



COURT OF APPEAL FOR ONTARIO

CITATION: Akagi v. Synergy Group (2000) Inc., 2015 ONCA 771

DATE: 20151110

DOCKET: C57582, C59494, C59496, C59497, C59498,

C59499, C59500, C59508, C59509, C59510, C59511

Simmons, Blair and Juriansz JJ.A.

BETWEEN

Trent Akagi

Applicant

(Respondent)

and

Synergy Group (2000) Inc. (aka Synergy Group
    Inc., Synergy Group 2000 Inc., The Synergy Group 2000 Inc., The Synergy Group,
    Inc., (2000), The Synergy Group Incorporated, The Synergy Group 2000
    Incorporated) and Integrated Business Concepts Inc.

Respondents

(Appellants)

Jonathan C. Lisus and James Renihan, for the appellants,
    Student Housing Canada Inc. and RV Inc.

William C. McDowell and Brian Kolenda, for the
    appellants, Integrated Business Concepts Inc. and Vincent Villanti

Shannon M. Puddister, for the appellant, Ravendra
    Chaudhary

Joseph M. Sereda, for the appellants, Synergy Group
    (2000) Inc., Shane Davidson Smith, Nadine Theresa Smith, Jean Breau, David
    Prentice, and 1893700 Ontario Limited

Jeffrey S. Leon and Ruth Promislow, for the respondent,
    J.P. Graci & Associates Ltd. in its capacity as Court-Appointed Receiver

Terry Corsianos, for the respondent, Trent Akagi

Heard: December 12, 2014

On appeal from the orders of Justice Colin Campbell of the
    Superior Court of Justice, dated June 14, 2013, June 24, 2013, June 28, 2013,
    August 2, 2013, and September 16, 2013.

COSTS ENDORSEMENT

[1]

On May 22, 2015, this Court released its decision setting aside a series
    of increasingly expansive
ex parte
receivership orders dated June 14, June
    24, June 28 and August 2, 2013, and a subsequent order on a Come Back Hearing
    dated September 16, 2013 maintaining those orders.

[2]

We have received and reviewed the costs submissions filed by counsel
    since then. This is our decision with respect to the costs of the proceedings.

BACKGROUND

[3]

The
    appeal concerned what was labelled an investigative receivership that
    generated a series of orders which the Court concluded stood on a
    fundamentally flawed premise and were unjustifiably overreaching in the
    powers they grant[ed]:
Akagi v. Synergy Group (2000) Inc.
, 2015 ONCA
    368, at para. 59.  In our view, both Mr. Akagi (who commenced the receivership
    proceedings without taking any initial steps to recover on his judgment) and
    the Receiver (who took the investigative receivership too far, essentially on
    the theory that an investigative receivership was akin to a criminal
    investigation or a public inquiry where there were allegations of significant
    fraud) must bear the cost consequences of the orders having been set aside.

[4]

Mr. Akagi
    applied for an initial
ex parte
order appointing a receiver (the
    Initial Order) after obtaining a default judgment in the amount of
    approximately $147,000, based on allegations of fraud arising out of the loss
    of funds he had contributed to a tax program marketed and sold by the Synergy
    Group (2000) Inc. (the Synergy Group). The program was supposed to generate
    tax loss allocations for him, but did not. His judgment was against the Synergy
    Group and certain individuals associated with it. The Initial Order granted a
    receivership over all the assets and undertakings of the Synergy Group and an
    additional company, Integrated Business Concepts Inc. (IBC).

[5]

It
    soon became clear, however, that the principal purpose of the receivership
    order was not to recover on Mr. Akagis judgment debt, but to institute a
    broad-ranging inquiry  a roving investigative receivership  into what was
    alleged to be a much larger tax fraud scheme, and to do so, purportedly, on
    behalf of approximately 3,800 other investors who may have been caught in the
    tax scheme as well. None of these investors were a party to the Akagi action or
    the receivership application, none purported to seek to have their interests
    protected, and Mr. Akagi and the Receiver maintained throughout that they did
    not purport to represent the interests of those investors.

[6]

As
    we explained in our reasons at para. 4:

Subsequently, through a series of further
ex parte
applications, the receivership order morphed into a wide-ranging investigative
    receivership, freezing and otherwise reaching the assets of 43 additional
    individuals and entities (including authorizing the registration of
    certificates of pending litigation against their properties).  None of the
    additional targets was a party to the receivership proceeding, only three had
    any connection to the underlying Akagi action, and only two were actually
    judgment debtors.

