Court File and Parties

COURT FILE NO.: 02-CL-4519 DATE: 20171011 SUPERIOR COURT OF JUSTICE – ONTARIO COMMERCIAL LIST

AND IN THE MATTER OF AN INTERIM RECEIVERSHIP ORDER OF THE HONOURABLE MR. JUSTICE GROUND DATED MAY 7, 2002, AS AMENDED

RE: Nyaz Jethwani, Plaintiff

AND:

Salim Damji and Strategic Trading Systems Instant White (also known as STS Instant White or Strategic Trade Systems or STS Inc.), Jem Holdings a division of 1289629 Ontario Inc., Izmo Investments Inc., Shaffin Damji, Hanif Damji, Olympic Sports Data Services, Limited and Spiros G. Athanas, Defendants

BEFORE: L. A. Pattillo J.

COUNSEL: Maurice J. Neirinck, for the Plaintiff Clifton Prophet, for A. Farber & Partners, Interim Receiver Jonathan Cooperman, for Interim Receiver Paul J. Martin, for Fasken Martineau Dale Denis, for Intelysis Corp.

HEARD: June 1, 2017

Endorsement

Introduction

[1] A. Farber & Partners Inc. (“Farber”), in its capacity as court-appointed Interim Receiver (the “Interim Receiver”) over the assets, property and undertaking of Salim Damji (“Damji”) (the “Damji Receivership”), moves for multiple orders in connection with its activities as Interim Receiver from May 6, 2002 to October 31, 2017. In particular, the Interim Receiver seeks approval of its fees and disbursements and those of other professionals who carried out work in the Damji Receivership during the above period.

[2] In addition, the Interim Receiver seeks the following orders:

i. Approving the Eighth Report to the Court of the Interim Receiver and all prior Reports referenced therein and the conduct of the Interim Receiver described; ii. Approving the final Statement of Receipts and Disbursements of the Interim Receiver; iii. Approving reimbursement paid to the Interim Receiver in its personal capacity of the sum of $195,637, representing amounts paid on account of the fees and disbursements of its counsel, Gowlings WGL (Canada) LLP, formerly Gowling Lafleur Henderson LLP (“Gowlings”); iv. Directing that any and all documents sealed by Order of the court in the Damji Receivership be unsealed and publically available in the files of the court; v. Directing that any person seeking production or disclosure of documents or information obtained or generated by the Interim Receiver in connection with its activities in the Damji Receivership proceed by: a) Paying the sum of $50,000 to the Interim Receiver, to be held in trust as a retainer to be applied against the fees and disbursements of the Interim Receiver in connection with such production requests; and b) Bringing a motion before a judge on the Commercial List, on seven days’ notice to the Interim Receiver, for the direction of this court concerning, among other things, the scope, manner and timing of any production to be made by the Interim Receiver. vi. Discharging the Interim Receiver from its duties and releasing and discharging Farber from any and all liability arising out of or related to the acts or omissions of it while acting as the Interim Receiver, save and except for liability for acts and omissions arising as a result of any gross negligence or wilful misconduct by it; and vii. Providing that, notwithstanding the discharge of the Interim Receiver, Farber shall continue to have the powers and protections granted under the Appointment Order and granted as relief on this motion, including the power to deal with any matters in relation to the Damji Receivership after its discharge.

[3] In support of the motion, the Interim Receiver has filed its Eighth Report which contains a detailed summary of the events that occurred during the Damji Receivership. The Eighth Report is 70 pages in length and has 82 appendices.

[4] The Interim Receiver’s motion is opposed by the plaintiff, Nyaz Jethwani (“Jethwani”), on his behalf and as the representative plaintiff for all other investors who lost money to Damji (the “Investors”). Jethwani is not opposed to the Interim Receiver’s discharge. His objections relate to certain of the Interim Receiver’s actions and to the fees of the Interim Receiver and certain of the professionals engaged during the Damji Receivership.

Background

[5] In order to understand the issues raised in this motion and my decisions in respect thereof, it is necessary to first provide an overview of the events which occurred during the more than 15 years of the Damji Receivership.

1) The Damji Fraud

[6] On April 26, 2002, Damji was arrested by Toronto police and charged with fraud. On November 13, 2002, Damji pleaded guilty to fraud in criminal court and was subsequently sentenced to seven and a half years in prison. In summary, between June of 1999 and the time of his arrest, Damji raised more than $78 million from investors through the sale of shares of various companies which he represented would provide significant returns on their investment. Needless to say, not only were there no returns on the investments, as promised, the investors also lost their investments.

[7] Jethwani and several of the investors who lost money formed an informal committee known as the Investment Recovery Group (“IRG”). Miller Thomson was counsel to the IRG.

2) The Damji Action

[8] On May 7, 2002, Jethwani, as the representative plaintiff of a proposed class of investors, commenced this action, a class action against Damji and the other defendants, alleging Damji had fraudulently raised approximately $100 million from an estimated five to six thousand investors (the “Action”). Miller Thomson was counsel to the plaintiffs in the Action.

3) The Appointment of the Interim Receiver

[9] Also on May 7, 2002, the Interim Receiver was appointed pursuant to an ex parte motion brought by Jethwani. The Appointment Order provided, among other things, that the Interim Receiver was to deal with the property, assets and undertaking of Damji together with “any funds, proceeds or other assets directly or indirectly related to the funds allegedly raised by the Defendants in the [Damji] Statement of Claim” (the “Damji Receivership”). Miller Thomson was appointed counsel to the Interim Receiver.

[10] In early 2003, Jethwani and the IRG terminated the retainer of Miller Thomson on behalf of the class and retained Fasken, Martineau DuMoulin LLP (“Faskens”) in its place. Faskens was subsequently appointed counsel to the Interim Receiver by Order dated May 16, 2003.

[11] In addition to the assistance of legal counsel, the Interim Receiver retained Intelysis Corp. (“Intelysis”) as a forensic accountant and investigator. Although the Interim Receiver met with Damji on more than one occasion, he refused to provide any meaningful information that would allow the Interim Receiver to recover assets related to the fraud.

[12] Between May 22, 2002 and November 4, 2009, the Interim Receiver filed seven reports with the court reporting on its investigations and recoveries and obtaining various approvals of the court for its actions. Specifically, in its Second Report dated October 17, 2002, the Interim Receiver detailed how it traced $78 million raised by Damji from investors through a number of bank accounts at various Canadian banks to:

1. Recovered assets (real estate, investments and luxury automobiles) totaling $4,746,000.
2. $19 million paid to Olympic Sports (“Olympic”), a sports betting business located in Jamaica and owned by a Spiros Athanas (“Athanas”) between February 1999 and February 2002. Olympic had returned $8 million to Damji, for a net loss of $11 million.
3. $54 million (US $34 million) paid to Montanas Magicas (aka British Caribbean Sports or BC Sports), a sports betting business located in Costa Rica and owned by Maynard Garber (“Garber”) between January 2001 and April 2002. Virtually no monies were returned by Montanas Magicas to Damji.

[13] In early 2003, the Interim Receiver and the IRG agreed on a Billing Approval Process (the “Billing Protocol”) regarding the fees of the Interim Receiver, Intelysis and Faskens. The Billing Protocol outlined a process whereby the IRG would receive copies of the invoices from the Interim Receiver, its legal counsel and other professionals which would allow the IRG an opportunity to raise any objections regarding those invoices. The Billing Protocol was approved by the court on July 15, 2003.

[14] From July to December 2002, the Interim Receiver was heavily involved in actions in Costa Rica to recover money from Garber’s sports book business. The Interim Receiver learned that almost all the monies in the Montanas Magicas bank accounts had been transferred out of Costa Rica by Garber shortly after Damji’s arrest in Canada on the advice of Garber’s counsel. Of the monies transferred by Garber, US $12.4 million was ultimately deposited to bank accounts at Bank Hapoalim in Switzerland (the “Swiss Accounts”). Although the Interim Receiver engaged both diplomatic and legal routes, in the end, it was only successful in obtaining US $365,000 of the monies which had been frozen in Costa Rica.

