COURT FILE NO.: CV-10-099429-00 DATE: 2013-07-08
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
1769656 Ontario Inc. Plaintiff
– and –
Leslie Philpotts and Yamunakaumari Nithiananthan Defendants
Counsel: Matthew Valitutti, for the Plaintiff Leslie Philpotts and Yamunakaumari Nithiananthan, Defendants, appearing in person Greg Ling Yu Wu, for Suvendu Goswami with respect to the costs issue only
HEARD: June 27, 2013
RULING ON MOTIONS
gilmore J.:
Background
[1] This is the plaintiff’s motion to amend the land titles register to remove certain notices registered on title against the property located at 22 Gaitwin Place, Toronto, Ontario (the “subject property”), and for costs against the defendants and against the defendants’ former solicitor, Suvendu Goswami (“Mr. Goswami”), personally.
[2] Both defendants were self represented at the motion. The defendant, Leslie Philpotts (“Mr. Philpotts”), advised the court that he did not file any material. When questioned by the court as to whether he wished to have an adjournment, he responded that he did not wish an adjournment and wished to proceed without material, as he was anxious to have the matter resolved.
[3] The other defendant, Yamunakaumari Nithiananthan (“Ms. Nithiananthan”), indicated that she had a new lawyer, but there was no notice of appointment of new counsel in the file. Mr. Goswami was Ms. Nithiananthan’s former counsel. Ms. Nithiananthan appeared with two volumes of material, which she provided to plaintiff’s counsel. One volume of material ostensibly related to another action involving some of the same parties, which was commenced and is continuing in Toronto. The other volume contained an unsworn affidavit from Ms. Nithiananthan and a selection of materials, most of which had previously been filed with the court. Ms. Nithiananthan sought an adjournment.
Adjournment Sought by the Defendant, Ms. Nithiananthan
[4] Ms. Nithiananthan sought an adjournment in order to allow her time to prepare and serve proper material. The adjournment was not granted, nor was she entitled to file her materials. Oral reasons were given at the time of the motion and those reasons are summarized below.
[5] Ms. Nithiananthan’s request for an adjournment was opposed by Mr. Philpotts and by the plaintiff. Counsel for Mr. Goswami did not take a position on the adjournment. There was agreement that Ms. Nithiananthan and the plaintiff had attended long motions scheduling court on January 9, 2013. The parties were advised at that time that their motion would be scheduled for the week of June 24, 2013, and that they would be advised by the trial office as to what day that week the motion would proceed. Mr. Goswami got off the record in April 2013.
[6] Ms. Nithiananthan was advised by the court on Monday June 24, 2013, that this motion would be heard on Thursday June 27, 2013. Therefore, Ms. Nithiananthan has had since January 2013 to prepare, serve and file her responding materials. The court briefly reviewed the materials she proposed to file on June 27, 2013. The affidavit was unsworn and her cross motion appeared to raise the same issues related to the setting aside of the default judgment, which have now been dealt with by this court on three previous occasions and the Court of Appeal on two previous occasions.
[7] Further, the issue relating to the removal of notices registered on title by the defendants, has been outstanding since October 2012. Delays have been caused by requests for adjournment by Ms. Nithiananthan’s former counsel, by Ms. Nithiananthan personally and by Mr. Philpotts. It should also be noted, that on several occasions the court has been unable to hear the matter because of an overflow of cases and a lack of judicial or courtroom resources.
[8] Finally, Ms. Nithiananthan has failed to pay previous costs orders which total over $9,000. She has not appealed those orders. There remains an issue as to whether Ms. Nithiananthan should be entitled to file material or be heard at all by this court, given her failure to pay previous costs orders.
[9] Given all of the above, I ruled that Ms. Nithiananthan’s request for an adjournment would be denied, as was her request to file unsworn material on the day of the motion. Notwithstanding the failure of both defendants to properly serve and file material, they were permitted to make brief oral submissions with respect to the issue of costs sought against them by the plaintiff.
Issue One: Costs Sought Against the Defendants and Mr. Goswami Personally
Background
[10] In order to fully understand why the plaintiff is seeking significant costs in this matter, it is important to canvass the full history of this rather torturous litigation. The costs relate specifically to the abandonment of a motion by Mr. Philpotts. It is therefore of importance to understand the events leading up to the abandonment of the motion and with respect to the costs sought personally against Mr. Goswami; it is important to understand the events that unfolded thereafter.
[11] Ms. Nithiananthan was the original owner of the subject property. After default on her mortgages, the property was sold by the second mortgagee under power of sale to Mr. Philpotts. The plaintiff gave a mortgage to Mr. Philpotts in relation to the subject property. Mr. Philpotts defaulted on that mortgage and default judgment was obtained by the plaintiff on July 28, 2010.
