerated in Linden Leas. They say the motion judge placed undue reliance on the fact that the loan instrument gave HarbourEdge the contractual right to appoint a receiver:
12. The list above includes 16 different factors, all of which must be individually considered and balanced. …
13. In brief, when a parties’ security instrument contains a right to appoint a receiver, this has the effect of relaxing the burden on the applicant by removing the “extraordinary” label from the relief, and by allowing the court to place considerable weight on this one factor.
…
15. In brief, while the “right to appoint” factor is important, the rest of the 16 factors are still required to be considered and weighed in order to properly determine the balance of convenience.
16. In their grounds for appeal, the appellants assert that the Learned Judge gave inordinate – almost exclusive – weight to the “right to appoint” factor, and either ignored or gave insufficient weight to the balance of the factors. …
(Underlining in Original; bolding added)
[24] In their subsequent submissions, the applicants appear to have changed their view with respect to the above assertions. Notably, they argue the motion judge was not obligated to consider and weigh all the factors, but only those that were relevant to the matter at hand. Instead, the applicants now assert the motion judge fell into error based upon misapprehending the evidence and by failing to provide sufficient reasons to permit appellate review. I note sufficiency of reasons was not a ground of appeal raised in the pleadings.
[25] The applicants allege the motion judge’s conclusion that the status quo was untenable was based upon two separate misapprehensions of evidence. First, the applicants say the motion judge erred in concluding they were intentionally withholding financial records from HarbourEdge. They say there was no evidence to support that finding. Second, they assert the motion judge was in error when he said “HarbourEdge did not know about the tax arrears of Can*Sport until reviewing the information appended as an exhibit to Mr. Adamski’s affidavit for this hearing”.
[26] In assessing whether the applicants’ assertions of misapprehension of evidence give rise to a prima facie meritorious appeal, it is necessary to look not only to the decision itself, but to the entirety of the motion record. In my view, neither of these concerns gives rise to a prima facie case for appellate intervention, especially in light of the deference afforded to the motion judge’s discretionary decision.
[27] When one looks to the arguments advanced and the evidence before him, the motion judge was entitled to draw the conclusion HarbourEdge was not receiving adequate financial information from the applicants. Further, based on the evidentiary record and arguments of counsel, an inference could be drawn that the information was being purposefully withheld. These are findings of fact available on the record. To interfere with the motion judge’s determination on appeal, the applicants are required to show a clear error of law or a substantial injustice. Their arguments in this regard are not prima facie meritorious.
[28] I reach the same conclusion regarding the motion judge’s error relating to when HarbourEdge became aware of the applicants’ tax arrears. HarbourEdge acknowledges it was aware of the accrual of tax arrears on the property prior to receiving Mr. Adamski’s affidavit. This is outlined in the affidavit of its CEO Larry Dunn. What Mr. Dunn’s affidavit asserts is that HarbourEdge was unaware of the payment arrangement the applicants had made with the Halifax Regional Municipality until it had received Mr. Adamski’s affidavit filed in opposition of the appointment motion. There is no doubt the motion judge misspoke when giving his oral reasons on this factual point.
[29] To assess the impact of this misstatement of fact, one must again look at its significance contextually and in light of the deferential standard of review. Although the factual error appears clear, in my view the applicants have not shown it likely contributed to the outcome. The evidence and arguments before the motion judge focused on the existence of significant tax arrears (which eroded HarbourEdge’s security position) accruing over the past five years, not when they were disclosed. This was in addition to other concerns regarding the lack of clarity relating to the revenues being earned and expenses being paid. In my view, the applicants have not demonstrated the motion judge’s misstatement of fact on this point gives rise to a likely error of law, or a manifest injustice. As such, it does not meet the threshold of a prima facie meritorious ground of appeal.
