Jules Berman

Following the dismissal of a motion to set aside assignments made by the bankruptcy trustee, the court determined costs.

The bankrupt's request for costs was dismissed as his participation was unnecessary.

The Trustee was awarded costs of $18,500 on a substantial indemnity basis because the moving parties lacked standing as 'aggrieved' persons under the BIA and had impugned the Trustee's integrity.

The moving parties sought an order under section 37 of the Bankruptcy and Insolvency Act to set aside the trustee's assignments of certain causes of action to the bankrupt, David Brook, and to direct a tender or auction process for their sale.

The moving parties argued they were aggrieved because the trustee did not market the causes of action to anyone else, the transaction was improvident, and the private sale process unfairly disregarded creditors' rights.

The court dismissed the motion, finding that the moving parties were not "aggrieved persons" as they were not deprived of a legal right.

Alternatively, the court found the trustee's decision to assign the causes of action to the bankrupt with a sharing arrangement was reasonable, particularly given the unwritten nature of the claims, the need for the bankrupt's active involvement, and the potential for greater upside for the estate compared to a fixed offer.

The applicants sought a representation order under Rule 10.01 of the Rules of Civil Procedure permitting them to represent 416 claimants who had used payroll processing services and alleged that trust funds were misapplied by a bank.

The underlying dispute concerned funds withdrawn from employers’ accounts for payroll and tax remittances that were deposited into mixed trust accounts and partially applied to reduce the payroll processor’s indebtedness to the bank or transferred to a related entity.

The bank opposed the representation order, arguing that two separate transactions created distinct issues among claimants.

The court held that common issues existed because liability for the alleged breaches of trust would affect all claimants collectively and distribution of any recovery would be shared.

A representation order was granted and a related unopposed motion concerning distribution of funds held by a government agency was also authorized.