Geoffrey B. Morawetz

Following an appellate ruling that set aside a trial decision and declared a trust declaration void, the court was asked to determine costs after the original trial judge retired.

The successful plaintiff sought substantial indemnity costs exceeding $200,000, relying on findings that the defendant had engaged in fraudulent misrepresentations in connection with a loan transaction and a trust declaration.

The defendants argued that costs should be deferred pending the disposition of a counterclaim and challenged the scale and scope of the claimed costs.

The court held that substantial indemnity costs were justified given the findings of dishonest conduct but deferred determination of most pre‑trial costs because the majority related to the outstanding counterclaim.

The court fixed immediate costs of $20,500 for trial attendance and preparation of cost submissions, payable jointly and severally by the defendants.

Following earlier motions seeking dismissal of two civil actions for delay, the court had dismissed the motions to dismiss but granted alternative relief compelling compliance with prior court orders, including outstanding undertakings.

The defendants and third party sought costs.

The court found that the plaintiffs had violated multiple court orders and allowed the actions to stagnate for several years, making the motion justified.

Applying Rule 57 and the fairness principles from Boucher, the court held that although the moving parties achieved only partial success, the plaintiffs’ conduct warranted a costs award.

Reduced costs were therefore ordered against the plaintiffs jointly and severally.

The plaintiffs brought an urgent motion for interim and interlocutory injunctive relief to restrain the defendants from completing a share sale pursuant to a unanimous shareholders agreement in the context of a shareholder dispute.

The plaintiffs alleged improper termination of a director and employment relationship and sought to preserve the status quo pending trial.

Applying the test for interlocutory injunctions from RJR‑MacDonald v. Canada (AG), the court accepted that a serious issue to be tried existed but held that the plaintiffs failed to demonstrate irreparable harm.

The court found that the remedies sought, including share valuation and damages, could be adequately compensated monetarily at trial.

As a result, the motion for injunctive relief was dismissed and costs were awarded to the defendants.

In insolvency proceedings under the Bankruptcy and Insolvency Act, the debtor sought approval of a stalking horse sale process, related charges, and an extension to file a proposal.

The court raised concerns that the originally proposed break fee and overbid increments would discourage competing bids.

After revision reducing the break fee and overbid requirements, the court found the revised structure reasonable and approved the stalking horse process, the administration and D&O charges, and the stalking horse charge.

The court also granted a sealing order over commercially sensitive materials applying the Sierra Club test and extended the time for the debtor to file its proposal.

The applicant sought an order directing an assessment of the respondent solicitor’s accounts under the Solicitors Act more than 12 months after the accounts were delivered and paid in full.

The court considered whether “special circumstances” existed to justify permitting a late assessment.

Evidence showed the applicant had signed a retainer agreement setting an hourly rate, received detailed accounts, and paid them without objection at the time.

The applicant failed to identify specific overcharging or explain the delay in seeking an assessment.

The court held that the applicant had not met the burden of establishing special circumstances and dismissed the application with costs.

Application under the Variation of Trusts Act seeking court approval of a variation to a family trust established in 1992.

The proposed variation would permit reorganization and distribution of trust assets to defer a significant capital gains tax liability arising from the Income Tax Act 21‑year deemed disposition rule.

All adult beneficiaries and trustees consented, and the Children’s Lawyer did not oppose the variation subject to a payment protecting contingent interests of minor and unborn beneficiaries.

The court applied the test from Finnell v. Schumacher Estate and related authorities, assessing whether the variation preserved the settlor’s intention and conferred a benefit on minor, unborn, unascertained, and incapable beneficiaries.

The court concluded that the variation preserved trust capital, benefited protected beneficiaries, and would be accepted by a prudent adult acting in self‑interest.

Following the granting of summary judgment dismissing the plaintiff’s action, the court determined the appropriate costs award.

The defendant sought substantial-indemnity costs, arguing that the plaintiff advanced serious but unsubstantiated allegations of theft and misconduct and engaged in conduct that increased litigation costs through numerous emails containing outlandish claims.