[12] On August 5, 2010, Ms. Nithiananthan came to court without notice and sought an order to set aside the default judgment on the grounds that it had been obtained by fraud. Healey J. ordered that the default judgment of July 28, 2010 be stayed as of August 5, 2010 and that Ms. Nithiananthan be added as a party. The plaintiff then brought a motion to reinstate the judgment of July 28, 2010. By order of McEwen J. on January 4, 2011, the judgment was reinstated and the plaintiff was given leave to issue a writ of possession against the subject property. Costs were ordered against Ms. Nithiananthan in the amount of $2,000. The plaintiff was ordered not to execute the writ of possession for sixty days. The order of McEwen J., dated January 4, 2011, was appealed by Ms. Nithiananthan. That appeal was dismissed and Ms. Nithiananthan was ordered to pay $4,000 in costs.
[13] The plaintiff then began enforcement on his judgment and issued a writ of possession. Ms. Nithiananthan responded by bringing another motion, after retaining Mr. Goswami. Ms. Nithiananthan sought once again to set aside the default judgment and to suspend the order of McEwen J. Again, Ms. Nithiananthan alleged fraud. It appears this motion was served on Mr. Philpotts. Boswell J. dismissed the motion on August 10, 2011 and ordered costs against Ms. Nithiananthan in the amount of $3,000 plus HST, payable in thirty days. It is interesting to note that in his reasons for the dismissal, Boswell J. mentions Ms. Nithiananthan’s request regarding fresh evidence referring to that evidence as:
…merely different, or perhaps more evidence than was previous before the court. All of this information could have been before the court on previous occasion, with the exercise of reasonable diligence.
[14] Boswell J. was satisfied that any of the material then before the court was not fresh evidence. The plaintiff sought costs against Mr. Goswami personally on that motion, but Boswell J. did not view that as appropriate. It is also interesting to note that Boswell J. mentions in his reasons that Ms. Nithiananthan’s motion before him was:
…an everything but the kitchen sink request to somehow to get around McEwen J.’s order notwithstanding the results at the Court of Appeal.
[15] Given that Ms. Nithiananthan’s motion before Boswell J. was dismissed, the plaintiff continued to deal with the subject property and leased it to tenants. Ms. Nithiananthan appealed Boswell J.’s ruling and asked the Court of Appeal for the same relief, i.e. setting aside the default judgment, staying the writ of possession and again alleging fraud. The Court of Appeal dismissed the matter for delay, but Ms. Nithiananthan returned to court and asked for an extension and vacant possession. The Court of Appeal did not give Ms. Nithiananthan vacant possession, but did allow her an extension of time to perfect her appeal. Ms. Nithiananthan brought a further motion to extend the time to perfect her appeal. At that point, the plaintiff brought a cross motion to the court of appeal, seeking to dismiss Ms. Nithiananthan’s appeal on the grounds that her appeal and subsequent requests for time to extend the time to perfect it was an abuse of the court’s process. The endorsement of Feldman J. of December 29, 2011 sets out that Ms. Nithiananthan would be entitled to an extension of time to perfect her appeal, but only upon payment of previous Court of Appeal’s order for costs and Feldman J.’s order for costs. Ultimately, the appeal was dismissed for delay on January 24, 2012, with costs fixed in the amount of $750.
[16] Mr. Philpotts brought his own motion returnable December 6, 2011. Mr. Goswami acted for Mr. Philpotts on this motion. Mr. Philpotts sought to set aside the default judgment dated July 28, 2010 and vacate the order of McEwen J., dated January 4, 2011, as well as rescinding any writs of possession pursuant to the default judgment and the order of McEwen J. He did so on the grounds that he alleged he was never served with any statement of claim or originating process and was unaware of and could not respond to the allegations in the statement of claim. He alleged that the plaintiff falsified the affidavit of service, in that the affidavit of service, sworn July 8, 2010, stated that Mr. Philpotts had been personally served with the statement of claim, when in fact he had not been. Mr. Philpotts alleged that the plaintiff obtained default judgment and leave to issue the writ of possession by perpetrating a fraud on the court.
[17] The plaintiff contends that Mr. Philpotts’ motion attempted to obtain the same relief as the motions brought by Ms. Nithiananthan, but because Ms. Nithiananthan had outstanding costs awards, she was unable to bring any further motions. The affidavit of Mr. Philpotts, sworn November 22, 2011, effectively concedes that his motion was brought to assist Ms. Nithiananthan. Specifically paragraph 12 of that affidavit sets out as follows:
On November 11, 2011, I attended the office of Mr. Goswami to discuss all of the events mentioned above so that I could assist the Nithiananthans in achieving the return of their home. Mr. Goswami advised me that it was in my best interest to put all of this information in the form of an affidavit and swear to its truth.
