SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

File No.: CV-13-10045-00CL

RE: Dr. K. Ansarian Dentistry Professional Corporation, Applicant

AND:

Dr. A. Mohajeri Dentistry Professional Corporation, Respondent

AND BETWEEN:

File No.: CV-13-10061-00CL

RE: Dr. K. Ansarian Dentistry Professional Corporation, Applicant

AND:

Aptco Capital Corporation and Dr. A. Mohajeri Dentristy Professional Corporation, Respondents

BEFORE: D. M. Brown J.

COUNSEL:
D. K. Alderson and N. Singh, for the Applicant, Dr. K. Ansarian Dentistry Professional Corporation

D. O’Connor and K. Gray, for the Respondent, Dr. A. Mohajeri Dentistry Professional Corporation

R. Choi, for the Respondent in CV-13-10061-00CL, Aptco Capital Corporation

HEARD: May 7, 2013; subsequent written cost submissions.

REASONS FOR DECISION - costs

I. The parties’ positions on costs

[1] By Reasons dated May 9, 2013 (2013 ONSC 2662), I dismissed both the First and Second Applications. In the First Application, Dr. K. Ansarian Dentistry Professional Corporation (“Ansarian”) sought leave to appeal two decisions of an arbitrator appointed to adjudicate disputes between Ansarian and Dr. A. Mohajeri Dentistry Professional Corporation (“Mohajeri”) under their written business arrangement, and in the Second Application it sought to secure relief from forfeiture of the Lease for the premises out of which both dentists operated part of their dental practices.

[2] The parties have now filed their cost submissions.

[3] In the First Application, Mohajeri seeks substantial indemnity costs of $73,446.06 or, alternatively, partial indemnity costs of $49,429.89. In response, Ansarian advanced a variety of positions: (i) the costs should be reserved to the arbitrator; (ii) there should be no order as to costs; (iii) it should receive substantial indemnity costs because of the misconduct of Mohajeri; or (iv) if costs were awarded to Mohajeri, they should be fixed at around $19,000.00 on a partial indemnity scale.

[4] In the Second Application, the Landlord, Aptco Capital Corporation, sought substantial indemnity costs of $42,018.34 pursuant to the terms of the Lease, and Mohajeri sought substantial indemnity costs of $32,938.48 or, alternatively, partial indemnity costs of $22,063.36. Ansarian submitted that there should be no order as to costs or, alternatively, any costs awarded to the Landlord should be paid jointly by Ansarian and Mohajeri and such costs should be in the neighbourhood of $16,500.00.

[5] In fixing the costs of the applications, I have taken into account 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). In addition, I have considered the principles set forth by the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 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.

II. The costs of the First Application

[6] The First Application involved requests by Ansarian to seek leave to appeal from decisions of the Arbitrator. The application was dismissed. As the successful party, Mohajeri is entitled to an award of costs, absent some good reason to deny it costs.

[7] I reject Ansarian’s submission that the costs of the proceeding before this Court should be reserved to the arbitrator. This Court controls the costs of proceedings before it; the arbitrator can control the costs of the proceeding before him.

[8] Much of Ansarian’s submissions regarding costs rested on allegations of misconduct against Mohajeri. That position on costs reflected the approach adopted by Ansarian on the issue of leave to appeal. That is to say, Ansarian’s First Application seemed to ignore that this Court’s jurisdiction, in the circumstances, was limited to ascertaining whether questions of law arose for review from the arbitrator’s decisions. As a result of that strategy, Ansarian placed a disproportionately large record before the Court, much of which dealt with issues of fact or, at best, issues of mixed fact and law. Ansarian’s own litigation conduct caused both parties to incur unnecessary litigation expenses.

[9] As a result, Mohajeri is entitled to some costs. That said, I do not regard Ansarian’s litigation conduct as rising to the level of “reprehensible” conduct which merits an award of elevated costs. Mohajeri is entitled to its partial indemnity costs.

[10] As to the quantum of those costs, Mohajeri seeks to recover costs for about 243 hours of work by senior counsel (65 hours), junior counsel (164 hours), a second senior counsel (3 hours) and a student (11 hours). Ansarian submitted its own bill of costs which showed about 71 hours’ worth of work.

