ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 04-CV-266546
DATE: 20120629

BETWEEN:

BARKATALI NAZARALI PIRANI, Plaintiff – and – YASMIN ESMAIL, TAJDIN ESMAIL and ALNAZ JIWA, Defendants

John Philpott, Counsel for the Plaintiff

Morris Cooper, Counsel for the Yasmin and Tajdin Esmail, two of the Defendants
Alnaz Jiwa, self-represented Defendant

ENDORSEMENT ON WRITTEN SUBMISSIONS ON COSTS: GREER J. :

[ 1 ] On February 22, 2012, I delivered Judgment in the Trial of this Action. The Plaintiff, Barkatali Nazarali Pirani, (“Pirani”) was successful at Trial. In paragraph 169 of my Judgment, I said that in the event the parties could not agree on Costs, I would receive brief written submissions from them.

[ 2 ] One issue remained outstanding at the end of the Trial and that was whether Pirani was entitled to either aggravated and/or punitive damages. The parties were allowed to make further submissions on that issue, for reasons noted in Supplementary Reasons released by me on May 31, 2012. Pirani had said at the end of Trial that he was not seeking punitive damages but was seeking an award with respect to aggravated damages. The parties were given the opportunity to make written submissions to me on that issue. I found that the Plaintiff was also entitled to aggravated damages for the reasons as set out in that document.

[ 3 ] Costs submissions were reviewed by me only after the aggravated damages award was made. I now have received all the submissions.

[ 4 ] Pirani submits that Costs should be awarded to him on a substantial indemnity basis against all three Defendants. The Action was commenced in April 2004. Pirani says that on several occasions he attempted to resolve the matter by way of mediation and offers, but was unsuccessful in doing so. He says that he experienced “continual difficulties” in scheduling discoveries and obtaining and Affidavit of Documents from the Defendants. The procedural history covered 7 years by the time the Judgment was delivered by me.

[ 5 ] Pirani says he is entitled to substantial indemnity Costs, given that he was successful in his pleading that the Defendants, Yasmin Esmail and Tajdin Esmail (“the Esmails”) had breached their fiduciary duty and were found by me to also be in breach of trust.

[ 6 ] Pirani’s Bill of Costs is broken into Actual Rate, inclusive of disbursements and GST or HST, as the case may be, of $101,709.46. The substantial indemnity ate is $84,634.19 and on the partial indemnity scale is $67,558.93. The Bill of Costs clearly sets out the work done by the four law firms that acted at one point or another in the litigation for Pirani. He says that there has been no duplication of effort by each new firm as it took over case. He also says that there is nothing in the fees for the preparation of the Costs Submissions themselves.

[ 7 ] There is included in the Costs submissions, an Affidavit of the Brauti firm’s Law Clerk setting out how the Bill of Costs was prepared. The document, itself, was well-prepared. The Law Clerk lists the various interlocutory steps that were taken and the interlocutory Orders that were made by the Court.

[ 8 ] Pirani, on August 24, 2010, was awarded Costs of $1,250 on the Esmails’ Motion to amend their Statement of Defence and allow a Counterclaim to be filed. These Costs were ordered payable “forthwith”. The Esmails, to date, have not paid these Costs.

[ 9 ] In addition, Madam Justice Epstein on June 9, 2006, awarded Pirani Costs of $1,500 against the Defendant Alnaz Jiwa (“Jiwa”) on Jiwa’s appeal of the Order of Mr. Justice Belobaba dismissing Jiwa’s summary judgment Motion. There is no evidence that these Costs have been paid by Jiwa, although he has included in his Costs Submissions a copy of a Fax Sheet sent to Maurice J. Niernick & Associates, saying the he paid to Steinberg & Morton, an amount of $4,800. Unless I hear otherwise, I accept what Jiwa says.

[ 10 ] There is also my Order of April 29, 2011 during the middle of the Trial, when the Esmails decided that they ought to have legal representation, after being self-represented for many years. Given the Trial disruption and the fact that the Trial date had been peremptory to the Esmails, I granted the adjournment reserving to me the right to order Costs if I determined they were warranted. In my view, such Costs are warranted, given that Trial was delayed for many months and counsel was required to bring himself up to speed again. Further, Pirani had to obtain a copy of the Trial transcript and review the same. I addition I ordered the parties to appear at another Settlement Conference before another Judge, thereby adding additional Costs. Pirani asks for his Costs of all of this at $8,750 inclusive of GST.

