SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: CV-13-10107-00CL
DATE: 20130910

COMMERCIAL LIST

In the matter of the Companies’ Creditors Arrangement Act, R.S.C. 1985, c.C-36, as amended

And in the Matter of a Plan of Compromise or Arrangement of GHANA GOLD CORPORATION, GHANA GOLD INC., COASTAL EXPLORATIONS LIMITED and Aburi goldfields ghana ltd.

BEFORE: Justice Newbould

COUNSEL:
C. Michael Citak and G.F. Camelino, for Minatura (BVI) Ltd.

John T. Porter and Kyla E.M. Mahar, for Applicants

Ian Aversa, for FCMI Parent Co. and FCMI Financial Corporation

Greg Azeff and Asim Iqbal, for the Monitor Ernst & Young Inc.

ENDORSEMENT

[1] On June 7, 2013 I dismissed a motion by Minatura to remove Aburi from these proceedings and for other consequential relief, and ordered costs to the applicants in this CCAA proceeding. I have now received cost submissions from the applicants. Mr. Citak has advised that he has received no instructions to make any reply cost submissions.

[2] The applicants seek costs on a substantial indemnity basis. I do not see this as a case for costs on that scale. There was no pleading or affidavit evidence asserting fraud by the applicants. The references to fraud allegations in my decision were (i) a statement of counsel for Minatura in argument that Minatura did not contact the EPA to discuss the correcting page for the licence out of a concern of a possible fraud involving EPA, although there was no evidence of fraud, and (ii) on his cross-examination, Mr. Turley of Minatura speculated it might be that Aburi had fraudulently drafted the correcting page of the licence, but said he had no evidence of that. I do not see these statements as elevating the case to one of unproven fraud allegations of the kind that lead to costs on the higher scale. The other reasons proffered for the higher scale do not warrant a higher scale.

[3] The applicants seek costs on a partial indemnity basis of $69,917.58, being fees of $57,632.11, disbursements of $4,383.02 and applicable HST.

[4] The amount of hours charged looks reasonable and I cannot say there is anything that sticks out to suggest otherwise. The hourly rates charged are taken from the rates recommended in the practice direction of the Costs Subcommittee of the Civil Rules Committee and increased by an inflation factor from 2005, when the recommended rates were published, to 2013. This was done on the authority of Smith J. in First Capital (Canholdings) Corp. v. North American Property Group 2012 ONSC 1359, [2012] O.J. No. 885 who increased those rates by an inflation factor.

[5] I have a fundamental problem with the suggested rates for Toronto law firms. They are plainly far too low and unrealistic. In Stetson Oil & Gas Ltd v. Stifel Nicolaus Canada Inc. 2013 ONSC 5213 I recently stated:

[22] Regarding the use of the rates recommended in the practice direction of the Costs Subcommittee of the Civil Rules Committee, I have considerable difficulty with the rates in that practice direction. They were the rates contained in the cost grid introduced in January, 2002. When the cost grid was abolished on July 1, 2005, they were continued in the practice direction. These rates are completely outdated and unrealistic for an action fought by two major downtown Toronto law firms.

[23] The practice direction is not a binding rule enacted as a regulation. It states that it “may provide some guidance to the profession as these changes are implemented”. It is apparent that other courts agree that the rates are not realistic. I agree with R. Smith J. in First Capital (Canholdings) Corp. v. North American Property Group 2012 ONSC 1359, [2012] O.J. No. 885 that the rates should be adjusted to account for inflation, but I would go further.

[6] In that case I awarded costs on a partial indemnity basis of 60% of the actual rates charged by the lawyers. This was based on prior decisions of the Court of Appeal that had done the same thing. I would have done the same thing here, but it was not asked for. The reason no doubt is that my decision Stetson was not released at the time I received the applicants’ cost submissions. With the inflation added, Mr. Porter’s claimed rate on a partial indemnity basis is $402.86, whereas 60% of his actual rate would have amounted to $435. Ms. Mahar’s rate adjusted for inflation is $345.31, whereas 60% of her actual rate would have been $360.

[7] In the circumstances, the costs claimed on a partial indemnity rate are reasonable, and taking into account the factors in rule 57.01, are approved. Minatura is to pay costs of $69,917.58 to the applicants within 30 days.

Newbould J.

Date: September 10, 2013