Mishev et al. v. Shah et al., 2015 ONSC 1661
COURT FILE NO.: CV-10-401105
DATE: 2015/03/13
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Ivan Mishev, et al., Plaintiffs
Yogesh Shah, et al., Defendants
BEFORE: Justice Moore
COUNSEL: Kristine Holder, for the Plaintiffs
Richard Worsfold, for the Defendants
DATE HEARD: March 11, 2015
E N D O R S E M E N T
[1] Counsel attended before me to speak to costs issues remaining in this matter, having earlier filed written submissions.
[2] The parties agree that the award of costs following the trial of this matter necessarily will involve substantial sums for its component parts of fee items, disbursements and H.S.T. as the trial followed years of highly contested litigation and the trial lasted 11 days.
[3] In part,[1] the defendants rely upon docket entries referenced in their bill of costs to support the quantum of fees and disbursements claimed. While I do not propose to analyze dockets line by line, I see no indication in the dockets I have reviewed that the time and work entries recorded are excessive or un-necessary. The issues involved in this case were many and sufficiently complex that capable and experienced counsel would necessarily undertake the work and expenses recorded in the dockets. And I am content that the hourly rates charged are reasonable.
[4] Moreover, the plaintiffs do not take exception to specifics of work done and services rendered and/or disbursements incurred as recorded in the bill of costs except to submit that the court should exercise its discretion with respect to all costs not essential to enforcing or validating the defendants’ mortgage. The plaintiffs’ principal position is that costs should be awarded throughout on a partial indemnity basis but, in the alternative, that costs should not exceed $170,000[2].
[5] The defendants also make alternate submissions on quantum: first, they seek full indemnity based costs of $242,281.34; and, in the alternative, costs based on a blending[3] of partial and full indemnity features totaling $212,562.41.
[6] The overall objective in fixing costs is to strike a fair balance between the respective interests of the parties.[4] I have considered the factors enumerated in Rules 57.01 and 49 and I have considered the submissions of the parties.
[7] At the outset of the trial of the action, I required that the parties exchange costs demands. I did not direct that those demands be filed and I was not aware of the demands made. In connection with the disposition of costs and in order that I might know something useful about the reasonable expectations of the parties as they engaged in the trial process and as their written submissions were silent on the point, I called for information on the demand made by the defendants, as it was they to whom I awarded costs in my reasons for decision
[8] Defence counsel advised plaintiffs’ counsel that the defendants’ full indemnity claim to costs up to the commencement of the trial was $128,936.88. The plaintiffs did not heed my direction and did not state their costs demand either to the point of trial or otherwise.
[9] From the bill of costs, I note that fee items of costs sought for trial and post-trial fees for preparation of written submissions and reply on trial issues and preparation for and attendance on costs issues totals $77,667.44. Although this figure was not predicted for the plaintiffs’ benefit by defence counsel before the trial began, in all of the circumstances, I find that it is in the order of magnitude that the plaintiffs could and should have been aware of it and of a costs claims potential jeopardy in going through with this trial of over $200,000 plus disbursements and associated H.S.T..
[10] Although a costs demand may prove to be optimistic when stated before trial, it is one useful measure upon which opposing parties can make an informed decision to proceed to trial upon.
[11] A better assist to me in considering the reasonable expectations of the paying party would be information on just what expectations the paying parties actually held. Unfortunately, the plaintiffs have not stated their position.[5] As such, the plaintiffs proceed at their peril on this important factor.[6]
[12] The defendants have been awarded $235,856.74 following lengthy litigation and a relatively long trial. This recovery is entirely in keeping with the amounts claimed. The defendants offered to settle their claims in a written offer dated October 9, 2013 for $180,000 with respect to the outstanding mortgage debt.
[13] I pause here to observe that the plaintiffs did not deliver a Rule 49 offer to settle at any time and did not respond to the defendants’ offer. In my view, offers to settle are encouraged in this court.[7] They can lead to real savings for the litigants in time, effort and money and further the interests of justice. The plaintiffs’ failure to accept the defendants’ offer to settle is an indication of their unreasonable approach to this litigation process. In this regard, I adopt the reasons of Spence J; he stated that:
parties have an obligation to begin to assess their respective cases at the outset of the litigation - even before the litigation commences and to make all reasonable efforts to settle. Legal fees can create enormous financial burdens for litigants and it behooves neither party simply to sit back and to roll the dice while those fees continue to mount.[8]
[14] As well, I repeat and endorsee the words of Perell J on this point:
[10] The court's discretion to award costs is designed to further three fundamental purposes in the administration of justice: (1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behaviour by litigants in their conduct of the proceedings: British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371; Fong v. Chan (1999), 48 O.R. (3d) 330 (C.A.); Fellowes, McNeil v. Kansa General International Insurance Co. 1997 12208 (ON SC), (1997), 37 O.R. (3d) 464.
[11] Costs are designed as to be a tool to administer justice and to control access to justice. In British Columbia (Minister of Forests) v. Okanagan Indian Band, supra, LeBel J. for a majority of the Supreme Court of Canada stated in para. 26:
Indeed, the traditional approach to costs can also be viewed as being animated by the broad concern to ensure that the justice system works fairly and efficiently. Because costs awards transfer some of the winner's litigation expenses to the loser rather than leaving each party's expenses where they fall (as is done in jurisdictions without costs rules), they act as a disincentive to those who might be tempted to harass others with meritless claims. And because they offset to some extent the outlays incurred by the winner, they make the legal system more accessible to litigants who seek to vindicate a legally sound position. These effects of the traditional rules can be connected to the court's concern with overseeing its own process and ensuring that litigation is conducted in an efficient and just manner. In this sense it is a natural evolution in the law to recognize the related policy objectives that are served by the modern approach to costs.[9]
[15] In addition therefore to considering the plaintiffs’ conduct and lack thereof in connection with attempts to settle the action, I consider that the defendants’ offer of October 9, 2013 meets the requirements of Rule 49.10 and find that the defendants are entitled to substantial indemnity costs from that date onward.
