ONTARIO SUPERIOR COURT OF JUSTICE In Bankruptcy
COURT FILES NO.: 31-1484655 and 31-1484672
DATE: 20120709
IN THE MATTER OF THE BANKRUPTCY OF DEREK BARRY ERDMAN OF THE CITY OF TORONTO IN THE PROVINCE OF ONTARIO
IN THE MATTER OF THE BANKRUPTCY OF NORMAN HILTON ERDMAN OF THE CITY OF TORONTO IN THE PROVINCE OF ONTARIO
BEFORE: Justice Newbould
COUNSEL:
Jonathan C. Lisus and Daniel Z. Naymark, for Daryl Erdman and the Derek Erdman Family Trust, Applicant
Sarit E. Batner and Moya J. Graham, for Laura Erdman and the Norman Erdman Family Trust, Applicant
George Benchetrit, for Derek and Norman Erdman, bankrupts
Catherine Francis and Hans Rizarri, for the trustee Soberman Inc., Respondent
Fred Myers, for Goodmans LLP
E N D O R S E M E N T
[ 1 ] On June 5, 2012 I released my decision on motions brought by Daryl and Laura Erdman, the wives of the bankrupts Derek and Norman Erdman, the Derek Erdman Family Trust and the Norman Erdman Family Trust (“Family Trusts”) to set aside or vary an ex parte order obtained by the Trustee of the estates of Derek Erdman and Norman Erdman on February 7, 2012 and to discharge certificates of pending litigation registered pursuant to that order against the matrimonial homes of each of the bankrupts, each registered in the name of the wife of the bankrupt. The Trustee of the estates of Derek Erdman and Norman Erdman now seek costs from the moving parties.
[ 2 ] The moving parties take the position that the cost of the motions should be in the cause or that each party shall bear its own costs. They essentially argue that they succeeded on what they set out to do in their motions, being to correct the manner in which the ex parte order was being used and to preserve the ability to decline production on the basis of relevance, and to confirm the inability of the trustee to register certificates of pending litigation in the absence of any claim for an interest in land.
[ 3 ] The moving parties overstate what they achieved on the motions. With respect to the scope of the ex parte production order, the objection of the moving parties was far broader than what they now assert. Amongst other things, the moving parties asserted unsuccessfully that the ex parte order should never have been made without notice and that there was improper lack of disclosure entitling them to have the order set aside. With respect to the relevance of documents sought by the trustee, the trustee did not contend that relevance could not be contested and in my endorsement, in light of the argument made, I stated that in order for there to be no doubt, and to adopt the position of the Trustee, no person who is served with the order of February 7, 2012 is precluded from objecting, on proper and cogent grounds, to the relevance of any particular document sought. I do not see these matters as precluding costs to the Trustee.
[ 4 ] With respect to the certificates of pending litigation, I did state that although it perhaps could be implied from the material on the ex parte application that no proceeding had been commenced in which a claim to an interest in land had been made, the Trustee ought to have expressly disclosed in its material than the proceeding had been brought in which a claim to interest in land was claimed and that the irregularity should not continue unabated. I left it open as to when a proceeding claiming an interest in land should be commenced and I refused to set aside the certificates in light of my concern that the bankrupt estates be protected and the refusal of counsel for the moving parties to make any undertaking that the properties would not in any way be encumbered without notice to the Trustee. In the circumstances I would not preclude costs to the Trustee as it was essentially successful in maintaining the certificates pending litigation, albeit on the condition that it commence a proceeding in which a claim to an interest in the lands is made.
[ 5 ] The moving parties also contend that the Trustee is essentially trying to punish the wives of the bankrupts by a costs order. I do not accept that. The Trustee is attending to recover its costs of motions on which it was essentially successful, and to which it is entitled.
[ 6 ] The Trustee seeks costs on a partial indemnity basis of $31,592.39, inclusive of disbursements and HST. The only objection to quantum made by the moving parties is for costs expended on the cross-examination of Daryl and Laura for nearly a full day shortly before the hearing of the motions. It is said that the examinations proceeded as a hybrid between cross-examinations on their affidavits with respect to matters at issue on the motions, and questions relating to the Trustee's underlying investigation in support of possible claims of the bankrupts’ estates, and that the bulk of the questions related to the Trustees investigation and not to the motion. Thus it is claimed that these costs are not properly claimed as part of the motions. In reply, the Trustee made no submissions on this point. Thus, while I do not have the transcript, and would be no position even if I had to make any real judgment as to whether questions related to one or the other matters, I accept that part at least of the cross-examinations related to matters other than strictly relating to the motions.
[ 7 ] The hourly rate of $350 claimed by Ms. Francis appears reasonable for a partial indemnity costs order. On the face of it, I cannot say that the hours shown were excessive, and no such argument is made on behalf of the moving parties.
[ 8 ] Taking into account the circumstances and the factors contained in rule 57.01(1), including the amount that the moving parties could reasonably expect to pay, I fixed the costs of the Trustee at $27,500 inclusive of disbursements and HST, to be paid within 30 days.
Newbould J.
DATE: July 9, 2012