SUPERIOR COURT OF JUSTICE - ONTARIO

RE: V. Vinokur Foundation in Support of Culture and Arts

v.

Mark Lathem, Litigation Administrator for the Estate of Oleg Fraev, Vladislav Moskalev and Snowview Bancorp Inc.

BEFORE: MASTER R.A. MUIR

COUNSEL:
Krista Chaytor and Rachel Goldenberg for the plaintiff
David Taub and Barbara Green for the defendant Snowview Bancorp Inc.
Andrea Sanche and Dana Lue, student at law, for the defendant Vladislav Moskalev

REASONS FOR DECISION - COSTS

[1] On January 30, 2013 I heard three motions in connection with this action. The defendants Snowview Bancorp Inc. (“Snowview”) and Vladislav Moskalev (“Moskalev”) both brought motions for an order requiring the plaintiff to post security for costs pursuant to Rule 56.01(1)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”).

[2] Snowview brought a further motion for confidentiality and sealing orders in respect of a certain document listing the names of various individuals who Snowview alleges were investors in the mortgage that forms part of the subject matter of this action. That motion was resolved on an unopposed basis (except for costs). The two motions for security for costs were fully argued.

[3] On January 31, 2013 I released my reasons for decision in respect of the security for costs motions. I ordered that the plaintiff post security in the amount of $35,000.00 for the costs of Snowview and $100,000.00 for Moskalev’s costs. I also requested that the parties attempt to resolve the issue of the costs of the security for costs motions. It appears that the parties have been unable to do so as I have now received the parties’ written costs submissions.

[4] Snowview seeks its costs in the amount of $8,359.73 on a partial indemnity basis. Moskalev seeks $9,422.68 on a substantial indemnity basis and $7,809.68 on a partial indemnity basis. The plaintiff argues that there should be no order for costs. Alternatively, the plaintiff takes the position that the costs requested by the moving parties are excessive for a motion of this nature.

[5] The court’s general authority to award costs as between parties to litigation is found in section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43. Rule 57.01(1) sets out a non-exhaustive list of factors the court is to consider when awarding costs. Rule 1.04(1.1) is also applicable. It requires the court in applying the Rules of Civil Procedure to make orders that are proportionate to the importance and complexity of the issues and to the amount involved in the proceeding. In general terms, the overall objective for the court is to fix an amount that is fair and reasonable for the unsuccessful party who generally must pay the costs of the successful party. See Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. No. 4495 (C.A.) at paragraph 4. In Clarington (Municipality) v. Blue Circle Canada Inc., 2009 ONCA 722 the Court of Appeal stated as follows at paragraph 52:

Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.

[6] I have reviewed the costs outlines and submissions of the parties. I do not view the partial indemnity costs being requested by Snowview and Moskalev as excessive for motions of this nature. These motion were not particularly complex but the issues were very important to the moving parties. The plaintiff is a non-resident. It has no assets in Canada. At the very least, the moving defendants wanted some element of security for the costs they were going to incur in connection with their motions to discharge a certificate of pending litigation the plaintiff obtained on a without notice basis. Those motions are scheduled for May 2, 2013. Given the tight timetable it was necessary that these motions be argued on an expedited basis which probably resulted in certain inefficiencies. I also note that the plaintiff sought costs in the approximate amount of $11,000.00 for the confidentiality motion ($5,000.00 was awarded to the plaintiff). The costs being requested by the moving parties on the security for costs motions should therefore come as no surprise to the plaintiff. The confidentiality motion involved a similar level of complexity and importance but it was never actually argued. The security for costs motions were fully argued before me on January 30, 2013.

[7] However, the moving parties have not been entirely successful. At the hearing of the motion, Snowview asked for security in the amount of $69,000.00 (after initially asking for $106,000.00 in its notice of motion). I awarded $35,000.00. Moskalev sought more than $130,000.00. He was provided with $100,000.00 in security. A reduction should be made for this lack of complete success.

[8] As well, it is my view that a further reduction should be made to the costs Snowview is seeking. Snowview did not deliver its statement of defence until January 28, 2013 (two days before its motion was argued). Rule 56.03(1) provides that a motion for security for costs can only be brought after a defendant has delivered its statement of defence. The plaintiff initially objected to Snowview’s motion on this basis. The objection became moot after the defence was delivered but the plaintiff had to deal with the issue nevertheless.

[9] The plaintiff also argues that Snowview’s costs should be reduced to account for unnecessary costs incurred by the plaintiff due to Snowview’s change in position on the confidentiality motion. I do not accept this argument. The costs of the confidentiality motion were fully dealt with by my costs order in favour of the plaintiff which I made as part of my January 31, 2013 order.

[10] The plaintiff also suggests that I should take into account offers to settle the motions the plaintiff made prior to the hearing. The plaintiff offered to post $20,000.00 in security for each moving defendant. However, the results the moving defendants achieved on the motions were substantially more favourable than the plaintiff’s offers.

[11] Finally, I am not prepared to award substantial indemnity costs as requested by Moskalev. Except as provided for by Rule 49, elevated costs orders should only be made on a clear finding of reprehensible conduct on the part of the party against whom the costs award is being made. See Clarington (Municipality) at paragraph 40. I see no evidence of the kind of conduct on the part of the plaintiff that would attract an elevated costs award.

[12] For these reasons, I have concluded that it is fair and reasonable that the plaintiff pay Snowview’s costs in the amount of $5,000.00 and Moskalev’s costs in the amount of $6,000.00. Both of these amounts are inclusive of HST and disbursements and shall be paid within 30 days.

February 15, 2013

Master R.A. Muir