A. Zweig

This decision addresses the costs arising from a successful motion to annul a corporate bankruptcy.

The court found that the assignment into bankruptcy was an improper use of the Bankruptcy and Insolvency Act, driven by self-interest to halt ongoing litigation.

While the conduct was not 'especially egregious' to warrant full indemnity costs, it justified an award of substantial indemnity costs.

The court awarded the successful party $55,750 in substantial indemnity costs against the party who improperly initiated the bankruptcy, comprising fees, HST, and disbursements.

No costs were awarded to or against the trustee.

The moving party, Gaspare Caruso, brought a motion to annul the bankruptcy of 1947755 Ontario Ltd. under s. 181(1) of the Bankruptcy and Insolvency Act.

The assignment in bankruptcy had been made by John Hanna Nissan amidst a protracted dispute over corporate control.

The court found that the corporation was not insolvent at the time of the assignment, as its assets exceeded its liabilities and it could have met its obligations with a modicum of effort.

Furthermore, the court held that the assignment was an abuse of process, strategically timed to avoid scheduled examinations in the ongoing litigation.

The motion to annul the bankruptcy was granted.

The trial in this matter was scheduled to commence on September 20, 2021.

Due to health issues involving counsel for the defendants, the court adjourned the trial to January 10, 2022, making the new date peremptory to the defendants.

The court also made orders regarding the re-drafting of pleadings and the production of outstanding documents by the defendants.

The issue of the plaintiffs' costs thrown away was reserved to the trial judge.

At a pre-trial conference for a property ownership dispute, the court addressed trial management issues to ensure readiness for a September 2021 trial.

The court set deadlines for the defendants to provide a redrafted statement of defence, finalize their position on the joint document brief, and answer outstanding undertakings regarding the property's income and expenses.

The court noted that failure to provide the undertakings could result in the plaintiff seeking to strike the defence at trial.

The plaintiff brought a motion for a status hearing to extend the deadline to set the action down for trial.

Shortly after the motion was filed, the Registrar mistakenly issued an Order Dismissing Action for Delay.

The court set aside the dismissal order because the motion was brought before the five-year deadline.

Applying the test for extending the trial deadline, the court found the plaintiff provided an acceptable explanation for the delay, citing the principal's mistaken belief that the action was settled alongside related actions, and the inadvertence of counsel.

The court also found the defendant would suffer no non-compensable prejudice, as documentary evidence was preserved and key witnesses were available.

The motion was granted and a timetable was set.