SUPERIOR COURT OF JUSTICE – ONTARIO
COMMERCIAL LIST
COURT FILE NO. CV-11-9180-00CL
RE: Prabhakaran Selvadurai, Padmini Selvadurai, Dr. Kirupalini Kirupakaran and Dr. Thas Yuwaraj, Plaintiffs
AND:
Stanislaus Antony, Tamil Vision Inc., 3885275 Canada Inc., 4254864 Canada Inc., Dr. Kandiah P. Gnanendran, Dr. Vadivelu Shanthakumar and Vairamuthu Sornalingam, Defendants
AND BETWEEN:
3885275 Canada Inc., Plaintiff by Counterclaim
AND:
Prabhakaran Selvadurai, Padmini Selvadurai, Dr. Kirupalini Kirupakaran, Dr. Thas Yuwaraj, Sivakumaran Sanmugasuntharam, Telcan Inc., 360 Tel, Callture Inc. and Diversity Media Group Inc., Defendants by Counterclaim
COURT FILE NO. CV-11-9181-00CL
RE: Sivakumaran Sanmugasuntharam, Plaintiff
AND:
Stan Antony and 3885275 Canada Inc., Defendants
AND BETWEEN:
3885275 Canada Inc., Plaintiff by Counterclaim
AND:
Sivakumaran Sanmugasuntharam, Prabhakaran Selvadurai, Padmini Selvadurai, Dr. Kirupalini Kirupakaran, Dr. Thas Yuwaraj, Telcan Inc., 360 Tel, Callture Inc. and Diversity Media Group Inc., Defendants by Counterclaim
BEFORE: D. M. Brown J.
COUNSEL:
G. Sidlofsky, for the Selvadurai Plaintiffs
I. Ellyn Q.C., for the Antony Defendants
HEARD: July 21, 2014; subsequent written cost submissions
reasons for decision - costs
Full indemnity costs on refusals and bifurcation motions in a case-managed Commercial List proceeding
[1] The parties have filed their cost submissions in respect of the Reasons released July 21, 2014 (2014 ONSC 4377). The plaintiffs succeeded in their motion to compel the production of documents from the Antony Defendants and, as well, successfully resisted the motion by the Antony Defendants to bi-furcate the issues in the proceeding. The plaintiffs seek full indemnity costs in the amount of $9,205.41.
[2] The Antony Defendants opposed such an award of costs on several basis: (i) there was no legal basis for full indemnity costs; (ii) in any event, the costs sought were grossly excessive because the materials were brief, the issues easily defined, no cross-examinations were involved, and no factum was delivered; (iii) the defendants did not breach any order or engage in any reprehensible litigation conduct; and, (iv) the senior counsel for the plaintiffs performed tasks which could have been done by a junior lawyer. In addition, the Antony Defendants complained about the lack of precision in the refusals and undertaking charts submitted by the plaintiffs for use on the motion and the “over-lawyering” of the file by plaintiffs’ counsel. The Antony Defendants submitted that costs of $2,500, plus HST, should be awarded.
[3] In their response the plaintiffs submitted that the refusals charts were accurate, the Antony Defendants not having identified any errors in argument, and that no over-lawyering of the file had taken place.
[4] The plaintiffs are entitled to their reasonable full indemnity costs. Prior orders issued during the case management of these proceedings clearly signaled to the parties that a failure to resolve informally their interlocutory disputes could well result in an award a full indemnity costs. The July 21 reasons stated:
I approved an April 11, 2014 timetable which, if complied with, would have seen the exchange of expert reports by the end of this year and the readiness of these proceedings for trial for the first half of next year. The timetable has gone off the rails, yet again, in large part because of the position the Antony Defendants have taken with respect to documentary production.
As early as my endorsement of May 16, 2014, I wrote that “counsel have put before me information which indicates that the parties have not complied with the consent April 14 timetable.” At that time the parties indicated they wished to bring a plethora of motions. I ordered a “motions free-for-all” day on the following terms:
I will hear two hours of motions on July 21/14. It will be a “motions free-for-all” – any motion by any party may be brought regarding timetabling, disclosure and discovery. I will allocate time on a pro-rata basis. The losing parties on any motion most likely will pay full indemnity costs because the parties obviously are incapable of rationally resolving procedural disputes even with a case management format. (emphasis added)
[5] Although decisions of the Court of Appeal have discussed the entitlement to elevated costs in terms of “reprehensible” conduct, those discussions did not take place in the context of case- managed proceedings on the Commercial List. The Commercial List has employed case management for many years. In broad strokes, case management has three goals: (i) to employ judicial time to move a case along in a timely fashion to a final adjudication or resolution on the merits; (ii) to focus the litigation work of the parties on attaining that goal; and (iii) to reduce or eliminate the need to resort to formal motions to deal with interlocutory procedural disputes, especially those which arise during the course of the production and discovery stages of the proceeding.