[15] In mid-December 2002, the Interim Receiver met with the IRG and recommended that the IRG/investors should accept the net monies recovered in the Damji Receivership of $1.725 million (or donate the monies to charity) and abandon any further pursuit against Garber for recoveries of the monies sent to Costa Rica by Damji. The Interim Receiver advised that the costs of pursuing Garber might exceed any recoveries and that there might be no monies to distribute in the end. The Interim Receiver also cautioned that it was possible that it could run out of money before any further recoveries, in which case further funding would be required. The IRG rejected the Interim Receiver’s recommendation and requested that the Interim Receiver use whatever resources were available to it and continue with retaining US counsel to commence a claim against Garber, who resided in California.

4) The California Action

[16] On May 16, 2003, the court approved a Retention Agreement with Shulman Hodges & Bastian, LLP (“SHB”), California counsel, to act on behalf of the Interim Receiver in legal proceedings to be commenced against Garber in California. The Retention Agreement provided for both payments of certain fees and expenses incurred and for certain contingent payments based on recoveries obtained from pursuing litigation against Garber. The Retention Agreement was negotiated with the involvement of the IRG.

[17] On April 15, 2005, the Interim Receiver filed a Complaint in the United States District Court for the Central District of California against Montanas Magicas, Garber and his son, Daniel Garber, to recover the $54 million CDN (US $34 million) sent by or on behalf of Damji to Costa Rica (the “California Action”).

[18] The California Action required extensive involvement of the Interim Receiver and its team. Numerous legal proceedings, discoveries and depositions ensued in the California Action.

5) The Swiss Proceedings

[19] On April 18 and 19, 2005, the Interim Receiver commenced various legal proceedings in Switzerland in order to recover some or all of the monies Garber transferred to the Swiss Accounts, including obtaining civil attachment orders directed to Bank Hapoalim in respect of the Swiss Accounts and filing a criminal complaint with the Swiss Prosecutor. The latter action resulted in Criminal Attachment Orders also freezing all the funds in all of the Swiss Accounts. In excess of US $21 million was frozen against which Bank Hapoalim claimed just over US $9 million owing in loans to Garber leaving a net amount of approximately US $12,300,000.

[20] The Interim Receiver was engaged in numerous legal proceedings and activities taken in the ancillary proceedings with respect to both the Civil and Criminal Attachment Orders, the criminal investigation (in which the Interim Receiver was designated as a “partie civile” (similar to intervener status) by the Swiss Federal Prosecutor) and the Swiss Accounts.

[21] In April 2008 and again in August 2008, Jethwani requested that the Swiss Federal Prosecutor appoint him and the entire IRG with the status of “partie civile”. The Interim Receiver opposed the request on the basis that it had the sole authority by virtue of its appointment to deal with the Swiss Accounts. The Swiss Federal Prosecutor rejected Jethwani and the entire IRG’s requests in July 2009. On July 16, 2009, Jethwani then wrote to the Swiss Federal Prosecutor and requested that the Interim Receiver be removed as “partie civile”.

[22] In November 2009, the Interim Receiver brought a motion (Seventh Report) to restrain Jethwani from interfering in the Swiss Proceedings. In response, Jethwani brought a cross-motion seeking effectively to restrain the Interim Receiver from carrying on with most of its activities. On December 1, 2009, Marrocco J. (as he then was) held that Jethwani and the other investors should not interfere to request the removal of the Interim Receiver as “partie civile” but declined to restrain them from seeking such status themselves.

[23] In March 2010, five investors filed an application for “civile partie” status with the Swiss Court. The Interim Receiver opposed the application. The application was rejected by the Swiss Federal Prosecutor on May 17, 2010. Thereafter, Jethwani and the five investors engaged in numerous Swiss legal proceedings, including appeals to obtain “partie civile” status. On January 24, 2013, the Swiss Federal Tribunal (Supreme Court) rejected their applications.

6) The Financing Agreement

[24] From 2003 to 2007, the Interim Receiver dealt with a chronic shortage of financial resources to continue its activities, primarily dealing with the California Action and the proceedings in Switzerland. The Retention Agreement with California counsel had to be renegotiated twice, initially because the Interim Receiver was in default of its financial obligations and subsequently due to unanticipated activities in the California Action. Although there were regular and ongoing discussions with the IRG to deal with the funding problems, apart from a few short term loans (which were repaid), the IRG provided no financial assistance. As a result, the Canadian professionals were effectively funding the Damji Receivership.

[25] In July 2007, with no other options, the Interim Receiver entered into a Financing Agreement with a third party lender (the “Lender”) subject to court approval and due diligence by the Lender (the “Financing Agreement”). The Financing Agreement provided, among other things, that the current amounts incurred by the professionals going forward would be paid by the Lender, but arrears owing to Canadian professionals (at the time more than $2 million) would not be paid until monies were recovered from Garber. Repayment of the loans from the Lender would only come from the monies recovered from Garber and others. On August 8, 2007, the Interim Receiver submitted its Fourth Report to the court seeking, among other things, approval of the Financing Agreement.

[26] In early September 2007, prior to the return of the Interim Receiver’s motion to approve the Financing Agreement, Jethwani retained new counsel to represent both he and the Investors in the Action. Jethwani’s counsel advised the Interim Receiver that he would be opposing the motion. Jethwani also opposed Faskens continuing to act for the Interim Receiver but agreed to allow it to act on the motion (and the subsequent appeal).

[27] On November 23, 2007, Spence J. approved the Financing Agreement. Jethwani and the IRG subsequently brought a motion for leave to appeal to the Divisional Court which was dismissed on March 14, 2008.

[28] The Interim Receiver retained Gowlings beginning in November 2007.

7) Settlement of the California Action

[29] Beginning in July 2006, settlement discussions commenced between the Interim Receiver and Garber. The discussions took place on and off through to mid-December 2006 when they were terminated by Garber following a ruling by the California Court on December 18, 2006, dismissing the California Action. The Interim Receiver appealed the ruling and on December 31, 2008, the California Court of Appeal allowed the appeal, set aside the lower court ruling and reinstated the California Action. A trial date was subsequently set for August 18, 2009.

[30] Following the reinstatement of the California Action, settlement discussions with Garber resumed. On April 24, 2009, the Interim Receiver and Garber entered into a settlement agreement (the “Garber Settlement”), the essential terms of which were:

i. The Interim Receiver would receive 55% of the Swiss Accounts, but not less than US $7 million; ii. Garber would receive 45% of the Swiss Accounts, subject to the minimum amount to be received by the Interim Receiver; iii. The Interim Receiver would abandon claims and release any interests in Garber’s real properties in the United States and against the Estate of Garber’s son who had died in 2007; iv. All other claims and legal proceedings would be terminated including those in California and Switzerland; v. The Garber Settlement was conditional on the Swiss Authorities releasing the Criminal Attachment against the Swiss Accounts.

[31] The Garber Settlement was approved by the California court on May 28, 2009.

[32] The Interim Receiver’s motion to Ontario court for approval of the Garber Settlement (Fifth Report) was opposed by Jethwani and the IRG. Spence J. dismissed the objections of Jethwani and the IRG and approved the Garber Settlement on September 9, 2009. In concluding that the proposed settlement was commercially reasonable, Spence J. noted that while the amount that would be paid under the settlement would cover the professional fees and a substantial part of the liability to the Lender, it would not be sufficient to afford any recovery to the victims.

[33] Jethwani and the IRG subsequently appealed Spence J.’s approval order to the Court of Appeal. The appeal was argued on March 30, 2010 and dismissed on April 14, 2010.

