COURT FILE AND PARTIES
COURT FILE NO.: FS – 10 – 16565
DATE: 20130326
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Rose Mayerovitch and Rushard Enterprises Limited
Plaintiffs
– and –
Richard Breslin, Neutron Telecommunications Inc., Corporate Identity Marketing Inc., 1292710 Ontario Limited, and Swift Oceanics Canada Limited
Defendants
Arie Gaertner and Howard J. Feldman, counsel for the Plaintiffs
Howard E. Warren, counsel for the Defendants
Jang Sung Lee in Trust and 7347481 Canada Inc.
Intervenors
David Rubin, for the Intervenors
KITELEY J.
REASONS FOR DECISION AS TO COSTS
[1] Following a trial, I released reasons for decision[^1] in which I granted judgment in favour of the Plaintiffs, dismissed the motion brought by Mr. Breslin, and directed counsel to make submissions as to costs.
[2] In their original submissions, counsel for the Plaintiffs asked for fees on a full recovery basis in the amount of $281,780 (together with HST of $36,631.40) or alternatively on a substantial indemnity basis in the amount of $225,440. Counsel provided the partial indemnity calculation for comparison only, which totaled $187,508. Disbursements including HST totaled $12,137.20 for a grand total on a full recovery basis of $330,548.60.
[3] In his original submissions, counsel for the Intervenors asked for fees on a full recovery basis in the amount of $98,180 together with HST in the amount of $12,763.40. Mr. Rubin also provided comparisons at substantial indemnity in the amount of $88,362 (plus HST of $11,487.06) and at partial indemnity in the amount of $58,908 (plus HST of $7,658.04). The disbursements including HST totaled $2,101.68 for a grand total on a full indemnity basis of $113,045.08.
[4] In their submissions, counsel for the Plaintiffs and the Intervenors relied on rule 24(1) of the Family Law Rules and rule 57.01(1)(e),(f) and (i) of the Rules of Civil Procedure as well as s. 131 of the Courts of Justice Act. I need not consider the relationship between the Family Law Rules and the Rules of Civil Procedure because I am satisfied that the decision as to costs rests essentially in the family law domain. Both counsel took the position that the Defendants had acted in bad faith or unreasonably and had made unfounded allegations of fraud or conspiracy.
[5] In his submissions, Mr. Warren conceded that as the successful parties, the Plaintiffs and Interveners are entitled to their costs of the trial, but he took issue with the amount claimed. Mr. Warren objected to the inclusion of two counsel in the costs outline and insisted that costs ought to be awarded throughout for only one counsel. Mr. Warren challenged the submissions particularly on the allegation of bad faith but did not suggest an amount that would be appropriate for the costs of the Plaintiffs and the Intervenors. He did point out that they collectively claimed over $440,000 while the equity in the property that was the focus of the dispute was only about one-quarter of a million dollars. On the principle of proportionality, he took the position that costs that reflects a doubling of the equity in the property ought not to be awarded. Mr. Warren used his submissions as an opportunity to challenge some of the findings made in the reasons for decision.
[6] In reply costs submissions, counsel for the Plaintiffs agreed to reduce the fee request in the amount of $7,500 on account of conferences for which costs were not reserved and in the amount of $1,190 to reflect work done by both lawyers where only one lawyer was appropriate. The total reduction is $8,690 plus HST on that amount or $1,129.70 for a total of $9,819.70.
[7] In his reply costs submissions, Mr. Rubin did not concede any adjustment.
Entitlement to costs
[8] According to rule 24(1) of the Family Law Rules, there is a presumption that a successful party is entitled to the costs of a case. Accordingly, Mr. Warren appropriately conceded that both the Plaintiffs and the Intervenors were entitled to costs on the basis of success.
Scale of recovery of fees and disbursements
[9] In determining the level of recovery, the court has a wide discretion. Rule 24(8) provides that if a party has acted in bad faith, then the court shall decide costs on a full recovery basis and shall order the party to pay them immediately. Furthermore, in setting the amount of costs, rule 24(11) requires the court to consider the unreasonableness of each party’s behavior in the case.
[10] In Ontario (Family Responsibility Office) v. Grant[^2] Blishen J. found bad faith and ordered full recovery costs. At paragraphs 6 and 7, she held as follows:
Rule 24(8) indicates that if a party has acted in bad faith, the court shall decide costs on a full recovery basis, payable immediately. As I noted in Leonardo v. Leonardo [citation omitted], conduct that is intended to deceive or mislead can establish bad faith. In Hendry v. Martins [citation omitted], Justice Campbell relies on Black’s Law Dictionary, [citation omitted] in stating:
Bad faith is not simply bad judgment or negligence but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. . . it contemplates a state of mind affirmatively operating with furtive design or ill will.