[ 11 ] Pirani also asks for Costs of submissions on the aggravated damages awarded to be awarded to him by me in my Supplementary Reasons. He asks for $6,638.97 on a substantial indemnity scale or $4,878.55 on a partial indemnity scale.

Offers to Settle

[ 12 ] Pirani made an Offer to Settle to the Esmails on May 18, 2011, in the amount of $170,000 inclusive of all taxes and all costs of previous Motions and of Costs thrown away on the adjournment of the Trial. That Offer remained open until 5 minutes after the Trial re-commenced. On the same date, Pirani made an Offer of Settlement to Jiwa of $15,000 all inclusive of disbursements and tax, including the Costs awarded against Jiwa on the summary judgment Motion and his various appeals. It, too, remained open until 5 minutes after the Trial began.

[ 13 ] The Esmails, on October 6, 2011, made a Counter-Offer to Pirani to settle his claims against them for $50,000 inclusive of interest and Costs. The Offer remained open until the re-commencement of Trial.

[ 14 ] Pirani made a further Offer to the Esmails to settle his Claims for $100,000 inclusive of disbursements and all taxes and interest. He asks for a certified cheque or bank draft to be delivered within 30 days. In addition, Pirani’s Offer says that the Esmails shall pay the Plaintiff’s Costs of the Action to either be agreed upon or assessed. None of these Offers were accepted by anyone. Jiwa made no Offers to Pirani at all.

Damages under the Judgment

[ 15 ] In my Judgment, I awarded Pirani damages of $67,815.67 against the Esmails, and $15,000 against Jiwa. Both were subject to pre-judgment interest at the Court of Justice Act rate over the years, based on each year’s average rate, with that year’s interest added to the principal sum cumulatively each year. Pirani was also awarded post-judgment interest on the whole amount at the Courts of Justice Act rate from the date of the Judgment to the date of payment.

[ 16 ] On May 31, 2012, I released Supplementary Reasons on the issue of aggravated damages. I ordered the Esmails jointly and severally to pay to Pirani an additional $15,000 in aggravated damages plus post-judgment interest on the sum until paid. The total award to Pirani is $82,815.67 jointly and severally by the Esmails plus $15,000 by Jiwa, for a total of $97,815.67 plus pre-judgment and post-judgment interest.

The Position of the Defendants

[ 17 ] The Esmails quite properly say that the Costs against all three Defendants must be divided between those relating to the Esmails’ Defence and those relating to Jiwa’s Defence. The Esmails say that Pirani is not entitled to Costs on a substantial indemnity basis. They point to the fact that my Judgment was “far less” than what the Pirani’s expert calculated. They further say that their mid-Trial Offer to Settle was reasonable in the circumstances.

[ 18 ] The Esmails dispute the assertion that the delays were caused by them. They say that the action was dismissed by the Registrar on July 5, 2007 and had to be reinstated at a cost in the proceeding. They say that there should be no pre-judgment interest for that period of delay. They point to the number of different counsel who acted for Pirani over the 7 years before the Trial concluded. They say that these changes in counsel have resulted in massive duplication of time and effort, the cost of which should not be visited upon them. They further say that there should be no time allocated to the unsuccessful Mareva Injunction brought on by Pirani against the Esmails in October 2012 during the Trial. Costs were awarded against Pirani in the amount of $3,000 and those Costs were paid.

[ 19 ] The Esmails point to two areas of Costs that relate strictly to Jiwa’s Summary Judgment Motion and appeals from it, all of which he lost, and to the time related to the examination of Jiwa.

[ 20 ] The Esmails say that Pirani should only be entitled to reasonable partial indemnity Costs. They say that on some of the accounts submitted to Pirani, the times docketed were not reasonable for the work done. In particular, they point to the dockets of Norman Epstein, who was solicitor of record for a short period of time. They say it was Pirani’s conduct that caused the Trial to take so long in getting set down and heard. They submit that Pirani should only be entitled to Costs not exceeding $23,000 plus a proportionate share of the disbursements. Tax, of course, would be added to that. They say that there should be no separate amount for Costs relating to the aggravated damages award.

