minicounsel

Court File No. 31-2368680

DATE: 2023/09/11

BEFORE: Associate Justice Ilchenko, Registrar in Bankruptcy

COUNSEL: J. Russo, LIT (“Russo”) for Moving Party Trustee Russo Corp. (the “Trustee”)

Elena Filatova, (“Filatova”) on her own behalf

Discharged Bankrupt Elena Bannikova not appearing (“Bannikova” or the “Bankrupt”)

Superintendent of Bankruptcy not opposing and not appearing

HEARD: Motion Opposing Trustee Taxation and Discharge adjourned on March 15, 2022 to June 28, 2022 – further written materials provided by Trustee – Negotiations of Costs award requested to be attempted by the Court between Filatova and Trustee not successful. As no agreement was reached by the parties, after considerable time was given to the Trustee and Filatova to agree as to costs, determination of Taxation and Discharge of Trustee and costs was necessitated.

I) Nature of Relief Sought by the Trustee

1When this opposed taxation, in a Summary Administration Bankruptcy Estate, initially came before me on March 15, 2022, I made the following endorsement (the “First Endorsement”):

“Adjourned Sine Die

The Trustee is seeking her discharge and has filed extensive materials. Ms. Filatova, belatedly also filed extensive materials and is opposing the Trustee's discharge, as a purported "interested person" within the meaning of s.41(5) of the BIA.

I note that the Jurisprudence provides that an "Interested Person" means for the purposes of that section a person entitled to notice of the Taxation under the provisions of s.152(5), being creditors with proven claims. Ms. Filatova had her proof of claim disallowed by the Trustee and did not appeal from the disallowance, after consulting with Mr. Harris.

Ms. Russo is seeking costs from Ms. Filatova. I have adjourned this hearing to permit Ms. Russo to prepare a summary of the basis on which she is entitled to costs from Ms. Filatova, and the quantification of those costs, as evidenced by dockets.

Ms. Russo is to prepare and serve her supplementary Motion Record with that information on Ms. Filatova, well in advance of any scheduled date to rehear this discharge. When the hearing date is available Ms. Russo shall also serve those supplementary taxation materials in accordance with s.152(5).

2When this opposed taxation recommenced on June 28, 2022, after being confronted with hundreds of more pages of materials filed by Filatova, I made the following additional endorsement (the “Second Endorsement”):

“I had hoped that my last disposition of this matter would deal with the outstanding issues, but in response to the Trustee filing its dockets as requested by me, Ms. Filatova filed an additional approximately 400 pages of material.

As I pointed out in my endorsement, Ms. Filatova has NO standing to oppose this taxation, having complained to the OSB that the Trustee had not disallowed her claim, and when the OSB instructed the Trustee to disallow her claim, did not appeal.

Thus in addition to causing further expense to the Trustee in responding to the OSB complaint about failing to disallow Ms. Filatova's claim and dealing with the opposition, she voluntarily utterly sabotaged her own legal position, for reasons unknown.

In these materials Ms. Filatova attempts to reduce the Trustee's fees claimed in this estate, claiming instead that the time was really spent in the Igor Bannikov estate 31-2375149. However what is really revealed is that Ms. Filatova has created utter carnage in the administration of BOTH bankruptcy estates, having made it appears a total of EIGHT (8) complaints to the OSB, which to my review have all been unsubstantiated and rejected by the OSB, has attempted to sue the Trustee at least once, but failed to obtain leave from Justice Dietrich under s.215 of the BIA, but Ms. Filatova did succeed in having $5000 in costs assessed against her, which she paid to the Trustee's counsel.

She did all this somehow as an inspector of the Igor Bannikov estate, in breach of her fiduciary duties as an inspector required to act on behalf of all of the creditors.

Attempting to sue the Trustee and having a costs award assessed against her is evidence of the utter conflict of interest she put herself in as an inspector, and she should have been removed as an inspector of the Igor Bannikov estate under s.116.

In this Estate Ms. Filatova has also brought a Motion to try to compel the Trustee to commence criminal, and other proceedings, including Fintrac, and complained to the OSB about the Trustee's failure to do so.

The Trustee advises that she has been discharged as Trustee in the Igor Bannikov estate, despite the opposition of Ms. Filatova. Igor Bannikov is an undischarged Bankrupt, Elena Bannikova is a discharged Bankrupt. As that estate is completed, Ms. Filatova is not an inspector of that Igor Bannikov estate, as she claims in her latest tome of Court Materials.

It should be noted that the Trustee in this Estate has received a positive Comments Letter from the OSB on the Statement of Receipts and Disbursements that she is trying to get approved, to obtain her discharge.

The OSB has approved all of the disbursements in this Elena Filatova Estate, in the total amount of TWO THOUSEND ONE HUNDRED AND SIXTY NINE DOLLARS AND THIRTY THREE CENTS ($2,169.33) of which the Trustee's fees comprise ONE THOUSEND FIVE HUNDRED AND THIRTY NINE DOLLARS AND THIRTY THREE CENTS ($1,539.14) inclusive of HST.

That is what the Ms. Filatova is trying to prevent.

The detailed dockets that the Trustee has submitted, and that Ms. Filatova has parsed and commented on, total unbilled Work in Progress that the Trustee is NOT seeking to have approved and paid, given that the total recoveries in this estate are $2,410.78, total TWENTY FOUR THOUSEND TWO HUNDRED TWENTY DOLLARS AND TWENTY FIVE CENTS.

This astonishing amount of unbilled and uncollectable fees is largely time dealing with Ms. Filatova, according to the Trustee, which is disputed by Ms. Filatova, who has made comments on each entry.

This behavior cannot continue, and I fear that the years of consequence-free activities in these estates engaged in by Ms. Filatova have emboldened her. There now have to be consequences.

Significant Consequences.

I have asked the Trustee to go through Ms. Filatova's latest comments and advise me her position as to whether the time charged is for the Igor Bannikov Estate or the Elena Bannikova Estate, and provide me with the numbers for the costs of responding to ALL of the OSB complaints and motions and other activity brought or engaged in by Ms. Filatova in this Estate or that have affected this Estate. If the Trustee could also provide me with all of the OSB response letters to the assorted complaints in one package, that would be helpful.

I would ask that the Trustee serve this documentation on Ms. Filatova, and the OSB, and provide an update of the costs of having to do so, again.

I have read the hundreds of pages of Ms. Filatova's materials already uploaded and do not need to read more.

I also raised the issue of whether a revised Statement of Receipts and Disbursements would have to be approved by me and the OSB once I determine how much Ms. Filatova will have to compensate the Trustee, in order to compensate the Trustee for the additional costs that the Trustee has had to incur as a result of Ms. Filatova's antics. The Trustee advised she will consult with her OR on the proper procedure.

Once I have those documents I will make my decision on the Costs that Ms. Filatova WILL BE PAYING to the Trustee, unless the Trustee and Ms. Filatova settle that costs amount in the interim.

If the Trustee can provide me with this documentation by July 31, I will provide an Order expeditiously, as there will not be need for yet another Zoom hearing, as I have determined that Ms. Filatova is not listening to me.”

3In the hopes that after my blunt Second Endorsement there would be some kind of realization by Filatova of the peril she was in, I let things sit for an extended period to see if Ms. Filatova, out of a sense of self-preservation, would see sense and come to a settlement with the Trustee as to costs.

4Ms. Russo has confirmed to me, that after discussions with Ms. Filatova, there will be no settlement of the Costs and that a costs determination will have to be made by the Court.

5At each appearance, I have strongly urged Filatova to obtain legal counsel, that could provide advice to her about the dire costs consequences that could occur if she continued with her conduct in relation to the Trustee. Filatova ignored this advice as well and continued to file voluminous materials.

6All underlined text in these reasons is emphasis added by me for these reasons.

7The Court has considered all materials and arguments raised by the parties. The Court has also read all of the materials filed by all of the parties on the Motion to Discharge the Trustee in the Bannikov Estate, in the Discharge hearing for Bannikova, and in the Motion by Filatova to obtain leave to sue the Trustee in the Bannikov Estate. 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.

The Bannikov and Bannikova Bankruptcies

8To put some context on the issues arising that must be considered in this Costs Endorsement, and to provide facts for the evaluation of the proportionality test of granting costs, the facts of the underlying Igor Bannikov estate 31-2375149 (“Bannikov”) and the Bankruptcy Estates of his wife Bannikova, must be set out.

9As an explanation of the names of this Bankrupt and her husband for a non-Slavic audience, Russian, like French, has gendered tenses for verbs, words and names, and women often have an “A” added after their last name when being formally referred to. Hence Bannikova was the wife (or allegedly was at material times preceding the Bankruptcy) of Bannikov.

10The evidence of the Trustee, which should be treated with deference by the Court, in the Affidavit of Joanne Russo sworn February 10, 2022 (the “Russo Affidavit”) stated:

“2. As the records will also reflect, Russo Corp. was the Licensed Insolvency Trustee charged with the administration of the bankruptcy of the Bankrupt's spouse, Igor Bannikov (hereafter referred to as "BANNIKOV") - Court file# 31-2375149. Although the two matters are separate filings and estates, they each had/have related circumstances and information as you will see further in my Affidavit.

Despite not being a creditor of the Bankrupt, Ms. Filatova served her Notice of Opposition to Discharge of Trustee pursuant to Section 41 (5) of the BIA as an interested party. Attached hereto and marked Exhibit "A" to this, my affidavit, is a copy of the Notice of Opposition to Discharge of Trustee dated February 19th 2021.
The Notice of Opposition to Discharge [sic] of Trustee in this matter alleges that the LIT failed to provide Reports to the Crown Attorney for offences under section 198 and 201 of the BIA and to Fintrac for investigations of possible money laundering committed by the Bankrupt in 2016 - 2018 years.
On or about February 18th 2020, Ms. Filatova brought forward a Motion to this Honourable Court under section 205(3) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the "BIA"), for an Order to direct the LIT to initiate proceedings for the prosecution of the Bankrupt for offences under this Act and under other statute in connection with the bankrupt. A copy of the Motion Record is attached hereto and marked as Exhibit "B", to this, my affidavit.
A copy of the LIT's Responding Motion Record dated February 28th 2020 is attached hereto and marked Exhibit "C". The motion was heard on March 10th 2020 and dismissed. Attached and marked Exhibit "D", to this my affidavit, is the endorsement of Master Mills (as was then) dated March 10th 2020.
Ms. Filatova also filed a complaint with the Office of the Superintendent of Bankruptcy, the ("OSB"). On April 26th 2021, the OSB provided its response letter to the complaint raised by Ms. Filatova. Attached and marked as Exhibit "E", to this my Affidavit, is a copy of their Response letter.
As stated earlier in this, my affidavit, the matter of the Bankrupt and in the matter of the bankruptcy of BANNIKOV, are separate filings and estates but they each have related circumstances and information. And although the Notice of Opposition to Discharge in this matter does not provide a history of activities during the estate administration, the LIT feels it is important that this Honourable Court receive an overview on the behaviour of Ms. Filatova throughout this process, not only in this administration but also in the administration of the bankrupt's spouse (BANNIKOV).
The allegations made by Ms. Filatova in her grounds for Notice of Opposition to Discharge of Trustee in this matter were also made by Ms. Filatova in her Notice of Opposition to Discharge of Trustee in the BANNIKOV estate.
A motion for LIT Discharge in the matter of BANNIKOV was heard on June 1st 2021. Attached hereto and marked Exhibit "F", to this, my affidavit, is a copy of the Order and Reasons for Decision as issued by Associate Justice Jean, dated September 1st 2021, in the BANNIKOV Matter.
Ms. Filatova continued to take the same position with respect to the Notice of Opposition to Discharge of Trustee in this matter despite receiving the Decision as issued by Associate Justice Jean dated September 1st 2021. The LIT informed Ms. Filatova that her continuing actions in both estates has caused the estates a significant amount of unpaid LIT fees and out of pocket and legal costs to which the LIT has no funds in the estate. Ms. Filatova continues to ignore this very issue.
The Bankrupt also informs us that Ms. Filatova has threatened to commence criminal proceedings post discharge. We are unaware if in fact these proceedings have been commenced. This has caused undue grief to the Bankrupt and unnecessary expense that the Bankrupt simply cannot afford.
On January 14th 2022, a Positive Comment Letter was issued by the OSB. A copy is attached hereto and marked Exhibit "G", to this, my affidavit.
On January 22nd 2022, the LIT served on all Creditors in the Matter of the Bankruptcy of Elena Bannikova, a Notice of Deemed Taxation of Trustees Account and Deemed Discharge of Trustee. The Affidavit of Service is attached at Exhibit "H", to this, my affidavit.
On January 26th 2022, the LIT filed with the Court a request for a Motion date by Zoom for an Application for Taxation of the LIT's accounts and Discharge of LIT in this estate. The court provided the LIT with the next available dates. The dates were canvassed by the LIT and Ms. Filatova. Ms. Filatova consented to March 15th 2022. An amended Hearing Request Form was submitted to the Court for scheduling. A copy of the final, fully executed Court Hearing Request Form, dated January 27th 2022 is attached hereto and marked Exhibit "I" to this, my affidavit.
On February 10th 2022 the LIT served a Notice of Motion - Returnable March 15th 2022 to the Opposing party.
It is my view that the Opposition to Discharge of the Trustee is unwarranted. The actions by Ms. Filatova have been frivolous and vexatious. Many unmeritorious claims have been made against the LIT. The LIT has successfully defended the motions Ms. Filatova has brought forward. The OSB accepted the bankruptcy filing and has supported the LIT in response to the several complaints raised by Ms. Filatova - all of which required a substantial amount of time and resources to reply to and in conclusion, each case has been closed. The estate is without funds, the LIT has suffered a significant loss. The LIT will be seeking costs as against Ms. Filatova equivalent to the maximum tariff permissible in a summary administration. To date, the LIT has incurred over $25,000.00 in billable time because of Ms. Filatova’s actions.
Attached hereto and marked Exhibit “J ” to this, my affidavit, is a copy of the Trial Balance Sheet and a copy of the General Ledger. The OSB has issued a positive comment letter in this estate and as such, the LIT’s accounts should be deemed taxed and the LIT to be discharged. The LIT will be seeking costs as against Ms. Filatova equivalent to the tariff permissible in a summary administration. To date, the LIT has incurred over $25,000.00 in billable time as a result of Ms. Filatova actions.”

