Superior Court of Justice - Ontario

DIVISIONAL COURT FILE NO.: 60/14

COURT FILE NO.: CV-13-474005

DATE: 20140620

RE: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Plaintiff

(Responding Party)

AND:

ASSESSMENT DIRECT INC., YAN KRIVORUK, ALEX SMOLAR,

ARTHUR BUDURYAN and ROMAN VOLFSON

Defendants

(Moving Parties)

BEFORE: Mr. Justice Lederer

COUNSEL: Sarah Jones & Catherine Keyes, for the Plaintiff/Responding Party

Richard H. Shekter, for the Defendants/Moving Parties

costs ENDORSEMENT

[1] This was a motion seeking leave to appeal an order which refused to strike claims for conspiracy which were said to have merged with the underlying claim of fraud and, thus, to be redundant.

[2] The moving parties, the defendants, were successful. Leave was granted.

[3] It is fair to observe that the cases dealing with this issue come to results that make a consistent appreciation of the applicable legal principles difficult. It is true, as counsel for the defendants pointed out, that judges have commented on the confusion: Justice Penny to say that it is a “vexed question”; Justice Perell to say that “[t]he merger principle has bedeviled pleaders, and it has become dysfunctional” and “the case law is divided and inconsistent”.

[4] In these circumstances, I do not doubt that the hours for which compensation is sought were spent. I acknowledge that costs beyond that might normally be foreseen for a motion such as this could have been predicted. Nonetheless, I am not prepared to award the $20,052.74 requested, particularly as costs on a partial indemnity scale. This amount is too high. I accept that it is not for the judge to arbitrarily reduce costs for time not unreasonably spent. On the other hand, this is not a licence to simply do the math: take the hours, multiply them by a “partial indemnity rate” and expect to get an award at that value.

[5] In this case, I accept the submissions of counsel for the responding party, the plaintiff, that the amount of time spent on research (7.0 hours), drafting, reviewing and revising the factum and preparing the book of authorities (12.5 hours by senior counsel and 11 hours by junior counsel) is more than should be the subject of a costs award. Normally, one would expect, and it would be reasonable for the losing party to have expected, more of this time to be at the rate of the junior lawyer.

[6] I agree, as can happen, that while counsel was required to be in court at 10:00 a.m., the motion was not heard until 2:30 p.m. I do not accept that the losing party should have to pay for the time spent waiting for the list to clear. As a general proposition, this is a cost that should be charged according to the practice of each lawyer and assumed by their own client. In other words, I am not prepared to award costs for 10 hours in court.

[7] Finally, this was a motion for leave to appeal, which is to say, the issues had already been prepared and presented on the initial motion. The work had been done once. Moreover, the benefits to the defendants and the process to which counsel for the defendants referred as arising from the success of the motion will only bear fruit if the appeal is successful; otherwise, they will be short-lived. I have no doubt that, if the appeal succeeds, more costs will be requested.

[8] It is of significance that a Bill of Costs prepared before the hearing of the motion, representing the costs of the plaintiff for the same motion, would have claimed only $3,165.38. To my mind, this is too low to be the award made here. This was not an uncomplicated or straight-forward problem. It required significant effort to trace the history of the issue and organize the argument.

[9] Costs are awarded to the defendants in the amount of $9,500, inclusive of HST and disbursements.

LEDERER J.

Date: 20140620