SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL COURT

COURT FILE NOS.: 98-CV-143556 and 99-CL-3473
DATE: 20140625

BETWEEN

NOVA GROWTH CORP., and

WIN NORTH GAMING CORPORATION

Plaintiffs

AND

ANDRZEJ ROMAN KEPINSKI, 1021862 ONTARIO LTD., RICHARD J. G. BOXER, 867214 ONTARIO LIMITED, BUCKINGHAM CAPITAL CORPORATION, FALLS ENTERTAINMENT CORPORATION and A. KEPINSKI & ASSOCIATES

Defendants

AND BETWEEN

BRIAN HAMM

Plaintiff

AND

ANDRZEJ ROMAN KEPINSKI, 1021862 ONTARIO LTD., RICHARD J. G. BOXER, 867214 ONTARIO LIMITED, BUCKINGHAM CAPITAL CORPORATION, FALLS ENTERTAINMENT CORPORATION and A. KEPINSKI & ASSOCIATES

Defendants

BEFORE: Newbould J.

COUNSEL:
S. Dale Denis, Stephen N. Infuso, Alan D. Gold and Blair Bowen, for the Plaintiffs

Thomas J. Dunne, Q.C., Duncan C. Boswell and Heather Cohen, for the Defendants, Andrzej Roman Kepinski, 1021862 Ontario Ltd and A. Kepinski & Associates

Ronald G. Slaght, Q.C., and Ren Bucholz, for the Defendants, Richard J.G. Boxer, 867214 Ontario Limited, Buckingham Capital Corporation and Falls Entertainment Corporation

ENDORSEMENT

[1] The defendants have moved for costs in these actions following the dismissal of both actions on May 12, 2014. They seek costs against several parties, including counsel for the plaintiffs in both actions. This endorsement deals only with the claim for an order that counsel for the plaintiff bear part of the costs of the trial.

[2] The claim of the plaintiffs was that in August 1996 William Hamm made an oral agreement with the defendants Andrzej Kepinski and Richard Boxer under which Mr. Kepinski and Mr. Boxer were to sell half of their interest in a venture to obtain the licence for a casino in Niagara Falls. A number of written agreements followed that contained clauses said by the defendants to render inadmissible any evidence of the alleged oral agreement.

[3] At the opening of the trial Mr. Denis for the plaintiffs said that he intended to prove the oral agreement by the direct testimony of Mr. Hamm and by the testimony of 22 witnesses who would give evidence of statements made by Mr. Kepinski and Mr. Boxer admitting to the oral agreement. The evidence of the 22 witnesses was heard subject to the position of the defendants that the evidence was inadmissible as contravening the parole evidence rule. In my reasons for decision I held that the evidence was inadmissible as contravening the parole evidence rule.

[4] The defendants take the position that the lawyers for the plaintiffs should personally bear the costs of ten days of the trial taken by the calling of the 22 witnesses. They brought a motion at the outset of the trial to exclude the evidence of these witnesses but assert that they stood the motion down and did not proceed with it prior to the witnesses being called in light of statements made by Mr. Denis regarding the essential nature of the evidence to be called. They claim that the calling of the witnesses was a waste of time and that it was a tactical choice that should result in Fogler Rubinoff being responsible for the costs incurred in dealing with the witnesses. I do not agree.

[5] Costs may be ordered against a solicitor under Rule 57.07(1) where the solicitor has caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default. Apart from Rule 57.07, the court possess jurisdiction to make an award of costs against a solicitor as part of its inherent jurisdiction to control abuse of process and contempt of court. Courts must be extremely cautious in awarding costs directly against a lawyer. See Young v. Young, 1993 34 (SCC), [1993] 4 S.C.R. 3.

[6] In Marchand (Litigation guardian of) v. Public General Hospital Society of Chatham (1998), 16 C.P.C. (4th) 201, Granger J. stated:

Although "bad faith" is not a requirement to invoking the costs sanctions of Rule 57.07 against a solicitor, such an order should only be made in rare circumstances and such orders should not discourage lawyers from pursuing unpopular or difficult cases. It is only when a lawyer pursues a goal which is clearly unattainable or is clearly derelict in his or her duties as an officer of the court that resort should be had to Rule 57.07

[7] While in this case it is perhaps unnecessary to say so, I am not sure that it is correct to say that bad faith is not a requirement to order costs against a lawyer. See Young v. Young, 1993 34 (SCC), [1993] 4 S.C.R. 3 in which McLachlin J. (as she then was) stated:

The basic principle on which costs are awarded is as compensation for the successful party, not in order to punish a barrister. Any member of the legal profession might be subject to a compensatory order for costs if it is shown that repetitive and irrelevant material, and excessive motions and applications, characterized the proceedings in which they were involved, and that the lawyer acted in bad faith in encouraging this abuse and delay. It is clear that the courts possess jurisdiction to make such an award, often under statute and, in any event, as part of their inherent jurisdiction to control abuse of process and contempt of court.

[8] In this case, it was open to the defendants to pursue their argument at the opening of the trial to exclude the evidence of the 22 witnesses under the parol evidence rule, but they chose not to. I do not accept that they did not pursue it only because of statements made by Mr. Denis that the evidence would establish that Mr. Kepinski and Mr. Boxer admitted the existence of the oral agreement alleged to have been made by them with Mr. Hamm. The evidence would have been inadmissible whether or not the evidence established that.

[9] In the end, I held that the evidence did not establish any admission by Mr. Kepinski or Mr. Boxer of an oral agreement. That does not mean, however, that Mr. Denis should have clearly known that such a finding would be made. Evidence of statements allegedly made by Mr. Kepinski or Mr. Boxer to the witnesses was also used by Mr. Denis in an attempt to cast doubt on the evidence of Mr. Kepinski and Mr. Boxer denying an oral agreement with Mr. Hamm and to argue that their evidence should not be accepted. While I did not accept that submission in the end, it was not reckless of Mr. Denis to lead the evidence for that purpose.

[10] It is common in trials for evidence ultimately not to support the position of a party calling the evidence. That does not permit an order for costs to be paid by the lawyer who called that evidence unless there are circumstances indicating that from the outset the goal was clearly unattainable to the extent that it could be said that the lawyer was reckless or derelict in his duties to his client or the court in some way that was undue or abusive. This is not such a case.

[11] The defendants contend that the extra time involved with the 22 witnesses should be taken into account in considering the costs they assert should be paid to them by the losing parties. I make no finding whatever on that issue. I am only determining at this stage that the actions of Mr. Denis were not sufficient to attract a cost order against him or his firm. All other cost issues remain to be dealt with.

Newbould J.

Date: June 25, 2014