ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-10-0406396/ CV-10-411851
DATE: 20130610

BETWEEN:

GEORGE FOULIDIS

Plaintiff

– and –

BRUCE BAKER

Defendant

AND BETWEEN:

GEORGE FOULIDIS

Plaintiff

– and –

ROBERT FORD

Defendant

Gary M. Caplan, for the Plaintiff George Foulidis

Gavin J. Tighe, for the Defendant Bruce Baker

Brian Shiller, for the Plaintiff George Foulidis

Gavin J. Tighe, for the Defendant Robert Ford

J. macdondald j.

reasons for decision

1The defendants Baker and Ford were sued for libel in separate actions by the same plaintiff. The defendants were represented by the same counsel. Both defendants were successful at trial and have presented a joint claim for costs against the plaintiff. The plaintiff does not object to the joint nature of the defendants’ costs claim.

The plaintiff’s position

2The plaintiff submits that no costs should be awarded to the defendants despite their success at trial. The plaintiff submits that both defendants used either the plaintiff or the Tuggs Inc. deal as a political “football” for their respective political campaigns, and thereby irresponsibly “used a private citizen and his business in an instrumental way for political purposes”.

3The court has jurisdiction to deny costs to successful libel defendants where the words in issue were abusive although not libellous and there is also reason for the court to express its disapproval of the defendant’s conduct. For example, as in the Baker case, where the words were libellous but protected by the defence of qualified privilege, costs have been denied: see Upton v. Better Business Bureau of the Mainland of British Columbia (1980) 1980 692 (BC SC), 23 B.C.L.R. 228 (S.C.); Wright v. McCallum (1941), 1941 255 (MB CA), 49 Man. R. 38 (C.A.). Costs have also been denied to a successful libel defendant where the non-libellous words were nonetheless improper and insulting: see Lever v. George 1950 97 (ON SC), [1950] O.R. 115 (H.C.); Williams v. Brown (1927) Man. L.R. 101 (K.B.).

4In support of this position, in the Baker action the plaintiff raises again the argument which I dismissed at trial that this defendant ought to have made inquiries into the assertions which he included in his letter to City Council. As the Reasons for Judgment state: “…on the evidence, I can see nothing which the defendant could have done to get to the bottom of these serious allegations in the time before the Tuggs lease would come before City Council for a vote.” In addition, I also made findings which are significant now, in deciding whether the defendant Baker’s libellous statements, rendered immune to suit by the defence of qualified privilege and also partially protected by the defence of fair comment, are of such a nature that they deserve disapproval expressed by means of a costs sanction. The defendant Baker, I held, “recognized the importance of verifying the accuracy” of the serious allegations he reported to Council. “That is why the thrust of his letter to the City was to call for a police investigation and an audit of what he knew to be mere allegations.” Further, I held, “(t)he defendant also did not knowingly or recklessly disregard the truth of what he stated in his letter. He was careful to refer to the content of the Malamas letter and to the Toronto Life election finance assertions as allegations. He did not hold them out as truth to be accepted. To the contrary, he called for investigation of them. He was neutral about their factuality and concerned to have it subjected to inquiry.” I also held that the defendant Baker was acting in the public interest in reporting these allegations to City Council. In my opinion, there is nothing in the defendant Baker’s actions which merits disapproval by means of a denial of costs.

5The defendant Ford used the word “corruption” in the statement for which he was sued. At trial, he explained that “corruption” meant not following the prescribed procedure. As I held at trial, the defendant Ford did not speak about the plaintiff when he spoke of corruption. Consequently, the use of such a serious word to describe procedural irregularities was, if viewed reasonably, neither abusive of the plaintiff nor offensive to him.

6In the statements for which they were sued, the defendant Baker spoke of the plaintiff and Tuggs Inc. and the defendant Ford spoke of Tuggs Inc. and its deal as part of their respective election campaigns. Consequently, the plaintiff is correct that the defendants each had a political purpose in speaking as they did. However, given both the importance of election campaigns in our democratic process and the findings at trial, there is no basis for saying that either defendant acted irresponsibly, abusively or offensively. Tuggs Inc.’s deal with the City, in which the plaintiff played some role, was a subject of significant municipal controversy and was thus an appropriate subject for each defendant to address in his municipal election campaign.

