Re Sklifas, 2026 ONSC 1754
ONTARIO
SUPERIOR COURT OF JUSTICE
IN BANKRUPTCY AND INSOLVENCY
IN THE MATTER OF THE BANKRUPTCY OF
GEORGE SKLIFAS (aka GEORGE SKLIFAS JR)
OF THE CITY OF TORONTO, IN THE PROVINCE OF ONTARIO, IN THE PROVINCE OF ONTARIO
BEFORE: Associate Justice Ilchenko, Registrar in Bankruptcy
COUNSEL:
Aaron Gideon (“Gideon”) for George Agas (the “Creditor” or “Agas”) the Plaintiff in Action CV-14-511783 (the “Action”) commenced by Statement of Claim (the “Statement of Claim”) issued on September 8, 2014 at Toronto against the Bankrupt and his Corporation Louka Holdings Inc. (”Louka”)
Matthew Harris (“Harris”) for the Bankrupt George Sklifas (the “Bankrupt”)
John Delo, LIT (“Delo”) for A. Farber & Partners Inc., Trustee in Bankruptcy (the “Trustee”) of the Bankrupt
Superintendent of Bankruptcy (the “OSB”) not appearing
HEARD: Initial Case Timetable established by AJ Jean on November 18, 2021 (the “First Timetable”); Second Case timetable set by me on March 15, 2022 (the “Second Timetable”) with requirement by me that Bankrupt pay $6,000 costs award from Discharge Order in 2021 before being able to file responding materials and requirement that parties schedule a Special Appointment Case Conference; attempt to circumvent Case Timetable by Moving Party was rejected on June 9, 2025; further case Conference on July 23, 2025 (the “Third Timetable”) with requirement Bankrupt fulfil prior case timetables, motion proceeded peremptorily; Consent Order granting leave granted on October 30, 2025; costs submissions to be filed by December 11, 2025.
COSTS endorsement
1On October 30th, 2025 I granted an Order in favour of the Creditor pursuant to his Motion (the “Leave Motion”) section 69.4 of the Bankruptcy and Insolvency Act, RSC 1985, c B-3, as amended (the “BIA”), lifting the automatic stay and declaring that the stay imposed by section 69.3 of the BIA no longer operates in respect of the Action relating to claims against the Debtor, for inter alia misrepresentation and fraud (the “s.69.4 Order”).
2The Action arose out of an investment made by the Creditor in September of 2009 in a “George the Greek” restaurant operated by the Bankrupt and Louka, which is also Bankrupt.
3The Action was commenced in September of 2014 and the Bankrupt’s Statement of Defence and Counterclaim was struck out by AJ Abrams in January 12, 2017, who also ordered costs against the Bankrupt of $8500. Prior to the Creditor being able to have a Motion for Judgment in the Action heard, the Bankrupt and Louka both made assignments into Bankruptcy in January, 2019.
4Prior Counsel for the Bankrupt had previously advised the Creditor in May 2018 that the Bankrupt would be filing for Bankruptcy.
5The Discharge Hearing was conducted by Registrar Jean on February 18 and March 11, 2021.
6In Reasons dated June 15, 2021 Registrar Jean found or ordered on the Discharge (the “Conditional Discharge Order”):
a) the Bankrupt was not an honest and unfortunate debtor;
b) the Bankrupt was purposely underemployed and imputed surplus income of $9450 payable as a condition of discharge;
c) that the Bankrupt had excess income sufficient to sustain a conditional payment and Ordered the Bankrupt to pay an additional $1000 per month for 60 months for a total of $60,000.
d) Ordered a 3 month suspension to sanction the Bankrupt’s misconduct; and
e) Ordered that the Bankrupt pay the Creditor $6000 in costs within 30 days of October 19, 2021.
7The $6,000 in costs ordered to be paid by the end of November 2021 were actually confirmed as being paid prior to the hearing date for the Leave Motion of October 30, 2025.
8To the knowledge of the Court at the time of these reasons, the Bankrupt remains undischarged after 5 years.
9The Notice of Motion for the Leave Motion was dated November 12, 2021. The Bankrupt and his prior counsel were not cooperative with setting dates for Case Conferences.
10The First Timetable, the Second Timetable and the Third Timetable were set to require compliance by the Bankrupt. The Bankrupt filed materials opposing the Leave Motion and was cross-examined. Essentially the Bankrupt argued prejudice would occur to him if leave was granted due to the alleged delay by the Creditor in bringing the Leave Motion.
11Given that the Bankrupt was ordered to pay the $6000 in costs from his 2021 Discharge Hearing as a condition of him being able to file materials on this Leave Motion that was heard in 2025, those arguments were nonsensical.
