SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: 09-8346-00CL
DATE: 20140609
RE: ROYAL BANK OF CANADA
Plaintiff
AND:
THEODORE BOUSSOULAS, CHRIS BOUSSOULAS,
PETER BOUSSOULAS, 4191153 CANADA INC. o/a
ROYAL EDGEBANDING SOLUTIONS INC., AND
ROYAL EDGE INCORPORATED, THERESA BOUSSOULAS,
2200504 ONTARIO INC. O/A EDGECRAFT INDUSTRIES AND
JOANNE BRADBURY
Defendants
BEFORE: Mr. Justice Lederer
COUNSEL: Milton Davis & Samantha Green, for the Plaintiff
Roman Baber, for Peter Boussoulas, and
4191153 Canada Inc. o/a Royal Edge, Defendants
A. Patrick Wymes, for Theodore Boussoulas and Chris Boussoulas,
Defendants
No one appeared for Edgebanding Solutions Inc., Royal Edge Incorporated,
2200504 Ontario Inc. O/A Edgecraft Industries and Joanne Bradbury,
Defendants
COSTS ENDORSEMENT
Introduction
[1] From the outset of this trial, it was apparent that the parties had not co-operated through the pre-trial phase and had not undertaken the work necessary to properly prepare for the trial. The decision requests that this be taken into account when considering submissions respecting costs. It is not clear to me that this has happened.
Background
[2] The Royal Bank of Canada (“RBC”) seeks costs, on a substantial indemnity scale, of $602,101.07. Its partial indemnity costs, should I determine that to be the appropriate scale, are $431,213.20.
[3] The request is based on the generally accepted premise that costs follow the event. In this case, RBC recovered judgment in fraud, against Peter Boussoulas, in the amount of $411,593.42. There was a further award, in favour of RBC, in the amount of $2,200,000 on a guarantee which was accepted by the Court over the evidence of Peter Boussoulas, who claimed he had not signed it. Thus, as the “winner”, RBC makes its claim for $602,101. 07.
[4] In its claim, the RBC alleged a broad-based conspiracy which implicated not only Peter Boussoulas, but also his sons: Theodore Boussoulas and Christopher Boussoulas. This claim, as against the sons, was dismissed. Thus, as “winners”, they claim costs for the trial, on a substantial indemnity scale, of $134,049.45 (or $67,024.72 each) from RBC. This is said in respect of Theodore Boussoulas, despite the fact that judgment was entered against him, in the amount of $1,275,000, on a guarantee he signed, but claimed was not effective as against the loan facilities that were extant at the time of the defaults that gave rise to the action. The submissions made on behalf of Theodore Boussoulas repeat that he was, at the time of the trial, an undischarged bankrupt. The action against him was continued pursuant to an order allowing it “for the purpose only of establishing the amount which [RBC] is entitled to claim in the bankruptcy (proposal) of Theodore as an unsecured creditor”. It is said that, in the absence of fraud by Theodore Boussoulas, RBC will recover nothing under the guarantee. On this basis, the judgment is meaningless. It was known that it would be such. Thus, as his counsel sees it, Theodore Boussoulas continues to have a right to the costs of the trial.
[5] Prior to the trial, on July 21, 22 and 23, 2010, a motion was heard to continue a Mareva injunction that had been ordered on an earlier appearance. The motion to continue the injunction was heard by Mr. Justice Stinson. He found that RBC had demonstrated that the conditions for such an order were satisfied but, nonetheless, set aside the injunction based on the conduct of RBC:
In my view, the plaintiff's conduct in these proceedings has been such as to disentitle it to an equitable remedy such as a Mareva injunction or the appointment of a receiver. At its heart, the problem stems from the plaintiff overstating its case and making unsupportable allegations in its notices of motion, factums and affidavits…
As I have indicated previously, in my view, the conduct of RBC in these proceedings has been such as to disentitle it to equitable relief. Misstatements and overstatements of evidence such as those mentioned above impair and impede the court in the performance of its function, and are to be strongly discouraged…
(Royal Bank of Canada v. Boussoulas, (Motion) 2010 ONSC 4650, at paras. 22 and 35)
[6] Initially, Mr. Justice Stinson requested written submissions with respect to costs but, with those submissions in hand, “[i]n view of the conduct of the Boussoulas Group” (Royal Bank of Canada v. Boussoulas, (Costs Endorsement), 2010 ONSC 5744, at para. 5), determined that costs of the motion, as between the Boussoulas interests and RBC, should be reserved to the trial judge. Again, as “winners”, Theodore Boussoulas and Christopher Boussoulas seek their costs of this motion, on a substantial indemnity scale, in the amount of $156,773.68 (or $78,386.84 each) from RBC.
[7] Peter Boussoulas and the borrower (4191153 Canada Inc., referred to throughout the judgment as “Royal Edge”) cannot, and do not claim to be “winners” at trial, but they submit that the nature of the victory of RBC is such that costs should be limited. The breadth of the claim for fraud was broad and over-reaching. In its reasons, on an appeal of the order of Mr. Justice Stinson which was refused, the Divisional Court noted that the pleadings “…were gorged with allegations of fraud” ([2012] O.J. No. 2335, at para. 19). This was repeated in the judgment that followed the trial (Royal Bank of Canada v. Boussoulas, (Judgment) 2014 ONSC 2367, at para. 164).