7The plaintiff also submits that the defendants’ contention that his lawsuits were politically motivated should be sanctioned by a complete denial of costs. I disagree. The defendants are entitled to be heard on the merits of their position, which I will address subsequently.

8The plaintiff has failed to establish a proper basis for a complete denial of costs to either defendant. The usual rule is that the costs follow the outcome and it should be applied here.

scale of costs

9The defendants seek full indemnification for all of their costs on a number of grounds, as follows.

Abuse of Process

10The defendants’ most significant submission in claiming full costs indemnification from the plaintiff is that his two libel actions were abuses of process. In the defendants’ submission, each action was a “strategic lawsuit against public participation” or “SLAPP” with a “high stakes, high profile political element”. The defendants assert that the plaintiff’s motive for suing the defendant Ford was that he was a Mayoral candidate and the frontrunner, and his motive for suing the defendant Baker was to stop his campaign for election as a municipal councillor because it was a challenge to the incumbent councillor.

11The defendants’ submission is that the plaintiff’s improper motive in each action may be inferred from the fact that he instituted each action during the municipal election campaign and, in addition, in the action against the defendant Ford, he sued for the extraordinary sum of $6 million damages and also held a press conference during the municipal election campaign.

12The plaintiff did institute both actions during the defendants’ municipal election campaigns. However, campaigning politicians are not immune to legal proceedings. Persons who believe that they have been wronged by a campaigning politician are entitled to seek legal redress during the election campaign.

13Lawsuits like these against campaigning politicians which are instituted during an election campaign and are based on campaign statements will have political repercussions. Nonetheless, those political repercussions do not necessarily mean that the lawsuits are politically motivated. That is because lawsuits in general cause collateral repercussions.

14In the Ford action, the plaintiff has sued for $6 million damages. There is no precedent in Ontario law for an award of libel damages anywhere close to that extraordinary figure. It is considered reasonable practice to claim a generous amount of damages in a Statement of Claim. Accepting that, the amount which the plaintiff claimed in the Ford action is so high that it leads me to infer that it was chosen to attract attention to the plaintiff’s litigation position, and in particular to his claim that the defendant Ford had libelled him.

15Resort to that tactic could infer either a very aggrieved plaintiff, a desire on the plaintiff’s part to attack the defendant, or a desire on the plaintiff’s part to stifle public discussion of the issues raised by the defendant Ford in his impugned statements. In my opinion, the defendant Ford has failed to establish that it is reasonable to infer from the extraordinary damages claim that the plaintiff’s motive was to stifle public discussion of the Tuggs Inc. issues which the defendant Ford had addressed.

16In addition, I am not persuaded that the plaintiff’s large damages claim had any effect upon the electoral process or upon public participation in it. That is because reasonable people recognize that Statements of Claim contain untested and unproven claims and allegations.

17The defendant Ford also submits that the plaintiff’s press conference, held soon after Mr. Ford’s impugned statements, demonstrates that the plaintiff’s lawsuit was not directed to the legitimate purpose of recovering damages and in turn, that supports the inference that its purpose was political. I think it is correct that the plaintiff’s press conference was not directed to the recovery of damages. In my view, it was directed to preventing or mitigating damages, for both Tuggs Inc. and the plaintiff. That was a legitimate objective, and that objective required a timely, public response to the defendant’s impugned statements. The response by means of a press conference was proportionate to the widespread dissemination in a newspaper of the defendant Ford’s impugned statements. Consequently, even though the plaintiff’s press conference was held during the defendant Ford’s municipal election campaign, I find that that does not support the assertion that the plaintiff’s motives were political, or an attempt to interfere with the political process.

18I do not doubt that, if a lawsuit is instituted for the sole or predominant purpose of its collateral impact, for example on the political process or on public participation in it, the lawsuit would be an abuse of process. But, on all the evidence, that is not what happened here. In my opinion, the defendants have failed to establish that either lawsuit was motivated by something other than the plaintiff’s belief that he had been libelled by each defendant, and by his desire to hold them accountable. The defendants have failed to establish that the electoral process was targeted or affected, let alone distorted by either lawsuit. I dismiss the allegation that these actions were abuses of process.