8) Further Proceedings in Switzerland

[34] During the period when Jethwani and the five investors were seeking “partie civile” status in Switzerland, both the Interim Receiver and Garber made numerous requests to the Swiss Courts to allow the Garber Settlement to be completed and the monies held in the Swiss Accounts paid out to them in accordance with the settlement. All requests were denied.

[35] After the applications of Jethwani and the five investors for “partie civile” status were finally resolved by the Swiss Court in January 2010, the completion of the Garber Settlement was further delayed by Bank Hapoalin, who, because it was named as a third party in two class proceedings commenced by the Investors in Canada, refused to transfer any monies from the Swiss Accounts to the Debt Collection Office (“DCO”) notwithstanding an order to that effect. The DCO is the judicial/government office in Switzerland which deals with attachment orders and payment of monies in respect thereof to requisite stakeholders.

[36] Numerous legal proceedings ensued, involving, among others, the Interim Receiver, to require Bank Hapoalin to transfer the monies in the Swiss Accounts. Ultimately, on November 28, 2014, the Swiss Federal Tribunal ordered Bank Hapoalin to pay the monies in the Swiss Accounts to the DCO. In response, on December 12, 2014, Bank Hapoalin obtained an attachment order covering the Swiss Accounts which effectively stopped the transfer of funds from the Swiss Accounts as ordered and resulted in further legal proceedings. While Bank Hapoalin eventually transferred most but not all of the monies in the Swiss Account to the DCO, the DCO refused to distribute the monies to the Interim Receiver and Garber in accordance with the Garber Settlement due to Bank Hapoalin’s attachment order.

9) Amendment of the Garber Settlement

[37] As a result of the Garber Settlement, the Interim Receiver kept all of the other various possible proceedings in California, including against Garber’s son’s estate, on hold. Proceedings were adjourned from time to time awaiting completion of the Garber Settlement. In due course, Garber raised concerns about the continuing delays in Switzerland, caused first by the Investors and then by Bank Hapoalin. Garber eventually threatened to move in California to have the Interim Receiver’s action dismissed based on the Garber Settlement being frustrated. Negotiations took place over a lengthy period. As the delays in Switzerland continued, Garber continued to express frustration and threatened to move to have the California Action dismissed.

[38] In the end, in February 2015 and again in May 2015, the Interim Receiver and Garber agreed to amend the Garber Settlement by, among other things, agreeing that Garber would receive $150,000 US towards his Swiss legal fees; he would never move to rescind or set aside the Garber Settlement; and a $100,000 US would be paid from his son’s estate to the Interim Receiver’s California counsel, in trust, as an advance on the Garber Settlement proceeds. In turn, the Interim Receiver agreed to lift the lis pendens on Garber’s real properties and withdraw its claim against Garber’s son’s estate.

10) Conclusion of the Swiss Proceedings

[39] In the latter part of 2015, the Court of First Instance in Switzerland ruled that Bank Hapoalin’s attachment order should be lifted and it should transfer the monies to the DCO. An appeal from that order was dismissed on December 4, 2015. Subsequently, Garber made a criminal complaint against Bank Hapoalin for failure to transfer all the monies in the Swiss Accounts as required by court orders. The Interim Receiver supported the complaint. On December 13, 2015, Bank Hapoalin transferred the remaining monies in the Swiss Accounts to the DCO.

[40] On January 18, 2016, the DCO distributed the Swiss monies in its possession ($15,830,539 US) to both the Interim Receiver and Garber in accordance with the terms of the Garber Settlement, as amended. After paying Swiss and California legal fees including contingent amounts owing, as well as the $150,000 to Garber’s Swiss counsel and converting the balance from US dollars to Canadian, the Interim Receiver received $6.3 million CDN.

[41] During the period that completion of the Garber Settlement was held up in Switzerland, the Interim Receiver engaged in the mediation of the numerous class actions the Investors had commenced and held negotiations with the third party claimant in an attempt to resolve the third party claim against Bank Hapoalin, all without success.

11) The Current Motion

[42] During the entire course of the Damji Receivership, the Interim Receiver recovered just over $18.7 million in total. After payment of expenses and interim fees, the Interim Receiver has $4,800,594 on hand. The total amount owing in respect of the fees and disbursements of the Interim Receiver and the other professionals is $5,286,025.

[43] As noted at the outset, part of the relief that the Interim Receiver seeks on this motion is approval of its fees and disbursements and those of the other professionals involved in the Damji Receivership over the course of the 15 years and authorizing the Interim Receiver to pay any remaining fees and disbursements owing.

[44] The motion has been a long time in getting to a hearing. At the outset the Interim Receiver provided Jethwani and the Investors with redacted accounts for the period September 30, 2007 to October 31, 2016 (accounts prior to September 30, 2007 had been previously provided to the Investors pursuant to the Billing Protocol). Subsequently, under court direction, the Interim Receiver agreed to and did provide unredacted accounts in return for a confidentiality agreement from Jethwani and his counsel. Jethwani subsequently delivered numerous objections and written interrogatories. Finally, pursuant to further court direction, the Interim Receiver and its counsel were cross-examined extensively.

[45] I propose to deal with each of the Interim Receiver’s requests, beginning with the major issue, the approval of the fees and disbursements.

Approval of the Fees and Disbursements

[46] The following is a breakdown of the professional fees incurred during the course of the Damji Receivership over the 15-year period by the Interim Receiver, the various legal counsel involved and Intelysis.

Professionals	Total Fees (Inc. of GST/HST)	Time Period	Paid to Date
Interim Receiver	$5,772,141.44	May 6/02 – Oct. 31/16	$1,652,044.15
Miller Thomson	$1,398,400.63	May 6/02 – May 16/03	$1,398,400.63
Faskens	$1,085,622.92	Mar. 24/03 – Oct. 31/08	$310,881.15
Gowlings	$656,525.07	Nov. 30/07 – Oct. 31/16	$656,525.07
Intelysis	$1,779,367.80	Apr. 29/02 – Oct. 31/09	$1,385,181.59

The Assessment of a Receiver’s Accounts

[47] In determining compensation for a court appointed receiver and its counsel, the overriding consideration is whether the compensation sought is fair and reasonable. In Bank of Nova Scotia v. Diemer, 2014 ONSC 365 at para. 5 (SCJ), aff’d ([2014] 2014 ONCA 851, 20 C.B.R. (6th) 292 (Ont. C.A.)), Pepall J.A. referred to the following factors to be considered as a “useful guideline” while at the same time noting that they were not exhaustive:

• The nature, extent and value of the assets;
• The complications and difficulties encountered;
• The degree of assistance provided by the debtor;
• The time spent;
• The receiver’s knowledge, experience and skill;
• The diligence and thoroughness displayed;
• The responsibilities assumed;
• The results of the receiver’s efforts; and
• The cost of comparable services when performed in a prudent and economical manner.

[48] Further, at para. 45 of Diemer, Justice Pepall stated that the focus of the fair and reasonable assessment should be on what was accomplished, not on how much time it took. The learned Judge further stated that “the measurement of accomplishment may include consideration of complications and difficulties encountered”.

[49] Where the actions of the receiver in the context of the receivership amount to imprudent and/or unreasonable conduct, fees and disbursements arising from such conduct will not be fair and reasonable: HSBC Bank Canada v. Mahvash Lechcier-Kimel, 2014 ONSC 1690; aff’d 2014 ONCA 721.

The Accounts

A. The Interim Receiver

[50] The Interim Receiver seeks approval of its fees, disbursements and applicable taxes in the total amount of $5,772,141.44.

[51] Invoices for the period May 6, 2002 to August 3, 2002 in the amount of $537,393.50 for fees and disbursements ($575,011.04 inclusive of GST) and for the period August 4, 2002 to April 5, 2003 in the amount of $740,465.00 for fees and disbursements ($792,297.55 inclusive of GST) were submitted to the court in the Second Report (November 5, 2002) and the Third Report (July 15, 2003), respectively.