[30] Finally, the applicants argue the motion judge’s reasons are so deficient that it is unclear how or why he concluded the appointment of a receiver was “just and convenient” in the circumstances. In oral argument, Mr. Robinson likened the reasons to a math test he had taken in high school. He recounted he provided correct answers to the questions, but despite that, was scored poorly. This was because the teacher expected to see the process of how he had reached his conclusions. Similarly, Mr. Robinson says the motion judge was obligated to set out a “full analysis” of every factor he said he considered. In their written submissions of December 13, 2021, the applicants further explain:
31. However, there is no indication in the Decision what evidence was weighed, what facts were found, how those facts were applied to the various factors, and then how the balance of convenience was determined in a just manner, as is required. In short, the Decision certainly lists the factors, but there is no indication whatsoever as to how the factors were actually considered and with what evidence; the Decision says they were considered, but silent as to how.
[31] In considering whether this argument gives rise to a prima facie meritorious ground of appeal, it is helpful to look at what this Court considers when insufficiency of reasons is alleged as a reason for appellate intervention. In McAleer v. Farnell, 2009 NSCA 14, Chief Justice MacDonald wrote:
[12] I begin with the recent decision of the Supreme Court of Canada in R.E.M., 2008 SCC 51. Although decided in a criminal law context, I nonetheless find that it offers good guidance in this appeal. There, the Chief Justice explained how a trial judge's reasons fulfill five basic purposes: 1) to inform the parties why the decision was made; 2) to provide public accountability for the judicial decision; 3) to permit effective appellate review; 4) to help ensure fair and accurate decision making, and 5) to provide guidance to future courts in accordance with the principle of stare decisis.
[13] These basic goals, the Chief Justice explains, are effectively fulfilled if the decision informs the reader as to what was decided and why:
¶ 17 These purposes are fulfilled if the reasons, read in context, show why the judge decided as he or she did. The object is not to show how the judge arrived at his or her conclusion, in a "watch me think" fashion. It is rather to show why the judge made that decision. The decision of the Ontario Court of Appeal in Morrissey predates the decision of this Court establishing a duty to give reasons in Sheppard. But the description in Morrissey of the object of a trial judge's reasons is apt. Doherty J.A. in Morrissey, at p. 525, puts it this way: "In giving reasons for judgment, the trial judge is attempting to tell the parties what he or she has decided and why he or she made that decision" (emphasis added). What is required is a logical connection between the "what" - the verdict - and the "why" - the basis for the verdict. The foundations of the judge's decision must be discernable, when looked at in the context of the evidence, the submissions of counsel and the history of how the trial unfolded.
…
¶ 25 The functional approach advocated in Sheppard suggests that what is required are reasons sufficient to perform the functions reasons serve - to inform the parties of the basis of the verdict, to provide public accountability and to permit meaningful appeal. The functional approach does not require more than will accomplish these objectives. Rather, reasons will be inadequate only where their objectives are not attained; otherwise, an appeal does not lie on the ground of insufficiency of reasons. This principle from Sheppard was reiterated thus in R. v. Braich, [2002] 1 S.C.R. 903, 2002 SCC 27, at para. 31: ... [Emphasis in original.]
[14] Furthermore, the amount of detail required to meet these basic functions very much depends on the context of each case:
¶ 44 The degree of detail required may vary with the circumstances. Less detailed reasons may be required in cases where the basis of the trial judge's decision is apparent from the record, even without being articulated. More detail may be required where the trial judge is called upon "to address troublesome principles of unsettled law, or to resolve confused and contradictory evidence on a key issue ...": Sheppard, at para. 55.
[15] For this reason, our role on appeal is not to criticize the level of detail or expression. Instead it is to determine if the functions noted above have been fulfilled to the point where a meaningful appeal is available:
¶ 53 However, the Court in Sheppard also stated: "The appellate court is not given the power to intervene simply because it thinks the trial court did a poor job of expressing itself" (para. 26). To justify appellate intervention, the Court makes clear, there must be a functional failing in the reasons. More precisely, the reasons, read in the context of the evidentiary record and the live issues on which the trial focussed, must fail to disclose an intelligible basis for the verdict, capable of permitting meaningful appellate review.