Adverse Credibility Findings Against the Plaintiff

19In seeking full indemnification for their costs, the defendants also rely on the fact that I made credibility findings against the plaintiff. The usual rule is that the unsuccessful party to a lawsuit pays partial indemnity costs to the successful party. The usual rule may be varied, in appropriate circumstances. Egregious misconduct during a trial by an unsuccessful party is one basis upon which the successful party may be awarded increased costs, as a form of sanction for the misconduct of the unsuccessful party. That is quite different, however, from what happened here. The most frequent reason for trials taking place is that there are contested issues of fact for the court to determine. The court is then called upon to determine the credibility, reliability and weight of the evidence presented, and thus to determine who and what it believes. One of the most common reasons why parties are unsuccessful at trial is that the court has not accepted their evidence. The usual rule, that the unsuccessful party pays partial indemnity costs to the successful party, would not be the usual rule if adverse credibility findings against the losing party were a proper basis for awarding costs increased above the partial indemnity scale. Something more is required to justify an increased scale of costs, whether as a fuller indemnity for the successful party or as a sanction to the unsuccessful party.

The Attack on the Defendant Ford’s Credibility

20The defendant Ford also seeks full indemnification for his costs because plaintiff’s counsel submitted in argument that Mr. Ford gave untrue testimony about certain meetings of City Council which took place “in camera”. It is, therefore, submitted that the plaintiff, through counsel, “outrageously” accused the “sitting Mayor of the City of Toronto and its Chief Magistrate of being a liar”, which justifies this defendant being fully indemnified by the plaintiff for the costs of his successful defence.

21As stated in the Reasons for Judgment, I did not find it necessary to make findings about Mr. Ford’s credibility, given the plaintiff’s failure to prove that the statements in issue were either about the plaintiff, or libellous. Nonetheless, the defendant Ford’s credibility and reliability as a witness were put in issue in this trial for the same reason that he put the plaintiff’s credibility and reliability in issue: there were disputed issues of fact to be resolved by the trial process. This is a common and necessary part of trial practice and for this reason, the submissions made by the plaintiff’s counsel in argument about the defendant Ford’s credibility as a witness were properly made. For the same reasons as previously, I say nothing about whether the submissions were accurate. I say only that the submissions were appropriate submissions in the context of the issues in this contested action.

One Plaintiff, Two Actions

22The plaintiff’s decision to institute two libel actions through two counsel was not unreasonable, in my opinion. That is because there were two different defendants who were sued for two different statements made at two different times. It was the plaintiff’s choice whether to institute one action or two, in these circumstances. If that decision unreasonably caused additional costs, that can be addressed in the determination of the amount of costs.

23The defendants have failed to establish that either of them is entitled to full indemnification for all of his costs. I award to the defendants their costs against the plaintiff on the partial indemnity scale.

the amount of costs

24The court has a broad discretion in respect of costs pursuant to section 131(1) of the Courts of Justice Act, R.S.O. 1990 ch. C.43 and Rule 57.01(1) of the Rules of Civil Procedure as amended, which state:

Costs

131(1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

Factors in Discretion

57.01(1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

(i) any other matter relevant to the question of costs.

25In Zesta Engineer Ltd. v. Cloutier (2002), 2002 25577 (ON CA), 21 C.C.E.L. (3d) 161 (Ont. C.A.), the court stated at paragraph 4:

“In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.”

26In Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.) the court stated at paragraph 26:

“Overall, as this court has stated, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.”

27The reasonable expectation of an unsuccessful party in respect of costs to be paid is also a relevant factor, pursuant to Rule 57.01(1)(0.b).

28Pursuant to Rule 57.01(1)(a), the defendant Ford submits that the amount claimed against him was $6 million damages, which necessitated an extraordinary amount of work in preparing his defence and which therefore justifies an extraordinary award of costs. I am satisfied that it must have been obvious to knowledgeable counsel from the outset that there is no precedent in Ontario law for an award of libel damages anywhere close to that extraordinary figure. In a sense, it is poetic justice that a plaintiff who sues for an excessive amount and fails at trial has to face costs consequences based on his own exaggerated position. However, I give little weight to this submission because the amount claimed was so plainly excessive and unreasonable, as a measure of what was in issue.