[18] Counsel for the plaintiff also points out that at the time that Mr. Goswami was acting for Mr. Philpotts, he was also acting against Mr. Philpotts and others in an action commenced in Toronto by Ms. Nithiananthan, being court file no. CV-10-39613.
[19] Mr. Philpotts’ motion was initially heard by Edwards J. on December 14, 2011. The motion was brought on urgently and the plaintiff sought an adjournment to file proper materials. Edwards J. set out a strict timetable for the return of the motion.
[20] On January 13, 2012, the plaintiff appointed new counsel, being the current counsel of record. Once the plaintiff had appointed new counsel, the new counsel initiated correspondence to Mr. Goswami regarding the timetable imposed by Edwards J. On February 3, 2012, counsel for the plaintiff received correspondence from Mr. Goswami indicating that Mr. Philpotts would not be proceeding with his motion. No reason for the abandonment of the motion is given, other than Mr. Goswami received certain text messages from Mr. Philpotts with those instructions. Those text messages were reproduced at page 418 of the plaintiff’s motion record. Specifically, they read as follows:
Mr. Philpotts: Hi I try to get in touch with u, the lady and I have an agreement that she should pay me some money last Wednesday she call me to informed me that when I go to the police and get her in the house then she will give me some money . I’m helping these people because of u , the stress it put me through done worth it for me, now I’m informing you that now I’m looking out for myself caz they are doing the same . As of today I have no intress in going any further with this I don’t need the money from them or going to court , thank you for your time and I hope you get justice for them caz they are starting to move side way. Thanks for offering to help me out and for that I am grateful. No heart feeling but I’m pulling out, I’m on my side now thank you.
Mr. Goswami: So you don’t want to go with the case?
Mr. Philpotts: No I’ve had enough and they r not setting a good example on good faith they promised to pay me some money yet they want to get in the house b4 they give me anything, the police cannot let them in only the court they are not being truthful with me I hope this don’t ruined our friendship I can’t believe this.
Mr. Goswami: So all the hard work is down through the flush? Why can’t you just wait till I am able to set aside the default judgment? How are losing or in any kind of stress when I am looking after the matter? I mean how are you losing or in any kind of stress when I am looking after the matter????
Mr. Phipotts: It’s not what I’m losing its what I’m gaining, u will try to get me a settlement but how much will it cost and how long will it takes I done like court and problems when there are personal grudge so I will step aside for now sorry.
Mr. Goswami: Ok! Then I can’t do anything! Fax/Sent me a Notice of Intention to Act in Person so that I am off the record! I am really tired of all these nonsense!!!! Please attend my office tomorrow@11:30 am to discuss the matter.
Mr. Philpotts: Hi I’m not going to be able to make it today caz I’m working ill try later
Mr. Goswami: Are you going to pursue the mater? If yes then you have to come to my office! We need to file reply material and set a date for cross-examination! Can you please let me know urgently? Since you abandoned your motion the new lawyers for Tom Thiru are proceeding to argue for costs against you! Thanks!
Mr. Philpotts: Thank-you ill call u later
Mr. Goswami: When can I expect to receive a signed letter and Notice of Intention to Act in Person? The opposing counsel is setting a date to argue costs of an abandoned motion!
[21] Plaintiff’s counsel put Mr. Goswami and Mr. Philpotts on notice by letter of June 6, 2012 that they would be seeking costs of the abandoned motion from both defendants and Mr. Goswami personally.
Plaintiff’s Position on Costs
[22] The plaintiff argues that it is entitled to costs against Mr. Philpotts as the moving party. Mr. Philpotts’ motion material was put forward on a rush basis and counsel for the plaintiff was just newly retained. There had been a significant history to the matter already and considerable work was put in by the plaintiff’s counsel to prepare responding materials on short notice only to find that the motion was ultimately abandoned. The plaintiff is also seeking costs against Ms. Nithiananthan because it argues there is an inherent power to award costs against the person who is the real litigant and the instigator of the motion. Finally, the plaintiff is seeking costs against Mr. Goswami personally because of what it says is an abuse of process on the part of Mr. Goswami.
