Ontario Securities Commission
IN THE MATTER OF THE SECURITIES ACT, R.S.O. 1990, CHAPTER S.5, AS AMENDED
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IN THE MATTER OF FIRST FEDERAL CAPITAL (CANADA) CORPORATION and MONTE MORRIS FRIESNER
Hearing: July 9, 2004
Panel: Paul M. Moore, Q.C. Vice-Chair of the Commission (Chair of the Panel)
M. Theresa McLeod Commissioner
Harold P. Hands Commissioner
Counsel: Walter Fox For First Canadian Capital (Canada) Corporation and Monte Morris Friesner
Alexandra S. Clark For Staff of the Commission
DECISION AND REASONS
I. Background
1This panel's reasons on the merits of this matter were released on February 3, 2004. We held that it was in the public interest to order that the respondents pay the costs of the Commission's investigation and hearing, pursuant to section 127.1 of the Ontario Securities Act, R.S.O. 1990, c.S.5 (the Act). We invited the parties to arrange for the exchange of information and to arrange a costs hearing. The matter before us is the hearing into the quantum of costs.
II. Preliminary Issue – Motion for Adjournment
2As a preliminary issue, counsel for Friesner moves for an adjournment. He submits that disclosure of costs by staff of the Commission (staff) is insufficient to meet the test set out in the Divisional Court decision of Donnini v. Ontario Securities Commission (2003), 37 B.L.R. (3d) 46 (Donnini). An adjournment, he argues, would permit staff to provide a more detailed accounting of how its bill of costs was arrived at and to allow for cross-examination of those mentioned in the accounts. He notes that Friesner was unrepresented by counsel until the day before this hearing. As a result, he only became aware of staff's bill of costs in late June 2004 and was unable to request an adjournment on his own. An affidavit by Friesner was tendered in support of the second ground.
3We have considered the motion as presented, the arguments of counsel, and Friesner's affidavit. We dismiss this motion as being out of time according to the Commission's Rules of Practice. We shall not exercise our discretion to waive the time limits in the Rules of Practice and will deal with the issue of the adequacy of staff's bill of costs in the body of these reasons.
III. Staff's Bill of Costs and Dockets
4Staff has submitted a bill of costs in the amount of $32,332.60, covering the period April 1, 2000 to May 26, 2003. Disbursements are supported by invoices totalling $256.10. Fees are broken down into two components, $27,470.00 in respect of litigation hours and $4,606.50 in respect of investigation hours. In support of these calculations are the dockets of the sole investigator, Colin McCann, and the dockets of enforcement legal counsel who worked on the file at various times, Sara Oseni, Kate Wooton, and Alexandra Clark.
5The dockets are in a common format. Under the name of each member of staff who worked on this file is a list of entries. Each entry is a single line that groups under descriptions the tasks performed on a weekly basis, and the number of hours spent performing the task. The tasks are grouped under generic words or shorts phrases, such as "Analysis", "Settlement", and "Preparing hearing/court proceedings". Staff advises us that the dockets are entered electronically on a weekly basis, and that the software used by the Enforcement branch of the Commission allows only preset task categories under which relevant tasks are grouped. The software does not allow for the entry of free-text descriptions or elaborations of activities performed by staff. A task description such as "Analysis", staff explains, may encompass several tasks, such as reviewing the file and reviewing caselaw.
6Counsel for staff advise that there are no other notes or docket information in existence.
7In correspondence dated May 27, 2003, staff provided Ron Pelletier, then-counsel for Friesner, with its bill of costs and disbursement invoices. On February 24, 2004, staff provided Jim Douglas, who succeeded Ron Pelletier as Friesner's counsel, with copies of the dockets mentioned above.
IV. Submissions of the Parties
8Staff submits that sufficient particulars have been provided to support the bill of costs in this matter. The bill of costs itself represents an appropriate balancing of the interests of the capital markets and fairness to Friesner. Staff argues that, as part of this balancing, the costs allocated to Friesner have been significantly discounted.
9Staff distinguishes this case from that of Donnini. In Donnini, no dockets were provided in support of a bill of costs amounting to $186,052.30. Staff submits that dockets in the identical format to those presented today have been accepted as the evidentiary basis for the calculation of the bill of costs by the Commission in matters following Donnini.
10Staff quotes the Divisional Court's statement in Donnini: "a claim for costs in this amount justifies a more intense and searching examination than the OSC is prepared to allow." She submits that, pursuant to Donnini, the degree of detail required in support of a bill of costs is proportional to the amount of costs claimed.
11Counsel for Friesner submits that that the dockets are insufficient: they do not provide full information about the specific activities performed by staff. They are, he contends, only summaries of dockets, insufficient to allow the Commission to reach a conclusion about the adequacy of the bill of costs.
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