SUPERIOR COURT OF JUSTICE - ONTARIO

COMMERCIAL COURT

Court File No.: 31-OR-207568-T
Date: 20120202

RE: BANKRUPTCY OF MORRIS KAISER

Before: Justice Newbould

Counsel:
Melvyn L. Solmon and C. Wetmore, for Morris Kaiser

Milton A. Davis, for the Trustee in Bankruptcy, Soberman LLP

ENDORSEMENT

[ 1 ] On December 23, 2011 I ordered that Mr. Kaiser and his counsel Mr. Solmon disclose the identity of the person who has paid Mr. Solmon for his fees and disbursements charged by him for the motion by Mr. Kaiser to have Mr. Davis' firm removed as the solicitors for the trustee, and ordered that costs be paid to the trustee in bankruptcy of Mr. Kaiser. I have now received cost submissions.

[ 2 ] The trustee asks for costs on a substantial indemnity basis, primarily on the contention that there was little merit in the position of Mr. Kaiser and that the underlying motion to remove Mr. Davis’ firm as solicitors of record for the trustee attracted full indemnity costs as it had no legitimate purpose. I do not see any grounds to award substantial indemnity costs. What happened in the prior motion is done with and no basis in itself to award the higher scale of costs. The position put forward on behalf of Mr. Kaiser that the identity of who paid his legal bill is privileged, while unsuccessful, was an arguable point and not the kind of activity that attracts substantial indemnity costs. See Hunt v. TD Securities Inc. (2003), 2003 3649 (ON CA) , 66 O.R. (3d) 481 (C.A.) at para. 123 per Gillese J.A.

[ 3 ] Mr. Kaiser asks that there be no costs to either party as the issue involved a new and unsettled point of law and the position taken was not unreasonable. I accept that the issues were somewhat novel in their application of the principles involved to the facts, but I do not see this as reason to award no costs to the successful party. On the motion itself, the position taken by Mr. Kaiser was that settled principles in the Supreme Court of Canada required the result that he put forward. Costs should follow the event.

[ 4 ] The partial indemnity costs sought by the trustee amount to $10,000 plus HST. Disbursements of $299.99, inclusive of HST, are claimed.

[ 5 ] Mr. Kaiser takes the position that an award of $2000 is appropriate. He contends that the objective in fixing costs is not simply to multiply hourly rates by hours docketed, but to fix an amount that is fair and reasonable. It is hard to quarrel with that proposition. I am to be guided by the factors in rule 57.1, including the amount that the losing party could reasonably expect to pay on the proceeding in question. Mr. Kaiser has not questioned the hours spent by the solicitors for the trustee, and has not provided any indication of the hours spent by his solicitors on the motion. I infer that the time spent by Mr. Solmon’s firm was not appreciably different from the time spent by Mr. Davis’ firm. See Frazer v. Haukioja , 2010 ONCA 249 .

[ 6 ] Mr. Kaiser does not contend that the hourly rates claimed by the trustee are too high. Mr. Davis’ claimed rate, he was called in 1978, is $350 and Mr. Hughes’s claimed rate, he was called in 2006, is $240. If the recommended scale is used, one may quarrel a bit about these rates, but I have difficulty with the scale and think it is clearly outdated and needs to be revised. The rule subcommittee stated that it would be reviewed periodically, but regrettably that has not taken place.

[ 7 ] The legal issue was not completely straightforward and perhaps required more work than is usual on a motion that was not lengthy. I do think that not all of the evidentiary record that was prepared by the trustee was necessary. Taking into account the factors in rule 57.1 and what a fair and reasonable amount would be, I fix the costs payable by Mr. Kaiser to the trustee, inclusive of disbursements and HST, at $7,000, to be paid within 30 days.

Newbould J.

DATE: February 2, 2011