The court held that the seriousness and lack of foundation for the allegations justified a substantial‑indemnity approach.

Applying the principles in Boucher v. Public Accountants Council for the Province of Ontario and the factors under Rule 57, the court reduced the claimed amount and awarded a fair and reasonable lump-sum costs award.

Following settlement of the substantive estate dispute, the parties disagreed over the language of a release, resulting in a motion to resolve the wording and determine costs.

The court found the dispute over wording insignificant and concluded the motion was unnecessary and could have been avoided through cooperation between counsel.

The revised release ultimately satisfied both parties.

Applying Rule 57.01 of the Rules of Civil Procedure and the principles governing costs, the court held the responding party's lack of responsiveness warranted cost consequences.

Partial indemnity costs were awarded to the moving parties but reduced to reflect the straightforward nature of the motion.

The defendants moved under Rules 21.01 and 25.11 of the Rules of Civil Procedure to strike portions of a statement of claim alleging participation in a multi‑million dollar investment fraud and civil conspiracy.

They argued the conspiracy allegations were inadequately pleaded and that a paragraph describing the scheme as a “typical bridge loan fraud” known to law enforcement was prejudicial and incapable of being pleaded back to.

The court held that the pleading adequately set out the elements of civil conspiracy, including the alleged agreement, overt acts, unlawful conduct, and resulting damages, and that conspiracy allegations should not be held to an extraordinary level of particularization at early stages.

The impugned paragraph was also relevant to the defendants’ alleged knowledge of the fraudulent scheme and was not vexatious or unduly prejudicial.

The motion to strike was dismissed with costs.

The Receiver brought an unopposed motion seeking approval of three asset purchase agreements to sell substantially all of the debtors' assets as a going concern in a 'quick flip' transaction.

The court applied the Soundair principles, finding that the sales process was fair, the market was sufficiently canvassed, and the transaction was the best available option to maximize recovery for the senior secured creditor.

The court also approved the use of a credit bid for partial payment and granted a sealing order for the purchase agreements and valuation reports to protect sensitive commercial information.

The applicant bank sought the appointment of a receiver over two corporate debtors and two residential properties owned by the individual guarantor following defaults on credit facilities.

The debtors opposed the appointment, arguing there was no urgency and that the guarantor was best positioned to sell the properties.

The court found it just and convenient to appoint a receiver over the corporate entities and a vacant residential property due to the ongoing erosion of security and the guarantor's failure to secure refinancing or a sale over two years.

However, the court declined to appoint a receiver over the guarantor's matrimonial home, finding it unnecessarily invasive and noting the bank could pursue other contractual remedies.

The applicant sought an order appointing Grant Thornton Limited as receiver of the respondents pursuant to section 243 of the Bankruptcy and Insolvency Act and section 101 of the Courts of Justice Act.

The respondents, operating a travel agency business, were insolvent and in default of their credit facilities.

The application was unopposed.

The court found it just and convenient to appoint the receiver to facilitate a going concern sale of the business, preserving consumer confidence and employee jobs.

In proceedings under the Companies’ Creditors Arrangement Act, the court addressed scheduling issues for a complex multi‑party trial involving the allocation of assets among creditor groups.

The parties proposed deferring the trial from April 1, 2014 to April 28, 2014, but disagreement remained regarding whether the later date would be feasible.

The court concluded that maintaining the earlier date risked a chaotic trial and that a rolling start date would create further uncertainty.

To ensure certainty and orderly preparation, the court rescheduled the trial to begin May 12, 2014 for 20 days and set case management and trial management conferences.

The court also required all parties to provide comprehensive fee and disbursement summaries to monitor escalating litigation costs.

A secured creditor applied for the appointment of a receiver over a group of integrated technology companies operating in Canada and the United States following defaults under a loan agreement and the expiry of a forbearance arrangement.

The creditor also sought approval of a stalking horse asset purchase agreement and sales process.

The court found the debtors insolvent and concluded that appointing a receiver under s. 243 of the Bankruptcy and Insolvency Act and s. 101 of the Courts of Justice Act was just and convenient, particularly to facilitate a cross-border restructuring and prevent fragmented enforcement actions by creditors.

