ONTARIO

SUPERIOR COURT OF JUSTICE

DATE: 2012-08-22

RE: 1352164 Ontario Limited, Extreme Retail (Canada) Inc. and Extreme Properties Inc., Plaintiffs/Moving Parties

AND:

Mikhail Holdings Limited, Joseph Mikhail, Louis Mikhail, Defendants/Responding Parties

BEFORE: Mr. Justice D. R. McDermid

COUNSEL:
R. G. Colauti and A. E. Landry, Counsel for the Plaintiffs/Moving Parties
C. Martini and S. Medaglia, Counsel for the Defendants/Responding Parties

ENDORSEMENT

[1] I have now considered the written submissions about costs that I received from counsel.

[2] The plaintiffs’ motion for summary judgment was dismissed as per written reasons dated May 7, 2012. The defendants’ motion for security for costs was granted. However, I have been asked to deal only with the costs of the motion for summary judgment because the plaintiffs have sought leave to appeal from my order for security for costs.

[3] The plaintiffs acknowledge that the successful party, in this case the defendants, are entitled to costs. The issue is on what scale and in what amount?

[4] The defendants seek costs on a substantial indemnity scale in the sum of $67,218.53, or, in the alternative partial indemnity costs in the sum of $55,888.86. The plaintiffs submit that partial indemnity costs of $15,000 are appropriate.

[5] I am guided by r. 20.06 and r. 57.01 of the Rules of Civil Procedure and s. 131 of the Courts of Justice Act .

[6] I am unable to find that the plaintiffs launched the motion in bad faith for the purpose of delay. However, in my opinion, the plaintiffs, represented by experienced counsel, ought to have known that their motion stood virtually no chance of success because of the multiple genuine factual issues for trial raised by the voluminous material they filed.

[7] The defendants have satisfied me that it was unreasonable, within the meaning of r. 26.01(1), for the plaintiffs to have brought the motion. Accordingly, the defendants are entitled to substantial indemnity costs.

[8] The plaintiffs submit that the costs that are awarded should be fair and reasonable and in an amount that an unsuccessful party could reasonably expect to pay in relation to the motion for summary judgment. It is their position that the costs claimed are excessive and in excess of what is fair and reasonable and what the plaintiffs could reasonably expect to pay for the motion for summary judgment.

[9] The plaintiffs do not specify any areas of the draft bill of costs provided by the defendants that are objectionable other than the hourly rates. They simply submit that $15,000 plus H.S.T. would be appropriate. I am not at all certain that the plaintiffs would have taken the same position about the amount of costs had they won the motion. However, I am persuaded that the amount claimed by the defendants for substantial indemnity costs is somewhat excessive, given the hourly rates attributed to counsel. I find that the sum of $45,000, plus disbursements of $1,811.30 and H.S.T., is fair and reasonable in the circumstances and an amount that the losing party could reasonably expect to pay on this motion.

[10] The plaintiffs took the risk of launching and arguing the motion for summary judgment with full knowledge of the danger of losing and being ordered to pay costs. In my opinion, it should have been obvious, especially given the principles enunciated in Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764 , 2011 CarswellOnt 13515, that pursuing the motion was almost certain to fail and was unreasonable and that costs would be granted on a substantial indemnity basis.

[11] Much time and effort was expended on behalf of the defendants in responding to the motion. They did so in much the same detail as the plaintiffs did in pursuing summary judgment. Accordingly, I order costs on a substantial indemnity basis in favour of the defendants payable by the plaintiffs in the sum of $45,000, plus disbursement of $1,811.30 and H.S.T.

[12] Further, I reject the plaintiffs’ submission that only the franchisee, 1352164 Ontario Limited, should be responsible for costs. The motion was brought by the three named plaintiffs and they thus exposed themselves to an order for costs against them. I am not persuaded that there is any valid reason to exempt the other two defendants from the order.

Mr. Justice D. R. McDermid

Released: August 22, 2012.