Court File and Parties

COURT FILE NO.: 32-1758002 DATE: 2023 05 29 ONTARIO SUPERIOR COURT OF JUSTICE IN BANKRUPTCY AND INSOLVENCY

IN THE MATTER OF THE BANKRUPTCY OF VERINDER MALHOTRA OF THE CITY OF BRAMPTON IN THE REGIONAL MUNCIPALITY OF PEEL

BEFORE: Associate Justice Ilchenko, Registrar in Bankruptcy

COUNSEL: Philip Gertler (“Gertler”) and Fred Tayar (“Tayar”) for the Bankrupt Verinder Malhotra (the “Bankrupt”) - Tayar is also counsel to Kiran Malhotra, wife of the Bankrupt (“Kiran”); Ted Laan (“Laan”) for Creditor Gurdeep Nagra (“Nagra”); Brandon Jaffe (“Jaffe”) for A. Farber and Partners Inc., the Bankruptcy Trustee of the Bankruptcy Estate of Verinder Malhotra (the “Trustee”) not appearing on the expungement Motion and Trustee not opposing the relief sought by the Bankrupt

HEARD: November 24, 2022 by Zoom Videoconference for a full day, Endorsement issued January 31, 2023 (the “Endorsement”) - As no agreement was reached by the parties, costs submissions made in writing

Costs Endorsement

I) Nature of Relief Sought by the Moving Creditors and Trustee on Motions

[1] All defined terms in my Endorsement will have the same meaning in this Costs Endorsement.

[2] The Expungement Motion was brought by the Bankrupt for the following relief:

“2 . An Order that the claim filed by Gurdeep Nagra ("Nagra") in the estate of Verinder Malhotra, a bankrupt dated July 30, 2013 originally in the amount of $5,994,500.00 (the "Nagra Claim") as accepted by A. Farber & Partners Inc., Licensed Insolvency Trustee (the "Trustee") of the estate of Verinder Malhotra, a bankrupt ("Malhotra") in the amount of $2,580,000.00 be expunged or reduced pursuant to section 135(5) of the Bankruptcy and Insolvency Act (Canada), R.S.C. 1985, c. B-3 as amended (the "BIA") to $85,000.00 being the amount of the cost award Nagra obtained against Malhotra in Ontario Superior Court of Justice in Court File No. 10-CV- 413793 (the "Cost Award");

3. Further and in the alternative an Order pursuant to section 37 of the BIA to modify the decision of the Trustee in comprising and accepting the Nagra Proof of Claim in the amount of $2,580,000.00 and to substitute therefor a decision to admit the Nagra Claim only to the extent of the Cost Award;”

[3] I granted the following relief to the Bankrupt in the Endorsement:

“[211] For all of the reasons set out above on the individual issues dealt with in my Reasons, and in exercising my discretion generally and in also exercising my discretion as Registrar under the provisions of the BIA and the BIA Rules, I hereby Order that:

1. the claim filed by Gurdeep Nagra ("Nagra") in the estate of Verinder Malhotra, a bankrupt (the “Bankrupt”) dated July 30, 2013 originally in the amount of $5,994,500.00 (the "Nagra Claim") as accepted by A. Farber & Partners Inc., Licensed Insolvency Trustee (the "Trustee") of the estate of the Bankrupt in the amount of $2,580,000.00 be expunged or reduced pursuant to section 135(5) of the Bankruptcy and Insolvency Act (Canada), R.S.C. 1985, c. B-3, (the “BIA”), and also that the decision of the Trustee to admit the Nagra Claim be modified under section 37 of the BIA, in each case to reduce the amount of the Nagra Claim to $85,000.00, being the amount of the cost award Nagra obtained against the Bankrupt in Ontario Superior Court of Justice in Court File No. 10-CV- 413793.”

[4] The Bankrupt was entirely successful in obtaining ALL of the relief the Bankrupt sought on the Expungement Motion.

[5] Nagra was NOT successful, in any way, in opposing the Expungement Motion.

[6] Having made this Order I made the following Order as to costs submissions:

“[212] If, despite the factual and legal findings made in these Reasons related to the conduct of Nagra on this Motion, the Brampton Collection Action and the Vermont criminal proceedings, the parties cannot agree on the disposition of the costs of this Motion, they may make written submissions, not exceeding three pages each, the Bankrupt within 40 days and Nagra within 60 days.”

[7] No agreement was reached by the Parties as to costs, despite paragraph 212 of my Endorsement, and after the parties and their counsel had read the preceding 211 paragraphs of my Endorsement.

[8] Accordingly I will provide my Order as to Costs.

II) Law and Analysis

[9] All underlined text in these reasons is emphasis added by me for these reasons.

[10] The Court has considered all materials and arguments raised by the parties in their Costs Submissions. Any failure by the Court to refer in these reasons to specific arguments and materials raised does not reflect that the Court has not considered those arguments.

General Principles

[11] Subject to the provisions of an Act or the Rules, the costs incurred during a proceeding or a step in a proceeding are in the discretion of the Court. The Court must determine by whom and to what extent costs shall be paid (s. 131(1), Courts of Justice Act (Ontario)).

[12] Under the relevant general provisions of s.197 the BIA:

197(1) Costs in discretion of court

Subject to this Act and to the General Rules, the costs of and incidental to any proceedings in court under this Act are in the discretion of the court.

197(2) How costs awarded

The court in awarding costs may direct that the costs shall be taxed and paid as between party and party or as between solicitor and client, or the court may fix a sum to be paid in lieu of taxation or of taxed costs, but in the absence of any express direction costs shall follow the event and shall be taxed as between party and party.

[13] Bankruptcy Courts have interpreted these provisions in exercising their discretion as to costs under s.197 of the BIA by citing jurisprudence generally interpreting the provincial Rules of Civil Procedure, such as the Registrar in Eastern Ontario District Soccer Association (Re) 2017 CarswellOnt 13201, 2017 ONSC 4932 stating:

“13 In my view section 197 of the BIA does in fact govern the issue of costs on this motion but it does not do so in a vacuum. There is ample case law in bankruptcy proceedings applying the factors set out in rule 57.01(1) in the determination of costs.”

And the Registrar in that case also applied the very influential Ontario Civil decision of Boucher v. Public Accountants Council (Ontario) (“Boucher”) in assessing the costs award.

[14] In Sally Creek Environs Corp., Re 2010 CarswellOnt 2634, 2010 ONCA 312 (“Sally Creek”) the Ontario Court of Appeal stated:

“148 We agree, in part, with the appellant. We note that s. 197 of the BIA grants a very broad discretion on the court to award costs. Section 197(1) states that, subject to the BIA and the General Rules, “the costs of and incidental to any proceedings in court under this Act are in the discretion of the court.” Subsections (2) and (3) create presumptions for party and party costs to be paid from the estate unless the court orders otherwise. In our view, this wide discretion allows the court to balance the myriad factors and diverse interests at play in bankruptcy proceedings.

