SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 802/09

DATE: 20140224

RE: George Galineas, Fevronia Galineas, Kathy Galineas, Kathy Agelakos, and Cristos Agelakos, Plaintiffs

AND:

RBC Dominion Securities Inc., Royal Bank Of Canada, and Kosta Dariotis, Defendants

AND:

James Howarth Bennett, Intervener

BEFORE: Edwards J.

COUNSEL:

N. Gross, for the Plaintiffs, Kathy Agelakos and Cristos Agelakos

M. Kesetnberg, for the Defendants, RBC Dominion Securities Inc., and Royal Bank of Canada

G. Mew and D. Zacks, for the Intervener, James Howarth Bannett

ENDORSEMENT

[1] The Defendant, Kosta Dariotis (“Dariotis”) and the defendants, RBC Dominion Securities Inc., (“RBC DS”) and Royal Bank of Canada, (“RBC”), each brought a motion for summary judgment dismissing the claim of Kathy Agelakos and Cristos Agelakos (“Agelakos”).

[2] The claims of the following plaintiffs: George Galineas, Fevronia Galineas and Kelly Galineas, were dismissed on consent on August 6, 2013.

[3] Agelakos took no position in oral argument on the motion.

[4] James Howarth Bennett, as intervener, (“Intervener”) resisted the motion.

[5] On January 7, 2014, I granted the defendants’ motion and dismissed the plaintiffs’ action. I have received now costs submissions.

[6] Dariotis seeks total costs of the action (including the motion) of $160,812.82, all inclusive. He seeks costs of the summary judgment motion on a substantial indemnity basis in the amount of $45,767.50, to be payable jointly and severally by the Intervener and Agelakos.

[7] Dariotis submits that as the plaintiffs’ claim spanned a 17 year period there was substantial documentary discovery (123 documents from the plaintiffs; 112 documents from Dariotis); there were 3 days of oral discovery in which Dariotis’ counsel took the lead in asking questions of the plaintiffs. The summary judgment motion to dismiss involved significant issues that required careful preparation of materials and review of the other parties’ documentation. The motion took one day to argue.

[8] Dariotis submits that factors to be considered for this cost award:

a. that partial indemnity rates should be used up to the date of the Offer to Settle dated June 14, 2013, and substantial indemnity thereafter. R 57.01(1)(0.a);

b. the plaintiffs had sought damages of $1,500,000 and it is reasonable to expect significant costs to be incurred in defending such a claim. R 57.01(0.b);

c. although the plaintiffs claimed $1,500,000 damages, they had no recovery. R 57.01(1)(a);

d. The matter was complex and the allegations spanned 17 years. R 57.01(1)(c);

e. There were very high stakes involved and it was very important to the defendant. R 57.01(1)(d);

f. The offer to settle dated June 14, 2013, from Dariotis in which he offered to pay $40,000 to end the proceedings. The motion for judgment ended the action. The Intervener participated in and opposed the motion. Neither the Intervener nor the Agelakos made any offer to settle.

[9] The defendants, RBC and RBC DS, have reached agreement with the Agelakos and the Intervener with respect to the costs of the summary judgment motion. Agelakos and the Intervener have agreed to pay to RBC and RBC DS the sum of $15,000 all inclusive, and request that this be reflected in my cost endorsement.

[10] RBC and RBC DS seek costs for the remainder of the action on a partial indemnity basis in the amount of $29,000, all inclusive.

[11] They submit that the following factors set out in Rule 57.01 must be considered:

a. The amount claimed by the plaintiffs was $1,500,000;

b. RBC and RBC DS’ position remained consistent throughout and the court agreed with that position;

c. the litigation spanned more than four years;

d. the litigation involved delivery of pleadings; demands for particulars, request to inspect, negotiation of a detailed discovery plan, exchange of eight volumes of documents, a motion for production and three full days of examination.

[12] RBC and RBC DS acknowledged that they played a lesser role than Dariotis’ counsel in some events; however the costs claimed on a partial indemnity basis by RBC and RBC DS were approximately 30% of the partial indemnity costs sought by Dariotis for the same steps.

[13] Agelakos’ general response to these submissions was that the costs claimed by RBC, RBC DS, and Dariotis were excessive, making them neither reasonable nor fair in the circumstances.

[14] Agelakos submit that the overriding principle in fixing costs is fairness and reasonableness, as applied to the factual matrix of the particular case; the award should reflect what is a fair and reasonable amount to be paid by the unsuccessful parties, rather than any exact measure of the actual costs of the successful litigant; there should be a balancing of the indemnity principle with the fundamental object of access to justice.

[15] Agelakos asserts that the costs sought by Dariotis for the summary judgment motion are excessive at $45,767.50. Agelakos acknowledge that they and the Intervener have settled the issue of the costs of the summary judgment motion with RBC and RBC DS by agreeing to pay them $15,000 including taxes and disbursements.

