SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 06-CV-306081
ENDORSEMENT RELEASED: August 30, 2012

RE: STEVE MOORE, JACK MOORE and ANNA MOORE v. TODD BERTUZZI, ORCA BAY HOCKEY LIMITED PARTNERSHIP and ORCA BAY HOCKEY, INC. dba THE VANCOUVER CANUCKS HOCKEY CLUB

BEFORE: Master R. Dash

COUNSEL:
Timothy Danson, for the plaintiffs

Geoffrey Adair, for the defendant Bertuzzi

Alan D’Silva and Ellen Snow, for the Orca Bay defendants

COSTS ENDORSEMENT

[ 1 ] This endorsement deals with the costs of a motion heard on June 11, 2012 to set aside or vary an order made by me on January 4, 2012 to compel two neuropsychological examinations of the plaintiff Steve Moore, one on behalf of the defendant Bertuzzi and one on behalf of the Orca Bay defendants. When the order permitting each defendant to conduct a defence neuropsychological examination was made on January 4 th the court and the plaintiffs were under the misapprehension that the defendants remained adverse in interest. Three weeks later it was revealed that four months earlier the defendants had signed a settlement agreement in which they agreed to end their respective crossclaims against each other and proportionally share any damages awarded in agreed percentages, thus ending their adversity on liability. On June 28, 2012 I released my reasons on the motion and ordered that my January 4 th order be varied such that only one neuropsychological assessment was permitted.

[ 2 ] The order was varied on either of two grounds. Firstly under rule 59.06 I considered the subsequently discovered fact (the ending of adversity) and determined that the order that would have been made on January 4 th had I known the correct state of the defendants’ adversity was a single neuropsychological examination on behalf of one or both defendants. Secondly the elimination of one of the neuropsychological assessments was an appropriate “consequence of the most serious nature” as stated by the court of appeal in Aecon v. Brampton arising out of the breach by the defendants of their obligation to immediately disclose the settlement agreement. [1]

[ 3 ] I also found that the neuropsychologists did not conduct the examinations strictly in accordance with the terms of my January 4 th order, but I did not impose further consequences to the defendants as a result.

[ 4 ] The plaintiffs had argued that the “consequence of the most serious nature” for the defendants’ breach of their duty to disclose the settlement agreement and for the breach of the terms of my order for the conduct of the examinations should be the setting aside of my entire January 4 th order such that both neuropsychological assessments would have been nullified. The defendant Bertuzzi had argued that the appropriate consequence for breach of their disclosure obligations was to award full indemnity costs of the motion but not to deny either neuropsychological assessment.

[ 5 ] When considering the costs of this motion I acknowledge that neither the plaintiffs nor the defendants obtained the relief they had sought. Nonetheless, the plaintiffs were successful in obtaining a variation of my order and the elimination of one of the examinations and in obtaining a finding that the examinations were not conducted in accordance with my order. The defendants were not only in breach of their duty to disclose the settlement agreement but their lawyers also contributed to the examinations being conducted contrary to the terms of my order by failing to send to the neuropsychologists the full terms of my order. Clearly the plaintiffs are entitled to their costs of the motion.

[ 6 ] I am further of the view that those costs should be on a full indemnity basis as part of the appropriate “consequences of the most serious nature” arising out of the breach by the defendants of their obligation to immediately disclose the settlement agreement as stated by the court of appeal in Aecon v. Brampton . Indeed Mr. Adair, the lawyer for the defendant Bertuzzi, had suggested on the motion that full indemnity costs was an appropriate consequence for the defendants’ failure to disclose, although clearly he was of the view that should be the sole consequence, a view with which I disagreed.

[ 7 ] I stated as follows in my endorsement of June 28, 2012:

66 I also disagree with Mr. Adair that the sole consequence should be the imposition on the defendants of the plaintiffs' full indemnity costs of this motion. That consequence fails to take into account that their non-disclosure, notwithstanding that it was made in good faith, resulted in the defendants getting more than they were entitled to on January 4th had the agreement been disclosed. Surely they cannot benefit by getting two examinations when the proper disposition of the motion made with full disclosure would have been one examination. That said, I do agree that the plaintiffs should have its full indemnity costs of the motion as "consequences of the most serious nature", but in addition to making the correct order as to the number of neuropsychologists. It may be that full indemnity costs are also in order for that part of the January 4th motion dealing with the neuropsychological examinations, but those costs have yet to be determined.

[ 8 ] I would add that notwithstanding that the defendants did not intend to mislead the court on January 4 th and that their failure to disclose arose from an honest but mistaken belief, the failure to disclose the true state of adversity on January 4 th resulted in a miscarriage of justice, in that, by failing to disclose their agreement, the defendants got an order to which they were not entitled. This was compounded when the defendants stated on January 4 th that the existence of an agreement was “mere speculation.”

[ 9 ] I wish to make clear that I have made no finding that the defendants’ conduct was “reprehensible, scandalous or outrageous”, the usual criterion for substantial indemnity costs [2] , particularly since the defendants did not intend to mislead, but I have concluded that the defendants’ failure to make immediate disclosure should attract elevated costs as a “consequence of the most serious nature” as stated by the court of appeal in Aecon v. Brampton .

