SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: Worldwide Recovery Inc., H.N. Beiles Consulting Inc. and Arnold Shell Holdings Ltd., Plaintiffs

AND:

A.W. Anderson Management Inc., Andy W. Anderson, Re Vision Reinsurance Brokers Limited and Direct Insurance Marketing Inc., Defendants

BEFORE: D. M. Brown J.

COUNSEL:
I. Ellyn and B. Schubert, for the Plaintiffs

R. Klotz, for the Defendants, A.W. Anderson Management Inc. and Andy W. Anderson

J. Pirie, for the Defendants, except Re Vision Reinsurance Brokers Limited

HEARD: June 20, 2012

REASONS FOR DECISION (Corrected)

I. Motion to stay the auction of a house pursuant to a writ of seizure and sale

[ 1 ] The defendant, Andy W. Anderson, owns and resides in his home at 81 Hillsdale Avenue (the “Property”). Since December, 2010, Mr. Anderson has been separated from his wife who resides elsewhere. Their two young daughters alternate spending time with both parents.

[ 2 ] Mr. Anderson (and the other defendants) are judgment debtors. The Honourable Dennis Lane issued arbitration awards in 2011 which were recognized by a judgment of this Court made August 15, 2011. Under the Awards and resulting Judgment the defendants are obliged to pay approximately $1.133 million.

[ 3 ] The plaintiffs seek to enforce the Judgment. They issued a writ of seizure and sale. The Sheriff has scheduled a public auction of the Property for next Tuesday, June 26, 2012.

[ 4 ] The defendants have not made any payment against the Judgment, although by reason of revenues received from a third party, which I will explain shortly, the parties agree that the current amount outstanding under the Judgment is $931,071.48, give or take $100.00.

[ 5 ] Mr. Anderson has expressed the view that the Property is worth about $1.2 million. The Property is encumbered by two mortgages to a financial institution totaling $551,875.75. Mr. Anderson thinks there is more than $600,000 in equity in the Property. Although no independent appraisal was filed of the Property’s worth, a June 11, 2012 letter of opinion from a real esate agent was put in evidence estimating the value of the Property at between $1.18 and $1.22 million. For purposes of this motion I will proceed on the basis that a reasonable prospect exists of netting $600,000 for unsecured creditors from the public auction of the Property.

[ 6 ] The defendants, Mr. Anderson and A.W. Anderson Management Inc., move under section 106 of the Courts of Justice Act , R.S.O. 1990, c. C.43, to stay the enforcement of the Judgment or, alternatively, to stay the scheduled auction of the Property.

[ 7 ] For the reasons set out below I dismiss the motion.

II. The arbitral award and Judgment

[ 8 ] Mr. Anderson, and Messrs. Arnold Shell and H.N. Beiles (now deceased), entered into several business ventures involving the sale and brokering of insurance products. Around 2003 those three individuals, together with a Mr. Graham Briggs, incorporated the plaintiff, Worldwide Recovery Inc., to receive reinsurance commissions, including commissions derived from a life insurance campaign involving National Bank Life Insurance Company. WRI entered into an agreement with Citicorp Life Insurance Limited under which Citicorp would pay WRI in perpetuity commissions on reinsurance premiums received by it from the NBLIC campaign. Met Life became the successor corporation to Citicorp.

[ 9 ] In June, 2005 Messrs. Anderson, Shell and Beiles, together with some of their personal companies, entered into what was called the “ABS Agreement”. A key component of the ABS Agreement was the mutual covenant of the parties “to ensure that at all times, all commissions payable to WRI on reinsurance of the insurance campaigns listed in Schedule A will not be diverted to another person or corporation.” The NBLIC campaign was one of the listed campaigns.

[ 10 ] Over time Shell and Beiles became concerned that WRI was not receiving the appropriate amount of commissions from the NBLIC campaign. Long story short, they commenced a proceeding against the defendants and, as I read the referral order, certain issues were sent to arbitration before The Honourable Dennis Lane.