[7]

The
    receivership orders were set aside on the basis that the receivership had
    proceeded on an entirely misguided course (para. 1), the orders were
    impermissibly overreaching, and the
ex parte
proceedings themselves
    had been tainted by certain procedural frailties, including the Receivers
    failure to disclose to the Commercial List judge that the Canada Revenue Agency
    had discontinued its investigation into the tax allocation scheme several
    months before the receivership was sought, when evidence of that inquiry had
    formed the basis for obtaining the orders.

THE COSTS SUBMISSIONS

[8]

The appellants IBC and Vincent Villanti (IBC/Villanti), Ravendra
    Chaudhary, and Student Housing Canada Inc. and RV Inc. (Student Housing/RV)
    all seek their costs on a full or substantial indemnity basis against both Mr.
    Akagi and the Receiver jointly and severally.  They rely on what the Court
    described as the impermissibly and breathtakingly broad sweep and nature of
    the
ex parte
orders (paras. 38, 43), the procedural frailties in the
    manner in which the successive
ex parte
orders were obtained, and what
    is said to be the unduly adversarial nature of the way in which the Receiver
    conducted itself.

[9]

The Receiver resists these allegations and argues that no costs should
    be awarded against it for the following reasons: it was proceeding in good
    faith and simply carry[ing] out what it understood to be the court-ordered
    mandate; its conduct and activities pursuant to the receivership orders were
    approved by the Court in the August 2, 2013 Order and the Come Back Order; and
    the general rule is that a receiver is not exposed to costs against it
    personally in receivership proceedings.

[10]

Mr.
    Akagi argues that his involvement with this receivership has been limited solely
    to obtaining the initial receivership order of June 14, 2013 and to defending
    [that] order throughout [the] receivership (i.e., at the Comeback Hearing, on
    a motion before Feldman J.A., and on the appeal to this Court). He therefore
    resists any responsibility for costs incurred by the appellants drawn into the
    proceedings by the three
ex parte
orders subsequent to the Initial
    Order. He also submits that costs should not be ordered because none of the
    appellants sought costs against him at the Comeback Hearing.

DISCUSSION

Mr. Akagi and the Receiver Are Both Liable to Pay Costs


Mr. Akagi

[11]

We
    do not accept that Mr. Akagis involvement in the receivership proceedings was
    minimal or limited to obtaining the Initial Order, or that he should be immune
    from an award of costs against him in the circumstances.

[12]

While
    it may be true that it was the Receiver that sought and obtained the subsequent
ex parte
orders, Mr. Akagi tenaciously defended those orders and the
    Initial Order once the appellants received notice of them and took steps to set
    them aside. Mr. Akagis counsel attended and participated in the various
    motions, scheduling appointments and examinations following the August 2, 2013
    Order and leading up to the appeal, and was a central participant on the appeal
    itself.  In short, Mr. Akagi instituted and then supported the proceedings throughout
    and, as counsel for IBC/Villanti submits, permitted himself to be misused as a
    proxy to initiate the impermissible voyage that was this receivership.

[13]

We
    also do not accept Mr. Akagis submission that no costs should be awarded with
    respect to the Comeback Hearing because none of the appellants sought costs
    against him in their notices of motion or appeal. In our view, this is not
    fatal to the claim for costs.

[14]

Costs
    of a proceeding and a step in the proceeding are within the discretion of the
    court: see
Courts of Justice Act
, R.S.O. 1990, c. C.43, s. 131.  The
    default loser pays rule is well-recognized and it is the usual expectation of
    parties that costs will be sought by a successful party. Indeed, r. 57.03(1) of
    the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194

requires
    the court to order costs unless it is satisfied that a different order would be
    more just. Although r. 37.06(a) requires a party to set out the relief sought
    in the notice of motion, a costs award is incidental to the substantive relief
    claimed and  absent prejudice to the losing party  we see no reason why the
    failure to ask for costs in the notice of motion should, in itself, preclude
    the court from making such an order where costs are requested at the hearing. 
    See
Kretzschmann v. Greater Sudbury (City of)
, 2010 ONSC 327, 69
    M.P.L.R. (4th) 114, at para.
10;
Lemieux v. Canada (AG)
,
    2005 CanLII 26317 (Ont. S.C.), at para.
7; and
Hakim Optical
    Laboratory Ltd. v. Phillips
(2009), 96 O.R. (3d) 798 (S.C.), at paras.
    4-7.

