SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

COURT FILE NO. CV-14-10470-00CL

RE: Romspen Investment Corporation, Applicant

AND:

6711162 Canada Inc., 1794247 Ontario Inc., 1387267 Ontario Inc., 1564168 Ontario Inc., 2033387 Ontario Inc., Hugel Lofts Ltd., Altaf Soorty and Zoran Cocov, Respondents

AND:

COURT FILE NO. CV-14-10529-00CL

RE: IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF 6711162 CANADA INC., AND THOSE OTHER COMPANIES LISTED IN SCHEDULE “A” HERETO

BEFORE: D. M. Brown J.

COUNSEL: S. Jackson, for the Romspen Investment Corporation

D. Magisano and S. Puddister, for 6711162 Canada Inc., 1794247 Ontario Inc., 1387267 Ontario Inc., 1564168 Ontario Inc., 2033387 Ontario Inc., Hugel Lofts Ltd. and Casino R.V. Resorts Inc., respondents/CCAA Applicants

A. Bouchelev, for Altaf Soorty and Zoran Cocov

E. Tingley, for Pezzack Financial Services Inc.

HEARD: May 2, 2014; written cost submissions dated May 15 and 29, 2014.

supplementary REASONS FOR DECISION -costs

[1] Pursuant to the directions in the May 5, 2014 Reasons (2014 ONSC 2781), the parties have filed their cost submissions.

[2] Romspen Investment Corporation (“Romspen”) seeks full indemnity costs, pursuant to the provisions of the mortgage documents. It submitted a Bill of Costs for $105,939.73, of which legal fees amounted to $86,135.00. The corporate respondents submitted that the amount claimed was excessive, and their counsel filed its own bill of costs showing they had incurred full indemnity legal fees of $50,022.50 (for a total of $60,612.86).

[3] While Romspen is entitled to full indemnity costs by virtue of the mortgage, a contractual right to the costs of enforcement proceedings is subject to the court’s over-riding duty to ensure that costs awarded are fair and reasonable. Put another way, when a party, relying on a contractual term, seeks an award of full indemnity costs, the party must demonstrate that the costs sought are reasonable full indemnity costs.

[4] The corporate respondents identified several areas in which they submitted the costs sought were unreasonable. First, all work was performed by a senior lawyer for the applicant employing a full indemnity rate of $535/hour. The principle of indemnification for reasonable costs requires the appropriate delegation to less expensive time-keepers of legal tasks which do not require the skill and experience of a senior counsel, such as the applicant’s counsel in this case. Where, because of the size of the firm, delegation may not be possible, then a party can only seek recovery for the less skilled work performed by senior counsel at a lower rate commensurate with the nature of the work. Consequently, some reduction of the applicant’s costs is merited for this reason, and I fix the reduction at 10% of the amount of legal fees initially claimed, or $8,613 (10% of $86,135.00).

[5] Second, the 33.9 hours claimed by senior counsel for research into the basic tests for the appointment of a receiver and the granting of an initial CCAA order was excessive. I allow 5 hours, resulting in a reduction of 28.9 hours, or $15,461.50.

[6] Finally, very similar amounts of time were claimed for preparing the applicant’s initial materials (38.9 hours) and its reply materials (31.2 hours). The latter number was excessive and I reduce it to 15 hours, for a reduction of $8,667.00.

[7] In sum, I conclude that reasonable full indemnity fees amount to $53,393.50.

[8] The corporate defendants submitted that two further reductions should be made. First, a reduction should be made reflecting the applicant’s lack of success against the individual respondents given the applicant’s withdrawal of its request for relief at the hearing. I do not agree because there was a significant overlap of the evidence dealing with issues relating to both the corporate and individual defendants.

[9] Second, the corporate defendants submitted that costs should be awarded to Casino R.V. Resorts Inc. for resisting the application. I disagree. I accept the argument put forward by the applicant in paragraphs 8 and 9 of its Cost Submissions. The conduct of Casino R.V. Resorts Inc. described therein disentitled it to any costs and, as well, disentitled the respondents to seek a further reduction in the costs claimed by the applicant.

[10] For those reasons, I fix the applicant’s reasonable full indemnity costs as follows: (i) legal fees - $53,393.50; (ii) HST on legal fees - $6,941.16; and, (iii) disbursements - $8,607.18. That results in a total award of costs of $68,941.84, which I order the corporate respondents to pay the applicant within 30 days of the date of this order.

D. M. Brown J.

Date: June 6, 2014