Court File and Parties

COURT FILE NO.: FS – 12 - 382982

DATE: 2013-12-30

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Lynda Friendly, Applicant

AND:

Manuel Elkind, Respondent

1671379 Ontario Inc., Respondent

BEFORE: Kiteley J.

COUNSEL: Elliot Birnboim, for the Applicant

Gary S. Joseph, for the Respondent Elkind

Jason R. Cherniak, for the Respondent 1671379 Ontario Inc.

ENDORSEMENT AS TO COSTS ARISING FROM MOTIONS

HEARD SEPTEMBER 24, 2013

Endorsement

[1] On September 24, 2013, counsel for the Applicant brought a motion to strike the pleadings of the Respondent Elkind for failure to comply with the order made by Paisley J. dated August 20, 2013. Counsel also asked for an order requiring the Respondent Elkind to return all documents of the corporate Respondent to the corporate office at the former matrimonial home and related relief and costs. Counsel for the Respondent Elkind brought a motion requesting leave to bring the motion and an order allowing him to amend his Answer, question the Applicant, an order requiring the Applicant to produce a financial statement, an order extending the 30 day deadline in the order made by Paisley J. and costs.

[2] In his written submission as to costs, Mr. Joseph asked for an order for costs, inclusive of disbursements and HST in the amount of $10,000. In his written submission, Mr. Birnboim asked for an order that the Respondent pay costs in the amount of $1503 on a partial indemnity basis with respect to the Respondent’s motion, with the balance adjourned to the return of her motion to strike the pleadings of the Respondent.

Success on the Motions

[3] Counsel for the Respondent made a preliminary objection that the Applicant’s motion to strike the Respondent’s pleadings should not be heard until after October 3, 2013, the previously agreed upon date for the Respondent’s motion to stay the order of Paisley J. I accepted that objection and adjourned the motion to strike pleadings.

[4] Counsel for the Applicant made a preliminary objection that the Respondent’s motion ought not to be heard and, with the exception of the motion to amend the Answer, all matters should be adjourned to the judge hearing the summary judgment motion. I did not accept that objection and heard submissions on the two aspects of the motion that Mr. Joseph indicated required immediate disposition, namely whether an order should be made for questioning of the Applicant and whether leave to amend the Answer would be granted.

[5] I heard submissions from counsel and granted the motion to amend the Answer with some modifications. I dismissed the motion for an order for questioning.

[6] The Respondent was successful on three issues: adjournment of the Applicant’s motion to strike his pleadings; granting leave to bring the motion to amend his Answer; and leave to amend his Answer.

[7] The Applicant was successful on two issues: limiting the proposed defences in the Answer and resisting the request for questioning.

Positions Advanced by Counsel

[8] Rule 24(1) contains a presumption that the successful party is entitled to costs. Pursuant to rule 24(4), a successful party who has behaved unreasonably during a case may be deprived of all or part of the party’s own costs or ordered to pay all or part of the unsuccessful party’s costs. Pursuant to rule 24(6), if success in a step in a case is divided, the court may apportion costs as appropriate. Pursuant to rule 24(8), if a party has acted in bad faith, the court shall decide costs on a full recovery basis and shall order the party to pay them immediately. Pursuant to rule 24(10), the court is to decide costs promptly after each step in the case. Pursuant to rule 24(11), the factors relevant to fixing the amount of costs include the importance, complexity or difficulty of the issues; the reasonableness or unreasonableness of each party’s behaviour in the case; the lawyer’s rates; the time properly spent on the case and expenses properly paid; and any other relevant matter.

[9] It is evident that reasonableness of behaviour is a factor in whether costs are to be ordered and if so, how much.

[10] On behalf of the Respondent, Mr. Joseph argued that the Applicant behaved unreasonably in several respects. First, by serving the motion to strike the Respondent’s Answer before the 30 days allowed by Paisley J. in his endorsement dated August 20 had elapsed. Second, by bringing the motion to strike before October 3rd, which was the date counsel had agreed upon for the hearing of the Respondent’s motion in the Court of Appeal for an order staying parts of the order of Paisley J. Third, by failing to consent to the requested amendment to the Answer. Fourth, by relying on a factum that counsel for the Applicant had served and filed when the motion to amend was originated but which he had not listed on his confirmation form, which meant that Mr. Joseph had to meet arguments with respect to the viability of certain defences for which he was not prepared.