[15]

Here,
    the appellants were unsuccessful at the Comeback Hearing and therefore it never
    became necessary to address the issue. They seek costs now.  We see no
    prejudice to Mr. Akagi in awarding costs against him for that proceeding.

[16]

For
    these reasons, Mr. Akagi is responsible for costs.

The
    Receiver

[17]

In
    the circumstances of this case, the Receiver is liable to pay costs as well, in
    our view.

[18]

The
    Receiver argues that costs are only awarded against a receiver personally in
    rare cases, relying upon
Hamilton Wentworth Credit Union Ltd. (Liquidator
    of) v. Courtcliffe Parks Ltd.
, 1995 CarswellOnt 3559 (Gen. Div.), at para.
    16. That principle applies, however, when the receiver is acting in its
    capacity as receiver in the course of the receivership. It does not apply where
    the receiver turns itself into a real litigator, impermissibly drawing others
    into the fray and forcing them to defend themselves in what amounts to a
    process that is extraneous to the creditor-driven receivership.

[19]

We
    do not say that the Receiver was acting in bad faith. In our view, however, it
    misconceived its role, and in the process lost its objectivity in the heady
    notion that it was an investigative receiver entitled to use a
    single-creditor receivership process to pursue a larger public cause on
    behalf of all 3,800 alleged victims of the tax scheme and with a view to
    gathering evidence that would support an eventual lawsuit on their behalf. Mr.
    Akagis claim was a relatively small one that did not justify, or require, the
    intrusive and far-reaching
Mareva
-like orders that were obtained. In taking
    these steps, the Receiver undermined its neutral position as an officer of the
    court and turned itself into a litigant for the cause. As a litigant, it is
    subject to the loser pays costs regime that applies in this jurisdiction.

[20]

If
    any further confirmation is necessary to demonstrate that the extraordinary
ex
    parte
orders sought by the Receiver in 2013 were obtained as part of a
    roving receivership conducted in contemplation of pending litigation in which
    the Receiver would be authorized to pursue what would have been, in effect, a
    class action in the guise of a receivership, it is found in the Receivers
    Seventh Report, dated August 28, 2014, at paras. 27-28:

It is contemplated by the Receiver that if the forensic work
    confirms the conclusions reached by CRA and the RCMP, the Receiver will
    recommend that an action be commenced by the Receiver (without security for
    costs) on behalf of the 3800 investors against the following individuals,
    claiming damages for fraud, an accounting and tracing and other related relief:
    Villanti, Chaudhary, Loschiavo, Shane Smith, Prentice and Lloyd. Additional
    potential defendants would be added as appeared appropriate based on further
    information as to the flow of funds that recently became available.

It is further contemplated that the Receiver may recommend that
    it be directed to commence actions against the various individuals and entities
    that earned the commissions from the sale of this tax scheme.  Further
    examinations are necessary (including those which the Receiver is currently
    trying to schedule) in order to further report to the Court on this matter.

[21]

This
    is not a case of bankruptcy proceedings in which a trustee enjoys a presumption
    that, in an action commenced by or against it under the
Bankruptcy and
    Insolvency Act
, R.S.C. 1985, c. B-3, as amended, the trustee is not
    personally liable for costs unless the court directs otherwise: see s.197(3). Here,
    the Receiver was appointed under s. 101 of the
Courts of Justice Act
,
    as amended, and, under its appointing Order, had the authority, but was not
    obliged, to take further legal proceedings.

[22]