11Filatova opposed the Taxation of the Trustee’s Statement of Receipts and Disbursements dated December 7, 2021 (the “SRD”), and opposed the Trustee’s discharge in the Bannikova Estate on the following grounds in her “Notice of Opposition to Discharge of Trustee” dated February 19, 2021 (the “Filatova Bannikova Discharge Opposition”):

“Take notice that Elena Filatova, an interested person, hereby opposes the discharge of the Trustee, pursuant to subsection 41(5) of the Bankruptcy and Insolvency Act (the "BIA") on the following among other grounds:

Equitable Bank, a first mortgage company, filed their Proof of Claim for $682,873 but the Trustee paid $701,453 to this creditor which is exceeded for $18,580, the Trustee must provide returning this money back to the Estate for the benefit of all creditors. (Proof of Claim of Equitable Bank; LIT's Supplementary s.170 Report, filed).
The Trustee paid $222,085 to Benson Custodian Corporation, a second mortgage company, which did not file any claim. According to 124 (1) of BIA - "Every creditor shall prove his claim, and a creditor who does not prove his claim is not entitled to share in any distribution that may be made." Therefore the Trustee must provide returning this money back to the Estate for the benefit of all creditors. (LIT's Supplementary s.170 Report).
During the Examination under Oath by Official Receiver, the Bankrupt disclosed that she had transferred $50,000 from her Royal Bank account to an unknown party in Russia a year before the bankruptcy (LIT's Supplementary s.170 Report, Form 82, s.6 (b)). The Trustee did not perform any investigation of this transfer with Royal Bank. This transaction must be void according to s. 4(1) of Assignments and Preferences. The Trustee must provide returning this money to the Estate for the benefit of creditors.
During the Examination, the Bankrupt disclosed that she had entered into a financial arrangement to preferentially pay the $9,500 owed to her daughter. (LIT's s.170 Supplementary Report, s. 6(b)). According to s. 4(2) of Assignments and Preferences Act if a debtor cannot pay their creditors and makes a transfer or payment favouring one particular creditor, that transfer or payment is considered a fraudulent preference and is void, thereby the $9,500 payment made by the Bankrupt to her daughter must be void and the Trustee must provide returning this money to the Estate for the benefit of creditors.
During the Examination, the Bankrupt indicated that she had owned of¼ interest in a property know as Komarova 9, Unit 37, Orenburg Region, City of Novotroitsk, Russia. This property was sold after the initial bankruptcy event for approximately $20,000. (LIT's Supplementary s.170 Report, Form 82, s. 6(b)). The Trustee must provide returning of the corresponding part of the money to the Estate for the benefit of creditors.
During the Examination, the Bankrupt confirmed that she had transferred $343,900 from her joined account to her personal undisclosed account to hide the money from her spouse (Revised LIT's s.170 Supplementary Report, Examination of Bankrupt by Official Receiver, question 49). But by this action, the Bankrupt also had hidden the money from her creditors and others. During two years before the bankruptcy, the Bankrupt had been concealing and hiding money from the joined account to her personal account to move the funds out of reach of her potential creditors and creditors of her spouse. Those transactions must be void according to s.2 of Fraudulent Preference Act F.29 and to s. 4(1) of Assignments and Preferences. The Trustee must provide returning this money to the Estate for the benefit of creditors.
For the bankruptcy, the Bankrupt disclosed a Royal Bank account #05172-5054663 joined with her spouse with a $0 balance at the date of the bankruptcy event. But during the Examination the Bankrupt disclosed that she owns other accounts. (Revised LIT's s.170 Supplementary Report, Examination of Bankrupt by Official Receiver, questions 23, 24). The Trustee must investigate the other bank accounts of the Bankrupt for the benefit of creditors.
Pursuant Order 31-2375149 from August 20, 2019, according to Way to Health Clinic management Examination, the Bankrupt had been receiving money from the Clinic. (LIT's Supplementary s.170 Repo1t, Minutes of Examination, questions 15 and 17). The Trustee must investigate this source of income of the Bankrupt for the benefit of creditors.
The Bankrupt had taken a $210,000 loan one year before the bankruptcy and had a $0 balance at the bankruptcy event. The Trustee must investigate where the money went to. (Revised LIT's s.170 Supplementary Report, Royal Bank transactions of account 05172- 5054663)
According to s.4 (i) of LIT's Supplementary s.170 Report, the Bankrupt has made payments in respect of the agreed-upon LIT's tees in the amount of $2,025. But the Bankrupt at the Examination confirmed that she did not pay and will not pay the Trustee anything. (Revised LIT's s.170 Supplementary Report, Examination of Bankrupt by Official Receiver, questions 59, 60). The Trustee has to clarity this issue.
During Court hearings on February 18, 2020, No.31-2368680, the Trustee confirmed that she had sent reports to Crown Attorney for offences under sections 198 (1) (a, c, f) and 201(3) of the Act; to the FINTRAC for investigation of possible money laundering commuted by the Bankrupt in 2016-18 years; to the CRA with a request of audit for the Bankrupt's taxes for 2016-2018 years. But the Trustee misled the Court because she was not able to provide a date of the delivery and the packages were not done properly as it was reported to the Court. The Trustee must follow the Court decision, repeat the packages to the authorities, and provide clear delivery confirmation.

I'm asking the court to refuse the discharge of the Trustee till the mentioned above issues in the management of the Estate of Elena Bannikova are fixed.”

12As this is a Summary Administration Bankruptcy Estate, this hearing occurred under the procedure in Bankruptcy and Insolvency General Rule 65 for Summary Administration Bankruptcy Estates where an objection has been made.

Statement of Receipts and Disbursements in Bannikova Estate being opposed by Filatova:

13Again, to put context on this dispute, the total proven unsecured creditors in the Bannikova Summary Administration Bankruptcy Estate (now) total $107,043.07 and the sole remaining proven secured creditor being the claim of Nissan Canada Finance totaling $30,405.58 for a car loan, the mortgagees on the home jointly owned by Bannikov and Bannikova at 64 Savage Road, Newmarket (“64 Savage”) having been paid from the sales proceeds.

14The remaining unsecured creditors of Bannikova are chiefly Royal Bank of Canada (totaling $58,695.35 for bank loans and credit cards), TD Canada Trust ($12,447.16 bank line of credit), CIBC ($30,120.58 – credit card) and Canadian Tire ($5,779.98 – credit card).

15The only assets realized in the Bannikova Estate were a pre-Bankruptcy income tax refund of $34.29 and post-bankruptcy tax refund of $348.79. The Bankrupt made a voluntary payment towards fees of $2,025.00.

16The following Notes were provided in the SRD being taxed:

Furniture - Furniture

3,000.00

The LIT is satisfied that the furniture is exempt pursuant to the Provisions of The Ontario Executions Act.

Motor Vehicles - Automobile - 2016 - Nissan - Rogue - 5N1AT2MV3GC892164

32,346.37

The LIT is satisfied that the automobile is full secured and there is NIL equity for the benefit of the estate.

Personal Effects - Personal Effects

3,000.00

The LIT is satisfied that the personal effects are exempt pursuant to the Provisions of The Ontario Executions Act.

Real Property or Immovable - House - Newmarket

64 Savage

980,000.00

The Bankrupt, jointly with her spouse, Igor Bannikova (“Bannikov”) held title to the Property located at 64 Savage Road, Newmarket, Ontario (the “Property”). The Property was sold on May 8, 2018 for $980,000.00. After factoring secured mortgages registered on title, the Estate realized NIL from the sale proceeds. Equitable Bank held a first mortgage over the Property in the amount of $701,453.39. Equitable Bank filed a proof of claim which was subsequently satisfied and the first mortgage was discharged from title. The Property was encumbered by a second mortgage in favour of Benson Custodian Corporation in the amount of $222,085.03. From the remaining closing proceeds of the Transaction, the second mortgage was discharged from the Property. Benson Custodian Corporation did not file a claim in the Bankruptcy.

Taxes - Debtor/Bankrupt - Post - Federal - 2018

0.00

The LIT has completed the Bankrupts pre and post tax filings and satisfied that it has realized any refunds for the benefit of the estate.

17The Total receipts in the Bannikova Estate were $2,410.78. The total disbursements are $2,169.33 with a total distribution, before Levy, of $241.45.

18The disbursements consisted of Trustees fees calculated on the basis of the Summary Administration Tariff of $1,539.14, with the remaining $630.19 consisting of counselling fees, fees paid to the Official Receiver and the Court, a $100.00 administrative disbursement and HST.

19The unbilled WIP that the Trustee reports that she has incurred as a result of Filatova’s conduct in the Bannikova Estate is $24,220.25, or approximately 15 times the amount chargeable under the Tariff. The Trustee seeks repayment of some of these costs on the basis of the Filatova’s conduct.

20Filatova opposes the costs award, the approval of the Trustee’s SRD in the Bannikova Estate, and the Trustee’s discharge.

21On January 14, 2022 the Superintendent issued a Positive Comments Letter regarding the SRD. The Superintendent did not oppose the approval of the SRD or the Discharge of the Trustee in the Bannikova Estate.

22The Trustee has had to file 1,823 pages of materials defending herself on this Motion. Filatova has filed 1,675 pages.

23All to approve an SRD with $2,410.78 in disbursements.

24But having read these materials it became abundantly clear to me the challenges that the Trustee has faced in dealing with the behavior of Filatova in an estate with no assets.

25Of note, for reasons I will subsequently explain in detail, Filatova is not a creditor with a proven claim in the Bannikova Estate, only the Bannikov Estate. Her claim in the Bannikova Estate was finally and irreversibly disallowed by the Trustee.

26No actual proven creditors of the Bannikova Estate have opposed the approval of the SRD or the discharge of the Trustee.

Discharge of the Bankrupt, Bannikova:

27Bannikova was discharged by AJ Jean on August 29, 2019. The Conditional Discharge Order imposed the following terms:

THIS COURT ORDERS THAT the discharge of the Bankrupt be and is hereby suspended for a period of six (6) months concurrent, such that the Bankrupt shall be discharged from bankruptcy on March 1, 2020.
THIS COURT FURTHER ORDERS THAT the Bankrupt shall execute an Undertaking whereby she agrees she will not use, possess, apply for, acquire or obtain any form of unsecured credit for a period of five years from the date hereof.

28These conditions were met by the Bankrupt Bannikova, and AJ Jean granted an unconditional discharge to Bannikova on September 17, 2021.

Filatova raised some similar objections to discharge of this Trustee in Bannikov Estate- Failed:

29Associate Justice Jean, in her endorsement dated June 1, 2021 discharging the Trustee as Trustee of the Bannikov Estate (the “Bannikov Trustee Discharge Endorsement”) decided as follows, dealing with some grounds of opposition that are similar to certain of the grounds of opposition by Filatova in the Filatova Bannikova Discharge Opposition:

“For the reasons that follow, the trustee is hereby discharged.

The trustee applied for discharge on June 1, 2021. The trustee's discharge was opposed by the creditor, Elena Filatova (the "creditor"). The creditor is also the sole inspector of the estate.

The creditor's objection to discharge and response on the motion in many respects seeks the advice and direction of the court. This court performs an adjudicative function and does not provide advice to creditors as to the conduct of bankruptcy proceedings. The creditor was informed that she should seek her own legal advice pertaining to matters of which she is concerned.

I turn to the merits of the trustee's application for discharge.

Subsection 41(1) of the BIA provides: "When a trustee has completed the duties required of him with respect to the administration of the property of a bankrupt, he shall apply to the court for a discharge."

Subsection 41(2) of the BIA provides: "The court may discharge a trustee with respect to any estate on full administration thereof or, for sufficient cause, before full administration."

Subsection 41(4) of the BIA provides: "When a trustee's accounts have been approved by the inspectors and taxed by the court and all objections, applications, oppositions, motions and appeals have been settled or dispose of and all dividends have been paid, the estate is deemed to be fully administered."

Subsection 41(5) of the BIA provides that "Any interested person desiring to object to the discharge of the trustee shall... file notice of objection with the registrar of the court setting out the reasons for the objection and serve a copy of the notice on the trustee.

Subsection 41(6) of the BIA provides that "the court shall consider the objection filed and may grant or withhold a discharge accordingly or give such directions as it may deem proper in the circumstances.

Here, the creditor/inspector has approved the trustee's SRD and, accordingly, by subsection 41(4) of the BIA, the estate is deemed to be fully administered. In my view, it is clear that the trustee would, but for the opposition, be entitled to be discharged accordingly.

However, I consider the opposition of the creditor/inspector as required by subsection 41(6) of the BIA. In her notice of opposition to the discharge of the trustee dated March 3, 2021, two issues are raised:

Whether the trustee should send reports to the Crown Attorney, FINTRAC and CRA respecting the bankrupt; and
Whether the reports that the trustee sent to the Crown Attorney, FINTRAC and CRA were properly delivered.

In her draft order, the creditor/inspector seeks an order postponing the discharge of the trustee until the reports have been sent by the trustee and includes relief relating to the alleged transfer of monies between the bankrupt and his spouse. The latter point was not raised as a ground of opposition and, regardless, is a matter that is subject to a s.38 BIA order granted in favour of the creditor.

I am satisfied from a review of the record that the trustee did send the reports in question to the Crown Attorney, FINTRAC and CRA via mail and albeit not by courier due to the COVID-19 pandemic. I am satisfied with the explanation of the trustee that there were scanning issues and that the trustee has in fact included all relevant documents in the mailing.

This conclusion is reinforced by or consistent with the dismissal of the complaint of the creditor/inspector filed with the Office of the Superintendent of Bankruptcy.

In my view, it is clear that the creditor/inspector has taken issue with the bankrupt's conduct and whether there have been improper transfers of monies and/or laundering of monies. The creditor, as mentioned above, has the benefit of a s. 38 order. Furthermore, any issues concerning criminality, FINTRAC and CRA are issues within the purview of these other authorities and are not a basis for refusing the trustee's discharge. The estate is without funds and, in fact, the trustee has suffered a significant deficiency in the administration of the estate.

In my view, the creditor/inspector has the benefit of a s. 38 BIA order and can pursue her remedies accordingly despite the discharge of the trustee. I am satisfied that the trustee has discharged all duties required under the BIA and that the estate has been fully administered. See Re Dubyk (2009), 59 C.B.R.(5th) 47 (Sask. Q.B.).

Order to go granting the trustee's discharge. I have signed the draft order filed by the trustee.”

Filatova tried to force Trustee to have investigations commenced by RCMP, Crown, FINTRAC and CRA in both the Bannikov and Bannikova Estates – Failed:

30Previously on March 10, 2020 (now) Justice Mills (“Registrar Mills”) resolved another motion brought by Filatova when the Trustee delivered correspondence to the RCMP, Fintrac and CRA about this Bankrupt’s conduct (the “Mills Endorsement”).

31There is no evidence before the Court that the RCMP, Fintrac or CRA have taken any steps to prosecute Bannikov or Bannikova in response to any of the “reports” that Filatova demanded that the Trustee send in either of the Bannikov or Bannikova Estates.

32Filatova had every ability, from the date of her loan to Bannikov in 2016, her lawsuit against Bannikov in 2018, before or after the assignments into Bankruptcy of Bannikov or Bannikova, to the present date, to independently report any crimes that had been allegedly committed against her by Bannikov or Bannikova to the Police, Fintrac and CRA not being reliant upon the Trustee, the OSB or the Court to do so.

33There is no evidence before the court that Filatova has ever done so, or that any of these entities have ever chosen to investigate any of her complaints, independent of any complaints she attempted to force the Trustee to make.

34Despite the settling of that issue in the Bannikov Estate, by the Mills Endorsement, and by AJ Jean in the Bannikov Trustee Discharge Endorsement, Filatova yet again brings up these issues on this application in this Estate by the Trustee for approval of the SRD and Discharge in the Bannikova Estate.

Filatova tried to sue the Trustee in the Bannikov Estate – Failed:

35In addition, Filatova attempted to sue the Trustee in the Bannikov Estate. Dietrich, J, denied leave under s.215 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c.B-3, as am. (the “BIA”) to Filatova to sue the Trustee, the relevant parts of her decision (Filatova v. Russo Corp., 2020 ONSC 7294) (the “Dietrich, J. S.215 Endorsement”) read:

“[1] In 2016, Elena Filatova (the “Applicant”) lent $80,000 to Igor Bannikov (the “Bankrupt”). She did not secure the loan with collateral or a general security agreement. The Bankrupt failed to repay the loan and, on March 7, 2018, the Applicant obtained a judgment for $83,200, plus $1,100 for costs. On March 20, 2018, she registered a writ against the Bankrupt and against real property, municipally known as 64 Savage Road, in the Town of Newmarket (the “Property”).

2The Bankrupt owned the Property jointly with his wife, Elena Bannikova (“Ms. Bannikova”). The Property was encumbered by a first mortgage and a second mortgage, both of which were in arrears. The first mortgagee was considering a sale of the Property under power of sale. The Bankrupt also had other unpaid loans and credit card debt.

3Ms. Bannikova personally made an assignment in bankruptcy on or about April 19, 2018. On May 7, 2018, using a power of attorney for property granted to her by the Bankrupt on October 17, 2008, Ms. Bannikova made an assignment in bankruptcy on his behalf.

4The respondent, Russo Corp., a Licensed Insolvency Trustee (the “Trustee”), was charged with administering the estates of Ms. Bannikova and the Bankrupt.

5On May 8, 2018, the Trustee sold the Property and made payments to the first mortgagee and the second mortgagee. Their respective mortgages were discharged. After satisfying those debts and paying the real estate commission and legal fees, a modest amount of proceeds was transferred to the Bankrupt’s estate. The Trustee was unable to realize any other asset of the Bankrupt and the Bankrupt did not pay the Trustee’s fees. The Trustee could not pay the Applicant’s unsecured claim.