[ 21 ] Jiwa submits separate submissions on his part, as one of the Defendants in the proceeding. Jiwa was the solicitor acting on the sale of the trust property in question in this litigation. He faults Pirani in his failure to not serve Jiwa with an Affidavit of Documents and in his refusal to be examined. Jiwa says that he brought a Motion to Strike Pirani’s pleadings in order to get re-attendance by him to be examined. That Motion did not take place, however.

[ 22 ] Jiwa says that he paid the Costs awarded against him on the bringing of his summary judgment Motion. He says two sets of Costs were awarded against him totalling $4,800, which he paid to Pirani’s then counsel, Mr. James Morton. He says he did not delay the Action moving forward. He says he should not be jointly and severally liable for all Costs of the Trial.

[ 23 ] Jiwa says that no Costs should be awarded against him since the amount recovered is within the Small Claims Court limit. He says the Costs were excessive for the amount of damages awarded by me.

Pirani’s Reply to the Defendants’ Costs Submissions

[ 24 ] Pirani says that the Esmails’ submission that $23,000 is a reasonable Costs award is not appropriate in the circumstances of this action. He points to Rule 57 and the factors the Court must take into consideration in applying the Rule. He says Pirani was successful on all major issues decided at Trial. He says that substantial damages flow from breach of fiduciary duty and breach of trust. The reasonable Offers made by Pirani can be taken into account. The one Counter-Offer made by the Esmails was unreasonable, given that the Trial was half-completed by that time. He points to the fact that the Esmails were dishonest in deliberately destroying or hiding or failing to produce the key documents in the Trial, namely the banking records, cancelled cheques, statements on account by creditors.

[ 25 ] Pirani was forced to hire an expert accountant in order to review all the accounting evidence and to have to use other sources in order to infer what rents may have been paid over the years and what factors should be taken into account to fill in all the blanks.

[ 26 ] He says that counsel had to be changed in mid-Trial due to the length of time the delay took, when the original Trial counsel changed firms and simply did not take the file with him.

[ 27 ] Pirani says that he should be entitled to pre-judgment interest for the whole time period in question. He says that the Esmails’ proposition that an award of aggravated damages does not draw an award of Costs is not supported by any case law.

[ 28 ] Pirani says that Jiwa’s submissions were based on his misunderstanding of how discovery is conducted and what constitutes a proper Affidavit of documents. Pirani was told by counsel not to answer Jiwa’s improper questions on what counsel perceived was a deficient Affidavit of Documents. He agrees with Jiwa that the Rule 49 Offer was actually for $10,200, given Costs that had been awarded against him. The Judgment of $15,000 was more favourable than Pirani’s Offer to Settle with Jiwa.

[ 29 ] Pirani says all Defendants ignored my Order that submissions were to be no longer than three pages. I agree with him on that point.

Analysis

[ 30 ] In my view, Pirani is entitled to his Costs on a substantial indemnity basis, with the exception of those Costs, which relate to the Bill of Norman Epstein and in part as is noted herein. My Judgment is 28 pages in length and throughout the Judgment I note how the Esmails were both in breach of trust, how both were in breach of their fiduciary duties. Both lied under oath and destroyed or secreted away every single bank statement each had received over all those years the trust was in existence. Neither was an honest but mistaken litigant. They kept no accounts whatsoever in their administration of the trust. I found their conduct to be egregious throughout the Trial, as well as during the lack of administration of the trust.

[ 31 ] The Esmails totally ignored, while acting on their own behalf, to pay the Costs of interlocutory proceedings awarded against them. It appears, in the materials before me, to this date they remain outstanding.

[ 32 ] The Esmails’ Offer to Settle was not reasonable in the circumstances, nor is their suggestion that their costs should be limited to $23,000. I find none of their complaints about Pirani’s conduct to be valid. He had to press for years to receive a proper accounting from the Esmails and none was provided until after the litigation was commenced. They eventually had to hire an expert to redo the accounts. In my Judgment, I found Pirani’s accountant’s analysis to be preferable.