149 We agree with the respondents that, in exercising this discretion, registrars and courts have often been guided by the Rules of Civil Procedure, the Courts of Justice Act and the case law flowing from them. Rule 3 of the General Rules states: “In cases not provided for in the Act or these Rules, the courts shall apply, within their respective jurisdictions, their ordinary procedure to the extent that that procedure is not inconsistent with the Act or these Rules.” Provincial rules of procedure thus perform a gap filling function in the interpretation and application of the General Rules. With respect to costs, reference to the Rules of Civil Procedure has been made in determining whether an appellant should post security for costs of an appeal (Towers Marts & Properties Ltd., Re, [1968] 1 O.R. 605 (Ont. S.C.)) and the effect of an offer to settle on a costs award (Baltman v. Coopers & Lybrand Ltd. (1997), 47 C.B.R. (3d) 121 (Ont. Bktcy.)).

150 In the present case, although reference to the Rules of Civil Procedure or Courts of Justice Act may have been helpful, the Supreme Court’s clear direction in Young v. Young governs. As noted above, this case held that solicitor and client costs are to be awarded only in the rarest of occasions. Although not decided in the bankruptcy context, that case laid out broad principles that we would apply to the present case.”

[15] In Kaptor Financial Inc. v. SF Partnership, LLP. 2016 CarswellOnt 17052, 2016 ONSC 6607 (“Kaptor”) Newbould J. applied relevant civil jurisprudence including Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (Ont. C.A.) (“Davies”) to a costs determination in a Bankruptcy context.

[16] As a result, following the Court of Appeal in Sally Creek and Newbould, J. in Kaptor, I will apply the Rules of Civil Procedure and the cases interpreting those rules in this Bankruptcy context, unless there is specific authority in Bankruptcy that contradicts those principles.

[17] In exercising its discretion in determining costs the court may consider, inter alia, the factors set out in Rule 57.01(1) of the Ontario Rules of Civil Procedure, which reads:

Factors in Discretion

57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(f) a party’s denial of or refusal to admit anything that should have been admitted;

(g) whether it is appropriate to award any costs or more than one set of costs where a party,

(h) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer;

(h.1) whether a party unreasonably objected to proceeding by telephone conference or video conference under rule 1.08; and

(i) any other matter relevant to the question of costs. R.R.O. 1990, Reg. 194, r. 57.01 (1); O. Reg. 627/98, s. 6; O. Reg. 42/05, s. 4 (1); O. Reg.

575/07, s. 1; O. Reg. 689/20, s. 37.

Costs Against Successful Party

(2) The fact that a party is successful in a proceeding or a step in a proceeding does not prevent the court from awarding costs against the party in a proper case. R.R.O. 1990, Reg. 194, r. 57.01 (2).

Fixing Costs: Tariffs

(3) When the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs. O. Reg. 284/01, s. 15 (1).

Assessment in Exceptional Cases

(3.1) Despite subrule (3), in an exceptional case the court may refer costs for assessment under Rule 58. O. Reg. 284/01, s. 15 (1).

Authority of Court

(4) Nothing in this rule or rules 57.02 to 57.07 affects the authority of the court under section 131 of the Courts of Justice Act,

(a) to award or refuse costs in respect of a particular issue or part of a proceeding;

(b) to award a percentage of assessed costs or award assessed costs up to or from a particular stage of a proceeding;

(c) to award all or part of the costs on a substantial indemnity basis;

(d) to award costs in an amount that represents full indemnity; or

(e) to award costs to a party acting in person. R.R.O. 1990, Reg.

194, r. 57.01 (4); O. Reg. 284/01, s. 15 (2); O. Reg. 42/05, s. 4 (2); O. Reg.

8/07, s. 3.

Bill of Costs

(5) After a trial, the hearing of a motion that disposes of a proceeding or the hearing of an application, a party who is awarded costs shall serve a bill of costs (Form 57A) on the other parties and shall file it, with proof of service. O. Reg. 284/01, s. 15 (3).

Costs Outline

(6) Unless the parties have agreed on the costs that it would be appropriate to award for a step in a proceeding, every party who intends to seek costs for that step shall give to every other party involved in the same step, and bring to the hearing, a costs outline (Form 57B) not exceeding three pages in length. O. Reg. 42/05, s. 4 (3).

Process for Fixing Costs

(7) The court shall devise and adopt the simplest, least expensive and most expeditious process for fixing costs and, without limiting the generality of the foregoing, costs may be fixed after receiving written submissions, without the attendance of the parties. O. Reg. 42/05, s. 4 (3).

[18] Fairness and reasonableness are the overriding principles to be considered by the Court in determining costs: Boucher and Deonath v. Iqbal, 2017 ONSC 3672 at paras. 20-21 (“Deonath”).

[19] Generally, costs on a partial indemnity scale should follow the event, and this principle should only be departed from for very good reasons such as findings of misconduct by a party, where there has been a miscarriage in procedure or where there is oppressive or vexatious conduct (1318706 Ontario Ltd. v. Niagara (Regional Municipality) (2005), 75 O.R. (3d) 405 (C.A.); 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238 at paras. 10, 12-14).

[20] Under the wording of s.197 of the BIA the Court may award “party and party” costs or “solicitor and client costs” or a lump sum. In Kaptor, Newbould, J. states the following regarding the general rules of awarding costs in a bankruptcy context:

“3 The normal rule is that costs are to be paid on a partial indemnity basis. However, conduct of a party that is reprehensible, scandalous or outrageous are grounds for costs to be awarded on a substantial or complete indemnity basis. See Young v. Young, [1993] 4 S.C.R. 3 (S.C.C.). The conduct giving rise to such an award can be conduct either in circumstances giving rise to the cause of action or in the proceedings themselves. See Orkin, The Law of Costs, 2nd ed. at para. 219.1; Ford Motor Co. of Canada v. Ontario (Municipal Employees Retirement Board) (2006), 17 B.L.R. (4th) 169 (Ont. C.A.) and Mortimer v. Cameron (1994), 17 O.R. (3d) 1 (Ont. C.A.).”

[21] In order for a Court to make its determination as to costs, Rule 1.04(1) must also be considered, to ensure that the Court makes a just, expeditious and least expensive determination of every civil proceeding on its merits and under Rule 1.04(1.1) so that costs orders are made which are proportionate to the importance and complexity of the issues and to the amount in dispute in the proceeding between the parties (Deonath at para. 21).

[22] In Davies the Court of Appeal stated as follows (at paragraph 52):

“Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.”