[16] They submit that Dariotis seeks recovery of 100% of the costs incurred on the summary judgment motion, as the substantial indemnity rate used in Dariotis’ Bill of Costs is the rate charged to the client.

[17] Agelakos submits that the costs claimed by Dariotis are excessive and surpass the costs that Agelakos could reasonably be expected to pay. The motion was not complicated and centered around one issue: was the action commenced outside of the two-year limitation period. There were no cross-examinations on the affidavits and the motion took one half of a day to argue. Dariotis claimed over 100 hours of lawyer time, compared to less than 60 hours of lawyer time claimed by RBC.

[18] Finally, it is Agelakos’ position that the Intervener should be responsible for any cost awarded with respect to the summary judgment motion as the Intervener opposed the motion. Agelakos did not oppose the motion, and filed only very brief materials in response to materials filed by the Intervener.

[19] Agelakos asserted that the costs sought by RBC and Dariotis for the remainder of the proceeding both exceed what is fair and reasonable in light of the circumstances of this case. The costs claimed are significantly in excess of the costs incurred by Agelakos, and therefore significantly in excess of what Agelakos could reasonably expect to pay. Agelakos’ lawyers committed a quarter of the time compared to the number of hours committed by Dariotis’ lawyers.

[20] Agelakos submit that the time spent by Dariotis’ lawyer fighting the claims of the other three plaintiffs whose claims were later dismissed on consent should not be part of the cost award. RBC has claimed the time associated with respect to the discovery motion that was resolved on consent, whereas Dariotis has not claimed it. Agelakos’ position is that this time should not be part of any cost award.

[21] The Intervener agrees that the costs of RBC and RBC DS for the summary judgment motion have been settled on the basis that the Intervener and Agelakos shall pay them the sum of $15,000.

[22] The Intervener’s position is that he should only bear Dariotis’ extra costs on the summary judgment motion incurred as a result of his intervention; Agelakos should pay the balance of the costs of the motion.

[23] The Intervener submits that he was partially successful as he intervened because of another action against him for $1,500,000 for breach of fiduciary duty, negligence and breach of contract. His purpose was to petition the court to refrain from making a finding of fact that would prejudice the defence of that action.

[24] He asserts that although RBC and RBC DS in their factum requested that the court grant relief without prejudicing the Intervener’s defence in the action against him, Dariotis’ factum did not include such a request. Therefore, there was a risk to the Intervener, which caused him to intervene.

[25] The Intervener submits that the hours spent by Dariotis’ lawyers were excessive. The Intervener’s lawyers spent 46 hours; RBC and RBC DS’ lawyers spent 60.3 hours and Dariotis’ lawyers spent 100.5 hours. He asserts that the 100.5 hours spent exceeds the boundaries of reasonableness for a summary judgment motion in which there were no cross-examinations on affidavits; the two defendants divided responsibility for their submissions; and the motion was argued in 2 hours.

[26] He asserts that the motion was procedurally simple; his intervention did not complicate the motion; Dariotis is entitled to compensation for the reasonable costs of reviewing the Intervener’s motion record, factum, and authorities. He notes that he spent 48 hours on the entire summary judgment motion, resulting in partial indemnity fees of $8,088.54.

[27] The Intervener submits that Dariotis’ Bill of Costs does not break down the extra work incurred due to the Intervener’s involvement in the motion, but asserts that those costs should be substantially less than $8,088.54.

[28] The Intervener advised Agelakos by email dated June 29, 2013 that the decision to oppose the motion was theirs alone. The fact that they unilaterally deferred to the Intervener’s oral argument does not allow them to escape the costs consequences of the motion.

[29] Finally, the Intervener submits that the offer to settle served by Dariotis on Agelakos can have no effect upon him as it was never served on him before or after he became an intervener.

[30] I will first deal with the costs of the summary judgment motion.

The Law

[31] Rule 57.01 of the Rules of Civil Procedure describes the factors to be considered on awarding costs. Both parties brought to my attention those factors that they felt were applicable to this fact matrix. I will refer below to those factors that I find are applicable.

Summary judgment motion

[32] Agelakos, the Intervener, RBC and RBC DS have agreed to settle the issue of the costs of the summary judgment motion by Agelakos and the Intervener paying to RBC and RBC DS the sum of $15,000, including taxes and disbursements. On consent, I so order.

[33] Dariotis seeks costs of the summary judgment motion on a substantial indemnity basis in the amount of $45,767.50, to be payable jointly and severally by the Intervener and Agelakos.

[34] For the summary judgment motion, the Intervener’s lawyers spent 46 hours; RBC and RBC DS’ lawyers spent 60.3 hours and Dariotis’ lawyers spent 100.5 hours.

