ONTARIO
SUPERIOR COURT OF JUSTICE
Court File No.: 05-CV-294945PD
Date: March 7, 2014
BETWEEN:
MIODRAG STOJANOVIC
J. Kleiman, for the plaintiff
(responding party)
Fax: 647-977-5770
Plaintiff (Responding party)
- and -
NIKOLA BULUT aka Nicolas Bulut), STEVEN BULUT, MARKO N. BULUT, 1091369 ONTARIO INC. and 1112618 ONTARIO INC.
P. Jervis, for the defendant
(moving party)
Fax: 416-363-0263
Defendants (Moving parties)
HEARD: November 29, 2013
Master C. Albert
COSTS OF NOVEMBER 29, 2013 MOTION
[1] The defendants[^1] successfully moved for security for costs and for further discovery of the plaintiff. By decision and reasons released January 29, 2014 the court ordered the plaintiff to post security for costs of $25,000.00 by March 31, 2014, plus $20,000.00 within 60 days after the action is set down for trial plus $50,000.00 no later than 60 days before trial. Counsel filed costs outlines at the conclusion of the motion hearing. The court invited written submissions on costs following release of the court’s disposition of the motion.
[2] Both parties filed written submissions on costs. These reasons provide the court’s costs disposition and reasons.
General principles
[3] As a general principle costs should follow the event and flow to the successful party. There is no reason to depart from that principle in this case.
[4] The defendant asks for costs to be fixed at $56,588.17 on a substantial indemnity scale or, in the alternative, $38,846.17 on a partial indemnity scale, inclusive of disbursements and HST. The plaintiff suggests that reasonable costs would be $5,413.00, inclusive of disbursements and HST, being the amount in the plaintiff’s costs outline.
Relevant factors in fixing costs
[5] Rules 57.01(1), 49 and 1.04 describe factors to consider when fixing costs. The list is non-exhaustive. The enumerated factors that apply to this motion are:
a) Indemnification: the experience of the lawyer for the party entitled to costs, the rates charged and the time spent;
b) Reasonable expectation of the payor: what quantum of costs should the unsuccessful party reasonably expect to pay?
c) Importance of the motion;
d) Outcome;
e) Complexity of the proceeding;
f) Conduct: did the conduct of any party shorten or unnecessarily lengthen the duration of the proceeding?
g) Proportionality: costs should be proportionate to the importance and complexity of the issues and to the amount involved in the proceeding.
h) Any other matter relevant to the question of costs.
[6] The court must also consider any rule 49 settlement offers. In this case there were none.
[7] I have considered each of these factors, which in my view are relevant in exercising discretion and determining an appropriate costs order in this case.
a) Indemnification
[8] Generally the successful party is entitled to costs. The moving party defendants are entitled to costs unless there is some reason to deprive them of those costs having regard to the factors described in rule 57.01, or other relevant factors.
Hourly rates and experience
[9] According to his costs outline the defendants’ principal lawyer, Peter Jervis, spent 67 hours on this motion. He was called to the bar in 1983. His time is claimed on a partial indemnity scale at $431.67 per hour and on a substantial indemnity scale at $647.50. His time is billed to the client at $925.00 per hour.
[10] S. Chiodo, who also worked on the file, spent 10 hours on this matter. She was called to the bar in 2012. Her time is claimed on a partial indemnity scale at $128.33 per hour and on a substantial indemnity scale at $192.50. Her time is billed to the client at $275.00 per hour.
[11] N. Pennyfeather, law clerk, also worked on the file for 18 hours. Her time is claimed on a partial indemnity scale at $46.67 per hour and on a substantial indemnity scale at $70.00. Her time is billed to the client at $100.00 per hour.
[12] I find that the hourly rates claimed by Mr. Jervis are excessive for a motion of this type. While the facts of the case are somewhat complex given the lengthy history of the litigation and the multiple actions, it does not warrant a lawyer of more than 30 years’ experience at an actual rate of $925.00 per hour for 67 hours. If a client chooses to retain such expensive legal expertise then the client ought not expect to pass costs at this level through to the opposite party, even if successful on the motion.
[13] I find that an hourly rate of $250.00 on a partial indemnity scale and $375.00 on a substantial indemnity scale for Mr. Jervis would be reasonable. I further find that an hourly rate of $100.00 on a partial indemnity scale and $150.00 on a substantial indemnity scale for Ms. Chiodo, in her first year of practice, would be reasonable and an hourly rate of $40.00 on a partial indemnity scale and $60.00 on a substantial indemnity scale for Ms. Pennyfeather, law clerk, would be reasonable.
