In a bankruptcy discharge proceeding, a creditor sought substantial indemnity costs for opposing the bankrupt’s discharge as well as recovery of the trustee’s legal fees and administrative expenses.
The court had previously denied the bankrupt’s discharge and was asked to determine the appropriate costs consequences.
Applying s. 197(2) of the Bankruptcy and Insolvency Act, the court held that costs normally follow the event on a partial indemnity basis.
While the creditor was successful in opposing the discharge, the court declined to award substantial indemnity costs and reduced the requested amount to $1,500 to avoid imposing an excessive financial burden that would undermine the debtor’s potential rehabilitation.
Determination of the trustee’s legal costs and expenses was deferred to the final discharge hearing and taxation of the trustee’s accounts.