R. B. Swan

Following a successful motion by the moving party in a proceeding under the Business Corporations Act (Ontario), the court addressed the appropriate quantum and scale of costs.

The successful party sought substantial indemnity costs.

The court held that substantial indemnity costs are exceptional and reserved for rare cases involving outrageous litigation conduct, which was not established.

Applying Rule 57 of the Rules of Civil Procedure and the fairness principles articulated by the Court of Appeal, the court reduced the requested amount due to duplication of effort and counsel learning time following a change of lawyers.

A respondent brought a motion to stay or consolidate an application seeking enforcement of a “clawback” provision in a unanimous shareholders’ agreement pending determination of several related proceedings, including a wrongful dismissal action and oppression claims.

The court considered the principles under the Courts of Justice Act and Rule 6.01 of the Rules of Civil Procedure governing consolidation and avoidance of multiplicity of proceedings.

The court found that the issues raised in the clawback application were inextricably intertwined with the issues in the related proceedings, including allegations of oppression, breach of the shareholders’ agreement, and the consequences of changes in employment status.

Separate adjudication would risk duplication of evidence, inconsistent findings, and inefficient use of judicial resources.

The motion was granted and the application was ordered to be heard together with the related proceedings.