COURT FILE AND PARTIES

COURT FILE NO.: C-121-11

DATE: 2014/09/25

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: STAN GIDZINSKI, a.k.a. STANISLAW GIDZINSKI

AND:

LAKE SIMCOE AEROPARK INC., BERNARDO MASCIOLI, ELIZABETH BETOWSKI a.k.a. EWA BETOWSKI,, Respondents

BEFORE: The Honourable Justice D.A. Broad

COUNSEL:
Applicant - self-represented

Peter I. Waldmann for the Respondents

ENDORSEMENT

[1] The respondents delivered their submissions on costs on July 18, 2014 as directed in my Reasons for Judgment released June 20, 2014.

[2] The applicant has not delivered any submissions on costs.

(a) Respondents’ Position

[3] The respondents seek costs on a partial indemnity basis in the sum of $32,014.74 comprised of fees for pre-trial attendances in the sum of $16,315, counsel fee for four days of trial in the sum of $10,000 for a total of $26,315 in respect of fees, HST on the fees in the sum of $3,420.95 and disbursements including HST in the sum of $2,278.79.

[4] The costs claimed by the respondents include costs of the motions leading up to the order directing a trial of the issues, which were reserved to the trial judge in the consent Order dated January 9, 2013 directing the trial of the issues.

(b) Guiding Principles

[5] The factors to be considered by the Court, in the exercise of its discretion on costs, are set forth in sub rule 57.01(1), including, the principle of indemnity and the amount of costs that an unsuccessful party could reasonably expect to pay.

[6] The Court of Appeal has observed that modern costs of rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behavior by litigants (see Fong v. Chan (1999) O.J. No. 3707 (CA) at para. 24).

[7] It is well known that the overall objective in dealing with costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful party. The expectation of the parties concerning the quantum of costs is a relevant factor to consider. The Court is required to consider what is "fair and reasonable" having regard to what the losing party could have expected the costs to be (see Boucher v. Public Accountants Council (Ontario) (2004) 2004 14579 (ON CA), O.J. No. 2634 (C.A.) at para. 26 and Coldmatic Refrigerator of Canada Ltd. v. Leveltek Processing LLC 2005 1042 (ON CA), [2005] O.J. No. 160 (C.A.)).

[8] Armstrong, J.A. in Boucher cast the overriding principle of reasonableness as an access to justice issue. At para 37 he stated as follows:

The failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice. The costs system is incorporated into the Rules of Civil Procedure, which exist to facilitate access to justice. There are obviously cases where the prospect of an award of costs against the losing party will operate as a reality check for the litigant and assist in discouraging frivolous or unnecessary litigation. However, in my view, the chilling effect of a costs award of the magnitude of the award in this case generally exceeds any fair and reasonable expectation of the parties.

[9] The Court of Appeal in the recent case of Marcus v. Cochrane 2014 ONCA 207 recently reaffirmed that the application of the principle of proportionality in making sound costs awards is fundamental to the health of our system of justice. Goudge, J.A. put it this way at para. 15:

In fixing those costs, it is important to remember that the dispute was essentially about a claim for approximately $80,000. The partial indemnity bill of costs of appellant's counsel Mr. Marks was $172,645.55. The full indemnity bill of costs of the respondents was $160,706.99. The comparison of what this dispute was about and what was spent on it is stark and difficult to justify. While undoubtedly Mr. Marks, as counsel asserting the claim, must bear the greater responsibility, the principle of proportionality which is fundamental to any sound costs award cries out for application by both counsel. With the assistance and indeed the direction of the trial judge if need be, counsel simply must cut the cloth to fit. The health of the justice system depends on it. Trial costs cannot serve as an incentive to look away from this important challenge.

(c) Analysis

[10] In the present case the respondents sought payment of the sum of $50,000 from the aggregate amount being held by the lawyer for the respondents and the former lawyer for the applicant in the sum of $79,690.24. In the Reasons for Judgment I directed that the sum of $34,171.00 be paid to the respondents with the balance to be released to the applicant. The respondents succeeded on six of the nine categories comprising their claim.

[11] I find both the amount of time expended by counsel for the respondents and the hourly rate utilized for their claim for partial indemnity costs to be reasonable. However, the award of costs should reflect the fact that the respondents succeeded with respect to only 68% of their claim, and should also reflect the principle of proportionality. Balanced against these factors, however, are firstly, the behaviour of the applicant in utilizing funds of the corporate respondent for purposes not associated with the corporation and secondly, the position which the applicant adopted in the litigation (as exemplified in his Offer to Settle calling for the respondents to pay to him the sum of $191,037.41 plus costs), each of which necessitated the bringing of the motions by the respondent’s and the requirement for the issues to be tried. Moreover one half day of trial was expended in settling the issues to be tried due to the applicant seeking to re-litigate the calculation of his shareholder’s account from the inception of the Corporation, an issue that already been determined by Justice Kent in his Order of October 25, 2011.

[12] In the exercise of my discretion and in the balancing of the factors set forth above I would reduce the fee component of the respondents’ partial indemnity costs claim by $3,000 to $23,315, plus HST thereon in the sum of $3,030.95. I would also allow the disbursements claimed in the sum of $2,270.79, for a total of $28,616.74.

(d) Disposition

[13] It is therefore ordered that the applicant pay to the respondents costs in the sum of $28,616.74. This amount shall be set off against the amounts held in trust by the respondents’ lawyer which the court directed be released to the applicant pursuant to para. 47 of the Reasons for Judgment.

D.A. Broad

Date: September 25, 2014