[23] In 1465778 Ontario Inc. v. 1122077 Ontario Ltd. the Court of Appeal stated the following in the factual context of pro bono counsel seeking costs:

“[26] Traditionally the purpose of an award of costs within our "loser pay" system was to partially or, in some limited circumstances, wholly indemnify the winning party for the legal costs it incurred. However, costs have more recently come to be recognized as an important tool in the hands of the court to influence the way the parties conduct themselves and to prevent abuse of the court's process. Specifically, the three other recognized purposes of costs awards are to encourage settlement, to deter frivolous actions and defences and to discourage unnecessary steps [page765] that unduly prolong the litigation. See Fellowes, McNeil v. Kansa General International Insurance Co. (1997), 37 O.R. (3d) 464, [1997] O.J. No. 5130 (Gen. Div.), at pp. 467 and 472 O.R.”

Interpretation of Rules and Proportionality

[24] Rule 1.04 of the Rules of Civil Procedure reads:

Interpretation

General Principle

1.04 (1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits. R.R.O. 1990, Reg. 194, r. 1.04 (1).

Proportionality

(1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding. O. Reg. 438/08, s. 2.

Matters Not Provided For

(2) Where matters are not provided for in these rules, the practice shall be determined by analogy to them. R.R.O. 1990, Reg. 194, r. 1.04 (2).

Proportionality

[25] Perrell, J. in Ontario v. Rothmans Inc., 2011 ONSC 3685 (S.C.J.) (“Rothmans”) states regarding the interpretation of the proportionality principle in R.1.04 that:

“The general principle in interpreting the rules set out in subrule 1.04(1) requires that the rules be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits. Subrule 1.04(1.1), subtitled "Proportionality", was added which states: In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding”

Positions of the Parties on the Claim Examination Motion

The Bankrupt’s Costs Submissions

[26] The Bankrupt in his Costs Submissions (the “Bankrupt’s Costs Submissions”) and Costs Outline (the “Bankrupts Costs Outline”) claims that costs, on a Full Indemnity Scale incurred for this motion (inclusive of HST) were $140,107.80, were $126,097.00 on a Substantial Indemnity Scale and $84,193.48 on a Partial Indemnity Scale. The relevant costs submissions of the Bankrupt are:

“1. This motion (the “Expungement Motion”) brought by Verinder Malhotra (“Malhotra”) for an order expunging the proof of claim dated July 30, 2013 in the amount of $5,994,500.00 (the “Nagra Claim”) filed by Gurdeep Nagra (“Nagra”) in Malhotra’s bankruptcy estate that had been admitted for dividend purposes by Malhotra’s trustee in bankruptcy A. Farber & Partners Inc., (the “Trustee”) in the amount of $2,580,000.00 without prior consultation with Malhotra (notwithstanding that Malhotra had previously advised the Trustee on multiple occasions that the Nagra Claim was not a proper claim and should not be accepted) was heard on November 24, 2022. By Endorsement dated January 31, 2023 (the “Endorsement”) the Nagra Claim was expunged save for a $85,000.00 cost award Nagra had obtained against Malhotra that Malhotra conceded was a claim provable in his estate.

2. The Endorsement (in paragraph 212 thereof) provides:

“[212] If, despite the factual and legal findings made in these Reasons related to the conduct of Nagra on this Motion, the Brampton Collection Action and the Vermont criminal proceedings, the parties cannot agree on the disposition of the costs of this Motion, they may make written submissions, not exceeding three pages each, the Bankrupt within 40 days and Nagra within 60 days.” (emphasis added)

3. Malhotra was wholly successful in the Expungement Motion (see paragraphs 185 and 189-196) and seeks his costs payable by Nagra on a full indemnity basis in the amount of $140,107.80. Malhotra submits this amount is reasonable given the conduct of Nagra as described in the Endorsement.

4. Rule, 57.01(1) of the Rules of Civil Procedure provide that "in exercising its discretion” under section 131 of the Courts of Justice Act to award costs, the Court may consider, in addition to the result in the proceeding… certain other considerations. Some of those relevant to these proceedings include the following:

1 (a) The amount claimed, and the amount recovered in the proceeding:

The Nagra Claim—was filed for $5,994,500.00—admitted by the Trustee for $2,580,000 and was ultimately determined to be $85,000. This substantial reduction in the Nagra Claim will result in substantial funds being made available by way of dividend to the other estate creditors, and will bring into question the quantum of the dividend Nagra previously received in the estate.

1 (b) The Complexity of the Proceedings

The Nagra Claim was based on a agreement and promissory note that was superseded by the "Governing Agreement" that Nagra refused to acknowledge the existence of (notwithstanding that he relied on the Governing Agreement to obtain a lesser sentence in his Vermont criminal proceedings (the “Nagra Criminal Proceedings”). Malhotra was required to prepare a substantial (three Volume 1500 page Motion Record), including affidavits of independent third parties (Shashi Airi and George Nostrand) as well as the transcript of the sentencing hearing for the Nagra Criminal Proceedings wherein Nostrand testified on behalf of Nagra.

1 (c) The Conduct Of Any Party That Tended To Shorten Or To Lengthen Unnecessarily The Duration Of The Proceedings

The Expungement Motion should not have been required. Malhotra wrote to the Trustee

in April, 2015 and Malhotra’s lawyer wrote to the Trustee in March, 2016 outlining why the Nagra Claim, given the Governing Agreement and Nagra’s reliance on same at his sentencing hearing in the Nagra Criminal Proceedings should not have been admitted. As is noted in the Endorsement, Nagra nonetheless maintained his position throughout these proceedings that the Nagra Claim was a valid and subsisting claim and that the Governing Agreement did not exist and was a recent fabrication.

5. Rule 57.01(4) of the Rules of Civil Procedure permits this Honourable Court (c) “to award all or part of the costs on a substantial indemnity basis”; or (d) “to award costs in an amount that represents full indemnity”.

6. In paragraph 11 of Olszowka v. Olszowka et. al. 2023 CarswellOnt 1824, 2023 ONSC 1150 the Court notes:

“In Davies v. Clarington (Municipality) the issue on appeal was the limits of the court's discretion to award costs on either a substantial indemnity or full indemnity scale. The Court of Appeal confirmed that elevated costs are warranted in only two circumstances:

a) Where substantial indemnity costs are explicitly authorized under the operation of Rule 49.10 of the Rules of Civil Procedure; and,

b) Where the losing party has engaged in behavior worthy of sanction.” (emphasis added)

7. In paragraphs 72 and 73 of Fatahi-Ghandehari v. Wilson 2022 CarswellOnt 17367, 2022 ONSC 6773 the Court notes:

“72 I acknowledge that substantial indemnity costs are a rare event, and are only awarded where there is either an offer to settle or where there is reprehensible or outrageous conduct. Davies v. Clarington, 2009 ONCA 722.