[ 11 ] Mr. Lane issued two awards: the first dated April 11, 2011 dealt with most of the substantive claims, and a subsequent award dated June 7, 2011 considered some remaining issues.

[ 12 ] The defendants lost the arbitration. Mr. Lane found that Mr. Anderson had diverted to a new company, which he had formed with another person, commissions on new NBLIC business in breach of the ABS Agreement. Mr. Lane did not find Mr. Anderson to be a credible witness. He described Mr. Anderson has having embarked “upon a concerted effort to mislead his colleagues as to why there was a reduction in the receipts from Met Life”, [1] lying to his business colleagues, [2] and hiding information from them. [3] In preferring the evidence of Messrs. Shell and Beiles to that of Mr. Anderson, the arbitrator wrote:

Anderson lied more than once and generally testified in argumentative fashion, often not answering the question, but seeking to answer some other question of his own choosing. [4]

[ 13 ] In his conclusion Arbitrator Lane wrote:

[Anderson] transferred an asset of value from WRI to his own company and sought to prevent those he cheated from discovering his fraudulent act by further acts of deceit. His concealment was successful for some years by virtue of his skill at evasive correspondence. [5]

[ 14 ] The resulting Judgment contained two components. First, the defendants were required to pay the plaintiffs $706,033.39, plus pre-judgment interest of $64,919.68. Reading the Judgment in light of the Award, it is clear that the arbitrator concluded that Mr. Anderson had diverted $706,033.39 in commissions from WRI, and the first part of the Judgment required repayment of those diverted funds. Second, the defendants were required to pay H. N. Beiles Consulting Inc. and Arnold Shell Holdings Ltd. punitive damages of $125,000.00 and costs of $237,542.85.

[ 15 ] The personal corporations of Anderson, Beiles and Shell held interests in WRI as shareholders in the following proportions: 22.5%, 13.8% and 13.8%. The remaining shares were owned by Ranchester, Mr. Briggs’ company. Given that Anderson’s company was a shareholder in WRI, paragraph 5 of the Judgment stipulated that his company’s share of the payments made to WRI by Met Life would be applied first to satisfy the various elements of the Judgment in favour of the Shell and Beiles plaintiffs.

III. Governing principles [6]

[ 16 ] In the case of Buttarazzi v. Buttarazzi , [7] McGee J. summarized the principles governing the exercise of the court’s discretion to stay execution on a judgment:

48 In what circumstances and upon what tests ought a stay of execution be granted? The statutory authority to stay a proceeding can be found under the Courts of Justice Act , R.S.O. 1990, c. C.43, s. 106

106. A court, on its own initiative or on motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just.

49 Edwin E. Bryant's statement from The Law of Pleading Under the Codes of Civil Procedure (2d ed. 1899) as quoted in Black's Law Dictionary is clear authority that the term "proceeding" extends not only to execution, but the proceedings supplemental to execution and the enforcement of the judgment.

50 The power to stay under section 106 is broad and highly discretionary:

"The test in deciding whether to grant a motion to stay really turns upon what the court in its discretion considers the interest of justice to demand. This is the purpose of the broad discretion conferred by s. 106 ."

ABB Power Generation Inc. v. CSX Transportation , [1996] O.J. No. 952 , para. 29 ,

51 The decision most often cited with respect to the power to stay an execution pursuant to section 106 is Zanetti Estate v. Roltford Developments Ltd. [1990] O.J. No. 2584 (G.D.) The case clearly provides that the right of an execution creditor to enforce its judgment is subject to the stay power conferred by section 106 , and that the court may exercise this power where it feels the actions of an execution creditor are oppressive.

"The question then comes down to whether the right of an execution creditor to enforce his execution should be absolute or may a court grant a stay in circumstances other than in an appeal using the powers granted to the court under section 119 [now s. 106] of the Courts of Justice Act .