In
    such non-bankruptcy situations, the law is clear that a receiver or trustee
    assuming the role of a real litigator runs the risk of being personally
    liable for costs, as is any unsuccessful litigant, and litigates at its peril
    in the absence of a source of indemnity available to it  generally the assets
    of the estate or a contract of indemnity with the creditor or creditors: see
    Frank Bennett,
Bennett on Receiverships
, 3rd ed. (Toronto: Thomson
    Reuters Canada, 2011), at pp. 259-60;
Haunert-Faga v. Faga
, 2013 ONSC
    1581, 100 C.B.R. (5th) 52, at paras. 12-16, and the authorities cited therein;
Touche
    Ross Ltd. v. Weldwood of Canada Sales Ltd.
(1984), 49 C.B.R. (N.S.) 284
    (Ont. H.C. in Bank.), at pp. 286-88;
Re Waterloo Mechanical Contractors
    Ltd.; Thorne Riddell Inc. v. Sinclair
(1983), 49 C.B.R. (N.S.) 196 (Ont.
    S.C.), at pp. 203-4;
Crossing Co. v. Banister Pipelines Inc.
, 2004
    ABQB 56, at para. 19;
Sigurdson v. Fidelity Insurance Co. of Canada et al.
(1980)
, 110 D.L.R. (3d) 491 (B.C.C.A.),
    at pp. 495-96; and
Canadian Imperial Bank of Commerce v. 437544 Ontario
    Inc.
(1995), 86 O.A.C. 241, at para. 14.

[23]

It
    does not matter that the receiver or trustee was acting in good faith or that
    it appeared desirable to the receiver or trustee to pursue the proceeding; as
    an unsuccessful litigant, they may still be liable for costs. In
Sigurdson
,
    at p. 495, the British Columbia Court of Appeal cited with approval the
    following passage from an early English case,
In re Arthur Williams &
    Co., Ex parte The Official Receiver
,
[1913] 2 K.B. 88, at pp. 94-95, which we also find persuasive:

The question in this appeal is one that is so familiar and so
    well settled with reference to other jurisdictions that I confess I was
    surprised to learn that it was thought capable of being argued in bankruptcy.
If
trustees of a settlement, or executors, or administrators of a deceased person,
    or
a receiver
, or a liquidator,
raise a contest with another
    person and bring him into Court to defend himself in respect of some claim
    which is set up against him, and the claim fails
, the trustees, or
    executors,
or receiver
, or official liquidator, are personally liable
    to pay the costs.
It is immaterial that in making the claim they acted bona
    fide in the belief that they were doing that which was for the benefit of the
    estate which they represented
.  They are personally liable as between them
    and the defendant; they are entitled to an indemnity out of the estate which
    they are representing unless they have been guilty of misconduct.  The question
    of misconduct is not relevant at all in these circumstances as between the
    plaintiffs and the defendant whom they have brought into Court;
it does not
    matter whether they have acted bona fide or not; they brought an action and failed,
    and they are personally liable to pay costs,
but in a proper case they
    are, as I have said, entitled to indemnity
.
[Emphasis added.]

[24]

The
    Receiver raises two additional arguments. First, it relies upon s. 142 of the
Courts
    of Justice Act
, which provides that [a] person is not liable for any act
    done in good faith in accordance with an order or process of a court in
    Ontario.  Secondly, it seeks to shelter under the protection provided in the
    August 2, 2013 Order, which states:

THIS COURT ORDERS that the Receiver, its counsel and any agents
    or advisors appointed by the Receiver to assist the Receiver in carrying out
    its duties, obligations and activities in connection with matters relating to
    the exercise of its powers and any ancillary matters in respect thereof
    including, without limitation, pursuant to this Order, Prior Receivership
    Orders or further Orders of this Court, shall have no liability with respect to
    carrying out such duties, obligations and activities.

[25]

We
    would not give effect to either of these contentions. First, a receiver cannot
    obtain a series of
ex parte
orders for an impermissible and extraneous
    purpose  as was the case here  and then seek to be shielded by s. 142 of the
Courts
    of Justice Act
on the basis that it was simply acting in accordance with
    those orders. Secondly, we read the provision of the Order, cited above, as
    providing a buffer for the Receiver against a lawsuit that might be commenced
    concerning its conduct of the receivership. We do not read it as providing the
    Receiver with immunity from the costs consequences of entering the arena as a
    real litigator  particularly in respect of a cause that it was not entitled
    to pursue.

THE SCALE AND QUANTUM OF COSTS BY PARTICIPANT

[26]

We
    now turn to the question of the scale and quantum of costs payable to the
    appellants. Counsel for the Receiver and for each of the appellants have filed
    comprehensive submissions, and appellants counsel have included their respective
    costs outlines. We have reviewed the submissions and the costs outlines
    carefully.

The Scale of Costs

[27]

We
    turn first to the appropriate scale of costs to be awarded.