73 In this case, I am satisfied that there has been reprehensible conduct on the part of Mr. Wilson.”

8. Malhotra’s submits that this is an instance Nagra’s conduct has been outrageous warranting the awarding of full indemnity costs or at minimum substantial indemnity costs. Such outrageous conduct includes (but is not limited to) Nagra continually denying the existence of the Governing Agreement while relying on it- including having Attorney George Nostrand testify on his behalf to his advantage in the Nagra Criminal Proceedings. (noted in paragraphs 98-101; 104; 120; and 204).

The Court also notes:

(i) Nagra’s attempt to enter into evidence via cross examinations his Responding Record that has been struck (paragraphs 68 to 70);

(ii) Nagra’s conduct constituted an abuse of process (paragraphs 162 to 165);

(iii) if Nagra is to be believed it would mean this his criminal law lawyer ‘went rogue” (Paragraph 113);

(iv) Nagra filed a false claim in the estate (paragraphs 181 to 185).

The foregoing is by no means exhaustive. The Court repeatedly notes that Nostrand testified on Nagra’s behalf as to the existence of the Governing Agreement during his sentencing hearing with Nagra looking on—the same Governing Agreement that Nagra now claims did not exist for the purposes of the Nagra Claim (paragraphs 103-105;111; 113;116; 120;121; 17; 180 and 186).

9. For the reasons set out in these submissions and in the Endorsement, Malhotra submits that this would be a proper instance for this Honourable Court to award costs, payable within 30 days, on a full indemnity basis in accordance with the attached Cost Outline.”

[27] The fees claimed in the Bankrupt’s Costs Outline are:

Fees (as detailed below):

	Partial Indemnity	Substantial Indemnity	Full Indemnity Actual Rate
Philip J. Gertler (1983)	$31,461.00	$46,719.53	$51,910.65
Fred Tayar** (1984)	$20,434.00	$30,560.85	$33,956.00
Colby Linthwaite (2004)	$19,593.00	29,389.50	$32,655.00
Josh Tayar	$3,019.50	$4,920.45	$5,467.50
Subtotal	$74,507.50	$111,590.30	$123,989.20
HST on fees of 13%	$9,685.98	$14,506.74	$16,118.59
Total	$84,193.48	$126,097.00	$140,107.80

[28] I note that Mr. Gertler is a sole practitioner, and due to the volume of the materials produced by the Bankrupt on the Motion, required co-counsel from the Messrs. Tayar and Mr. Linthwaite to assist him in representing the Bankrupt.

[29] Mr. Tayar is also counsel for Kiran Malhotra, the wife of the Bankrupt in certain proceedings brought against her by Nagra pursuant to an Order under s.38 of the BIA, and who was also cross-examined on this Motion. I will deal with those issues specifically in my analysis.

[30] As set out in the Bankrupt’s Costs Outline, Gertler was involved in all aspects of the Motion, and the preparation of Motion Materials, other than the legal research, the majority of which was carried out appropriately by Mr. Linthwaite and the Joshua Tayar, at their hourly rates.

[31] The vast majority of the work in conducting the research and preparing the Factum and the Reply Factum of the Bankrupt was also conducted by Mr. Linthwaite and Joshua Tayar, at their lower hourly rates, although Gertler and Fred Tayar also contributed. Gertler and Joshua Tayar prepared the Costs submissions.

[32] For this Motion, the Bankrupt filed 925 pages of Materials, including:

1. the 3 Volume, 541 page Motion Record containing the Bankrupt’s February 13, 2019 Affidavit, and the Kiran February 13, 2019 Affidavit, upon which the Examinations took place where Gertler represented the Bankrupt and Fred Tayar represented Kiran,
2. a 32 page Factum,
3. a 18 page Reply Factum,
4. a Supplementary Motion Record of 33 pages containing the Bankrupt’s May 26, 2022 Affidavit, and
5. a 232 Page Compendium.

[33] With respect to the hourly rates charged, they are as follows:

Lawyer	Year of Call	Partial Indemnity Rate	Substantial Indemnity Rate	Actual Rate
Philip Gertler	1983 - 40 years	$300.00	$445.50	$495.00
Fred Tayar	1984 – 39 years	$340.00	$508.50	$565.00
Colby Linthwaite	2004 – 19 years	$315.00	$472.50	$525.00
Joshua Tayar	2020 – 3 years	$165.00	$247.50	$275.00

[34] Given that Gertler and Fred Tayar have almost 80 years of collective litigation experience between them, I have no issue with the rates they have charged, as specialty Bankruptcy litigation counsel. Given the difference in overheads between Mr. Tayar’s firm and Mr. Gertler’s, the rate differential between of them of $70 is also of no concern to me, Gertler and Fred Tayar being similarly seasoned. Similarly, the rates charged by Linthwaite with 20 years’ experience and Joshua Tayar with 3 years’ experience are also very reasonable for specialty Bankruptcy litigation counsel, particularly in the GTA rate environment.

[35] As set out below, Laan’s rate charged to Nagra, with similar experience to Gertler and Fred Tayar, was almost $100 per hour greater than Fred Tayar and almost $200 per hour greater than Gertler.

[36] I do not find the hourly rates charged by the collective counsel to the Bankrupt on this Motion to be inappropriate given their years of experience. I find that the hourly rates claimed by counsel for the Bankrupt would be in the contemplation of Nagra on this Motion, for the purposes of determining costs under the principle of indemnity in R.57.01(0.a) and (0.b). I will deal with quantum separately.

The Nagra Costs Submissions

[37] The position of Nagra in his Costs Submissions (the “Nagra Costs Submissions”) was:

“Background

1. The Creditor alleged a debt based upon a Written Agreement between the parties.

2. The expungement motion turned, in part, on whether the Written Agreements between the parties were superseded on December 11, 2007 by an oral agreement. The oral agreement was referred to by the Bankrupt as the “Governing Agreement”.

3. The Creditor maintained that the Governing Agreement did not exist and was a recent fabrication.

4. The court exercised its discretion to expunge the debt in part, reducing it to $85,000.00.

5. The Honourable Associate Justice Ilchenko made findings of fact roundly discrediting the credibility of the Creditor.

6. At page 36 of his Endorsement, the Honourable Associate Justice Ilchenko quoted directly from the cross-examination of the Bankrupt.

7. The quoted portion of the cross-examination revealed the following:

a) the Bankrupt’s Statement of Defence in the collection proceeding referencing the Written Agreement of November 24, 2007, makes no mention of an alleged oral agreement on December 11, 2007;

b) the Bankrupt’s Affidavit sworn February 2, 2011 in the collection proceeding referencing the Written Agreement of November 24, 2007, and makes no mention of an alleged oral agreement on December 11, 2007;

c) the Bankrupt’s Affidavit sworn April 11, 2011 in the collection proceeding, which adopts his February 2, 2011 Affidavit, referencing the Written Agreement of November 24, 2007, makes no mention of an alleged oral agreement on December 11, 2007;

d) the Bankrupt’s Affidavit sworn July 18, 2011 in the collection proceeding, referencing a Written Agreement entered into on November 19, 2007 and amended on November 24, 2007, makes no mention of an alleged oral agreement of December 11, 2007, and misstating the November 24, 2007 Written Agreement;

e) the Bankrupt’s Affidavit sworn July 18, 2011 in the collection proceeding also deals with events that took place between December 6, 2007 and December 15, 2007. It makes no mention of an alleged oral agreement of December 11, 2007, but alleges an oral agreement of December 15, 2007;

f) the Bankrupt’s Affidavit sworn November 30, 2011 in the collection proceeding makes no mention of a meeting that took place on December 11, 2007 or that any oral agreement was reached.