[52] After the two invoices submitted to the court, and in accordance with the Billing Protocol, the Interim Receiver invoices which were issued from time to time during the period from April 6, 2003 to September 29, 2007 and totaling $1,565,719.54 inclusive of fees, disbursements and taxes were provided to the IRG.

[53] In accordance with the Billing Protocol, on March 6, 2006, the Interim Receiver, Jethwani and the IRG entered into a Fee Reduction Agreement whereby the Interim Receiver agreed to reduce the fees incurred up to February 28, 2004 by $150,000 (fees of $141,509.43 and GST of $8,490.57). Apart from the Fee Reduction Agreement, there is no evidence that Jethwani or the IRG objected to any of the other fees and disbursements set out in the invoices provided by the Interim Receiver.

[54] Accordingly, the total of the Interim Receiver’s fees and disbursements inclusive of GST through to September 26, 2007 is $2,783,028.13, ($1,367,308.59 for the two invoices submitted to the court and invoices totaling $1,415,719.54 thereafter). Invoices covering fees, disbursements and taxes for the period from September 30, 2007 to October 31, 2016 totaling $2,989,113.31 were not provided to Jethwani or the IRG until the commencement of this motion.

[55] To date, the Interim Receiver has received $1,652,044.15 on account of fees, disbursements and taxes leaving a balance of $4,120,097.29 unpaid and owing.

[56] In light of the fact that the monies that the Interim Receiver has on hand ($4,800,594) are not sufficient to cover all of the fees, disbursements and taxes owing, in December of 2016 the Interim Receiver, Faskens and Intelysis agreed on a distribution schedule circulated by the Interim Receiver based on the court approving the distribution of the $4,800,594 amount (the “Distribution Agreement”). The Distribution Agreement is based on the current amounts of fees owing ($5,286,025) and the Interim Receiver’s estimate of the costs to complete the Damji Receivership of $170,000 which result in a shortfall of the amount available to pay the fees, estimated at that time to be $655,431.

[57] The Distribution Agreement provides that each of the Interim Receiver, Faskens and Intelysis will share the shortfall pro rata in respect of monies owing up to the time that both Intelysis and Faskens were no longer involved and thereafter both the Interim Receiver and its counsel (Gowlings) would be paid fully for all time incurred while the Interim Receiver fully funded the Damji Receivership. Based on the projected shortfall of $655,431, each of the Interim Receiver, Intelysis and Faskens would receive 73.88% of their fees owing prior to October 2008.

[58] In respect of the Interim Receiver, the proposed Distribution Agreement would reduce the amount owing to the Interim Receiver for fees, disbursements and taxes billed prior to December 31, 2007, from $1,343,360 to $992,471, a reduction of $350,889.00.

[59] Jethwani objects to a number of items arising from the Interim Receiver’s accounts:

i. Pre October 2007 Accounts

[60] As noted, all of the Interim Receiver’s accounts up to September 30, 2007 were provided to the IRG in accordance with the Billing Protocol. Jethwani has no specific objections to the Interim Receiver’s accounts up to October 2007. He submits that the Billing Protocol does not equate to court approval and that based on the Interim Receiver’s actions post October 2007, the earlier accounts should be reduced by something in the order of between 10 and 20 %.

[61] In my view, there is no basis on the record for such an arbitrary reduction. While I agree that the Billing Protocol is not the same as court approval of the accounts, it was put in place to allow the Investors to object to the Interim Receiver’s fees and disbursement on a timely basis after each account was rendered. The Fee Reduction Agreement indicates that the Investors took advantage of that right. I can only infer, therefore, that in the absence of evidence of any further objections that the Investors had no issues with the accounts in question. To arbitrarily reduce those accounts at this point for conduct after the fact, which is the subject of further accounts, is simply not appropriate.

[62] The record establishes that between the date of its appointment in May, 2002 and October 2007, the Interim Receiver was engaged in a significant amount of work in identifying, obtaining and monetizing assets arising from the Damji Fraud. The accounts, while large, reflect the extent of that work.

[63] For the above reasons, therefore, I am satisfied that the pre-October 2007 accounts of the Interim Receiver are fair and reasonable and should not be reduced.

ii. The Amendment to the Garber Settlement

[64] Jethwani seeks the reduction of the Interim Receiver’s fees in the total amount of $233,194.50 arising out of the Interim Receiver’s failure to obtain court approval of the amendment to the Garber Settlement in the spring of 2015 and the impact of the amendment on the Retention Agreement with SHB.

[65] Jethwani submits that because the amendment resulted in the Interim Receiver paying Garber’s Swiss counsel $150,000 US from the monies received from the Swiss Accounts, the Interim Receiver’s fees should be reduced by a corresponding amount ($150,000 US x 1.4133 (exchange rate) = $211,995.00 CDN). Jethwani further submits that because the Interim Receiver failed to raise the issue of whether SHB’s contingency fee would be reduced accordingly at the time the payment to Garber was agreed to, the Interim Receiver had to pay SHB an additional $15,000 US or $21,199.50 CDN, requiring the Interim Receiver’s fee to be further reduced by such amount.

[66] In support of his submission, Jethwani relies on HSBC Bank Canada (supra), which involved the reduction by the court of what it considered “unnecessary” receiver’s fees and legal fees incurred after departing from a recommended and approved course of action. The receiver had recommended and obtained court approval to proceed with a sale of property by auction. Subsequently, the receiver received an offer for the property which it pursued including a further motion to the court to discard the auction process which was denied. The receiver subsequently sought approval of both its fees and its counsel’s fees which included fees and disbursements for dealing with the offer. In concluding that such fees were not fair and reasonable, the court held that the actions of the receiver in dealing with the offer and departing from the approved course of action amounted to “imprudent and unreasonable conduct” by the receiver.

[67] In my view, the facts in HSBC Bank Canada which gave rise to the result in that case are very different than those before me. I do not consider the conduct of the Interim Receiver in entering into the amendment to the Garber Settlement to have been imprudent and unreasonable. Rather, I consider it to have been commercially reasonable at the time. Garber was threatening to bring a motion to the California Court to terminate the Garber Settlement as frustrated based primarily on delay. The Interim Receiver’s legal advice did not dismiss the possibility of such motion succeeding. There had been significant delay in obtaining the monies in the Swiss Accounts, caused, in part, both directly and indirectly by the actions of the Investors. And the delay was prejudicing not only Garber but also his son’s estate.

[68] Jethwani submits that there was no legal basis upon which Garber could have terminated the Garber Settlement and that therefore the Interim Receiver erred in agreeing to the amendment. As noted, the Interim Receiver’s legal advice from its California counsel was contrary to that submission. Nor has Jethwani produced a legal opinion of California counsel to the contrary.

[69] Further, Jethwani has not identified any fees resulting from the Interim Receiver’s failure to obtain approval of the amendment. Rather, Jethwani seeks to effectively have the Interim Receiver pay for the settlement. In my view that is not appropriate, particularly given that I consider the settlement to have been commercially reasonable.

[70] While the Interim Receiver should have applied to the court for approval of the amendment of the Garber Settlement, in the circumstances, I do not consider that it should be penalized financially for not having done so. As noted, I consider the amendment to have been prudent, necessary and commercially reasonable. I am of the view it would have been approved. But not without opposition from Jethwani and the Investors. They opposed the approval of the original Garber Settlement (including an appeal to the Court of Appeal) and based on their position before me, would likely have opposed the amendment. The result would have been increased costs for the Interim Receiver, its counsel and the Investors. Given the time that had transpired in resolving the Swiss proceedings, the Interim Receiver’s actions in resolving the issues with the Garber Settlement in order to conclude the Damji Receivership with as little extra cost as necessary was the prudent course at that stage of the Damji Receivership.

