N.B. firm slapped with costs in potato farmer case

A New Brunswick law firm attempting to repatriate a Canadian farmer imprisoned in Lebanon has been slapped with a $100,000 costs bill after a judge found it undermined insolvency proceedings against his companies.

In an October judgment, Court of Queen’s Bench Justice Lucie LaVigne had already cut Gilbert McGloan Gillis’ fees to $150,000 from $500,000 after finding much of its work on a restructuring plan for the holdings of Hank Tepper under the Companies’ Creditor Arrangement Act was duplicated, unnecessary and wasteful.

But now the firm will have to hand over a large chunk of that amount, around $100,000 after a new ruling awarded costs against the firm itself for its behaviour.

“GMG’s conduct amounts to a serious dereliction of the duty owed to the court which justifies the use of the word ‘gross.’ It clearly goes beyond mistake, error in judgment, or mere negligence. I conclude that GMG’s conduct amounts to acting in disregard of the interests of justice in these CCAA proceedings,” LaVigne wrote in the Dec. 1 decision.

Tepper has been held without charge in Lebanon since March over the alleged export of potatoes by his company to Algeria that were found to have ring rot. GMG withdrew as representative for the companies after creditors and a court-appointed monitor raised concerns about its billings, but continues to advocate for Tepper’s release from custody in Lebanon.

The firm argued that only individual lawyers could be held liable for costs, but at least nine lawyers and one articling student from GMG had worked on the file, making it “very difficult, if not impossible, to single out particular lawyers in this case,” said the judge.

LaVigne found GMG had failed to make full disclosure during an ex-parte motion, allowed inaccurate information on company cash flow to be presented to the court, brought unnecessary motions, and acted in its own interest to the detriment of the corporations when it refused at first to remove itself from the file until an arrangement could be reached over its fees.

In proceeding as it did at the initial hearing in June, LaVigne said the firm “set the ground for distrust which explains in part why there had been little or no progress towards a plan of arrangement as of September 30.”

The costs incurred by all parties so far is more than $650,000, but LaVigne said it was difficult to give a precise estimate for the amount wasted due to GMG’s actions. In the end, she ordered the firm to pay the court-appointed monitor $11,000, plus $25,000 for its lawyer. Main creditor BMO got $50,000 and another creditor, the National Bank, got $8,000. A further $8,500 was shared between BMO and the monitor for their costs on the hearing.

It’s been a tough couple of months for GMG. In addition to the Tepper episode, senior partner Rodney Gillis, was recently charged with obstruction of justice, according to local Telegraph-Journal newspaper.

The Telegraph-Journal says the file has been passed on to an out-of-province prosecutor after an investigation by Fredericton Police into an incident in Bathurst, N.B., in which Gillis allegedly attempted to “dissuade a person by threats, bribes or other corrupt means from giving evidence.”

“I’ve never obstructed any justice any time in my life,” Gillis told the paper in response. “I’m somewhat taken aback by such an outrageous statement.”

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