Court File and Parties

Court of Appeal for Ontario Date: 2024-11-29 Docket: M55127 (COA-23-CV-1202)

Before: Miller, Harvison Young and Gomery JJ.A.

In The Matter of the Bankruptcy of Sergio Grillone Bankruptcy Application under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended

Counsel: Sergio Grillone, acting in person Kenneth D. Kraft and Meredith Bascal, for the responding party/respondent, Bluecore Capital Inc.

Heard: In writing

Costs Endorsement

[1] On July 19, 2024, we dismissed the appellant Sergio Grillone’s motion to vary Benotto J.A.’s decision dismissing his motion for leave to set aside the Registrar’s dismissal order under r. 61.13(3.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The appellant was ordered to pay costs of $10,000 to the respondent Bluecore Capital Inc. on the motion.

[2] As directed by the court, the parties filed brief submissions with respect to $30,000 that the appellant had been ordered to post as security for costs on the appeal by Brown J.A. on December 18, 2023. The respondent seeks an order fixing the costs of earlier motions brought by the appellant in this court (the costs of which were reserved) and directing the Accountant of the Superior Court of Justice, pursuant to r. 72.03(1), to pay the $30,000 to Bluecore’s counsel, Dentons Canada LLP, for total outstanding costs ordered by this court.

[3] The appellant does not take issue with the quantum of costs sought by the respondents but contends that a r. 72.03(1) order is inappropriate. In his submission, as he was adjudged bankrupt in October 2023, the security for costs are assets of his estate, to be distributed by the trustee in bankruptcy to the appellants’ creditors. He argues that it would be premature to order payment to the respondent as there are secured creditors whose claims rank ahead of its claim. In addition, he argues that he has grounds to seek reconsideration of the bankruptcy order because, in a July 18, 2024 letter, the trustee in bankruptcy named by the court, B. Riley Farber Inc. (the “Trustee”), stated that the security claimed by the respondent at trial and in its proof of claim is not a valid and enforceable security interest.

[4] We reject the appellant’s submission.

[5] The October 2023 bankruptcy order was automatically stayed when the appellant appealed it, but this stay was lifted by Brown J.A. in December 2023. As a result, under s. 71 of the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, the appellant has no capacity to dispose of or otherwise deal with his property, which passed to and is vested in the Trustee.

[6] The appellant posted the security for costs on February 8, 2024. His credit facilities had all been frozen or cancelled at the time the security was posted and the Trustee already had control over the appellant’s estate. When questioned by the Trustee, he refused to disclose the source of the posted funds.

[7] There is no evidence before the court, however, establishing that the funds were improperly obtained. The appellant could have received them by way of gift through a family member or friend. The Trustee has not come forward to object to the order now sought by the appellant nor did it take any position on the respondent’s motion for security for costs in December 2023.

[8] In these circumstances, we conclude that the respondent is entitled to the order sought. The security posted by the appellant is not and has never been an asset of the estate. Contrary to the appellant’s submission, the payment into court was not for the benefit of the creditors of the estate, but to secure the cost of this appeal and the motions before this court.

[9] Given our conclusion on this central issue, we do not need to address the appellant’s other arguments. We do not agree, however, with the appellant’s characterization of the Trustee’s July 18, 2024 letter.

[10] We order the appellant to pay the respondent the following costs, in addition to the $10,000 in costs on the motion and $750 in costs on the Registrar’s dismissal order:

• With respect to the respondent’s motion to cancel the stay of the bankruptcy order and for security for costs heard by Brown J.A. on December 13, 2023, with reasons released on December 18, 2023: $3,500;
• With respect to the respondent’s motion for an order prohibiting the appellant from bringing motions without leave and quashing a summons, and the appellant’s cross-motion for contempt heard by Benotto J.A. on March 26, 2024, with reasons released on April 3, 2024: $3,500; and
• With respect to the appeal: $2,250.

[11] These cost orders total $20,000. To this must be added a further $10,000 in earlier cost orders by this court in the respondent’s favour, which remain outstanding.

[12] The respondent is accordingly entitled to an order for payment of $30,000, the full amount posted by the appellant as security for costs. The draft order submitted by the respondent for the disposition of the motion is approved.

“B.W. Miller J.A.” “A. Harvison Young J.A.” “S. Gomery J.A.”