In my view, the power of a court to exercise the power of stay ought to be exercised in those circumstances where the actions of an execution creditor may be said to be oppressive. Not only am I mindful of the earlier decisions under the Judicature Act but also the aphorism that difficult cases can make bad law. At the same time, the facts here show that a multitude of proceedings have been put into motion to frustrate enforcement of the decision of J. Holland J. The court surely must have authority to grant a stay to prevent the frustration of a judgment or order of a court. For this reason, I order a stay pursuant to the powers given to me under section 119 [now s. 106 ] of the Courts of Justice Act . " [emphasis added]

52 The authority for a court to stay an execution per section 106 of the Courts of Justice Act , has been well settled within 1247902 Ontario Inc. v. Carlisle Power Systems Ltd. 2003 (Ont Div. Crt.) CarswellOnt 6433 , confirmed on appeal at 2005 CarswellOnt 132 (Ont C.A.) and adopted in Dimensional Communications Inc. v. Oz Optics Ltd. [2005] O.J. No. 5773 .

53 In 1247902 Ontario Inc. Cunningham A.C.J. considered a number of cases, including Zanetti Estate v. Roltford Developments Ltd. [1990] O.J. No. 2584 . The issues before him were: whether the Superior Court had jurisdiction to stay enforcement of a final judgment pursuant to section 106 of the Court of Justice Act in circumstances not involving an appeal or a counterclaim against assets of a judgment creditor not otherwise exempt from execution; and if there was such jurisdiction, what principles should guide a judge in the exercise of discretion? He concluded that,

... in very rare circumstances there is discretion under section 106 of the CJA to stay the enforcement of a final judgment. This discretion ought to be used very sparingly and only in circumstances where it could be found that not only would it be oppressive or vexatious or an abuse of process of the court, but also in circumstances where it would not cause an injustice to the plaintiff.

54 In his concluding comments, Justice Cunningham considered whether the three part test set out in RJR-MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC) , [1994] 1 S.C.R. 311 (S.C.C.) ought to by analogy be used in these instances. That test sets out well known principals which govern the exercise of discretion to grant a stay of interlocutory relief pending appeal or motions on leave to appeal. Justice Cunningham declined to apply the same tests to stays of final judgments, and rather, treats the stay of an execution from a decision not under appeal as requiring a separate analysis.

55 Thus, although qualified as a rare set of circumstances, a stay may be granted in circumstances in which conduct is oppressive, or vexatious, or an abuse of process, as well as in circumstances in which no injustice is caused to the plaintiff.

[ 17 ] Earlier this year in McEwen v. Marino , [8] B. O’Marra J. accepted the principles stated in the Buttarazzi case, but held, on the unique circumstances of the case before him, that a stay should issue of the summary judgment he had granted the plaintiff until the determination of an action brought by the judgment debtor against his former lawyer. A close relationship existed between the plaintiff’s action and the action brought by the judgment debtor against his lawyer; the plaintiff had acknowledged in examinations that had it not been for the lawyer contacting her, she would not have commenced the claim for which judgment was granted. The distinctive features of the McEwen case were set out in the following portions of the court’s reasons:

9 The test for a temporary stay requires the court to determine whether the equities favour a temporary stay. Catalyst Fund Ltd. Partnership II v. IMAX Corporation, 2008 CarswellOnt 5700 (S.C.J.) para. 21 , 23.

10 This is not a situation where the defendant seeks to stay execution pending a completely unrelated litigation in hope of some recovery. There is no dispute that the mortgage debt is owed but the timing and circumstance of the claim are inextricably linked with the conduct of a former lawyer for the Marinos who became very actively involved in launching and maintaining the action. The defendants have not "sat on their rights" regarding the conduct of their former lawyer and learned relatively recently of his involvement in this action.

