ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-12-466694-00CP
DATE: July 18, 2013
BETWEEN:
EXCALIBUR SPECIAL OPPORTUNITIES LP
Plaintiff
– and –
SCHWARTZ LEVITSKY FELDMAN LLP
Defendant
Margaret L. Waddell for the Plaintiff
Tim Farrell and Matthew M.A. Stroh for the Defendant
Proceeding under the Class Proceedings Act, 1992
HEARD: In writing
PERELL, J.
REASONS FOR DECISION
[1] This is a costs endorsement.
[2] Excalibur Special Opportunities LP is the proposed representative plaintiff in a class proceeding under the Class Proceedings Act, 1992, S.O. 1992, c. c.6, against Schwartz Levitsky Feldman LLP (“SLF”). Excalibur alleges that SLF provided audit reports for a company that were materially false or misleading. The audit reports were relied on by investors, the proposed class members, who together contributed $7,594,965.00 in a private placement. It is alleged that the proposed class members lost their whole investment and now hold shares and warrants that are worthless.
[3] SLF challenged Excalibur’s standing to bring the proposed class action. The challenge arose because at the time it commenced the action, Excalibur had not registered its change of name under the Limited Partnerships Act, R.S.O. 1990, c. L. 16. After the challenge was made, Excalibur brought a motion, which was subsequently converted into an application, pursuant to s.28 (2) of the Limited Partnerships Act. It sought leave to maintain the proposed class action.
[4] SLF did not oppose an order, but it submitted that while Excalibur may be granted leave to commence a new action (which action arguably might be statute-barred), it could not be granted leave to continue the existing action.
[5] I granted Excalibur’s application. My judgment, which provides more of the background, is reported as Excalibur Special Opportunities LP v. Schwartz Levitsky Feldman LLP, 2013 ONSC 3271.
[6] The parties could not agree about costs. Excalibur now claims costs of $29,606.06 on a partial indemnity basis, inclusive of HST and disbursements of $565.06. Or, it claims $35,651.56, all inclusive, based on a partial indemnity up to March 31, 2013 and a substantial indemnity after April 1, 2013.
[7] The explanation for the hybrid claim for costs is that on April 1, 2013, Excalibur offered not to seek costs if SLF consented to the application in light of the additional affidavit material that had been filed, but Excalibur warned that it would be seeking costs on a substantial indemnity basis from that point forward, if SLF continued to oppose the motion.
[8] SLF submits that Excalibur should recover no costs because the leave motion was required by law and ultimately Excalibur was seeking an indulgence from the court to remediate an error that it had made, and it was Excalibur and not SLF that was responsible for any unnecessary costs associated with the motion that became an application. In the alternative, SLF submits that if costs are awarded, a reasonable award would be $7,000.00.
[9] I disagree with SLF’s submissions, and for the reasons that follow, I award Excalibur $22,225.00, all inclusive, on a partial indemnity basis, payable within 30 days of the release of this costs endorsement.
[10] It is true, as SLF submits, that Excalibur was obliged to bring a motion or an application under the Limited Partnerships Act, R.S.O. 1990, c. L. 16, once it was discovered that a mistake had been made and through inadvertence a registration had not been completed. It, however, is not true that this motion or application had to be a contested motion, and it is not true, as SLF would have it, that the court was indulging Excalibur by granting leave. In the circumstances of this case, as SLF eventually conceded, Excalibur was entitled to an order under the Act.
[11] It was SLF that made a justiciable issue about the nature of an order under the Act, and it was SLF that made an issue about whether it was possible to maintain the current action or whether Excalibur had to commence a new action.
[12] It is true, as SLF submits, that there may be limitation period arguments about the existing proceeding, but whatever those arguments may be, they obviously would turn on an earlier date of commencement than the date of commencement of a new action. As it is entitled to do, SLF may rely on a limitation period defence, and in resisting the motion/application under the Limited Partnerships Act, it was entitled to attempt to have that limitation period battle fought out on a more favourable legal battlefield.
[13] SLF made a tactical deployment of its legal arguments, but it lost the motion and application. It should, therefore, pay the victor its costs on a partial indemnity basis.
[14] Given its tactical decision, it is understandable that SLF did not accept the offer to settle, which would have been a surrender, but I see no reason to punish it with a punitive costs award. The appropriate award is the normal one based on a partial indemnity scale.
[15] Once SLF decided to challenge Excalibur’s motion, initially on the basis of serious allegations that Excalibur’s error was advertent (due to its lawyers’ mishandling of the registration) and later on the basis of the legal argument about the operation of an order under the Limited Partnership Act, it cannot be said that either party caused unnecessary costs or expenditures. The costs and expenditures followed in the natural course of how the contest developed.
[16] The motion and application became an important one for the parties and they apparently dedicated the legal resources that were necessary for a motion and application that had considerable importance to both parties.
[17] In these circumstances, a fair and reasonable award on a partial indemnity basis is $22,500.00 all inclusive.
[18] Order accordingly.
Perell, J.
Released: July 18, 2013
COURT FILE NO.: CV-12-466694-00CP
DATE: July 18, 2013
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
EXCALIBUR SPECIAL OPPORTUNITIES LP
Plaintiff
‑ and ‑
SCHWARTZ LEVITSKY FELDMAN LLP
Defendant
REASONS FOR DECISION
Perell, J.
Released: July 18, 2013.