[35] I find that the 100.5 hours spent by Dariotis’ lawyers exceeds the boundaries of reasonableness, especially when compared to the time spent by the other counsel, and in light of the fact that counsel for Dariotis and RBC/RBC DS divided the oral argument between themselves. I acknowledge that the stakes for Dariotis were high and that he was successful. However, there was one primary issue in question on the motion and the issue was relatively straightforward.

[36] I find that a more reasonable cost amount on an indemnity basis is $25,000 and on a partial indemnity basis $16,000.

[37] Dariotis seeks the costs on a substantial indemnity basis from both the Intervener and Agelakos, jointly and severally, on the basis that the result of the motion was more favourable than the offer to settle served on June 14, 2013. The Intervener resists this position, and states that as the offer to settle was not served upon him, it can have no effect upon him.

[38] I find that the offer to settle was not served upon the Intervener and can have no impact upon the cost award with respect to the intervener.

[39] Agelakos asserts that it did not oppose the motion and therefore the Intervener should pay the costs of the motion. However, the Intervener advised Agelakos by email dated June 29, 2013 that the decision to oppose the motion was theirs alone, and therefore I find that Agelakos cannot avoid a cost award on the basis of their unilateral decision not to argue the motion.

[40] I do not accept the Intervener’s argument that he should only be responsible for the extra costs incurred due to his presence at the summary judgment motion. I am satisfied that a cost award for the motion should be made on the basis of the entire costs of the motion, and not on the basis of allocating the extra costs incurred due to the Intervener’s presence.

[41] The Intervener submits that he was partially successful on the motion. Although he may have partially achieved the result he sought, the Dariotis was completely success on his motion. Dariotis is entitled to his costs.

[42] I set the costs in the amount of $25,000 fixed, all in, on an indemnity basis and $16,000, fixed, all in, on a partial indemnity basis.

[43] I award costs against the Intervener on a partial indemnity basis. He shall pay to Dariotis one half of the partial indemnity award of $16,000, fixed, all in; namely the sum of $8,000.

[44] I award costs against Agelakos on an indemnity basis in the amount of $25,000, fixed, all in. This amount is reduced by the amount of cost award made against the Intervener. Accordingly, Agelakos shall pay to Dariotis the sum of $17,000 fixed all in for the costs of the summary judgment motion.

Action costs

[45] Dariotis seeks total costs of the action (including the motion) of $160,812.82, all inclusive. As he seeks the sum of $45,767.50, for the summary judgment motion, the amount sought for the action, excluding the summary judgment motion, on a partial indemnity basis is $115,045.32 all inclusive.

[46] RBC and RBC DS seek costs for the remainder of the action on a partial indemnity basis in the amount of $29,000, all inclusive.

[47] The Intervener and Agelakos both assert that the time spent by counsel for both defendants was excessive and beyond what the plaintiff could expect to pay if they were unsuccessful.

[48] Based upon the size of the damages claimed, the length of the period over which the claim and the law suit ranged, and the documentation involved, I find that the time spent and the hourly rates claimed by RBC and RBC DS are reasonable, with the exception of the time spent on the discovery motion which was resolved on consent. The amount claimed is also an amount that is fair and reasonable for an unsuccessful party to pay.

[49] I award costs of the action, excluding the summary judgment motion, to RBC and RBC DS, payable by Agelakos, in the amount of $27,000 fixed, all in, on a partial indemnity basis.

[50] Dariotis has claimed costs of $115,045.32 on a partial indemnity basis.

[51] Dariotis was successful in defeating a claim for $1,500,000 and is entitled to a cost award.

[52] I acknowledge that Dariotis played a more active role in this litigation than counsel for RBC and RBC DS. I do not take issue with the hourly rate charged. However, I find the time spent to be excessive in the circumstances. It is more than 4 times the amount claimed by RBC and RBC DS.

[53] I find that fees claimed exceed the amount that an unsuccessful party reasonably would have anticipated having to pay. It exceeds what would be fair and reasonable in these circumstances.

[54] I award costs on a partial indemnity basis for the action, excluding the summary judgment motion, to be paid by Agelakos to Dariotis in the amount of $50,000, all in, fixed.

[55] In summary,

a. On consent, I order the Intervener and Agelakos to pay the sum of $15,000 to RBC and RBC DS for the costs of the summary judgment motion.

b. I order the Intervener to pay the sum of $8,000 to Dariotis for the costs of the summary judgment motion.

c. I order Agelakos to pay the sum of $17,000 to Dariotis for the costs of the summary judgment motion.

d. I order that Agelakos pay the sum of $27,000 to RBC and RBC DS for all costs of the action, excluding the costs of the summary judgment motion.

e. I order that Agelakos pay the sum of $50,000 to Dariotis for all costs of the action, excluding the costs of the summary judgment motion.

f. All of the above cost awards are fixed and all inclusive.

Edwards J.

Date: February 24, 2014