6On October 24, 2018, the creditors of the Bankrupt appointed the Applicant as the sole inspector of the Bankrupt’s estate. On January 15, 2019, pursuant to s. 38 of the Bankruptcy and Insolvency Act , R.S.C. 1985, c. B-3 (the “BIA”), the Applicant obtained an order authorizing her to continue the action against the Bankrupt’s assets located in Russia and Canada, and assigning all the Trustee’s rights, title and interest in the subject matter of the proceedings to the Applicant.

7The Applicant was unsuccessful in realizing any additional assets of the Bankrupt.

8The Applicant brings this motion for leave to bring an action against the Trustee. She alleges that the Bankrupt’s assignment into bankruptcy was illegal and the Trustee should not have accepted it. She asserts that the power of attorney for property used by Ms. Bannikova to make the assignment in bankruptcy on the Bankrupt’s behalf was defective and that Ms. Bannikova did not have the authority to act as his attorney for property.

9The Applicant further asserts that if the Trustee had not accepted the Bankrupt’s assignment into bankruptcy, the Applicant would not have been prevented from collecting her debt from the Bankrupt. But for the bankruptcy she could have negotiated with the Bankrupt for the repayment of her debt, in whole or in part, in exchange for her agreement to lift her writ of execution to permit him to sell the Property.

10For the reasons that follow, I decline to grant leave to the Applicant. She has not provided sufficient evidence to establish that there is a factual basis for a claim against the Trustee or that her claim discloses a cause of action.

19The Applicant asserts that, had the Trustee not accepted the “illegal” power of attorney and Ms. Bannikova’s authority to make an assignment in bankruptcy on behalf of the Bankrupt, the Applicant would have been able to negotiate with the Bankrupt directly. She would have bargained with him for payment of some or all of the judgment in exchange for lifting her writ so he could sell the Property. Again, I disagree. Apart from the finding that the power of attorney was not a defective document and Ms. Bannikova was not disqualified from relying on it to make the assignment in bankruptcy, I find the Applicant’s reasoning on her alleged damages to be speculative at best. Since the Bankrupt had no equity in the Property, it is unlikely that he would have had any interest in negotiating with the Applicant to lift her writ. The more probable outcome, it seems to me, would have been a sale of the Property by a mortgagee under power of sale. The Applicant was one of a number of unsecured creditors of the Bankrupt.

20The facts relied on by the Applicant relating to the power of attorney and the consequences of the Trustee’s acceptance of Ms. Bannikova’s authority to act as an attorney for property do not disclose a cause of action against the Trustee.

21Further, I note that the Applicant acknowledges that she has actively participated in the administration of the Bankrupt’s estate. She is an inspector of the Bankrupt’s estate, she regularly participated in creditor meetings and she attended at the Trustee’s office to review and make copies of records and documents.

22Throughout the administration of the Bankrupt’s estate, the Applicant challenged the Trustee’s actions and filed eight complaints with the Office of the Superintendent of Bankruptcy. Each of these complaints, including the one regarding the legality of the power of attorney, was reviewed by that Office and subsequently closed.

23The Applicant has not established a factual basis for a claim against the Trustee or that her claim discloses a cause of action against the Trustee. The Applicant has not provided evidence to show that the Trustee has any liability for her loss or that she has suffered damages as a consequence of the Trustee’s actions.

24 Section 215 of the BIA balances two important objectives: the need for proper oversight of receivers and trustees, which takes the form of both court oversight and creditors’ rights to proceed against receivers and trustees, and the need to prevent unmeritorious actions from proceeding against a court’s agent: Crate Marine Sales Ltd. (Re), 2017 ONSC 178, [2017] O.J. No. 884, at para. 62. The Applicant’s proposed action is unmeritorious and should not proceed against the Trustee, an agent of the court.

Disposition and Costs

25The Applicant’s motion for leave to pursue her claim against the Trustee is dismissed.

26The Trustee has succeeded in defending this motion and is entitled to its costs. The Trustee seeks costs on a full indemnity basis in the amount of $27,674, or on a substantial indemnity basis in the amount of $24,919, inclusive of disbursements and HST. Considering the general principles relating to costs as set out in r. 57 of the Rules of Civil Procedure , R.R.O. 1990, Reg. 194, I fix the costs payable by the Applicant to the Trustee on a partial indemnity basis at $5,000, payable forthwith.

27I have endorsed the Order to go in the form attached. The Order is effective as of the date of this endorsement and does not need to be entered.”

S.38 Order granted to Filatova in Bannikov Estate - Filatova fails to collect any amounts from Bannikov:

36In a Section 38 Order granted by Associate Justice Jean on January 15, 2019 in the Bannikov Estate (the “s.38 Order”), Filatova was granted the following relief:

“1. THIS COURT ORDERS that the applicant creditor may and they are hereby authorized to initiate an action against the bankrupt's assets located in Russia

(Russia, Orenburg region, Novotroitsk, street Ural 30a; Reg## 56: 42: 0232006: 706 and 56: 42: 0232006: 705;

Russia, Orenburg region, Novotroitsk, street Ural 20a, Reg# 56:42:0230008:57;

Russia, Orenburg region, Novotroitsk, Solnechny, street Cherry, 30, Reg# 56:42:401001:44;

Russia, Orenburg region, Novotroitsk, street New, Reg# 56:42:0217005:134;

Russia, Orenburg region, Novotroitsk, Komarov Street, 9, ap. 38, Reg# 56:42:0225005:453);

funds and businesses located in Canada and Russia (WAY TO HEALTH CLINIC INC, Ontario; VALENTINA, the Russian Federation)

arising from the appointment of the Trustee, or vesting in the Trustee as a result of its appointment, in the applicant creditor's own name and at its own expense and risk, in accordance with s.38 of the BIA”

37As stated in the Bannikov Trustee Discharge Endorsement by AJ Jean, Filatova has had the right to pursue the assets listed in the Bannikov s.38 Order, which ground for the opposition by Filatova to oppose the discharge of the Trustee in the Bannikov Estate was specifically rejected by AJ Jean.

38These grounds again reappears in the Filatova Bannikova Discharge Opposition, as if the Bannikov Trustee Discharge Endorsement was never issued.

39At the hearing before me Filatova admitted she has not had any success in the last 4 years in realizing upon the Russian properties listed in the Bannikov s.38 Order, one of which “Komarova 9, Unit 38, Orenburg Region, City of Novotroitsk, Russia.”

40This appears from the Bannikova’s testimony at the s.161 examination held on December 18, 2018 to be the same physical unit joined with “Komarova 9, Unit 37, Orenburg Region, City of Novotroitsk, Russia.” listed as a ground of opposition to the Trustee’s discharge in this Estate.

41As stated by the Bannikova at Question 6:

“6. Do you have or have you had, an ownership claim on any properly, within Canada or abroad? If yes, provide details? How about your spouse?

(Komarova 9, Unit 37, Orenburg Region, Novotroitsk, Russia)

Bankrupt: In Canada the only properly I had was 64 Savage, In Russia, I owned 1/4 of the apartment. I am not sure If I have ownership still. OR: is that the Komarova 9, Unit 38, Orenburg Region, Novotroitsk, Russia address?

Bankrupt: It is the same address but Unit 37.

We had two apartments but they were joint.

(a) Is this an apartment building, condo or a house?

(b) Bankrupt: Yes. An Apartment

42It appears that Filatova made an error in the Bannikov s.38 Order in the Bannikov Estate she provided to the Court in not also adding unit 38 to the Bannikov s.38 Order.

Filatova Proof of Claim disallowed at Filatova’s request- Filatova is not a creditor of the Bannikova Estate

43Filatova is not a proven creditor of the Bannikova Bankruptcy Estate, in very unusual circumstances.

44Filatova had filed a claim in this Bannikova Bankruptcy Estate in the amount of $85,336.58, that Filatova then demanded that the Trustee disallow (the “Bannikova Proof of Claim”).

45She had previously filed a Proof of Claim 85,336.58 in the Bannikov Estate as a secured creditor, for the entirety of the amount claimed, that was disallowed as a secured claim, and allowed as an unsecured claim (the “Bannikov Proof of Claim”).

46The basis of both proofs of claim was a default Judgment obtained by Filatova in the Newmarket Superior Court on March 07, 2018 against Bannikov, ALONE in the amount of $83,200.00, costs of $1,110.00 and post-judgment interest at 3% (the “Bannikov Judgment”).

47Filatova obtained a writ of seizure and sale for her judgement against Bannikov, ALONE.

48On October 29, 2018 the Trustee properly disallowed the proof of claim of Filatova in the Bannikov Estate as a secured claim on the basis that no security was provided for the loan as the writ of seizure and sale is not security, of any kind, and the Trustees interest in the assets of the Bankrupt Bannikov had priority over the Bannikov Judgement under the provisions of s.70 of the BIA, which reads:

“Precedence of bankruptcy orders and assignments

70 (1) Every bankruptcy order and every assignment made under this Act takes precedence over all judicial or other attachments, garnishments, certificates having the effect of judgments, judgments, certificates of judgment, legal hypothecs of judgment creditors, executions or other process against the property of a bankrupt, except those that have been completely executed by payment to the creditor or the creditor’s representative, and except the rights of a secured creditor.”

49The actual proven unsecured creditors of the Bannikov Estate (not Filatova) total $49,471.26, and appear to have taken no role or interest whatsoever in the administration of the Bannikov Estate.

50Filatova appears to have recycled her claim under the Bannikov Judgment, that supported the Bannikov Proof of Claim, as the basis for the Bannikova Proof of Claim she filed in the Bannikova Estate, in the exact same amount.

51I do not understand why Filatova insisted that the Trustee disallow the Bannikova Proof of Claim. But she did insist.

52When the Trustee did not disallow the Bannikova Proof of Claims with sufficient alacrity, Filatova made yet another complaint to the OSB regarding the Trustee’s failure to disallow the Bannikova Proof of Claim, which the OSB, yet again, investigated and determined to be unfounded in fact and law.

53The Trustee did issue a Notice of Disallowance, properly, given that the Bannikov Judgment is only against Bannikov, which Filatova failed to appeal within the permitted time periods, after consulting with Mr. Harris.

54As a result, at her own insistence, Filatova is not a creditor of the Bankruptcy Estate of Bannikova. For the purposes of the opposition to the approval of the Trustee’s Statement of Receipts and Disbursements, Filatova is not a creditor with a proven claim.

55Later in these reasons, I will detail the scope, subject matter and disposition of the NINE (9) complaints filed by Filatova with the OSB against the Trustee, in both the Bannikov and Bannikova Estates that appear in the materials before me. They were all found by the OSB to be unfounded.

56 Section 41(5) of the BIA reads:

41(5) Objections to be filed with court and trustee

Any interested person desiring to object to the discharge of a trustee shall, at least five days prior to the date of the hearing, file notice of objection with the registrar of the court setting out the reasons for the objection and serve a copy of the notice on the trustee.

57The term “interested person” has been interpreted in Genometrics Corp., Re, 2005 SKQB 488 (Sask. Q.B.) (“Genometrics”) at par. 15:

“Although the language of these provisions could have been clearer I would suggest that one can infer that "interested person" would be those that are required to receive notice of taxation. Those parties entitled to notice are specified in s. 152(5) as 'every creditor whose claim has been proved, to the registrar, to the Superintendent and to the bankrupt.”

58Because of her self-inflicted disallowance of her own claim in the Bannikova Estate, Filatova is not an “interested person” for the purposes of s.41(5) for the Bannikova Estate.

59I am supported in this assessment by the recent binding decision of the Court of Appeal in YG Limited Partnership and YSL Residences Inc. (Re), 2023 ONCA 505 (“YG”), upholding the decision of Osborne, J. in YG Limited Partnership and YSL Residences Inc., 2022 ONSC 6548 where the Court of Appeal, in determining standing in an appeal of a Trustee’s disallowance of a Proof of Claim, stated the general principle of Standing as:

“ First, in Ivandaeva, [Ivandaeva Total Image Salon Inc. v. Hlembizky (2003), 2003 43168 (ON CA), 63 O.R. (3d) 769 (C.A.)] at para. 27, in describing the basis for standing Borins J.A. stipulated that “the order must be one that directly affects the rights of the moving party in respect of the proprietary or economic interests of the party.”

60In this case, with the disallowance of her proof of claim in the Bannikova Estate, at her own insistence, Filatova no longer had any “…proprietary or economic interests” that were “directly affected” by the Motion by the Trustee to have the SRD Taxed and to be discharged in the Bannikova Estate, under the YG test.

61This lack of standing was pointed out to Filatova by me in the First Endorsement, and in the Second Endorsement. Filatova nevertheless filed hundreds of pages of responding materials in the Bannikova Estate continuing to oppose the approval of the SRD and the discharge of the Trustee, purportedly in the capacity as:

“SUPPLEMENTARY RESPONDING MOTION RECORD OF ELENA FILATOVA, AN INTERESTED PARTY

Creditor and Inspector In the Matter of the Bankruptcy of Igor Bannikov, a spouse of

Elena Bannikova, a bankrupt”

62That attempt also fails, as none of those positions, even if applicable to Filatova in the Bannikov Estate, fit within the definition of an “interested person” in the Bannikova Estate, as interpreted in Genomics.

63Also, the only party with the actual legal ability to represent the Bannikov Estate, is the Trustee, not Filatova.

64In addition, AJ Jean in her Bannikov Trustee Discharge Endorsement granted an Order discharging the Trustee in the Bannikov Estate, despite the opposition of Filatova, on very similar grounds as the opposition she filed in the Bannikova Estate. As a result, there is no longer an open Bannikov Estate for Filatova to be an “inspector” of to try to salvage her “standing” to oppose the discharge of the Trustee in the Bannikova Estate.

65In any event, given that Filatova attempted in February of 2020 to sue the Trustee and the Bannikov Estate that she was an Inspector of, and was denied leave to do so by Dietrich, J. in November of 2020 and ordered to pay costs to the Trustee, under the provisions of s.116(2) of the BIA, Filatova should have resigned or been removed under s.116(5) as an inspector of the Bannikov Estate from February of 2020 onward.

66However, given the thousands of pages filed by Filatova in proceedings in the Bannikov Estate and the Bannikova Estate, and on this Motion, and given the lack of funding of the Trustee in either estate, and from the Trustee’s submissions before me at the hearing, it is apparent to me that the Trustee chose not to make a formal motion under the provisions of s.116(5) to remove Filatova as inspector of the Bannikov Estate on practical grounds, and not because she lacked ample legal grounds and evidence to do so.

67In any event, even if she was still an inspector of the Bannikov Estate, where the AJ Jean had already determined was fully administered, the Order for taxation and discharge sought by the Trustee in the Bannikova Estate, where Filatova was neither inspector nor creditor, was not one that “…directly affects the rights of the moving party in respect of the proprietary or economic interests of…” Filatova per the YG test.

68As a result, Filatova lacked any standing whatsoever to oppose the approval of the SRD and the discharge of the Trustee in the Bannikova Estate.

69But still she persisted opposing on very similar grounds as where rejected by AJ Jean in the Bannikov Trustee Discharge Endorsement, with no actual right to do so.

The Broader Context

70There is a much broader context to the goings on in this particular opposition to the SRD the Bannikova Summary Administration Bankruptcy Estate.

71The fundamental issue is, as stated by the Trustee in the SRD, is that the total recoveries in the Bannikova Estate are $2,410.78. In the Bannikov Estate the Trustee realized $75.00.

72At no point in all of this activity did Filatova provide any funding to the Trustee to undertake any of the investigations of either Bankrupt.

73What is at the heart of this issue is that Filatova refuses to acknowledge that the Trustee has no funding in the Bannikova estate, and the Trustee has to administer the Bannikova Estate within that financial reality, notwithstanding Filatova’s incessant demands to conduct investigations and commence proceedings.

74The actual proven creditors of the Bannikova Estate, mostly institutional, have combined claims larger than Filatova’s claim, before it was disallowed. The Trustee must be cognizant of the interests of all of the creditors, and not merely the campaign by Filatova against Bannikov and Bannikova, particularly where Filatova has no proven claim in the Bannikova Estate.

