SUPERIOR COURT OF JUSTICE – ONTARIO
COURT FILE NO.: CV-04-658 (Brantford)
DATE: 2014/09/12
RE: Lidia Yvonne Szpakowsky (Plaintiff) v. Robert Michael Kramar, Grant Rayner, Lawrence Ben Eliezer and Jerry Herzkopf (Defendants)
BEFORE: The Honourable Mr. Justice R.A. Lococo
COUNSEL:
Jeffrey Langevin, for the Plaintiff
Ian S. Epstein and Bradley Phillips, for the Defendant, Grant Rayner
Brian A. Pickards, for the Defendants, Lawrence Ben Eliezer and Jerry Herzkopf
HEARD: By written submissions dated July 16 to September 3, 2014
E N D O R S E M E N T – C O S T S
I. Introduction
[1] The Plaintiff, Lidia Yvonne Szpakowsky, previously invested in real estate properties in the Toronto area. In this action, she has alleged that she lost her property as a result of misdeeds of other persons involved with her investment activities, including her former spouse and various financial and legal advisers.
[2] On July 10, 2014, upon the motion of the Defendant Grant Rayner and the Defendants Lawrence Ben Eliezer and Jerry Herzkopf, I dismissed Ms. Szpakowsky’s action for delay as against those Defendants and provided oral reasons for my decision. I left costs to be determined based on written submissions, which have since been delivered by the parties. This endorsement provides my decision and reasons on the issue of costs.
[3] By way of background, starting in 1988, Ms. Szpakowsky commenced three successive actions relating to a property transaction that occurred in November 1987. The first action was commenced in August 1988. Her counsel in the action was Grant Rayner. That action was dismissed for delay in 1992.
[4] In November 1993, Ms. Szpakowsky commenced a second action raising essentially the same allegations. Lawrence Ben Eliezer and Jerry Herzkopf were her counsel in that action until March 1998, when their retainer was terminated. The second action was dismissed for delay in May 1998.
[5] In March 2004, Ms. Szpakowsky commenced the current action, again raising essentially the same allegations. Messrs. Rayner, Ben Eliezer and Herzhkopf were also defendants in this action, based on allegations of solicitors’ negligence. Initially, Ms. Szpakowsky was not represented by counsel in this action, but she later retained her current counsel. It was this action that I dismissed for delay as against Messrs. Rayner, Ben Eliezer and Herzhkof. The action had previously been dismissed as against two other defendants in July 2006 at a status hearing. As well, in April 2011, Justice Arrell dismissed the action for delay as against two further defendants, a decision that was upheld by the Court of Appeal. Now that I have dismissed the action as against Messrs. Rayner, Ben Eliezer and Herzkopf, the only remaining defendant is Robert Kramar, Ms. Szpakowsky’s former spouse.
II. Submissions on costs
[6] In their costs submissions, the moving parties sought partial indemnity costs against Ms. Szpakowsky. Counsel for Mr. Rayner and counsel for Messrs. Ben Eliezer and Herzkopf have each filed a costs outline. In Mr. Rayner’s costs outline, partial indemnity costs were calculated at $103,796, which includes costs of $18,771 for the dismissal motion. In the costs outline for Messrs. Ben Eliezer and Herzkopf, partial indemnity costs were calculated at $115,261, which includes costs of $17,662 for the dismissal motion. If accepted, these calculations would result in a costs award against Ms. Szpakowsky totalling in excess of $200,000.
[7] In the costs submissions filed by Plaintiff’s counsel, Ms. Szpakowsky did not dispute that the moving parties should be awarded costs, nor did she dispute that the amounts claimed appropriately reflected the legal work required for this litigation. She argued, however, that the court should award only nominal costs against her, taking into account her impecunious state. She suggested an award of $5,000 (inclusive of disbursements and tax) payable to Mr. Rayner, and the same award for Messrs. Ben Eliezer and Herzkopf.
