Louis Brzezinski

The defendants brought an urgent motion to discharge certificates of pending litigation (CPLs) obtained ex parte by the plaintiff on four properties.

The defendants argued the CPLs should be discharged due to material non-disclosure by the plaintiff regarding the nature of the transactions and an alleged fraud.

The Master found no material non-disclosure.

However, to facilitate pending sales, the Master ordered the CPLs on two properties discharged on the condition that net proceeds be held in trust or paid into court.

The CPLs on the other two properties, which had already been sold to arm's length third parties, were discharged at the plaintiff's expense.

A creditor commenced a bankruptcy application alleging fraud but sought a stay pending the respondent’s criminal trial and ultimately withdrew the application when evidence of fraud was unavailable.

The court was asked to determine the appropriate costs consequences of the withdrawal.

Although the respondent sought substantial indemnity costs exceeding $50,000, the court held that such an award was not justified.

The court considered the applicant’s impecuniosity, the respondent’s alleged involvement in a Ponzi scheme that led to the applicant’s losses, and the policy considerations of the Bankruptcy and Insolvency Act.

Balancing these factors, the court concluded that a modest sanction was appropriate because the applicant should have given earlier notice of withdrawal to avoid wasted trial preparation.