75As found as matters of fact by Dietrich, J. with respect to the Bannikov Estate:

“[5] On May 8, 2018, the Trustee sold the Property and made payments to the first mortgagee and the second mortgagee. Their respective mortgages were discharged. After satisfying those debts and paying the real estate commission and legal fees, a modest amount of proceeds was transferred to the Bankrupt’s estate. The Trustee was unable to realize any other asset of the Bankrupt and the Bankrupt did not pay the Trustee’s fees. The Trustee could not pay the Applicant’s unsecured claim.

6On October 24, 2018, the creditors of the Bankrupt appointed the Applicant as the sole inspector of the Bankrupt’s estate. On January 15, 2019, pursuant to s. 38 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the “BIA”), the Applicant obtained an order authorizing her to continue the action against the Bankrupt’s assets located in Russia and Canada, and assigning all the Trustee’s rights, title and interest in the subject matter of the proceedings to the Applicant.”

7The Applicant was unsuccessful in realizing any additional assets of the Bankrupt.

And:

“[21] Further, I note that the Applicant acknowledges that she has actively participated in the administration of the Bankrupt’s estate. She is an inspector of the Bankrupt’s estate, she regularly participated in creditor meetings and she attended at the Trustee’s office to review and make copies of records and documents.

39As found as matters of fact by AJ Jean with respect to the Bannikov Estate, a year prior to Filatova opposing the SRD and discharge of the Trustee in the Bannikova Estate:

“In my view, it is clear that the creditor/inspector has taken issue with the bankrupt's conduct and whether there have been improper transfers of monies and/or laundering of monies. The creditor, as mentioned above, has the benefit of as. 38 order. Furthermore, any issues concerning criminality, FINTRAC and CRA are issues within the purview of these other authorities and are not a basis for refusing the trustee's discharge. The estate is without funds and, in fact, the trustee has suffered a significant deficiency in the administration of the estate.

76The overall conduct of Filatova, and the findings made by AJ Jean, and Dietrich, J. must be factored into my evaluation of the conduct of the parties to determine Costs on this Motion, given the evidence of the futility of all of Filatova’s activity in both estates.

77Filatova, by recycling complaints against the conduct of the Trustee in the Bannikov Estate in her objections to the approval of the SRD and the Discharge of the Trustee in the Bannikova Estate, has invited scrutiny by the Court of her conduct in both the Bannikov and Bannikova Estates, in order to properly adjudicate her objections, and to determine the costs she will have to pay as a result of the failure of her objections to prevent Taxation and Discharge in the Bannikova Estate.

Nine complaints made by Filatova to OSB – all deemed unfounded

78The most extraordinary aspect of this entire debacle is the sheer volume of complaints made by Filatova against the Trustee, the degree of involvement of the OSB in having to investigate each complaint as required under the BIA, and rejecting all 9 of them as unfounded (the “OSB Complaint Rejection Letters”), and the vexatious repetitive nature of each complaint.

79In order to properly place all of these complaints in context of the complaints made, AGAIN, in the Filatova Bannikova Discharge Opposition, I had to prepare the following chart:

OSB Complaint Date by Filatova

Bannikov or Bannikova Estate

Subject Matter of Complaint

Date complaint rejected by OSB

Raised again in motion for Mills Endorsement March 10, 2020

Raised again in Bannikov s.215 Motion before Dietrich, J. November 26, 2020

Raised again in Bannikov Taxation before AJ Jean, September 1. 2021

Raised again by Filatova in Bannikova Taxation before AJ Ilchenko February 19, 2021 heard on March 15, 2022

Raised again by Filatova at hearing June 28, 2022

July 17, 2018

Bannikov

-Quantum and priority of proof of claim as secured creditor -validity of power of attorney under which assigned -details of 64 Savage Road, 225 Platten Blvd., Russian Assets, 56 Direzze Court, IB Import Export Canada, Way to Health Clinic

September 17, 2018- direction by OSB to Filatova regarding s.38 as estate has no funds

Yes- relating to allegations of transfers of Russian assets and funds

Yes -demands that Mortgagees of 64 Savage Road return secured mortgage proceeds received despite priority, investigation of Russian assets, Way to Health

Yes

October 12, 2018 (25 days after OSB rejection of prior complaint)

Bannikov

-Notice regarding proof of claim filed -conduct of first meeting of creditors

validity of power of attorney used for filing assignment -access to estate documents as creditor -opposition to discharge for failure of duties
realization on 64 Savage Road, 225 Platten Blvd., Russian Assets, 56 Direzze Court, IB Import Export Canada, Way to Health Clinic

October 23, 2018

Yes- leave denied for leave to sue Trustee for assigning Bannikov on basis of Power of Attorney held by Bannikova

Yes- relating to allegations of transfers of Russian assets and funds

Yes – demands that Mortgagees of 64 Savage Road return secured mortgage proceeds received despite priority, investigation of Russian assets, Way to Health

Yes

November 27, 2018 (35 days after OSB rejection of prior complaint)

Bannikov

Providing copies of minutes of inspector meetings and timeliness of responses from Bankrupt

December 19, 2018

Yes- regarding timeliness of responses by Trustee

March 1, 2019 (72 days after OSB rejection of prior complaint)

Bannikov

-Slowness of responses by Trustee to Filatova correspondence -revisions to minutes of meetings of creditors -Trustee obtaining further information about Russian assets after Filatova obtained s.38 Order for Russian Assets -attempt by Filatova to hold meeting of inspectors without Trustee present and to chair meeting

March 21, 2019

Yes- relating to allegations of transfers of assets and funds

Yes- demands that Mortgagees of 64 Savage Road return secured mortgage proceeds received despite priority, investigation of Russian assets, Way to Health

Yes

April 14, 2019 (44 days after OSB rejection of prior complaint)

Both

-demand by Filatova to chair meeting of Inspectors despite prior OSB statement she could not

demand by Filatova to amend minutes of meetings of inspectors despite prior OSB statement she could not
failure of Trustee to get Court hearing date despite not being in the control of Trustee -demand for criminal charges against Bankrupt by OSB -Demands for Estate documents by Filatova -demand by Filatova to file proof of claim in Bannikova Estate, where she was not a creditor to have claim disallowed -allegations of offences by Bannikova

May 14, 2019

Unknown

Yes regarding demands that discharge be delayed until packages are resent to Crown, Fintrac and CRA and relief related to transfers of assets

Yes regarding demands that discharge be delayed until packages are resent to Crown, Fintrac and CRA

August 19, 2019 (97 days after OSB rejection of prior complaint)

Bannikova

-complaint regarding s.170 Report and whether Bannikova has been convicted of an offence under the BIA- despite Filatova not being a creditor of the Bannikova Estate

August 26, 2019

Unknown

Not certain of specifics of allegation against Bannikova by Filatova from OSB letter

Yes

Yes- to extent of basis for asking that “packages” be resent to Crown

January 20, 2020 (147 days after OSB rejection of prior complaint)

OSB letter does not specify

-unknown from letter – may be related to noncompliance of Bannikov and Bannikova

February 18, 2020

Unknown

January 28 and 29, 2021 (I have counted as two complaints) (345 days after OSB rejection of prior complaint)

Both

Complaint “Packages” sent to Crown, FINTRAC and CRA requesting investigations “not professional” and should be resent, and proof of service provided to Filatova

April 26, 2021

Yes

No- complaint made after decision

Yes- Rejected again by AJ Jean

Yes

80In her materials Filatova has attempted to recast all of these rejections of her complaints by OSB as great victories where Filatova forced the Trustee to do what she requested, or to do what the Trustee would do anyway under the BIA, but faster. Having read each of the OSB Complaint Rejection Letters in both the Bannikov and Bannikova Estates I note that they generally contain the following language:

“On the basis of the available information, we have completed our review of your concerns and your complaint file has been closed accordingly.”

81The OSB, as the regulator of Trustees have great disciplinary powers under the provisions of the BIA to review the conduct of Trustee’s and, in appropriate circumstances. Each of the OSB Complain Rejection Letters states:

“In accordance with paragraph 5(3)(f) of the BIA, the OSB has a duty to receive and keep a record of all complaints from any creditor or other person interested in any estate and make such specific investigations with regards to such complaints as the Superintendent may determine.”

And

“The OSB manages a multi-faceted regulatory program and is responsible for supervising all estates and matters to which the Bankruptcy and Insolvency Act (BIA) applies, as well as certain matters under the Companies' Creditors Arrangement Act (CCAA). The ongoing monitoring of trustee, debtor, and creditor compliance in relation to the Act and its Rules and Directives is an essential part of our mandate. Our office will initiate action, as appropriate, to address the non-compliance issues it detects but unless the matter is part of the public record, we cannot share the details of our compliance and enforcement activities.”

82I take Judicial Notice of the fact that, despite investigating NINE (9) complaints made by Filatova in the Bannikova and Bannikov Estates, there is no evidence before me that the OSB has taken ANY disciplinary action whatsoever against the Trustee.

83I also take Judicial Notice of the fact that the OSB has taken a considerable amount of taxpayer funded time and effort and resources to deal with Filatova’s unfounded complaints.

84The sad part of all of this is if Filatova had concentrated her Ire and resources against Bannikova and Bannikov, instead of the Trustee, she may have been more successful in obtaining repayment of her loan.

85This is also important as, given the terms of the s.38 Order, any amounts that would have been recovered over and above the amounts claimed by Filatova in the Bannikov Proof of Claim, would have had to have been returned by Filatova to the Trustee for payment of the costs of administration of the Bannikov Estate, and distribution to the other significant unsecured creditors. Filatova’s failure to collect anything from Bannikov under the s.38 Order since its issuance in January 2019 prejudices the interests of those other creditors in the Bannikov Estate.

86From the review of thousands of pages of materials filed by Filatova and the Trustee in both the Bannikov and Bannikova Estates, it is quite apparent to me that the Courts, the Trustee and the OSB have all bent over backwards to placate Filatova’s incessant demands in both the Bannikov and Bannikova estates and that:

a) Filatova was given far more access to the records of both estates than ordinarily a creditor or inspector would be entitled to under the BIA or the BIA Rules;

b) Filatova obtained an order under s.163(2) and examined Vadim Rumberg the Manager of Way to Health Clinic on August 20, 2019;

c) Filatova obtained a s.38 Order assigning to her the Trustee’s claims relating to the Russian Assets and the Way to Health Clinic;

d) Notwithstanding that Filatova was insisting that charges be brought under s.205 of the BIA in a manner that was wholly inconsistent with how that section is supposed to function, those “packages” were indeed sent to the Crown, FINTRAC and the CRA to placate Filatova, despite the OSB and the Trustee having absolutely no ability whatsoever to affect the charging, investigation and audit discretion of the Crown, FINTRAC and the CRA, being entirely independent bodies, and despite being advised of that fact in several letters by OSB and again by AJ Jean;

e) Again, notwithstanding the Mills Endorsement in 2020, and then the Bannikov Trustee Discharge Endorsement in 2021, a year later Filatova continued to insist that the “packages” be resent as a ground of opposition to the Trustees SRD in the Filatova Bannikova Discharge Opposition, because of Filatova’s belief that the “packages” were insufficiently “professional”, rather than acknowledging that perhaps the Crown, FINTRAC and the CRA may have chosen not to exercise their discretion to investigate her complaints further, particularly where the accused Bannikov appeared to be residing in Russia.

87What has resulted from all of this frenetic activity by Filatova. Nothing.

88As stated by Dietrich J. in the Dietrich, J. s.215 Endorsement in November of 2020, Filatova “…was unsuccessful in realizing any additional assets of the Bankrupt.”

89Filatova confirmed this before me two years later.

90Had Filatova taken the advice provide by the Trustee, by the OSB in OSB Complaint Rejection Letters, as well as by AJ Jean and myself, and hired insolvency counsel to provide her with proper advice, for a likely cost less than the costs that were assessed against Filatova by Dietrich, J. alone, she may have recovered something in this estate. But she did not and here we are again assessing costs against her for her conduct in relation to the Trustee.

91And in this situation, there is no doubt in my mind that Bannikov and Bannikova are bad actors who failed in their duties as Bankrupts under the BIA.

92The Trustee properly opposed the discharge of Bannikov on the following grounds:

173(1)(a} - the assets of the bankrupt are not of value equal to fifty cents on the dollar;

173(1)(b) - the bankrupt has omitted to keep such books of account as are usual and proper in the business carried on by the bankrupt and as sufficiently disclose the business transactions and financial position of the bankrupt within the period beginning on the day that is three years before the date of the initial bankruptcy event and ending on the date of bankruptcy, both dates included;

173(1)(d) - the bankrupt has failed to account satisfactorily for any loss of assets of or any deficiency of assets to meet the bankrupt's liabilities;

173(1){e) - the bankrupt has brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of the bankrupt's business affairs;

173(1)(f) - the bankrupt has put creditors to unnecessary expense by a frivolous or vexatious defence to any action properly brought against the bankrupt;

173(1)(i) - the bankrupt has incurred liabilities in order to make the bankrupt's assets equal to fifty cents on the dollar;

173(1)(1) - the bankrupt has committed an offence under this Act or any other statute in connection with the bankrupt's property, the bankrupt or the proceedings thereunder;

173(1)(0) - the bankrupt has failed to perform the duties imposed on the bankrupt under this Act or comply with any order of the court.

Furthermore, the Bankrupt has:

i) Failed to pay LIT's fees;

ii) Failed to deliver his property to the LIT;

iii) Failed to deliver to the UT all credit cards;

iv) Failed to deliver all documents relating to his property or affairs to the LIT;

v) Failed to provide all the assistance within his power to the LIT in making an inventory of his assets;

vi) Failed to aid in the realization of his property;

vii) Failed to keep the LIT advised at all time of his place of residence or address;

viii) Failed to complete his counselling sessions;

ix) Failed to disclose any information with respect to filing any tax information;

x) Failed to attend 1st and second meeting of Creditors”

93Bannikov, apparently now residing in Russia, did not attend his discharge hearing and a “NO Order” was granted. He remains an undischarged Bankrupt.

94The Trustee properly opposed the discharge of Bannikova on the following grounds:

“The Bankrupt failed to perform the duties imposed on the bankrupt under this Act or to comply with any order of the court, Section 173(1)(o) and 158(a) please refer to Notice of Examination Question 6 and Question 2 (g)

During the examination the bankrupt indicated that they had known of 1/4 interest in a property know as Komarova 9 Unit 37 Orenburg Region, Novotroitsk In Russia. The Property was not disclosed on the Statement of Affairs. Based on records provided to the LIT, it appears the property was sold In August 2018 for approximately $20,000.00. The Bankrupt disclosed that her spouse has a POA that allows him to deal with any of her assets in Russia.

The Bankrupt failed to perform the duties imposed on the Bankrupt under this Act or to comply with any order of the Court, pursuant to section 173(1)(o) and 158(g) Please review to Question 58 tabled at the examination.

During the examination, the Bankrupt failed to admit to the LIT that she had made other transfers to Russia from a joint account, but could not recall the liming of these payments.

The Bankrupt has brought on, or contributed to, the bankruptcy by rash and hazardous speculations, by unjustifiable extravagance in living, by gambling or by culpable neglect of the bankrupt's business affairs, pursuant to section 173(e) of the BIA, please refer to question 18 in the Notice of Examination.

The Bankrupt disclosed at the examination that she transferred $50,000 to an unknown party in Russia in May 2017. She further stated that her husband had requested she send the above noted funds to Russia. She was unable to confirm if the transfer was lo an arm's length party or not.

The Bankrupt disclosed at the examination that she would come to a financial arrangement to preferentially pay the $9,500.00 owed to her daughter, question 18 ii.

During the Examination, there is inconsistencies with the information provided by the bankrupt regarding her current contact and relationship with her spouse. The bankruptcy indicated that she rarely spoke to her spouse who is currently located in Russia. The Bankrupt then stated that she contacted her spouse a few days prior to the exam and that they would discuss their family among other matters. The bankrupt Indicated that she had been aware of her spouse's alleged gambling issues 5-7 years prior to the exam and further indicated that she had concealed funds from him. However, she indicated that her spouse currently has a POA to deal with properly in Russia on her behalf despite knowing the alleged gambling issues of her spouse.