[ 33 ] I have allowed Pirani’s counsel time dealing with the Mareva Injunction brought on by Pirani in mid-trial before another Judge. I had no knowledge about what took place until after the Trial was finished. In my view, Pirani had good reason to bring on the Motion since Tajdin Esmail had tried to make himself judgment proof from CRA claims (see my Judgment) by transferring his own property as well as the Trust property to Yasmin Esmail, without informing Pirani. Further, Pirani believed that the Esmails were planning on selling all their assets here in Canada, with the idea of returning to Africa from which they had emigrated many years before, which would make it almost impossible to levy judgment against them.

[ 34 ] When Tajdin Esmail, while acting on his own at the beginning of the Trial, in mid-Trial said he could not go on due to his health, and that he wanted to seek counsel to act for him and his wife, I ordered him to produce a doctor’s report on his illness. Eventually, when the Trial resumed, a small note on a prescription form note pad was produced, which was not a report at all. In my view, Esmail realized he was in trouble, given the evidence of Pirani’s expert, and therefore feigned illness. He was no doubt anxiety ridden but there is no medical evidence that he was ill or suffering from heart problems.

[ 35 ] As for Jiwa’s conduct, he was shockingly lacking in professional conduct in his role as the solicitor for the Esmails on the sale of the trust property. He put himself into a fiduciary relationship with Pirani, who thought that Fakirani, the counsel who had acted for him and the Esmails when the trust was set up, was going to act on the sale. Pirani did not trust Jiwa and so ended up having to hire Fakirani, himself, to protect his interest in the proceeds of sale of the Trust property.

[ 36 ] I find that the Esmails did not want Fakirani to act since he had drafted the Trust agreement. Jiwa openly admitted that he never looked at the trust document Fakirani sent to him, and in fact on cross-examination said “I’ve even now not read it in full.” It was a one-page document. There is a reasonable inference that he did not read any part of it. He ignored Pirani’s counsel’s letter about an accounting and failed to properly respond to that counsel. Jiwa’s conduct was also egregious. He, too, shall pay his proportionate share of Costs on a substantial indemnity basis.

[ 37 ] As a solicitor, Jiwa ought to have reported this case to the Law Society and have the Society look into his actions. He did not do this. Jiwa’s Defence of himself, was never properly conducted and his Costs submissions were rambling including documents that did not relate to Costs and not on point.

[ 38 ] I agree that the three Defendants are not jointly and severally liable to Pirani, but the Esmails are jointly and severally liable to him. On the other hand, Jiwa was hired by Tajdin Esmail, when Tajdin was no longer the Trustee of the Trust. In addition, Jiwa acted under Tajdin’s instructions so they were integrally connected throughout Jiwa’s failure to act properly in the circumstances as the legal solicitor for the Trustee, who, at that point, was Yasmin Esmail.

[ 39 ] I therefore find, based on my review of the various Bills of Cost submitted by Pirani, and given that Jiwa took an active part in the Trial, that Jiwa is responsible for one-fifth (1/5 th ) of the overall Costs awarded by me to Pirani, and the Esmails four-fifths(4/5 ths) jointly and severally.

[ 40 ] The two principles the Court applies when fixing Costs is that they must be fair and reasonable in the circumstances and the principle of proportionality must be applied to the circumstances of the case. The expectation of the parties must also be examined. These principles are set out in Zesta Engineering Ltd. v. Cloutier (2002), 21 C.C.E.L. (3d) 161 (Ont. C.A.) and Boucher v. Public Accountants Council (Ontario), [2004] O.J. NO. 2634 (Ont. C.A.) and Beach v. Toronto Real Estate Board.

[ 41 ] In this Action, I have found that the three Defendants were in breach of their fiduciary duties to Pirani. I have also found that the Esmails were in breach of Trust, where Pirani was one of the beneficiaries of the Trust. In 561895 Ontario Inc. v. Metropolitan Trust Co. of Canada, Mr. Justice Panet in paras. 15, 16, and 17, looks at the conduct of the parties to determine whether there has been fraud, deceit and breach of fiduciary obligations on the part of defendants, in determining the quantum of Costs to be awarded to a successful party. He adopts the statement of Mr. Justice Binks in Beaver Lumber Co. v. 222044 (Ontario Ltd. (1996), that where there is a form of reprehensible conduct on the part of litigants, which gives rise to the Court’s disapproval, this can give rise to solicitor and client Costs against the party whose conduct is found to be reprehensible. Those Costs are now known as substantial indemnity Costs.

