Court File and Parties

COURT FILE NO.: CV-18-00592103-00CL

DATE: 20230102

SUPERIOR COURT OF JUSTICE – ONTARIO

IN THE MATTER OF Section 243(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c.b-3, as amended and section 101 of the Courts of Justice Act, R.S.O. 1990 c. c.45, as amended

RE: COMFORT CAPITAL INC., THE BANK OF NOVA SCOTIA TRUST COMPANY, E. MANSON INVESTMENTS LTD., FENFAM HOLDINGS INC., 593651 ONTARIO LTD., 1031436 ONTARIO INC., ALRAE INVESTMENTS INC., BARRY SPIEGEL, SHARON NIGHTINGALE, DAVID SUGAR, PHYLLIS SUGAR, NATIONAL TIRE LTD., 1119778 ONTARIO LIMITED, 1415976 ONTARIO LIMITED, ALRAE INVESTMENTS INC., BAMBURGH HOLDINGS LTD., BEVERLEY GORDON, DIANE GRAFSTEIN, RICHARD GRUNEIR, B. & M. HANDELMAN INVESTMENTS LTD., RIDGEWAY OCCUPATIONAL CONSULTANTS INC., YERUSHA INVESTMENTS INC., MIHALTYLMAN, A. ELIEZER KIRSHBLUM, 593651 ONTARIO LIMITED, THE BANK OF NOVA SCOTIA TRUST COMPANY IN TRUST FOR BAILEY LEVENSON, THE BANK OF NOVA SCOTIA TRUST COMPANY IN TRUST FOR ROSEMONDE KELLY, ANNE HANDELMAN, YERUSHA INVESTMENTS INC., CELMAR INVESTMENTS CORP., BEVERLEY GORDON, PHILGOR INVESTMENTS LTD., BRILLIANT INVESTCORP INC., MAXOREN INVESTMENTS, 2227046 ONTARIO LIMITED, DAST PROPERTIES LIMITED, TOVA MARKOVZKI, JOSEPH SUCKONIC and B. & M. HANDELMAN INVESTMENTS LIMITED, Applicants

AND:

ANNIE YERETSIAN, TERRY WILSON, 2457674 ONTARIO INC., 2399029 ONTARIO INC., MOSS DEVELOPMENT LTD. and TERRY WILSON, Respondents

BEFORE: Cavanagh J.

COUNSEL: Eric Golden for Rosen Goldberg Inc. in its capacity as Receiver Peter Smiley, for Money Gate Corporation P. James Zibarras for the Moving Parties, Canada Capital Corporation and Canada Investment Corporation Eli Karp for Curah Capital Corporation

HEARD: In writing

COSTS ENDORSEMENT

[1] In an endorsement released on November 24, 2022, I dismissed a motion brought by Money Gate Corporation for an Order authorizing the Receiver of certain property at 65 Malmo Court, Vaughan to make a distribution to MGC, as administrator, in the amount of $1,159,517.66 on account of mortgage indebtedness arising from the second mortgage on the Malmo property.

[2] The responding parties seek costs of the motion.

[3] The responding parties 2399029 Ontario Inc. (“239”) and World Corporation Inc. seek costs on a substantial indemnity scale in the amount of $185,687.19. In support of their contention that substantial indemnity costs are justified, these parties submit that MGC made unsubstantiated allegations of fraud against the principal of 239 and, by association, other representatives of 239 and World Corporation.

[4] MGC does not dispute that 239 is entitled to substantial indemnity costs. MGC submits that the amount of costs claimed by 239 and World Corporation is intentionally and significantly inflated. MGC submits that costs in the amount of $40,000 are reasonable on this straightforward motion where 239 served a single affidavit and no cross-examinations were held. MGC submits, in particular, that the amount of time claimed for preparation of motion materials (121.1 hours) offends propriety.

[5] 239 and World Corporation filed the affidavit of Troy Wilson sworn August 2, 2022 in response to this motion. Mr. Wilson’s affidavit is 30 pages long and includes 111 paragraphs. There are 36 exhibits. 239 and World Corporation claim fees for the preparation of the Responding Motion Record based on time spent of 29.7 hours for lead counsel, 37.4 hours for second counsel, and 11.6 hours for a law clerk.

[6] The factum filed by 239 and World Corporation was 23 pages long. Twenty authorities were cited. These parties claim costs for these legal services based on 21.1 hours for senior counsel, 16.1 hours for second counsel, and 5.2 hours for the law clerk.

[7] The total time claimed for review of motion materials and preparation of responding motion materials is 139.6 hours. In addition, these parties claim costs for a motion for production of documents on February 15, 2022 (22 hours), document production pursuant to the endorsement of Penny J. dated June 22, 2022 (5 hours), various case conferences (37 hours), research and document review (48.5 hours), preparation for and attendance at the hearing scheduled for two days (38.7 hours), and costs submissions (9.7 hours).

[8] In my endorsement, at para. 19, I observed that each of MGC and 029 made submissions attacking, generally, the credibility of the witness who gave evidence on behalf of the opposing party based on findings of credibility made in other legal proceedings. I did not make findings of credibility on the record before me.

[9] The affidavit of Mr. Wilson includes evidence about “the Laila Group’s ongoing Dispute with the Katebians”. Much of this evidence, which included evidence in relation to proceedings before other adjudicative tribunals in Canada and in the United States was, in my view, irrelevant to the issues on the motion. Submissions in relation to this evidence were made in the factum filed by these parties.

[10] In Boucher v. Public Accountants Council for the Province of Ontario, 2004 CanLII 14579 (ON CA), [2004] O.J. No. 2634, the Court of Appeal held that the objective in fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.

[11] The time spent for services preparing motion materials and parts of the factum dealing with the history of the contentious relationship between the parties and details of other proceedings and findings made in those proceedings was substantially unnecessary, particularly on a motion where there were no cross-examinations. The fees claimed should be reduced to account for this unnecessary work.

[12] I note that MGC did not file its own Costs Outline. As a result, I am unable to assess the submission made by MGC that the costs claimed are unreasonable high by comparing the costs claimed with the costs that would have been claimed by MGC if it had been successful on the motion. I infer that the costs that would have been claimed by MGC if it had been successful would have exceeded the amount it submits would be reasonable to be awarded to the successful parties.

[13] When I consider the factors in rule 57.01 and the principle in Boucher, I conclude that the costs of 239 and World Corporation on a substantial indemnity scale should be fixed in the amount of $160,000 inclusive of fees, disbursements and HST. Costs in this amount are to be paid by MGC to 239 and World Corporation within 30 days.

[14] The responding party Curah Capital Corporation was successful in opposing the motion. It seeks costs on a partial indemnity scale in the amount of $12,024. Curah did not file responding evidence or a factum. Having regard to the factors in rule 57.01 and the principle in Boucher, I regard the costs claimed by Curah to be reasonable and proportionate.

[15] I fix costs to be paid by MGC to Curah in the amount of $12,024. These costs are to be paid within 30 days.

Cavanagh J.

Date: February 1, 2023