During the examination, the bankrupt indicated that she had using cash advances from credit cards, transferred money from her lines of credit to pay her credit cards and used lines of credit to pay her mortgage for a period of 6-8 months prior to filing an assignment into bankruptcy (question 18 in examination).”

95As noted above, after assessing these facts and in exercising her Registrar’s Discretion, Bannikova was discharged conditionally by AJ Jean on August, 29 2019 and discharged unconditionally by AJ Jean on September 17, 2021 after meeting her conditions.

Protections of the Trustee under the BIA

96The crux of all of this is the fact that bad non-compliant bankrupts, and estates with no funds, are a challenge to administer for Trustees.

97The general approach to the interpretation of the BIA, and the protections and remedies provided to trustees under the BIA, recognizes this reality. Courts have consistently interpreted the provisions of the BIA in a manner that recognizes that Trustees are officers of the Court and require the protection of the Court to fulfill their duties under, and the objectives of, the BIA.

98As stated in Bankruptcy and Insolvency Law of Canada, Fourth Edition, by The Honourable Mr. Justice Lloyd W. Houlden, Mr. Justice Geoffrey B. Morawetz, and Dr. Janis P. Sarra (“Houlden & Morawetz”) at “§ 2:128. Actions Against the Trustee—Generally” it is a general principal that:

“The court should be cautious in allowing applications to be made against a trustee in bankruptcy, remembering that the trustee is by definition, the trustee of an insolvent estate. It is the court's duty at all times to protect an insolvent estate against unnecessary expense: Port v. Auger, [1994] 3 All E.R. 200 (Ch.D.).”

99One of the key protections for Trustees administering estates which have few assets, where creditors are demanding that the Trustee take steps that the Trustee cannot risk, is the assignment of the claims of Trustees to creditors under s.38 of the BIA.

100In the context of interpreting the BIA in a s.38 context, which Filatova has availed herself of in the Bannikov Estate (Filatova not being eligible under s.38 in the Bannikova Estate as she is not a creditor with a proven claim as a result of demanding the Trustee disallow her proof of claim) the Court of Appeal stated the following interpretive principles for s.38 in Shaw Estate (Trustee of) v. Nicol Island Development Inc. 2009 CarswellOnt 1748, 2009 ONCA 276, [2009] O.J. No. 1333, 177 A.C.W.S. (3d) 296, 248 O.A.C. 35, 51 C.B.R. (5th) 12:

“(1) Applicable Interpretive Principles

35 It is well-established that an overly narrow, legalistic approach to the interpretation of the Act is to be avoided: A. Marquette & fils Inc. v. Mercure, 1975 195 (SCC), [1977] 1 S.C.R. 547 (S.C.C.), at p. 556. Lloyd W. Houlden, Geoffrey B. Morawetz and Janis P. Sarra in The 2009 Annotated Bankruptcy and Insolvency Act (Toronto: Thomson Carswell: 2008) note at p. 2:

The general approach to the Act by the courts has been that it is a commercial statute, the administration of which is largely in the hands of business people and technical objections should, therefore, not be given effect to beyond what is necessary for the proper interpretation of the Act...Litigation and court proceedings are to be avoided, thus maximizing the return to creditors. [Citations omitted.]

36 The general purpose of the Act is described by these authors at p. 3 of the above-cited text in part as follows:

The Act was passed to provide for the orderly and fair distribution of the property of a bankrupt among his or her creditors on a pari passu basis.

The Act permits the setting aside of preferences, settlements, and other fraudulent transactions so that all ordinary creditors may share equally in the administration of the bankrupt's assets. [Citations omitted.]

37 The central issues in this case concern s. 38(1) of the Act. In Toyota Canada Inc. v. Imperial Richmond Holdings Ltd (1994), 1994 ABCA 261, 27 C.B.R. (3d) 1 (Alta. C.A.), at paras. 14-15, leave to appeal to S.C.C. refused, [1994] S.C.C.A. No. 346 (S.C.C.), the Alberta Court of Appeal expressed the purpose of s. 38 in this fashion:

In my view, its primary purpose is to ensure that the bankrupt's assets are preserved for the benefit of the creditors. It provides the mechanism for creditors to proceed with an action when the trustee refuses or fails to act; thereby ensuring that assets of the bankrupt (which may otherwise go unrecovered) are available to creditors willing to finance the litigation.

The secondary purpose, relating to notice, is to make sure the section operates fairly. While it is fair that those parties willing to accept the risks and costs of litigation receive a preference in terms of recovering their losses, the right to that preference must be shared with all creditors.

See also, Jaston & Co. v. McCarthy (1998), 1998 6455 (BC CA), 8 C.B.R. (4th) 25 (B.C. C.A.), at paras. 48-50; Penfold v. Provenzano (1996), 1996 8035 (ON SC), 30 O.R. (3d) 230 (Ont. Gen. Div.), at para. 18.”

101In Pantziris, Re 2014 CarswellOnt 9149, 2014 ONSC 4057, 241 A.C.W.S. (3d) 778, in a situation where the Bankrupt was urging the Trustee to continue to expend funds to pursue actions possibly beneficial to the Bankrupt that had been transferred to the Bankrupt to conduct, Brown, J. as he then was, stated:

“3 The parties could not agree on who should pursue the appeal of the dismissed Keane Action. I called for written submissions. On May 13, 2014 the Trustee advised that as a result of a direction from the Divisional Court to perfect the appeal, the Trustee "was then forced to perfect the appeal in order to perfect the Bankrupt's rights and filed a 'placeholder' factum".

4 The Bankrupt submitted that the Trustee had failed to take steps to keep the Keane Action alive and therefore should perfect and argue the appeal from the order of Master Dash "so that it is in a position to return the 2010 law suit to the bankrupt in the manner in which the trustee acquired it".

5 I do not accept that submission. The Trustee's Second Report dated April 4, 2014, disclosed that the Trustee had made reasonable efforts to preserve the Keane Action, both in its preparation for and its submissions at the status hearing before Master Dash on February 19, 2014. The Trustee kept the Bankrupt's counsel informed about the status hearing and the materials it was filing for that hearing. When Bankrupt's counsel advised that he would be on vacation the week of the status hearing, Trustee's counsel asked whether there was anything he wanted the Trustee to bring to the attention of Master Dash at the status hearing. The Trustee appeared at the status hearing and made submissions to keep the Keane Action alive. Notwithstanding that Master Dash did not accept those submissions, the record disclosed that the Trustee made reasonable efforts to protect the Keane Action from dismissal. There was no failure on the Trustee's part.

6 Consequently, now that the Trustee's interest in the Keane Action has been transferred to the Bankrupt, it falls on the Bankrupt to prosecute the appeal of Master Dash's order. The Bankrupt has argued vigorously at several appearances that he sees real value in the Keane Action, despite the very adverse arbitration award made against him on December 16, 2011. If the Bankrupt sees value in that action, then he should risk his money to prosecute the appeal.”

102The BIA also provides specific protection to Trustees in s.215, requiring:

“215 Except by leave of the court, no action lies against the Superintendent, an official receiver, an interim receiver or a trustee with respect to any report made under, or any action taken pursuant to, this Act.”

103In interpreting the predecessor section to s. 215 in Walsh, Re, 1924 CarswellOnt 54, [1924] O.J. No. 252, 27 O.W.N. 8, 5 C.B.R. 27, (“Walsh”) Holmestead, K.C. sitting as Registrar stated as follows regarding the basis for the BIA providing trustees with protection with respect to proceedings against them in relation to the administration of the Bankruptcy Estate:

“13 But it must be remembered that a trustee in bankruptcy is in the same position as a receiver: Bankruptcy Act, sec. 17(2) [1 C.B.R. 27]. He is therefore a quasi officer of the Court, and he is entitled to the protection of the Court against any improper suits or proceedings in respect of any alleged liabilities arising out of his trusteeship; and any one seeking to bring any action or proceeding against him must apply to the Court for leave before doing so. See cases cited in Holmested’s Ont. Judicature Act, 1915, p. 1023; Kerr on Receivers, 7th ed., pp. 197 et seq.”

104In Pelee Motor Inn Ltd. (No. 2), Re 1979 CarswellOnt 207, 30 C.B.R. (N.S.) 216, (“Pelee Motor Inn”) Henry, J. states:

“I add that that case [Lumberking] is also authority for the proposition that the control placed upon the activities of those who seek to pursue the trustee by litigation is for the protection of the trustee as an officer of the court against unwarranted proceedings in the courts by claimants.”

105Lumberking Home & Garden Centre Ltd., Re 1975 422 (ON SC), 1975 CarswellOnt 89, 20 C.B.R. (N.S.) 181, 58 D.L.R. (3d) 531, 8 O.R. (2d) 563, appeal abandoned on consent 58 D.L.R. (3d) 531n, 8 O.R. (2d) 563n (Ont. CA) (“Lumberking”) Henry, J. also states the following relevant to some of the objections made by Filatova to the approval of the SRD:

“This latter provision reflects the policy of the law that a secured creditor is, subject to compliance with other provisions of the Act that do not affect the issue here, free to realize his security independently of the trustee and his administration of the bankrupt estate. That is a clear principle emerging from s. 49 and the Act as a whole.”

106In Re McEwen 2019 CarswellOnt 17006, 2019 ONSC 5593, 311 A.C.W.S. (3d) 243, 73 C.B.R. (6th) 257, 97 C.C.L.I. (5th) 310 (“McEwan”), Kershman, J. interpreted Walsh and Pelee Motor Inn, stating:

“44 Denial of standing in the present circumstances is consistent with the principle that courts are charged with guarding against improper and frivolous proceedings against a trustee and a bankrupt estate as guardians of the latter: Walsh, Re (1924), 5 C.B.R. 27 (Ont. S.C.); Pelee Motor Inn Ltd. (No. 2), Re (1979), 30 C.B.R. (N.S.) 216 (Ont. Bktcy.).”

107On a more general level dealing with requests to implement remedies under the BIA that would have little practical impact on recoveries for creditors in the estate, Chief Justice Morawetz stated in Giambattista (Re), 2009 2912 (ON SC) (“Giambattista”), in the context of motion brought by the Bankrupt to expunge the proof of claim of a creditor in an estate with very few assets:

“[28] This is a summary administration estate. Section 49(6) and Rule 130 of the BIA provide that if the realizable assets of the bankrupt, after deducting the claims of secured creditors, do not exceed $10,000, the provisions of the BIA relating to summary administrations apply. In this case, Ms. Giambattista declared assets of $400.

29In his affidavit, Mr. Williams states that it was clear from the outset of the bankruptcy that there would be no assets or funds available to pay creditors and while normally he would not have ruled on any proofs of claim, he was approached by Ms. Giambattista who requested that he disallow the Movado claim. Mr. Williams goes on to state that the Movado claim was subjected to a much higher standard of scrutiny than the standard normally applied to claims in bankruptcy and after reviewing the claim it was admitted.

30Although the Trustee may have admitted the claim, this does not put an end to the inquiry. Ms. Giambattista does have the ability under s.135(5) to bring forth an application to expunge the Proof of Claim.

31However, from the standpoint of the creditors, there is no benefit to the Estate in having this issue determined until such time as there are realizations in the Estate or in the Fraudulent Conveyance Action. The reason is straight forward. If there are no assets to distribute, the quantum of the claims filed against the Estate is, for distribution purposes, irrelevant. If the situation changes, and there are realizations in the estate or if proceeds are realized in the Fraudulent Conveyance Action, it could be that this issue becomes relevant. However, at this point, it is not relevant and, it seems to me that the Estate should not be burdened with any additional administrative costs in addressing this issue until it is, for distribution purposes, a relevant issue.

32From the standpoint of Ms. Giambattista, she makes the point in her affidavit sworn October 29, 2008 that the existence of the Proof of Claim may make it more difficult for her to be eventually discharged from bankruptcy and, in addition, her discharge may be subject to more onerous conditions if the claim of Movado is allowed to stand. I need not comment on this issue other than to repeat my views that neither the Trustee nor the Estate should be subjected to additional costs to address this issue at this time.

33In my view, the appropriate disposition with respect to this issue is to stay the proceedings initiated by Ms. Giambattista to expunge the Proof the Claim pending further order of the court. This matter can be revisited in the event that there are assets available for distribution to creditors in the Estate or to the participating creditors in the Fraudulent Conveyance Action. It could also be revisited in the event that Ms. Giambattista or some third party indicates that they are prepared to fully cover the expenses of the Trustee and Movado and their counsel for all costs associated with the application to expunge the Proof of Claim.”

108One of the most significant issues with a Trustee conducting litigation in an estate with no assets, as was demanded of this Trustee by Filatova in both the Bannikov and Bannikova Estates, and is among the grounds listed in the Filatova Bannikova Discharge Opposition, is that if the Trustee loses, it can be held liable personally for the costs of the winning party. As stated in Houlden & Morawetz at § 8:114. Personal Liability of the Trustee for Costs”

“The principal situation where a trustee in bankruptcy has been ordered to pay costs personally is where the trustee brings proceedings and the estate has no assets or insufficient assets to pay costs if the trustee is unsuccessful: Re Revere Electric Inc. (1993), 1993 8543 (ON SC), 13 O.R. (3d) 637, 19 C.B.R. (3d) 29, 1993 CarswellOnt 202 (Gen. Div.). The reasoning behind these decisions is that a trustee in this position should either obtain an indemnity agreement from creditor or inspectors before instituting proceedings; or if they refuse to do so, permit a creditor to take the proceedings under s. 38(1): Thorne v. Canadian Steering Wheel Co. (1922), 1922 550 (ON SC), 2 C.B.R. 455 (Ont. S.C.); Re Ellsey Dress Co. (1922), 3 C.B.R. 47 (Ont. S.C.); Thorne Riddell Inc. v. Sinclair (1983), 1982 1678 (ON CJ), 49 C.B.R. (N.S.) 196 (Ont. S.C.); Touche Ross Ltd. v. Weldwood of Canada Sales Ltd. (1984), 1984 2103 (ON SC), 49 C.B.R. (N.S.) 284 (Ont. S.C.); Canadian Imperial Bank of Commerce v. 437544 Ontario Inc. (1995), 1995 362 (ON CA), 43 C.P.C. (3d) 216, 86 O.A.C. 241, 1995 CarswellOnt 1218 (C.A.); Carter Oil & Gas Ltd. (Trustee of) v. 400133 B.C. Ltd. (1998), 1998 ABQB 135, [2000] 1 W.W.R. 410, 217 A.R. 135, 72 Alta. L.R. (3d) 285, 1998 CarswellAlta 1303 (Q.B.), affirmed (1998), 1998 ABCA 372, [1999] 4 W.W.R. 523, 228 A.R. 1, 188 W.A.C. 1, 64 Alta. L.R. (3d) 269, 1998 CarswellAlta 1013 (C.A.). The fact that the inspectors authorized the bringing of the proceedings is no protection to the trustee; the trustee is still liable personally for the costs if there are insufficient assets in the estate to pay them: Re Feldstein (1926), 7 C.B.R. 617 (Que. S.C.); Touche Ross Ltd. v. Weldwood of Canada Sales Ltd. (1984), 49 C.B.R. (N.S.) 284 (Ont. S.C.). A fortiori it is no defense to the trustee that he was acting bona fide in bringing the proceedings: Touche Ross Ltd. v. Weldwood of Canada Sales Ltd. (1984), 49 C.B.R. (N.S.) 284 (Ont. S.C.); Berry v. Cypost Corp. (2004), [2004] B.C.J. No. 403, 2004 CarswellBC 426, 50 C.B.R. (4th) 36, 26 B.C.L.R. (4th) 62, 2004 BCSC 244 (B.C. S.C.).”

109In this case, had the Trustee acquiesced to Filatova’s demands, to conduct all of the litigation Filatova was insisting that the Trustee conduct, mostly to her personal benefit, without providing any funding or meaningful indemnification for costs if the litigation was unsuccessful, then this Trustee would likely had been liable for the costs to the Bankrupts and any other third parties involved, personally, had the Trustee lost.

