In proposal proceedings under the Bankruptcy and Insolvency Act, the debtor brought concurrent expungement motions against proofs of claim filed by two former law firms.
The court held that the debtor failed to establish, on a balance of probabilities, that the trustee erred in admitting the unpaid appeal-fee claim of one firm or that the claim was not legitimate, and further held that s. 135(5) did not permit reopening paid accounts or ordering repayment beyond the amount of the proof of claim.
Applying insolvency expungement jurisprudence, solicitor’s account assessment principles, and the single proceeding model, the court found that the negligence allegations against the second firm raised complex unliquidated set-off issues more appropriately determined in the pending civil negligence action.
The expungement motion as to the first law firm was dismissed, while the motion as to the second was adjourned pending the civil action, with the trustee directed to retain the disputed amount.