8. In view of the prior inconsistent statements of the Bankrupt, it was reasonable for the Creditor to insist upon a hearing to test whether his assertion that there was a Governing Agreement was credible.

9. The motion was a contest between two individuals, each of whom had credibility issues.

10. The court has an absolute and unfettered discretion to award or withhold costs.

11. The fact that a party is successful in a proceeding for a step in a proceeding does not prevent the court from awarding costs against the party in a proper case. Rule 57.01(2), Rules of Civil Procedure

12. Costs can be awarded to an unsuccessful party where the opposing party’s conduct had been reprehensible. Malcolm King v. Gulf Canada Limited [1992] 60 O.A.C. 139 (C.A.)

13. There is no finding or suggestion that the Creditor’s conduct is reprehensible, but he did suffer credibility issues as set out above.

14. Of course, the Creditor does not seek costs, but rather requests the court to consider whether an appropriate balancing calls for an order for no costs, or alternatively, for an order for costs payable by the Creditor to the Bankrupt on a partial indemnity basis.”

[38] In the Costs Outline attached to the Nagra Costs Submissions counsel for Nagra states:

“Ted Laan, of Keyser Mason Ball LLP, lawyers for the Creditor, Gurdeep Nagra, provide the following outline of the costs claims by the Creditor, Gurdeep Nagra, in respect of the motion brought by the Bankrupt to expunge the proof of claim filed by the Creditor, Gurdeep Nagra, in the estate of the Bankrupt and all matters ancillary thereto.

Fees (as detailed below)

	Partial Indemnity	Substantial Indemnity
Fees (as detailed below)	$23,820.00	$35,333.00
HST on Fees @ 13%	$3,096.60	$4,593.29
Total	$26,916.60	$39,926.29

The following submissions are made in support of the costs sought with reference to the factors set out in subrule 57.01(1):

The complexity of the proceeding: Complex, as the factual matrix dates back to 2007.

The importance of the issues: Significant amounts of money at stake.

The conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding: No. Motion proceeded on the basis of the Bankrupt’s Affidavit and transcripts of cross-examination thereof.

Whether any step in the proceeding was improper, vexatious or unnecessary or taken through negligence, mistake or excessive caution: Endorsement of Associate Justice Jean addressed by payment of costs order made by Her Honour. Thereafter, the hearing of the motion proceeded properly.

The experience of the party’s lawyer: 43 years

The hours spent, the rates sought for costs and the rate actually charge rate actually charged ($675.00/hr.) by the party’s lawyer:”

[39] Laan is counsel to Keyser Mason Ball LLP, a firm of approximately 30 lawyers in the GTA, and was called to the bar in 1979, his actual rate of $675/hour charged is $100 an hour greater than to those of Fred Tayar, and almost $200 per hour greater than Gertler, and with similar experience.

[40] Given that Nagra, despite being prohibited from filing motion materials other than a Factum on this Expungement Motion by the collective effect of the AJ Jean Reasons, the Conway, J. Reasons and my March 17, 2022 Endorsement, still managed to file 535 pages of Motion Materials, despite containing no fresh affidavits or exhibits, consisting of:

1. a 46 page Factum,
2. a 120 page Compendium,
3. an 93 page Exhibit Brief from the Exhibits identified in the three day Bankrupt’s 2021 Examination, and the Kiran Examination, which examinations Laan conducted,
4. which transcripts of the Examinations collectively added another 202 pages of materials filed by Nagra on this Motion, that Laan devoted significant time in preparing, cross-examining the Bankrupt and Malhotra, and preparing the Motion Materials he did attempt to file.

[41] From the Nagra Costs Outline, Laan alone did all of the work on the Expungement Motion and reports spending 79.4 hours. At the actual rate, the full indemnity cost of Laan’s time, which is not provided in the Nagra Costs Outline, would be $53,595, exclusive of HST.

[42] Nagra makes no submissions on the rates charged or experience levels of the counsel or the quantum of the costs claimed by Counsel for the Bankrupt, other than arguing that the court should consider an Order of No Costs or that the costs be ordered on a partial indemnity basis.

[43] From a review of the Nagra Costs Submissions, it is apparent to me that, organically and vexatiously, Nagra seems incapable of comprehending the full impact his behavior has caused to the Bankrupt, the Trustee in the administration of the Bankruptcy Estate, the other 10 secured creditors and 12 unsecured creditors who have filed claims in this estate, most significantly CRA with a proven $1,261,924.71 Tax claim and another $23,267.58 deemed trust claim, and most particularly the possible peril he has placed himself in as a result of his behavior.

[44] This Expungement Motion was not brought in the context of ordinary civil proceedings between parties with a private legal dispute. It was brought in the Context of a Bankruptcy proceeding involving the collective rights and obligations of Creditors, including Nagra, supervised by this Court and it’s Court Officers, the Proposal Trustee and the Trustee upon whom are imposed duties, rights and obligations under the BIA, the BIAR and the Directives of the Superintendent of Bankruptcy.

[45] As I noted in my Endorsement:

“[204] The evidence before me of Nagra’s conduct in:

1. allowing Nostrand to describe the Governing Agreement to successfully reduce his sentence before Judge Sessions at the Sentencing Hearing; then

2. Commencing the Brampton Collection Action to try to collect on the Promissory Note on the basis there was no Governing Agreement; then

3. Filing the Nagra Claim not making mention of the existence of the Governing Agreement asserted in the Brampton Collection Action, knowing that the existence of the Nostrand Affidavit, then

4. Using the Nagra Claim to vote down the Proposal and substitute the Trustee for the Proposal Trustee; then

5. As an inspector of the Bankruptcy Estate allowing the Trustee to commence the Vermont Negligence Action against Nostrand on the basis that the Bankruptcy Estate was damaged by the failure of Nostrand to monument the Governing Agreement (which Nagra denied the existence of in the Brampton Collection Action); then after the Trustee collected the settlement funds from the Vermont Negligence Action

6. Again asserting that the Governing Agreement was “new” and didn’t exist on this Motion to defend Nagra’s ability to collect the proceeds of the settlement of the Vermont Negligence Action (created by the Trustee by asserting the Governing Agreement existed) by opposing this expungement Motion of the Nagra Claim on the basis that the Governing Agreement didn’t exist.

prove a weather-vane-like inconsistency of legal and factual positions taken by Nagra in his Criminal case, the Brampton Collection Action, the Trustee’s Vermont Negligence Action and this Motion which would appear to fit squarely within the types of conduct described in Bellatrix as acting:

“…capriciously and arbitrarily; or where they lie or otherwise knowingly mislead each other about matters relating to the insolvency proceedings”

and

“…lies, half-truths, omissions and even silence.” as per CWB ”

(in the context of a determination of the duty of good faith under s.4.2 of the BIA, the consideration of which is also germane for the purposes of determining costs)

[46] As I set out in my Endorsement, Nagra, because of this behavior in relation to the filing and settlement of the Nagra Claim, may have imperiled himself under s.116, s.201, s.205, and s.206 of the BIA, and possibly s.131 and s.136 of the Criminal Code RSC 1985, c C-46 as well as possibly under the terms of his Plea Agreement in the United States District Court for the District of Vermont.

