Court File and Parties

COURT FILE NO.: CV-23-00704962-0000 DATE: 20240222 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: MOHAMMADHOSSEIN FODAZI and BELGHISSADAT SAJADIMOGHADAM, Plaintiffs AND: ROUNAK FARROKHI KOUKIA, ESTATE OF MOHAMMAD FODAZI, deceased, and PERSTILE INC.

BEFORE: VERMETTE J.

COUNSEL: Esmaeil Mehrabi, for the Plaintiffs Dimitrios Mylonopoulos, for the Defendant Rounak Farrokhi Koukia

HEARD: In writing.

Endorsement as to Costs

[1] On November 3, 2023, I released an endorsement (2023 ONSC 6260) dismissing the Plaintiffs’ motion for a Mareva injunction as against the Estate of Mohammad Fodazi (“Estate”) and PersTile Inc., and granting it in part as against Rounak Farrokhi Koukia.

[2] The parties were not able to agree on costs and have delivered costs submissions.

Positions of the parties

a. Position of the Plaintiffs

[3] The Plaintiffs submit that they are entitled to costs on a substantial indemnity basis and that Ms. Koukia ought to be liable for two thirds of the overall costs of the motion. On this basis, they seek costs in the amount of $10,969.14 plus disbursements of $4,858.44, for a total of $15,827.58.

[4] The Plaintiffs state that they were successful in obtaining relief against Ms. Koukia and are presumptively entitled to their costs. They submit that the costs of the motion should be ordered to be paid within 30 days. They point out that while motions for interlocutory injunctions are sometimes treated differently than other motions and costs are ordered in the cause, other cases have awarded costs to successful plaintiffs following an interim Mareva Order. The Plaintiffs argue that they are entitled to an award of costs following the motion because they established a prima facie case of fraud and unjust enrichment against Ms. Koukia and her conduct unnecessarily extended and complicated the litigation.

[5] In support of their position that Ms. Koukia should be liable for two thirds of the overall costs of the motion, the Plaintiffs state that Ms. Koukia’s responding materials at the outset indicated that her counsel represented the “Defendants”, and included responses regarding the Plaintiffs’ claims against the Estate and PersTile Inc. As a result, the Plaintiffs were required to engage in lengthy and expensive procedures in order to provide a fulsome response to Ms. Koukia’s narrative. The Plaintiffs also argue that unnecessary time and costs were incurred cross-examining two realtors which could have been avoided had Ms. Koukia not provided misleading evidence during her cross-examination.

[6] The Plaintiffs submit that they are entitled to costs on a substantial indemnity basis and they rely on the comments in my decision regarding Ms. Koukia’s conduct. They state that the factors under Rule 57.01(1) of the Rules of Civil Procedure strongly support the requested award, and that the amount sought is reasonable and should reasonably have been contemplated by Ms. Koukia for such a motion.

b. Position of Ms. Koukia

[7] Ms. Koukia’s position is that this Court ought not to award costs on the motion. In the alternative, Ms. Koukia submits that costs should be reserved to the trial judge. In the further alternative, Ms. Koukia argues that the Plaintiffs are only entitled to one third of the overall costs and that they are not entitled to costs on a substantial indemnity basis.

[8] Ms. Koukia submits that the Plaintiffs were confused, and that this significantly contributed to the length, expense, and complexity of the motion in all respects, as there are significant issues with respect to nearly all aspects of the Plaintiffs’ claim. Ms. Koukia points out that the Plaintiffs’ claim was not properly constituted against the Estate and is stayed. She states that the Plaintiffs have no evidence corroborating their allegations against the Estate. She argues that the Plaintiffs ought not to have brought a motion seeking relief against the Estate in the first place, and that the Plaintiffs cannot seek contribution from her for costs on work they did with respect to their motion against the Estate.

[9] Ms. Koukia notes that the Plaintiffs also failed to get relief against PersTile Inc.

[10] Ms. Koukia states that while the Plaintiffs were successful in obtaining the injunction against her, they only succeeded in part and they failed in establishing a strong prima facie case on numerous fronts. She points out that the Plaintiffs’ relief against her was limited to $40,000.00, which is only $5,000.00 more than the limit for Small Claims Court matters. She argues as follows in her written submissions:

The Plaintiffs sought relief in the form of a Mareva injunction encompassing $600,000.00 worth of assets regarding the Estate and Perstile and $150,000.00 worth of assets regarding [Ms. Koukia]. The Plaintiffs failed entirely as against the Estate and Perstile, securing none of the relief sought, and obtained a Mareva injunction against $40,000.00 worth of [Ms. Koukia]’s assets. As against [Ms. Koukia], the Plaintiffs therefore obtained 26% of their relief. However, taking into consideration the global relief sought in the herein motion, which wasn’t even properly constituted against arguably the most significant party (the Estate), the Plaintiffs’ recovery is even worse, totalling a mere 5.3% of the global relief sought. [Emphasis in the original.]

[11] Ms. Koukia submits that the significant issues with the Plaintiffs’ claim and the “staggering disparity” between the relief they sought and the relief that they ultimately obtained support her position on costs set out in paragraph 7 above.

c. Plaintiffs’ reply submissions

[12] The Plaintiffs submit that the Estate is a proper party to the litigation and that they were entitled to seek relief against the Estate. They argue that commencing an action against the Estate is an irregularity that can be corrected. They state that the impact of this irregularity on the length and complexity of the proceeding was minimal. The Plaintiffs point out that Ms. Koukia’s submissions fail to take into account the fact that she first put in her own evidence and made submissions on key issues relating to the Plaintiffs’ claims against the Estate and PersTile Inc.