11 Based on the particular chronology of this matter, it is appropriate that the court exercise its discretionary authority to grant a temporary stay of execution of the judgment on terms. If the Marinos do not pursue their claim against C.L. related to their mortgage debt action in a diligent manner, the plaintiff will be entitled to bring the matter back before me or another Justice of this court on short notice to consider ending the temporary stay.

IV. Application of the principles to the facts of this case

[ 18 ] In the present case the Judgment is a final judgment; no review or appeal was taken of the awards issued by the Arbitrator. [9] The Anderson defendants are not creditors under any judgment granted in their favour against the plaintiffs.

[ 19 ] Unlike the circumstances in the McEwen case, at present no action has been commenced by the Anderson defendants against the plaintiffs concerning any matter related to the subject-matter of the Judgment. There are rumblings that the Anderson defendants wish to invoke a mediation process, but I will return to that point shortly.

A. The first equity advanced by Mr. Anderson

[ 20 ] In his affidavit Mr. Anderson deposed to three “equities” which he contended justified a stay of execution of the Judgment. The first equity concerned his demand of the plaintiffs for a statement of “the exact amount owing on the judgment as at today’s date”. Mr. Shell provided such a statement as of June 26, 2012 as an exhibit to his affidavit. The first “equity” no longer exists.

B. The third equity advanced by Mr. Anderson

[ 21 ] The third equity described by Mr. Anderson related to the fact that as a shareholder of WRI, he will be entitled to part of the proceeds of the Judgment. That is true. Under the Judgment the Anderson defendants owe H.N. Beiles Consulting Inc. and Arnold Shell Holdings Ltd. $362,542.85 in which they are not entitled to share, but they also owe WRI and those two plaintiffs $770,953.07 which, if paid, would result in WRI paying out to its shareholders, including Mr. Anderson’s company, their proportionate share of that recovery. Mr. Anderson owns 22.5% of WRI through his company; 22.5% of the $770,953.07 in diverted funds amounts to $173,464.44. So, if the Anderson defendants were to satisfy the Judgment, they ultimately would receive about $175,000, subject to adjustments for amounts received from Met Life and interest, provided the entitlements of the plaintiffs under the Judgment were satisfied as required by paragraph 5 of the Judgment.

[ 22 ] However, the Anderson defendants have not paid one cent of the Judgment. As a result, I find no air of commercial reality to Mr. Anderson’s assertion that “I am concerned…in view of the bad blood among us, that if I could pay the full amount owing under the judgment, I would not recover my 22.5% share.” The simple reality is that Mr. Anderson has paid nothing under the Judgment and has not adduced any cogent evidence that he is about to pay anything under the Judgment, so the “third equity” which he advances is a mere straw man.

[ 23 ] Moreover, this is not a case where the judgment creditors will only share in a small portion of the net proceeds of the auction of the Property. By my calculation, the Shell and Beiles plaintiffs are entitled to payment of $575,325.89 under the Judgment, [10] again without taking into account adjustments for receipts to date from Met Life or interest. To that must be added the $50,000 or so outstanding to other execution creditors, [11] resulting in about $625,000 in executions to be satisfied from the equity on the sale, which I am prepared to assume might be as high as $600,000.00. Even if one were to apply against the outstanding execution amounts all of the sum of $223,671.71, which Mr. Shell deposed had been received and applied to date under paragraph 5 of the Judgment, that would leave $400,000 outstanding in executions. Deducting that amount from notional equity proceeds of $600,000.00, potentially Mr. Anderson would receive about $200,000 in net equity from the auction. It might be one thing if the plaintiffs were seeking execution on an asset when they would only net a small proportion of the equity from the execution auction. However, I do not regard as oppressive efforts by creditors to execute on an asset where they are likely to receive about 67% of the net proceeds of the realization.

C. The second equity advanced by Mr. Anderson

[ 24 ] The other equity advanced by Mr. Anderson involves, in effect, a late attempt to set up a potential claim against the plaintiffs which, if successful, might result in a judgment which the Anderson defendants could use to set-off against the Judgment.