(a) Abuse of Process
[23] The plaintiff argues that the defendants and Mr. Goswami should pay costs because Mr. Philpott’s motion was an abuse of process. Plaintiff’s counsel cited Jazz Air LP v. Toronto Port Authority[^1]. In that case, the court set out the legal parameters for abuse of process. Pertinent to this case is the part of the doctrine which dictates that an abuse of process may be found where:
(a) the court process is used for an improper purpose;
(b) where repeated attempts are made to litigate essentially the same dispute by naming slightly different parties applying in different capacities or relying on slightly different statutory provisions and earlier attempts have failed; or,
(c) where a litigant is re-litigating on a different legal basis, an action or proceeding based on the same facts as in a previously determined proceeding.
[24] There were four motions in this matter. The fourth motion was the motion that is the subject of the costs hearing and was the motion abandoned by Mr. Philpotts. However, the plaintiff argues that all four motions must be considered in the context of costs for this proceeding. All four motions related to allegations that the plaintiff had perpetrated fraud on the court and that the default judgment from July 2010 be set aside and the writ of possession vacated.
[25] This was argued before Healey J. on August 5, 2010, in front of McEwen J. on October 18, 2010, in front of Boswell J. on August 8, 2011 and was the relief framed in the motion brought by Mr. Philpotts, dated December 6, 2011. In addition, there was the appeal of the order of McEwen J., brought on the basis that the motions judge failed to appreciate the relevant evidence related to misappropriation of mortgage payments and fraud and the appeal of Boswell J.’s order, related to the motions judge being unduly fettered to do substantial justice despite overwhelming evidence of fraud and severe irregularities on the part of the plaintiff.
[26] The plaintiff argues therefore that the motion brought by Mr. Philpotts was for a purpose other than enforcing his rights. In fact, it was brought by Mr. Philpotts because Ms. Nithiananthan was unable at that point to get around all the other proceedings and avoid costs orders. A motion was brought for an improper purpose and fits within the parameters of the definition of an abuse of process.
[27] Plaintiff’s counsel also argues that costs are in order because the motion has been abandoned. The abandonment in this case is clear and was set out in writing by Mr. Goswami at the relevant time. The Rules of Civil Procedure are clear that costs on an abandoned motion are payable forthwith unless the court orders otherwise. There is nothing in the rule or under section 131 of the Courts of Justice Act which prevents the court from ordering costs on an abandoned motion on a full or substantial indemnity scale.
(b) Who Should Pay Costs?
[28] With respect to who should be liable to pay costs, the plaintiff argues that clearly Mr. Philpotts should pay costs because he was the moving party of the motion that was abandoned. The plaintiff also seeks costs against Ms. Nithiananthan. He does so on the grounds that she is the real litigant and that Mr. Philpotts was simply a straw man used to allow Ms. Nithiananthan to once again re-litigate the same issues she had litigated in the previous three motions. Plaintiff’s counsel relied on Sturmer and Beaverton (Town) (Re)[^2]. In that case, court held that:
There was inherent power in the court to make the person who had set the court in motion pay the costs of the unsuccessful application, and this though the person be not formally a party but one who is the instigator and supporter of the movement.
[29] Similarly, in Television Real Estate Ltd. v. Rogers Cable T.V. Ltd.[^3], a more recently decided case from the Court of Appeal, it was held that the court had inherent jurisdiction to:
Prevent abuse of its process, and, as part of this jurisdiction will stay proceedings, as being taken against good faith, when a man of straw is put forward by those really litigating…
[30] The plaintiff argues that they have met the required test with respect to Ms. Nithiananthan. She had standing to bring the motion herself. Mr. Philpotts was not the true claimant and admits that in paragraph 12 of his affidavit. He was a man of straw put forward to protect Ms. Nithiananthan from further costs awards.
[31] Finally, there is the issue of the text messages. There was no material filed by any party to refute that these text messages were not authored by the persons indicated or that they were inaccurate. The messages are clear that there was a payment arrangement between Mr. Philpotts and Ms. Nithiananthan, whereby Ms. Nithiananthan was to pay Mr. Philpotts a sum of money to proceed with the litigation, so she could go back into what she thought of as her home. The plaintiff argues that this supports that Mr. Philpotts’ motion was being brought for an illegitimate purpose.
[32] The plaintiff also seeks costs against Mr. Goswami personally. The plaintiff refers to rule 57.07 of the Rules of Civil Procedure in that respect. The plaintiff relies on this rule as well as the case law from the Ontario Court of Appeal, specifically, Galganov v. Russell (Township)[^4]. That case cites Young v. Young[^5]:
The basic principle on which costs are awarded is as compensation for the successful party, not in order to punish a barrister. Any member of the legal profession might be subject to a compensatory order for costs it if is shown that repetitive and irrelevant material, and excessive motions and applications, characterized the proceedings in which they were involved, and that the lawyer acted in bad faith in encouraging this abuse and delay. It is clear that the courts possess jurisdiction to make such an award, often under statute and, in any event, as part of their inherent jurisdiction to control abuse of process and contempt of court.