[28]

The
    appellants seek their costs on a full indemnity or substantial indemnity basis.
    In support of this position, they variously argue the following:

(a) Mr. Akagi and the Receiver knew
    they were embarking on a process that was fraught with legal risk and which had
    an incredibly damaging effect on the appellants;

(b) the receivership appears to have
    been instituted in order to circumvent the customary procedural safeguards
    relating to a claim for
Mareva
-like interlocutory injunctive relief or
    other similar pre-trial relief;

(c) in the circumstances of this case,
    the
ex parte
orders constituted not only execution before judgment
    but, in fact, execution before the commencement of any claim;

(d) Mr. Akagi and the Receiver
    continued to press forward with the process even after Feldman J.A. had
    expressed reservations about the procedural flaws in November 2013, and Penny
    J. did the same in May 2014;

(e) offers to settle  at least on the
    part of Student Housing/RV  were vigorously rebuffed (even in the face of the
    procedurally flawed registration of certificates of pending litigation
    following the August 2, 2013 Order);

(f) at least in the cases of Mr.
    Chaudhary and Student Housing/RV, neither was a party to the receivership
    proceedings, neither had any connection to the underlying Akagi action, and
    neither was indebted to Mr. Akagi or to any other of the 3,800 alleged victims,
    nor had any claim ever been commenced against them or evidence of wrongdoing on
    their part ever put forward;

(g) in spite of the foregoing, Mr.
    Akagi and the Receiver insisted on pursuing far-reaching demands for
    production, compelled the examinations of various appellants and members of
    their families, brought a contempt motion against the solicitor for one of the
    appellants, and prevented the appellants from doing business with their banks
    by sending copies of the various orders to every bank the Receiver identified
    as dealing with the appellants and individuals related to them; and finally,

(g) the Receiver failed to make full
    and complete disclosure by not advising the Court that the CRA investigation
    (upon which Mr. Akagi and the Receiver relied to obtain the orders) had been
    discontinued three months before the Initial Order was obtained (although, in
    fairness, the RCMP was by that time conducting a criminal investigation).

[29]

In
    short, the appellants say, the receivership was overreaching, harassing and
    abusive. Costs should be awarded on a full or substantial indemnity basis.

[30]

A
    review of this Courts earlier reasons will reveal that there is some substance
    to these submissions. The attempted use of the receivership process by the
    Receiver was misguided. Its goal was to utilize the machinery of a
    receivership, and the status and position of the Receiver as an officer of the
    court, to freeze and otherwise tie up the assets of over 40 far-flung,
    non-party individuals and entities (only three of which had any connection to
    the Akagi proceedings)  all with a view to putting forward a future claim on
    behalf of 3,800 alleged victims of the tax scheme, none of whom expressed any
    desire to be represented or came forward to join in the receivership
    proceedings. The
ex parte
orders obtained were akin to
Mareva
injunctions,
[1]

Anton Piller
orders
[2]
and
Norwich
orders
[3]
combined, but with none of the procedural protections usually afforded to
    defendant litigants in such cases and none of the obligations usually required
    of plaintiffs.
[4]

[31]

The
    general rule is that costs are awarded on a partial indemnity basis. In some 
    generally rare  circumstances, however, the level of costs may be increased to
    substantial indemnity or even a full indemnity basis. One of those
    circumstances is where it is necessary to mark the courts disapproval of the
    conduct of the party in the litigation: Mark M. Orkin,
The Law of Costs
,
    loose-leaf (2015-Rel. 54), 2nd ed. (Aurora: Canada Law Book, 1993) vol. 1 at p.
    2-217, cited by this Court with approval in
Hunt v. TD Securities Inc.
(2003), 66 O.R. (3d) 481, at para. 123. See also
Mortimer v. Cameron
(1994),
    17 O.R. (3d) 1 (C.A.), at p. 23, leave to appeal refused, [1994] S.C.C.A. No.
    150.

[32]

In
    our view, this is one of those cases. For all of the reasons outlined above,
    the Receiver took a useful concept  that of the investigative receivership 
    and ran too far with it for an extraneous purpose, losing sight in the process
    of its role as an officer of the court, bound to protect the interests of every
    individual or entity involved. We conclude that the extension of the orders, on
    an
ex parte
basis, against Mr. Chaudhary and Student Housing/RV was
    particularly egregious in the circumstances.

[33]

That
    said, we do not propose to make an award of costs against the Receiver on a
    full indemnity scale. We do, however, award costs against the Receiver on a
    substantial indemnity scale as a measure of our disapproval of its conduct.