Bad faith can also be established by the intentional failure to fulfill an agreement in order to achieve an ulterior motive or, an intentional breach of a court order with a view to achieving another purpose. See Erickson v. Erickson [citation omitted] and Hunt v. Hunt [citation omitted]. Further in Van Westerop v. Van Westerop [citation omitted] the court held that noncompliance with an order, combined with failure to take available legal steps to stay that order, was sufficient to attract an award of full recovery costs. It is also sufficient to support a finding of bad faith within the scope of the Family Law Rules 24(8). See Hunt
[11] I do not intend to review the many grounds on which counsel for the Plaintiffs and the Intervenors argue that the Defendants acted unreasonably or in bad faith. Suffice it to say that Mr. Breslin acted in bad faith (and therefor unreasonably) for many reasons detailed in the earlier reasons for decision including the following: signing a Memorandum of Understanding and then refusing to comply with it; taking advantage of and acting pursuant to the MOU when it was to his advantage; alleging fraud against Ms. Mayerovitch without foundation; alleging conspiracy against the Intervenor without foundation; misleading the court in his initial Mareva injunction motion. There is no question that substantial indemnity costs should be ordered to bring home to Mr. Breslin the serious consequences of his conduct.
Allowance for Two Counsel for the Plaintiffs
[12] After Mr. Breslin launched his motion to remove Mr. Feldman as counsel for the Plaintiffs, it was reasonable for the Plaintiffs to have engaged Mr. Gaertner. His involvement was a direct result of the action taken by Mr. Breslin. Even after Goodman J. dismissed that motion in brief reasons, Mr. Breslin persisted and a summons to witness was served on Mr. Feldman. It was only on the second day of the hearing that Mr. Warren advised that he would not be calling Mr. Feldman. By that point, Mr. Gaertner was prepared for and had begun the trial. Mr. Breslin’s conduct was sufficiently unpredictable that it was reasonable for both counsel to remain for the duration of the short trial.
Conclusion on fees
[13] Mr. Warren did not provide any information or documents to indicate the amount of his account to the Defendants. Accordingly, I am not in a position to compare the services rendered or the hourly rates. This was a relatively complex matter that involved several significant legal issues. The substantial effort made by senior counsel in preparation and during the hearing was reflected in the success achieved. The trial itself reflected a degree of stress and professionalism that is not often seen in that, for reasons outlined in the reasons for decision, time limits were imposed. A great deal had to be accomplished. Considerable advocacy skills were required.
[14] Mr. Warren pointed out that the motion brought on behalf of the Plaintiffs for an order for security for costs was dismissed and for that reason the Plaintiffs ought not to recover costs associated with the failed motion. The court has the discretion to award costs to an unsuccessful party. It was reasonable for the Plaintiffs to have brought that motion. That motion was heard at the same time as the motion brought on behalf of the Defendants to have Mr. Feldman removed as counsel on which the Plaintiffs were resoundingly successful. It is not necessary to separate the services rendered on that occasion between those related to the successful outcome and those related to the unsuccessful outcome. Mr. Warren has not disclosed the costs his clients incurred on that specific motion and hence I have no comparison. In the overall context of this case, it would not be just to deny the Plaintiffs their costs of that motion.
[15] Mr. Warren did raise the issue of proportionality. I agree that it is relevant. However, it is not accurate to focus only on the equity in the building. There were other assets resolved in the MOU which would have been impacted had the MOU not been found to be a final and binding agreement.
[16] As to reasonable expectations of the parties, I agree with counsel for the Plaintiffs and the Intervenors that Mr. Breslin was by all accounts a sophisticated litigant. He had no compunctions about obtaining a Mareva injunction without full disclosure for the purpose of leveraging Ms. Mayerovitch into settling on his terms. He acknowledged lying under oath in two judgment debtor examinations to advance his agenda. By his own evidence, he was well versed in how to pursue legal actions and it was for that reason that both Justice Eberhard and I gave him leave to act on behalf of the Defendant corporations. He had to expect that substantial costs would be a consequence of his actions against both Ms. Mayerovitch and the Intervenor. Neither Ms. Mayerovitch nor the Intervenor should be expected to absorb any part of the costs associated with the legal services each incurred.
[17] There are no offers to settle that are relevant.
[18] Mr. Warren did not respond on the issue as to whether costs should be ordered jointly and severally against all Defendants. The action was against all the Defendants while only Mr. Breslin pursued his motion to set aside the orders. All the evidence was heard and submissions made on both claims. Under those circumstances, it is reasonable that all Defendants should be jointly and severally liable.
Disbursements
[19] Since there is no challenge to any of the disbursements, the total amounts claimed are allowed.
ORDER TO GO AS FOLLOWS:
[20] The Defendants shall jointly and severally pay to the Plaintiffs the sum of $320,728.90 being the amount claimed of $330,548.60 less the adjustment of $9,819.70.
[21] The Defendants shall jointly and severally pay to the Intervenors the amount claimed, namely $113,045.08.
[22] The Defendants shall make the payments referred to above immediately.
Kiteley J.
Released: March 26, 2013
COURT FILE NO.: FS – 10 – 16565
DATE: 20130326
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Rose Mayerovitch and Rushard Enterprises Limited
Plaintiffs
– and –
Richard Breslin, Neutron Telecommunications Inc., Corporate Identity Marketing Inc., 1292710 Ontario Limited, and Swift Oceanics Canada Limited
Defendants
Jang Sung Lee in Trust and 7347481 Canada Inc.
Intervenors
REASONS FOR DECISION AS TO COSTS
Kiteley J.
Released: March 26, 2013
[^1]: Mayerovitch v. Breslin, 2012 ONSC 5192
[^2]: 2003 64323 (ON SC)