122164 Canada Limited (c.o.b. New York Fries) v. C.M. Takacs Holding Corporation, 2015 ONSC 4016
CITATION: 122164 Canada Limited (c.o.b. New York Fries) v. C.M. Takacs Holding Corporation, 2015 ONSC 4016
COURT FILE NO.: CV-12-454607
DATE: 20150623
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
122164 CANADA LIMITED o/a NEW YORK FRIES
Plaintiffs
– and –
C.M. TAKACS HOLDINGS CORPORATION, C.M. TAKACS RESTAURANTS INC., CHARLES TAKACS and DEBORAH TAKACS
Defendants
Ian A. Johncox for the Plaintiffs
Deborah Takacs, self-represented for the Defendants
HEARD: In writing
PERELL, J.
REASONS FOR DECISION - COSTS
[1] The Plaintiff 122164 Canada Limited is a fast food franchisor that operates a chain of restaurants known as New York Fries (“NYF”). It sued the Defendants, C.M. Takacs Holdings Corporation, C.M. Takacs Restaurants Inc., Charles Takacs, and Deborah Takacs for defamation (the “Defamation Action”). There was, and is, other litigation (the “Franchise Action”) between these parties and Warren Price, who is the Executive Vice President of NYF.
[2] In the Defamation Action, The Defendants brought a motion to set aside a $525,000 default judgment granted on November 7, 2012. In Reasons issued on May 11, 2015, reported as 122164 Canada Limited (c.o.b. New York Fries) v. C.M. Takacs Holding Corporation, 2015 ONSC 3007, I set aside the judgment - subject to the Takacs retaining counsel for themselves and their corporations and delivering a Statement of Defence and Counterclaim within 60 days.
[3] I directed that if the parties could not agree about the matter of costs of the motion, they could make submissions in writing beginning with NYF’s costs submissions followed by the Defendants’ submissions.
[4] What occurred were two rounds of written costs submissions; that is: (1) Costs Submissions of the Plaintiff (NYF); (2) Defendants’ Costs Submissions; (3) [NYC’s] Reply Submissions for Costs; and (4) [Defendants’] Response to the Reply Submissions.
[5] The copious Costs Submissions were for the most part unhelpful.
[6] Sadly, the parties continue to hector and vilify one another and to argue and reargue not only the motion to set aside the default judgment but about other aspects of the Defamation Action and the Franchise Action including: (a) the animosity between the parties; (b) the animosity between the Takacs and most every lawyer who has acted for NYF; (c) the allegations and refutations of criminal charges of perjury and obstruction of justice; (d) the complaints made by the Takacs to the Law Society; (e) the numerous misunderstandings about how the Rules of Civil Procedure operate and have operated; and (f) the substantive, evidentiary, procedural, criminal, and moral merits of their respective positions.
[7] I have read the parties written submissions, but I decline to be baited into responding in kind.
[8] Instead, keeping in mind that I am deciding the costs for the motion that was before the court, not delivering a report card on civility and professionalism in civil litigation, I shall decide the costs of the motion in accordance with the norms that guide the court’s discretion.
[9] I shall focus on the immediate task, which is to address the respective costs requests of the parties. To foreshadow the result, I order that: (1) in the event that the Defendants in the Defamation Action retain a lawyer of record and thus satisfy the condition of the order setting aside the default judgment, then they shall pay NYF $29,491.52 in costs in any event of the cause and $19,507.74 to NYF in the cause; and (2) in the event that the Defendants in the Defamation Action do not satisfy the condition of the order setting aside the default judgment, then they shall pay NYF $19,507.74 forthwith.
[10] In the Costs Submissions of NYF, it seeks the costs for the wasted default judgment, and although the unsuccessful party on the motion to set aside the default judgment and although unsuccessful in resisting the Defendants’ motion for leave for Mrs. Takacs to represent the corporations on the motion, NYF seeks the costs of the motions.
[11] More precisely, NYF seeks $29,491.52, all inclusive, for the costs thrown away as a result of the default judgment being set aside, and it seeks $19,507.74 for partial indemnity costs for the motion for a total award of $48,999.26.
[12] In the guise of making costs submissions but really a re-argument of the motion, NYF sought that I impose the additional term to my Order that the Defendants to the Defamation Action pay $48,999.26 as a precondition to setting aside the default judgment.
[13] I am, however, not on this costs assessment, changing the Order I already made.
[14] For their part, in the Defendants’ Costs Submissions, they submit that NYF should recover no costs, largely because of the alleged misconduct of it and of its lawyers, Messrs. Flaherty, Gotowiec, and Johncox. The Defendants submit that NYF should pay them $56,292 plus further amounts as the court deems just.
[15] I can quickly say that I shall not be ordering any costs payable to the Defendants.