110What principals can be synthesized from this jurisprudence relating to this opposition by Filatova to the approval of the SRD and the costs determination?

111The principles of interpretation of the BIA are succinctly summarized as follows in Houlden & Morawetz at § 1:8. Interpretation of Bankruptcy and Insolvency Legislation:

“The Supreme Court of Canada has held that the starting point for statutory interpretation in Canada is Driedger's definitive formulation in Construction of Statutes (2nd ed. 1982) at p. 87:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act and the intention of Parliament.

Barrie Public Utilities v. Canadian Cable Television Assn. (2003), 2003 CarswellNat 1226, 2003 CarswellNat 1268, 2003 SCC 28, [2003] 1 S.C.R. 476.” (“Barrie Public Utilities”)

112In Re Handelman 1997 12409 (ON SC), 1997 CarswellOnt 2891, [1997] O.J. No. 3599, 48 C.B.R. (3d) 29, 73 A.C.W.S. (3d) 896 , (“Handelman”) Farley, J. stated:

“2 The BIA must be given efficacy in the insolvency context. That is, the language of the Act must be given a reasonable interpretation which supports the framework of the legislation. Unless the language is unambiguous, an absurd result should be avoided.”

113In terms of the taxation of the Statements of Receipts and Disbursements of Trustees, the following principles are relevant, as summarized in Houlden & Morawetz at “§ 2:170. Remuneration of Trustee Generally”:

“The onus is on the trustee to satisfy the court that the amount claimed for remuneration is justified: Re Omni Data Supply Ltd. (2002), 39 C.B.R. (4th) 95, 2002 CarswellBC 3111, 2002 BCSC 1631 (B.C. S.C.).

The Ontario Superior Court of Justice held that the following principles were required to be considered on taxation: (a) trustees are entitled to fair compensation for their services; (b) unjustifiable payments for trustee fees to the detriment of the bankrupt estate and its creditors must be prevented; and (c) efficient, conscientious administration of the bankrupt estate for the benefit of the creditors and, so far as the public is concerned, in the interests of the proper carrying-out of the principles and objectives of the BIA ought to be encouraged …Re Nelson (2006), 2006 23396 (ON SC), 2006 CarswellOnt 4198, 24 C.B.R. (5th) 40 (Ont. S.C.J. [Commercial List]), additional reasons at (2006), 2006 34276 (ON SC), 2006 CarswellOnt 6192, 31 C.B.R. (5th) 181 (Ont. S.C.J. [Commercial List]); Re Hoskinson (1976), 22 C.B.R. (N.S.) 127 (Ont. S.C.).”

114The BIA provisions, and jurisprudence, summarized above protecting the Trustee, cannot be “interpreted harmoniously” if they also do not protect a Trustee in proceedings dealing with taxation and discharge of Trustees, which are also statutory duties imposed on Trustees under the BIA, from parties whose oppositions to taxation and discharge are:

“unwarranted” (“Pelee Moter Inn”), or

“improper suits and proceedings” (“Webster”), or

“improper and frivolous proceedings” (“McEwan”)

and where factually due to lack of assets in an estate, the objections of the “creditor” to taxation and discharge are in a context where:

“…there is no benefit to the Estate in having this issue determined…the Estate should not be burdened with any additional administrative costs in addressing this issue until it is, for distribution purposes, a relevant issue” (“Giambattista”)

115To apply these principles requires me to assess the specific objections raised by Filatova in the Filatova Bannikova Discharge Opposition, filed in opposition to the approval of the SRD, and opposing the Discharge of the Trustee in the Bannikova Estate, in the context of the behavior of Filatova in both the Bannikov and Bannikova Estates, and in light of the findings by the OSB in the OSB Complaint Rejection Letters, the Mills, J. Endorsement, the AJ Jean Bannikov Trustee Discharge Endorsement and the Dietrich, J. s.215 Endorsement.

Specific Grounds of Opposition to taxation and discharge in Bannikova Estate by Filatova:

A) Grounds Relating to Mortgagees returning funds:

“1. Equitable Bank, a first mortgage company, filed their Proof of Claim for $682,873 but the Trustee paid $701,453 to this creditor which is exceeded for $18,580, the Trustee must provide returning this money back to the Estate for the benefit of all creditors. (Proof of Claim of Equitable Bank; LIT's Supplementary s.170 Report, filed).

The Trustee paid $222,085 to Benson Custodian Corporation, a second mortgage company, which did not file any claim. According to 124 (1) of BIA - "Every creditor shall prove his claim, and a creditor who does not prove his claim is not entitled to share in any distribution that may be made." Therefore the Trustee must provide returning this money back to the Estate for the benefit of all creditors. (LIT's Supplementary s.170 Report).”

116These grounds of opposition, like many of the issues raised by Filatova, are based on a fundamental misunderstanding of the way the BIA functions.

117The law of participation of secured creditors in Bankruptcy proceedings is summarized as follows in Houlden & Morawetz § 6:159. General Position of Secured Creditors

“Where a debtor has made an assignment or has had a bankruptcy order made against him or her, the policy of the Act is not to interfere with secured creditors except insofar as may be necessary to protect the estate as to any surplus in the assets covered by the security: Re King George Billiard Hall, 1925 489 (AB KB), 5 C.B.R. 465, [1925] 1 W.W.R. 172, [1925] 2 D.L.R. 514 (Alta. T.D.); Re Cole (1926), 7 C.B.R. 644 (N.B. K.B.); White & Co. v. “Iona” (The) (1921), 1 C.B.R. 415, 69 D.L.R. 94 (Ex. Ct.); Re Cie du Boulevard Pie IX (1921), 1921 594 (QC CA), 3 C.B.R. 163, 67 D.L.R. 385, 28 R.L.N.S. 120 (C.A.).

Subject to ss. 69.3(2), 79, 81, 128(1) and (1.1), 129(1), (2) and (4) and 149, secured creditors may ignore the bankruptcy and deal with their security in the usual manner followed by creditors holding that kind of security: F.B.D.B. v. Québec (Comm. de la santé & de la sécurité du travail), 1988 105 (SCC), [1988] 1 S.C.R. 1061, 68 C.B.R. (N.S.) 209, 50 D.L.R. (4th) 577, 14 Q.A.C. 140, 84 N.R. 308, 1988 CarswellQue 142, 1988 CarswellQue 31.

The Bankruptcy and Insolvency Act defers to the rights of secured creditors as they exist under provincial law: Cdn. Acceptance Corp. v. Gillespie (1985), 1985 4152 (NB CA), 56 C.B.R. (N.S.) 197, 65 N.B.R. (2d) 38, 167 A.P.R. 38 (C.A.).

And

The following is a general outline of the position of secured creditors under ss. 127–133:

A secured creditor may rely on its security and not prove a claim. The secured creditor may proceed to realize the security, unless the court otherwise orders: s. 69.3(2);
Where a secured creditor realizes its security, the secured creditor may prove for the balance due to its after deducting the net amount realized: s. 127(1);

118In addition under Houlden & Morawetz § 6:287. Priority of Claims, Generally Secured Creditors states:

“Money realized from the sale of security held by secured creditors is not property of the bankrupt: Re Toronto Specialty Manufacturing Co. (1932), 14 C.B.R. 77, 41 O.W.N. 224 (Ont. S.C.). The distribution of such money will be governed by provincial law, the distribution ordinarily being carried out in sale proceedings under a mortgage or hypothec: see, for example, Supertest Petroleum Corp. v. Jacques-Cartier Automobiles Inc., [1960] Que. S.C. 329, 2 C.B.R. (N.S.) 62, affirmed 6 C.B.R. (N.S.) 74, [1963] B.R. 336. If there is a surplus after payment of the secured claim and expenses, the surplus will be property of the bankrupt and will be distributed in accordance with the scheme of distribution in the Bankruptcy and Insolvency Act: Roynat Ltd. v. Kandanos Restaurant Ltd. (1980), 37 C.B.R. (N.S.) 131 (B.C. S.C.).’

119In addition, in relation to interest and other charges owing on secured claims, Houlden & Morawetz states at § 6:254. Interest and Other Charges on Secured Claims:

“When the realization from the security held by a secured creditor is sufficient to pay interest and other charges, the secured creditor is entitled to be paid in full, including interest up to the date of payment. Interest does not, in such a case, stop at the date of bankruptcy: Toronto Dominion Bank v. Druker (1956), 36 C.B.R. 39, [1957] Que. S.C. 389 (S.C.); Re Civano Construction Inc. (1961), 4 C.B.R. (N.S.) 294 (Que. S.C.). Even if a secured creditor had consented to a sale by the trustee of the assets on which the secured creditor holds security, the secured creditor is entitled to interest to the date of payment: Toronto Dominion Bank v. Druker (1956), 36 C.B.R. 39, [1957] Que. S.C. 389 (S.C.); Re Civano Construction Inc. (1961), 4 C.B.R. (N.S.) 294 (Que. S.C.).”

120Filatova is profoundly wrong in her interpretations of the BIA that ground these two objections to taxation and discharge of the Trustee in the Bannikova Estate. From having read all of the materials filed on the Bannikov Trustee Discharge, and that were before Dietrich, J., it is apparent to me that the Trustee correctly assessed that Equitable Bank and Benson Custodian Corporation were secured creditors with valid enforceable mortgages on the 64 Savage Road Newmarket property. After the sale, the application of the sale proceeds to the principle, interest and allowable costs of the realization by these secured creditors reduced the proceeds payable to the Trustee in the Bannikov Estate and the Bannikova Estate.

121Occam’s Razor, and the evidence provided on this motion by the Trustee, completely explains that the increased amount paid to Equitable Bank results from the interest and realization costs payable to Equitable Bank under its mortgage between the date of the Bankruptcy and the date of realization on the 64 Savage Road property.

122Accordingly the first ground of opposition fails on the law and facts as found by the Court.

123With respect to the second ground of opposition, as noted, Secured Creditors are not required to file a proof of claim under the provisions of s.69.3(2) of the BIA, and only if they suffer a shortfall and wish to receive a dividend from the Bankruptcy Estate, which Benson Custodian Corporation did not suffer. Accordingly the second ground of opposition also fails in fact and law.

124In addition, as I have set out previously, these two grounds relating to demand that the secured creditors return realization funds to the Bankruptcy Estates were already rejected in the July 17, 2018, October 12, 2018, and March 1, 2019 OSB Complaint Rejection Letters, and dealt with in the Dietrich, J. s.215 Endorsement. Oddly, this specific complaint appears not to have been actually raised by Filatova in opposing the Bannikov Estate Discharge.

125In any event, since Filatova is not a creditor of the Bannikova Estate, at her own demand, and has no standing as a creditor of the Bannikov Estate to oppose the Bannikova Trustee discharge, and is no longer an inspector of the Bannikov Estate, even if these monies were returned to the Bannikova Estate by the Secured Creditors, no dividend would have been payable to Filatova as a result.

B) Grounds relating to claims already assigned to Filatova under s.38 Order in the Bannikov Estate:

During the Examination, the Bankrupt indicated that she had owned of¼ interest in a property know as Komarova 9, Unit 37, Orenburg Region, City of Novotroitsk, Russia. This property was sold after the initial bankruptcy event for approximately $20,000. (LIT's Supplementary s.170 Report, Form 82, s. 6(b)). The Trustee must provide returning of the corresponding part of the money to the Estate for the benefit of creditors.
Pursuant Order 31-2375149 from August 20, 2019, according to Way to Health Clinic management Examination, the Bankrupt had been receiving money from the Clinic. (LIT's Supplementary s.170 Report, Minutes of Examination, questions 15 and 17). The Trustee must investigate this source of income of the Bankrupt for the benefit of creditors.”

126As noted above, Filatova has had assigned to her under the terms of the s.38 Order the ability to pursue the assets of Bannikov in Novotroisk Russia including the apparently jointly owned property with Bannikova, and also payments made by the Way to Health Clinic, insofar as they relate to amounts payable to Bannikov.

127These issues were also raised by the Trustee in the s.170 Report and considered by AJ Jean at the discharge hearing for Bannikova. In addition the Russian assets were also considered by AJ Jean in the Bannikov Trustee Discharge Endorsement where AJ Jean stated:

128As cited as applicable in the Bannikov Trustee Discharge Endorsement by AJ Jean, Re Dubyk (2009), 59 C.B.R.(5th) 47 (Sask. Q.B.)(“Dubyk”) states:

“36 It is settled law that the discharge of a bankrupt or of a trustee is not a bar to a s. 38 proceeding. (see: Gladstone v. Bronson Granite & Marble Ltd. (1998), 4 C.B.R. (4th) 265 (Ont. Bktcy.) at para. 25; Beothic Fish Processors Ltd., Re, 2009 NLTD 19 (N.L. T.D.) at para. 18; Hutton v. Bitten (2001), 2001 BCSC 209, 24 C.B.R. (4th) 47 (B.C. S.C.), 209 at para. 12; Royal Bank v. King (1991), 1991 8324 (ON SC), 82 D.L.R. (4th) 225 (Ont. Gen. Div.); Bennett on Bankruptcy, at p. 107.)

37 More to the point, the courts have held that the trustee's discharge does not affect the operation of a s. 38 order. (The 2009 Annotated Bankruptcy and Insolvency Act, at p. 104 (citing Markis v. Soccio, 35 C.B.R. 1, [1954] C.S. 457 (C.S. Que.); Coulter, Re (1968), 11 C.B.R. (N.S.) 250 (Ont. S.C.); Gladstone v. Bronson Granite & Marble Ltd. supra).

38 The case of Penfold v. Provenzano (1996), 1996 8035 (ON SC), 42 C.B.R. (3d) 148 (Ont. Gen. Div.) provides a very helpful discussion on the purpose of s. 38 and its compatibility with the rights of bankrupts and trustees. At paragraph 18 the court observes:

“Section 38 is clearly aimed at protecting and advancing the interest of creditors where the trustee has failed or refused to do so. By this mechanism, the creditors' interest may be independently investigated and adjudicated upon, without risk or cost to the trustee. The honest but unfortunate debtor's discharge and rehabilitation is not undermined in the process. The result either way supports a full and fair distribution of the debtor's property amongst the creditors..... If the creditors seeking the benefit of section 38 fail, then they do so at their own risk, without consequence to the trustee or bankrupt.”

129Accordingly, applying Dubyk Filatova’s failure to date to enforce the claims assigned to her by the Trustee of the Bannikov Estate under the s.38 Order is not a reason to refuse to discharge the Trustee as Trustee of the Bannikova Estate.

C) Grounds Relating to Matters raised in Trustee’s s.170 Report for Bankrupt’s Discharge hearing :

“3. During the Examination under Oath by Official Receiver, the Bankrupt disclosed that she had transferred $50,000 from her Royal Bank account to an unknown party in Russia a year before the bankruptcy (LIT's Supplementary s.170 Report, Form 82, s.6 (b)). The Trustee did not perform any investigation of this transfer with Royal Bank. This transaction must be void according to s. 4(1) of Assignments and Preferences. The Trustee must provide returning this money to the Estate for the benefit of creditors.