[34]

Mr.
    Akagi (narrowly) escapes that sanction, although he will be liable for the
    appellants costs on a partial indemnity basis, for the reasons outlined
    above.  Although the appellants are correct in submitting that Mr. Akagi lent
    his name as proxy to the roving receivership and supported it all along, it
    appears to us from the record that it was the Receiver that was the more active
    litigant, pushing for the potential action on behalf of all 3,800 alleged
    victims and calling the shots on the overreaching orders that were obtained. In
    addition, Mr. Akagi is an unpaid creditor and at least had some interest in
    pursuing the receivership.

The Quantum of Costs

[35]

In
    addressing the question of quantum of costs, we have carefully considered
    counsels submissions and the costs outlines filed. Having done so, we make the
    following preliminary observations.

Adjusting
    Factors

[36]

First,
    the receivership and the proceedings it generated were complex and far-reaching.
    Subject to some submissions about overlapping efforts, neither Mr. Akagis
    counsel nor the Receivers quarrel with the time spent by the various counsel
    in dealing with the matter, or with the hourly rates put forward. Nor do we.

[37]

Secondly,
    because of the evolving nature and complexity of the receivership, the Synergy
    Group and IBC (and, to a certain extent, Mr. Villanti), who were the initial
    targets, were undoubtedly required to invest more time and resources in
    ultimately defending their positions than would have been the case had the
    receivership not been extended to ensnare the 40 or so additional non-parties
    to the receivership. For that reason, the Synergy Group and IBC/Villanti are
    entitled to their costs on a substantial indemnity basis against the Receiver
    and on a partial indemnity basis against Mr. Akagi, even though they are the
    appellants who might be said to have had the most direct connection with the
    underlying Akagi action.

[38]

Thirdly,
    because each of the appellants  except for the Synergy Group  changed counsel
    at some point between the Comeback Hearing and the argument of the appeal,
    there is an inevitable overlap in preparation time spent by counsel. This
    overlap is reflected in the costs outlines submitted, requiring the amounts
    claimed to be adjusted accordingly.

[39]

Finally,
    a significant amount of the time logged related to motions before Penny J. in
    the Superior Court, while the appeal was pending, and to the motion before
    Tulloch J.A. in this Court to set aside the Registrars order dismissing the
    appeal for delay, as well as the subsequent motion before the panel that
    reinstated the appeal. Costs were dealt with by Penny J. (costs to Mr. Akagi
    and the Receiver jointly, fixed at $7,500) and his orders were not appealed. The
    costs of the proceedings in this Court relating to the reinstatement of the
    appeal were also dealt with by the panel ($15,000 to Student Housing/RV and
    $15,000 to IBC/Villanti). These orders stand and, as a result, the time devoted
    to those particular proceedings cannot form part of the costs order being made
    at this time.

Quantum
    (Partial and Substantial Indemnity)

[40]

The
    appellants are entitled to their costs against Mr. Akagi on a partial indemnity
    basis and against the Receiver on a substantial indemnity basis, in the amounts
    set out below with respect to the Comeback Hearing, the stay motion before
    Feldman J.A. (who reserved costs to the panel) and the appeal (including
    submissions as to costs). In addition, they are entitled to their disbursements
    as set out below.

The
    Comeback Hearing

[41]

Costs
    are awarded for the Comeback Hearing as follows:



TO

PARTIAL
          INDEMNITY

SUBSTANTIAL
          INDEMNITY



STUDENT HOUSING/RV

$10,000 + HST

$15,000 + HST



CHAUDHARY

$10,000 + HST

$15,000 + HST



SYNERGY/IBC/VILLANTI

$10,000 + HST

$15,000 + HST



TOTAL

$30,000 + HST

$45,000 + HST



Stay Motion

[42]

The
    stay motion was important and no doubt reasonably complex.  However, it is with
    respect to this proceeding that we have had to reduce some of the time claimed
    by counsel. It appears that a certain amount of time has been accounted for in
    the same portions of their costs outlines with respect to both the stay motion
    and other proceedings that occurred around that period, up to the point when it
    became necessary to deal with the reinstatement of the appeal.

[43]

Albeit
    that the appellants were unsuccessful before Feldman J.A., we are satisfied
    that they should receive their costs in relation to that proceeding.  Justice
    Feldman expressed serious reservations about the procedure employed to appoint
    and maintain the receivership; the appellants were fully successful on the
    appeal, partly because those concerns were determined to have merit.

