ONTARIO
SUPERIOR COURT OF JUSTICE
IN BANKRUPTCY AND INSOLVENCY
IN THE MATTER OF THE BANKRUPCTY OF
JAMES VINCENT ADDARIO
OF THE CITY OF BRAMPTON, IN THE PROVINCE OF ONTARIO
Master Wiebe
COSTS AWARD
(Discharge hearing)
[1] On July 29, 2014, I denied the discharge from bankruptcy of James Vincent Addario. On August 7, 2013, counsel for the opposing creditor (RBC), Lawrence Hansen, submitted written submissions in which RBC claims three heads of costs: $4,133.23 substantial indemnity costs for the discharge hearing; $22,452 to the estate’s legal fees as shown in the trustee’s report; and $23,125.52 for the trustee’s time and expense charges.
[2] On August 28, 2014, counsel for the bankrupt, Bruce Simpson, delivered responding written submissions, and took the position that either there be no costs or that costs be deferred to the final discharge hearing. Mr. Hansen replied to this submission by letter dated September 4, 2014, and Mr. Simpson responded to the reply by letter dated September 8, 2014.
[3] Having reviewed these submissions, I have concluded that Mr. Addario is to pay RBC $1,500 in partial indemnity costs for the discharge hearing, and that the trustee’s costs being claimed by RBC are to be deferred to the discharge hearing. I award costs accordingly.
[4] I make this ruling for the following reasons:
• The trustee costs (its legal and its own costs) are firstly charges on the estate, and are properly dealt with at the time of the final discharge hearing and the taxation of the trustee’s costs. I was given no legal authority to go beyond this rule, at least at this point. Furthermore, there seems to be some issue as to whether the trustee’s legal costs are the subject of an existing court order, and therefore not properly a subject matter for this hearing.
• The Bankruptcy and Insolvency Act (“BIA”) section 197(2) specifies that, “in the absence of any express direction costs shall follow the event and shall be taxed as between party and party.” Party and party costs are partial indemnity costs. As RBC was successful in its opposition to the discharge, it should be awarded costs. The real issue is whether there should be an “express direction” to deviate from a partial indemnity award.
• I maintain my criticism that the bankrupt showed a history of not dealing with his debts forthrightly. However, I will not award substantial indemnity costs in these circumstances. I agree with Mr. Simpson that an onerous award of costs would, based on the evidence presented, be borne by Mr. Addario’s family and would significantly affect the family’s ability to become contributing members of society. Such a result would not be consistent with the purposes of the BIA. I am also mindful of the fact that the discharge hearing was a process that Mr. Addario did not initiate.
• The claimed partial indemnity costs are not unreasonable as to quantum, and would be what the losing bankrupt would reasonably expect to pay for a discharge hearing that took the better part of a day. However, again, I am mindful of imposing an excessive burden on the family. I, therefore, have reduced the claimed partial indemnity costs to an all-inclusive amount of $1,500.
• The issues in this discharge hearing were important. But RBC has already succeeded to meeting the one purpose to be served by the BIA on this discharge hearing, namely the protection of the public and other creditors in relation to a bankrupt who has not dealt forthrightly with his debts. I denied the discharge. I must now pay attention to the other purpose to be served by the BIA, namely a rehabilitation of the debtor. I have concluded that my award is the best way of doing so.
[5] To reiterate, I award RBC the total sum of $1,500 for the costs of the discharge hearing, and defer a ruling on the claimed costs for the trustee’s legal costs and own time and expenses to the eventual discharge hearing and taxation.
MASTER C. WIEBE
Released: September 22, 2014
COURT FILE NO.: 32-158095
DATE: September 22, 2014
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE BANRUPTCY OF
JAMES VINCENT ADDARIO
OF THE CITY OF BRAMPTON, IN THE PROVINCE OF ONTARIO
COSTS AWARD
(Discharge hearing)
Master C. Wiebe
Released: September 22, 2014