COURT OF APPEAL FOR ONTARIO
LASKIN, GOUDGE AND FELDMAN JJ.A.
B E T W E E N :
MOJA GROUP (CANADA) INC.
Appellant Hanif Sheikh in person
(Plaintiff)
Simon J. Adler
– and –
for the respondent Pink
PAUL PINK, VIRGINIA PINK and GLEN BELL (Defendants)
James W. Sloan
(Defendants)
for the respondent Bell
A N D B E T W E E N:
GLEN BELL (Plaintiff by Counterclaim)
– and –
MOJA GROUP (CANADA) INC., HANIF SHEIKH, and ROBIN CASLICK
(Defendants to the Counterclaim)
A N D B E T W E E N:
PAUL PINK (Plaintiff by Counterclaim)
– and –
MOJA GROUP (CANADA) INC., HANIF SHEIKH, ROBIN CASLICK and 1459720 ONTARIO INC.
(Defendants by Counterclaim)
Heard: September 14, 2005
On appeal from the costs order of Justice Patrick Joseph Flynn of the Superior Court of Justice dated March 9, 2005.
BY THE COURT:
1The appellant Hanif Sheikh was the directing mind of Moja Group (Canada) Inc., the plaintiff in the original action and a personal defendant in the counterclaim. He seeks to appeal, with leave, from the two costs orders made against him personally in this litigation. One costs order is in favour of the defendants Paul and Virginia Pink in the total amount of $66,000. The other costs order is in favour of Glen Bell in the total amount of $74,000.
2Both orders have two parts. One half of each order relates to the claim and awards substantial indemnity costs of the successful motions by Pink and Bell as defendants, dismissing the claim of the plaintiff Moja Group (Canada) Inc. as disclosing no genuine issue for trial.
3The other half of each order relates to the counterclaim and awards substantial indemnity costs of the failed motions brought by the defendants by counterclaim (including the appellant) seeking summary judgment dismissing the counterclaims of Pink and Bell.
4The orders appealed from make the appellant jointly and severally liable for both halves of both costs orders. The appellant was not a party to the main claim, but was held liable for costs of the motions dismissing Moja’s claim because he was found to be the controlling mind of the company who caused it to commence the proceeding in bad faith in order to cause financial pain to Pink and Bell and to extend and complicate the proceedings. The appellant was a party to the counterclaim and was held liable for costs of the motion that failed to dismiss the counterclaim because, along with others, he unreasonably brought a summary judgment motion that was unsuccessful.
5In our view, that part of the orders below assessing costs against the appellant personally for the motions dismissing the claim brought by Moja cannot stand because the appellant is not a party to that proceeding. In circumstances such as these, to require the controlling mind of a company to pay costs personally in litigation brought by the company, the company must be sham or a “man of straw” put forward by the person who is the real litigant to shield himself from liability for costs. See Television Real Estate Ltd. v. Rogers Cable TV Ltd. (1997), 34 O.R. (3d) 291 (Ont. C.A.).
6While the motion judge made findings of bad faith, intimidation and vindictive conduct by the appellant in causing the action to be commenced, he did not find that the appellant fraudulently used the plaintiff company to commence this action. There is no doubt that the company carried on an active business at the time of the events at issue. Indeed the claim is about a business venture that failed. The company was not simply a sham put up to shield the appellant from liability for costs. This aspect of both orders must therefore be set aside.
7However we see no reason to disturb the other half of both orders. The appellant is a party to the counterclaim. Along with the other defendants by counterclaim he moved unsuccessfully for summary judgment to dismiss the counterclaim. Rule 20.06(1) makes him liable for substantial indemnity costs unless the court is satisfied that it was reasonable to bring the motion. The judge below found that it was not, and we see no basis to interfere with that finding. Equally, it was open to the motion judge to exercise his discretion to make the appellant jointly and severally liable with the other major defendants by counterclaim for the entirety of those costs.
Result
8The appellant therefore remains liable to Pink for costs in the amount of $33,000 and to Bell for costs in the amount of $37,000.
9Leave to appeal costs is granted and the appeal allowed to the extent set out in this endorsement. The appeal is otherwise dismissed. Success in this court being divided, there will be no costs of the appeal.
RELEASED: November 25, 2005 “JL”
“John Laskin J.A.”
“S. T. Goudge J.A.”
“K. Feldman J.A.”
