COURT FILE AND PARTIES

COURT FILE NO.: 07-34937
DATE: 2012/09/27
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Lakemount Sportsworld Inc., Angelo Angelopoulos, and Ed D’Andrea Plaintiffs

AND:

Ernest Cicchi, Defendant

AND:

Paul X. Dixon and Keesmaat Dixon Kranjc Lewis & Kovacs barristers and solicitors, Third Parties

BEFORE: The Honourable Mr. Justice Reid

COUNSEL: L. Frapporti and P. Kennedy, Counsel, for the Plaintiffs

J. Scarfone, Counsel, for the Defendant

HEARD: November 17, 2011

COSTS ENDORSEMENT and supplementary reasons re: interest

[ 1 ] The plaintiffs in this action sought an order enforcing terms of the settlement of the lawsuit based on a verbal deal that was made between the personal plaintiffs and the defendant on June 6, 2011. The defendant requested the same relief, but based on a different understanding of the settlement terms.

[ 2 ] The parties had been involved in at least five separate court actions against one another. The personal plaintiffs were the majority shareholders of Lakemount. The defendant and the estate of his late father were the minority shareholders.

[ 3 ] The settlement was to the effect that the plaintiffs would purchase the Lakemount shares of the defendant for $625,000, transfer their shares in another corporation to him or as he may direct; and that no costs were to be paid. The transaction was to have closed on July 15, 2011.

[ 4 ] By decision dated January 23, 2012, summary judgment was granted to the defendants. I am advised that the payment of $625,000 was made in April, 2012.

[ 5 ] I invited the parties to make submissions as to costs within five weeks of the date of my award if they were not able to agree on a resolution of that issue.

[ 6 ] No agreement on costs was reached and submissions were received from the successful defendant dated July 24, 2012. Counsel for the plaintiff requested an extension of time to file responding costs submissions owing to urgent personal circumstances and his submissions were received dated September 24, 2012.

[ 7 ] It is conceded that costs should be awarded to the successful defendant.

[ 8 ] The parties have requested that I make an award as to pre- and postjudgment interest on the amount of the settlement, and they have both made submissions in that regard. They agree that prejudgment interest should run from the date of the anticipated closing of the sale transaction, being July 15, 2011, to January 23, 2012 and that postjudgment interest should run thereafter to the date of payment.

[ 9 ] The issues are:

• What is the appropriate scale of costs?

• In addition to costs incurred by counsel for the defendant, should the defendant receive costs for work performed by himself as a lawyer, and by a member of his firm?

• Should the defendant be compensated for fees paid to tax experts?

• What is the appropriate rate of pre- and postjudgment interest?

• Should there be any consequences for failing to abide by the court-ordered timetable for costs submissions?

[ 10 ] The defendant seeks costs on a substantial indemnity basis and the plaintiff responds that partial indemnity is the appropriate scale. There were no rule 49 offers and in my view no conduct which was sufficiently reprehensible to justify the awarding of costs on a substantial indemnity basis. As a result, there will be a costs award in favour of the defendant on a partial indemnity basis.

[ 11 ] In making his submissions, the defendant provided a separate Bill of Costs for counsel of record and for himself personally. As noted, the defendant is a lawyer.

[ 12 ] The plaintiffs agree that the costs claimed on behalf of counsel for the defendant are reasonable, in the amount of $10,095.52 inclusive of HST and disbursements.

[ 13 ] It appears from the Bill of Costs relating to the defendant personally that he performed over 33 hours of work relating to the summary judgment motion. Another lawyer in his firm contributed a further 10.4 hours. The plaintiff objects to those claims on the basis that a lawyer/litigant is not entitled to costs in addition to those incurred by his counsel of record. It is acknowledged that there are special rules for compensating a self- represented party as well as for compensating a litigant who is a barrister and represents himself, as distinct from the normal cost consequences for represented litigants. However, there is no support in the case law for the creation of a fourth category which is that of a litigant who is represented by counsel but is entitled to personal compensation because he is a lawyer. As indicated by this court in MacRae v. Simpson , [2003] O.J. No. 407, at par. 13 , the creation of such a category

“would bring in a whole new aspect of costs in litigation since, if the same rationale is applied, there is no reason why a self-employed doctor, businessperson etc. should then not be compensated for the time that they would spend in their lawyer’s office either in having office attendances, making notes for the lawyer or preparing for trial.”

