Court File and Parties
DIVISIONAL COURT FILE NO.: 396/10
SUPERIOR COURT OF JUSTICE – ONTARIO
DIVISIONAL COURT
RE: Richard Paul Kruger, Applicant (Respondent in Appeal)
AND:
Michael J. Holubik, Respondent (Appellant)
BEFORE: Ferrier J.
COUNSEL: Gary E. Shortliffe, for the Applicant (Respondent in Appeal)
Bruce R. Jaeger, for the Respondent Michael J. Holubik
HEARD at Toronto: January 14, 2011
ENDORSEMENT
1The appellant/defendant (Holubik) moves for an extension of time and seeks leave to appeal, from the order of Newbould J. dated December 8, 2009. The order concerned solely the question of costs, following the consent dismissal of these proceedings.
2These proceedings were commenced in 1993, almost 18 years ago. The consent dismissal occurred in 2008, some 15 years after they were commenced.
3In very brief summary, the claims of the respondent/plaintiff (Kruger) arose out of contractual arrangements entered into between the parties in connection with a retail billiard table sales business. The respondent alleged that he invested substantial sums to become an equal owner with the appellant. The respondent was to be the investor and the appellant was to run the business.
4The respondent claimed $750,000 in damages and made allegations against the appellant which included fraud.
5Over the years, the proceedings languished. There were delays for as much as six years when nothing whatsoever was done to advance the proceedings or have them determined. Delays of six months, one year, 18 months, and two years, were the norm.
6Eventually the appellant launched a motion to dismiss the plaintiff’s claims. That motion was contested and cross examinations were undertaken. The motion had been returnable on August 12, 2008 but the parties agreed to adjourn that motion pending completion of the examinations. No one advised the court of the adjournment and the matter came before Justice Newbould in the Commercial court. He summoned counsel to appear before him immediately which they did.
7At the hearing before Newbould J. that day, the parties agreed that the proceedings would be dismissed, but the respondent would not agree to pay any costs.
8The proceedings were thus dismissed on consent and the issue of entitlement to costs was argued before the motions judge on that day. He held that the appellant “is entitled to his costs of the application and action”.
9The endorsement then goes on to read as follows:
[The appellant’s] submissions on quantum of costs are to be delivered within 40 days, including a bill of costs and any supporting material he chooses to file. [The respondent's] response is to be delivered within 40 further days. [The respondent] is entitled to make any submissions relevant to the issue of costs under rule 57.1. The [appellant] to produce any relevant documents, including dockets, invoices and receipts, requested by [the respondent], excluding any privileged information." [Emphasis added]
10Counsel for the appellant was late in filing his submissions. He served them on the respondent but did not file them with the court. Unaware that the appellant’s submissions had not been filed, the respondent served and filed his submissions.
11On March 20, 2009 the motions judge issued a further endorsement which provided in part as follows:
On August 12, 2008 this matter came on before me in the Commercial List. Nothing had been done in the action since 2000 and Mr. Shortliffe on behalf of Mr. Kruger agreed that the proceeding should be dismissed but he did not agree to pay any costs. I held that Mr. Holubik was entitled to his costs of the application and the action both of which were dismissed for delay. [Emphasis added]
12He then went on to give further directions.
13Once all the written submissions had been filed, the motions judge issued his endorsement dated 8 December 2009, which is the subject of this motion for leave to appeal. The respondent had submitted in his materials that there should be no order as to costs.
14The endorsement reads in part as follows:
This matter came on before me on August 12, 2008 on the Commercial List. Nothing had been done in the action since 2000 and Mr. Shortliffe on behalf of Mr. Kruger agreed that the proceedings should be dismissed but he did not agree to pay any costs. In spite of that, in my endorsement, I directed that costs be paid and requested cost submissions. For reasons that are unimportant, it took a considerable time for the cost submissions to be received. [Emphasis added]
I have now received the cost submissions. Mr. Kruger has asserted that in spite of my previous endorsement, no costs should be paid by Mr. Kruger.
15The motions judge then notes that affidavits have been filed with him [by the respondent] which were not available to him in August 2008, including affidavits sworn in connection with the motion that had been returnable August 12 as well as affidavits from 1993 and excerpts from cross examinations and certain documentation.