The issue stated

[ 25 ] As mentioned, the Awards and Judgment related to an ABS Agreement entered into in June, 2005. At that time Messrs. Shell and Beiles entered into several agreements under which Mr. Anderson (or his company) agreed to buy-out their shares in certain insurance businesses. Four such Share Purchase Agreements were entered into on or around June 21, 2005 under which Shell and Beiles agreed to sell their interests in four businesses to Anderson. Only two of the SPAs were filed before me in evidence. The purchase price in both consisted of a combination of cash on closing, which took place in June, 2005, plus a stream of future payments generated, I understand, from the revenues of the businesses sold.

[ 26 ] One SPA, involving the business of Direct Insurance Marketing Inc., stipulated that the Anderson purchasers would pay the vendors “future revenues received or receivable by DIMI for the period commencing on May 1 st , 2005 and terminating on November 30, 2010, even if paid by DIMI clients after the said date, reconciled on a periodic basis as further set out in a Collection Agreement attached as Schedule “B” to this Agreement…” [12] Although the parties did not place before me that Collection Agreement, Tab 10 to the Exhibit Brief contained the Collection Agreement for another of the SPAs entered into that day. That Collection Agreement required the vendors to provide monthly summary statements and contemplated quarterly reconciliations of amounts received. Since counsel for the Anderson defendants submitted that the SPAs were similar in form, I will proceed on the basis that the unfiled Collection Agreement for the Direct Insurance Marketing Inc. SPA contained a similar quarterly reconciliation mechanism in respect of payments of the purchase price made post-closing.

[ 27 ] The SPA in question contained a qualification to the determination of future revenues payable to the vendors. Section 4.1(3.1) provided that the “earnout payments due by the Purchaser to the Vendors…are intended to be earnings from the DIMI clients for six full fiscal years, namely, from December 1, 2004 to November 30, 2010…Payments due for any month or fiscal period ended after December 1, 2004 and on or before November 30, 2010 shall be included in the payments due to the Purchasers.”

[ 28 ] The parties apparently performed their closing and post-closing payment obligations under the SPA. The obligation to pay future revenues terminated on November 30, 2010. During that time the Anderson defendants made no allegation that a miscalculation had occurred in any portion of the purchase price.

[ 29 ] However, by email dated January 24, 2011 Mr. Anderson informed Mr. Beiles that an error in the calculation of the purchase price had occurred:

[W]hen researching this we found that the payments on closing for the amounts due from Dec 2004 to April 2005 were not correct. You were paid a % of revenue received during the period Dec 04 to April 2005, rather than a % of what was actually earned. This is not correct given paragraph 4.1.3.1 above.

As a result of this error, you were overpaid by $161,685. With interest, in accordance with the Agreement, the total amount due is now $385,022. Please refer to the attached for the calculations. This amount will be reduced by the amount of the ING Fees received for the period September and October 2010 of $17,380.40 which was received by DIRECTimi on December 23, 2010 resulting in a net amount due of $367,641.60.

We would therefore request that you provide a direction to ING to pay the September and October 2010 GID fees and the November 2010 fees to DIRECTimi to reduce the amount due to DIRECTimi. For the balance, we require that to be settled in the next 14 days. (emphasis added)

[ 30 ] Mr. Beiles responded that same day:

Andy,

The closing amounts were not a whim. We spent lots of time agreeing on the closing amounts and they have nothing to do with this issue. And just use some basic logic. If the funds were not due to us under this agreement, then they were due to us as owners which we were until the effective date of the agreement.

We will not give the instructions you suggest. Those funds are payable to Soho Timberlane under the clear terms of the agreement. They have nothing to do with allegedly incorrect closing amounts 6 years ago.

