ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-14-511796
COURT FILE NO.: CV-14-517283
DATE: 20150710
BETWEEN:
2057552 ONTARIO INC.
Plaintiff
– and –
CHARLES DICK, ESTHER DICK, MEIR DICK, JACQUELINE MILEVSKY (nee DICK), JOEL DICK, 8800383 CANADA INC., ABC VARIETY SERVICES INC., and ABC VARIETY
Defendants
AND BETWEEN:
ESTER KLEIN and WILLY (VILMOS) KLEIN
Plaintiffs
– and –
CHARLES DICK, ESTHER DICK, JOEL DICK, 8800383 CANADA INC., ABC VARIETY SERVICES INC., ABC VARIETY, and JAMARMY FINANCIAL SERVICES
Defendants
Eliezer Karp for the Plaintiff 2057552 Ontario Inc. and for the Plaintiffs Ester Klein and Willy (Vilmos) Klein
James Clark for the Defendants Charles Dick, Esther Dick, and ABC Variety Services Inc., ABC Variety, and Jamarmy Financial Services
James Round for the Defendants Esther Dick, ABC Variety Services Inc. and ABC Variety
Fred Tayar for the Defendants Jacqueline Milevsky (nee Dick), Joel Dick and 8800383 Canada Inc.
HEARD: In writing
PERELL, J.
REASONS FOR DECISION - COSTS
The Motions in the Finkelstein and Klein Actions
[1] The Plaintiff, 2057552 Ontario Inc. (the “Finkelsteins”), brought a motion:
• to extend a Mareva injunction granted against: (a) Charles Dick and Esther Dick; (b) ABC Variety Services Inc. and ABC Variety, formerly Jamarmy Financial Services; (c) the Dicks’ adult children, Joel Dick, Meir Dick, and Jacqueline Milevsky; and (d) Joel’s and Jacqueline’s corporation, 8800383 Canada Inc.;
• for leave to issue a certificate of pending litigation against the Dick matrimonial home; and
• for a summary judgment to set aside two mortgages on the Dick matrimonial home granted by Esther Dick to Ms. Milevsky and to 8800383 Canada Inc. on the grounds that the mortgages are fraudulent conveyances under the Fraudulent Preferences Act, R.S.O. 1990, c. F.29.
[2] In a separate action, the Plaintiffs Ester and Willy Klein brought a motion:
• for a summary judgment against Esther Dick and Charles Dick for repayment of a $710,000 loan based on unsecured promissory notes;
• for a summary judgment to set aside the mortgages on the Dick matrimonial home on the grounds that the mortgages were fraudulent conveyances;
• for a certificate of pending litigation against the matrimonial home;
• in the alternative, for an extension of a Mareva injunction that they obtained against: (a) Charles Dick and Esther Dick; (b) ABC Variety Services Inc., ABC Variety, and Jamarmy Financial Services; (c) Joel Dick; and (d) 8800383 Canada Inc.
[3] The Dicks defended the summary judgment motions, and the Defendants in both actions brought motions to have the Mareva injunctions set aside.
[4] Charles Dick brought a cross-motion to have his dispute with the Kleins transferred to arbitration before a “Beth Din,” a Rabbinical Court, pursuant to an arbitration clause found in some of the promissory notes.
[5] I dissolved the Mareva injunctions. I refused to grant a certificate of pending litigation. I dismissed the fraudulent conveyance claims. I granted the Kleins a summary judgment for $710,000 plus interest against Charles Dick, Esther Dick, ABC Variety Services Inc., ABC Variety, and Jamarmy Financial Services jointly and severally for repayment of the promissory notes. The issue of referring the Klein Action to arbitration became moot. See 2057552 Ontario Inc. v. Dick, 2015 ONSC 3182.
[6] I directed that if the parties could not agree about the matter of costs, they could make submissions in writing. I noted that in the Finkelstein Action, subject to reviewing the submissions of the parties, I was inclined to make Charles Dick’s, Esther Dick’s, ABC Variety Services Inc.’s and the Finkelsteins’ costs in the cause.