[71] With respect to the additional $15,000 US which was paid to SHB as a result of the amendment to the Garber Settlement, the actual amount that was owing to SHB under the Retention Agreement, as amended, was 20% of $150,000 or $30,000 US. The Interim Receiver was able to negotiate a reduced amount with SHB. While the Interim Receiver may be criticized after the fact for not dealing with SHB’s fee as part of the Garber Settlement amendment negotiations, there is no evidence that it would have been any less than the amount agreed. As a result, I do not consider the Interim Receiver’s actions concerning the additional payment to SHB to have been imprudent or unreasonable.

[72] For the above reasons therefore, as requested by the Interim Receiver during the motion, I approve the amendment to the Garber Settlement as being commercially reasonable and would not reduce the Interim Receiver’s fees in respect thereof as submitted by Jethwani.

iii. The Interim Receiver’s Unjustified dealings with Garber

[73] Jethwani submits that the Interim Receiver’s fees of $351,854.00 should be reduced by in excess of $150,000 up to $200,000 on account of what he terms “unjustified/unnecessary/no value/unfair dealings” with Garber.

[74] I have already touched on the Interim Receiver’s actions in dealing with the amendment to the Garber Settlement. The dealings with Garber and his counsel were lengthy and took place over a long period of time. The Garber Settlement was reached in April of 2009 and approved in April of 2010. At the time, neither party envisaged that it would take more than five years to conclude it. The delay was attributable to numerous factors including the Investors, directly or indirectly. It was not on account of any unreasonable actions by the Interim Receiver. The release of the monies in the Swiss Accounts, which formed the basis of the settlement, required numerous legal proceedings in Switzerland, joined in by both the Interim Receiver and Garber. Further, the Interim Receiver had to spend substantial time dealing with Garber and his lawyers after Garber threatened to withdraw from the settlement.

[75] In the circumstances, I am unable to conclude that any of the time the Interim Receiver spent dealing with Garber was unnecessary or unjustified. Accordingly, I reject Jethwani’s request to reduce the Interim Receiver’s fees in respect of his dealings with Garber.

iv. The Damji Agreement

[76] In June of 2009, the Interim Receiver’s counsel was contacted by counsel for Damji and advised that Damji had information concerning very substantial monies (in excess of $15 million) derived from the Damji Fraud that was only accessible by Damji. Damji wanted payment for the return of those monies to the Interim Receiver.

[77] Although the Interim Receiver was reluctant to have any dealings with Damji given his history and refusal to abide by court orders, despite a detailed investigation, a substantial amount of monies Damji defrauded the Investors of remained missing and unaccounted for. The Interim Receiver considered that it was faced with a no win proposition. On the one hand, a deal with Damji would be a deal with the devil (and reward a fraudster). On the other hand, the Interim Receiver could not consider an agreement which was potentially economically beneficial to the thousands of defrauded Investors.

[78] As a result, the Interim Receiver reluctantly entered into an agreement with Damji, which was subject to court approval, and provided that Damji would only be paid from monies recovered directly by the Interim Receiver as a result of the agreement.

[79] On August 20, 2009, the court (Spies J.) rejected approval of the Damji agreement.

[80] Jethwani submits that $59,091 of fees (including $29,457.30 of legal fees by Gowlings) should be disallowed in respect of the motion for approval of the Damji agreement. I disagree. The Interim Receiver was put in a difficult and no win position as a result of Damji’s approach. It recognized the serious concerns in dealing with Damji but, on the other hand, if there was any validity to his proposal, the Investors stood to recover some of their lost investments.

[81] In my view, the Interim Receiver took the right course. It negotiated the agreement conditional on court approval and then had the court make the decision. I do not consider that in her reasons Justice Spies criticized the Interim Receiver’s actions in entering the agreement or bringing the motion. Rather, she was offended (quite rightly) with the proposition that Damji, a fraudster who had blatantly disregarded court orders, could somehow now profit from his conduct. The Interim Receiver had the same concerns.

[82] In my view, the fees of both the Interim Receiver and its counsel for the motion seeking approval of the proposed Damji agreement are fair and reasonable and should not be reduced as submitted by Jethwani.

v. Reduction of Fees concerning the Interim Receiver’s Opposition to Jethwani applying for “*partie civile*” status in the Swiss Criminal Proceedings

[83] Jethwani submits that there should be some reduction of the fees charged by the Interim Receiver and its counsel in respect of its opposition to Jethwani and the five Investors who sought “partie civile” status in Switzerland in light of the fact that Marrocco J. (as he then was) denied the Interim Receiver’s motion for an order restraining Jethwani and the Investors from seeking “partie civile” status in Switzerland. Jethwani submits that notwithstanding the dismissal of its motion, the Interim Receiver subsequently vigorously opposed his request in Switzerland and that of five other investors for “partie civile” status and the Interim Receiver’s fees and those of its counsel in respect of those actions by the Interim Receiver and its counsel in Switzerland should be disallowed.

[84] I do not consider that the order of Justice Marrocco dismissing the Interim Receiver’s motion for a restraining order prohibited the Interim Receiver from subsequently objecting to applications by Jethwani or the five investors for “partie civile” status in Switzerland. The reasons of Justice Marrocco (paragraphs 8 and 9) make it clear that he declined the Interim Receiver’s motion on the basis that it was not appropriate for the Ontario court to exercise jurisdiction over Jethwani by ordering him to stop participating in the Swiss criminal proceedings. Rather it was a matter for the Swiss authorities. As a result, I do not consider that Marrocco J.’s order prevented the Interim Receiver from opposing Jethwani and the five Investors’ applications for “partie civile” in Switzerland.

[85] Further, I do not consider that there was anything improper or unreasonable in the Interim Receiver opposing the applications of Jethwani and the five Investors in Switzerland. The Interim Receiver viewed such actions as detrimental to the completion of the Garber Settlement and contrary to the terms of the Appointment Order. There was no reason for the Investors to get involved directly in the Swiss criminal proceedings except to interfere with the Interim Receiver’s attempts to obtain the monies in the Swiss Accounts.

[86] While the results of the motions before Justice Marrocco were divided and there was no order as to costs that does not mean that the Interim Receiver (and its counsel) are not entitled to their fees. The question is whether the fees are fair and reasonable in the circumstances. Given that I consider that the Interim Receiver’s motion was reasonable in the circumstances, I have no issue with the Interim Receiver and its counsel receiving their fees in respect of the motion.

[87] As noted, Jethwani’s objection is not that the fees themselves in respect of the Swiss proceedings are unreasonable. Rather it is that the fees should be reduced due to the Interim Receiver’s actions in the face of the Marrocco J. Order. As I have concluded, however, there was nothing imprudent or unreasonable in the Interim Receiver’s actions in respect of the Swiss proceedings. Further, given the nature of the proceedings in Switzerland, I consider that the Interim Receiver’s fees and those of its counsel in respect of the Swiss proceedings to be fair and reasonable. Accordingly, Jethwani’s submission that the fees relating to the Swiss “partie civile” proceedings be reduced is denied.

vi. Internal Receiver Briefings

[88] Jethwani submits that the Interim Receiver’s fees of $67,622 on account of internal office briefings by the partner in charge at Farber to his fellow partners between 2010 and 2016 should be disallowed as having no value to the Damji Receivership. He further submits that fees of $61,914 between December 1, 2008 and December 31, 2009 for similar internal briefings should also be denied.

[89] There is no question that the Damji Receivership was very difficult and long. The Interim Receiver and the other professionals ended up having to finance it. Matters became more complicated when Jethwani and the Investors became adversarial towards the Interim Receiver in 2007.

[90] Given the costs which were being incurred and the Investors’ refusal to provide any permanent financing, it is understandable why internal partner briefings at Farber arose. In my view, they were reasonable and in the circumstances, a proper charge to the Damji Receivership.