[44]

It
    appears that Mr. Chaudhary did not file materials in relation to the stay
    motion or appear on it. He is therefore not entitled to costs for that
    proceeding.

[45]

The
    following award of costs is made with respect to the stay motion:



TO

PARTIAL
          INDEMNITY

SUBSTANTIAL
          INDEMNITY



STUDENT HOUSING/RV

$7,500 + HST

$11,250 + HST



CHAUDHARY

$0

$0



SYNERGY/IBC/VILLANTI

$7,500 + HST

$11,250 + HST



TOTAL

$15,000 + HST

$22,500 + HST



The
    Appeal

[46]

We
    have determined that $37,500 represents a reasonable amount at which to fix
    costs of the appeal on a partial indemnity basis for all appellants except the
    Synergy Group, for reasons we will explain below, which is roughly what counsel
    for Student Housing/RV and IBC/Villanti claimed in their submissions. Counsel
    for the Trustee accepts this as reasonable.  We have also topped up this
    amount to include a small sum representing costs in relation to these costs
    submissions.

[47]

The
    Synergy Group is not entitled to the same amount for the costs of the appeal as
    are the other appellants because it did not fully participate in the proceeding.
    By the time of the appeal, IBC and Mr. Villanti had changed counsel from Mr.
    Sereda to the Lenczner Slaght firm. Mr. Sereda continued to represent the
    Synergy Group. Mr. Sereda filed materials on the appeal, but he did not attend
    on the argument, instead instructing an agent who attended and simply advised
    the Court that the Synergy Group was adopting the submissions of the other
    appellants.

[48]

Accordingly,
    we fix the costs of the appeal payable to the Synergy Group on a partial
    indemnity basis at $15,000, taking these factors into account and recognizing
    as well that there was a certain amount of duplication in preparation time as
    between Mr. Sereda and newly retained counsel for IBC/Villanti.

[49]

For
    reasons already explained, we award costs of the appeal against Mr. Akagi on a
    partial indemnity basis and against the Receiver on a substantial indemnity
    basis.

[50]

Costs
    of the appeal (and of the submissions relating to these costs) are therefore
    fixed in the following amounts:



TO

PARTIAL
          INDEMNITY

SUBSTANTIAL
          INDEMNITY



STUDENT HOUSING/RV

$39,000 + HST

$58,500 + HST



CHAUDHARY

$39,000 + HST

$58,500 + HST



IBC/VILLANTI

$39,000 + HST

$58,500 + HST



SYNERGY

$16,500 + HST

$24,750 + HST



TOTAL

$133,500 + HST

$200,250 + HST



Disbursements

[51]

The
    appellants are entitled to their disbursements, paid jointly and severally by
    Mr. Akagi and the Receiver, in the following amounts, which are inclusive of
    HST:



TO

DISBURSEMENTS



STUDENT HOUSING/RV

$8,300.48



CHAUDHARY

$2,736.91



IBC/VILLANTI

$8,386.11



SYNERGY

$7,837.92
[5]



TOTAL

$27,261.42



The Substantial Indemnity Quantum

[52]

Some
    explanation of the way in which we arrived at the substantial indemnity amounts
    referred to in the charts above may be helpful.

[53]

In
    seeking substantial indemnity costs, counsel appear to have proceeded on the
    basis that substantial indemnity costs represent 90% of full indemnity.  While
    that may be so in some circumstances, we do not think that is an accurate
    general principle of law.

[54]

Counsel
    have referred us to two Superior Court decisions in which judges have concluded
    that a substantial indemnity
hourly rate
may fairly represent 90% of
    the full indemnity
hourly rate
. They have come to this conclusion
    based on the premise that a fair partial indemnity hourly rate represents
    approximately 60% of full indemnity. Applying a factor of 1.5  the factor set
    out in the definition of substantial indemnity costs in r. 1.03  the judges
    arrived at a substantial indemnity
hourly rate
of 90% of full
    indemnity. See
OGT Holdings Ltd. v. Startek Canada Services Ltd.
, 2010
    ONSC 1090; and
Middleton v. Highlands East (Municipality of)
, 2013
    ONSC 2027.