[33] The test to determine the liability of a lawyer for costs is a two part one. First, the court is to inquire as to whether a lawyer’s conduct falls within rule 57.07(1) in that the lawyer caused costs to be incurred unnecessarily. The second step is to consider the extreme caution principle enunciated in Young v. Young and whether in the circumstances the imposition of costs against the lawyer personally is warranted.
[34] The plaintiff also argued that the case of Standard Life Assurance Co. v. Elliott[^6] applied with respect to the likelihood of recovery. In that case, the court held that the only way to truly compensate the plaintiff insurer for its costs would be to make the costs payable by the solicitor. Where abuse of process is found and the conduct of counsel drove up the cost of litigation, the courts have held that it is appropriate that the solicitor pay costs personally.
[35] The plaintiffs submit that Mr. Goswami was involved in an abuse of process. While acting for Ms. Nithiananthan, he brought the motion before Boswell J. He lost and appealed asking for the same relief. Boswell J. made reference to the fact that Ms. Nithiananthan was attempting to circumvent McEwen J.’s order by bringing the motion before Boswell J. Mr. Goswami also registered the notices on title, which relate to the second issue in this motion. Mr. Goswami knew of the previous orders and brought the same motion and appeal. It was all designed to interfere with the mortgage enforcement. Ultimately, when all other options had been exhausted, he decided to have Mr. Philpotts bring a motion. While counsel for the plaintiff was careful to ensure that he was not submitting that Mr. Goswami was part of the financial arrangement between the defendants, counsel did indicate that Mr. Goswami’s response to the text messages made it clear that he was pursuing the litigation for an improper purpose when he asked Mr. Philpotts if he would not reconsider his instructions to abandon until Mr. Goswami brought a motion to set aside the default judgment.
(c) What is the Scale of Costs?
[36] The plaintiff submits that costs should either be on a full indemnity or a substantial indemnity basis. There is nothing that fetters this court’s discretion to order full indemnity or substantial indemnity costs on an abandoned motion. Further, all of the claims in this matter allege fraud and that has a well accepted effect on the scale of costs.
[37] Unsubstantiated allegations of fraud, as in this case, often lead to increased awards of costs (see 131843 Canada Inc. v. Double “R” (Toronto) Ltd.[^7]). Further, in addition to the improper purpose, motions brought for tactical purposes should also be considered subject to costs at a higher scale (see Kaiser (Re)[^8]).
[38] The plaintiff provided a costs outline. Counsel for the plaintiff indicated that he had been practicing for six years and his full hourly rate was $175 and his partial indemnity rate was just over $100 per hour, which he submitted was extremely reasonable in the circumstances. Total costs sought, including counsel fee for the hearing of the motion was $20,444.01 for full indemnity costs, $18,256.93 for substantial indemnity costs, and $13,388.88 for partial indemnity costs. These amounts included HST and disbursements. Counsel submitted that costs should be awarded on a joint and several basis with respect to both defendants and Mr. Goswami.
[39] Plaintiff’s counsel conceded that Mr. Goswami was not the grand planner of this scheme, but it is clear that he was involved in it and that it was designed for an ulterior purpose. If Mr. Goswami found out through Mr. Philpotts that there was fresh evidence, why not bring a motion for fresh evidence as he had done before Boswell J. Mr. Philpotts admitted in his affidavit that he was attempting to assist Ms. Nithiananthan to get her house back and therefore it can be inferred that Mr. Goswami was assisting in trying to get around previous court orders. In fact, Ms. Nithiananthan should have given an affidavit in support of a motion for fresh evidence brought by Mr. Philpotts.
[40] The court invited Mr. Philpotts to make submissions in relation to costs. He submitted that it was unfair to require him to pay any amounts for costs as the plaintiff commenced this action and he was simply being used by the plaintiff to get Ms. Nithiananthan out of the house. He has children to support and is self employed in the renovation business. He simply cannot afford to pay court costs.
[41] Ms. Nithiananthan was also invited to make submissions on costs. She advised that solicitor Mr. Goswami should pay all of the costs, as she requested that he not bring the motions and he did so despite her instructions. In addition, she has already paid him $23,000 and has assessed his accounts. He should be responsible for all costs.
[42] Mr. Goswami’s counsel indicated that Mr. Goswami was retained by Ms. Nithiananthan in order to get her property back. She was not represented by Mr. Goswami until he brought the motion before Boswell J. in August 2011. Counsel for Mr. Goswami wished the court to know that the motion before Boswell J. did not contain the same relief as the one before Healey J. and McEwen J. In fact, the motion related to fresh evidence and Ms. Nithiananthan attempt to have further and better information brought before the court. It was brought on an emergency basis because Ms. Nithiananthan was at the point of losing her house.