[14] I further find that 67 hours for senior counsel to spend on a motion of this type and complexity is excessive. A security for costs motion and motion for further discovery is a common civil motion brought time and again in civil proceedings. The complex factual foundation of this case does not warrant 67 hours of senior counsel’s time. Furthermore, the motion was rescheduled from August to November, 2013 and while some duplication of preparation is expected, much of the initial preparation should apply to the return of the motion. I have taken this factor into account in fixing costs.
[15] Taking all of these factors into account I would allow 40 hours for Mr. Jervis, 10 hours for Ms Chiodo and 18 hours for Ms Pennyfeather as reasonable for a motion of this type and complexity. On a partial indemnity scale this translates to $11,720.00 for fees and on a substantial indemnity scale this translates to $17,580.00 for fees.
b) Reasonable expectation of the unsuccessful party
[16] Access to justice requires that a costs award must be in the reasonable expectation of the unsuccessful party. Consequently reasonable expectation of the unsuccessful party is a relevant factor in exercising discretion when fixing costs. The key concept is reasonableness.
[17] The costs provisions of the rules should reasonably have informed the unsuccessful plaintiff to expect to pay costs if unsuccessful. In this case the plaintiff argues that the costs claimed are excessive, relying on his own counsel’s costs outline showing $5,250.00 for fees plus $163.00 for disbursements. The plaintiff asserts that this would be within the plaintiff’s reasonable expectations as to costs if unsuccessful.
[18] I find that the plaintiff’s position on this issue is unreasonable. The motion materials were voluminous, a fact that is not reflected in the plaintiff’s costs submissions. I note that when the plaintiff filed his written submission on costs counsel did not have before him the defendants’ argument on costs. However he did have the defendants’ costs outline and most of the defendants’ position and argument is reflected in that document, provided at the conclusion of the motion hearing on November 29, 2013. The defendants’ argument on costs submitted by letter on March 3, 2014 does not address the issue of reasonable expectation.
[19] The plaintiff’s current solicitor came into the motion late in the day, having served and filed a notice of change of solicitors on September 10, 2013. The plaintiff does not include in his costs outline, or his submissions as to his reasonable expectation of costs, all of the preparation and materials prepared and filed for the motion that was first before the court on August 15, 2013. By that date the plaintiff, represented by his previous solicitor, had reviewed, prepared and filed voluminous materials. The costs reflected in the plaintiff’s costs outline do not include any of these costs of preparing the motion. I find that the costs outline relied on by the plaintiff as reflecting his reasonable expectation as to costs is unreasonable and unreliable as a reflection of appropriate costs of the motion.
[20] In the absence of any other evidence from the plaintiff as to what might reasonably have been expected in costs, I find that the costs outline submitted by the defendants, as adjusted downwards by me herein, ought reasonably have been expected by the plaintiff on this motion.
c) Importance of the motion
[21] The amount of the plaintiff’s claim supports a finding that the matter is important to the defendants. The plaintiff claims the sum of $1,368,923.00 US, alleging that he paid this amount in kind by providing an equivalent value in pulp products to a Serbian government corporation to satisfy a guarantee. Given that the plaintiff resides outside of Canada and has no assets in Canada, obtaining security for costs is very important to the defendants, who must prepare for a trial over this amount of money.
[22] Regarding the portion of the motion seeking further discovery of the plaintiff, the plaintiff’s answers on discovery (including answers to undertakings) were such that I found further discovery is warranted. Given that the plaintiff’s case is predicated on proving that he paid the equivalent of $1,368,923.00 US in kind and that his answers on discovery were vague and incomplete, further discovery on this issue is very important to the defendants.
[23] I conclude that the defendants’ motion for security for costs and for further discovery of the plaintiff was necessary and important.
d) Outcome
[24] The defendants asked for security for costs of $217,918.35. On the motion they achieved an order for security for costs of $95,000.00 phased over three stages of the action. While the moving party was successful on the motion, success was limited. Put another way, the defendants were overreaching in their demand. This is relevant because excessively high demands discourage settlement offers.
[25] This is a relevant factor when fixing costs as it goes to whether some of the costs incurred by the moving party could have been avoided had the demand been more reasonable.
e) Complexity
[26] The case is factually complex. The litigation spans decades and involves several court proceedings in Serbia and Ontario. The issue on the motion for security for costs that was somewhat complex was that of impecuniosity or financial hardship and, specifically, whether the plaintiff mislead the court in the 2010 security for costs motion by withholding from the court his beneficial interest in two properties in Belgrade, leading to a finding of financial hardship and relieving the plaintiff from any obligation to post security for costs.