12Wisely, Harris, recognizing the futility of the Bankrupt’s position, obtained the agreement of the Bankrupt to the s.69.4 Order the day before the hearing, obviating the need for full argument.
13However over the preceding 4 years the Creditor had filed materials and responding materials, cross-examined the Bankrupt and was cross-examined, and attended multiple scheduling conferences as well as preparing for the hearing of the Leave Motion. As a result of the Bankrupt’s conduct, and in particular the Bankrupt’s long-standing failure to pay the costs award imposed by AJ Jean as a condition of discharge, and imposed as a condition by me for the Bankrupt to file any materials for this Motion, the hearing of the Leave Motion was delayed.
COSTS
Bankruptcy Context for determination of Costs:
14I set out in detail in Re Bannikova 2023 CarswellOnt 14017, 2023 ONSC 5131, 2023 A.C.W.S. 4499 the interplay between the provisions of the BIA for the assessment of Costs under s.197, and the provisions of s.131 of the Ontario Courts of Justice Act and Rule 57 of the Ontario Rules of Civil Procedure, for the Bankruptcy Court in determining costs for Motions brought under the BIA:
“166 Subject 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)).
167 Under the relevant general provisions of s.197 the BIA:
197(1) Costs in discretion of court
Subject to this Act and to the General Rules, the costs of and incidental to any proceedings in court under this Act are in the discretion of the court.
197(2) How costs awarded
The court in awarding costs may direct that the costs shall be taxed and paid as between party and party or as between solicitor and client, or the court may fix a sum to be paid in lieu of taxation or of taxed costs, but in the absence of any express direction costs shall follow the event and shall be taxed as between party and party.
168 Bankruptcy Courts have interpreted these provisions in exercising their discretion as to costs under s.197 of the BIA by citing jurisprudence generally interpreting the provincial Rules of Civil Procedure, such as the Registrar in Eastern Ontario District Soccer Association (Re)2017 CarswellOnt 13201, 2017 ONSC 4932, 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.)] in assessing the costs award.
169 In 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 HCJ), [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."
170 In 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.”
172 Very 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.
15As a result, following the Court of Appeal in Boucher and Davies, and Sally Creek, Newbould, J. in Kaptor, and Osborne, J. (as he then was) 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.
16In exercising its discretion in determining costs the court may consider, inter alia, the factors set out in Rule 57.01(1) of the Ontario Rules of Civil Procedure, which reads:
Factors in Discretion
57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(f) a party's denial of or refusal to admit anything that should have been admitted;
(g) whether it is appropriate to award any costs or more than one set of costs where a party,
(h) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer;
(h.1) whether a party unreasonably objected to proceeding by telephone conference or video conference under rule 1.08; and
(i) any other matter relevant to the question of costs
Authority of Court
(4) Nothing in this rule or rules 57.02 to 57.07 affects the authority of the court under section 131 of the Courts of Justice Act,
(a) to award or refuse costs in respect of a particular issue or part of a proceeding;
(b) to award a percentage of assessed costs or award assessed costs up to or from a particular stage of a proceeding;
(c) to award all or part of the costs on a substantial indemnity basis;
(d) to award costs in an amount that represents full indemnity; or
(e) to award costs to a party acting in person.
17Fairness and reasonableness are the overriding principles to be considered by the Court in determining costs: Boucher and Deonath v. Iqbal 2017 ONSC 3672 (Ont. S.C.J.) at paras. 20-21) ("Deonath").
18Generally, 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 (Ont. C.A.) Lakeshore Oakville Holdings Inc. v. Misek 2010 ONSC 7238 (Ont. S.C.J.) at paras. 10, 12-14).
19In 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).
20In 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."
Analysis of Tests under s.197 of the BIA and R.57.01 and R.1.04
21The Creditor was entirely successful in its Motion.
22The Bankrupt entirely failed in his opposition to the Creditor’s Motion, and, on the literal eve of the hearing, consented to an Order granting leave.
23In the Bill of Costs filed by counsel for the Creditor, are for costs of $30,817.52 on a full indemnity basis. The Creditor is requesting costs on a substantial indemnity basis in the amount of $25,665.52, or, alternatively, on a partial indemnity scale in the amount of $20,513.52. All figures are inclusive of HST and disbursements.
Importance of issues
24The Creditor, if not granted the relief sought to continue the Action, would have no practical means of having a determination made of his fraud and misappropriation claims against the Bankrupt.
25These issues were important to the Creditor, as well as for the administration of the Bankruptcy Estate.