[ 10 ] It is also my view that if the motion had failed and I had not varied my January 4 th order but rather had left both neuropsychological examinations intact, I would still have awarded costs of the motion to the plaintiffs and on a full indemnity basis as the “consequence of the most serious nature” as stated by the court of appeal in Aecon v. Brampton . This arises as a result of the defendants’ breach of their duty to immediately disclose the settlement agreement causing the court on January 4 th to determine the motion on the basis of a mistaken belief as to the defendants’ adversity. Indeed, Mr. Adair had suggested that my order not be varied but that the plaintiffs still be awarded their full indemnity costs of the motion.

[ 11 ] The plaintiffs have incurred significant costs on this motion. The motion was of great importance to the plaintiffs, given the serious consequences of the defendants’ breach of their disclosure obligations. The motion was equally important to the defendants who fought to resist any variation of my January 4 th order. I would add that the motion was also important to the court for reasons of what transpired on January 4 th when the court made a judicial determination based on incorrect assumptions as a result of the non-disclosure. As a result both sides expended considerable resources on the issue. Affidavits were submitted. There was extensive research by all parties and fulsome factums and books of authority were provided. The issues of the application of rule 59.06 and the determination of the appropriate consequences for breach of the obligation to disclose were of significant complexity. The defendants cross-examined both the plaintiff Steve Moore and the plaintiffs’ assisting lawyer, Stephen Reich, on their affidavits and the plaintiffs cross-examined Dr. McCrae (by videoconference). The lawyers had to become fully familiar with the factual matrix of this matter as well as the law.

[ 12 ] Costs however, even on a full indemnity basis, must be fair and reasonable. The fixing of costs, even on a full indemnity basis, is not simply an arithmetic exercise of multiplying hours by the respective hourly rates. Further the time spent by the plaintiffs’ lawyers must be directly related to the motion heard on June 11 th , and not to any other matters in this action happening during the same time period.

[ 13 ] The plaintiffs seek full indemnity costs of $22,500 for fees (reduced from actual time based fees of $33,220.00 inclusive of $29,705 for preparation, drafting, research and cross-examinations plus $3,515.00 counsel fee at the hearing), plus HST thereon of $2,925, disbursements of $1,442.32 and $130.34 HST on the taxable portion thereof for a total of $26,997.66 (which I round off to $27,000).

[ 14 ] The plaintiffs’ lawyers have significantly reduced their full indemnity costs claimed (by almost $11,000) for two reasons:

(a) It was difficult for them to accurately allocate preparation time as between this motion, the appeal heard by Justice Perell on May 14, 2012 and preparation for trial. The time set out in the lawyers’ dockets did not always clearly differentiate these items. Although the plaintiffs’ lawyers made a good faith and best efforts judgment call as to the amount of time spent in preparation for this motion, the arbitrary reduction suggested by the plaintiffs was designed to ensure that there was no overlap or incorrect allocations.

(b) Mr. Danson admits that his productivity and efficiency was impacted by a medical condition resulting from an accident and the defendants should not have to bear any incremental costs resulting therefrom.

[ 15 ] The question is whether the costs claimed of $27,000 are fair and reasonable on a full indemnity basis, proportional to the importance and complexity of the issues and within the reasonable contemplation of the defendants. As previously indicated, the issues were of great importance to all parties and were of significant complexity and all parties prepared factums and authorities. The Orca Bay defendants submit that the plaintiffs at most are entitled to substantial indemnity, not full indemnity costs, that the costs claimed by the plaintiffs are excessive and should be fixed in the sum of $12,000. Mr. Adair, on behalf of the defendant Bertuzzi, relies on the submissions made by Orca Bay and has made no further costs submissions. It must however be remembered that Mr. Adair conceded at the hearing of the motion that full indemnity costs were an appropriate consequence of the breach of the duty to disclose (albeit in his view the sole consequence). Neither the Orca Bay defendants nor the defendant Bertuzzi have provided me with a summary of the time they spent on this motion. The Orca Bay costs submissions were made after the plaintiffs made their costs submissions, but before the plaintiffs’ lawyers provided their dockets. Although given an opportunity to do so after the plaintiffs’ dockets were provided, neither Bertuzzi nor Orca Bay have made specific comments about the contents or quantum of those dockets.

[ 16 ] In my view costs of $27,000 on a full indemnity basis inclusive of disbursements and HST is fair and reasonable in all the circumstances, proportionate to the importance and complexity of the issues and should have been within the reasonable contemplation of the defendants.

[ 17 ] ORDER

[ 18 ] The defendants shall pay to the plaintiffs on a joint and several basis the costs of the motion heard on June 11, 2012 within 30 days fixed in the sum of $27,000.00

Master R. Dash

DATE: August 30 , 2012

[1] Aecon Buildings, a Division of Aecon Construction Group Inc. v. Brampton (City) , 2010 ONCA 898 , [2010] O.J. No. 5630 (C.A.) at para. 16 .

[2] Young v. Young , 1993 34 (SCC) , [1993] 4 S.C.R. 3, [1993] S.C.J. No. 112 (S.C.C.) at para. 251