ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE : 13-43631 COURT FILE NO.: 13-43631

DATE: 2014/04/02

BETWEEN:

EJAZ BUTT

Applicant

– and –

MAHMOOD ALI NAIMPOOR, OMAR DRISSI SMAILI, JAMIE MACARTHUR, HABIBULLAH KHAN NIAZI, MOHAMMAD IDRISH, MOHAMUD IMAN, AJMAL KHAN, MAGDI FADL, MUHAMMAD WASIM KHAN

Respondent

Robert Healey, for the Applicant

Michael Freeman, for the Respondent

turnbull, J.

costs eNDORSEMENT

[1] The court heard this application on December 19, 2013 and released its decision on January 2, 2014. The applicant was awarded his costs and written submissions were requested from counsel by the end of January, 2013. They were received in a timely manner.

[2] The submissions received were similar to the arguments made by counsel on the application. They were concise, fair and helpful to the court. Again, I thank counsel for their outstanding work on this matter.

Position of the Applicant

[3] The applicant notes that, in the usual course, costs should follow the event. The applicant sought two orders in this matter. First he sought a declaration that he was a president of the OTWU notwithstanding the actions taken by the respondents in August 2013. Second, the applicant sought confirmation that he remained a member of the OTWU notwithstanding the actions of the respondents taken on August 20, 2013. The applicant was successful in that both orders were granted.

[4] The applicant argues that he is entitled to substantial indemnity costs because he made an offer to settle in a letter dated November 13, 2013 addressed to counsel for the respondent. It contained a settlement proposal. The offer, however, was not accepted nor was any counter-offer made by the respondents. However, the offer was not a signed offer within the meaning of Rule 49 of the Rules of Practice. It simply indicated that the applicant was prepared to attempt to negotiate a settlement of this matter and obviously the terms were not acceptable to the respondents.

[5] The applicant submits that the conduct of the respondents merits judicial rebuke. The respondents decided to hold a “no confidence” vote to remove the applicant as president at the August 6, 2013 meeting, without prior notice to the applicant and also despite the fact there were no provisions in the union’s constitution which permitted them to do so. Two weeks later, they removed him as a member of the union. They took these steps without any consultation with the general membership and contrary to the provisions of the constitution.

[6] Counsel for the applicant has prepared two bills of costs for the court to consider. The substantial indemnity bill of costs claims $15,000 for fees, plus HST on those fees of $1,950. The disbursements claimed appear to be appropriate to me and assessable and amount to $1,408.40. The final total of all fees and disbursements claimed on a substantial indemnity basis are $18,358.40. On a partial indemnity basis, the applicant claims total fees and disbursements of $15,653.87.

Position of the Respondents

[7] The respondents submit there is no basis in this case for awarding costs on a substantial indemnity basis. Counsel suggests that the respondent shall be awarded costs on a partial indemnity basis in the amount of $12,000 considering all relevant factors set out in Rule 57.01(1). Counsel for the respondents further submitted that there was no Rule 49 offer which would attract the substantial indemnity provisions of that Rule. I concur with counsel for the respondent that the informal settlement offer made through counsel in the letter of November 13, 2013 proposed the holding of an election for a new board of executives. The applicant made the same proposal as an alternative request for relief in his factum but chose not to pursue that remedy at the hearing of the application.

Analysis

[8] The courts have typically awarded costs on a substantial indemnity in three circumstances: 1) where the unsuccessful party rejects a favourable Rule 49 offer; 2) where there is an unproven allegation of fraud, bad faith or misconduct against another party; and 3) where there has been improper conduct by a party during the course of the litigation. [i]

[9] I concur with counsel for the respondent that none of these three factors are present in the instant case. Rule 1.03 defines substantial indemnity costs as costs awarded in the amount that is 1.5 of what would otherwise be awarded in accordance with Part 1 of Tariff A. In the Law of Costs, looseleaf, 2nd ed. (Aurora, Ont.: Canada Law Book, 1993) at para. 219.05, M. Orkin, notes that “full indemnity costs” is not a defined term but generally considered to be a complete reimbursement of all amounts a client has had to pay to his or her lawyer in relation to the litigation.

[10] Section 131 of the Courts of Justice Act, R.S.O 1990, c.43 and Rules 49 and 57.01 of the Rules of Civil Procedure, R.O. 1990, reg. 194 govern the award of costs by this court. Section 131 of the Courts of Justice Act, provides wide discretion to the court to determine by whom and to what extent costs shall be paid.

[11] Rule 57.01(1) specifies factors that should be taken into account by the court in assessing costs. In this matter the lawyers were senior experienced members of the bar. I find the rates charged and the hours expended by Mr. Freeman to be reasonable bearing in mind the heated nature of the litigation and the issues involved. I find that the amount of costs being sought by the applicant would be reasonably expected by the respondents. The case was not overly complex but it did require significant review and preparation. I have taken into account the conduct of both parties. In my view pre-litigation conduct can be considered in determining a costs order. However, there was no evidence before this court that the respondents’ attempts to remove the applicant from the position as president and member of the OTWU were motivated by improper motives or bad faith considerations. Based on the material filed on the application their actions appear to have been motivated by concerns about the applicant’s conduct and the good and welfare of the organization.

[12] I have further taken into account the fact that the applicant altered his position with respect to this litigation following his decision to retain counsel in November 2013, approximately one week before the original scheduled hearing in this matter. In the supplementary factum served on or about December 11, 2013, the applicant did not pursue either of the orders sought in his original Notice of Application, but instead took the position, for the first time, that he was seeking a declaration that he was president of OTWU on the basis that the board did not have authority to remove him from office on August 6, 2013. In the alternative, the application sought an order reinstating to membership and directing a fresh election, a position that he did not pursue at the hearing.

[13] I further find that the applicant’s failure to retain counsel at an earlier date resulted in a delay in the hearing in this matter and an adjournment. The late retaining of counsel also required the respondents to file a significant supplementary record in order to adequately respond to the change in position. This resulted in additional costs being incurred by the respondents and, in my view, it should be reflected in a reduction in any costs granted to him.

Conclusion

[14] Having considered the above and considering what the respondents could reasonably expect to pay in relation to this proceeding I assess the applicant’s costs at $11,000 plus appropriate HST, plus disbursements claimed and HST thereon, in the amount of $1,408.40.

Regional Senior Justice James R. Turnbull

Date: April 2, 2014

[i] Davis v. Clarington (Municipality) 2009 ONCA 722, [2009] O.J. No. 4236, at para. 28-31.