SUPERIOR COURT OF JUSTICE - ONTARIO

THE MANUFACTURERS LIFE INSURANCE COMPANY

Plaintiff

and

HIGH PARK MEDICAL & REHABILITATION CENTRE LTD. c.o.b. HIGH PARK

MEDICAL REHABILITATION CENTRE et al.

Defendants

BEFORE: F.L. Myers J.

READ: August 17, 2015

COUNSEL:
B. Wong and S. Kwon for the plaintiff

E. Karp for the defendants

endorsement

[1] By Endorsement dated July 23, 2015, I dismissed motions seeking four heads of relief. Eugene Gordeiev sought to set aside the Mareva and Anton Pillar orders against him. He sought, alternatively, to free up $7,000 in cash found in his mother’s purse that he claimed was a wedding present for him from his grandfather. He also sought to free up $15,000 to pay for his wedding celebration in the Caribbean. Irena Gordeiev and her corporations sought to release $25,000 to pay suppliers and staff.

[2] These motions all arise from orders made by Dunphy J. based on findings by His Honour that the plaintiff had proven a strong prima facie case against the defendants for fraud among other causes of action. In effect, the defendants fraudulently pretended to operate businesses providing therapy to insured accident victims. Under the defendants’ scheme, insured “patients” were induced by the defendants to submit claims to Manulife for reimbursement for services that were never provided to them and for which they had never paid. The defendants provided the necessary documentary back-up claiming to evidence the services provided and purportedly paid for by the patients. The patients split the proceeds with the defendants.

[3] The costs before me include prior hearings where costs had been reserved. The plaintiff seeks its costs of all proceedings on a substantial indemnity basis. It has proven its entitlement to such costs in my view.

[4] The defendants have conducted themselves abominably in business and in the proceedings to date. They have not followed court directed schedules. They serve material at the last second (as happened before me as well as previously). They purport to add new heads of relief without scheduling and without notice to the plaintiff. Mr. Wong has responded with calm but resolute insistence of procedural fairness to both sides despite the continued efforts of the defendants to blindside him and take advantage at every turn. At the hearing, I ruled that only the matters scheduled would proceed. The rest were deferred to CPC for scheduling. Issues should be joined and scheduled efficiently. Ad hoc claims and faux urgency are not appropriate.

[5] In their costs submissions, the defendants try to minimize the import of their motions. They say that only $60,000 was involved for Eugene Gordeiev. In fact, he sought to lift all of the injunctive relief against him. I held that he was prima facie liable for the full amount of the claims against the other defendants and that I had little doubt that if the injunctions were lifted, he and his mother will funnel assets beyond the reach of the parties and the court. Simple matters like title to assets do not trouble them. In fact, Mr. Gordeiev sought to explain away his deceptive title practices by suggesting that he was not defrauding the plaintiff but perhaps hiding assets from the mother of his child as if that was any less despicable. I found that his evidence specifically was incredible. He had no particulars and was evasive as to the details of some 75 treatments for which he had been indemnified by the plaintiff. There is a strong prima facie case that he and his mother were joint participants in a very substantial fraud. The plaintiff has found false book entries. It has found extreme amounts of cash for which Irena Gordeieva gave ridiculous evidence. They are dishonest people caught in dishonest acts acting dishonestly in court rather than forthrightly seeking to make amends.

[6] The defendants complain about the amount of time spent by the plaintiff. The plaintiff is engaged in a physical and forensic investigation of a multi-million dollar fraud. They have to figure out what books and records exist; which are true; which are false; which relate to others; and which do not. It is an intense and expensive exercise made more time consuming and more expensive by the defendants’ dissembling responses and unfair surprise tactics in court.

[7] 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.

[8] In my view, the partial indemnity fees claimed by the plaintiff at approximately $50,000 are very reasonable. This is one of the rare cases where the defendants’ reprehensible conduct ought to render them liable for costs calculated on a substantial indemnity basis. To convert partial indemnity fees to substantial indemnity fees, Rule 1.03 prescribes a factor of 1.5. Accordingly, the defendants Eugene and Irena Grodeiev are jointly and severally liable to pay costs to the plaintiff of $75,000 for fees plus $11,291.87 for disbursements and taxes.

[9] Finally, I note that in my endorsement, I limited the parties to three pages of submissions on costs. I also required the defendants to deliver a Costs Outline for comparison purposes. I expressly directed that case law was not to be provided but that references to cases would be made by hyperlinks embedded in parties’ pdf submissions. The defendants’ first submissions were 11 ½ pages in length. They provided no Costs Outline despite being directed expressly to do so. They included pdf copies of cases rather than hyperlinks to . Scanning and emailing pdf copies of case law is one of the biggest wastes of the profession’s collective time. Everyone has free access to and most in the business have subscription access to at least two other major online reporting services. The time spent to scan cases adds no value. Moreover the proliferation of unindexed pdf copies of the same case is valueless. The use of limited email space by space-hogging pdfs is singularly wasteful. Of more note perhaps is the defendants’ repeated showing that they simply do not care to follow the Rules or the Court’s directions. As the defendants are already paying costs on a substantial indemnity basis, I do not see that any further response is required at this time.

F.L. Myers J.

Date: August 17, 2015