[91] Although the Damji Receivership received some financial relief in the form of the Financing Agreement (which was opposed by Jethwani and the Investors), the Lender last advanced funds on February 22, 2010 and subsequently advised the Interim Receiver that he was electing not to advance further funds. As a result, from 2010 to 2016, the Damji Receivership was carried by the Interim Receiver. As noted, during that period, a lot of activity was taking place in Switzerland to finalize the Garber Settlement as well as in California and Canada.

[92] In the circumstances, I do not consider that the briefings by the Farber partner in charge to his partners as to the status of the Damji Receivership over the periods in question was unreasonable. The fees charged for the briefings are properly part of the Damji Receivership given the financial involvement of Farber. Further, given the time period involved, I consider the fees to be fair and reasonable. Jethwani’s request is therefore denied.

vii. Time Charged by Messrs. Farber and Lifman

[93] Jethwani also objects to fees charged for the time of Mr. Farber ($10,785) and Mr. Lifman ($77,227), senior partners of Farber, on the basis that there was no value to the Estate.

[94] I accept the Interim Receiver’s submission that, as senior partners, Messrs. Farber and Liftman were providing guidance concerning the Damji Receivership. Given the length of the Damji Receivership and its complexity, I do not consider the fees sought for Messrs. Farber and Lifman’s advice and direction from time to time to be unreasonable or unfair.

viii. Reduction of Fees For Dealing With the Lender

[95] Jethwani submits that the Interim Receiver’s fees in the amount of $36,517.00 concerning dealings with the Lender should be disallowed.

[96] The Lender defaulted under the Financing Agreement in February 2010 when he refused to advance further funds. Jethwani submits that once he defaulted, there should have been no further dealings with the Lender.

[97] The Financing Agreement provided that the Lender would be repaid his loans in the event of recovery. It granted the Lender a first charge on the proceeds from the Garber Settlement. Because, however, the Lender refused to advance any further funds after February 2010, the Interim Receiver took the position that he was only entitled to the return of the monies advanced pursuant to the Financing Agreement.

[98] The fees incurred by the Interim Receiver relate to advising the Lender from time to time as to the status of the completion of the Garber Settlement and then negotiating the final settlement and a full and final release with the Lender prior to repaying the loans. In all the circumstances, I do not consider that the disputed fees incurred with respect to the Interim Receiver’s dealings with the Lender after February 2010 are unfair or unreasonable. Jethwani’s position is therefore rejected.

ix. Reduction for Updates to Intelysis and Faskens

[99] Jethwani submits that fees charged by the Interim Receiver of $25,397 in respect of time spent providing periodic updates to Intelysis and Faskens between 2010 and 2016 should be disallowed on the basis that the activity provided no value of any kind to the Estate. Neither Intelysis nor Faskens was providing any services to the Damji Receivership at that time.

[100] While both Intelysis and Faskens were no longer involved in the Damji Receivership, they were owed money for their fees, the payment of which was dependent on the amount of the Garber Settlement. In my view, they were clearly entitled to be kept advised of the status of the Damji Receivership. Further, in the circumstances as outlined earlier in respect of the Farber briefings, I consider that the time spent in respect of such briefings is properly charged to the Damji Receivership.

[101] Once again, given the time period involved and the amount in issue, I consider the disputed fees to be fair and reasonable.

x. Unjustifiable Charges for Office Assistants

[102] Jethwani submits that the fees charged by the Interim Receiver for the Farber partner in charge’s “assistants” from September 1, 2007 to the end of 2015 in the amount of $409,675 should more fairly be below $100,000. Jethwani characterizes the work as “purely administrative work” and “clerical” work and submits that the entire amount is more properly characterized as overhead and should be disallowed.

[103] The individuals involved during the period in question, Mss. Marshall, Chopowick and Falcione, were all senior insolvency administrators and were operating as paralegals carrying out accounting and banking functions in respect of the Damji Receivership. The nature of the work done by them was frequently complicated and technical. Moreover, from a commercial perspective, the delegation of work to the above individuals was both prudent and economical. As such I do not consider that they should be classified as clerical and therefore part of office overhead.

[104] Once again, I consider that the charges complained of were fair and reasonable and should not be reduced.

xi. Reduction of Fees Relating to Involvement in the Class Actions

[105] Jethwani submits that the Interim Receiver’s charge of $97,893 for about 171 hours of time relating to involvement with the Class Actions and a mediation in respect thereof should be disallowed. The Class Actions were outside the Damji Receivership and the Interim Receiver should not have been involved.

[106] In total, there are six Class Actions. While they are outside the Damji Receivership, the record establishes that the Interim Receiver was brought into them, not by its actions, but rather by the actions of both the Investors and the defendants primarily in respect of document production.

[107] Over the many years of the Damji Receivership, the Interim Receiver gathered a significant amount of knowledge and documents concerning the Damji Fraud which made it the primary resource for all of the parties to the Class Actions. The various document requests were extensive and raised privacy issues, privilege issues (including production of sealed documents) and issues of reasonableness and proportionality all of which had to be addressed by the Interim Receiver, often at case conferences in the Class Actions.

[108] Further, as previously noted, the Interim Receiver attended the mediation of the Class Actions in order to try and assist in a resolution to expedite completion of the Garber Settlement in Switzerland.

[109] To simply say, as Jethwani does, that the Interim Receiver has no interest in the Class Actions and therefore is not entitled to any fees in respect thereof is not appropriate, particularly given the extent to which the Investors have attempted to engage the Interim Receiver in the production of documents.

[110] Once again, Jethwani’s submission is rejected. The fees charged by the Interim Receiver concerning its involvement in respect of the Class Actions are fair and reasonable.

xii. Third Party Requests for Production of Documents

[111] Jethwani submits that the Interim Receiver’s claim for $42,746 on account of 75 hours of time in 2014-2016 dealing with requests for documents from other law firms should be disallowed on the ground that the requests were from third parties and had nothing to do with the Damji Receivership.

[112] My comments concerning the time spent by the Interim Receiver in respect of the Class Actions applies to this submission. The requests all arise out of the Class Actions. They are made to Farber in its capacity as Interim Receiver in respect of documents that it has gathered during the course of the Damji Receivership. As noted, the request raised a number of issues which the Interim Receiver and its counsel had to deal with. In my view, the time spent dealing with such requests is clearly a Damji Receivership expense. In the context, I also consider it fair and reasonable.

xiii. The Time Spent on the Eighth Report

[113] Jethwani submits that the Interim Receiver’s claim for $345,217 in respect of the time by the partner in charge and a paralegal to prepare the Eighth Report to the court is “grossly excessive” and should be reduced by $245,217 to $100,000 which Jethwani submits is still “overly generous”.

[114] As noted at the outset, the Eighth Report is over 70 pages in length and has 82 appendices contained in five volumes. The Report also contains a 28-page chronology and information of the Swiss Judicial Structure. It is a substantial piece of work and has been of great assistance to me in understanding in some detail the activities of the Damji Receivership over the course of the 15 years.

[115] The high cost of the Eighth Report is directly attributable to the fact that although the Interim Receiver made periodic Reports to the court over the course of the first seven and a half years of the Damji Receivership, there was a further seven and a half years between the Seventh Report (November 2009) and the Eighth Report during which time there were serious issues concerning finalization of the Garber Settlement and whether the estate would actually recover funds. The Interim Receiver submits that it was appropriate to defer its reporting over this period given the uncertainty of the final recovery.

[116] Paragraph 26 of the Appointment Order provides that the Interim Receiver shall have the right to apply to the court for approval and payment of its fees and disbursements on an interim basis. While I agree that in the normal course a receiver should seek approval of its fees on an ongoing and timely basis, I do not consider the Damji Receivership to be normal.

