COURT FILE AND PARTIES

COURT FILE NO.: CV-12-464349

DATE: 2014\09\22

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Ontario Consumers Home Services Inc., Plaintiff

AND:

EnerCare Inc., EcoSmart Home Services Inc., EcoSmart Energy Savings Corp., Direct Energy Marketing Limited, Stephen Wells, Patricia Carraretto, Tom Cooper, Shannon Miranda and Tanya Faulds, Defendants

BEFORE: Justice A.J. O’Marra

COUNSEL:
Kevin D. Toyne and Pradeep Chand, for the Plaintiff/Respondent

Stuart Svonkin, Mark Klaiman, Paul Le Vay, Barry Kuretzky and Jennifer Wu, for the Defendants/Moving Parties

HEARD: June 5, 2014

COSTS ENDORSEMENT

[1] In a statement of claim brought by the plaintiff against the defendants, five causes of action were alleged: 1) civil conspiracy, 2) unlawful interference with economic interests, 3) trespass to property/chattels, 4) trespass to land, and 5) misappropriation of confidential information (breach of confidence). The plaintiff sought damages in the amount of $10,000,000, jointly and severally against all defendants, and an accounting and disgorgement of revenues and profits of each defendant.

[2] The defendants moved to strike out the statement of claim on the basis that it disclosed no reasonable cause of action and that the allegations were scandalous, frivolous, and/or vexatious and otherwise an abuse of the court process.

[3] In the result, on July 10, 2014 I struck out the plaintiff’s claim against all of the individually named defendants, employees or directors of the corporate defendants, Tom Cooper, Tanya Faulds, Shannon Miranda, Patricia Carraretto and Stephen Wells, as an abuse of process.

[4] As against the corporate defendants 1) the claim of civil conspiracy was struck due to deficiencies in pleading the requisite elements of the cause of action, with leave to amend by providing particulars. 2) The claim of intentional interference with economic interests was struck as disclosing no cause of action without leave to amend. 3) The claim of trespass to land was struck with leave to amend by providing particulars. 4) Specific paragraphs in the statement of claim were struck as being unnecessary and irrelevant to the narrative or context for the claims asserted.

[5] In that the results of the motion were divided as between the plaintiff and corporate defendants, I ordered no costs as between them. However, costs were awarded to the individual named defendants as being wholly successful in the result.

[6] I ordered that if the parties were unable to agree as to costs between themselves they could make written submissions. I have received those submissions, all of which I take into account. The following is my costs endorsement in the matter.

[7] All of the individually named defendants seek costs on a substantial indemnity basis as there was no proper basis for the statement of claim asserting claims against them which constituted an abuse of the court’s process.

• Shannon Miranda and Tanya Faulds represented by counsel for EnerCare Inc., who took the lead on arguing the motion, seeks 50 per cent of their total costs on a substantial indemnity basis in the amounts of $24,837.23.

• Tom Cooper seeks fees and disbursements in the amount of $16,893.17.

• Steven Wells and Patricia Carraretto, also represented by counsel for EcoSmart, seeks costs based on a 50 per cent allocation between the individual and corporate defendants in the amount of $3,557.92 for fees, disbursements and HST.

[8] All of the individual defendants seek costs on substantial indemnity basis as a result of observations made in the reasons for judgment at paras. 69-70:

In this matter, none of the individual defendants are alleged to have exhibited a separate identity or interest beyond their role as employee or director of the corporate defendants. There are no allegations in the statement of claim that any of the individual defendants engaged in any acts or conduct other than that said to have been done in their roles as employees or directors of the corporate defendants. There is no allegation that any of them acted outside the scope of his or her authority.

It would appear, as noted in the circumstances of National Trust Co. v. Furbacher, [1994] O.J. No. 2384 that asserting a claim in the amount of $10,000,000 in which the individual defendants would be jointly and severally liable amounts to either tactical harassment or an inappropriate attempt to get discovery of senior personnel possibly for an impermissible fishing expedition. The claims of personal liability against the individual defendants are an abuse of process.

