Court File and Parties

Court File No.: 33-2587911 Date: 2020/06/23 Ontario Superior Court of Justice in Bankruptcy and Insolvency

In the Matter of the Consumer Proposal of Ocean Dezarie Bonneau Of the City of Perth In the Province of Ontario Dental Administrator

Before: Justice Stanley J. Kershman

Heard in Ottawa: June 16, 2020 by Teleconference

Appearance: Matthew Harris, for Harris & Partners Inc. Brenden Higgins, Creditor

Costs Decision

[1] The issue before the Court is the costs of the court approval of the consumer proposal (“Consumer Proposal”) of Ocean Dezarie Bonneau (the “Debtor”).

[2] The Consumer Proposal originally filed by the Debtor was approved by a majority of her creditors. Thereafter, Mr. Higgins filed an objection that required the Proposal’s administrator (the “Administrator”) to bring a motion for court approval of the Consumer Proposal, pursuant to section 66.22(1) of the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3 (“BIA”).

[3] The Administrator brought the motion, which was heard by this Court. A decision rendered May 20, 2020 approved the Consumer Proposal.

[4] Mr. Higgins’ involvement in this matter is related to his guaranteeing or co-signing the Debtor’s debt in favour of Medicard Finance Inc./iFinance Canada Inc. (“iFinance”). The Debtor’s exposure in relation to the outstanding balance on the loan was approximately $5,500, excluding any dividend payable in the Proposal.

[5] Mr. Higgins’ position throughout this proceeding was that the Debtor did not disclose various matters to the Administrator and to the Court, including: 1) the Debtor’s ownership of a 2011 Kawasaki motorcycle; 2) the number of people in the Debtor’s family unit; and 3) the Debtor’s true income. Mr. Higgins’ position was that the Consumer Proposal should not be approved.

[6] Mr. Higgins spent a great deal of time attempting to prove that the Debtor had committed fraud. In addition, he tried to show that certain debts, which the Debtor claimed were fraudulently obtained by third parties in her name, were not fraudulently obtained and were owed by her.

[7] According to the Debtor, all of the creditors in question had conducted their own internal investigations and had found that no fraud had been committed by any third party using the Debtor’s identity and were owing by her.

[8] The issue of the birth of the Debtor’s child became a critical issue after the motion was argued. This issue arose out of various social media posts made by either the Debtor or someone else, which showed the Debtor as pregnant at a time after the date on which she said that the child was born.

[9] By endorsement, the Court requested information regarding the birth of the child. The Ottawa Hospital provided information that proved unsatisfactory as it related to the birth of the child. The Court issued a further endorsement and the Ottawa Hospital provided more evidence which satisfied the Court that the child was born on or about April 26, 2020.

[10] Notwithstanding this fact, Mr. Higgins was not satisfied with the evidence accepted by the Court and demanded further proof regarding the birth of the child. The Court refused to require further proof, as it found that the information provided was satisfactory.

[11] Mr. Higgins also filed three complaints against the Debtor and/or the Administrator with the Office of the Superintendent of Bankruptcy (“OSB”). In each case, the OSB closed the complaint files involving the Debtor and/or the Administrator without taking any action.

Administrator’s Position

[12] The Administrator is seeking costs of $4,548.25 on a partial indemnity basis, and costs of $5,446.60 on a substantial indemnity basis. Both are inclusive of disbursements and HST.

[13] The Administrator seeks these costs on the grounds that it was successful in obtaining the approval of the Debtor’s Consumer Proposal.

[14] The Administrator also submits that the OSB found that the complaints filed against the Administrator were without merit.

[15] The Administrator argues that the allegations made against it were unfounded, and that its reputation has been tarnished because of the allegations.

[16] The Administrator relies on Re Rizzo, 2017 ONSC 4234, 50 C.B.R. (6th) 332. In that case, the Trustee had been required to bring the matter to court for approval of a Division I proposal. The proposal was approved, and the issue at hand was one of costs. The Court found that partial indemnity costs should be granted.

[17] In the present case, the Court notes that the Administrator was not necessarily required to obtain court approval, because this was a Division II proposal. However, the Administrator was compelled to do so because of Mr. Higgins’ actions. The BIA allows for court approval under s. 66.22(1).