[ 31 ] Nothing further happened on this issue until March 8, 2012 when Mr. Anderson wrote to plaintiffs’ counsel seeking to invoke the mediation/arbitration provisions under the SPAs to address the issue which he framed as follows:

The issue arose out of my office’s review of the Irrevocable Assignment of Proceeds from contracts under the Agreement, which revealed a substantial error in the amounts paid to the Shell Group and Beiles Group for the period December 1, 2004 to April 30, 2005.

Our finance person at the time had improperly included payments received by the companies during that period but the payments were in fact earned for periods prior to December 1, 2004. Pursuant to the Agreement, the period for which payments were to be made to the Shell Group and Beiles Group is clearly set out in section 4.1.(3.1). The amount mistakenly paid to your clients was $521,426, however the correct amount to be paid in accordance with the Agreement was $259,741, resulting in an overpayment of $261,685.

[ 32 ] On his cross-examination Mr. Anderson clarified that the overpayments he contends were made were paid at the closing of the SPA transaction in June, 2005, some seven years ago. [13]

[ 33 ] In his May 12, 2012 affidavit Mr. Anderson deposed:

As set out in [the March 8] letter, due to an accounting error, the amounts paid to Beiles and Shell under these four agreements for the period December 1, 2004 to April 30, 2005, were roughly $260,000 more than their rightful entitlement. With interest at the rate specified by the agreements, this now amounts to some $400,000…

Eventually, I will recover this money. But in the meantime, I will lose my house unless, pending the determination of the claim, the Writ is stayed to the extent of this amount in dispute. I am quite prepared to give mortgage security over the home to eliminate any possible prejudice to the Plaintiffs in the meantime.

Each of the four agreements in question contain an identical mediation and arbitration clause. I initiated this process in March, 2012 by my letter of March 8 noted above. The dispute has not been resolved and must proceed to mediation/arbitration. While I am quite content to expedite the arbitration, and indeed I request the court’s assistance to so expedite, it will not be completed before the date of the Sheriff’s auction of my home. At today’s date, the Plaintiffs are delaying the resolution of the matter.

[ 34 ] The plaintiffs have not agreed to participate in the mediation proposed by Mr. Anderson, describing the claim asserted by Mr. Anderson as a “stalling tactic”.

Analysis

[ 35 ] Is the conduct of the plaintiff judgment creditors in refusing to participate in the mediation/arbitration requested by Mr. Anderson oppressive, vexatious, or an abuse of process thereby meriting a stay of the execution of the Judgment? I conclude that it is not.

[ 36 ] First, Mr. Anderson has not adduced adequate evidence to support the merits of his claim. He asserts that an accounting error by his staff led to overpayments under all four June, 2005 SPAs and he relies on section 4.1(3.1) of one SPA as the basis for remedying the error. However, although section 4.1(3.1) appears in the SPA found at Tab 12 of the Exhibit Brief, it does not appear in the one found at Tab 10 (which Mr. Anderson appended as Exhibit “D” to his affidavit”). The other two SPAs were not filed in evidence. Mr. Anderson contends that the alleged overpayment claim of $260,000 (plus interest) arises from all four SPAs, but he does not explain how the claim would arise in the SPAs which lacked a clause equivalent to section 4.1 (3.1).

[ 37 ] Second, as he frames his claim in his correspondence, it relates to commissions paid between December 1, 2004 and April 30, 2005 – i.e. prior to the closing of the four SPAs and at a time when Shell and Beiles remained shareholders in each of the companies they subsequently sold to Mr. Anderson. As Mr. Beiles put it in his January 24, 2011 email to Mr. Anderson: “And just use some basic logic. If the funds were not due to us under this agreement, then they were due to us as owners which we were until the effective date of the agreement.” Mr. Anderson did not address that problem with his claim in his evidence.