There will be no costs order as regards the claim by the defendant for work done by him personally.

[ 14 ] As to the work performed by another lawyer in the defendant’s law firm in support of the motion, it seems to me that recovery of those costs should not be prohibited in the same way. Presumably, that lawyer was doing legal work that would have been chargeable if the work was performed on other files and for other clients. However, the plaintiff raises an additional concern about duplication and the Bill of Costs provided by the defendant does not make it clear that the time docketed by his firm’s lawyer involved work that was separate and distinct from that charged by the counsel of record. Since the duplication does not appear to be complete, I am prepared to allow 5.2 hours at the partial indemnity rate of $262.50 per hour for a total of $1,543.00 inclusive of HST.

[ 15 ] The disbursement claim by the defendant includes the sum of $1,733.42 for a lawyer who provided tax advice in relation to the dispute. The details of his advice formed part of the submissions made by the defendant in support of the motion. In addition there was a disbursement of $1,130.00 for advice from an accountant. That accountant’s affidavit was not permitted to be referred to in the motion. I allow the first amount as a legitimate disbursement and disallow the second amount.

[ 16 ] As to the late filing, counsel for the defendant indicated that internal office staffing issues together with other obligations prevented him from giving appropriate attention to the timely preparation of the costs submissions. This is despite the fact that, according to counsel for the plaintiffs, several requests for the submissions were made by the plaintiffs. The defendant responds that there was no prejudice to the plaintiffs arising from the late filing.

[ 17 ] Is not uncommon that circumstances arise which prevent compliance with timelines in litigation, including timelines that are the subject of a court order. However, in such situations, it is appropriate and also not uncommon for the counsel to seek the consent of the opposing party to an extension and to request an extension of time from the court. In this case, those efforts were not made.

[ 18 ] In Re: Spengen Estate, (2006) 2006 ON SC 2780 , 80 O.R. (3d) 317, Flynn J. of this court ordered costs submissions to be of a prescribed nature and length. One of the parties did not follow the order and filed an affidavit and more lengthy material than was mandated. The judge commented that a court order or direction as to costs must never be taken as a mere suggestion. In that case, he ordered that a portion of the costs be paid personally by counsel and the estate trustee, without recourse to estate assets.

[ 19 ] In this case, I consider it appropriate for the defendant to receive no compensation for preparation of the cost submissions and as a result, the costs claimed will be reduced by $364.50 plus HST for a total of $411.88.

[ 20 ] Therefore, in summary, the plaintiff will pay to the defendant on account of partial indemnity costs the following:

a. $10,095.52 less $411.88 = $9,683.64

b. $1,543.00

c. $1,733.42

for a total of $12,960.06 inclusive of HST and disbursements.

[ 21 ] As to pre- and postjudgment interest, the defendant submits that I should exercise my discretion pursuant to section 130(1) (b) of the Courts of Justice Act , R.S.O. 1990, c. C.43 and allow interest at a rate higher than that provided in section 128 and 129 of the Act.

[ 22 ] It is well-established that the award of interest should be neither a reward nor a penalty but rather a recognition of the value of money wrongly withheld by the unsuccessful party. In this case, I see no reason to depart from the normal practice in allowing the court rate for pre- and postjudgment interest, and therefore there will be an order for prejudgment interest on the unpaid balance of the settlement proceeds from July 15, 2011 to January 23, 2012 at 1.3% per annum and thereafter to the date of payment at 3% per annum.

Reid J.

Date: September 27, 2012