COURT FILE NO.: CV-23-60
DATE: 2024/10/01
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Khaled Suleiman
Applicant
– and –
Prakash Venkataraman and Paul Hodgson
Respondents
M. Marshall, for the Applicant
S. Zeitz/J. Bogacki, for the Respondents
COSTS ENDORSEMENT
The HONOURABLE JUSTICE A.D. HILLIARD
[1] For reasons set out in my judgment released on August 9, 2024 (2024 ONSC 4441), I dismissed Mr. Suleiman’s application for a declaration that the Judgement he obtained against the Respondents survived their bankruptcy.
[2] The Respondents are now seeking their costs on a full indemnity basis. They argue that they are presumptively entitled to their costs as the successful party and that an elevated costs award is appropriate due to Mr. Suleiman’s “ill-conceived” Application alleging fraud that was ultimately dismissed. The Respondents’ position is that courts must sanction individuals who allege fraud by way of elevated costs awards otherwise creditors will be incentivized to make “last-ditch attempts” to collect debts.
[3] The Respondent’s argument that Mr. Suleiman “dragged” the Respondents through litigation spanning almost a decade in order to recover a debt owed to him is an inaccurate characterization of the history of the proceedings between these parties. In assessing the conduct of the parties, I have considered that the Respondents consented to a judgment in Mr. Suleiman’s favour during the original action and only after that judgment had been issued and entered did they then declare bankruptcy, freeing themselves of the obligation to pay the judgment that they had consented to.
[4] Mr. Suleiman exercised his legal right to pursue a judgment against the Respondents for breach of contract by commencing an action. The Respondents ultimately conceded that they were in breach of contract and owed money to Mr. Suleiman as he had claimed. Then after having resolved the action on consent, the Respondents failed to honour their negotiated deal to repay the money owing and a Default Judgment was entered as a result. None of what occurred in those proceedings up to and including the entering of a default judgment against the Respondents was improper, vexatious or unnecessary.
[5] As for the report made by Mr. Suleiman to the police about the Respondents committing fraud, I have no authority to sanction Mr. Suleiman in these proceedings for anything that happened to the Respondents in the context of a criminal investigation. I cannot, in my view, even consider the conduct of Mr. Suleiman in making a report to the police about the conduct of the Respondents in assessing whether it is appropriate to award costs on this Application. A report of fraud to the police is completely outside of the scope of these proceedings.
[6] The Respondents’ argument for costs relies heavily on my finding at paragraph 24 of the judgment that this case “was strictly a breach of contract.” However, what the Respondents fail to note is what I went on to find in that same paragraph: “Money was loaned and not paid back. Then the Respondent (sic) consented to a settlement, defaulted on that settlement and then declared bankruptcy.” The Respondents have already acknowledged the debt owing to the Applicant in the settlement of the main action. To now suggest that the steps the Applicant has taken in an attempt to enforce that judgment were frivolous and vexatious and thereby portraying themselves as innocent victims is unfounded and inaccurate.
[7] The Applicant argues that no costs should be payable in the circumstances. Mr. Suleiman’s argument is grounded in equity and in the Court’s discretion under section 131 of the Courts of Justice Act to not award costs.
[8] Both parties referred to and relied upon caselaw that was not particularly helpful or informative of the issue before me. None of the cases referenced by counsel were ones in which the Court was dealing with an Application under section 178 of the Bankruptcy and Insolvency Act.
[9] The decision of Copeland J, as she then was, in CBM Ready Mix Division v 8377278 Canada Inc., 2020 ONSC 1079 is instructive of the appropriate approach to costs in these types of Applications. At paragraph 10 of that decision, Copeland J. wrote “I make no order as to costs. Although the defendant prevailed on the motion, as a matter of fairness, it is unfair to saddle the plaintiff with the defendant’s costs of the motion, when the plaintiff loses the ability to collect the debt due to the “fresh start” policy of the BIA.”
[10] The approach to costs in CBM Ready Mix was then cited with approval by Nicholson J. in an unreported costs endorsement, Hanna, et al. v Robertson, et al. 2023 1226 (Stratford neutral citation), wherein he concludes his endorsement at paragraph 16 as follows:
It remains my view that the consequences of the Robertsons’ bankruptcy here were incredibly harsh to the creditors. The creditors properly followed the legal channels and obtained judgment in excess of $600,000 in relation to goods and services that went to the benefits of the Robertsons. They have been deprived of a just debt as a consequence of the BIA, which although serves an important purpose for bankrupts, did not result in a “fair” result in the circumstances of this case. I would not also order costs against the Creditor in the circumstances here.
[11] I echo and rely upon the sentiments of both Copeland J, as she then was, and Nicholson J. in their assessment of the appropriateness of awarding costs against an unsuccessful creditor. Mr. Suleiman has lost the ability to collect over $65,000CDN and $616,000USD owing to him by the Respondents due to the “fresh start” policy of the Bankruptcy and Solvency Act. It would be unfair to then saddle Mr. Suleiman with a costs order due to being unsuccessful on his motion for a declaration pursuant to section 178 of the BIA.
[12] In all of the circumstances I find that it is appropriate for me to exercise my discretion to deny the Respondents an award of costs despite their success on the motion.
[13] Costs order to go:
- Each party shall bear their own costs of this proceeding.
A.D. Hilliard
Released: October 1, 2024
COURT FILE NO.: CV-23-60
DATE: 2024/10/01
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Khaled Suleiman
Applicant
– and –
Prakash Venkataraman and Paul Hodgson
Respondents
COSTS DECISION
A. D. Hilliard, J.
Released: October 1, 2024