26Effectively there has been no recovery in the Bankruptcy estate as, to the knowledge of the Court, at the time of the hearing of this Leave Motion, the Bankrupt had not paid the Trustee any amount ordered to be paid to the Bankruptcy Estate by AJ Jean under the Conditional Discharge Order, in the almost 5 YEARS since the date of the Conditional Discharge Order. Only the costs award to the Creditor has been paid, as a condition of my allowing the Bankrupt to file opposing materials.
Complexity of Motion
27The subject matter of this Motion was not complex. The Statement of Claim is clear as to the misrepresentations that the Bankrupt was alleged to have made to induce the Creditor into investing in the restaurant and the alleged behaviour. As stated by Chief Justice Morawetz in Re Ielluzi 2012 CarswellOnt 7608, 2012 ONSC 3447, [2012] O.J. No. 2763, 216 A.C.W.S. (3d) 825
“10 The moving creditor need only plead specific facts which show that there are sound reasons to lift the stay, such as a set of facts which, if believed, would fall within the ambit of subsection 178 (1) (d).”
28The Statement of Claim passed that low bar. The Bankrupt’s Defence and Counterclaim in the Action had been struck 8 years prior to the hearing date of the Motion.
29I warned the Bankrupt’s prior counsel, in 2022 when I first took over case management of this matter, that from the materials provided at that time that the Creditor would likely be able to meet the Ma, Advocate Mines, Ielluzi tests for granting leave.
30The Bankrupt ignored that warning and proceeded to file responding materials and facta making nonsensical laches arguments, blaming the Creditor for failing to move the Action along prior to Bankruptcy, and failing to bring this Motion on a timely basis. Cross-examinations conducted.
31From the initial case conference for the Leave Motion before AJ Jean in November of 2021 to the requirement setting 3 Timetables to enforce the Bankrupt’s compliance, from my review of the record it was the Bankrupt that was dilatory, not the Creditor.
32From the Court Record of the Action it appears that the delay in the Action was also precipitated by the Bankrupt, and the same delay tactics were used. AJ Abrams stated in her endorsement dated January 12, 2017 striking out the Bankrupt’s Statement of Defence and Counterclaim in the Action:
“No responding motion materials were delivered by the defendants. The motion is unopposed, save as it relates to the payment of costs by counsel for the defendants (i.e. rather than by the defendants).
The statement of defence and counterclaim is thus ordered struck; the counterclaim is hereby dismissed; and the further costs of the action and this motion are fixed in the amount of $8,500.00 payable by February 15/17.
Also payable by the defendants, and outstanding, is the $2,500.00 costs award made by Master Dash on September 9/16. That amount is outstanding and overdue.
Counsel for the defendants acknowledges having had, in hand, a cheque for $1,600.00, being the amount of costs earlier ordered paid by Master Short. He says, but there is no evidence filed to substantiate that this is so, that the cheque was never forwarded to the plaintiff because his clients did not want to proceed with the litigation and were indigent.
What I do know is that an Order for payment of $1,600.00 was made by the court; and I know too that, relying on counsel’s representation on September 9/16 that counsel was “in funds to make immediate payment” and that compliance with the Order at issue would be made--albeit late, Master Dash declined to grant the plaintiff the relief sought on the motion before him. The plaintiff has been delayed by some 4 months in having the statement of defence struck and the counterclaim dismissed.
With no evidence before me as to how/why circumstances changed and with the representation upon which Master Dash relied not having been carried through, I do think that counsel bears some responsibility here for the failure to pay the $1,600.00 that the defendants were ordered to pay and, at least as at September 9/16, had taken steps to pay. The step of preparing a trust cheque, relying upon it for court and, then, cancelling it in the face of both a court Order that required payment and a second Order that relied upon the promise of payment is what causes me to visit some responsibility on counsel.
Of the $1,600.00 that is outstanding pursuant to Master Short’s Order, joint and several liability for ½ is now visited by me on defendants’ counsel.
Thus, costs owing to the plaintiff are $12,600.00—$11,800 being payable by the defendants alone and $800.00 being payable by the defendants and their lawyer, jointly and severally.”
33The Bankrupt’s behaviour in futilely opposing for 4 years, running up the costs of the Creditor, requiring continual Court intervention, then consenting to the s.69.4 Order on the eve of the hearing, added unneeded complexity to the Leave Motion.
34This motion was complex.
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
35As I have stated above, the Bankrupt’s opposition, and particularly the failure to pay the costs award of AJ Jean imposed at the Discharge Hearing over a lengthy period of time, then filing spurious materials to oppose the Leave Motion, only to consent to the Order at the last possible moment, over a 4 year period did “…tend to shorten or to lengthen unnecessarily the duration of the proceeding.”