During the Examination, the Bankrupt disclosed that she had entered into a financial arrangement to preferentially pay the $9,500 owed to her daughter. (LIT's s.170 Supplementary Report, s. 6(b)). According to s. 4(2) of Assignments and Preferences Act if a debtor cannot pay their creditors and makes a transfer or payment favouring one particular creditor, that transfer or payment is considered a fraudulent preference and is void, thereby the $9,500 payment made by the Bankrupt to her daughter must be void and the Trustee must provide returning this money to the Estate for the benefit of creditors.
During the Examination, the Bankrupt confirmed that she had transferred $343,900 from her joined account to her personal undisclosed account to hide the money from her spouse (Revised LIT's sl70 Supplementary Report, Examination of Bankrupt by Official Receiver, question 49). But by this action, the Bankrupt also had hidden the money from her creditors and others. During two years before the bankruptcy, the Bankrupt had been concealing and hiding money from the joined account to her personal account to move the funds out of reach of her potential creditors and creditors of her spouse. Those transactions must be void according to s.2 of Fraudulent Preference Act F.29 and to s. 4(1) of Assignments and Preferences. The Trustee must provide returning this money to the Estate for the benefit of creditors.
For the bankruptcy, the Bankrupt disclosed a Royal Bank account #05172-5054663 joined with her spouse with a $0 balance at the date of the bankruptcy event. But during the Examination the Bankrupt disclosed that she owns other accounts. (Revised LIT's s.170 Supplementary Report, Examination of Bankrupt by Official Receiver, questions 23, 24). The Trustee must investigate the other bank accounts of the Bankrupt for the benefit of creditors.
The Bankrupt had taken a $210,000 loan one year before the bankruptcy and had a $0 balance at the bankruptcy event. The Trustee must investigate where the money went to. (Revised LIT's s.170 Supplementary Report, Royal Bank transactions of account 05172- 5054663)
According to s.4 (i) of LIT's Supplementary s.170 Report, the Bankrupt has made payments in respect of the agreed-upon LIT's tees in the amount of $2,025. But the Bankrupt at the Examination confirmed that she did not pay and will not pay the Trustee anything. (Revised LIT's s.170 Supplementary Report, Examination of Bankrupt by Official Receiver, questions 59, 60). The Trustee has to clarity this issue.”

130The Trustee in her Supplementary s.170 Report raised many of these issues for the Court to consider. AJ Jean did not find a sufficient degree of evidence being present to exercise her Discretion to incorporate these issues as conditions of Discharge.

131In addition, because of the key issue in these proceedings, that there is no money in the Estate, none of the Creditors of the Bannikova Estate who, unlike Filatova, have proven claims in the Bannikova Estate have chosen to either fund the Trustee to pursue any of these issues or have them assigned under s.38. Filatova did not have any of these claims assigned to her under s.38 prior to her claim being disallowed, and becoming ineligible.

132In addition there are practical issues. To my knowledge, Canada has no Treaty with Russia relating to the reciprocal enforcement of Ontario Court Orders. With respect to the $50,000 allegedly transferred to “an unknown party in Russia” the trustee seeking the relief requested by Filatova in her objection under the Ontario provincial Assignments and Preferences Act would be legally and practically pointless, even if the relief was available in these fact circumstances under that Act, when the transaction being sought to be set aside involved monies in Russia.

133There could be significant issues with even having the authority of a Trustee appointed under Canadian law recognized in Russia. There is also the issue of whether the sanctions regime currently in force would even allow any such activity in Russia by the Trustee.

134Even without these complications, the quantum of the $50,000 claim would be very difficult to affordably litigate in the ordinary Civil Courts on a cost/benefit basis.

135There is no evidence before me on this motion regarding the legal legitimacy of the underlying facts as the basis for a fraudulent conveyance action, as Filatova is insisting that the Trustee commence, at least 7 years after the alleged transfer.

136There is a similar practicality issue about bringing action against the daughter for $9,500. There is no evidence before me on this motion regarding the legal legitimacy of the underlying facts as the basis for a fraudulent conveyance action, as Filatova is insisting that the Trustee commence, at least 7 years after the alleged transfer, even ignoring that the monies sought to be recovered in the proposed action are in Russia.

137With respect to the monies allegedly hidden by Bannikova from Bannikov, I note that as an alleged “joint asset” the other holder of the “joint account” is Bannikov, and therefore the Trustee of the Bannikov estate would have had the direct claim to these assets, even if such assets indeed existed.

138I note that AJ Jean had determined that the Trustee had fully administered Bannikov Estate and discharged the Trustee in the Bannikov Trustee Discharge Endorsement 2 years ago. I have no knowledge whether that specific objection was raised by Filatova at the Bannikov Trustee discharge hearing, but it is certainly not evident from AJ Jean’s endorsement that Filatova did oppose on that basis.

139I also note that the summary made by Filatova in her objection is a misleading recitation of Bannikova’s actual testimony at the s.161 examination. The Bankrupt’s actual testimony was:

140Accordingly, I can find no evidence whatsoever before me on this motion regarding the legal legitimacy of the underlying facts as the basis for a fraudulent conveyance action, as Filatova is insisting that the Trustee commence, at least 7 years after the alleged transfers.

141With respect to the “other accounts”, again, I can find no evidence whatsoever before me on this motion regarding the legal legitimacy of the underlying facts of the existence of the “other accounts” as the basis for any kind of remedy enforceable by the Bannikova Estate, at least 7 years after the alleged transfers made to those “other accounts”.

142With respect to the alleged $210,000 loan, this appears to, again, be discussing the Benson Custodian 2nd mortgage. Filatova’s misleading recitation in her objection ignores the Bankrupt’s s.161 testimony on this issue, which states at Q.18:

“(a) Benson Custodian Corporation (17-1551 - Claims Register - Secured - no proved) - $210,000 When did you get this credit?

Bankrupt: In May 2017. Back then the cost of the house was very high and we obtained the loan for the house. We obtained this loan and the house was a security for the loan.

OR: What was this credit used for?

Bankrupt: At the first place we wanted to finish basement in order to sell the house at a right price and to pay for our credit cards, because the interest on the loan was lower than the credit cards. Back then we had a joint account so I am not sure how much money he took out or what he did with it.”

143Accordingly this objection is based on a false and misleading submission by Filatova contrary to the Bankrupt’s actual sworn testimony.

144I can find no evidence whatsoever before me on this motion regarding the legal legitimacy of the underlying facts of the existence of the $210,000 loan as the basis for any kind of remedy enforceable by the Bannikova Estate, at least 7 years after the alleged transfers made to those “other accounts”. In fact it appears the Bankrupt’s evidence was she paid off credit cards, renovated the basement and Bannikov may have used portions of the proceeds to gamble.

145Finally, regarding Filatova’s objection to the Bankrupt’s payment of the Trustee’s fee, as virtually the only recovery in this estate, I cannot comprehend the complaint. Is it Filatova’s submission that the Trustee should repay it to the Bankrupt because of inconsistency with the Bannikova’s s.161 testimony? How would this benefit the Bannikova Estate?

D) Issues relating to the Trustee re-re-re-sending “packages” to the Crown, FINTRAC and the CRA.

“11. During Court hearings on February 18, 2020, No.31-2368680, the Trustee confirmed that she had sent reports to Crown Attorney for offences under sections 198 (1) (a, c, f) and 201(3) of the Act; to the FINTRAC for investigation of possible money laundering commuted by the Bankrupt in 2016-18 years; to the CRA with a request of audit for the Bankrupt's taxes for 2016-2018 years. But the Trustee misled the Court because she was not able to provide a date of the delivery and the packages were not done properly as it was reported to the Court. The Trustee must follow the Court decision, repeat the packages to the authorities, and provide clear delivery confirmation. I'm asking the court to refuse the discharge of the Trustee till the mentioned above issues in the management of the Estate of Elena Bannikova are fixed.”

146As noted previously, this issue has been dealt with by the Mills Endorsement, was the subject matter of the May 14, 2019 and April 26, 2021 OSB Complaint Rejection Letters and by AJ Jean in the Bannikov Trustee Discharge Endorsement where AJ Jean stated, on June 1, 2021, a year prior to Filatova trying again with me on this Motion:

“Furthermore, any issues concerning criminality, FINTRAC and CRA are issues within the purview of these other authorities and are not a basis for refusing the trustee's discharge. The estate is without funds and, in fact, the trustee has suffered a significant deficiency in the administration of the estate.”

147I concur with AJ Jean. Repackaging yet again, two years later, the “packages” to the Crown, FINTRAC and CRA will not change the outcome of the charging and audit discretion of the Crown, FINTRAC and CRA, with respect to allegations made related to events that occurred almost a decade previously. Filatova seems unwilling to acknowledge that the Crown, FINTRAC and CRA will not be changing their decision.

Conclusions on Objections to Taxation and Discharge raised by Filatova:

148AJ Jean, in the Bannikov Trustee Discharge Endorsement in 2021 summarized the principles for discharge of Trustee under the BIA, which are equally applicable in the Bannikova Estate:

“I turn to the merits of the trustee's application for discharge.

Subsection 41(2) of the BIA provides: "The court may discharge a trustee with respect to any estate on full administration thereof or, for sufficient cause, before full administration."

149In accordance with the statutory tests, under s.41(6) I have considered, and rejected, ALL of the objections filed by Filatova to refuse to grant the discharge of the Trustee in the Bannikova estate, for the reasons I have set out, in detail.

150None of the objections raised by Filatova are a basis for me refusing to approved the SRD or for the Court to grant the discharge of the Trustee.

151No creditor with an actual proven claim in the Bannikova Estate has objected to the approval of the SRD and the discharge of the Trustee in the Bannikova Estate. Neither has the Superintendent.

152On the review of all of the evidence before me, I find that that in relation to the administration of the Bannikova Estate:

A) The Trustee has completed all of its duties under the BIA;

B) the Bannikova Estate and all of the property of the Bannikova Estate have been fully administered;

C) that in any event, sufficient cause exists under the provisions of s.41(2) of the BIA to discharge the Trustee.

153I will exercise my Registrar’s Discretion to approve the SRD and to Discharge the Trustee in the Bannikova Estate.

Disposition of Filatova’s Objections to Approval of the SRD:

154The SRD submitted is for the approval of the Trustee’s fees and disbursements in this Summary Administration Bankruptcy Estate, calculated on the Summary Administration Tariff, in the amount of $1,539.14 (not including HST of $213.09) despite the tens of thousands of dollar value unbilled WIP that the Trustee has claimed as having been incurred to deal with Filatova. I will assess those costs separately.

155Generally, in non-tariff cases, the following principles as set in Houlden & Morawetz at § 2:170. Remuneration of Trustee Generally are applicable:

“The Ontario Superior Court of Justice held that the following principles were required to be considered on taxation: (a) trustees are entitled to fair compensation for their services; (b) unjustifiable payments for trustee fees to the detriment of the bankrupt estate and its creditors must be prevented; and (c) efficient, conscientious administration of the bankrupt estate for the benefit of the creditors and, so far as the public is concerned, in the interests of the proper carrying-out of the principles and objectives of the BIA ought to be encouraged. The court held that where a trustee in bankruptcy has not administered a bankrupt estate in accordance with the BIA and has not fulfilled its statutory duties, whether at all or on a timely basis, the registrar has the discretion to reduce the trustee's fees on taxation. This authority exists whether or not the trustee's conduct or lack thereof has had a negative financial impact on the bankrupt estate. The court further held that in arriving at an appropriate amount by which the trustee's fees ought to be reduced, a registrar ought to consider whether: the trustee's deficiencies were inadvertent; harm was caused to the bankrupt estate; and the office practices of the trustee that led to the deficiencies were remedied once brought to the trustee's attention: Re Nelson (2006), 2006 23396 (ON SC), 2006 CarswellOnt 4198, 24 C.B.R. (5th) 40 (Ont. S.C.J. [Commercial List]), additional reasons at (2006), 2006 34276 (ON SC), 2006 CarswellOnt 6192, 31 C.B.R. (5th) 181 (Ont. S.C.J. [Commercial List]); Re Hoskinson (1976), 22 C.B.R. (N.S.) 127 (Ont. S.C.).”

156Applying these principles, I find that, prior to determination of costs of Filatova’s failed objections, the $1,539.14 claimed by the Trustee under the Summary Administration Tariff should NOT be reduced as:

(a) it constitutes fair compensation for the services rendered by the Trustee;

(b) these are not unjustifiable payments for trustee fees to the detriment of the bankrupt estate;

(c) the Trustee in the Bannikova Estate conducted efficient, conscientious administration of the bankrupt estate for the benefit of the creditors and in the interests of the proper carrying-out of the principles and objectives of the BIA, despite the conduct of Filatova;

(d) the Trustee administered the Bannikova Estate in accordance with the BIA and has fulfilled its statutory duties on a timely basis, despite the conduct of Filatova.

157For all of these reasons, including that as Filatova is not a creditor with a proven claim in the Bannikova Estate, she has no standing to oppose the approval of the SRD, and exercising my Registrar’s Discretion, I find that the Receipts and Disbursements reported by the Trustee in the SRD, and the subject of a Positive Comments Letter from the OSB, are fair and reasonable in all of the circumstances of the administration of this extremely difficult estate, and subject to the determination of the Trustee and OSB as to how the Costs I will be awarding to the Trustee on this motion will be accounted for, and whether an amended SRD will need to be approved to account for the receipt of those costs that will be payable by Filatova, I will approve the SRD with disbursements of AT LEAST $2,169.33 as currently requested by the Trustee and approved by the OSB.

158If an amended SRD must be approved by me, I will approve that amended SRD at a Case Conference attended by Ms. Russo, and the OSB, if the OSB wishes to appear.

159Because I have found that Filatova has no standing to further oppose the approval of the SRD or the Discharge of the Trustee, as she has been determined by disallowance to NOT be a proven creditor of the Bannikova Estate, exercising my Registrar’s Discretion I order and direct in relation to the Bannikova Estate that Filatova is entitled to no further Notice of any hearing or further administrative step in the administration of the Bannikova Estate, service of any notice under the BIA on Filatova is not required, and Filatova will have NO standing to appear on any hearing or other proceeding relating to the Bannikova Estate, under the provisions of ss. 4.2, 34(1), 41(4), 41(5), 41(6), 187(9) 187(11), 187(12), 192(1)(i) and (k) of the BIA and Bankruptcy and Insolvency General Rules 3, 6(2) and (4), 58(5), 60, 61, 64, 65, and 67.

Disposition of Filatova’s Objections to Discharge of Trustee:

160Because of the mandatory nature of the provisions of s.41 of the BIA, once the SRD is taxed by me, the Trustee is to follow the usual procedure for discharge under s.41 and Bankruptcy and Insolvency General Rule 67(2)-(4) as a Summary Administration Bankruptcy Estate, having disposed of the objections from Filatova in these reasons.

161I will remain seized of this matter, and as per my prior findings, Filatova will NOT be entitled to any further notice, of any kind, with respect to the Bannikova Estate.

DETERMINATION OF TRUSTEE’S COSTS CLAIM AGAINST FILATOVA

162The Trustee was entirely successful in having the SRD approved, despite all of the objections made by Filatova.

163Filatova was NOT successful, in any way, in her objections.

164No agreement was reached by the Parties as to costs, despite my urging.

165Accordingly I will provide my Order as to Costs.

Law and Analysis on Costs

General Principles

166Subject to the provisions of an Act or the Rules of Civil Procedure, 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)).

167Under 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.

168Bankruptcy 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, 283 A.C.W.S. (3d) 696, 51 C.B.R. (6th) 305 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.”

The Registrar in that case also applied the very influential Ontario Civil decision of Boucher v. Public Accountants Council (Ontario) 2004 14579 (ON CA), [2004 CarswellOnt 2521 (Ont. C.A.)], 2004 14579 (“Boucher”) in assessing the costs award.

169In Sally Creek Environs Corp., Re 2010 CarswellOnt 2634, 2010 ONCA 312, 188 A.C.W.S. (3d) 344, 261 O.A.C. 199, 67 C.B.R. (5th) 161, (“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 270 (ON SC), [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.”

170In Kaptor Financial Inc. v. SF Partnership, LLP. 2016 CarswellOnt 17052, 2016 ONSC 6607, [2016] O.J. No. 5612, 272 A.C.W.S. (3d) 25, 41 C.B.R. (6th) 262, (“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.

171In Kaptor, Newbould, J. stated the following that is relevant to the allegations made by MCO against the Administrator, the Consumer Debtor and Manis on this Motion:

“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 34 (SCC), [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), 1994 10998 (ON CA), 17 O.R. (3d) 1 (Ont. C.A.).

4 Unfounded allegations of improper conduct seriously prejudicial to the character or reputation of a party can give rise to costs on a substantial indemnity scale. See 131843 Canada Inc. v. Double "R" (Toronto) Ltd.(1992), 7 C.P.C. (3d) 15 (Ont. Gen. Div.) per Blair J. (as he then was). In Bisyk (No. 2), Re(1980), 1980 1843 (ON SC), 32 O.R. (2d) 281 (Ont. H.C.); aff'd [1981] O.J. No. 1319 (Ont. C.A.), Robins J. (as he then was), held that unproven allegations of undue influence in the preparation of a will were allegations of improper conduct seriously prejudicial to the character or reputation of a party deserving of costs on a solicitor and client basis. Both of these cases were referred to with acceptance in Davies v. Clarington (Municipality)(2009), 2009 ONCA 722, 100 O.R. (3d) 66 (Ont. C.A.) at para. 47.

