COURT FILE AND PARTIES
COURT FILE NO.: CV-14-10543-00CL
DATE: 20151105
SUPERIOR COURT OF JUSTICE – ONTARIO
COMMERCIAL LIST
BETWEEN:
8527504 CANADA INC.
Applicant
- and –
LIQUIBRANDS INC.
Respondent
Court File No. CV-13-10331-00CL
AND BETWEEN:
8527504 CANADA INC.
Applicant
- and -
SUN PAC FOODS LIMITED
Respondent
APPLICATIONS UNDER Section 243 of the Bankruptcy and Insolvency Act, R.S.C 1985, c. B-3, and Section 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43.
BEFORE: Newbould J.
COUNSEL:
Harvey Chaiton and Sam Rappos, for the Applicant
David E. Wires and Krista Bulmer, Csaba Reider
Anthony J. O’Brien, for BDO Canada Limited, receiver of Sun Pac Foods Limited and Liquibrands Inc.
ENDORSEMENT
[1] On September 28, 2015 I dismissed motions by Mr. Reider and ordered costs to be paid by him to the Receiver and to 852. I have now received cost submissions.
[2] The Receiver asks for costs of $7,500 plus HST. This would amount to actual amounts incurred for the work done. I do not think that a Receiver, a court officer, is necessarily entitled to full indemnity costs in litigation matters involving the receiver. In this case, I do not think the conduct of Mr. Reider warrants costs on this scale. Mr. Reider claims the costs of the Receiver should be $3,000 all in. I think an award of $6,000 plus HST is an appropriate amount taking into account the factors in rule 57.01 and what Mr. Reider could reasonable expect to pay, and I fix the costs of the Receiver in that amount.
[3] 852 asks for costs on a partial indemnity basis of $37,542.75 inclusive of HST and disbursements. The fee portion is approximately $31,500. Mr. Reider says that involved over-lawyering and is excessive. He does not state what an appropriate amount would be other than to say that the bill of costs of his counsel claiming fees of $10,386 reflects his reasonable expectations.
[4] I cannot say there was over-lawyering on this matter. The issues were not all that usual. The hourly rates were not out of line. I must say that on the issues, I did not find the legal material from counsel for Mr. Reider all that helpful. I raised an issue regarding credit bidding that required further research and I do not see any time for that in the bill of costs of Mr. Reider, although it may be buried in one of the claimed amounts. I do not think the bill of Mr. Reider reflects the amount of work required for such a motion.
[5] 852 incurred a disbursement of $1,363 for legal research required because of the issue I raised regarding credit bidding. As the case law on the subject in Canada was limited, research on U.S. law was done. Mr. Reider takes the position that time for legal research should not be permitted and cites Brown v. Canada (Attorney General), 2013 ONSC 6887 in which Justice Belobaba stated that with lawyers charging “very-high, monopoly-based, hourly rates for the legal knowledge” should not be charging for legal research. I respectively decline from such a view. It is unrealistic to expect lawyers to know all law on a subject and legal research is the stuff of all litigation. Courts rely on counsel providing the law on matter in issue and do not expect counsel to just cite legal principles off the top of their head. Clients would be ill served if their lawyers did no legal research in every case and if the work has to be done there is no reason why it should not be charged. The notion that hourly rates covers all legal research would reward those who do little legal research and would inevitably lead to higher hourly rates for those cases in which more legal research was required. I note that the position taken by Mr. Reider on this issue is inconsistent with the bill of costs of his lawyers who have included time for “researching and drafting factum”.
[6] Mr. Reider had to know that his motions would be hotly contested. He was attempting to take over what litigation in which a claim for $100 million dollars was made. Taking into account the factors in rule 57.01 and what Mr. Reider could reasonable expect to pay, I think a reasonable amount for costs for 842, inclusive of HST and disbursements, is $27,500 and I fix 852’s costs in that amount.
[7] Mr. Reider takes the position that the costs should be paid by Liquibrands Inc. as he is the sole director of that company and believes that the steps taken by the receiver were not in the best interest of Liquibrands. He cites Peterborough (City) v. Kawartha Native Housing Society Inc., (2009), 2009 92134 (ON CA), 99 O.R. (3d) 573 (C.A.) as authority.
[8] I do not see that case as apt. In this case, Mr. Reider was not acting out of altruism for the good of Liquibrands. He requested an order (i) that he, as the sole director of Liquibrands be granted leave to vote Liquibrands shares in Sun Pac to elect him as a director of Sun Pac for the purpose of advancing the action previously commenced by Liquibrands and Sun Pac under the Forbearance Agreement against Bridging Canada Inc. 852, and (ii) that he be entitled to control the action on behalf of Liquibrands and Sun Pac under the residual authority of the directors of the companies. The law suit would be for his personal benefit. Moreover, Liquibrands is in receivership and there is no evidence before me that it has any cash to pay costs. Even if it did, it would effectively come out of the pocket of 852, its secured creditor, making the cost order in favour of 852 an illusion. I decline to order the costs of Mr. Reider to be paid by Liquibrands.
[9] The costs of $6,000 plus HST in favour of the Receiver and of $27,500 in favour of 852 are to be paid within 30 days.
Newbould J.
Date: November 5, 2015