[16] Much, if not most, of the Defendants’ submissions about costs focus on the alleged procedural and substantive impropriety of the default judgment granted by Justice Macdonald, which judgment will be set aside if the Defendants comply with the conditions of my Order.
[17] With respect to the Defendants’ submissions about what happened before Justice Macdonald, it is for the most part irrelevant to deciding the costs of the motion to set aside the default judgment, but, in any event, I am not in a position to evaluate the evidence used to obtain what may be a dead letter judgment, and, in any event, I see no procedural impropriety in how the judgment was obtained.
[18] In this last regard, I pause to inform the Defendants that they are simply mistaken in thinking that a Notice of Motion must always be served for an interlocutory motion. A Notice of Motion is indeed prepared for a motion on notice, and it will be served on the opponent, but a Notice of Motion is also prepared for a motion made without notice.
[19] On a motion without notice, the Notice of Motion is largely prepared for the court’s use, and it will not be served on an opponent except sometimes after the fact. On a motion for a default judgment the Notice of Motion need not be served on the party already in default.
[20] NYF and its lawyers did not nothing wrong in preparing a Notice of Motion for the motion decided by Justice Macdonald.
[21] The issue then is whether NYF should be awarded any costs for the Defendants’ motion to set aside the default judgment.
[22] Normally costs of an interlocutory motion are awarded to the successful party, but motions to set aside a noting in default or a default judgment are somewhat special or different from other motions because the successful party; i.e. the defendant who was noted in default or who had become a judgment debtor because of the default judgment may have himself or herself to blame for the noting in default or default judgment having occurred in the first place.
[23] This blameworthiness is particularly true in cases where the defendant or his or her lawyer has engaged in some discussions with the plaintiff or the plaintiff’s lawyer about whether an extension of time will be given for the delivery of the Statement of Defence and the plaintiff indicates that he or she will insist on compliance with the Rules of Civil Procedure.
[24] Thus, as submitted by NYF, it is common on successful motions to have a default judgment set aside for there to be no costs for the successful defendant or to order the successful defendant to pay the plaintiff’s wasted or thrown away costs in obtaining the default judgment, which is being set aside. This is fair because these costs would not have been occurred had the defendant just complied with the Rules of Civil Procedure and delivered a Statement of Defence.
[25] In the case at bar, although there was nothing magnanimous or noble in NYF’s proceeding to note the Defendants in the Defamation Action in default, and although I suspect that NYF knew that its sternness was just going to exacerbate the ill will and be a source of grief to all concerned, it complied with the rules for service and the Rules of Civil Procedure and did nothing technically wrong in having the Defendants in the Defamation Action noted in default and in moving for a default judgment against them.
[26] In contrast, the Defendants knowingly ran a risk and they were not compliant with the Rules of Civil Procedure.
[27] In the case at bar if the default judgment is set aside, all the costs associated with obtaining it have been wasted, and it is fair for NYF to ask that the Defendants pay for these wasted costs, which already have been assessed as part of the default judgment procedure.
[28] I, therefore, order that $29,491.52 be paid to NYF in any event of the cause should the default judgment be set aside. However, if the default judgment is not set aside, these costs would not be wasted and these costs, therefore, would not need to be paid.
[29] I have not made the $29,491.52 for wasted costs payable forthwith but to NYF in any event of the cause, because while it would be fair and just for NYF to recover these wasted costs win or lose on the merits of the Defamation Action, it would not be fair and just for them to recover these costs forthwith without having those merits tested after the default judgment has been set aside.
[30] It appears that NYF does not need these costs to be paid forthwith in order for it to have access to justice; it will just have to be patient and allow the Defendants to have their day in court first.
[31] The next matter is whether although unsuccessful, NYF should receive its partial indemnity costs of the motion to set aside the default judgment.
[32] NYF claims $19,507.74 for these costs on a partial indemnity basis. Provided that these costs are payable to NYF in the cause; i.e. if it is successful in the Defamation Action, then in my opinion, NYF should recover $19,507.74, which is fair and reasonable in all the circumstances of the Defamation Action.
[33] However, if the default judgment is not set aside, then NYF should receive its costs for what will have been a wasted motion forthwith.
[34] Order accordingly.
Perell, J.
Released: June 23, 2015
CITATION: 122164 Canada Limited (c.o.b. New York Fries) v. C.M. Takacs Holding Corporation, 2015 ONSC 4016
COURT FILE NO.: CV-12-454607
DATE: 20150623
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
122164 CANADA LIMITED o/a NEW YORK FRIES
Plaintiffs
– and –
C.M. TAKACS HOLDING CORPORATION, C.M. TAKACS RESTAURANTS INC., CHARLES TAKACS and DEBORAH TAKACS
Defendants
REASONS FOR DECISION - COSTS
PERELL J.
Released: June 23, 2015