[18] The Administrator also relies on Kaptor Financial Inc. v. SF Partnership, LLP, 2016 ONSC 6607, 41 C.B.R. (6th) 262, wherein, Newbould J. dealt with the issue of costs on a motion in an insolvency matter. The Court found that allegations made by one defendant to advance his own personal interests were unfounded. That defendant’s actions caused the trustee/receiver to expend considerable time and resources to address the issues raised. The Court awarded substantial indemnity costs.

Mr. Higgins’ Position

[19] Mr. Higgins argues that the Debtor had failed to disclose assets, which he helped uncover – a 2011 Kawasaki motorcycle.

[20] In addition, Mr. Higgins argues that the Debtor did not contact him in advance of filing the Consumer Proposal to inform him of the Debtor’s financial difficulties. It was Mr. Higgins’ position that it was the Debtor’s obligation to advise him because he was obligated to pay the debt if she did not.

[21] Mr. Higgins also argues that he spent a significant amount of time and effort on this matter, for which he should be compensated.

[22] Mr. Higgins claims costs of $25,658 on a partial indemnity basis, and $34,251 on a substantial indemnity basis. The latter includes an amount of $33,000 for his time, billed at $100 per hour, plus legal fees for the monies paid to at least two lawyers.

[23] Mr. Higgins says that he cannot afford to pay any costs as an unsuccessful party.

Analysis

[24] Costs awards are at the discretion of the court.

[25] The amount being paid into the Consumer Proposal is approximately $9,900, over a period of 60 months. The total debts were in excess of $20,000.

[26] As stated previously, Mr. Higgins’ exposure was approximately $5,500. This was before taking into consideration the dividend payable in the proposal.

[27] The Court’s discretion in awarding costs is guided by the relevant factors set out in r. 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[28] As mentioned above, the amount at issue in terms of debt was approximately $20,000. The dividend is approximately $9,900. Mr. Higgins’ exposure was approximately $5,500.

[29] The Court does not understand why Mr. Higgins would have objected to the approval of the Consumer Proposal. If not approved, the Debtor would in all likelihood have gone bankrupt. This would have reduced the dividends payable to all creditors, including iFinance, which in turn would increase—not decrease—the exposure of Mr. Higgins to iFinance.

[30] Based on the analysis provided by the Administrator, which the Court accepted, the dividend in a bankruptcy would have been approximately 1.02%, while the dividend in the Consumer Proposal would be approximately 28.63%. The Court cannot understand Mr. Higgins’ logic behind his move to set aside approval of the Consumer Proposal.

[31] Indeed, this case took on a life of its own and spun out of control. This was in large part due to the actions of Mr. Higgins.

[32] The Court accepts the submission that Mr. Higgins was able to show that one asset was not included in the Statement of Affairs; this being a motorcycle. As it turned out, however, the evidence accepted by the Court was that, based on the value of the motorcycle, it would have been an exempt asset in a bankruptcy.

[33] Mr. Higgins filed three complaints against the Debtor and the Administrator with the OSB within a 10-to-12-week period. All of those complaints were closed by the OSB without further action being taken.

[34] Mr. Higgins also made arguments about the size of the Debtor’s family unit since she had moved into a new residence with her fiancé. Mr. Higgins claimed that the incomes of the fiancé, his mother and his sister should be included in the calculation of surplus income because the Debtor was now living with them in the finance’s mother’s home. The Court rejected this argument.

[35] These are only some of the issues raised by Mr. Higgins.

[36] The Court finds that the Administrator was successful and is entitled to costs. Mr. Higgins was unsuccessful and is not entitled to costs.

[37] Notwithstanding the Kaptor Financial case, the Court finds that partial indemnity costs should be awarded in this case.

[38] The Court finds that the hours incurred by the Administrator’s counsel are somewhat high. However, the Court finds that the hourly rate claimed is acceptable.

[39] The Court notes that Mr. Higgins was claiming his time at the rate of $100 per hour, while he acknowledged in oral evidence, that he only earns approximately $25.00 per hour.

[40] In relation to what a losing party could reasonably expect to pay, it should be noted that Mr. Higgins works for two employers and that his income has been negatively affected due to the COVID-19 pandemic.

[41] As stated previously, costs awards are at the discretion of the court. Exercising this discretion, the Court assesses the Administrator’s costs at $2,200, inclusive of disbursements and HST. These are payable by Mr. Higgins within 200 days of today. This extension of time is given to Mr. Higgins because of the reduction of his income due to the COVID-19 pandemic.

[42] This endorsement has the same effect as a formal order, and is effective as of today.

[43] Order accordingly.

Justice Stanley J. Kershman Released: June 23, 2020