[16] The issues in this litigation included complex issues that were important to the parties. Complex issues arose largely in the context of factual issues and evidence. The parties were largely ad idem on the applicable law. Important issues included whether the mortgage on the residential property on Brian Avenue stood in arrears; the consequences of the outcome on that issue alone could lead to the sale of the property.
[17] I have specifically considered whether the parties have conducted themselves in a manner that tended to lengthen the trial; both sides did. Defence counsel cross examined Ivan Mishev over two trial days and plaintiffs’ counsel cross examined Yogesh Shaw for four days. To an extent, both counsel turned a blind eye to opportunities to expedite the trial process and to reduce its expense.
[18] The defendants seek an enhanced award of costs on the basis that the plaintiffs unsuccessfully pleaded and pursued claims for damages for extortion, fraud, intimidation, breach of fiduciary duty, breach of trust and fraudulent misrepresentation.
[19] These claims were actively pursued at trial. Plaintiffs’ counsel submitted the proposition to Mr. Shah, for example, that he knowingly engaged Mr. Ivan Mishev in a “bait and switch” game in order to mislead and ensnare Mr. Mishev.
[20] Our courts frown on such allegations when they cannot be established. Costs consequences can follow. In A-C-H International[10] the court noted that the unsuccessful litigant had raised fraud-like allegations and that there is ample authority for the proposition that parties who advance unfounded fraud-like allegations are liable to pay costs on a substantial indemnity scale.
[21] Although fraud-like allegations were indeed raised in this case, the bulk of the time at trial was spent on evidence following the money involved in the many lending transactions at issue. The parties differed greatly on what was paid out and paid back on each transaction, paid by whom, when and by what means. It was not suggested that every transaction bore fraud-like features.
[22] I have considered the positions of the parties and the evidence and outcome on fraud-like allegations and will enhance some but not all of the costs entitlement of the defendants accordingly.
[23] The defendants also seek enhanced costs based on the provisions of the standard charge terms of the mortgage in question and cases supporting the view that mortgagees are entitled to indemnification of all of their costs and expenses reasonably and properly incurred in connection with recovering upon the mortgage debt.
[24] The plaintiffs acknowledge the defendants’ entitlement to rely upon the standard charge terms appended to their mortgage. But the plaintiffs insist that the defendants repeatedly brought motions beginning in July 2010 to terminate the litigation and enforce their claims prior to trial. The plaintiffs insist that these efforts were not necessary to validate or enforce their mortgage and, as such, enhanced costs are not warranted.
[25] Here too, it is important to note that payment upon the mortgage indebtedness was a live issue and one of the most important and time consuming issues at trial. In my view, application of the standard charge terms to the entire costs claim of the defendants is not appropriate in this case.
[26] Therefore, having considered the positions of the parties and all relevant factors informing fixing of costs in a matter such as this and having stepped back to consider the overall fairness of the costs to be awarded in the circumstances of this particular case, I fix costs as follows: the defendants shall recover costs fixed in the sum of $175,000.00 for fee items plus H.S.T. thereon of $22,750 plus disbursements of $27,948.46 plus H.S.T. thereon of $3,433.70 for a total of $229,121.16.
[27] Counsel advised that an appeal from my decision at trial has been launched and that a motion date is booked for an application to stay execution upon Writs of Possession issued against the mortgaged property, 48 Brian Avenue. The defendants undertook before me on March 10, 2015 to forbear in pursuing execution upon said Writs pending a determination on the motion in the Court of Appeal. Otherwise the parties agree that the plaintiffs be afforded 30 days from the date of these reasons to pay the amounts outstanding pursuant to the Judgment in this matter before execution upon the Writs may proceed.
[28] Subject to the above, the parties agree to the form of the draft judgment attached. Judgment shall issue therefore in that form with costs of $229,121.76 inserted into paragraph 2 and the total mortgage debt inserted into that paragraph as $464,977.90.
[29] Into paragraph 3 shall be inserted April 13 as the date before which the plaintiffs shall pay the amount outstanding failing which the consequence referred to therein may follow.
Moore J.
DATE: March 13, 2015
[1] Rule 57.01(1)(0.a)
[2] A blanket statement, not particularized as to its component parts or rationale
[3] Partial indemnity costs to October 9, 2013 and full indemnity costs thereafter.
[4] Boucher v. Public Accountants Council (Ontario), 2004 14579 (ON CA), 2004 CarswellOnt 2521 (C.A.), para 26.
[5] Beyond stating that costs should not exceed $170,000.
[6] Rule 57.01(1)(0.b)
[7] Rule 18 of the Family Law Rules
[8] Husein v. Chatoor, 2005 CarswellOnt 7809 at para 30
[9] John Doe v. Ontario, [2007 50279 (ON SC)](https://www.canlii.org/en/on/onsc/doc/2007/2007canlii50279/2007canlii50279.html) at paras [6 & 7](https://www.canlii.org/en/on/onsc/doc/2007/2007canlii50279/2007canlii50279.html)
[10] A-C-H International Inc. v. Royal Bank of Canada, 2005 17769 (ONCA) at para 31; and see also Unisys Canada Inc. v. York Three Associates Inc., 2001 7276 (ONCA) at para 15