[13] The Plaintiffs argue that Ms. Koukia is now attempting to minimize the role that she played by putting in evidence on behalf of the Estate and complicating the proceedings, only to abandon the Estate when it was not in her benefit. They submit that they are entitled to seek contribution from Ms. Koukia for two thirds of the costs of the motion as a result of Ms. Koukia putting forward evidence and submissions on behalf of herself and the Estate, which greatly added to the time, costs and complexity of the proceedings.

Discussion

a. Entitlement to costs

[14] I do not accept Ms. Koukia’s submission that this Court ought not to award costs on the motion. While I found that there were issues with the Plaintiffs’ claim, I also found that the Plaintiffs had established a strong prima facie case of unjust enrichment against Ms. Koukia, as well as a strong prima facie case that Ms. Koukia had deprived the Plaintiffs dishonestly of funds which were theirs and to which they were entitled. In addition, I concluded that there were significant issues with respect to Ms. Koukia’s evidence and credibility. In these circumstances, I am of the view that it is appropriate to make an order of costs as against Ms. Koukia.

[15] I also do not accept Ms. Koukia’s alternative submission that costs should be reserved to the trial judge. There is no mandatory rule requiring that the question of costs be reserved to the trial judge when a plaintiff succeeds in obtaining an interlocutory injunction. Rather, the motion judge retains discretion with respect to the issue of costs in order to determine what costs order would be just. The exercise of discretion in a particular case depends on the circumstances of the case. See Barry’s Bootcamp Canada Inc. v. 100 Bloor Street West Corporation, 2022 ONSC 4331 at paras. 11-12.

[16] In my view, this is not an appropriate case to order costs in the cause. First, as discussed further below, Ms. Koukia displayed reprehensible behaviour in the context of this motion and a prima facie case of fraud was established against her. Accordingly, it is appropriate to order her to pay costs now. See Parkland Corporation v. SRAA Inc., 2021 ONSC 3342 at para. 8 and Amphenol Canada Corp. v. Sundaram, 2019 ONSC 2226 at para. 9. Second, the Plaintiffs were unsuccessful with respect to a significant part of their motion and they should not be able to recover costs in the cause in relation to the part of the motion on which they were unsuccessful. See Quizno’s Canada Restaurant Corporation v. 1450987 Ontario Corp. at para. 9 (Ont. S.C.J.). This is the case even though the Estate and PersTile Inc. are not in a position to claim costs as the successful Defendants given that they were unable to take steps to respond to the motion. An additional consideration is that I am in a better position to fix the costs of this motion than the trial judge.

[17] While I find that the Plaintiffs are entitled to some costs, the following must be taken into account: (a) they were unsuccessful against the Estate and PerStile Inc.; (b) they were only successful on some of their claims against Ms. Koukia; and (c) the scope of the Mareva injunction against Ms. Koukia was limited to $40,000.00. Given this, I agree with Ms. Koukia’s submission that the Plaintiffs are only entitled to one third of the overall costs of the motion, with one exception. The exception is that Ms. Koukia should pay half of the Plaintiffs’ disbursements to reflect the fact that she is the only Defendant who responded to the motion and some of the examinations (i.e., the examinations of the two real estate agents) took place as a result of her untruthful evidence.

[18] While Ms. Koukia may have provided evidence regarding the Plaintiffs’ claim against the Estate and PersTile Inc., this is not a sufficient reason to increase her liability for the costs of the motion because this does not change the fact that the Plaintiffs’ claim against the Estate and PersTile Inc. were unsuccessful. Further, it is not surprising that Ms. Koukia engaged on these issues as Mohammad Fodazi’s will names her as the sole beneficiary and estate trustee of his Estate, and there is a parallel dispute between Ms. Koukia and the Plaintiffs regarding her appointment as estate trustee of the Estate.

b. Scale of costs

[19] As has been observed in many cases, costs on an elevated scale are exceptional and are reserved for those situations when a party has displayed reprehensible, scandalous or outrageous conduct: see Quickie Convenience Stores Corp. v. Parkland Fuel Corporation, 2021 ONCA 287 at para. 4.

[20] Ms. Koukia displayed reprehensible behaviour in this litigation. Paragraph 76 of my decision sets out numerous problems with Ms. Koukia’s evidence and credibility. In paragraph 121 of my decision, I found that Ms. Koukia had been willing to be untruthful under solemn affirmation in this court proceeding, and I also referred to her “clandestine behaviour, her concealment, evasiveness and deception”.

[21] Consequently, I am satisfied that substantial indemnity costs are appropriate in this case.

c. Quantum

[22] I have reviewed the Plaintiffs’ costs outline. I find that the hourly rates and time spent are reasonable.

[23] Using the figures in the Plaintiffs’ costs outline, one third of the legal fees on a substantial indemnity basis (including HST) amounts to $5,484.57. Fifty percent of the disbursements amounts to $2,429.22. The total is $7,913.79.

Conclusion

[24] Taking the foregoing into account, as well as the factors set out in Rule 57.01(1) of the Rules of Civil Procedure and the reasonable expectations of the parties, I find that the fair and reasonable award of costs in favour of the Plaintiffs against Ms. Koukia is on a substantial indemnity basis in the all-inclusive amount of $7,913.79. In my view, this is an amount that Ms. Koukia should reasonably have expected to pay in the event that she was unsuccessful on the motion. The costs are to be paid by Ms. Koukia to the Plaintiffs within 30 days.

Vermette J. Date: February 22, 2024