36The conduct of the Bankrupt in its totality was improper and lengthened unnecessarily the duration of the proceeding for the purposes of the R.57 tests, as well for the tests under s.4.2 of the BIA regarding the duty of good faith for parties participating in Bankruptcy Proceedings, as set out in the tests summarized in CWB Maxium Financial Inc v 2026998 Alberta Ltd,2021 ABQB 137.
Principle of Indemnity and Scale of Costs
37The principle of indemnity is particularly important in the case of Bankruptcy proceedings, as this is not ordinary Civil Litigation.
38As noted in Davies, Substantial Indemnity scale costs (or Solicitor and Client Costs for the purposes of s.197(2) of the BIA) are awarded outside of the usual costs regime of Partial Indemnity costs as an explicit sanction and penalty by the Court of egregious conduct "...which makes such costs desirable as a form of chastisement."
39Substantial Indemnity Costs (or Solicitor and Client Costs for the purposes of s.197(2) of the BIA) are awarded over and above the ordinary principles of proportionality and indemnity, in part to discourage this Bankrupt, as well as other parties from engaging in similar behaviour, particularly in the context of Bankruptcy Proceedings.
40Accordingly, given my findings that the conduct of the Bankrupt meets these tests, and in applying s.4.2 of the BIA, I will exercise my Registrar's Discretion to determine the costs of the Creditor on a Substantial Indemnity Scale under the provisions of s.131 of the Courts of Justice Act, and Rule 57.01 (or "solicitor and client costs" in the language of s.197(2) of the BIA), after the determination of quantum.
Quantum of costs
41I have reviewed in detail the Costs Outline submitted by the Creditor.
42The information presented is sufficiently detailed to allow me to make determinations of quantum and permissible costs for the purposes of determining the proper quantum of costs, and to determine the proportionality of the costs for the purposes of s.197 and 4.2 of the BIA and R.57 and R.1.04(1.1) of the Rules of Civil Procedure.
43I find in exercising my Registrar's Discretion to assess costs under the BIA, under the CJA and under the Rules, that the $29,108.80 in actual fees (exclusive of HST) claimed by the Creditor is fair and reasonable in the circumstances of the hearing of the Leave Motion dragging on unnecessarily for 4 years, and in terms of the provisions of s.197 of the BIA and Rule 1.04(1.1), I find that the costs requested are proportionate to the importance and complexity of the issues, as per the tests of proportionality in Deonath and Rothmans.
44Therefore for the purposes of calculating the quantum of the claim I will accept the $23,956.80 (exclusive of disbursements and HST) claimed by the Creditor on the Substantial Indemnity Scale (or a Solicitor and Client Costs for the purposes of s.197(2) of the BIA).
45I find that the amount of costs of $25,665.52 (inclusive of $1,708.72 of disbursements and HST) on a Substantial Indemnity Scale (or a Solicitor and Client Scale for the purposes of s.197 of the BIA) is an amount that the Bankrupt could reasonably have expected to pay in relation to this Motion(s), given the importance of the issues to the Creditor, the factual and legal complexity of the issues being raised, and my finding that the Bankrupt’s conduct unnecessarily and improperly necessitated and lengthened this hearing, as well as based on his consistent record in both the Action and the Bankruptcy of having costs awards imposed against him and not paying them for long periods of time or at all, for the purposes of the R.57, R.1.04(1.1) and s.4.1 of the BIA tests.
46A costs award in this range was clearly within the contemplation of the Bankrupt, having previously had costs assessed against him multiple times in both the Action and in the Bankruptcy.
47Following Davies, rather than engaging in a purely mathematical exercise, I find that the costs awards to the Creditor of $25,665.52 (inclusive of disbursements and HST) on the Substantial Indemnity Scale (or a Solicitor and Client Costs for the purposes of s.197(2) of the BIA) is a fair and reasonable amount that should be paid by the Bankrupt, forthwith, and shall be paid by the Bankrupt to the Creditor, IN FULL within 30 days of the release of this Endorsement, as the unsuccessful party on this Leave Motion, rather than any exact measure of the actual costs of the successful litigant Creditor, incurred over a 5 year period in the Bankruptcy, and over the 12 year period since the Action was first commenced on September 8, 2014.
48I must advise that for the reasons that I summarized in Re Gary Man Kin Ng 2026 CarswellOnt 3420, 2026 ONSC 1418 at paragraphs 31-43, the costs that will be ordered for opposing this Leave Motion occurred post-bankruptcy, any costs award that I will make is not a “claim provable” in bankruptcy, and will not be compromised by any order of discharge of this Bankrupt, including the Conditional Discharge Order.
Associate Justice Ilchenko
Registrar in Bankruptcy
Superior Court of Justice