Ms. Milevsky’s, Mr. Joel Dick’s, and 8800383 Canada Inc.’s Claim for Costs in the Finkelstein and Klein Actions
[7] Ms. Milevsky, Mr. Joel Dick, and 8800383 Canada Inc. are now out of the Finkelstein Action and the Klein Action, and they seek costs on a substantial indemnity basis of $58,861.19, all inclusive, jointly and severally against the Finkelsteins and the Kleins.
[8] Ms. Milevsky, Mr. Joel Dick, and 8800383 Canada Inc. note that the Mareva injunctions against them were dissolved, and that the fraudulent conveyance actions against them were dismissed. They submit that because the Plaintiffs made but failed to prove allegations of fraud, the Defendants are justified in seeking costs on a substantial indemnity basis. Ms. Milevsky, Mr. Joel Dick, and 8800383 Canada Inc.’s claim on a partial indemnity basis is $44,199.44, all inclusive.
[9] In response to these costs submissions, the Finkelsteins and the Kleins submit that there was good reason to suspect that there had been fraudulent conveyances and the delay in the Defendants filing a statement of defence, which they have never done, and the Defendants’ late disclosure of their bona fides in advancing a loan to their parents meant that the Finkelsteins and the Kleins never had the opportunity to allow Ms. Milevsky, Mr. Joel Dick, and 8800383 Canada Inc. out of the action. In this regard, in their responding costs submissions, the Finkelsteins and the Kleins submitted:
Accordingly, in circumstances where the Defendants did not respond to the claims of fraudulent conveyances for over 6 months, the Plaintiffs were deprived of their opportunity to withdraw their claim at the very beginning of the litigation, and were entitled to believe that there had been a fraud, as no answer was forthcoming from the Defendants.
[10] The Finkelsteins and the Kleins submitted, therefore, that costs should be fixed at $5,000 for withdrawing a claim after service of a statement of defence. The Finkelsteins and the Kleins also submitted that there was overcharging in the accounts for consent adjournments and that any costs award should be reduced by $20,000.
[11] I see no merit in the Finkelsteins’ and Kleins’ argument. Had the Defendants delivered a statement of defence, it is beyond belief that the Finkelsteins and Kleins would have abandoned their claims. From what I can determine from the several attendances before me, the Finkelsteins and Kleins were intent on pursuing claims against the Dick family come hell or high water and they would not have been put off by a statement of defence any more than they were put off by the sworn affidavits of the Defendants.
[12] The Finkelsteins and the Kleins failed in their quest for a judgment against Ms. Milevsky, Mr. Joel Dick, and 8800383 Canada Inc. and having regard to the allegations of fraud, this is an appropriate case to award costs on a substantial indemnity basis.
[13] For these reasons, in the Finkelstein Action and in the Klein Action, I award Ms. Milevsky, Mr. Joel Dick, and 8800383 Canada Inc. costs on a substantial indemnity basis of $58,861.19, all inclusive, jointly and severally against the Finkelsteins and the Kleins, payable forthwith.
[14] I now turn to: (1) the action between the Finkelsteins and Mr. and Mrs. Dick and Mrs. Dick’s businesses; and (2) the action between the Kleins and Mr. and Mrs. Dick and Mrs. Dick’s businesses.
The Claims for Costs in the Klein Action
[15] In the Klein Action, the Dicks went through a series of retainers in defending the action. Mr. Dick was represented by Stern Landesman Clark, LLP throughout. Mrs. Dick initially had a joint retainer with her husband, but for the last phase of the motions, she and her business were represented by Torkin Manes.
[16] With respect to their retainer of Stern Landesman Clark, LLP, Mr. Charles Dick, Mrs. Dick, and ABC Variety Services Inc., who were successful in setting aside the Mareva injunction obtained by the Kleins, claim substantial indemnity costs of $24,285.78, all inclusive. By my reckoning, their claim on a partial indemnity basis is approximately $17,000, all inclusive. With respect to their retainer of Torkin Manes, which followed their retainer of Stern Landesman Clark, LLP, Mrs. Dick and her businesses claimed costs on a substantial indemnity basis of $19,325.36, all inclusive, jointly and severally against the Finkelsteins and the Kleins. The claim on a partial indemnity basis is $15,457.28, all inclusive.