[ 42 ] In Barry v. Garden River Ojibway Nation No. 14 the Court found that an appellant who was a beneficiary of a trust and who had to sue the Trustee, should receive Costs on a solicitor and client basis.

[ 43 ] The Defendant Jiwa says that I should follow the decision of Mr. Justice J. Macdonald in Stewart v. Canadian Broadcasting Corp. where the plaintiff was not allowed Costs on a solicitor and client scale. There the Court found that there had been a mistaken understanding on the part of the plaintiff’s lawyer. The Court did note, however, that there are some cases, in which a lawyer’s breach of fiduciary duty has resulted in awards of solicitor and client costs. In my view, Jiwa falls within that latter category and I award Pirani Costs against Jiwa on a substantial indemnity basis.

[ 44 ] I adopt the reasoning in the above cases. In this Action, the reprehensible conduct of the Defendants has been outlined by me in my Judgment and in my Supplementary Reasons. Pirani is therefore entitled to his Costs fixed on a substantial indemnity basis, except as otherwise noted in Schedule A attached hereto. In addition, I award Pirani his Costs of the aggravated damages submissions at $4,000, as being reasonable in the circumstances. The total of all legal Costs as awarded by me, inclusive of disbursements and HST or GST, as the case may be is $87,655.14. An Order shall go that the Defendants pay forthwith these Costs as follows, given my formula:

(a) The Esmail Defendants: 4/5ths of the fees = $70,124.11 plus post-judgment interest from the date of my Judgment at the Courts of Justice Act rate until fully paid. They are to be paid forthwith by the Esmails, jointly and severally.

(b) The Defendant Jiwa: 1/5 th of the fees = $17,531.03 plus post-judgment interest from the date of my Judgment at the Courts of Justice Act rate until fully paid. They are to be paid forthwith by Jiwa personally.

[ 45 ] All Orders to go accordingly.

Greer J.
Released: June 29, 2012

SCHEDULE A

COSTS TO PIRANI, THE PLAINTIFF FIXED AS FOLLOWS :

1. (a) Costs of Brauti Thorning Zibarras, November 6, 2010 to October 21, 2011 $35,284.00
   plus HST 4,586.92
   plus disbursements 11,972.55
   $51,843.47

(b) Costs of Brauti Thorning Zibarras – for aggravated damages submissions 4,000.00
$56,843.47

2. Norman Epstein, December 2003 to June 24, 2005

• dockets do not show time or hourly rate – he has already received
  $6,000 on account

Partial Indemnity $6,705.00
plus GST 469.35
plus disbursements 1,140.73
plus GST 79.85
plus disbursements as Agent 157.00
$8,551.93

3. Maurice J. Niernick & Associates, February 12, 2008 to December 10, 2010

• reduce Substantial Indemnity by $2,000 as a lot of time was correspondence
  and e-mails and an aborted examination of Y. Esmail $8,330.00

GST @ 7% 583.10
plus disbursements 1,211.80
plus GST & HST 59.49
$10,184.39

4. Steinberg Morton Hope & Israel, August 7, 2005 to April 30, 2008

• including preparation and attending at examination for discovery and
  preparation and attending at Divisional Court $8,017.84

• no mention in dockets of $4,800 payment by Jiwa

plus GST @ 6% 481.07
plus disbursements $1,614.82
plus GST and disbursements @ 6% 96.89
$10,210.62

• Counsel for Pirani to check with Mr. Morton as to whether the $4,800
  was ever received by his firm. If so, the amount awarded to him
  shall be reduced by that amount.

Continued, Page 2…

SCHEDULE A – continued

5. Bell, Temple – for Mr. Fazel (counsel at Trial) November 21, 2011 to
   November 24, 2011 $1,500.00

plus disbursements 150.20
plus HST 214.53
$1,864.73

TOTAL FEES $87,655.14

1/5 $17,531.03
4/5 $70,124.11

COURT FILE NO.: 04-CV-266546
DATE: 20120629

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

BARKATALI NAZARALI PIRANI, Plaintiff – and – YASMIN ESMAIL, TAJDIN ESMAIL and ALNAZ JIWA, Defendants

ENDORSEMENT ON WRITTEN SUBMSISIONS ON COSTS

Greer J.

Released: June 29, 2012