[47] There may be other future impacts of the expungement of the Nagra Claim, given that Nagra, by virtue of the Nagra Claim being an accepted claim by both the Trustee and the Proposal Trustee in the Proposal of the Bankrupt,

1. voted against the approval of the Bankrupt’s Division 1 Proposal employing the full original $5,994,500.00 amount of the Nagra Claim,

2. thus voting down the Division 1 Proposal creating the Bankruptcy, then

3. substituted the Trustee for the Proposal Trustee in the first meeting of creditors using that same $5,994,500.00 original claim amount, and then

4. voted himself to be an Inspector of the Bankruptcy Estate; and then

5. gave instructions to the Trustee throughout the Bankruptcy as an inspector with fiduciary obligations to the other Creditors and the Bankruptcy Estate, being appointed by use of the Nagra Claim, and then

6. had claims assigned to him under s.38 in the Section 38 Action by virtue of being a Creditor with the admitted Nagra Claim being the basis for legal eligibility to do so; and also

7. received the Nagra Dividend Payment from the Trustee in the amount of $70,762.01 while CRA with a proven claim of $1,361,924.71 received an interim dividend payment of $16,076.82.

[48] Consequently there are far reaching implications of Nagra’s behavior which resulted from the expungement of the Nagra Claim by my Order.

[49] So no, the Expungement Motion was not, in any way:

“9. …a contest between two individuals, each of whom had credibility issues.”

as Nagra astonishingly and vexatiously attempts to argue in the Nagra Costs Submissions, after the findings and rulings I made on the facts and the law in the 212 paragraphs of my Endorsement.

[50] If there was a credibility contest here, it was not between Nagra and the Bankrupt (and/or Kiran, Nostrand, Airi, Shelkrot, Vic Singh, Elizabeth Sackett, Raymond J. Obuchouski as Court Approved Receiver, Tom Carlson, Danielle Fogarty, and finally U.S. District Judge Sessions).

[51] The credibility contest was instead between Nagra and Nagra in the contradictory sworn testimony given by him, and witnesses called on his behalf, in all of the whirlwind of proceedings that he had initiated, while alternately relying on, or disputing, the existence of the Governing Agreement, as it situationally suited him.

[52] The Bankrupt didn’t file the Nagra Claim, Nagra did, and Nagra bears the sole responsibility for the whirlwind he reaped.

Disposition of Costs of Expungement Motion

Analysis of Tests under s.197 of the BIA and R.57.01 and R.1.04

[53] In my view, the Bankrupt was completely successful in obtaining the relief sought on the Expungement Motion, and the is entitled to costs.

[54] I decline to exercise my discretion under Rule 57.01(2) to grant Nagra costs, despite Nagra being utterly and completely unsuccessful in opposing the Expungement Motion, particularly based on the fact that he continued to oppose the Expungement Motion after AJ Jean and Conway, J. prevented him from filing Affidavit Materials, having found his prior efforts to be an abuse of process.

[55] I could not tell from the Nagra Costs submissions if this was an actual argument being made and do not understand the citing of Malcolm King v. Gulf Canada Limited [1992] 60 O.A.C. 139 (C.A.) by Nagra for the proposition that Nagra should be awarded costs despite utterly failing on the Expungement Motion. In that case the Court of Appeal, in an employment case, states:

“15 The trial judge dismissed the action with costs. Given the actions of the respondent in dismissing the appellant capriciously, contrary to its own written operating principles; given the false reason for his firing contained in its letter of dismissal; and given its attempt at trial to rely on an allegation of technical inadequacy on Mr. King's part, when the evidence was to the contrary — all of these in the face of its written policy of "at all times" observing the "highest standards of integrity", I am of the view that Gulf acted in a reprehensible manner in this case. Although I cannot find a legally binding contract created by the July 1978 letter, there is no doubt that a clear moral commitment was made by Gulf in that letter not to act in the manner it did in this case. In the circumstances, it was reasonable for Mr. King to ask the court to adjudicate on the issues involved at trial and on appeal. I am of the view that he should not suffer any costs as a result of so doing. I would award him solicitor and client costs here and below.”

[56] Given that I found that the Bankrupt had proven the existence of the Governing Agreement, the existence of which Nagra accepted as part of his sentencing hearing in the U.S. District Court, I do not see how, in any way, this case is relevant to this fact situation, as I made no finding of reprehensible conduct on the part of the Bankrupt in the evidence before me on the Expungement Motion.

[57] Therefore I decline to exercise my Registrar’s Discretion to award costs to Nagra for failing to succeed in defending the Expungement Motion.

Importance of issues

[58] This motion was important to the Trustee’s administration of the Estate, for the reasons set out above, the Expungement of the Nagra Claim significantly increases possible recoveries to the other creditors in the Estate, most particularly CRA.

[59] In addition the Expungement of the Nagra Claim may have implications in other issues, including the s.38 proceedings initiated by Nagra against Kiran, as well as integrity of the Bankruptcy System and creditor conduct issues for Nagra that I have enumerated above, and at very great length in my Endorsement.

[60] For the purposes of the various aspects of the tests under s.197 and R.57.01, I find that the issues determined on this Claims Examination Motion were important.

Complexity of Motion

[61] The Expungement Motion was complex in terms of the volume of materials or evidence presented. The Materials were lengthy, comprising more than 1600 pages.

[62] The Expungement Motion raised many complex factual and legal issues, including the interplay between evidence presented in U.S. Criminal Proceedings, Ontario Civil Proceedings, and Ontario Bankruptcy Proceedings, and significant conduct issues arising from the behavior of Nagra.

[63] The Expungement Motion also had the issue of Nagra introducing documentation through exhibits to the various cross-examinations, despite being prohibited from filing Motion Materials through the Orders of AJ Jean and Conway, J.

[64] The Expungement Motion was argued before me for a full day.

[65] This was a complex motion for the purposes of the R.57.01 tests.