5 In this case, the position of Mr. Inspektor that the settlement release was no bar to the claim of Trendi Dezign Incorporated was doomed to fail and an abuse of process in an attempt to circumvent the settlement. As stated in my endorsement allowing the motion of the plaintiffs, what Mr. Inspektor was attempting to do amounted to an end-run around the clear terms of a release negotiated to protect the participants from this very situation. This entitles the plaintiffs to their costs on a substantial indemnity basis. Moreover, the completely unsubstantiated allegations of Mr. Inspektor in his argument regarding costs of Mr. Larry breaching an undertaking given to the court are grounds for the higher level of costs.

6 Regarding the Trustee, Mr. Inspektor's motion materials made several serious and unsubstantiated allegations against the Trustee/Receiver designed to discredit Crowe Soberman. These allegations which were completely unrelated to the relief sought, included allegations that Crowe Soberman was part of a conspiracy with Steven Uster to expose Mr. Inspektor's theft of funds from the Kaptor Group, ignored material facts in its reports to the Court, and in fulfilling its Court ordered duties and statutory obligations as Court-Appointed Receiver of the Kaptor Group engaged in "creative accounting" and disregarded generally accepted accounting (GAPP) principles.

7 Mr. Inspektor's allegations have been filed in the public record. To make reckless allegations with respect to the integrity of a court-officer occupying a position of public trust is a serious matter. This is not the first time that Mr. Inspektor has brought proceedings in his fight with the litigation committee. The Trustee/Receiver says that this motion was part of a troubling trend in the receivership/bankruptcy proceedings of the Kaptor Group, in which Crowe Soberman has been forced to spend considerable time and resources at the expense of the estates in addressing and responding to Mr. Inspektor's efforts to advance his own personal interests. In this the Trustee/Receiver appears to be right. In the circumstances the Trustee/Receiver is entitled to costs on a substantial indemnity basis.”

172Very recently, Osborne, J. confirmed these principles of assessment of costs under the BIA in BMO v. Can United Consulting Corporation, 2023 ONSC 4773, (“Can United”) in the context of proceedings relating to a Receiver appointed under s.243 of the BIA stating:

“19. This proceeding was brought, and the Receiver was appointed, pursuant to section 243 of the Bankruptcy and Insolvency Act (BIA) and section 101 of the Courts of Justice Act (CJA). This Court has the discretion to award costs of BIA proceedings pursuant to section 197 of the BIA and has the discretion to award costs in any civil proceeding pursuant to section 131 of the CJA (taking into account the factors set out in Rule 57.01).

The discretion under both statutes includes the discretion to determine whether costs should be paid, and if so by whom, and to what extent. This discretion includes the jurisdiction to award costs against a non-party: Dallas/North Group Inc. (Re), 2001 3636 (ON CA), [2001] 148 O.A.C. 288, O.J. No. 2743 (C.A.) at paras. 6 – 15; 1730960 Ontario Ltd. (Re), 2009 ONCA 720, O.J. No. 4182 at para. 8; and 2403177 Ontario Inc. v. Bending Lake Iron Group Limited, 2017 ONSC 3566, O.J. No. 3374 at paras. 27 – 28.
Generally, an award of costs against a non-party requires evidence of fraud, abuse of the court process in general and/or the bankruptcy process in particular to serve a collateral purpose or similar wrongdoing: 1730960 at para. 8.
The language of section 131 of the CJA does not exclude the inherent jurisdiction of the court to order costs against a non-party who commits an abuse of process. It is “permissive” in that it confers broad discretion to make costs orders. This is consistent with Rule 57.01 which prescribes the factors that the court may take into account when exercising the section 131 discretion. The factors expressly include “any other matter relevant to the question of costs”: 1318847 Ontario Ltd. v. Laval Tool & Mould Ltd., 2017 ONCA 184, 134 O.R. (3d) 641 at paras. 69 - 72.
What, then, constitutes an abuse of process? In Laval, the Court of Appeal quoted with approval the Supreme Court of Canada characterization of abuse of process as “the bringing of proceedings that are unfair to the point that they are contrary to the interest of justice”, or “oppressive’ or ‘vexatious” treatment that undermines “the public interest in a fair and just trial process and the proper administration of justice”: Laval, at para. 73, quoting with approval Behn v. Moulton Contracting Ltd., 2013 SCC 26, 2 S.C.R. 1031 at para. 39.
In Laval, the Court of Appeal gave examples of conduct that constituted an abuse of process by a non-party so as to attract a costs order. Those examples included initiating proceedings through a nominal plaintiff in order to oppress the defendant (Dallas/North); putting forward a nominal plaintiff to employ the court’s processes as an instrument to defraud the defendant (Oasis Hotel Ltd. v. Zurich Insurance Co., 1981 433 (BC CA), 1981, 28 B.C.L.R. 230, 124 D.L..R (3d) 455 (C.A.)); or engaging in conduct that amounts to the tort of maintenance (paras. 74-75).
The Court of Appeal observed that “situations of gross misconduct, vexatious conduct, or conduct by a non-party that undermines the fair administration of justice other than those discussed above can be envisioned” (paras. 74 - 76). The court further stated:

costs against non-parties who are directors, shareholders or principals of corporations may be ordered in exceptional circumstances if the non-party commits an abuse of process. Such circumstances may include fraud or gross misconduct in the instigation or conduct of the litigation. But the injunction and authorities referred to [earlier in the reasons] must be followed - costs should not be awarded against corporate officers, directors or shareholders simply because they directed the operations of the company [emphasis added, citations omitted] (para. 77).

All of the above is consistent with the statements of the Court of Appeal in Davies v. Clarington (Municipality) et al, 2009 ONCA 722, 100 O.R. (3d) 66 at para. 40 to the effect that “while fixing costs is a discretionary exercise ….. it must be on a principled basis …… [and there should be] a clear finding of reprehensible conduct on the part of the party against which the cost award is being made”.
Accordingly, it seems to me that to constitute an abuse of process, conduct need not require the instigation or commencement of frivolous or vexatious litigation. Rather, conduct of a non-party during litigation can, in appropriate circumstances, amount to an abuse.
In my view, it follows from the BIA and the CJA and these authorities that I have the jurisdiction and the discretion to award costs against Mr. Wu in this case, assuming he has been given notice that such relief was sought. I am satisfied that he has been given notice, and in fact the thrust of the responding affidavit in the submissions of counsel for the Respondents (which he controls) are all directed in large part to this issue.
The question, therefore, is whether the evidence in the record as to his conduct amounts to an abuse of process.”

173As a result, following the Court of Appeal in Sally Creek, Newbould, J. in Kaptor, and Osborne, J. in Can United, 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.

174In 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;

(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;

(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).

175Fairness 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”).

176Generally, 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), 2005 16071 (ON CA), 75 O.R. (3d) 405 (C.A.); 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238 at paras. 10, 12-14).

177Under 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:

178In 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).

179In 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.”

180In 1465778 Ontario Inc. v. 1122077 Ontario Ltd., 2006 35819 (ON CA) 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), 1997 12208 (ON SC), 37 O.R. (3d) 464, [1997] O.J. No. 5130 (Gen. Div.), at pp. 467 and 472 O.R.”

Interpretation of Rules and Proportionality

181 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

182Perrell, 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”

The Trustee’s Costs Submissions

183Neither party being lawyers, neither party submitted conventional costs submissions. Their argument centered on the quantification of the Trustee’s costs claim, and the allegations regarding the duplication of claims in the Bannikov and Bannikova Estates.

184It should be noted that AJ Jean in the Bannikov Trustee Discharge Endorsement did not award costs to any party.

185In the Dietrich, J. Endorsement, costs were awarded to the Trustee in the amount of $5,000 on a partial indemnity basis, that seemed to have no impact on the Filatova’s conduct.

186The Trustee is effectively seeking costs on a full indemnity basis in the total amount of $22,147.75.

187The Trustee breaks down this amount in her Supplementary Affidavit dated July 19, 2022 (the “Trustee’s Supplementary Affidavit”).

“We have broken down the Time Summary Dockets as submitted to this Honourable court based on Codes for each service provided by our office. (We have reviewed Ms. Filatova concerns and adjusted our time accordingly. Please note we have not added any time with respect to preparation of this material and our last court hearing date.)

In summary, the billable hours have been broken down as follows:

a) Proof of Claim Analysis – Notice of Disallowance

2.05 hours $ 871.25

b) Notice of Opposition 24.98 hours $ 7,146.50

c) OSB Complaints 6.05 hours $2,571.25

d) Section 205 (2) 13.35 $5, 617.50

e) Sale of Assets .20 $ 85.00

f) Notice Examination .50 $ 212.50

g) Section 215 13.35 $ 5,643.75

Total Billable $ 22, 147.75

188The Trustee’s Supplementary Affidavit was filed in response to my Second Endorsement, and the materials that Filatova filed arguing that the prior detailed time entries of the Trustee were duplicative by including time for the Bannikov Estate that had already been dealt with in the Bannikov Trustee Discharge Endorsement where AJ Jean did not award costs.

189The Trustee’s hourly rates charged are at $425 an hour for Joanne Russo, LIT, $175 an hour for Anna Equizi an Administrator, and Santina Zito an administrator at $175 an hour.

190Given Ms. Russo’s decades of experience the rate of $425 per hour is consistent with rates charged by other LIT’s with similar experience in the GTA and the administrator rates are also consistent with rates charged by other administrators with similar experience in the GTA.

191I also find that the assignment of tasks between Joanne Russo at her higher hourly rate, and Anna Equizi and Santina Zito at their lower hourly rates, to be proper. Given the complexity and the seriousness of the accusations made by Filatova, the involvement of Russo as an LIT at her higher hourly rate should have been in the contemplation of Filatova, and I approve the allocation of tasks as set out in the detailed time reports.

192I do not find the hourly rates charged by the Trustee to be inappropriate given their years of experience. I find that the hourly rates claimed by the Trustee would be in the contemplation of Filatova on this Motion, for the purposes of determining costs under the principle of indemnity in R.57.01(0.a) and (0.b), particularly as before Dietrich, J. the costs claimed by the Trustee and her counsel on the s.215 Motion brought by Filatova totaled $27,674 on a full indemnity basis. I will deal with the determination of quantum separately.

193As I noted previously, on dealing with the objections of Filatova to the discharge of the Trustee in a Summary Administration Bankruptcy Estate before me, alone, the Trustee has had to file almost 1900 pages of materials. I also note that the Trustee has not added certain time with respect to preparation of further responding materials as a result of the Second Endorsement. I note that these costs claimed in the Bannikova Estate are for all of the costs claimed by the Trustee incurred as a result of the behavior of Filatova in the Bannikova Estate, and are claimed not to be duplicative of time spent in the Bannikov Estate.

194Filatova disagrees and I will resolve this dispute.

The Filatova Costs Submissions

195Not surprisingly, Filatova disagrees, claiming that 80% of the Trustee’s detailed time reports as filed as an exhibit to the Trustee’s Affidavit sworn April 14, 2022 (the “April 14 Affidavit”) in response to her objections to discharge are “false entries”.

196Importantly, Filatova has filed a Bill of Costs (the “Filatova Bill of Costs”) where she claims it took her 40 hours just to prepare her approximately 400 page response to the Trustee’s detailed time entries in the April 14 Affidavit alone, at a rate of $60 per hour making a full indemnity scale costs claim on this motion against the Trustee in the amount of $2,400.

197Therefore that 40 hour number is a useful minimum amount of time that would clearly be within the contemplation of Filatova as the time Trustee would have had to expend to prepare materials and attend at the hearings before me.

198The Trustee was ordered by me to file supplementary materials in response to Filatova’s claims, and the Trustee’s Supplementary Affidavit is the result. I will review the Supplementary Affidavit, and the detailed time summary to determine whether I consider any of the issues raised by Filatova in her June 16, 2022 Affidavit (“Filatova Costs Objection Affidavit”) are still relevant.

DISPOSITION OF COSTS OF BANNIKOVA DISCHARGE MOTION

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

199In my view, the Trustee was completely successful in obtaining the relief sought being the approval of the SRD and refuting the grounds of objection raised by Filatova in the Notice of Objection to discharge, and is entitled to costs.

200Filatova, completely failed in sustaining her objections and is entitled to none of the costs that she claimed in the Filatova Bill of Costs.

Importance of issues

201This motion was important to the Trustee’s administration of the Estate, for the reasons set out above, as obtaining a discharge order is a duty of the Trustee under the BIA, and the objections by Filatova prevent the closing of the estate and fulfilment of that duty.

202In addition the release from claims arising from the administration of the estate that is provided by the BIA on discharge is important to this Trustee in the circumstances of the administration of the Bannikova Estate, given the vociferousness of Filatova in making unfounded allegations against the Trustee.

203For the purposes of the various aspects of the tests under s.197 and R.57.01, I find that the issues determined on this motion by the Trustee to approve the SRD and obtain Discharge were important.

Complexity of Motion

204The Bannikova Discharge Motion was complex in terms of the volume of materials or evidence presented. I have reviewed more than 3000 pages of materials filed in Caselines in both the Bannikov and Bannikova Estates to assess the history of the disputes between the Trustee, the OSB and Filatova to assess the conduct of all parties.

205The prolix documentation and repetitive nature of the complaints raised by Filatova, as well as her persistent misapplication of the provisions of the BIA, raised many complex factual and legal issues and highlighted significant conduct issues on the part of Filatova.

206This was a complex motion for the purposes of the R.57.01 tests.

Whether any step in the proceeding was improper, vexatious or unnecessary, or taken through negligence, mistake or excessive caution, and did the conduct of any party tend to shorten or to lengthen unnecessarily the duration of the proceeding

207There is evidence before me on the Bannikova Discharge Motion that the conduct of Filatova in this case meets the strict test of vexatiousness set out by Henry, J. in Re Lang Michener and Fabian, 1987 172 (ON SC)(“Fabian”), which identifies the following tests for the determination whether proceedings are “vexatious”:

“I have been referred to the following judicial decisions by counsel for the applicants: Foy v. Foy (No. 2) (1979), 1979 1631 (ON CA), 26 O.R. (2d) 220 at p. 226, 102 D.L.R. (3d) 342 at p. 348, 12 C.P.C. 188 (Ont. C.A.); Re Kitchener-Waterloo Record Ltd. and Weber (1986), 1986 2715 (ON SC), 53 O.R. (2d) 687 at p. 693 (Ont. S.C.); Re Law Society of Upper Canada and Zikov (1984), 47 C.P.C. 42 (Ont. S.C.).

From these decisions the following principles may be extracted:

(a) the bringing of one or more actions to determine an issue which has already been determined by a court of competent jurisdiction constitutes a vexatious proceeding;

(b) where it is obvious that an action cannot succeed, or if the action would lead to no possible good, or if no reasonable person can reasonably expect to obtain relief, the action is vexatious;

(c) vexatious actions include those brought for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights;

(d) it is a general characteristic of vexatious proceedings that grounds and issues raised tend to be rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings;

(e) in determining whether proceedings are vexatious, the court must look at the whole history of the matter and not just whether there was originally a good cause of action;

(f) the failure of the person instituting the proceedings to pay the costs of unsuccessful proceedings is one factor to be considered in determining whether proceedings are vexatious;

(g) the respondent's conduct in persistently taking unsuccessful appeals from judicial decisions can be considered vexatious conduct of legal proceedings.”

208These co-related factors have particular import in this situation, where it is evident that we are here today as a result of Filatova’s persistent fastening onto improper and unsupportable interpretations of section after section of the BIA, in both the Bannikov and Bannikova Estates, then having the Trustee, Registrar Mills, AJ Jean, Justice Dietrich and the OSB find that her interpretation of a particular section was fundamentally wrong, which