[117] In the first instance, the Billing Protocol between the Interim Receiver and the IRG gave the Investors the opportunity to review and object to the Interim Receiver’s fees and those of its counsel and other professionals through the provision of the Interim Receiver’s periodic accounts and the accounts of the professionals between the date of its appointment and 2007.

[118] The period between 2007 and the date of the Eighth Report, when the Billing Protocol was no longer being followed by the Interim Receiver (I infer due to the adversarial nature of the relationship that had arisen between the Interim Receiver and Jethwani and the Investors), was a period during which the Interim Receiver was taking steps to implement the Gerber Settlement. The estate had received no monies for a long period of time and, as noted, there were serious issues as to whether the Gerber Settlement would be finalized and how much, if any, the estate would recover.

[119] The Interim Receiver states that it did not move for approval of its accounts between 2007 and 2016 due to the fact that the Damji Receivership had no funds and the completion of the Garber Settlement was in doubt. In my view, in the circumstances, that position by the Interim Receiver was commercially reasonable. It is clear from the adversarial nature of the Investors’ actions after 2007 that any motion to seek interim fee approval between 2007 and 2016 would have been opposed. More importantly, until the Garber Settlement was finalized and the recoveries were in hand, any motion for interim fee approval respecting the Interim Receiver’s activities during that period could not have been properly evaluated by the court.

[120] Although the amount incurred for preparation of the Eighth Report is high, there is no question that a comprehensive and detailed report was necessary to provide the court with the detail required to properly access its activities and those of its counsel over the entire period of the Damji Receivership, but particularly between 2007 and 2016. This is particularly so given the length and complexity of Jethwani’s opposition to the accounts going back to 2005. In such circumstances, therefore, I do not consider the amount of fees incurred for the preparation of the Eighth Report to be excessive.

[121] Accordingly, for the above reasons, I am satisfied that the Interim Receiver’s fees in respect of the preparation of the Eighth Report is fair and reasonable and I would not reduce the amount sought as submitted by Jethwani.

A. Intelysis

[122] Intelysis was retained by the Interim Receiver at the beginning of the Damji Receivership to perform various investigative functions regarding the Damji Fraud both in Canada and elsewhere; review banking and other financial records and assist the Interim Receiver and its counsel in litigation.

[123] Intelysis’ total fees and disbursements over the course of its retainer were $1,668,229.04 plus applicable GST of which $1,301,087.10 has been paid to date and the balance, $367,141.94 remains due and owing.

[124] Intelysis’ invoices for the periods April 29, 2002 to July 31, 2002 ($289,130.94) and August 1, 2002 to April 30, 2003 ($711,715.50) were submitted to the court for approval in the Second Report and the Third Report respectively.

[125] Further, all of Intelysis’ invoices except for those totaling $19,689 were provided to the IRG and there is no evidence of objection being raised to the invoices.

[126] At the hearing, counsel for Jethwani advised that he takes no objection to the Intelysis’ accounts and agrees that Intelysis carried out good work in locating Damji assets. Accordingly, the fees and disbursements of Intelysis not previously approved in the amount of $778,521.36 are approved.

B. Miller Thomson - $160,235.30

[127] As noted, Miller Thomson acted for the Investors from the outset in respect of the Action and thereafter acted for the Interim Receiver from the date of its appointment.

[128] On November 26, 2003, the court approved Miller Thomson’s invoices rendered to that date totaling $1,238,165.33 inclusive of disbursements and taxes. Miller Thomson rendered further invoices for periods through to May 2005 which totaled $175,749.93, inclusive of taxes. The Investors objected to the further accounts which subsequently resulted in Minutes of Settlement dated May 3, 2006 between the Interim Receiver, Miller Thomson and Jethwani whereby the amount owing was reduced by $15,514.62 to $160,235.30 ($149,752.62 and taxes of $10,482.68).

[129] The Interim Receiver now seeks approval of the Minutes of Settlement and the related payment to Miller Thomson of $160,235.30.

[130] Jethwani has raised no objection to the Interim Receiver’s request concerning the balance of the Miller Thomson fees and disbursements as agreed in the Minutes of Settlement. In my view and based on the Minutes of Settlement entered into by all parties, which I approve, I have no hesitation in concluding that the remaining balance of Miller Thomson’s fees and disbursements ($160,235.30) as agreed to in the Minutes of Settlement are fair and reasonable and they are therefore approved.

C. Faskens - $1,085,622.92

[131] The amount of $1,085,622.92 sought to be approved in relation to Faskens is made up of its fees, disbursements and taxes in respect of two separate matters arising out of two retainers on May 16, 2003 – first, $107,527.15 relating to an Action commenced on August 25, 2005 against the Bank of Montreal (“BMO”) by two investors (the “BMO Action”) concerning payments made to “Salim Damji in Trust” that were deposited into accounts at the BMO. Second – $978,095.77 on account of acting for the Interim Receiver and the Investors until September 2007.

[132] The Faskens’ fee approval request is supported by an affidavit from a partner at Faskens who was directly involved in both the BMO Action and the Damji Receivership during the course of Faskens’ retainers.

[133] At the outset of the proceedings, Jethwani made certain allegations of negligence against Fasken. Those allegations were withdrawn prior to the hearing.

a) The BMO Action

[134] At the request of the plaintiffs and the IRG, Faskens agreed to act for the plaintiffs in the BMO Action. Also at the request of the IRG, the Interim Receiver agreed to partially fund the legal fees and costs to pursue the BMO Action. Faskens agreed at the outset that it would reduce its current hourly rates for the work performed by 10%.

[135] Faskens’ accounts were rendered between September 23, 2003 and June 15, 2007 when it was replaced as counsel for the plaintiffs. In addition to the 10% reduction in the hourly rates, Faskens also refrained from increasing its hourly rates over the period of its retainer. Copies of all invoices were sent to the IRG in accordance with the Billing Protocol. There is no evidence before me that the IRG or the two plaintiffs ever raised any objections or issues in respect of the accounts.

[136] In accordance with the agreement to partially fund the BMO Action, the Interim Receiver paid $70,727.40 to Faskens in respect of its accounts leaving an unpaid balance owing of $36,799.75.

[137] Jethwani submits that the BMO Action had no value as the Action was subsequently started resulting in the BMO Action being dropped. Notwithstanding that the BMO Action was eclipsed by two subsequent class actions against BMO, in the absence of evidence supporting the submission, I am not prepared to conclude that it was a waste of time. Further, Jethwani and the two plaintiffs signed a retainer agreement in July of 2005 which provided, among other things, that Faskens could not guarantee any recovery in the BMO Action.

[138] Accordingly, I am satisfied that Fasken’s fees and disbursements in respect of the BMO Action are fair and reasonable and they are therefore approved.

b) The Damji Receivership

[139] Faskens acted for the Interim Receiver from May 16, 2003 to the conclusion of Jethwani’s motion for leave to appeal the November 23, 2007 order approving the Financing Agreement in February, 2008.

[140] The Interim Receiver seeks approval of Faskens’ fees, disbursements, inclusive of taxes for the above period in the total amount of $978,095.77 of which $240,153.75 has been paid to date and $737,942 remains unpaid.

[141] During the period, invoices totaling $871,327.52 were provided to the IRG in accordance with the Billing Protocol and invoices totaling $106,768.25 were not. Once again, there is no evidence that the IRG ever raised any complaint or issues about the invoices. Nor has Jethwani raised any issues with respect to the Faskens’ invoices before me. The evidence also indicates that during the period, the Interim Receiver and its counsel were engaged in many issues concerning the Damji Receivership. Accordingly, I conclude that Faskens’ accounts in respect of the Damji Receivership in the total amount of $978,095.77 are fair and reasonable.

[142] Jethwani submits that given Faskens is a party to the Distribution Agreement and agreed to a pro rata reduction of its fees in accordance with the Interim Receiver’s proposed distribution schedule, the amount of its unpaid fees should be limited to 73.88% of the amount owing - $27,188 in respect of the BMO Action and $545,190 in respect of the Damji Receivership. In the alternative, Jethwani submits that Faskens’ fees should be reduced by “about 10% or as the Court may be advised from its review of Faskens’ accounts.”

