DATE: 20050906

DOCKET: C42652

COURT OF APPEAL FOR ONTARIO

RE:

WOODCLIFFE CORPORATION, WOODCLIFFE DEVELOPMENT CORPORATION, PAUL OBERMAN, WOODLAWN EQUITIES LIMITED, QUEEN RICHMOND EQUITIES LIMITED, EQUIFUND YORK DEVELOPMENTS LIMITED, EQUIFUND YORK PROPERTIES LIMITED, EQUIFUND YORK 125 LIMITED, EQUIFUND YORK LEASEHOLDS LIMITED, EQUIFUND YORK EQUITIES LIMITED, EQUIFUND INVESTMENT CORPORATION, and EQUIFUND CORPORATION Plaintiffs (Appellants) -and- BARRY ROTENBERG and HARRIS SHEAFFER Defendants (Respondents)

-and- THE MUTUAL TRUST COMPANY, MCAP FINANCIAL CORPORATION, 1209011 ONTARIO INC., THORNVILLE DEVELOPMENTS INC., MALTER HOLDINGS LIMITED, PAUL BAILEY, SOMERSWORTH DEVELOPMENT CORPORATION, HERBERT GREEN and RIVER OAKS DEVELOPMENTS INC. Third Parties (Respondents)

BEFORE:

Labrosse, Sharpe and Lang JJ.A.

COUNSEL:

Milton A. Davis and Brett D. Moldaver

for the plaintiffs/appellants

Michael R. Kestenberg

for the defendants/respondents

Robert J. Howe

for the third party/respondent

Thornville Developments Inc.

Neil S. Rabinovitch

for the third parties/respondents

Herbert Green, River Oaks Development Inc. and Somersworth Development Corporation

Leah Price

for the third party/respondent

Malter Holdings Limited

Joel D. Watson and Albert A. Pelletier

for the third parties/respondents

The Mutual Trust Company and MCAP Financial Corporation

HEARD:

June 28, 2005

ADDENDUM

[1] By reasons dated July 6, 2005, the appeal from the decision of the motions judge granting a stay of the main action and third party proceedings was dismissed, except for an issue in the main action that was allowed to proceed to trial against the Firm.

[2] As in the court below, the basis for the third parties’ success on appeal was that the issues raised in the action had previously been litigated to settlement, consent judgment and the exchange of full and mutual releases which included indemnity and save harmless agreements for legal costs.

[3] Although the action had only been commenced against the Firm, it would have been clear to the appellants that the Firm would claim over against the various third parties. In light of the releases and indemnity agreements, the appellants must reasonably have anticipated to fully indemnify the third parties for the costs of the proceedings if the third parties were successful in having the proceedings stayed. Moreover, the appellants had been provided with full disclosure to the respondents’ case prior to the bringing of the original motion and an offer to discontinue the action, without costs, was rejected.

[4] We do not accept that success was divided on this appeal. The third parties were fully successful and it remains to determine the costs of the appeal. We see no good reason why the third parties should not be fully indemnified for the costs of the proceedings.

[5] The third parties are claiming, in round figures, the following costs of the appeal on a full indemnity basis:

The Mutual Trust Company, MCAP Financial Corporation (“Mutual”) $60,000

Somersworth Development Corporation, Herbert Green, River Oaks Developments Inc. (“Somersworth”) $32,000

Thornville Developments Inc. (“Thornville”) $14,000

Malter Holdings Limited (“Malter”) $31,000

[6] Mutual took the lead in the delivery of written and oral arguments. Thereafter, the written and oral arguments of the other third parties were largely duplication and added little to the case. They were repetitive save for the particulars of each party. The appeal turned one one primary legal issue, namely, the interpretation of the releases and much of the work done on the appeal was a re-hashing of the work done on the underlying motion for which substantial costs were awarded.

[7] Mutual claims over 152 hours of preparation (close to 4 forty hour weeks of preparation) and Malter, which played a minor role on the appeal claims some 75 hours of preparation. The bills of costs also appear to demonstrate unnecessary internal duplication of effort by the parties.

[8] In our view, as between the parties, the costs claimed are more than can be justified, even on a full indemnity basis.

[9] In addition to the full indemnity costs being claimed for the appeal, Malter submits that the award of costs by the motions judge ought to be revised. Malter also claims substantial indemnity costs in the amount of $7,500 from the Firm on the cross-appeal of the Firm that if the appeal was allowed and the main action permitted to proceed, the third party action should also be permitted to proceed. Malter also submits that any order for costs of the appeal should be jointly and severally payable by the appellants and the Firm.

[10] We see no merit in these submissions.

[11] The award of costs made by the motions judge was not appealed and there is no basis for this court to re-visit the award.

[12] Malter is the only third party to seek costs with respect to the Firm’s cross-appeal. Aside from Malter, no other third party delivered any material in response to the cross-appeal or incurred any costs with respect thereto. Furthermore, at the hearing of the appeal, no submissions were made in respect of the cross-appeal by the Firm, Malter or any of the other third parties. Clearly, the Firm’s cross-appeal was brought specifically to protect itself in case the main action was allowed to proceed. Malter’s claim for costs against the Firm in this regard is not reasonable.

[13] Finally, there is no proper basis to have the costs of the appeal payable jointly and severally by the appellants and the Firm. The Firm was not a moving party on the motion below. The dispute in these proceedings was really between the appellants and the third parties.

[14] The Firm is also seeking costs against the appellants in the amount of some $29,000. The Bill of Costs appears to be prepared on a full or substantial indemnity basis. In any event the Firm would not be entitled to a higher scale than partial indemnity. As noted above, the Firm did not bring the motion to stay the main action. It rode the shirttails of the third parties’ motion and its role involved much duplication of the oral and written arguments. Moreover, the appeal was allowed in part against the Firm. The amount claimed by the Firm is excessive and although we think that the Firm should be allowed some costs, we agree with the appellants that the costs should be minimal.

[15] In the end, the costs are in the discretion of the court both as to entitlement and quantum and any award of costs must be fair and reasonable for the unsuccessful party on this appeal.

[16] The costs of the appeal are fixed in the following amounts:

Mutual $40,000

Somersworth $12,000

Thornville $5,000

Malter $12,000

The Firm $3,000

[17] There will be an order that the moneys paid into court pursuant to the order of Rosenberg J.A. be paid out to the parties in whose favour the order was made and credited to the costs awarded above.