COURT FILE NO.: 05-114/09

DATE: 20120525

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: RACHEL SKROBACKY, by her attorneys for property Madelon Niman and Susan Zarnett, MADELON NIMAN and SUZAN ZARNETT personally and in their capacities as Trustees of the Skrobacky Family Trust 2

Plaintiffs

• and -

JACK FRYMER, SAMUEL STERN (also known as SAM STERN), JANICE STERN, CAROL FRYMER, GARFIN ZEIDENBERG LLP, STEINBERG MORTON HOPE & ISREAL LLP, STACY MITCHELL, THE CANADA TRUST COMPANY, in its capacity as Estate Trustee During Litigation of the Estate of Abraham Skrobacky, ES-LEA HOLDINGS LIMITED, ES-LEA INVESTMENTS LIMITED, K.R.S. CONSTRUCTION LIMITED, CAMWOOD CONSTRUCTION LIMITED, CAMWOOD INVESTMENTS LIMITED, QUEEN PETER HOLDINGS INC. QUEEN BROWN HOLDINGS INC., KING PETER INVESTMENTS INC., JANFAR HOLDINGS LIMITED, S. STERN FINANCIAL CORPORATION, JAN-SAM HOLDINGS LTD., JORDALE MANAGEMENT INC., 1253174 ONTARIO LTD., MAX STERN INVESTEMNTS LIMITED, BAYCREST CENTRE FOR GERIATRIC CARE, ISRAEL SOLDIERS FUND, JEWISH NATIONAL FUND OF CANADA, BETH DAVID SYNAGOGUE OF TORONTO, ZAREINU EDUCATIONAL CENTRE, ADAM NIMAN, DALE NIMAN, JEREMY NIMAN, DARA ZARNETT, DAVID ZARNETT, FRANCIES CULTER (also known as FRANCES CULTER HAHN) and MERCEDES STEWART

Defendants

BEFORE: WHITAKER J.

COUNSEL:
Christopher D. Bredt, Danielle Joel, Ewa Krajewska , for the Plaintiffs

Melanie Yach, for the Defendants , Samuel Stern, Janice Stern, S. Stern Financial Corporation, Jan-Sam Holdings Ltd., and Jordale Management Inc .

Albert S. Frank , for the Defendants, Queen Peter Holdings Inc., Queen Brown Holdings Inc., King Peter Investments Inc., Max Stern Investments Limited and Janfar Holdings Limited

Antonios Antoniou, for the Defendants, Garfin Zeidenbrg LLP

Alan B. Dryer, for the Defendants, Jack Frymer, Carol Frymer and 1253174 Ontario Limited

Douglas Stewart, for the Defendants, The Canada Trust Company, Es-Lea Holdings Limited, Es-Lea Investments Limited and K.R.S. Construction Limited

DATE : In Chambers:

ENDORSEMENT

[ 1 ] The parties were before me on March 2, 2012 to deal with the plaintiffs’ motion for leave on the derivative issues. The hearing time was consumed by oral argument on the derivative issues, leaving a number of other issues unaddressed. Those issues unaddressed included the defendants’ leave to amend, scheduling and ancillary relief.

[ 2 ] My decision on the derivative issues was released on March 7, 2012, in favour of the plaintiffs’ position on the motion.

[ 3 ] The parties were invited to make written submissions on the outstanding issues not addressed on March 2, 2012, including costs on five motions.

[ 4 ] Substantial written submissions have been filed. The balance of this endorsement deals with the request for direction and costs on the motions.

Directions

[ 5 ] The plaintiff has suggested a series of terms found in volume 2, paragraphs 1 to 11 of the plaintiffs’ written submissions of March 19, 2012.

[ 6 ] The plaintiffs’ proposed terms are in substance not seriously contested. They make practical sense in the interests of moving this litigation forward. I see little prejudice to the defendants in these proposed terms.

[ 7 ] The plaintiffs’ proposed terms are ordered. If any party has difficulty complying with the terms as a result of the timing of this endorsement, this may be raised with me in brief further written submissions within ten days.

Costs

[ 8 ] With respect to costs, the plaintiffs seek their costs of the five motions, those being the motions to amend by the Queen Peter defendants, Janfar Holdings, the Stern defendants, the Frymer defendants, and the plaintiffs’ derivative motion.

[ 9 ] The plaintiffs’ cost outline for these motions is for fees, taxes and disbursements to March 19, 2012. It is quite apparent that the bulk of this work deals with the litigation of the derivative issues. Most of this relates directly to the March 2, 2012 motion, with some arising as costs thrown away and ancillary issues.

[ 10 ] The plaintiffs seek costs of $131,499.00 on a substantial indemnity basis for the motion heard on March 12, 2012, and further costs thrown away of $12,663.35. - for a total of $144,062.35.

[ 11 ] I have considered the costs claimed in the context of the factors set out in Rule 57 and discussed in Boucher v. Public Accountants (2004), 2004 14579 (ON CA) , 71 O.R. (3d) 291.

[ 12 ] There is no doubt that the litigation is in some ways complex, of considerable significance to the parties, and of great value in terms of the size of the estate in contest. It must also be said that the jurisprudence on the main issue of derivative leave remains thin.

[ 13 ] While I am mindful of the direction to refrain from parsing the calculation of hours and hourly rates, costs awarded should reflect the reasonable expectations of the unsuccessful parties, and the principle of proportionality. These considerations apply regardless of the complexity of the matter or the significance of the litigation to the parties.

[ 14 ] I have considered the quantity of preparation done in advance of the March 2, 2012 motion, the exchange of offers both formal and informal and the submissions regarding costs thrown away on motions withdrawn.

[ 15 ] There is no basis for an award of costs on a substantial indemnity basis.

[ 16 ] With all due respect to counsel for the plaintiffs, I am compelled to conclude the costs sought for the argument of the derivative issues and costs thrown away could not possibly reflect the reasonable expectations of the unsuccessful parties. Further, the costs sought cannot be considered in any way to be proportionate to the essential features of the one day motion heard in its entirety on March 2, 2012.

[ 17 ] The plaintiffs are entitled to their costs inclusive of taxes and interest, fixed at $55,000.00 payable forthwith from the defendants jointly and severally.

[ 18 ] Finally, I have reviewed the cost submissions of the parties with respect to the ETDL. I do not find it appropriate as the plaintiffs suggest to direct the defendants to pay the costs of the ETDL. I agree with the submissions of the ETDL that in light of the Low order, no further order is required in this regard.

WHITAKER J.

Date: May 25, 2012