Whether any step in the proceeding was improper, vexatious or unnecessary and did the conduct of any party tend to shorten or to lengthen unnecessarily the duration of the proceeding

[66] There is no evidence before me on the Expungement Motion that in this case meets the strict test of vexatiousness set out by Henry, J. in Re Lang Michener and Fabian.

[67] However, given that the combined effect of the decisions of AJ Jean and Conway J. was to prevent Nagra filing his own affidavit Motion Materials, Nagra should have reconsidered persisting in defending this motion, particularly with:

1. his actual knowledge of exactly what was said on his behalf in his sentencing hearing before the U.S. District Court, and
2. how that evidence clashed with the claims he had been making in the Brampton Collection Action,
3. which clashed with the claims made against Nostrand by the Trustee in the Vermont Negligence Action where Nagra directed the Trustee as inspector in that Action, and
4. then again clashed with the claims he was now making in filing and settling the Nagra Claim and defending the Expungement Motion.

[68] Given the possible peril that Nagra has created for himself under the provisions of s.116, s.201, s.202, s.205, and s.206 of the BIA, and possibly s.131 and s.136 of the Criminal Code RSC 1985, c C-46, as well as possibly under the terms of his Plea Agreement in the United States District Court for the District of Vermont, the defence of the Expungement Motion by Nagra was unnecessary and the methods by which Nagra attempted to do so, in the context of the prior orders of AJ Jean and Conway, J. as set out above in my Endorsement and above, were improper.

[69] Nagra through this behavior also lengthened unnecessarily the duration of the proceeding, including the actual hearing which I stopped to give Laan a chance to obtain instructions from his client at my direction:

“[120] I was so concerned by the positions taken, and tactics adopted, by Nagra on this hearing that so fundamentally contradicted the positions taken in his Plea Agreement and the testimony of Nostrand in his favour, AS HIS WITNESS, AT HIS SENTENCING HEARING, that obviously reduced his sentence by Judge Sessions, and the jeopardy that could put Nagra in by possibly vitiating his Plea Agreement, having allocuted as part of the Plea Agreement and in his Sentencing Hearing to a particular set of facts that he seemed now to be resiling from 13 years later to try to collect on the Nagra Claim, that I stopped the hearing of the Motion and directed Laan to seek instructions from his client as to whether he wished to continue opposing the Expungement Motion.

[121] After a break Laan confirmed Nagra’s instructions that he wished to proceed to continue to argue that the Governing Agreement did not exist DESPITE NOSTRAND’S CLEAR

EVIDENCE, GIVEN FOR NAGRA’s BENEFIT, UNDER OATH, IN HIS PRESENCE, IN 2009, THAT:

. “…And so, I think he respects Sonny for being a man of his word, and Sonny's not going to get any money until my guy [the Bankrupt] gets all his money back, if he gets it all back, your Honor.”

And

“…And so it may be several years, and it may ultimately be that -- that Sonny Nagra never gets nothing. The deal we made with him is, "We get our money back; then we pay on your note.”

[122] So be it.

[123] Laan also made the submission, after this break, that Nagra, as a criminal defendant, was at a disadvantage and therefore was helpless to stop his apparently highly experienced, very reputable Defence Attorney from making submissions Nagra (now) disagreed with, and calling Nostrand as a witness, whose sworn evidence Nagra (now) disagreed with regarding the existence of the Governing Agreement (now denied), while (successfully) attempting to reduce his custodial sentence and fine.”

[70] I find that the conduct of the Nagra in defending the Expungement Motion, and the methods used to do so, were unnecessary, improper, and unnecessarily lengthened the hearing of this proceeding for the purposes of the R.57 tests as well for the tests under s.4.2 of the BIA regarding the duty of good faith, as set out in the tests in Bellatrix and CWB as set out in detail in the Endorsement.

Scale of Costs

[71] The Bankrupt in the Bankrupt’s Costs Submissions advocates for costs to be granted on a full indemnity scale.

[72] However, s.197(2) of the BIA reads:

197(2) How costs awarded

The court in awarding costs may direct that the costs shall be taxed and paid as between party and party or as between solicitor and client, or the court may fix a sum to be paid in lieu of taxation or of taxed costs, but in the absence of any express direction costs shall follow the event and shall be taxed as between party and party.

[73] In Re Down 2002 CarswellBC 2765, 2002 BCCA 632, [2002] B.C.J. No. 2575, 118 A.C.W.S. (3d) 10, 175 B.C.A.C. 70, 222 D.L.R. (4th) 521, 289 W.A.C. 70, 37 C.B.R. (4th) 224, 7 B.C.L.R. (4th) 309, the B.C. Court of Appeal states:

“22 Earlier in these reasons, I remarked that the applications were misconceived. The reason is simple. The relevant provisions of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 — and these proceedings were brought under that Act say nothing about "increased costs" or "solicitor and own client costs". As to the former, it is a concept, now happily abolished, of the British Columbia Supreme Court Rules, which, when applicable, engaged the judges in a consideration of "special costs"”

[74] Accordingly, I may be precluded from awarding “solicitor and own client” or “complete indemnity” costs, by the specific wording of s.197(2) of the BIA.

[75] Per Davies:

“[14] Rule 57.01(4) allows for elevated levels of costs:

57.01(4) Nothing in this rule or rules 57.02 to 57.07 affects the authority of the court under section 131 of the Courts of Justice Act, . . . . .

(c) to award all or part of the costs on a substantial indemnity basis;

(d) to award costs in an amount that represents full indemnity

[28] The first issue is whether the trial judge erred in relying on the February 2005 offer as justification for an elevated costs award. This court, following the principle established by the Supreme Court, has repeatedly said that elevated costs are warranted in only two circumstances. The first involves the operation of an offer to settle under rule 49.10, where substantial indemnity costs are explicitly authorized. The second is where the losing party has engaged in behaviour worthy of sanction.

[29] In Young v. Young, [1993] 4 S.C.R. 3, [1993] S.C.J. No. 112, at p. 134 S.C.R., McLachlin J. described the circumstances when elevated costs are warranted as "only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties".

[30] The same principle was expanded upon in Mortimer v. Cameron (1994), 17 O.R. (3d) 1, [1994] O.J. No. 277 (C.A.), at p. 23 O.R., where Robins J.A., speaking for the court, set out the restricted circumstances in which a higher costs scale is appropriate with reference to Orkin, at para. 219. [page75]

An award of costs on the solicitor-and-client scale, it has been said, is ordered only in rare and exceptional cases to mark the court's disapproval of the conduct of a party in the litigation. The principle guiding the decision to award solicitor-and-client costs has been enunciated thus:

[S]olicitor-and-client costs should not be awarded unless there is some form of reprehensible conduct, either in the circumstances giving rise to the cause of action, or in the proceedings, which makes such costs desirable as a form of chastisement.