[43] Counsel for Mr. Goswami advised that the appeal of Boswell J.’s order was dismissed for delay. This was due to the fact that the defendant did not pay the costs order of the Court of Appeal, although she was advised to do so. A direction, dated December 30, 2011, and signed by Ms. Nithiananthan was produced, in which she instructed Mr. Goswami not to proceed with the appeal. The appeal was therefore dismissed because he was instructed not to proceed.
[44] With respect to the abandoned motion which is the subject of this proceeding, counsel for Mr. Goswami noted as follows:
(a) Ms. Nithiananthan is assessing Mr. Goswami’s account.
(b) Mr. Philpotts came to Mr. Goswami with evidence regarding the property in question. That evidence revealed wrong-doing or fraud that may have been committed by the plaintiff. Based on that, Mr. Goswami felt that Mr. Philpotts should bring a motion on the grounds that he believed that Mr. Philpotts was never served with the statement of claim.
(c) Although the motion brought by Mr. Philpotts sought similar relief to that brought by Ms. Nithiananthan, it was still different. This was not a scheme and not orchestrated by Mr. Goswami. There was sufficient evidence to bring the motion and there was evidence that Mr. Philpotts specifically instructed Mr. Goswami to abandon the motion.
(d) Mr. Goswami was never aware of any payment arrangements between the defendants. Mr. Goswami did not know why Ms. Nithiananthan abandoned the motion, but it was his belief that there was pressure put on Ms. Nithiananthan by the plaintiff because of a concern on the part of the plaintiff that certain evidence would surface regarding wrongdoing. There was nothing that Mr. Goswami could have done to prevent the abandonment of the subject motion.
(e) Counsel for Mr. Goswami cautioned the court to avoid punishing a lawyer for properly bringing forward his client’s case. The motion before Boswell J. in relation to fresh evidence, the appeal and the motion that is the subject of this proceeding were brought with reasonable cause. These were not repetitive motions, but based on strong evidence with a good chance of success. Counsel warned that costs are to be awarded against lawyers only in the clearest of cases. There is contradictory evidence with respect to whether or not Mr. Goswami was the grand planner of the litigation scheme. It is not up to counsel to screen out clients at the first instance with respect to whether or not they have a clear chance of success. There is nothing to show that Mr. Goswami participated in any unreasonable conduct and therefore should not be personally liable for costs.
Issue Two: Notices Registered on Title
[45] Both defendants have registered notices on title to the subject property. The notice registered by Ms. Nithiananthan had the effect of interfering with and ultimately preventing a power of sale of the mortgage property from being completed. The notice registered by Mr. Philpotts does not specify any reason for its registration. Despite demands to both defendants, they have refused to remove the notices on title and the plaintiff is therefore fettered in his ability to properly deal with the property as a mortgagee in possession.
[46] On September 16, 2011, the plaintiff entered into an agreement of purchase and sale for the subject property for a purchase price of $335,000 with a closing date of October 24, 2011. On September 28, 2011, Ms. Nithiananthan registered a notice on title to the mortgage property. The transaction was unable to close as a result of this notice.
[47] The notice provided as follows:
The applicant, a previous owner of the property, has appealed to the Court of Appeal for Ontario, court file no. C-54266 from the judgment and order of the Honourable Mr. Justice Boswell, Ontario Superior Court of Justice at Newmarket, court file no. CV-10-099429-00, dated August 10, 2011. In the said appeal, among others, the applicant has asked for a judgment in terms of the accepted offer to settle, dated January 4, 2011, made between 1769656 Ontario Inc. and the applicant, allowing the latter to buy the property within.
[48] The second notice on title was registered on behalf of Mr. Philpotts on January 5, 2012. There is no reason given as to why the notice was registered. Both notices were registered by Mr. Goswami on behalf of his then clients.
[49] The land registry office will only remove the notices from title to the property if directed to by the defendants or by court order.
[50] The first notice and second notice were registered pursuant to section 71 of the Land Titles Act. Where there is no consent by the registrants, sections 151 and 160 of the Land Titles Act provide that the court may order rectification of the record.
[51] Counsel for the plaintiff submits that the first notice registered by Ms. Nithiananthan is clearly tied to the appeal. That appeal was ultimately dismissed and there is therefore no reason for the notice to remain on title. Counsel for the plaintiff submits that the court has the authority to remove the notices. The first notice should be deleted because the appeal is over and the second was simply an attempt to tie up the land.