[11] On behalf of the Applicant, Mr. Birnboim argued that the Respondent had acted in bad faith in several respects. First, the Respondent was subject to the order made by Paisley J. that his pleadings were stayed and it was on that account that he had to seek leave to bring the motion. That order as well as multiple breaches of other court orders that were not detailed, warranted opposition to the request for leave to bring the motion. Second, the key reason for adjourning the Applicant’s motion to strike the Answer was the motion to stay that had been scheduled to be heard in the Court of Appeal on October 3rd. Mr. Birnboim provided a copy of the endorsement of Laskin J.A. dated October 3rd in which he dismissed the motion to stay partly on the basis that the order from which the appeal was sought was likely interlocutory. According to paragraph 16 and 17 of his submissions, Mr. Birnboim argued that the Respondent was forced to abandon his defective appeal and that he had demonstrated tactical, bad faith conduct designed to obtain an adjournment of the main motion to strike his Answer. While not describing it as unreasonable or bad faith, Mr. Birnboim also pointed out that in an order made on May 14, 2013, Jarvis J. had given the Respondent leave to bring the motion to amend his Answer, yet he had not brought the motion until September 24, 2013 which threatened the Applicant’s outstanding summary judgment motion scheduled for October 28th. Furthermore, in the factum he had served and filed in May, 2013, Mr. Birnboim had pointed out that certain of the legal defences raised had not been properly pleaded and were not viable yet the draft Answer did not reflect those challenges.

Analysis

[12] I will not consider the submission that it is relevant to costs that the position taken by the Applicant that the appeal from the order of Paisley J. was launched in bad faith was vindicated when counsel appeared in the Court of Appeal on October 3rd. That submission would require that I consider events subsequent to September 24th. While rule 24(4) gives the court the jurisdiction to deal with costs “in the case” which might broaden the time frame relevant to the order of costs, I am not prepared to consider post-motion events, even where the motion to stay on October 3rd was known on September 24th.

[13] I also do not find that the behaviour on the part of the Respondent constituted bad faith. There is a difference between unreasonable behaviour and bad faith conduct. Without reviewing the authorities on the issue of bad faith, none of which were provided by counsel for the Applicant, I am not persuaded that the allegations against the Respondent approach bad faith conduct.

[14] I am satisfied that both parties acted unreasonably: the Applicant by launching a motion within the 30 days allowed by Paisley J. (which meant that an adjournment was likely and simply contributed to the existing high conflict nature of the proceedings) and by launching it before the agreed upon date for the hearing of the motion to stay; and the Respondent by not launching his motion to amend his Answer to plead legal defences to the Applicant’s claims on promissory notes until 4 months after he had been granted leave to do so and only then within weeks of the outstanding motion for summary judgment. Rule 11(3) provides that a court shall give permission to a party to amend a pleading unless the amendment would disadvantage another party in a way for which costs or an adjournment could not compensate. As I indicated in my endorsement on September 24th, there was no prejudice. However, it is understandable that counsel for the Applicant would have challenged the motion to amend the Answer under these circumstances. In view of the fact that both parties have acted unreasonably and success was divided, neither party should be rewarded with costs.

[15] I do not agree that any aspect of the costs of these motions should await the outcome of the motion for summary judgment. As indicated above, the court is expected to make orders as to costs at each step. It is the case that sometimes the success of a preliminary motion should be factored into a decision as to costs of the main motion. However, in a situation such as this, it is inappropriate to visit on the judge hearing submissions as to costs of the main motion, a decision as to the costs of the preliminary skirmishing, particularly since both parties must accept some responsibility for acting unreasonably.

ORDER TO GO AS FOLLOWS:

[16] Neither party shall recover any costs associated with the preparation for and attendance at the motions returnable September 24, 2013.

Kiteley J.

Date: December 30, 2013