[9] The position of the plaintiff is that the quanta of costs claimed by all of the individual defendants are excessive. The quantum claimed by Cooper, Carraretto, and Wells is duplicative of the materials and submissions made on behalf of EnerCare and Miranda and Faulds. The plaintiff submits as a result of the divided result costs on a partial indemnity basis and not a substantial indemnity scale is more appropriate.

[10] In determining the issue of costs I must take into account the factors as set out under Rule 57, including the time spent, the result achieved and the complexity of the matter. In addition I must adhere to the principles set out by the Court of Appeal in Bucher v. Public Accountants’ Counsel for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634 that the overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances rather than an amount fixed by actual costs incurred by the successful litigant.

[11] Elevated costs are warranted in two circumstances. The first involves the operation of an offer to settle under Rule 49.10, where substantial indemnity costs are explicitly authorized. The second is where the losing party is engaged in behavior worthy of sanction. In Young v. Young, 1993 34 (SCC), [1993] 4 S.C.R. 3 at p.134 McLachlin J. stated that elevated costs are warranted only on a clear finding where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties.

[12] Before the issue of the quantum of costs is considered, the question as to the scale must be determined. Was the inclusion of the individual named defendants in a $10,000,000 claim without basis or particulars worthy of sanction?

[13] In Rousseau v. Scotia Mortgage Corporation, 2013 ONSC 677 at para. 23 Reid J. stated the following:

Substantial indemnity costs when awarded independently of a relevant Rule 49 offer contain an element of penalty. For example, such a cost award are made where one party to litigation behaved in an abusive manner, brought proceedings wholly to void a merit and unnecessarily ran up the cost of litigation. An award of substantial indemnity costs, or threat of it, can ideally function as a tool available to the court to prevent or control frivolous or needless litigation. Making such an award in the proper circumstances enhances access to justice for other litigants.

[14] In this instance, it was found that there was no basis to have asserted a claim in the amount of $10,000,000 against the named individual defendants.

[15] All of the defendants made a number of requests for particulars to be provided by the plaintiff. The plaintiff’s response to the demand for particulars by the defendants to understand the case they were to defend against was that “the information is within the knowledge of the defendants” or “the particulars requested are not required by the Rules of Civil Procedure”.

[16] Clearly the plaintiff had no particulars in support of the allegations against the individually named defendants. It would appear to be conduct that is sanction worthy by way of elevated costs. However, when I consider the basis for the plaintiff’s claim it appears less so. The plaintiff learned that GPS tracking devices had been installed surreptitiously on their vehicles and that the individual defendants had some involvement with the data therefrom. It cannot be said that they were named arbitrarily. The plaintiff failed to plead particulars that any of them exhibited a separate identity or interest beyond their role as employee or director of the corporate defendants. I do not consider elevated cost to be warranted in this instance.

[17] In this instance, Counsel for EnerCare, Miranada and Faulds took the lead on the motion to strike as against the corporate interests including the claims against the individual defendants. Counsel for the other corporate and individual defendants, to some degree adopted and echoed the written and oral submissions made by counsel for EnerCare, Miranda and Faulds. Counsel for the other named defendants acknowledged in their written cost submissions that it was not possible to separate the time in defending the individual defendants from the corporate defendants, however, reduced their bill of costs to reflect that the bulk of the preparation, research and investigation attributed to the corporate defendant was presented by counsel for EnerCare.

[18] It is the position of the plaintiff that the claim against the parties were interrelated and the individual defendants represented by the same counsel as the corporate defendants pursued a common defence and that while the issues involving the corporate defendants were complex they were less so with respect to the individual defendants which should be reflected by a lower allocation to fix costs. I agree. An allocation of 50 per cent of the costs by the named defendants represented by counsel where the corporate defendants were involved is disproportionate.

[19] I have examined the bill of costs prepared by each of the individual defendants and while I do not take issue with the time allocated to the matter, the hourly rates charged, the allocation of time as between corporate defendants and individual defendants in fixing costs that are fair and reasonable should be adjusted.

[20] In the result, I fix costs payable by the plaintiff to defendants, Faulds and Miranda in the amount of $10,000, to Cooper, $5000.00, and to Carraretto and Wells, $3,557.92 as claimed, forthwith.

A.J. O’Marra J.

Date: September 22, 2014