Morgan Westgate

Following the dismissal of the plaintiff's action on a motion for summary judgment, the defendants sought costs on a substantial indemnity basis.

The court found that the plaintiff's unfounded allegations of intentional misconduct, fraud, and conspiracy warranted an elevated scale of costs.

The court distinguished a previous decision involving the same plaintiff and awarded the defendants substantial indemnity costs fixed at $900,000.

This costs endorsement follows a summary judgment decision where HSBC Bank Canada (the Bank) successfully dismissed Kari Holdings Inc.'s (Kari) action.

The Bank sought costs on a partial indemnity basis, arguing for substantial indemnity post-settlement offer.

Kari opposed, citing novel legal issues and undue hardship to its shareholders, or proposed a lower partial indemnity amount.

The court found the Bank was entitled to costs on a partial indemnity basis, rejecting Kari's arguments regarding novelty and shareholder hardship.

The court awarded the Bank $100,000, inclusive, payable within 30 days, considering the complexity, resources expended, and the seriousness of the allegations.

Kari Holdings Inc., a secured creditor, brought a summary judgment motion against HSBC Bank Canada, alleging that HSBC improperly granted overdraft protection to their mutual debtor, C.I.F. Furniture Limited (CIF), and repaid itself using collateral subject to Kari's prior security interest.

Kari sought a declaration of priority and payment of $467,455 for the alleged overdrafts and $57,260 for credit card debt.

HSBC brought a cross-motion for summary judgment dismissing Kari's action.

The court dismissed Kari's motion and granted HSBC's cross-motion, finding that HSBC did not extend credit by way of overdraft and, alternatively, that CIF's repayments were made in the ordinary course of business, which was permitted under Kari's general security agreement.