ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 77202/05
DATE: 20120501

BETWEEN:

Bruno Scenna, John Gregoris and Pre-Eng Contracting Ltd. Plaintiff s – and – Maxwell Stanford, 1244903 Ontario Limited, Novacrete Construction Ltd., 985724 Ontario Ltd., and Constaff Construction Ltd. Defendants

T. Kent, for the Plaintiffs

D. Preger, for the Defendant Maxwell Stanford

HEARD: May 1, 2012

Justice B.A. Glass

COSTS FOR DEFENCE MOTION FOR DIRECTIONS AND PLAINTIFF MOTION FOR CONTEMPT

Background

[ 1 ] On October 19, 2012, the parties argued two cross motions flowing from my judgment of October 17, 2007 followed by the judgment being settled on November 9, 2007. The judgment had followed a five day trial.

[ 2 ] The core issue for the trial had been a determination of the existence of an agreement of purchase and sale of shares. The parties had worked together for many years. The outcome was a judgment that there was a contract.

[ 3 ] Mr. Stanford appealed to the Ontario Court of Appeal without success.

[ 4 ] The parties had continued to struggle to complete the transaction because Mr. Stanford basically wanted a structure that would enable him to have a capital gains exemption. I had noted that in my reasons for judgment that Mr. Stanford had received accounting advice to the effect that he would not qualify for a capital gains exemption.

[ 5 ] I dismissed the Mr. Stanford’s motion for directions because the reasons for judgment had been so clear that directions were not required by the parties for the mechanics of completing the transaction.

[ 6 ] I found Mr. Stanford in contempt. He was basically still trying to change the terms of an agreement that I had found to exist. At the trial, I had determined that there was an agreement after which Mr. Stanford changed his mind and wanted a better deal.

Positions of the Parties

[ 7 ] Mr. Kent has presented a draft bill of costs asking the court to consider costs on a substantial indemnity basis in the rounded sum of $11,500 or on a partial indemnity basis in a rounded sum of $9,200. These sums are inclusive of HST. In addition, disbursements for filing the motion materials for the Plaintiffs, the cost of the process server and air fare for Mr. Kent travelling to Ontario from British Columbia total a rounded off sum of $1,150. The bill of costs from Mr. Kent for the Plaintiffs is Exhibit 1 at this costs hearing.

[ 8 ] Mr. Kent has filed an outline for the costs, which has been made Exhibit 2. Mr. Kent filed a copy of a letter from him to counsel for Mr. Stanford dated November 1, 2011. The letter has been made Exhibit. 3. The letter in Exhibit 3 contains an offer to settle the motion. The offer was an invitation for Mr. Stanford to withdraw his motion and complete the transaction barring which the Plaintiffs would seek solicitor and client costs on the motion. The Defendant did not withdraw the motion. The Plaintiffs were successful after this offer to settle.

[ 9 ] Mr. Preger has filed costs submissions for Mr. Stanford. This has been made Exhibit 4 at the costs hearing. Mr. Preger suggests that his bill of costs is an example of what reasonable costs on a partial indemnity scale and on a substantial indemnity scale would be. He suggests that a partial indemnity scale of costs would amount to $6,000 plus and on a substantial indemnity scale would amount to $8,400 plus. This is an indication of what he would be charging his client.

[ 10 ] Mr. Preger emphasized that the issues here were not complicated, that Mr. Stanford was simply following his rightful approach to the judgment, was not acting so as to be vexatious, improper or unnecessary. A litigant should be able to foresee reasonable costs when undertaking any proceeding. In the motion, a person in Mr. Stanford’s position would not expect the scale of costs suggested by Mr. Kent. The bottom line for Mr. Preger is that costs should be on a partial indemnity basis.

[ 11 ] Mr. Kent in his letter of November 1, 2011 sets out that the Defendant has extended this litigation unnecessarily. In a nutshell, Mr. Kent’s letter accurately points out that the trial decision set out the agreement as well as the method of completing it. There was no need for directions, as found by me at the motion for directions. The Plaintiffs had a valid foundation to apply to enforce the judgment.