[ 38 ] Third, as noted, on his cross-examination Mr. Anderson testified that the overpayment was in respect of amounts paid at closing. However, a release signed by Mr. Anderson (and his companies) released all claims except “obligations with respect to the payment and reconciliation of amounts to be paid” under SPA. It is not at all clear that Mr. Anderson’s recent claim in respect of amounts paid at closing would fall within the carve-out language of the release.

[ 39 ] Fourth, there is not an identity of the parties between the judgment creditors under the Judgment and the potential targets of Mr. Anderson’s claim. Arnold Shell Holdings Ltd., a judgment creditor, was not a party to the SPA which contained the section 4.1(3.1).

[ 40 ] Fifth, Mr. Anderson’s proposed claim is not related to the subject-matter of the dispute over the ABS Agreement which resulted in the Awards and Judgments; they are completely different matters.

[ 41 ] Sixth, Mr. Anderson provided no credible explanation about why it took him until January, 2011 to discover what he contends was an error by his finance person for the period December, 2004 until April, 2005 which resulted in an overpayment on June, 2005 closings. In his affidavit Mr. Anderson deposed: “We discovered the overpayment in January, 2011…” But it is clear from his cross-examination that since the time of the June, 2005 closing Mr. Anderson has had in his possession the documents on which he now bases his claim for overpayment. [14] This is not a case where material facts or documents unknown to Mr. Anderson only recently came into his possession.

[ 42 ] At the hearing counsel for the defendants submitted that following the closing Mr. Anderson was entitled to close up the boxes containing the closing documents and re-open them many years later to discover a claim. I disagree. The SPAs between Mr. Anderson and the Shell/Beiles plaintiffs contemplated a post-closing stream of revenues to satisfy the purchase price, monthly statements of such revenues, and periodic reconciliations of revenues due. In those circumstances the purchaser, Mr. Anderson, was required to conduct a modicum of due diligence at the time he made payments on the purchase price, including the payments made at closing, to ensure their accuracy. He is not entitled to place documents in storage for six years, then pull them out and expect the vendors to take seriously a claim going back six years.

[ 43 ] In my view the Limitations Act [15] stands as a very high hurdle over which Mr. Anderson would have to leap to assert, in 2012, claims for overpayments dating back to closings in June, 2005. I suspect the hurdle is insurmountable.

[ 44 ] Finally, after raising the issue with Mr. Beiles in late January, 2011, Mr. Anderson then “sat on his rights” until March 8, 2012, when he sent the letter seeking to mediate/arbitrate the dispute. Even as of today’s date Mr. Anderson has not commenced an action to assert his claims.

[ 45 ] For these reasons I conclude that the claim which Mr. Anderson advanced in his affidavit concerning the overpayments on the June, 2005 closings is one of very dubious merit and one which likely faces insurmountable limitations problems. Mr. Anderson’s claim bears all the hallmarks of a last-ditch delay tactic to prevent the enforcement of the Judgment against him, rather than the characteristics of a bona fide claim. Accordingly, I see nothing oppressive or unfair in the circumstances in the plaintiffs pressing forward with the execution of their Judgment in the face of the claim now raised by Mr. Anderson.

D. Summary

[ 46 ] By way of summary, I see nothing in any of the “three equities” advanced by Mr. Anderson which would make oppressive or unfair the efforts by the plaintiffs to enforce the Judgment, including the auction sale of the Property scheduled for early next week.