[55]

It
    is well-established, however, that fixing costs of a proceeding or of a step
    within a proceeding on a partial indemnity basis pursuant to Part I of Tariff A
    of the
Rules of Civil Procedure
is not simply an exercise of
    multiplying hourly rates by the amount of time expended. The court must balance
    the discretionary factors set out in r. 57.01(1) and, in the end, arrive at an
    amount that is reasonable and fair in the circumstances and that bears some
    relationship to the amount that an unsuccessful party could reasonably expect
    to pay: see
Boucher v. Public Accountants Council for the Province of
    Ontario
(2004),
71 O.R. (3d) 291
(C.A.), at paras. 26, 37-38. That the Receiver itself had accumulated fees and
    disbursements exceeding $300,000 as at the Comeback Hearing is confirmation of
    what would have reasonably been contemplated in the eyes of the Receiver. It is
    on that basis that we have arrived at the partial indemnity amounts awarded
    above.

[56]

Costs
    awarded on a substantial indemnity basis are not a function of full indemnity
rates
,
    however, or of full indemnity costs where full indemnity rates are reasonable. Under
    the
Rules
, substantial indemnity costs are a function of the costs
    awarded on a partial indemnity basis.  Rule 1.03 is quite clear on this:

Substantial indemnity costs mean costs awarded in an amount
    that is 1.5 times what would otherwise be awarded in accordance with Part I of
    Tariff A, and on a substantial indemnity basis has a corresponding meaning.

[57]

In
    short, costs awarded on a substantial indemnity scale are to be determined on
    the basis of applying a factor of 1.5 to the amount of the partial indemnity
    costs as fixed (or that would otherwise have been fixed) in accordance with the
Rules
and Tariff A. The substantial indemnity costs we have awarded,
    as set out in the charts above, have been arrived at in this fashion.

Joint and Several
    Liability

[58]

We
    are satisfied that, in the circumstances, Mr. Akagi and the Receiver should be
    jointly and severally liable for the partial indemnity costs and the
    disbursements, as set out above. The Receiver shall be severally liable for the
    difference between the partial indemnity amounts and the substantial indemnity
    amounts as shown. HST is payable on the costs amounts awarded. The
    disbursements awarded are inclusive of HST.

[59]

We
    have not been provided with any information about whether the Receiver has an
    indemnity agreement from Mr. Akagi. If such is the case, however, we order that
    the Receiver is not to be indemnified for more than the partial indemnity costs
    awarded. In addition, the Receiver shall not be entitled to be indemnified out
    of the assets of the receivership estate: see
HSBC Bank Canada v.
    Lechcier-Kimel
, 2014 ONCA 721, at para. 19.

DISPOSITION

[60]

An
    order will go fixing the costs of the Comeback Motion, the stay motion before
    Feldman J.A. and the appeal in the amounts set out above.

Janet
    M. Simmons J.A.

R.A.
    Blair J.A. 

R.G.
    Juriansz J.A.





[1]
A
Mareva
injunction operates to restrain a party from disposing of his
    or her assets pending a trial: see Robert J. Sharpe,
Injunctions and
    Specific Performance
, loose-leaf (2014-Rel. 23), (Toronto: Thomson Reuters
    Canada, 2014), at paras. 2.750, 2.800.



[2]
An
Anton Piller
order gives the plaintiff access to the defendants
    premises to inspect documents and remove items to which the plaintiff asserts a
    proprietary claim: Sharpe, at para. 2.1100.



[3]
A
Norwich
order  which is similar to, but distinct from, an
Anton
    Piller
order  authorizes pre-action discovery: see
GEA Group
    AG v. Flex-N-Gate Corp.
, 2009 ONCA 619, at para. 41. More
    specifically, it allows the plaintiff to gain disclosure of facts required to
    bring an action where he or she can demonstrate that such disclosure is
    necessary in all the circumstances: Sharpe, at para. 2.1197.



[4]
To obtain a
Mareva
injunction, the plaintiff must generally meet the
    following requirements: i) make full and frank disclosure; ii) give sufficient
    particulars of the claim, so that a defence can be put forward; iii) provide
    evidence that the defendant has assets and that there is a risk of those assets
    being removed from the jurisdiction or otherwise improperly dealt with; and iv)
    give an undertaking as to damages: see Sharpe, at paras. 2.850 to 2.900.



[5]
A portion of these disbursements were incurred while Mr. Sereda was
    representing IBC/Villanti.  We leave it to counsel to make any allocation that
    may be appropriate.


