SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: Matvei Weig, Applicant

AND:

Roman Weig, Leib Broner, Lev Spitzin, Benjamin Finkelstein, 2014210 Ontario Ltd. c.o.b. Deluxe International Group, 2014052 Ontario Ltd. c.o.b. Deluxe Windows of Canada, 2014213 Ontario Ltd. c.o.b. Oakwood Fine Products, 1275330 Ontario Ltd., 973590 Ontario Ltd., Cleidons Deluxe Doors Inc., Cleidons Deluxe Windows Inc., Deluxe Developments International Inc., Deluxe Window Industries Inc., Deluxe Windows International Inc., Riz Management Inc., Royal Deluxe Profiles Limited, 1321867 Ontario Ltd., Northview Windows & Doors Inc., Evrica Enterprises Inc., Pride Windows and Doors Inc., 976017 Ontario Ltd., Floating Residence Inc., Oakwood Architectural Lumber Inc., Shrimp Deluxe Ltd., Vildrom Construction Ltd., Vimach Delux Arches Inc., Riga-22 Weg, LLC, MTI Ltd., California Deluxe Windows Industries, Inc., Wrought Iron Art Ltd., Royal Deluxe Windows International, Inc. (U.S.), Stone Mason and Architectural Carvers Creators Ltd., Roman W. Marketing and 1273268 Ontario Ltd., Respondents

AND BETWEEN:

Sofia Weig and Faina Prupes, Applicants

AND:

Matvei Weig, Roman Weig, Leib Broner, Lev Spitzin, Benjamin Finkelstein, 2014210 Ontario Ltd. c.o.b. Deluxe International Group, 2014052 Ontario Ltd. c.o.b. Deluxe Windows of Canada, 2014213 Ontario Ltd. c.o.b. Oakwood Fine Products, 1275330 Ontario Ltd., 973590 Ontario Ltd., Cleidons Deluxe Doors Inc., Cleidons Deluxe Windows Inc., Deluxe Developments International Inc., Deluxe Window Industries Inc., Deluxe Windows International Inc., Riz Management Inc., Royal Deluxe Profiles Limited, 1321867 Ontario Ltd., Northview Windows & Doors Inc., Evrica Enterprises Inc., Pride Windows and Doors Inc., 976017 Ontario Ltd., Floating Residence Inc., Oakwood Architectural Lumber Inc., Shrimp Deluxe Ltd., Vildrom Construction Ltd., Vimach Delux Arches Inc., Riga-22 Weg, LLC, MTI Ltd., California Deluxe Windows Industries, Inc., Wrought Iron Art Ltd., Royal Deluxe Windows International, Inc. (U.S.), Stone Mason and Architectural Carvers Creators Ltd., Roman W. Marketing and 1273268 Ontario Ltd., Respondents

BEFORE: D. M. Brown J.

COUNSEL:
S. Rosen, for Matvei Weig

B. Salsberg, for the Respondents

M. Wise, for Avital Weig and Frances Weig

S. Zeitz and I. Klaiman, for Sofia Weig and Faina Prupes

HEARD: October 2 and 5, 2012; subsequent written cost submissions.

REASONS FOR DECISION - costs

I. Positions of the parties

[1] By Reasons dated December 21, 2012 (2012 ONSC 7262) I appointed, on the application of Matvei Weig, a judgment creditor of Roman Weig, Schwartz Levitsky Feldman Inc. as receiver, without security, of all of the assets, undertaking and properties of Roman Weig to act as a receiver in aid of execution.

[2] The parties have filed their cost submissions. Matvei Weig seeks full indemnity costs in the amount of $94,224.72 payable jointly by Roman and Sofia Weig or, alternatively, partial indemnity costs of $68,335.29 payable by both.

[3] Roman Weig submitted at this point of time “there ought not to be any costs sanction imposed but rather costs ought to follow the event and be payable on a partial indemnity basis”. Roman contended that an appropriate costs award would be $26,555.00, calculated using 96 hours in allowable time.

[4] Sofia opposed any award of costs against her on the basis that she was not a party to Matvei’s receivership application and she did not oppose it. Sofia sought her costs of making cost submissions.