[17] Thus, as against the Kleins, the Dicks in the aggregate claim $43,611.14, all inclusive, on a substantial indemnity basis, and $32,457.28, all inclusive, on a partial indemnity basis.
[18] The Dicks’ justifications for claiming costs on a substantial indemnity basis are that the Klein’s advanced unfounded fraud allegations.
[19] In the Klein Action, while the Kleins failed in extending the Mareva injunction and in obtaining a certification of pending litigation, they did succeed in obtaining a summary judgment against the Dicks for repayment of a $710,000 loan.
[20] Because of their success on the summary judgment motion, the Kleins submitted that they are entitled to partial indemnity costs of $42,243, all inclusive, and that they should not have to pay any costs for the failed motion to extend the Mareva injunction.
[21] In the alternative, the Kleins submit that Dicks should recover partial indemnity costs of $7,500 for their success in having the Mareva injunction set aside.
[22] In my opinion, the appropriate exercise of discretion about costs in the circumstances of the Klein Action is to award the Dicks substantial indemnity costs of $40,000, all inclusive, for their success on the motions and to award the Kleins partial indemnity costs of $15,000, all inclusive, for their success in obtaining a summary judgment against the Dicks.
[23] Setting off the respective costs awards, the Dicks should receive costs of $25,000, all inclusive, which can be set-off against the Kleins’ judgment against the Dicks.
The Claim for Costs in the Finkelstein Action
[24] In the Finkelstein Action, with respect to their retainer of Stern Landesman Clark, LLP, Mr. Charles Dick, Mrs. Dick, and ABC Variety Services Inc., who were successful in setting aside the Mareva injunction obtained by the Finkelsteins, claim substantial indemnity costs of $25,851.49, all inclusive. Their claim on a partial indemnity basis is $17,930.19.
[25] As noted above, in the Finkelstein Action, with respect to their retainer of Torkin Manes, which followed their retainer of Stern Landesman Clark, LLP, Mrs. Dick and her businesses claimed costs on a substantial indemnity basis of $19,325.36, all inclusive, jointly and severally against the Finkelsteins and the Kleins. The claim on a partial indemnity basis is $15,457.28, all inclusive.
[26] Thus, as against the Finkelsteins, in the aggregate the Dicks claim $45,176.85, all inclusive, on a substantial indemnity basis, and $33,387.47 all inclusive, on a partial indemnity basis.
[27] The justifications advanced for costs on a substantial indemnity basis are: (1) the Finkelsteins advanced unfounded fraud allegations; (2) they failed to make full and frank disclosure in obtaining the Mareva injunction; and (3) they violated the implied undertaking rule.
[28] In my opinion, the appropriate exercise of discretion about costs in the circumstances of the Finkelstein Action, which is on-going, is to award the Dicks substantial indemnity costs of $40,000 all inclusive, payable to the Dicks in the cause.
[29] I make this award because it strikes me that it is fair to tie the Dicks’ entitlement to costs as against the Finkelsteins to the Dicks’ success in defending the Finkelstein Action or in advancing a counterclaim as they may be advised.
[30] Orders accordingly.
Perell, J.
Released: July 10, 2015
COURT FILE NO.: CV-14-511796
COURT FILE NO.: CV-14-517283
DATE: 20150710
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
2057552 ONTARIO INC.
Plaintiff
– and –
CHARLES DICK, ESTHER DICK, MEIR DICK, JACQUELINE MILEVSKY (nee DICK), JOEL DICK, 8800383 CANADA INC., ABC VARIETY SERVICES INC., and ABC VARIETY
Defendants
AND BETWEEN:
ESTER KLEIN and WILLY (VILMOS) KLEIN
Plaintiffs
– and –
CHARLES DICK, ESTHER DICK, JOEL DICK, 8800383 CANADA INC., ABC VARIETY SERVICES INC., ABC VARIETY, and JAMARMY FINANCIAL SERVICES
Defendants
REASONS FOR DECISION - COSTS
PERELL J.
Released: July 10, 2015