[8] On this basis, it is submitted, on behalf of Peter Boussoulas, that RBC, in effect, is also not a “winner”. Rather, it is proposed that RBC and Peter Boussoulas split their success and that there should be no award of costs between them.
[9] These submissions go on to consider the impact of the refusal of Mr. Justice Stinson to allow the Mareva injunction to continue. Since the motion was turned down, Peter Boussoulas, like his sons, says he was a “winner”. It is submitted that any costs he “may be entitled to” on the refusal to continue the Mareva injunction, be set off against what he “may be” ordered to pay as a result of the trial. No amount is referred to.
[10] It is from these positions that I am asked to determine the costs of both the refusal to continue the Mareva injunction and the trial.
Costs of RBC
a) The Injunction Motion
[11] RBC makes no claim for its costs of the motion to continue the injunction.
b) The Trial
[12] Given the manner in which RBC has conducted this litigation, I am not prepared to award it costs on a substantial indemnity basis. How the RBC could continue, as it did, in the face of the observations of Mr. Justice Stinson and the Divisional Court is beyond explanation. In our law, we do not take allegations of fraud lightly and certainly do not reward people for making them too easily or too broadly.
[13] Accordingly, the costs claimed by RBC are limited to its partial indemnity claim: $431,213.20.
Costs of Theodore Boussoulas and Christopher Boussoulas
a) The Injunction Motion
[14] I am not prepared to award costs, on a substantial indemnity scale, to Theodore Boussoulas or Christopher Boussoulas for the motion to continue the Mareva injunction. They did not succeed on the motion because of any action of their own. To the contrary, Mr. Justice Stinson found that the criteria for a Mareva injunction were met. He exercised his discretion and refused the motion because of the actions of RBC.
[15] Accordingly, the costs they claim for the Mareva injunction are limited to their partial indemnity claim which, pursuant to calculations made as part of the submissions to Mr. Justice Stinson, would be 55% of the claim on a substantial indemnity scale. Since Peter Boussoulas is not considered in this calculation, I include 55% of the fees attributable to his sons and 2/3 of the costs of the disbursements.
• Fees for each of the three, being (total fees of $228,547.47 divided by 3): $76,182.49
• The fees for the two sons, on a substantial indemnity scale, being (fees for each $76,182.49 multiplied by 2): $152,364.98
• The fees for the two sons, on a partial indemnity scale, being (55% of $152,364.98): $83,800.74
Plus
• Disbursements, being (total $6,613.06 divided by 3 multiplied by 2): $4,408.71
Totalling
• $83,800.74 + $4,408.71 being: $88,209.45
b) The Trial
[16] Theodore Boussolas and Christopher Boussoulas were successful at the trial. The central allegation against them was that they were complicit in a broad fraud perpetrated against RBC. This claim was dismissed. While the efficacy of the guarantee signed by Theodore Boussoulas was challenged this took up little time, was easily dealt with and, given the bankruptcy of Theodore Boussoulas had little substantive meaning.
[17] I am not prepared to award costs of the trial, on a substantial indemnity scale to either Theodore Boussoulas or Christopher Boussoulas. I see no reason to go beyond the usual partial indemnity scale.
[18] As referred to above and outlined in the Costs Outline submitted on their behalf, the costs requested on a substantial indemnity scale, inclusive of disbursements, are $134,049.45. Costs on a partial indemnity scale are claimed at ($107,900.00, plus disbursements of $1,249.45) $109,149.45.
Costs of Peter Boussoulas
a) The Injunction Motion
[19] I will not order any costs payable to Peter Boussoulas with respect to the motion.
[20] RBC loaned money to Royal Edge. Under the direction of Peter Boussoulas, the company defaulted on the loans. Peter Boussoulas acted to protect the interests of his family. In so doing, he defrauded RBC.
[21] Peter Boussoulas did not win at trial. He lost.
Set off
[23] It would be true to observe that Theodore Boussoulas and Christopher Boussoulas were successful, both at trial and at the motion to continue the Mareva injunction.
[25] Quite apart from set off as referred to in the Courts of Justice Act, R.S.O. 1990 c. C.43 (see: s. 111), the law recognizes that there can be an “equitable set off”.
[26] I have no difficulty applying these requirements to the competing claims for costs.
[27] Set off being ordered, there is no reason for me to consider whether a “Sanderson” or “Bullock” order need be issued as requested on behalf of RBC.
Costs Calculations
[28] The costs to be paid by Peter Boussoulas stand at $431,213.20.
[29] These would be set off against the costs to be paid by RBC to Theodore Boussoulas and Christopher Boussoulas.
[30] Without going further, this would result in an order requiring Peter Boussoulas to pay costs to RBC in the amount of $233,854.30.
Rule 57
[31] Rule 57 of the Rules of Civil Procedure outlines factors the court may consider in exercising its jurisdiction to award costs.
[33] RBC chose to proceed as it did. Ignoring the warnings and admonitions of the court is not free of risk.
[34] On account of these issues, I exercise my discretion and reduce the costs that might otherwise have been awarded by $50,000.
Conclusion
[39] I award costs, payable to RBC, by Peter Boussoulas, in the amount of $183,854.30.
LEDERER J.
Date: 20140609