Superior Court of Justice - Ontario (Divisional Court)

Court File No.: 211-08

Date: 2009-01-09

Re: Anthony Mascia & Northern Magnetic Corporation v. Dixie X-Ray Associates Limited, Cedarwood Management and Financial Consultants Inc., Cirrus Management Incorporated, Karing Management Limited, Sadara Management Corporation, Daniel Slipacoff, Allan Yee, Kwan Cheung Tsui, Isadore Czosniak, Ron Polson and Soe Lwin Kyone

Before: Cunningham, A.C.J., Carnwath, J. and Bellamy, J.

Counsel: Barry H. Bresner & Markus Kremer, for the Respondents/Appellants, Dixie et al. Lisa S. Corne, for the Applicants/Cross-Appellants, Anthony Mascia & Northern Magnetic Corporation

Endorsement

By the Court:

[1] On November 17, 2008, we released our decision regarding an appeal and cross-appeal from a decision of Madam Justice A. Hoy dated March 25, 2008. We have now received submissions with respect to costs.

The Position of the Parties

[2] In total, the successful respondents seek $199,240 in partial and substantial indemnity costs or, alternatively, $156,686 in partial indemnity costs.

[3] The applicants submit the parties should bear their own costs. Alternatively, costs should be awarded on a partial indemnity basis only and the total should be between $50,000 - $65,000 for the appeal, the cross-appeal and the various motions before the Divisional Court, and an amount less than $57,000 for the earlier matter before Justice Hoy.

The application & motions before Justice Hoy

[4] In lieu of the $10,000 ordered by Hoy J. when success had been mixed, the respondents seek their costs of $57,100 inclusive, on at least a partial indemnity basis, given they have ultimately been entirely successful in responding to Dr. Mascia’s application and motions. A key factor in the respondents’ submission is the amount the applicants could reasonably have been expected to pay if unsuccessful given that their own lawyer’s fees for the application before Hoy J. had been $93,105. To support their position, they also rely on the complexity of the proceeding, the applicants’ refusal to admit, and Justice Hoy’s finding that Dr. Mascia’s conduct tended to lengthen unnecessarily the duration of the proceeding.

[5] The applicants make three alternative submissions: (1) refer the issue of costs of the application back to Justice Hoy; (2) order an assessment; or (3) reduce the $57,100 being claimed by the respondents as this amount is excessive for a one-day hearing with no cross-examinations and, in any case, the hourly rates are too high.

The applicants’ fresh evidence motion, the respondents’ summons motion and their motion to strike

[6] The applicants brought a motion for an order permitting the introduction of fresh evidence on the appeal and the cross-appeal, and also sought to examine nine witnesses to obtain additional evidence. In supporting material, they sought to include allegations that Dixie, its principal and their counsel had engaged in fraudulent, criminal and/or unethical or unprofessional conduct which compelled Dixie’s counsel to bring the motion to strike. These allegations were refuted and were followed by a further affidavit from Dr. Mascia in which he asserted new and unfounded rumours and extended his allegations of unprofessional conduct to include hearsay allegations against counsel for Dixie.

[7] The respondents brought a motion to quash three summonses and a motion to strike allegations contained in an affidavit.

[8] Dixie submits that Dr. Mascia’s conduct with respect to the motions calls for an award of costs on a substantial indemnity basis and asks for $92,842. If unsuccessful in that submission, it seeks $50,288 in partial indemnity costs.

[9] The applicants strongly oppose substantial indemnity costs and argue that a reasonable award for the motion and cross-examinations should be in the range of $20,000 - $30,000. In the alternative, if this court decides to award costs on a substantial indemnity basis, it should award an hourly rate which is 1.5 times higher than the partial indemnity rate.

The appeal and the cross-appeal

[10] The respondents were entirely successful and seek partial indemnity costs of $49,388 inclusive.

[11] The appellants submit that the issues raised on the appeal and cross-appeal were not new, as counsel had previously expended a considerable amount of time and effort on these issues in advance of attending before Hoy J. They contend the dockets reveal a considerable amount of duplication among each of the lawyers involved, and they question the necessity of having four lawyers involved, especially as two of those had less than five years of experience which must inevitably have led to more work because of the obvious learning curve. They submit that a partial indemnity amount should be between $30,000 - $35,000 and should include the amount for the motion to quash.

Analysis & Conclusion

[12] The respondents were entirely successful and are entitled to their reasonable costs.

[13] Hoy J wrote a comprehensive endorsement with respect to costs on the matters before her, including references to the increased time and costs occasioned by the conduct of the applicants. The result before her had been mixed, so she ordered the applicants to pay the respondents’ costs of $10,000, inclusive of disbursements and GST. In light of the respondents’ success on the appeal before us, they are entitled to their reasonable costs of the matters before Justice Hoy on a partial indemnity basis

[14] With respect to the three motions before us, this is an appropriate case for costs to be awarded on a substantial indemnity basis. As we stated in our decision on the merits, there was, in fact, no new evidence. At most, Dr. Mascia made many new allegations of wrongdoing, some of them criminal in nature. Much of what he alleged was based on rumour, speculation and unfounded allegations. The appeal and the cross-appeal were made substantially more complex than necessary as a direct result of the unsuccessful fresh evidence motion which required cross-examinations on affidavits. While the motion to quash was rendered moot as a result of our conclusion with respect to the appeal, our decision made it clear that we would have granted the motion. Finally, it was only as a result of the court’s invitation that the motion to strike was withdrawn, but not before the respondents had been required to prepare materials for the motion.

[15] The respondents were entirely successful on the appeal and the cross-appeal, and are entitled to their costs on a partial indemnity basis. These issues were the most important before us, as the appeal related to the onus and analytical framework for determining whether there was a penalty clause. Without seeking leave, the applicants had asserted a cross-appeal with respect to a procedural issue and that cross-appeal was dismissed at the hearing. This conduct unnecessarily required the respondents to prepare for the matter and also unnecessarily lengthened the conduct of the hearing.

Conclusion

[16] Having regard to the respondents’ complete success in all matters, we have determined that it is reasonable and fair to order the applicants to pay the respondents’ costs, inclusive of disbursements and GST, in the amount of $125,000.00. An order shall issue accordingly.

Cunningham, A.C. J.

Carnwath, J.

Bellamy, J.

DATE: January 9, 2009