Neil S. Abbott

In an addendum regarding costs following an appeal, the Court of Appeal held that the appellant was entitled to partial-indemnity costs up to the date of a settlement offer and substantial-indemnity costs thereafter to the conclusion of the trial.

The court noted that a Rule 49 offer made before trial does not apply to proceedings in the Court of Appeal.

Trial costs were referred for assessment, and the appeal costs were fixed at $15,000 plus disbursements and GST.

The appellant bank financed the respondents' shopping centres with security instruments including a debenture and an assignment of leases and rents.

After the loan defaulted, but before the bank enforced its security, the respondents diverted $394,100 in rental receipts to a new corporate account.

The application judge held the respondents were free to use the rents until the bank enforced its security.

The Court of Appeal reversed, finding that under the assignment of rents, the borrower's freedom from accountability ended upon default.

The court ordered judgment in favour of the bank for the diverted funds.