[11] The First Application took a little over half a day to argue. The materials were voluminous, for a leave to appeal on a question of law, but it was Ansarian which put such a large factual matrix in issue; all that should have been before the Court were the records considered by the arbitrator. The issues were not complex. While Mohajeri filed a bill of costs, it did not file the underlying time dockets, so I am unable to assess the reasonableness of all the work performed, especially the 64 hours spent by junior counsel on preparing application materials.

[12] Given the broad factual matrix put in issue by Ansarian, the large volume of materials filed by it, as well as the numerous 9:30 attendances initiated by Ansarian before the Commercial List, I think a reasonable allowance for work performed by Mohajeri’s counsel would be 50 hours by senior counsel and 100 hours by junior counsel. The partial indemnity rates sought by senior counsel ($350/hour, 1992 call) and junior counsel ($110/hour, 2012 call) were reasonable. That then results in allowable fees totaling $28,500.00 ($350 x 50 = $17,500 + $110 x 100 = $11,000), plus H.S.T. of $3,705.00. No objection was taken to the claimed disbursements of $698.77.

[13] I therefore order Ansarian to pay Mohajeri partial indemnity costs of the First Application fixed at $32,903.77.

III. The costs of the Second Application

[14] Under sections 9.07 and 14.04 of the Lease, the Tenant is required to pay the Landlord solicitor and client costs, by way of indemnity, for any claim “arising from or out of the occupancy or use by the Tenant of the Premises or any other part of the Development or occasioned wholly or in part by any act or omission of the Tenant”. In my view, Ansarian’s claim against the Landlord fell into that obligation to indemnify. While I am not bound by that contractual term, I conclude that it is fair and reasonable to follow the principle of indemnification contained in that clause, not only because of the contractual bargain between Landlord and Tenant, but because Ansarian’s conduct in roping the Landlord into its fight with its co-venturer constituted reprehensible litigation conduct which merited, in its own right, an award of elevated costs against Ansarian. That the contractual clause required indemnification from the Tenant, which is both Ansarian and Mohajeri, is neither here nor there. First, my award of substantial indemnity costs is based on this court’s overall discretion to award costs. Second, Ansarian dragged the Landlord unnecessarily into its fight with Mohajeri, so Ansarian alone will foot the bill for its litigation decision.

[15] As to the quantum of the costs payable to the Landlord, I consider the approximately 100 hours of time claimed to be excessive. The Landlord spent some time in its materials alleging acts of default against the Tenant which would preclude granting relief from forfeiture. The lease was in good standing at the time of the Second Application; those acts of default were irrelevant. I therefore reduce the overall time claimed by the Landlord by 20%. The substantial indemnity rates claimed for senior counsel ($525/hour, 1992 call) and junior counsel who did the lion’s share of the work ($315/hour, 2008) were reasonable. Accordingly, I reduce the fees claimed from $40,388.46 to $32,310.77, including H.S.T. The disbursements sought of $629.88, including H.S.T., were reasonable.

[16] I therefore order Ansarian to pay the Landlord costs in the amount of $32,940.65 for the Second Application.

[17] As to the claim for costs by Mohajeri, I allow costs, but on a partial indemnity basis for the same reason as I set the scale of costs in the First Application.

[18] The 100 hours claimed by Mohajeri for the Second Application is excessive. Mohajeri basically told the same story on the Second Application as it did on the First. A large portion of its materials simply were the product of cutting and pasting portions from its affidavits used on the First Application. The legal issues were not complex. The Second Application took part of the afternoon to hear, and Mohajeri’s counsel made about 15 minutes worth of submissions. In the circumstances, I think a fair allowance of time to Mohajeri for the work connected with the Second Application would be 30 hours, allocated 10 hours to senior counsel and 20 hours to junior counsel. That results in total fees of $5,700.00 (10 x $350 = $3,500 + 20 x $110 = $2,200), plus H.S.T. of $741.00 and disbursements of $313.12.

[19] I therefore order Ansarian to pay Mohajeri costs in the amount of $6,754.12 for the Second Application.

D. M. Brown J.

Date: June 6, 2013