29I give the most weight, in fixing costs, to the importance of the issues and the complexity of the proceedings. Matters of public significance were in issue. Both defendants were campaigning for election and were sued for statements made as part of their election campaigns. In both cases, the defences of qualified privilege and fair comment were pleaded, raising important public interest issues. In addition, libel actions generally are more complex in their nature than most civil litigation, and these were no exception.

30The defendant Ford brought a motion in his action for an order striking out portions of the Statement of Claim and for other relief, and in the alternative, for an order that the action be tried together with the Baker action. This motion was resolved by a consent order which did not contain a costs award. That is the final disposition of the costs of this motion.

31The defendant Baker brought a motion for summary judgment. The motion was pending when the Court of Appeal released its decision in Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764. As a result, the parties consented to an order dismissing the motion with the costs thereof reserved to the trial judge. Both parties now seek the costs of this motion. With the benefit of hindsight, the motion had no reasonable prospect of success. However, at the time it was brought, there was uncertainty in the law relating to summary judgment motions. Given that uncertainty, I cannot say this motion lengthened this lawsuit unnecessarily, contrary to Rule 57.01(1)(e) or was a step which was improper, unnecessary or a mistake, contrary to Rule 57.01(1)(f)(i) or (ii). In my opinion, the proper disposition is to award no costs of this motion.

32In each case, the damages assessed in favour of the plaintiff were within the monetary jurisdiction of the Small Claims Court. Since the defendants were called upon to defend in this court, I am of the view that their costs should reflect that.

33The parties also joust over the need to move for and order for the trial of both actions together, which eventually was made on consent. There is no doubt that the plaintiff could have instituted one action against both defendants, but that was not required of the plaintiff. In my opinion, neither defendant was more burdened in this litigation by the existence of the other lawsuit, apart from the motion for trial together. However that motion was also finalized by a consent order in which no costs were awarded. That is the final disposition of this aspect of the costs.

34In general, I find the amounts sought by the defendants to be quite high, taking into account the reasonable expectation of the unsuccessful party and the need to see that costs awards are proportionate to the matters in issue, and to their significance. The defendants seek fees of $226,663. calculated on the partial indemnity scale, plus disbursements of $10,221.90, plus HST, for a total of $267,238.51. I do not doubt that the hours claimed were spent. Nonetheless, I am satisfied that a fair and reasonable costs award will not be achieved if all of those hours are taken into account, in determining what the unsuccessful party should pay on the partial indemnity scale. As Morden A.C.J.O. held in Murano v. Bank of Montreal (1998), 1998 5633 (ON CA), 41 O.R. (3d) 222 (C.A.) at p. 249, an overall sense of what is reasonable may be taken into account, in determining the award of costs.

35The hourly rates claimed on the partial indemnity scale are somewhat high, in my opinion. I allow to Mr. Tighe, who was lead counsel and who was called in 1993 an hourly rate of $345. I allow to Mr. Thiele who was associate counsel and who was called in 1992 an hourly rate of $185. Ms. Petersen acted as junior counsel following her call to the Bar in 2011. I allow her $110 per hour on the partial indemnity scale. Student’s time has been claimed at $130 per hour on the partial indemnity scale. I allow $95 per hour. I allow law clerk’s time at $60 per hour.

36I award to both defendants jointly against the plaintiff partial indemnity fees fixed in the amount of $135,750. plus disbursements of $9,095.62 plus HST where applicable, payable forthwith.

Mr. Justice John Macdonald

Date: June 10, 2013

COURT FILE NO.: CV-10-0406396/ CV-10-411851

DATE: 20130610

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

GEORGE FOULIDIS

Plaintiff

– and –

BRUCE BAKER

Defendant

AND BETWEEN:

GEORGE FOULIDIS

Plaintiff

– and –

ROBERT FORD

Defendant

REASONS FOR DECISION

J. Macdonald J.

Released: June 10, 2013