16The endorsement continues:
Having considered the matter, it is apparent to me that there should be no costs ordered to be paid by Mr. Kruger to Mr. Holubik. [Emphasis added]
17The learned motions judge then refers to "highly questionable, if not dishonest, practices" by Mr. Holubik in the circumstances giving rise to the action. In effect, the motions judge became engaged in an assessment of the issues between the parties in the action and found that the appellant had behaved improperly and dishonestly in the events leading up to the litigation.
18His endorsement then concludes:
It is clear that both parties are responsible for the delays. In the circumstances, there will be no order of costs payable by either party to the other.
19Thus, on the record, the motions judge held on August 12, 2008 that the appellant was entitled to costs. The only outstanding issue was quantum. Following submissions on quantum, in which the respondent revisited the question of entitlement, the learned motions judge held that there should be no order as to costs.
20The appellant takes the position that he was deprived of the opportunity to make submissions on the question whether the issue of entitlement could be or should be revisited before the motions judge; further, that he was deprived of any opportunity to make submissions on entitlement if the issue were to be revisited.
21His position is that there was a denial of natural justice and that the order for “no costs” should be set aside and that the matter be remitted back to the trial list to have the question of costs determined.
22Before the motions judge the appellant sought $125,000 in costs.
Jurisdiction
23Counsel for both parties took the position that this court has jurisdiction to hear the motion for leave to appeal.
24I am satisfied that this court does not have jurisdiction and that the motion to extend the time and for leave to appeal must be made in the Court of Appeal.
25The following are my reasons.
26There are three relevant sections of the Courts of Justice Act, R.S.O. Chap. C.43:
Section 133(b) provides that where the appeal is only as to costs, leave is required of the court to which the appeal is to be taken.
Section 6(1)(b) provides that an appeal lies to the Court of Appeal from a final order of a Superior Court judge,…except an order referred to in clause 19(1)(a).
Section 19 provides that an appeal lies to the Divisional Court from,
(a) a final order of a judge of the Superior Court of Justice, as described in…subsection (1.2);
Subsection (1.2) applies in respect of a final order,
(a) for a single payment of not more than $50,000, exclusive of costs;
(c) dismissing a claim for an amount that is not more than [$50,000];
27The appeal at hand is only as to Costs. Leave is required. The order below is a final order of a Superior Court judge.
28The net effect of sections 6(1)(b) and 19(1)(a) is that an appeal from a final order of a Superior Court judge lies to the Court of Appeal, unless the order falls within section 19(1.2), in which case the appeal is to the Divisional Court.
29Subsection (1.2)(a) has no application here because the order below is not one for a payment of anything.
30The claim below was for Costs in the amount of $125,000. The claim was dismissed, but the amount of the claim was more than $50,000, in which case the order does not fall within section 19(1)(a).
31In Morden and Perell, The Law of Civil Procedure in Ontario, first edition (Markham: LexisNexis, 2010) at page 759, the authors state: “If the order fixes the costs to be paid in an amount not more than $50,000 the appeal lies to the Divisional Court. Otherwise it lies to the Court of Appeal.” They cite as authority, sections 6(1)(b) and 19(1)(a) of the Courts of Justice Act.
32In Kennedy v. Guardian Insurance Co. of Canada (1991), 5 O.R. (3d) 339, Maloney J. wrote at para. 9:
A General Division judge’s final order as to costs is appealed to the Divisional Court under s.18(1)(a) (Mark M. Orkin, The Law of Costs, 2nd ed. (Aurora Ont.: Canada Law Book 1990) at p.8-4), unless the order is for more than $25,000….This appears to be so despite the inclusion of the words “exclusive of costs” in sec. 18(1)(a).
33To conclude, in this matter a claim for costs in the amount of $125,000 was dismissed. Subsection 19(1.2)(c), with its $50,000 limit, does not bring the matter within the jurisdiction of the Divisional Court.
34Accordingly jurisdiction lies with the Court of Appeal.
35This motion is adjourned to the Court of Appeal.
36I make no order as to costs of this motion.
Ferrier J.
Date: March 21, 2011