[6] When a case management judge gives forward-looking directions for the next steps in a proceeding, the over-arching judicial goal is to secure the fair, timely and cost effective determination of the case on the merits. While the failure of parties to comply with such case management directions or their failure to resolve interlocutory procedural disputes in an informal way may not merit the moniker “reprehensible”, such conduct thwarts the objectives of case management and impedes the ability of the court to secure the fundamental goal of the civil litigation process which is the timely, cost-effective and fair determination of civil cases on their merits. In my view, in case-managed civil proceedings litigation conduct which thwarts, stymies or obstructs the efforts of judges to move the proceeding to a final determination on the merits justifies the award of elevated costs.
[7] This is particularly true where the interlocutory disputes involve production and discovery issues. The delays and costs currently caused by production and discovery disputes in Ontario civil proceedings constitute a most serious threat to the legitimacy of our civil justice system and the ability of that system to provide affordable and accessible justice to litigants. Unreasonable positions taken by parties on production and discovery issues merit, in my view, severe cost sanctions. The judiciary should employ cost awards to eliminate such unreasonable litigation conduct in order to restore the confidence of those who invoke the process of this Court that their cases will be managed in a fair, timely and cost-effective manner to their final determination on the merits.
[8] The Court of Appeal held in Boucher v. Public Accountants Council for the Province of Ontario[^1] and Davies v. Clarington (Municipality)[^2] that the overall objective of fixing costs is to fix an amount that is fair and reasonable for an unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant. The May 16, 2014 endorsement gave the parties fair and clear warning that their failure to comply with a consent timetable and their thirst for more interlocutory motions would lead me to consider imposing in any such motion full indemnity costs on the unsuccessful party. That judicial direction was given against the backdrop of close to a year’s case management of these proceedings in an effort to get the parties to focus on the real dispute and to get moving towards a final determination on the merits.
[9] As a result, the parties were on notice that the losers of the motions might pay full indemnity costs. The Antony Defendants lost both motions. Their motion to bifurcate constituted an effort to unwind the consent timetable which they had agreed to only a few months earlier. In a case-managed proceeding where the parties agree to a timetable, a subsequent effort to unwind the timetable and, in this case, to bi-furcate issues in a clear attempt to delay the proceeding and to avoid relevant documentary production, merits the imposition of elevated costs. So, too, the unreasonable refusal of the Antony Defendants to produce relevant documents. As my July 21 Reasons disclosed, there was no reasonable basis for the Antony Defendants to resist the production of the requested documents. In light of the cost expectations signaled by the May 16 endorsement and the unreasonable litigation conduct of the Antony Defendants which sought to thwart the case-management objectives of this proceeding, I conclude that an award of full indemnity costs is more than justified.
[10] I have reviewed the Bill of Costs filed by the plaintiffs. I have taken into account the factors enumerated under Rule 57, including the time spent, the result achieved, and the complexity of the matter, as well as the application of the principle of proportionality, the practical application of which the Court of Appeal recently described as “cutting the cloth to fit”.[^3] I am satisfied that the time spent by the plaintiffs was reasonable, that proper delegation of tasks to more junior counsel occurred, and that the hourly rates were reasonable. I give no effect to the submissions of the Antony Defendants that unnecessary costs were incurred because of an alleged inaccuracy in the refusals chart; no such complaint was made at the hearing.
[11] For these reasons, I conclude that an award of costs in the amount of $9,205.41, inclusive of taxes and disbursements, would be a reasonable one in the circumstances, and I order the Antony Defendants to pay the plaintiffs that amount within 20 days.
D. M. Brown J.
Date: September 4, 2014
[^1]: (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.)
[^2]: (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.)
[^3]: Marcus v. Cochrane, 2014 ONCA 207, para. 15.