[52] Both defendants maintained their refusal to consent to the removal of those notices on the day of the motion. Counsel for Mr. Goswami took no position in relation to this part of the motion.
Analysis and Ruling
Costs Issue
[53] I do not find that this is one of those exceptional cases in which costs should be awarded against a lawyer. While there may have been some similarities in the motion brought by Mr. Philpotts and those previously brought by Ms. Nithiananthan, I accept that Mr. Goswami received certain information from Mr. Philpotts that concerned him and that he felt was important enough to bring the matter to court. It related to what was alleged to be serious wrong-doing on the part of the plaintiff and no doubt Mr. Goswami felt that this needed to be drawn to the attention of the court and that Mr. Philpotts’ rights were in issue.
[54] I also find that Mr. Goswami in no way orchestrated the abandonment of the motion. The text messages clearly indicate that it was solely Mr. Philpotts’ position to abandon the motion and that he did so for his own reasons and not for any reason that could be associated with Mr. Goswami.
[55] While the interests of the defendants may be similar, it would be unjust to Mr. Goswami, in my view, to tie all of the proceedings together and find that he was somehow the driving force and orchestrated proceedings for some improper purpose.
[56] It is clear that Mr. Goswami was not involved in any financial arrangement between the defendants and he therefore cannot be implicated with respect to nefarious schemes or under the table arrangements to which he was not a party.
[57] While it can only be termed unusual that Mr. Goswami would agree to act for Mr. Philpotts when he was already acting for Ms. Nithiananthan in a proceeding in which Mr. Philpotts was a defendant, that issue was not before me and there was never any indication in the material that Ms. Nithiananthan did not support Mr. Philpotts with respect to his motion.
[58] In my view, the court cannot be seen as overly fettering a solicitor’s ability to bring forward a client’s case and to punish Mr. Goswami with costs in this situation would have a chilling effect on counsel’s ability to properly advocate on behalf of their clients.
[59] As to any costs which may be payable by Mr. Philpotts and Ms. Nithiananthan, I find that Ms. Nithiananthan was the instigator of this litigation and should bear some responsibility for the costs. While it is true that Mr. Philpotts contacted Mr. Goswami about information he had, it appears that his motivation to do so was to assist Ms. Nithiananthan in getting back into her home. This motivation was in turn the result of a financial arrangement between the defendants, in which Ms. Nithiananthan intended to pay money to Mr. Philpotts in order to have him bring forward litigation that would assist in having her reinstated into the subject property. This financial arrangement is made clear by the text messages.
[60] It cannot be stated strongly enough that the court is not to be duped by arrangements between parties which they hide from their own solicitor and from the court.
[61] I accept the submissions of counsel for the plaintiff that, in fact, Mr. Philpotts was used as a straw man because Ms. Nithiananthan was in a position such that it was not reasonably possible for her to bring a further motion. She had already brought forth three motions and two appeals. It was unlikely that any judge would have heard her case. Ms. Nithiananthan was desperate to get back into the property and she was convinced that the plaintiff had perpetrated a fraud.
[62] Mr. Philpotts, with respect, was somewhat naïve in all of this. In exchange for what was apparently a payment that he had agreed to receive from Ms. Nithiananthan, he was prepared to act as the moving party in litigation which would ultimately benefit Ms. Nithiananthan. I agree with counsel for the plaintiff that the case of Sturmer and Beaverton (Town) (Re) noted above, is authority for the court to award costs against a person who appears to have been the real litigant and was put forward as a “man of straw” in his or her desire to avoid becoming liable for costs.
[63] There is no doubt that at the relevant times, Ms. Nithiananthan was liable for costs. The amount of costs exceeded $9,000. I find that Ms. Nithiananthan knew very well that any further attempt on her behalf to re-litigate the matters before the court, would have little chance of success.
[64] While I find that Mr. Philpotts was aware of the implications of his involvement, his responsibility can be considered one of lesser degree than that of Ms. Nithiananthan and this should reflect in the quantum of costs awarded.
[65] The subject motion was abandoned and therefore attracts costs pursuant to rule 37.09 of the Rules of Civil Procedure. Caselaw presented by plaintiff’s counsel makes it clear that there is nothing fettering this court’s discretion with respect to ordering costs on a full or substantial indemnity scale with respect to rule 37.10.
[66] I find that in this case, although abuse of process may be taking matters too far, the motion was certainly brought in a context which can only be described as tactical. The allegations of fraud must also be considered in this case, vis a vis the quantum of costs. As per Procor Ltd. v. U.S.W.A[^9]:
Solicitor and client costs may be justified where a defendant unjustly accuses a plaintiff of fraudulent and dishonest conduct and persists in those assertions through and to and including trial without being able to substantiate them.