(Emphasis added)
See also Carleton Road Industries Association v. Sanford, 2015 NSCA 95.
[32] Although Mr. Robinson may have been expected to demonstrate the process he used to solve his math equations, judges’ reasons are not required to take a “watch me think” approach. He is wrong in suggesting the two exercises are comparable. The legal principles above clearly demonstrate the motion judge was not required by law to perform an exacting analysis of each factor upon which he relied. All that was required was for his reasons, read in context of the evidence and submissions before him, to adequately explain why he made the determination he did.
[33] I am unable to conclude the applicants have met the threshold of establishing the alleged insufficiency of reasons is a prima facie meritorious ground of appeal for two reasons. First, and as noted earlier, it is not a pled ground of appeal. The applicants have not indicated there would be a sought amendment. It is difficult to grant leave on the basis of a ground of appeal that has not been pled.
[34] Secondly, on its face, the motion judge’s reasons explain what law he applied, what the factual context was and the factors that led to his conclusion the appointment of a receiver was appropriate. A review of the motion record only serves to enhance what is already apparent in the decision. Other than the applicants’ misguided comparison to a high school math test, they have not presented any legally sound argument that the motion judge’s reasons would likely warrant appellate intervention.
[35] I am satisfied the applicants have not established the appeal is prima facie meritorious. I would dismiss the application for leave on this basis alone.
An issue of general importance
[36] The applicants are not claiming the motion judge identified incorrect legal principles. At the heart of their complaint is their assertion he failed to view the evidence in the manner they sought and to weigh the Linden Leas factors in their favour. The proposed grounds of appeal are entirely related to a dispute between this creditor and this debtor.
[37] In my view, there is nothing in this fact-specific dispute that gives rise to an issue of general importance to the practice of bankruptcy/insolvency matters or to the administration of justice as a whole. See Buduchnist Credit Union, supra, at para. 18 and Enroute Imports Inc. (Re), 2016 ONCA 247 at paras. 7–8.
[38] The applicants have not met this criterion, and I would dismiss the application on this basis as well.
Undue hindrance of the proceedings
[39] The final Pine Tree, supra, criterion is whether the proposed appeal would unduly hinder the progress of the bankruptcy/insolvency proceedings. The applicants’ argument on this point is brief and based upon propositions I have already rejected. In their December 13 written submissions, they assert:
46. The key word in the element of the test is “unduly”. The Appellants submit that the prima facie meritorious nature of the appealable errors, which engage the administration of justice as these do, cannot be seen as “undue” … rather, any resulting delay must instead be seen as necessary.
(Emphasis in original)
[40] HarbourEdge submits granting leave to appeal, which would serve to stay the appointment of the receiver, would be problematic. It has not received payment from the applicants in relation to the loan advanced for several years. There is significant municipal tax arrears owing in relation to the property, accruing since 2015. The municipality has given notice of its intention to proceed to a tax sale of the property. There is a further lien and judgment registered against the property. The applicants have not provided a plan as to how they intend to deal with these issues.
[41] HarbourEdge says it has no information regarding how the applicants are managing the revenue and expenses of the property and are fearful its security interest in the property may be further eroded. Granting leave to appeal would delay the court-appointed receiver in attempting to ascertain the financial reality and taking appropriate steps, with court oversight if necessary.
[42] A review of the motion judge’s factual conclusions and the record satisfies me HarbourEdge’s concerns regarding delay should leave be granted are warranted.
Conclusion
[43] For the reasons above, the applicants’ application for leave to appeal is dismissed.
[44] With respect to costs, the applicants advised during the hearing that if successful, they sought costs against both HarbourEdge and the receiver, MNP. HarbourEdge, if successful, sought costs jointly and severally against the applicants. MNP advised if the motion were dismissed, it would seek costs only against Mr. Adamski.
[45] HarbourEdge is entitled to costs of $1,500.00 on the motion, payable by the applicants on a joint and several basis. MNP is entitled to costs in the amount of $500.00, payable by Lee Adamski personally.
Bourgeois J.A.