SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

COURT FILE NO.: CV-11-9417-00CL
DATE: 20130124

RE: Farzaneh Abravani also known as Farzaneh Abravani-Ilkhchi, Raheleh Abravani Ilkhchi, Aghdas Nasseri and 7538715 Canada Ltd., Applicants

AND:

Mohammad Petgar, Mohammad Mahmoudzadeh, Mohammad Javad Derakhishan, 2087392 Ontario Ltd., 2087398 Ontario Ltd., Mohammad Amin Tavakoli, Nissan Reyhanian, Vahid Derakhshan and 222 Finch Avenue West Inc., Respondents

BEFORE: L.A. Pattillo J.

COUNSEL:
Philip Healey and Attoosa Mahdavian, for the Applicants

Stephen Turk, for the Respondent Mohammad Petgar

Costs ENDORSEMENT

[1] On November 28, 2012, I released reasons for decision following a three day trial of an issue concerning who were the shareholders of the Applicant 7538715 Canada Ltd. (“753”). The parties on the trial were the individual applicants and the respondent Mohammad Petgar (“Petgar”). At the end of my reasons, I indicated that in the absence of agreement on costs, the parties could make submissions in writing. I have now received and considered submissions from both the applicants and Petgar.

[2] The applicants submit that, given their application continues, costs should be in the cause. I disagree. The issue at the trial, while related to the issues on the application, was quite separate and distinct. Petgar was successful at the trial and is entitled to his costs. He submits the costs should be awarded on a substantial indemnity basis or in the alternative partial indemnity.

[3] I do not consider that the Applicants’ conduct either before or during the trial amounted to “reprehensible, scandalous or outrageous” conduct necessary to justify an award of substantial indemnity costs: see Young v. Young, 1993 34 (SCC), [1993] 4 S.C.R. 3 (S.C.C.) at para. 66. The fact that I preferred the evidence of Petgar over that of the applicants does not give rise to the higher costs scale. Further, while the applicant Farzaneh Abravani (“Abravani”) actions in setting up a second immigration company without advising her husband and equal shareholder Petgar may amount to reprehensible conduct, it was not germane to the issue being tried. It is more relevant to the matrimonial issues between Abravani and Petgar which are being played out in another court.

[4] I also do not consider the applicants’ counsel’s conduct during the trial to come close to the type of conduct necessary to merit substantial indemnity costs. The trial lasted three days. While the trial took somewhat longer to complete than initially estimated, the fault was not solely that of applicants’ counsel.

[5] The applicants submit that as a result of an offer they made on the eve of trial, which they say was a “significant compromise” and consistent with the findings I made, Petgar should receive costs only up to the date of the offer and no costs thereafter.

[6] The offer provided that Petgar would be entitled to 50% of the profits of 753 after all of the individual applicants were paid back the monies they invested or lent to 753. In addition, the fees of the monitor appointed at the applicants’ request would also have to be paid first. Finally, any costs found owing to the respondent 222 Finch Avenue West would be paid by Petgar.

[7] In my view, the offer does not comply with Rule 49.10. It was made six days before trial. Further, the applicants did not obtain a judgment as favourable as or more favourable than its terms. Given the issue at trial, the offer does not amount to a “substantial compromise” nor is it consistent with my findings. I made no findings concerning the monitor or the payment of its costs or the costs of 222 Finch. Nor did I conclude that all of the individual applicants invested or lent money to 753. In fact, as noted, I was not satisfied on the evidence that the money invested in 753 came from other than Abravani and the immigration business. To the extent that it came from Abravani through the immigration business, it has been Petgar’s position that he owns 50% of that business and therefore 50% of the funds invested belonged to him. That issue remains to be resolved in the matrimonial proceedings. For those reasons, the applicants offer has no bearing whatsoever on the award of costs.

[8] Petgar seeks a total of $47,460 in partial indemnity costs made up of $40,500 in fees, $1,500 in disbursements and HST. The applicants take no issue with the hourly rate claimed by Petgar’s counsel. They submit, however, that the 132.8 hours of time claimed “is beyond the pale.” The applicants submit, having regard to the steps taken leading up to the trial and the actual time of trial itself, that a total of 45 hours is more reasonable. Taking no issue with the disbursements claimed, the applicants further submit that a reasonable amount for costs on a partial indemnity basis would be $17,205, inclusive of disbursements and HST.

[9] I agree with the applicants that the time spent by Petgar’s counsel is excessive, given the issues. As noted, the trial was a straight forward factual dispute. That said, I do not agree with the applicants that the time should only be considered from the time the trial of the issue was ordered. The issue was raised in the application and would have involved time from the outset considering and replying to it in addition to the other issues raised by the applicants. It was also necessary, once the trial of an issue was ordered, to spend time preparing for it.

[10] I am further of the view that Petgar is not entitled to any costs for the production motion which he brought at the start of trial and was not successful on. In my view, the applicants are entitled to a small credit against Petgar’s trial costs for costs of that motion. I say small because the motion was neither complicated nor long and the applicants’ counsel did not spend a lot of time preparing for it.

[11] The assessment of costs involves more than simply multiplying hours spent times hourly rate. It is a question of what is reasonable having regard to the factors set out in Rule 57(1): Boucher v. Public Accounts Council (Ontario) (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.). In my view, considering all of the factors, a fair and reasonable amount for partial indemnity costs in this case is $30,000 inclusive of disbursements and taxes.

[12] The applicants submit that any costs awarded against them should be made payable out of Abravanis share of the assets jointly held by them including the profits from 753. I do not agree. This is not similar to the appointment of the monitor where Petgar’s share of the jointly ordered costs was ordered to be paid from his share of the joint assets. Petgar was completely successful at the trial and is entitled to payment of his costs from the three individual applicants. While Petgar will be entitled to realize against Abravanis assets in the event the costs are not paid, he should not be restricted to that recourse only.

[13] In conclusion, the costs of the trial are awarded to Petgar on a partial indemnity basis, assessed in the amount of $30,000 inclusive of disbursements and taxes, payable by the three individual applicants jointly and severally within 30 days.

L. A. Pattillo J.

Released: January 24, 2013