Mervyn D. Abramowitz

The appellants appealed the disallowance of their claims in a bankruptcy proposal proceeding.

They claimed a 20% beneficial interest in the proceeds of a commercial property sale based on an amended trust declaration, and advanced an unsecured claim for damages alleging oppressive conduct.

The court dismissed the appeal, finding no certainty of intention to create an express trust, no basis for a constructive trust, and no evidence of oppressive conduct by the bankrupt corporation.

The defendants' motion for security for costs was returned to the Master after a successful appeal.

The appeal judge found the Master erred by failing to consider the quality of the plaintiff's only asset, a $100,000 cash deposit held by the defendants, which could easily be transferred out of Ontario once returned.

The Master ordered the defendants to return the deposit (less a $5,000 holdback) and ordered the plaintiff to immediately post $65,000 as security for costs, noting the plaintiff was a shell corporation and the cash would likely be transferred to its parent company.

The defendants raised an issue regarding the Master's previous reasons for a costs award on the plaintiff's abandoned motion for a certificate of pending litigation.

The Master acknowledged overlooking that the defendants had filed separate costs outlines for the abandoned motion and a security for costs motion.

After reviewing the separate costs outline, the Master found the $22,015.37 sought by the defendants to be excessive, noting the motion did not proceed beyond the filing of materials and involved overlapping work.

The Master amended the previous endorsement, awarding the defendants costs of $12,500 on a substantial indemnity basis.

The plaintiff abandoned its motion for a certificate of pending litigation (CPL) after the defendants served responding materials.

The defendants sought substantial indemnity costs for the abandoned motion and brought a cross-motion for security for costs.

The court awarded the defendants substantial indemnity costs for the CPL motion, finding the plaintiff had an ulterior motive to thwart the sale of the property.

However, the court dismissed the defendants' motion for security for costs, finding that the plaintiff's $100,000 deposit currently held by the defendants constituted sufficient assets in Ontario to satisfy a costs award, and that the action was not frivolous or vexatious.