Serious and failed allegations of misconduct attracting substantial indemnity cost consequences

Ontario civil | Bankruptcy and Insolvency | Practice and procedure in courts | Costs

In May 2015, plaintiffs obtained default judgment against defendant M in action claiming damages for August 2014 defamation. M made assignment in bankruptcy. Plaintiffs’ proof of claim was accepted by trustee. With trustee’s consent, plaintiffs sought and obtained order pursuant to s. 38 of Bankruptcy and Insolvency Act for leave to commence action against M alleging he had fraudulently conveyed interest in residential property to spouse, defendant B. On June 1, 2016, plaintiffs commenced action seeking, among other things, declaration of fraudulent conveyance and declaration B held one-half of property in resulting trust subject to execution by creditors. Defendants brought successful motion for summary judgment dismissing action. Motion judge found that plaintiffs’ claim arose many years after alleged fraudulent conveyance of M’s interest in home to B and that plaintiffs had no standing as “creditors or others” under Fraudulent Conveyances Act in respect of impugned transfer. Hearing was held to determine costs. Defendants were awarded $20,000 in costs on substantial indemnity basis, inclusive of disbursements and HST. Plaintiffs made serious allegations without standing to have 1993 transfer set aside although they had no claim at time of impugned transfer. Plaintiffs’ serious and failed allegations of misconduct constituted reprehensible, scandalous or outrageous conduct attracting substantial indemnity cost consequences.

Wilfert v. McCallum (2017), 2017 CarswellOnt 11078, 2017 ONSC 4431, M.D. Faieta J. (Ont. S.C.J.); additional reasons (2017), 2017 CarswellOnt 9686, 2017 ONSC 3853, M.D. Faieta J. (Ont. S.C.J.).

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