[ 47 ] Further, in my view a stay would cause an injustice to the plaintiffs. They have obtained Judgment against a person whom the arbitrator concluded had fraudulently diverted funds away from his business partners to his own benefit. The Awards were issued over a year ago; the Judgment was entered last August, 2011. To date the Anderson defendants have made no payments against the Judgment, although Mr. Anderson has stated he earns a salary of $250,000 a year. [16] In his affidavit Mr. Anderson deposed that “while my assets are quite substantial and significantly exceed the amount owing on the Judgment, I am cash poor.” Mr. Anderson did not file a current net worth statement to support that assertion. At the hearing counsel for the Anderson defendants submitted that his client could make a payment of $352,986.20 by June 26 to the plaintiffs, but in his affidavit Mr. Anderson deposed, on the one hand, that he could not raise “over $400,000” before June 22, but he was in a position to raise $370,000. He provided no details to support his assertions. Call me skeptical, but when the Anderson defendants had difficulty in posting $20,000 in security for costs before the hearing of this motion, I have difficulty accepting counsel’s submission that they can raise more than 10 times that amount before next Tuesday. Actions speak louder than words when it comes to satisfying debts, and there is no evidence of any action by the Anderson defendants. [17]

[ 48 ] Finally, in his affidavit Mr. Anderson deposed that his family had resided in the Property since March, 2004 and “my two daughters, ages 5 and 8, have lived there all their lives”. A strong plea, indeed, for equitable mercy by the court. By Mr. Anderson was not candid with the court in his affidavit. When cross-examined he revealed that he has been separated from his wife since December, 2010 and she was living elsewhere. Also, he stated that he and his wife had shared custody and shared access of their daughters, with his children living with him “half the time”. [18] Hardly the picture which Mr. Anderson tried to paint in his affidavit.

[ 49 ] I see absolutely no reason to interfere with the lawful efforts of the plaintiffs to enforce the Judgment. The motion is dismissed.

[ 50 ] At the hearing Mr. Pirie requested a date for the hearing of a motion by the Anderson defendants to compel the plaintiffs to appoint a mediator to consider the claim raised recently by Mr. Anderson. If, after reading these Reasons, Mr. Pirie wishes to renew the request for a motion date, he can do so through a 9:30 a.m. appointment.

V. Costs

[ 51 ] In their Factum the plaintiffs sought substantial indemnity costs, but they filed a Costs Outline setting out full indemnity costs of $34,273.98 and partial indemnity costs of $24,461.29. At the conclusion of the hearing defendants’ counsel stated he would leave with the Registrar copies of his dockets so that I would have a basis for evaluating the reasonableness of the costs sought by the plaintiffs. He did not do so. The Registrar informed me that counsel stated he would fax them to me on Thursday. I did not receive anything.

[ 52 ] The Anderson defendants did not succeed on their motion. Costs should follow the cause, and the plaintiffs are entitled to costs.

[ 53 ] To grant elevated costs a court must make a finding of “reprehensible conduct”: Davies v. Clarington (Municipality) . [19] While the motion by the Anderson defendants really was nothing more than a desperate, last minute attempt to avoid the sale of the Property, I cannot conclude that it amounted to litigation conduct which reached the level of “reprehensible conduct” necessary to trigger elevated costs. Accordingly, the plaintiffs are entitled to their costs on a partial indemnity basis.

[ 54 ] I have taken into account the factors enumerated under Rule 57, including the time spent, the result achieved, and the complexity of the matter, as well as the application of the principle of proportionality: Rule 1.04(1). In addition, I have considered the principles set forth by the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario , [20] specifically that the overall objective of fixing costs is to fix an amount that is fair and reasonable for an unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant.

[ 55 ] I have considered plaintiffs’ Costs Outline. This motion required several 9:30 attendances, the preparation of responding materials and attendances on two cross-examinations. The issue was of importance to the plaintiffs, representing a significant opportunity to secure payment of some of their Judgment. In reviewing the Costs Outline I conclude that an appropriate delegation of work was made by senior to junior counsel and that the hourly rates claimed and hours spent were reasonable in the circumstances. The disbursements were reasonable, consisting mostly of the cost of an overnight transcript.

[ 56 ] I conclude that an award of costs in the amount of $24,461.29 would be reasonable in the circumstances, and I order the Anderson defendants to pay H.N. Beiles Consulting Inc. and Arnold Shell Holdings Ltd. that amount within 30 days.

D. M. Brown J.
Date : June 22, 2012