Applying the principles governing receiver sales from Royal Bank of Canada v. Soundair Corporation, the court approved the stalking horse process and sealed confidential commercial appendices containing sensitive information.

Orders appointing the receiver, approving the sales process, and sealing the confidential materials were granted.

Following dismissal of a motion brought by a claimant in insolvency proceedings, the joint official liquidators sought costs on a substantial‑indemnity basis.

The court considered the principles governing costs under Rule 57 and the Court of Appeal’s guidance that costs awards should be fair and reasonable rather than reflective of full indemnity.

Although the motion had been unsuccessful and described by the liquidators as frivolous, the court found the surrounding proceedings involved confusion and unresolved issues concerning entitlement to assets in multiple jurisdictions.

The court therefore declined to award substantial‑indemnity costs and instead ordered partial‑indemnity costs.

The amount claimed was reduced due to the use of two lawyers for a straightforward motion.

Following a successful motion by the moving party in a proceeding under the Business Corporations Act (Ontario), the court addressed the appropriate quantum and scale of costs.

The successful party sought substantial indemnity costs.

The court held that substantial indemnity costs are exceptional and reserved for rare cases involving outrageous litigation conduct, which was not established.

Applying Rule 57 of the Rules of Civil Procedure and the fairness principles articulated by the Court of Appeal, the court reduced the requested amount due to duplication of effort and counsel learning time following a change of lawyers.

Honeywell brought a motion in Comstock's CCAA proceedings seeking an order directing Comstock to disclaim a subcontract or, alternatively, lifting the stay of proceedings to allow Honeywell to terminate the subcontract.

Comstock had ceased performance on the construction project and stopped paying Honeywell.

The court held it could not force a disclaimer under section 32 of the CCAA without the Monitor's approval.

However, because Comstock was no longer actively involved in the project and it would not form part of the restructuring, the court lifted the stay of proceedings to allow Honeywell to pursue its options.

In CCAA proceedings involving the Nortel group, the joint administrators of certain European, Middle Eastern, and African debtor entities brought a motion under Rule 30.10 of the Rules of Civil Procedure seeking production of documents from a non‑party accounting firm relating to transfer pricing arrangements and intellectual property development.

The court reviewed the governing principles for non‑party production, including the requirement that such orders be granted only in exceptional circumstances and where it would be unfair to require the moving party to proceed to trial without the documents.

The court found that many of the requested documents had already been communicated to the client and were likely produced through existing discovery processes.

For documents not communicated to the client, the moving party failed to demonstrate their importance or any evidentiary gap justifying exceptional production.

The court concluded that proceeding to trial without the requested materials would not be unfair and dismissed the motion with costs.

The debtor company in CCAA proceedings brought a motion seeking a declaration that two Occupational Health and Safety Act prosecutions commenced by the provincial labour ministry were stayed by the CCAA initial order, or alternatively that the proceedings should be stayed under s. 11.1(4) of the Companies’ Creditors Arrangement Act.

The debtor argued that any conviction would result only in monetary fines, rendering the ministry a creditor whose claim should be addressed within the insolvency process.

The court held that regulatory prosecutions are not equivalent to creditor enforcement where no monetary obligation has yet crystallized and the regulator is acting in a prosecutorial capacity.

Applying the Supreme Court’s test for regulatory claims under insolvency legislation, the court concluded that the ministry was not acting as a creditor and that the proceedings remained regulatory in nature.

The motion to declare the prosecutions stayed was therefore dismissed.

The court addressed three motions in a proceeding involving the sale of multi-unit residential buildings by a court-appointed Sales Officer.

The court approved the Sales Officer's activities, receipts, and post-appointment fees, but directed that pre-appointment fees be allocated between the Sales Officer mandate and the applicants who initially sought a broader receivership.

The applicants' motions for production of accounting records and for independent oversight of the interim distribution were largely deferred to a case conference, though the court ordered a $7,500,000 holdback from the distribution to ensure liquidity for future adjustments.