III. Analysis and conclusion
[8] In support of her position, Ms. Szpakowsky’s counsel relied on the principles set out in decision of Justice Lane of this court in Walsh v. 1124660 Ontario Ltd.[^1] and the decision of Master Dash in Burrell v. Peel (Regional Municipality) Police Services Board.[^2] In the latter decision, Master Dash reviewed a number of cases that considered to what extent impecuniosity of a litigant may be taken into account when considering the issue of costs. He made the following observations, which I agree with:
The cases to which I have referred lead me to conclude that the court has a discretion to take into account the impecuniosity of a litigant in an award of costs and on a motion to dismiss for failure to pay those costs. The court should consider as a relevant factor in the exercise of its discretion the effect on access to justice if costs are sought to be awarded or enforced against an impecunious litigant, but the court is free to then it give it whatever weight it deems appropriate in all of the circumstances, including no weight. Furthermore, although impecuniosity is a relevant factor, it is only one factor. There is not only one party involved in the action – the defendant has rights as well which the court must take into account…. There must be fairness and a balancing of interests, but clearly a person's modest means cannot serve as an excuse to play by a different set of procedural rules and ignore orders of the court and the rules of court with impunity. Unreasonable conduct should not be rewarded by denying costs to the innocent defendant or by deferring payment until after trial.[^3]
[9] I agree with Ms. Szpakowsky that it is appropriate to take into account her impecuniosity when considering the issue of costs of this action. While there is no evidence before me as to the specifics of Ms. Szpakowsky’s financial position, I am prepared to accept her counsel’s submission that she is impecunious, taking into account the evidence before me on the dismissal motion. She appears to be a woman of modest means, and given her family responsibilities, she would have financial difficulty in prosecuting this complex action together with a second substantial claim she is pursuing in Toronto with the assistance of the same counsel. However, while I sympathize with her situation, I cannot agree that a nominal costs award is appropriate in the circumstances of this case.
[10] As a general rule, an unsuccessful litigant can expect an adverse costs award in the absence of special circumstances.[^4] While impecuniosity may be taken into account in account in determining an appropriate costs award, a litigant cannot use impecuniosity as a shield to avoid the costs consequences of unreasonable behaviour.[^5] In my view, a significant costs award is appropriate in this case, given the history of delay in this action and the two previous actions.
[11] In all the circumstances, an order will issue awarding costs to Mr. Rayner in the amount of $50,000 and to Messrs. Ben Eliezer and Herzkopf in the amount of $50,000. In each case, this amount includes disbursements and tax, and is payable by Ms. Szpakowsky within 90 days. Taking into account the financial challenges faced by Ms. Szpakowsky, I have reduced the amount of costs that would otherwise be payable and modestly extended the time for payment.
[12] I have also taken into account the fact that in each case the amount claimed for partial indemnity costs was in fact the actual amount that defence counsel billed to LawPro, which was below market rates. As argued by defence counsel and consistent with previous case law, the actual rate charged may be awarded as partial indemnity costs (rather than some lesser amount, as would normally be the case) as long as the indemnity does not exceed the amount billed.[^6] However, I do not consider it appropriate to award the full amount billed in the circumstances of this case, including Ms. Szpakowsky’s financial challenges.
[13] Accordingly, on the question of costs, an order will issue as follows:
The Defendant Grant Rayner is entitled to his costs of the action, fixed at $50,000 including disbursements and tax, payable by the Plaintiff within 90 days; and
The Defendants Lawrence Ben Eliezer and Jerry Herzkopf are entitled to their costs of the action, fixed at $50,000 including disbursements and tax, payable by the Plaintiff within 90 days.
The Honourable Mr. Justice R.A. Lococo
Released: September 12, 2014
COURT FILE NO.: CV-04-658 (Brantford)
DATE: 2014/09/12
SUPERIOR COURT OF JUSTICE - ONTARIO
BETWEEN:
Lidia Yvonne Szpakowsky
Plaintiff
- and -
Robert Michael Kramar, Grant Rayner, Lawrence Ben Eliezer and Jerry Herzkopf
Defendants
BEFORE: The Honourable Mr. Justice R.A. Lococo
COUNSEL: Jeffrey Langevin, for the Plaintiff
Ian S. Epstein and Bradley Phillips, for the Defendant, Grant Rayner
Brian A. Pickards, for the Defendants, Lawrence Ben Eliezer and Jerry Herzkopf
ENDORSEMENT – COSTS
Lococo J.
Released: September 12, 2014
[^1]: 2007 27588 (ON SC), [2007] O.J. No. 2773 (S.C.).
[^2]: [2007] O.J. No. 4232; aff’d [2008] O.J. 5718 (S.C.).
[^3]: Ibid. at para. 54.
[^4]: Bell Canada v. Olympia & York Developments Ltd. (1994), 1994 239 (ON CA), 17 O.R. (3d) 135 (C.A.) at para. 21.
[^5]: Burrell v. Peel (Regional Municipality) Police Services Board, supra; see also Mark v. Bhangari, 2010 ONSC 4638, [2010] O.J. No. 3608 (S.C.) at para 9; Myers v. Metropolitan Toronto (Municipality) Police Force, 1995 11086 (ON SCDC), [1995] O.J. No. 1321 (Div. Ct.) at para. 22.
[^6]: See Geographic Resources Integrated Data Solutions Ltd. v. Peterson, 2013 ONSC 1041, [2013] O.J. No. 717 (Div. Ct.).