COURT FILE AND PARTIES
COURT FILE NO.: CV-09-45535
DATE: 20130919
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 6038212 CANADA INC. and John Yang, Plaintiffs
AND
1230367 Ontario Ltd. and Surinder Sumra, Defendants
AND
Zheng Anderson, Third Party
BEFORE: J. Mackinnon J.
COUNSEL: Steven J. Greenberg, for the Plaintiffs
Hank Witteveen, for the Defendants
Ian Stauffer and Lesley Joseph, for the Third Party
HEARD: September 11, 2013
ENDORSEMENT regarding costs
[1] The defendants and third party seek costs of this nine day trial on the basis of their success in obtaining a dismissal of the plaintiffs’ actions against them. The plaintiffs acknowledge entitlement but submit that each set of costs should be fixed at $70,000 rather than the higher substantial and full indemnity amounts sought.
[2] In seeking the higher scale of costs, the defendants rely primarily on the allegation of fraud against them. It was alleged that they stated falsely that the property was not contaminated and that they actively concealed the fact of the contamination. The defendants also rely on an Offer they made to settle the main action that, if accepted, would have had the result that this case would have been dismissed without costs. They concede that Rule 49 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“Rules”) does not apply to that Offer. Finally, they have cross claimed for the portion of their costs that were not recovered in the main action, namely, $27,850 which is approximately 26% of their total bill in that action.
[3] In my view, the defendants ought not to recover the balance owing on their costs of the main action in this one. All I know is that the main action was settled pursuant to Minutes of Settlement signed in November 2010. I have not seen the Minutes. I am told the settlement was confidential. I do not even know who was responsible for the costs the defendants did recover. I have no basis on which to determine liability for or quantum of costs arising from that action.
[4] Nor do I agree that the Offer the defendants delivered in the main action is a factor to be considered in relation to the costs of this case. It was an Offer delivered to the plaintiff in the main action and, if accepted by that plaintiff, then it could also have been accepted by the plaintiffs here. The main action plaintiff did not accept the Offer and, accordingly, it was never open for acceptance by the plaintiffs in this action. The defendants did not deliver a separate Offer applicable only to this case.
[5] I do find that the allegations made against the defendants in this action were tantamount to allegations of fraud. The allegations included making false representations, deliberately misleading the plaintiffs and defrauding them by making false representations. These allegations and the unsuccessful effort at trial to prove them, engage the ruling in 131843 Canada Inc. v. Double “R” (Toronto) Ltd., 1992 CarswellOnt 437, 7 C.P.C. (3d) 15. In that case, R.A. Blair J. (as he then was) stated at paras. 8, 9, 10, 11and 13:
8 The real question at issue is whether the defendants, or some of them, should be awarded costs on a solicitor-and-client scale, as opposed to the normal party-and-party scale.
9 The power to make such an award is clearly within the discretion of the court. It is equally clear, however, that such a power is only exercised in special and rare cases. See, for example, Foulis v. Robinson (1978), 1978 1307 (ON CA), 8 C.P.C. 198, and S & A Strasser Ltd. v. Richmond Hill (Town), supra.
10 Cases where allegations of fraud are made and found to be totally unfounded fall into this latter category. So, too, do cases involving "other allegations of improper conduct seriously prejudicial to the character or reputation of a party," which are found in the result to be totally unfounded: Re Bisyk (No. 2) (1980), 1980 1843 (ON SC), 32 O.R. (2d) 281.
11 In my opinion this matter is one of those special and rare cases where solicitor-and-client costs are warranted. The action was pleaded and pursued throughout on the basis that the defendants had "wrongfully and maliciously conspired ... to injure the plaintiff by appropriating the transaction and its attendant benefits for the benefit of Vasa, McGorman, Cowper and ...." The statement of claim alleged as well that Mr. Elliott and Mr. Boys had "made false statements to the plaintiff ... and failed to disclose material information to the plaintiff for the purpose of misleading the plaintiff."
13 Allegations of "appropriating" a transaction, and of "stealing" an interest in property are serious allegations, as is the allegation that one has made "false statements" for the "purpose of misleading". They go to the heart of a person's integrity, and to my mind, are analogous to allegations of fraud. They are "allegations of improper conduct seriously prejudicial to the character or reputation of a party". In this case, I have held them to be quite unfounded.
[6] These remarks are equally applicable here.
[7] The Bill of Costs submitted by the defendants is fair and reasonable in all respects, once the costs claimed from the main action are removed. I have also deducted 13% for HST on that amount. The defendants’ costs are fixed at $94,250 all-inclusive.
[8] The third party relies upon the Offer to Settle she made in March 2013 to consent to a dismissal of the claim against her without costs in support of an award of partial costs to the date of the Offer and full costs thereafter. The third party also conceded that Rule 49 cannot apply to her Offer. She seeks the higher scale as a discretionary award and asks for an award of $150,000 on an all-inclusive basis.
[9] One reason that the third party bill is higher than the defendants’ is that she was not party to the main action and therefore did not receive any contribution to the costs she incurred during that period of time. The main action commenced in July 2009. The third party was brought in, in October 2009. She did incur legal fees given the overlap in issues and her need to keep watch on the progress and development of the main action. On a partial recovery basis, those amount to $18,000.
[10] In my view, the third party should receive costs at the higher scale, on a substantial recovery basis, for the fees incurred after delivery of her Offer on March 22, 2013. Her Offer was more advantageous to the plaintiffs than the outcome after trial which will include a significant costs award. There was no Offer from the plaintiffs. Although this outcome is not mandatory or presumptive under the Rules, it makes sense to exercise my discretion on principles reflected in the Rules. The Bill of Costs only enables me to know with precision the fees attributable to the actual days of trial although, undoubtedly, fees for preparation would have been incurred after the offer date and before commencement of trial. I have taken that into account.
[11] I have also considered the plaintiffs’ submissions with respect to excessive hours spent on preparation and pre-trial attendances in relation to what is reasonable for an opposing party to bear and whether a second trial counsel was necessary. I did not conclude that junior counsel was necessary, although certainly fortuitous when senior counsel was required to absent himself and the trial could nonetheless proceed. I have taken these factors into account. I have considered the question of reasonableness by comparison to the defendants’ Bill of Costs, which did reflect less time expended at various stages of the case.
[12] The plaintiffs also questioned the disbursements incurred and set out in the Bill of Costs, with respect to photocopies and expert fees. The third party was not asked to provide any records in support of these expenses. Experts’ fees were shared with the defendants with a view to economizing. I see no reason to adjust the disbursements.
[13] On this basis, the third party’s costs are fixed at $110,000 inclusive of fees, disbursements and HST.
J. Mackinnon J.
Date: September ___, 2013
COURT FILE NO.: CV-09-45535
DATE: 20130919
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: 6038212 CANADA INC. and John Yang, Plaintiffs
AND
1230367 Ontario Ltd. and Surinder Sumra, Defendants
AND
Zheng Anderson, Third Party
BEFORE: J. Mackinnon J
COUNSEL: Steven J. Greenberg, for the Plaintiffs
Hank Witteveen, for the Defendants
Ian Stauffer and Lesley Joseph, for the Third Party
ENDORSEMENT regarding costs
J. Mackinnon J
Released: September 19, 2013