[67] Although a trial has not been held in this matter, there is no doubt that in each and every proceeding put forward by these defendants, an allegation of fraud against the plaintiff has been made. Those allegations have never been substantiated.
[68] Turning to the quantum of costs, I have already outlined above the amounts sought by the plaintiff which had been broken down into amounts based on full indemnity compensation, substantial indemnity compensation and partial indemnity compensation.
[69] I find that this is a case which attracts a scale of substantial indemnity costs. I agree with counsel for the plaintiff that it is beyond the usual partial indemnity scale because of the clear intent on the part of the defendants to manipulate the court process and the unsubstantiated allegations of fraud.
[70] The real issue however becomes proportionality. The costs claimed related to the abandoned motion and the notices registered on title. The total hours claimed by counsel for the plaintiff, including work done by law clerks, articling students and senior counsel is 76.7 hours. In my view, this is disproportional with respect to the issues before the court. I understand that a full responding record had to be prepared in relation to the motion that was ultimately abandoned. I also understand that further preparation was required for this motion, in that all previous material was required to be assembled and put before the court in order to ensure the court had a full understanding of the history of this matter, given the nature of the claims. I further understand that two factums were prepared, one related to the costs issue and the other related to the notices registered on title.
[71] However, proportionality would dictate that in all of the circumstances, a total of 35 hours chargeable at Mr. Valitutti’s substantial indemnity rate of $152 per hour would be more proportional. That results in total fees of $5,320 plus HST of $691.60. Disbursements of $2,526.60 shall be added, as well as a counsel fee of $1,125 for a grand total of $9663.20
[72] While counsel for the plaintiff sought to have the defendants liable for costs on a joint and several basis, I do not believe that the circumstances merit this. In my view, Ms. Nithiananthan should be responsible for the majority of the costs, while Mr. Philpotts should have some liability, but not to the same extent. Therefore, costs shall be divided between Mr. Philpotts and Ms. Nithiananthan such that Mr. Philpotts shall be responsible for 30% of the costs, or $2,898.96 and Ms. Nithiananthan shall be responsible for 70% of the costs, or $6,764.24.
Notices Registered on Title
[73] There is no doubt that the first notice registered by Ms. Nithiananthan is of no further relevance. That notice makes specific reference to an appeal which has long been dismissed. At this point, the first registered notice serves only to tie up the land and restrain the plaintiff from dealing with it, and more particularly, selling it. The second notice appears to have no purpose at all, other than tying up the land and it is improper that it remain registered. Therefore, pursuant to the authority in the Land Titles Act and specifically sections 159 and 160, the record shall be rectified with respect to the removal of those notices.
Orders
[74] Given all of the above, I make the following orders,
(a) The plaintiff’s claim for costs against Mr. Goswami personally is dismissed;
(b) The plaintiff’s claim for costs against the defendants is granted on a substantial indemnity scale in the amount of $9,663.20, Mr. Philpotts being responsible for payment of $2,898.96 and Ms. Nithiananthan being responsible for $6,764.24. These costs relate to the abandoned motion and the registered notices on title;
(c) Neither defendant may bring any further motions in relation to this matter, without having paid these costs as ordered;
(d) The notice registered by Ms. Nithiananthan, as instrument AT2825193 in land registry office no. 66 is to be expunged and the title to the subject property being parcel register 06262-0015 (LT) be rectified accordingly; and,
(e) The notice registered by Mr. Philpotts, as instrument AT2911161 in land registry office no. 66 is to be expunged and the title to the subject property being parcel register 06262-0015 (LT) be rectified accordingly.
(f) There are no costs payable for this motion. The counsel fee for this appearance is included in the cost award herein.
Justice C.A. Gilmore
Released: July 8, 2013
[^1]: [2007] F.C.J. No. 160 (Fed.Ct.) at paragraph 27. [^2]: 1912 CanLII 588 (ON SCDC), [1912] O.J. No. 184 (H.C.J. (Div. Ct.)), paragraph 8. [^3]: 1997 CanLII 999 (ON CA), [1997] O.J. No. 1944 (C.A.), paragraph 12. [^4]: 2012 ONCA 410, [2012] O.J. No. 2679 (C.A.), paragraphs 13 to 18. [^5]: 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3, at pages 135 to 136. [^6]: 2007 CanLII 18579 (ON SC), [2007] O.J. No. 2031 (S.C.J.). [^7]: [1992] O.J. No. 3879 (S.C.J.). [^8]: [2011] O.J. No. 4488 (S.C.J.). [^9]: (1990), 71 O.R 2d at 410.