SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 00-CV-188846
DATE: 20140207

RE: Richard Dick, Steve Marek by his litigation guardian David Marek, and John Kuca, Plaintiffs

– AND –

Robert Duncan McKinnon, Tubular Steel Inc., and 1086668 Ontario Inc., Defendants

BEFORE: E.M. Morgan J.

COUNSEL: Daniel Dochylo and Matthew Furrow, for the Plaintiff, Steve Marek by his litigation guardian David Marek

Jonathan McKinnon, for the Defendants

HEARD: December 4, 2013, with written submission on interest and costs

SUPPLEMENTARY ENDORSEMENT

[1] On January 17, 2014, I issued my endorsement in this matter enforcing an August 2005 settlement agreement. In my endorsement I requested written submissions on costs, which I have now received from both counsel.

[2] As the Defendants were successful in the motion it is appropriate that they be awarded costs on a partial indemnity scale. Mr. McKinnon, on the Defendants’ behalf, seeks costs of $7,153.58. This is a reasonable request for a motion of this length and nature. Mr. Dochylo, on behalf of the Plaintiff, David Marek as litigation guardian for Steve Marek, concedes that this is a reasonable request.

[3] Mr. Dochylo also seeks an award of pre-judgment interest on the amount that the Defendants are to pay his client under the settlement. As indicated, the settlement was agreed upon in August 2005. Using the then prevailing interest rate of 2.8%, Mr. Dochylo calculates that a total of $162,975.34 in pre-judgment interest would have accumulated on the settlement amount of $700,000.

[4] Mr. McKinnon states that pre-judgment interest is the mechanism that courts use to ensure that outstanding debts are updated to reflect a present value. The settlement in issue here, he submits, “is not to enforce a debt obligation of the Defendants to the Plaintiff, but to enforce the Defendants’ claim to title to the subject shares, in consideration of the payment of $700,000…” In his view, the context of the settlement distinguishes this case from that of an outstanding debt that has now been ordered to be paid.

[5] For his part, Mr. Dochylo contends that the context does not change the fact that pre-judgment interest is due on the funds. He further argues that the Plaintiff has a right to pre-judgment interest despite the fact that he was the party that had resisted enforcement of the settlement, since interest is awarded as a matter of economic fairness and efficiency and not is not a judgment of the party’s conduct.

[6] Mr. Dochylo observes that in the Defendant’s affidavit, it was deposed that the settlement funds of $700,000 were deposited to the trust account of their counsel on November 24, 2005 in proof of the fact that the Defendants were ready to go ahead with the settlement transaction. As Mr Dochylo puts it, “[t]his signifies not only that the defendants were ready to complete, but that the monies were invested and earning interest or could have been invested… In the intervening years, the defendants have enjoyed the benefit of holding $700,000.”

[7] Mr. Dochylo is correct, of course, in stating that the Defendants have had the closing funds all of this time. On the other hand, Mr. McKinnon is correct in stating that the $700,000 was not adjudged as being owed to the Plaintiff. Rather, the arrangement was a settlement in which the Defendant was to pay $700,000 as the purchase price for shares held and owned by the Plaintiff. The Defendant did not turn the settlement funds over to the Plaintiff because the Plaintiff did not turn the shares over to the Defendant.

[8] Just as the Defendants have enjoyed the benefit of holding the funds since August 2005, the Plaintiff has enjoyed the benefit of holding the shares. This circumstance is different in principle from one in which money is found payable on a long outstanding debt. While the latter case gives rise to an award of pre-judgment interest, the present case gives rise to no such award. The exchange of money for shares is happening now. No pre-judgment interest is required to bring the exchange up to date; the Plaintiff’s claim for pre-judgment interest is therefore dismissed.

[9] The Plaintiff, David Marek as litigation guardian for Steve Marek, shall pay the Defendants costs in the all-inclusive amount of $7,153.58.

[10] The exchange of settlement funds for shares is to take place by February 16, 2014 – i.e. 30 days from my endorsement of January 17, 2014. The Defendants may deduct the $7,153.58 owing to them in costs from the $700,000 otherwise payable by them to Steve Marek.

Morgan J.

Date: February 7, 2014