[ 12 ] Mr. Kent emphasized that the amount of money involved was significant and that the motions amounted to Mr. Maxwell trying to re-open the proceedings years after judgment was rendered. He points out that the sanctity of the judgment was placed in issue. The question of whether or not the trial judge was functus officio had to be argued. Mr. Kent points to the motion by Mr. Stanford as being arguably improper so that it might be considered in the category of being without any necessity. Finding Mr. Stanford in contempt is an indication that Mr. Stanford acted improperly.

[ 13 ] Mr. Kent has been practicing law since his admission to the Bar in 1986 with an hourly rate of $425 for substantial indemnity and $350 for partial indemnity scale of costs.

[ 14 ] On the other hand, Mr. Preger for Mr. Stanford emphasizes that costs should be awarded on a partial indemnity basis. He refers to cases in which the Court of Appeal has held that substantial indemnity costs should only be awarded in rare and exceptional circumstances where there has been an abuse of process, harassment by the pursuit of fruitless litigation, reprehensible, scandalous or outrageous conduct in the proceedings on the part of the party who is to pay the costs. This was set out in Davies v. Clarington (Municipality) 2009 CarswellOnt 6186.

[ 15 ] Further, Mr. Preger also referenced Foulis v. Robinson 1978 ONCA 1307 , 1978 CarswellOnt 466 for a review of costs being a burden on all parties with party and party costs ( as they were referred to in 1978) striking a balance between the costs borne by a successful party without putting the cost of litigation out of reach for a losing party.

Analysis

[ 16 ] The analysis that follows is meant to take into account the reasoning found in the decisions in Davies v. Clarington (supra) and Foulis v. Robinson (supra). They reflect that costs do not become a wild penalty for the losing party nor a luxurious cookie jar for the winning side. Costs do not go out of bounds so that litigants cannot go to court. At the same time, costs should reflect important issues argued, the complexity of the proceeding, the conduct of parties, any improper or vexatious or unnecessary conduct by parties as well as hourly rates charged by counsel.

[ 17 ] I have determined that Mr. Stanford continues to try for a better deal to this day.

[ 18 ] The actions of Mr. Stanford have resulted in a delay of many years in trying to complete the transaction. That conduct is without merit. When a party conducts himself in this manner, it will lead to costs being considered on a substantial indemnity basis.

[ 19 ] The issues for the motions were significant and no doubt required considerable work by Mr. Kent to address them. Mr. Stanford brought a motion for directions when it was not warranted thereby drawing an inference that his approach in reality amounted to further attempts to get a better deal. He did not have merit in doing so.

[ 20 ] I am persuaded that the cost assessment should be awarded on a substantial indemnity basis. This was not a minor motion. Rather, the motion came years after the trial and the unsuccessful appeal of Mr. Stanford. My conclusion has been that Mr. Stanford has continued to refuse to accept the fact that he lost the trial and the appeal. He went to trial attempting to get more money. He came to this motion still trying to get more money in his pocket. He will not take no for an answer. There is no foundation for any suggestion that the Plaintiffs should absorb additional costs for the actions of Mr. Stanford.

[ 21 ] The disbursements are reasonable . The air fare costs total $622.13 are not excessive. The filing and process server costs of $254 and $200 respectively along with photocopying f $40 are reasonable.

[ 22 ] One might question whether the Plaintiffs should be compensated for their counsel’s air fare from British Columbia; however, I am satisfied that they should be included. Mr. Kent was trial counsel and has continued to act for the Plaintiffs as they have attempted to complete the transaction following the trial. Continuing with trial counsel to conclude the whole matter of this litigation is reasonable.

[ 23 ] Costs for today at the cost hearing have been reduced by the parties appearing by way of teleconference.

[ 24 ] I conclude that a client would expect to encounter costs within the range presented by Mr. Kent for the Plaintiffs. The costs cannot be considered to be excessive or out of the range of consideration that a client in Mr. Stanford’s position might think.

Conclusion

[ 25 ] Costs to the Plaintiff on a substantial indemnity basis will be awarded as follows:

a. Fees $11,500

b. Disbursements $ 1,150

Total $ 12,650

[ 26 ] These costs will be deducted from the funds required to complete the judgment granted in favour of the Plaintiffs in 2007.

Justice B.A. Glass

Released: May 2, 2012