[27] This complexity justifies the amount of time that the court recognizes as reasonable for a motion of this type.
f) Conduct
[28] Substantial indemnity costs may apply where there has been fault or some other factor that would justify a high award of costs against the unsuccessful party. The failure by the plaintiff to disclose to the court his beneficial interest in the two properties in Belgrade gave rise to the need for this motion. On the other hand, had the cross-examination conducted for this motion been conducted prior to the 2010 motion, then evidence obtained on this motion of the plaintiff’s transfer of the two properties to his son for no consideration in February 2009, could reasonably have been ascertained in time for the 2010 motion.
[29] While I find that the plaintiff withheld relevant information form the court in the 2010 motion, I also find that the evidence that persuaded me as to the appropriateness of ordering security for costs was discoverable on the 2010 security for costs motion.
[30] In these circumstances I find that an award of substantial indemnity costs is not warranted at this stage. However, should the trial judge find otherwise then the calculation of costs on a substantial indemnity scale for this motion would warrant in the fee component of this costs award to the quantum specified in paragraph 15.
g) Proportionality
[31] Proportionality is incorporated into section 1.04(1.1) of the Rules:
1.04(1.1) Proportionality: In applying these rules, the court shall make orders and give directions that are proportionate to the importance of and complexity of the issues, and to the amount involved, in the proceeding.
[32] The plaintiff is suing the defendants for $1,368,923.00 U.S. I find that the amount claimed for costs, as adjusted therein to reflect reasonable rates and reasonable hours, is proportionate to the amount in issue in this litigation, taking into account that the plaintiff has no assets in Ontario and, if successful the defendants have no other recourse to enforce a costs award.
h) Any other relevant factor
[33] The defendant asks the court to reverse the costs awards of $5,000.00 against the defendants ordered by Master Dash on the first security for costs motion and $2,500.00 against the defendants ordered by Justice Gans on appeal. This request is refused for two reasons. The first is that these costs submissions were filed after the deadline for filing costs submissions and for that reason alone ought not be considered as the plaintiffs did not have an opportunity to respond. While extensions of time could be granted, there must be finality to interlocutory proceedings and endless extensions for no valid reason (the defendants did not even seek an extension of time. Mr. Jervis merely filed his submissions late).
[34] The second reason for refusing this request is a substantive one: reversing prior costs awards is not properly before me. I do not have appellate power over either Master Dash or Justice Gans. Adding the amount of the costs awards that they made to this costs award would be tantamount to reversing their costs awards. The defendants will have to seek this remedy elsewhere.
Disbursements
[35] The plaintiff claims $3,360.31 for disbursements, including HST. One item stands out: $2,153.00 for photocopies. No breakdown or backup was provided. The tariff provides that a reasonable amount may be charged for photocopies. At ten cents a page, the amount claimed for photocopies would allow for over two hundred thousand pages. At twenty five cents a page it would allow for 8,612 pages. The materials filed were voluminous but not so voluminous as to warrant an unsubstantiated claim for photocopying of this magnitude.
[36] The court allows $500.00 for photocopies for a total of $1,137.54 for taxable disbursements plus HST of $147.88 plus non-taxable disbursements of $207.00 for a total for disbursements of $1,492.42.
Calculation
[37] Allowable costs in favour of the moving party defendants are calculates as follows:
Fees: $11,720.00
HST on fees: 1,523.60
$13,243.60
Disbursements including applicable HST: 1,492.42
Total fees and disbursements: $14,736.02
CONCLUSION
[38] In all the circumstances it is my view that costs ought to be fixed at $14,736.02 in favour of the moving party defendants payable by the plaintiff. I regard this amount as fair and reasonable in the circumstances and what the plaintiff ought reasonably have expected to pay if unsuccessful..
[39] This court orders that Miodrag Stojanovic pay costs fixed at $14,736.02 to the defendants Steven Bulut, Marko N. Bulut, 1091369 Ontario Inc. and 1112618 Ontario Inc. within 60 days.
Master C. Albert .
Released: March 7, 2014
COURT FILE NO.: 05-CV-294945PD
DATE: March 7, 2014
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MIODRAG STOJANOVIC
Plaintiff (Responding party)
- and -
NIKOLA BULUT aka Nicolas Bulut), STEVEN BULUT, MARKO N. BULUT, 1091369 ONTARIO INC. and 1112618 ONTARIO INC.
Defendants (Moving parties)
COSTS
Master C. Albert
Released: January 29, 2014
[^1]: The moving party defendants are all of the defendants other than Nicholas Bulut