[143] In my view, the Distribution Agreement does not create a ceiling on fees. Rather it allocates the estimated shortfall between fees owing and monies available for distribution between the Interim Receiver, Fasken and Intelysis of amounts owing to them as at December 31, 2007 on a pro rata basis. The Distribution Agreement is based on the amount available for distribution.

D. Gowlings

[144] As noted, Gowlings replaced Fasken as counsel to the Interim Receiver in November 2007. The Interim Receiver is seeking approval of all Gowlings’ invoices for the period from November 30, 2007 to October 31, 2016 in the total amount of $656,525.07 inclusive of taxes (fees of $596,445.50, disbursements of $17,335.85 and $42,804.72 for GST/HST). All of Gowlings fees for which approval is sought have been paid, from Damji Receivership funds or Farber personally ($195,637.00).

[145] Gowlings fee approval request is supported by the affidavit of Clifton Prophet, a partner at Gowlings involved in the matter. Jethwani, through his counsel, consented to Mr. Prophet continuing to act as counsel to the Interim Receiver including appearing on the motion before me.

[146] Jethwani submits that Gowlings’ fees should be reduced by somewhere between $100,000 and $150,000 for a number of reasons including its fees for the motion before Justice Spies in respect of the proposed Damji Agreement ($29,457.50); its fees for the motion before Marrocco J. ($23,380); excessive hourly rates on account of increase in Mr. Prophet’s hourly rate over the period ($625 in November 2007 to $700 in January 2009 to $825 in 2016); duplication work, administration work, clerical work unnecessary work and work of no value; and $5,649 on account of staff charges.

[147] Jethwani also submitted that after April 2010, when approximately $150,000 in total fees, disbursements and taxes were incurred, such fees were unreasonable given only routine matters took place in Ontario and there was no litigation in Ontario.

[148] In my view, there should be no reduction of Fasken’s fees in respect of the motions for approval of the proposed Damji agreement and motion before Marrocco J. As I have noted, both motions were reasonable and proper in the context of the ongoing Damji Receivership.

[149] Nor do I consider Jethwani’s submission that the accounts should be reduced because nothing was happening in Ontario after April 2010 to have any validity. Gowlings is the Interim Receiver’s main counsel which by definition, given the complexity of the Damji Receivership, involves it in a multitude of issues on a weekly, if not daily basis, not just in Ontario. To purport to confine Gowlings services to just Ontario matters after April 2010 given what was happening in the Damji Receivership is both unrealistic and unreasonable.

[150] Nor do I have any issue with the increase in Mr. Prophet’s hourly rate over the years, given the length of time over which the services were rendered. There is no agreement that Gowlings hourly rates would be frozen. Further, I consider that the hourly rates charged were consistent with the market rates at the time and entirely commensurate with the complexity of the Damji Receivership.

[151] For the above reasons therefore, I find that Gowlings accounts for the period in question were fair and reasonable and they are therefore approved.

General Considerations

[152] The Damji Receivership has been long and complex. It has involved proceedings in multiple jurisdictions. In total, over the entire course of the Damji Receivership, the Interim Receiver recovered $18,711,462. After expenses, it currently has on hand $4,800,595. Upon approval of the fees and disbursements sought by the Interim receiver and its counsel and Intelysis, there will be a shortfall in an aggregate amount in excess of $655,000.

[153] In my view, based on the material filed, the Interim Receiver and its counsel and Intelysis have done an exemplary job in administering the Damji Receivership over such a long period in accordance with the terms of the Appointment Order. The receivership was difficult and complex. It was made more difficult and costly as a result of the Investors’ actions after 2007.

[154] In concluding that the fees and disbursements of the Interim Receiver, its counsel over the period and Intelysis are fair and reasonable, in addition to the factors set out in Diemer, supra, I have taken into account what I consider to be the overall success achieved by the Interim Receiver.

[155] I agree with the Interim Receiver’s submission that the central theme underpinning many of Jethwani’s objections to the fees of the Interim Receiver and the other professionals is that the fees should be reduced because no amount is available to distribute to Investors. But the Investors have been aware, from at least late 2002 that there was a very real possibility that the fees could exceed the recoveries resulting in no distribution of monies to them.

[156] As noted, in December 2002, with net recoveries of $1.725 million in hand, the Interim Receiver advised the IRG to accept the monies and abandon any further pursuit against Garber for recovery of monies as the costs could exceed the recoveries. The IRG rejected that advice and chose to pursue the actions against Garber. While those actions eventually resulted in significant recoveries, they also resulted in substantial fees which have amounted to more than the recoveries. As noted, I consider all of the fees to be fair and reasonable in the circumstances.

[157] The fact therefore that there are no monies available for distribution to the Investors at the conclusion of the Damji Receivership should come as no surprise to the Investors.

[158] The Damji Receivership has come to an end, save and except for minor issues that may continue to arise. The Interim Receiver has requested and I agree that $120,000 should be set aside of the funds available for distribution to cover such contingencies. The further costs include legal costs in both Switzerland and California as well as costs for the Interim Receiver and its counsel and document storage costs.

[159] For the above reasons therefore, the Interim Receiver’s proposed distribution of Damji Receivership monies on hand as set out in Appendix 69 to the Eighth Report is approved.

Additional Orders

[160] The Eighth Report is approved. I am not, however, prepared to approve all prior Reports. In any event, the Eighth Report encompasses all of the Interim Receiver’s activities during the Damji Receivership.

[161] The Interim Receiver’s final Statement of Receipts and Disbursements for the period from May 7, 2002 to October 31, 2016 at Appendix 64 of the Motion Record is also approved.

[162] The Interim Receiver is therefore discharged from its duties and Farber is released and discharged from any and all liability arising out of or related to its acts or omissions while acting as Interim Receiver, save and except for liability for acts and omissions arising from any gross negligence or wilful misconduct on its part.

[163] Notwithstanding its discharge, Farber shall continue to have the powers and protections granted under the Appointment Order including the power to deal with any matters in relation to the Damji Receivership after its discharge for a period of one year from the date of my decision. In that regard, Farber shall be required to report back to the court within the year concerning its activities during the period, approval of fees, its proposal for final completion of its duties, and the distribution of any remaining monies.

[164] As noted in respect of the Gowlings fees, Farber, in its personal capacity, has paid $195,637 to Gowlings in payment of some but not all of Gowlings fees and disbursements. Those fees have been approved by me. The payments were made during the period when there was insufficient funds in the Damji Receivership to pay Gowlings accounts. Accordingly, Farber is entitled to re-payment of $195,637 to reimburse it for such payments.

[165] I agree that with the completion of the Damji Receivership, all documents sealed by court order during the Damji Receivership should be unsealed and become part of the public record in the files of the court. Jethwani does not oppose.

[166] Farber seeks approval of a procedure for dealing with requests for disclosure of documents or information obtained or generated by it during its duties as Interim Receiver. I do not agree with Farber’s suggested procedure. In my view it is too expensive. Rather, a pay as you go method is simpler and reimburses Farber for its costs incurred in responding to any requests. Third parties seeking documents or information should first set out exactly what it is they require. Farber should then provide an estimate of the costs to produce the documents or information listing personnel involved, hourly rates and overall estimated time required by each Farber person. If the parties are unable to come to an agreement concerning production, a motion may be brought to a judge on the Commercial List on seven days’ notice for directions.

Costs

[167] The parties are encouraged to meet and discuss costs in respect of this motion. In the event that the parties are unable to come to an agreement as to the costs, an appointment may be arranged before me through the Commercial List office to establish a procedure for dealing with costs.

L. A. Pattillo J. Date Released: October 11, 2017