CITATION: LPIC v. Clarke et al., 2015 ONSC 3303

COURT FILE NO.: CV-14-511079
DATE: 20150525

SUPERIOR COURT OF JUSTICE - ONTARIO

RE:

LAWYERS’ PROFESSIONAL INDEMNITY COMPANY

Plaintiff

-AND-

EUSTACE CLARKE also known as EUSTACE SAMUEL CLARKE, NOVA BAILEY also known as NOVA TAYLOR and MARJORIE REID

Defendants

BEFORE: F.L. Myers J.

COUNSEL:

Y. Lipetz for the defendant Marjorie Reid

A. Speigel for the plaintiff

READ: May 25, 2015

COSTS ENDORSEMENT

[1] The plaintiff requests an order that the defendants Clarke and Reid be jointly and severally liable to pay the plaintiff’s costs on a full indemnity basis due to the reprehensible conduct of those defendants in this proceeding.

[2] By reasons dated April 24, 2015, reported at 2015 ONSC 2643, I granted summary judgment as sought by the plaintiff declaring that certain properties that the defendants claimed belonged to Ms Reid were in fact owned beneficially by Clarke’s long-since discharged trustee in bankruptcy. Mr. Clarke created a fraudulent paper trial of sham transactions by which title to the properties appeared to be sold to third parties when, in fact, they remained owned by him beneficially throughout. Mr. Clarke’s bankruptcy has already been found by other courts to be a “plan to defeat the interests of his creditors” and a “perversion of justice.” The manipulations of title to the properties were part and parcel of that dishonest scheme.

[3] Apart from the dishonest scheme by which the properties were moved and hidden from Clarke’s trustee in bankruptcy years ago, the plaintiff also points to the misconduct of the defendants in this proceeding to support the request for costs. The defendant Nova Bailey is the daughter of the defendant Reid. Clarke had legal title to the properties put in the name of Ms Bailey. In his defence to this action, he claimed that Ms Bailey was the beneficial owner of the properties. When Ms Bailey provided truthful evidence, supported by financial documentation, that the properties were not hers but, in fact, belonged to Mr. Clarke, the defendants Clarke and Reid concocted a deceitful tale claiming that the properties had been purchased by Ms Reid with title being held in trust by Ms Bailey for Ms Reid. Of course the pleading that Ms Bailey owned beneficial title to the properties was wholly at odds with the new story that Ms Reid was the owner of the properties and that when she purchased them, she had asked her daughter to hold title for her as a trustee.

[4] The defendants also stalled this action. They were abusive to counsel opposite. And filed untrue evidence in this proceeding.

[5] The defendant Clarke did not deliver costs submissions. But Ms Reid has retained counsel to deliver submissions for her. Ms Reid says that she was not involved in any of the misconduct committed by Mr. Clarke. He is her spouse however. They live at one of the properties. She allowed herself to be put forward and even accused her daughter of being untruthful in an effort to help Mr. Clarke keep the equity in the properties out of the legitimate reach of Mr. Clarke’s creditors. She stands to benefit personally from the outcome and she participated dishonestly in the proceeding to try to do so. It seems to me to be fair, reasonable, and just that she be found to be jointly and severally liable with Mr. Clarke with whom she acted in concert throughout.

[6] The fixing of costs is a discretionary decision under section 131 of the Courts of Justice Act. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the complexity of the issues (57.01(1)(c)). Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v Public Accountants Council (Ontario), 2004 14579 (ON CA), (2004), 71 O.R. (3d) 291, at paras 26, 37.

[7] In my view, this is one of the rare cases in which equity demands that the plaintiff not be put to one penny of expense in the pursuit of justice. The plaintiff seeks costs of $121,523.99. I have reviewed the plaintiff’s bill of costs. The rates and hours of counsel are quite reasonable especially in light of the multiple unnecessary steps precipitated by the stalling efforts of the defendants Clarke and Reid.

[8] Ms Reid submits that she should be liable for no more than $5,000 in costs. The action involved title to several hundred thousand dollars in property. The issues were of great importance to the defendants in particular. In light of the lengths to which they went to try to fabricate a defence and to attack the plaintiff’s counsel personally, they ought reasonably to have anticipated a full-on effort by the plaintiff to respond. In my view it is fair and reasonable that the defendants Clarke and Reid be jointly and severally liable to pay the plaintiff its costs of this entire action on a full indemnity basis which I fix at $121,523.99 inclusive of disbursements and taxes.

[9] The plaintiff asks for a court-ordered charge against the properties so that it is paid its costs first before other creditors of Mr. Clarke share in the fruits of its efforts. It seems to me that the costs of this action are analogous and ought to be considered to be costs of an applicant for a bankruptcy order. As such, subsection 45(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c.B-3 applies to Mr. Clarke’s liability for costs vis-à-vis the properties that are the subject matter of this proceeding. The order against Ms Reid and Mr. Clarke is exigible in the ordinary course otherwise.

________________________________ F.L. Myers J.

Date: May 25, 2015