[40] In summary, while fixing costs is a discretionary exercise, attracting a high level of deference, it must be on a principled basis. The judicial discretion under rules 49.13 and 57.01 is not [page77] so broad as to permit a fundamental change to the law that governs the award of an elevated level of costs. Apart from the operation of rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made. As Austin J.A. established in Scapillati, Strasser should be interpreted to fit within this framework -- as a case where the trial judge implicitly found such egregious behaviour, deserving of sanction.”

[76] The Bankrupt cites Fatahi-Ghandehari v. Wilson 2022 CarswellOnt 17367, 2022 ONSC 6773 and Olszowka v. Olszowka et. al. 2023 CarswellOnt 1824, 2023 ONSC 1150, each following Davies for the circumstances in which substantial indemnity costs may be awarded. Nagra cites no jurisprudence on the issue in the Nagra Costs Submissions.

[77] From the evidence before me, I do find that the conduct of Nagra, for the reasons I set out in great detail in my Endorsement, and above, did rise to the standard of “…reprehensible, scandalous or outrageous conduct” per Young v Young, and that I can make”…a clear finding of reprehensible conduct on the part of the party against which the cost award is being made” on the evidence before me as per Davies, and that this is one of those rare and exceptional cases…” where substantial indemnity costs must be ordered against Nagra “…to mark the court's disapproval of the conduct of a party in the litigation…” (per Davies), for the reasons set out in great length and detail in my Endorsement.

[78] Accordingly, given that the conduct of Nagra meets these tests, but that I may be precluded by the specific wording of s.197(2) from awarding full indemnity costs, as set out in the reasoning of the B.C. Court of Appeal in Re Down, and in applying s.4.2 of the BIA, I will exercise my Registrar’s Discretion to determine the costs of the Bankrupt on the Expungement Motion on a Substantial Indemnity Scale.

Quantum of costs

[79] On a substantial indemnity basis the Bankrupt is claiming costs (inclusive of HST) of $126,097 with no disbursements claimed. On a substantial indemnity basis, counsel for Nagra reports fees of $39,926 inclusive of HST.

[80] Nagra does not take issue with the quantum of fees claimed by the Bankrupt or the quantum of hours spent by the counsel for the Bankrupt, or the number of counsel for the Bankrupt. Despite this, I must still consider the issue for the purposes of determining the proper quantum of costs, and to determine the proportionality of the costs for the purposes of s.197 of the BIA and R.57 and R.1.04(1.1).

[81] Given the complexity of the issues, the work in bringing and prosecuting the motion would be substantial, and as I stated above, I do not have an issue with Gertler as a sole practitioner engaging co-counsel. Generally speaking, Gertler’s submissions dealt with the intricate factual issues and Fred Tayar’s submissions dealt with certain of the legal issues. I do not find there to be significant duplication in that regard as Gertler would have had to do similar work at a similar rate if Fred Tayar was not there and a senior counsel bringing a junior counsel to deal with certain issues at a hearing is not impermissible.

[82] There may also have been some duplication or quintuplicating of effort between Gertler, Fred Tayar and Linthwaite and Joshua Tayar in the preparation of the Factum and Reply Factum, but again, if Gertler had done this alone, his substantial indemnity rate and Linthwaite’s rate were similar.

[83] However, given that Gertler spent 15.3 hours or $6,825 preparing and responding to assorted facta, and the team of Fred Tayar, Linthwaite and Joshua Tayar spent another combined 79.4 hours or $34,770.40 doing so at a substantial indemnity rate, there should be some reduction of this amount given that almost 95 hours was spent by 4 lawyers researching and preparing the Facta. This was a complex dispute, and the product and results were excellent, but proportionality requires a reduction of 25% or $8,692.50 to reflect this.

[84] The one issue I do find is whether Fred Tayar, in attending the Cross Examinations, was clearly representing Kiran, as Gertler was representing the Bankrupt, and Kiran is not the moving party on the Expungement Motion, although is clearly affected by the outcome. The dockets provided do not break out the approximately 30 hours spent by Fred Tayar in attending the examinations of the Bankrupt, Nagra and Kiran. Accordingly I will reduce the amount awarded for this component by 29.6 hours or $15,051.60 for Fred Tayar’s time in attending the examinations for Kiran.

[85] Otherwise, I find that the amount of costs claimed by the Bankrupt are in amount that Nagra could reasonably have expected to pay in relation to this Motion, given the importance of the issues both to the parties on the Expungement Motion and the administration of the Bankruptcy Estate, the factual and legal complexity of the issues being raised, and his own conduct unnecessarily and improperly lengthened the hearing of this proceeding for the purposes of the R.57 and R.1.04(1.1) tests. Therefore for the purposes of calculating the quantum of the claim I will use the total amount of $111,590.30 in fees claimed, minus the amounts of $8,692.50 and $15,051.60 for a total of $87,846.2 which with HST would total on $99,266.21 on the Substantial Indemnity Scale.

[86] Following Davies, rather than engaging in a purely mathematical exercise, I find that the costs awards to the Bankrupt of $99,266.21 (including HST) on the Substantial Indemnity Scale is a fair and reasonable amount that should be paid by Nagra as the unsuccessful party on the Expungement Motion rather than any exact measure of the actual costs of the successful litigant.

[87] I find that the costs claimed by the Bankrupt are fair and reasonable in the circumstances, and in terms of the provisions Rule 1.04(1.1) I find that the costs requested are proportionate to the importance and complexity of the issues and to the amount in dispute in the proceeding between the parties, as per the tests in Deonath and Rothmans, above.

III) Summary of Costs Order Granted

[88] Considering the factors in s.197 of the BIA, R.57.01, R.1.04(1.1), s.4.2 of the BIA, and the application of the binding jurisprudence I have cited, I have concluded that given:

1. the significance of the relief sought on this motion,
2. the time spent,
3. the amount at stake,
4. the complexity of the issues, and
5. the conduct of the Bankrupt and Nagra, and in their respective costs submissions,

and employing my Registrar’s discretion, that the substantial indemnity costs as claimed by the Bankrupt from Nagra on the Expungement Motion as calculated by me above, are fair, reasonable, proportionate and an amount that the respective parties should reasonably have expected to pay in the event they were unsuccessful on this motion, given that the costs listed in their respective Costs Outlines and Costs Submissions.

[89] I am satisfied that the Bankrupt is entitled to the costs claimed, as analyzed above.

[90] In my view the all-inclusive sum of $99,266.21 (including HST), calculated on a substantial indemnity scale, is a fair and reasonable amount that Nagra could expect to pay for costs in all of the circumstances of the Expungement Motion, and within the reasonable expectations of the parties, payable to the Bankrupt by Nagra, within 30 days of the release of this endorsement.

Associate Justice Ilchenko Registrar in Bankruptcy Date: May 29, 2023