II. Against whom a costs order should be made

[5] Matvei sought a receiver of Roman’s assets. Sofia did not oppose the appointment. However, she argued that she enjoyed a prior secured interest in some of Roman’s assets. I have directed the Receiver to report on that issue. In those circumstances, I see no basis for making a costs order against Sofia in respect of the order granting the appointment of a receiver in aid of execution. Costs relating to Sofia’s position regarding her security will be determined later in this proceeding.

III. Scale of the costs order against Roman Weig

[6] In Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.) the Court of Appeal held that, absent Rule 49 considerations, an award of elevated – i.e. substantial or full indemnity – costs only can be made where the court has made a clear finding of reprehensible conduct or egregious behaviour on the part of the party against which the award is made.

[7] Roman submitted that he engaged in no such conduct. Roman also submitted that he did not strenuously oppose the appointment of the Receiver. I do not accept that submission; Roman strongly opposed the appointment motion.

[8] In my December Reasons I made the following findings regarding Roman’s conduct in respect of Matvei’s attempts to enforce

(i) Roman has no intention of voluntarily paying the Judgment, a judgment which resulted from a settlement to which he agreed (Reasons, para. 115) ;

(ii) Not only will Roman not pay the Judgment, the evidence disclosed that he has worked to obstruct the enforcement of the Judgment (Para. 116);

(iii) Roman does not want his brother to gain a clear understanding of his financial affairs, and Roman has withheld material information which renders resorting to traditional enforcement mechanisms very difficult and ineffective (Para. 116);

(iv) Roman has enlisted his wife, Sofia, in his efforts to obstruct the enforcement process (Para. 117);

(v) Roman also secured the co-operation of his fellow shareholders in obstructing Matvei’s efforts to enforce the Judgment (Para. 118);

(vi) The Default Judgment was based on some demonstrably false allegations and was the product of improper collusion between Sofia and Roman (Para. 125);

(vii) Roman has ignored the limitations the law places on his ability, as purported trustee, to deal with the Cottage and has treated the Cottage as his own property to his own advantage, while at the same time taking the position that the property is not available for execution by his creditors (Para. 119); and,

(viii) Roman has used a complex of corporations as debt avoidance vehicles – nominally providing his services for free to the corporations, but arranging for a stream of payments by the corporations to look after on-going family expenses (Para. 122).

[9] Taken together, such conduct amounts to reprehensible conduct designed to prevent the enforcement of a judgment of this court and, as such, merits an award of substantial indemnity costs against Roman.

IV. Quantum of the costs

[10] In fixing the costs of a motion, a court must consider the principles set forth by the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario 2004 14579 (ON CA), (2004), 71 O.R. (3rd) 291 (C.A.) and Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.), specifically that the overall objective of fixing costs is to fix an amount that is fair and reasonable for an unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant. Further, a court must take into the factors enumerated under Rule 57, including the time spent, the result achieved, and the complexity of the matter, as well as the application of the principle of proportionality: Rule 1.04(1).

[11] I accept the submission of Roman that some of the legal time claimed by Matvei concerned issues which I deferred pending the report of the Receiver – see Reasons, para. 126. Based on my review of the cost submissions of Matvei and Roman, I conclude that an appropriate allocation of legal time to the issues raised and decided on the motion would be 100 hours. I consider Mr. Rosen’s full indemnity hourly rate of $425.00 (1994) to be reasonable, and I would reduce it to $400.00 per hour on a substantial indemnity basis. That results in allowable fees of $40,000.00. H.S.T. in the amount of $5,200.00, and disbursements of $7,926.62, for total allowable costs of $53,126.62.

[12] Accordingly, I order Roman Weig to pay Matvei Weig costs of $53,126.62 within 30 days of the date of this order.

[13] Sofia sought costs against Matvei in the amount of $1,186.50 on the basis that since Matvei had not sought costs against her in his Notice of Motion, but did so following the release of my December Reasons, she had been put to an unnecessary expense. In light of the findings of collusion which I made regarding the conduct of Roman and Sofia, it is a bit brazen for her to be seeking costs on this motion. I reject her request.

D. M. Brown J.

Date: March 13, 2013