ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 09-45392
DATE: 2012/03/29
BETWEEN:
Steve Maynes, 6223087 Canada Inc., 6223362 Canada Inc., Jean Robichaud and Ken Gingrich Plaintiffs – and – Allen-Vanguard Technologies Inc. (formerly Med-Eng Systems Inc.), Maurice J. M. Baril, Pierre Boivin, Thomas Csathy, Paul Echenberg, Mathiew Gauvin, Cecile Ducharme, Mark Norton, Danny Osadca, Richard L’Abbé (Collectively, the “Original Defendants”) Allen Vanguard Corporation, 1062455 Ontario Inc., Growthworks Canadian Fund Ltd., Schroder Venture Managers (Canada) Limited in its capacity as general partner of each of Schroder Canadian Buy-Out Fund II Limited Partnership CLP1, Schroder Canadian Buy-Out Fund II Limited Partnership CLP1, Schroder Canadian Buy-Out Fund II Limited Partnership CLP1, Schroder Canadian Buy-Out Fund II Limited Partnership CLP1, Schroder Canadian Buy-Out Fund II Limited Partnership CLP1, Schroder Canadian Buy-Out Fund II Limited Partnership CLP1, Schroder Ventures Holding Limited, in its capacity as general partner of Schroder Canadian Buy-Out Fund II UKLP, and on behalf of Schroder Candian Buy-Out Fund II Coinvestment Scheme and SVG Capital plc (formally, Schroder Ventures International Investment Trust plc), and Computershare Trust Company of Canada (Collectively, the “Added Defendants”)
John P. O’Toole, for the Plaintiffs
Thomas G. Conway, for the Defendants Richard L’Abbé, 1062455 Ontario Inc., Growthworks Canadian Fund Ltd., Schroder Venture Managers (Canada) Limited, and Schroder Ventures Holding Limited
K. Scott McLean, for the Defendants Maurice J. M. Baril, Pierre Boivin, Thomas Csathy, Paul Echenberg, Mathieu Gauvin, Cecile Ducharme, Mark Norton, Danny Osadca and Richard L’Abbé (Not Parties to this Motion)
Eli S. Lederman, for the Defendants, Allen-Vanguard Corporation and Allen-Vanguard Technologies Inc. (formerly Med-Eng Systems Inc.) (Not Parties to this Motion)
HEARD: By written submissions
decision on costs
McNamara J.
[ 1 ] The Defendants’ motion to strike the Plaintiffs’ Statement of Claim and the Plaintiffs’ cross-motion seeking to amend that claim or to join it to pre-existing actions, were heard by myself on March 30 and 31, 2010. The defendants were entirely successful on both motions.
[ 2 ] In my decision released May 18, 2010 I directed that if the parties were unable to agree on costs, I would receive their submissions. The matter went to the Court of Appeal, the appeal was dismissed, and Mr. Conway on behalf of his clients and Mr. O’Toole on behalf of his have now provided me with their written submissions on costs, the last of which was received on March 21, 2012.
[ 3 ] As part of his submission Mr. Conway has delivered a Bill of Costs which seeks costs on a partial indemnity basis of $45,228.75 plus GST and disbursements, and on a substantial indemnity basis of $67,857.53 plus GST and disbursements.
[ 4 ] Dealing firstly with the scale of costs, Mr. Conway argues it should be on a substantial indemnity basis. He submits that his clients, having succeeded on a Rule 21 motion, convinced the Court to strike the Statement of Claim because it disclosed no reasonable cause of action. He argues further that in issuing this claim the Plaintiffs created a duplicate proceeding to which the Defendants had to respond. Mr. O’Toole argues that there is no reasonable basis for an award on a substantial indemnity scale and he points to the fact that the Court of Appeal, in the very same proceeding and with the same factual background as was before myself, awarded costs on a partial indemnity basis.
[ 5 ] The case law that has developed on costs has repeatedly stated that elevated costs are warranted in only two circumstances. The first involves the operation of an offer to settle under rule 49.10 where substantial indemnity costs are explicitly authorized. The other circumstance is where the losing party has engaged in behaviour worthy of sanction.
[ 6 ] Not surprisingly, in view of the nature of the motions, there is no indication of any offers under Rule 49. Furthermore I am not persuaded that there was any inappropriate conduct attributable to the Plaintiffs requiring sanction. The case was very well argued by all parties and required considerable review and analysis before being in a position to render a decision. That is reinforced by the very detailed decision of the Court of Appeal and, furthermore as indicated above, partial indemnity costs were ordered at the Court of Appeal. That same scale is appropriate here.
[ 7 ] In terms of quantum of costs Mr. Conway argues that, of necessity in view of the position of his clients, he took the lead on the motion both in terms of his materials and oral argument. He also points out that unlike the other parties to the motion, his clients were not parties to the existing actions and as such the outcome of this motion was more critical to them. Mr. O’Toole argues that the quantum of costs sought is excessive and that in determining the appropriate quantum the Court must have regard to the fact that there were three sets of independently represented defendants on this motion, and that that is relevant to the Court’s analysis as to proportionality and the reasonable expectations of the parties. He further argues that the issues argued on the motions were somewhat novel from a corporate law perspective, but that the framework of law and procedure applicable to pleadings motions is well established.
[ 8 ] In exercising my discretion under s. 131 of the Courts of Justice Act , R.S.O. 1990, c. C.43, to award costs, I must take into account the factors set forth at rule 57.01(1) of the Rules of Civil Procedure . In fixing an appropriate quantum I must be guided by the overriding principle of reasonableness and fairness, and that in deciding what is fair and reasonable the expectation of the parties is a relevant factor. I must also have regard to principles of proportionality. While I accept that Mr. Conway’s firm was required to take the lead on the motion and the matter was somewhat complex, the time spent as outlined in the Bill of Costs seems somewhat excessive and beyond what might reasonably be expected. The Bill indicates in excess of 240 hours spent on the matter. That is the equivalent of more than 30 full-time days in a case where the hearing took only two days.
[ 9 ] Having considered the matter as a whole in the context of the factors under the Rule I am of the view that costs of $30,000.00 plus GST and disbursements would be fair, reasonable, and proportionate.
The Honourable Justice J. McNamara
Released: March 29, 2012
COURT FILE NO.: 09-45392
DATE: 2012/03/29
ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Steve Maynes et al. – and – Allen-Vanguard Technologies Inc. (formerly Med-Eng Systems Inc.) et al. decision on costs McNamara J.
Released: March 29, 2012