SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: Caja Paraguaya de Jubiliaciones y Pensiones del Personal de Itaipu Binacional, Plaintiff

AND:

Eduardo Garcia Obregon a.k.a. Eduardo Garcia a.k.a. Eddie Obregon, Claudia Patricia Garcia a.k.a. Patricia Garcia a.k.a. Claudia Patricia de Garcia a.k.a. Claudia Santisteban, Ligia Ponciano, Managed (Portfolio), Corp., Genesis (LA), Corp. (Ontario Corporation Number 1653094), Genesis (LA), Corp. (Alberta Corporate Access Number 2013145921), FC Int, Corp., First Canadian Int, Corp., Union Securities Limited, Scott Colwell, Marty Hibbs, Hibbs Enterprises Ltd., Columbus Capital Corporation, Antonio Duscio, Leanne Duscio, Leanne Duscio carrying on business as The Queen St. Conservatory, Catan Canada Inc., Vijay Paul, Greg Baker, Bradley F. Breen, Lou Maraj, 2138003 Ontario Inc., Mackie Research Capital Corporation, First Canadian Capital Markets Ltd., First Canadian Capital Corp., FC Financial Private Wealth Group Inc., Jason C. Monaco, Daniel Boase, Paolo Abate, Nikolaos Sylianos Tsimidis, Genesis Land Development Corporation, Limited Partnership Land Pool (2007), and GP LPLP 2007 Inc., Defendants

AND BETWEEN:

Eduardo Garcia, FC Int, Corp., Genesis (LA), Corp. (Ontario Corporation Number 1653094) and Patricia Garcia, Plaintiffs by Counterclaim

AND

Upper Canada Explorations Limited, Parkside Resources Corporation, Global Sport Technologies Corp., and Caja Paraguaya de Jubiliaciones y Pensiones del Personal de Itaipu Binacional, Defendants by Counterclaim

BEFORE: D. M. Brown J.

COUNSEL:
T. McRae, for the Plaintiff

R. Craigen, for the Defendants, Eduardo Garcia, Patricia Garcia, Managed (Portfolio), Corp., Genesis (LA), Corp. (Ontario Corporation Number 1653094), Genesis (LA), Corp. (Alberta Corporate Access Number 2013145921), FC Int, Corp. and First Canadian Int, Corp.

HEARD: Motion heard by telephone conference call held November 1, 2013

reasons for decision - costs

[1] By orders made April 15, 2013, Newbould J. permitted Gowling Lafleur and Henderson LLP to remove themselves from the record as counsel for the Garcia defendants and he declined to permit Mr. Garcia to represent the corporate Garcia defendants. No appeal was taken from that order.

[2] On August 29, 2013, the plaintiff commenced a motion to strike out the statement of defence of the corporate Garcia defendants and their counterclaim on the ground that the corporate Garcia defendants had failed to appoint new counsel. Pursuant to an order made at a 9:30 appointment on September 6, the motion was scheduled for hearing on October 25, 2013.

[3] Mr. Garcia served responding materials. He was cross-examined at length on them on October 15, 2013. On October 24 the plaintiff filed a supplementary motion record and factum.

[4] Around noon that same day the Gowlings firm came back on the record for the Garcia defendants and filed a factum resisting the motion to strike. At a case conference that day plaintiff’s counsel indicated that his client likely would not proceed with the motion to strike given that there was now counsel for the corporate Garcia defendants, but the issue of costs thrown away remained. Despite further discussions, the parties were not able to resolve the costs issue, and I heard submissions on the point this morning.

[5] The plaintiff filed a Bill of Costs seeking partial indemnity costs in the amount of $8,908.19 (fees: $6,662.50; disbursements: $1,379.56). The Bill of Costs used an hourly rate of $325/hour for counsel who was a 1991 call; the rate sought is a reasonable one.

[6] Defendants’ counsel submitted that no costs should be awarded for several reasons: (i) the motion was not argued; (ii) if it had been argued, it was unlikely the court would have struck the statement of defence because the case law provides that a court only should grant such a serious remedy as a last resort; (iii) the defendants had co-operated in participating in discoveries, productions and cross-examinations; and, (iv) the corporate Garcia defendants ultimately did retain counsel.

[7] This case involves serious allegations of fraud (and other causes of action) against the Garcia defendants and others with the plaintiff claiming about $14.5 million in damages. In his April 15, 2013 endorsement Newbould J. observed that “this litigation is not straightforward, to say the least, and needs to be dealt with properly”. He expressed concern that “Mr. Garcia does not appreciate how litigation should be properly conducted” and gave, by way of illustration, examples of Mr. Garcia reporting plaintiff’s counsel to the RCMP and “besieging” plaintiff’s counsel with requests for documentation.

[8] Given the complexity of this litigation, and the timetable in place to move it along to trial, it was most reasonable in the circumstances for the plaintiff to have brought a motion to strike the defence of the corporate Garcia defendants. That would prompt those defendants to make the necessary decision as to whether to defend or not. Certainty thereby could be brought to the preparation of the case for trial.

[9] Defendants’ counsel submitted that no costs should be awarded because ultimately the corporate Garcia defendants appointed counsel and the motion was not argued. That is true, but the appointment came just as the clock was about to strike midnight and the plaintiff had been put to significant expense. Those defendants had the better part of two months to retain counsel, yet left it to the last minute. Such delay caused the plaintiff to incur unnecessary costs.

[10] Whether the plaintiff would have succeeded in whole, in part or not at all on the motion is not a matter I need consider. I formed no view on the issue prior to October 25 because of the advice of counsel that the motion would not be proceeding. I repeat, however, that in the circumstances I regard as reasonable the decision of the plaintiff to bring the motion in order to move this case along to trial.

[11] Accordingly, I conclude that the plaintiff is entitled to reasonable costs thrown away calculated on a partial indemnity basis.

[12] I have reviewed the plaintiff’s Bill of Costs and 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.

[13] The plaintiff seeks only half the costs of the transcript of the cross-examination of Mr. Garcia because the defendant has agreed the transcript can be treated as part of his examination for discovery. That being the agreement, I think no recovery for the cost of the transcript should be allowed at this time; it can be considered in the final disposition of costs. That reduces recoverable disbursements to $355.38. In my view, the claimed time of 20.5 hours was reasonable. I therefore allow fees, plus H.S.T. of $7,528.63, and the disbursements of $355.38, for a total of $7,884.01.

[14] Mr. Garcia deposed that he has little in the way of funds; Newbould J. made observations to the contrary. On the basis that it is of more assistance to the Court in a complex case of this sort to have parties represented by counsel than to be left to their own efforts, I will stagger the obligation of the corporate Garcia defendants - Managed (Portfolio), Corp., Genesis (LA), Corp. (Ontario Corporation Number 1653094), Genesis (LA), Corp. (Alberta Corporate Access Number 2013145921), FC Int, Corp. and First Canadian Int, Corp. – to pay the costs awarded. I order those defendants to pay the costs of $7,884.01 to the plaintiff on the following schedule:

(i) $2,000 on or before December 1, 2013;

(ii) $2,000 on or before January 1, 2014;

(iii) $2,000 on or before February 1, 2014; and,

(iv) $1,884.01 on or before March 1, 2014.

D. M. Brown J.

Date: November 1, 2013