CITATION: Abuzour v. Heydary, 2015 ONSC 551

COURT FILE NO.: CV-12-9960-00CL

DATE: 20150129

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Hasan Abuzour and Samira Abuzour, Applicants

AND:

Javad Heydary and Heydary Hamilton Professional Corporation, Respondents

BEFORE: Penny J.

COUNSEL: Brian N. Radnoff and Louise Moher for the Moving Parties

Mark Adilman for the Applicants

Megan Marrie for the Lawyers Professional Indemnity Company

HEARD: January 19, 2015

ENDORSEMENT

Overview

[1] This is a motion under Rule 37.14(1) to set aside or vary my order of October 9, 2014 in which I allowed a motion by the applicants to garnish a LawPro policy of insurance in favour of Javad Heydary and Heydary Hamilton Professional Corporation. That order directed that the proceeds of the Policy be paid to the Abuzours. The practical effect of my order was to exhaust the $1 million limit of the Policy. LawPro did not appeal.

[2] The moving parties are three lawyers formerly employed by Heydary Hamilton. They are each insureds under the Policy. The Abuzours threatened litigation against the moving parties in a demand letter sent to them on March 6, 2014. LawPro’s position is that the Policy is the only policy of insurance that responds to the claim made by the Abuzours against the moving parties in relation to the events giving rise to my Order. The effect of my Order, therefore, was to leave the moving parties without recourse to the Policy for defence costs and/or indemnity for damages in the event they are sued by the Abuzours.

[3] The moving parties say that they had an economic interest in the outcome of the first motion and were affected by my Order. Nevertheless, the moving parties were not served and say they received inadequate notice of the motion. They were, as a result, deprived of the opportunity to make submissions. The moving parties also say that important arguments in their favour were not made by LawPro in the first motion. They wish to advance those arguments now.

[4] The issues on this motion are:

(1) do the moving parties have status to bring this motion – are they “affected”?

(2) did the moving parties fail to appear at the first motion through insufficient notice? and

(3) based on the “new” arguments sought to be advanced by the moving parties, should my Order be varied or set aside?

Background

[5] My October 28, 2014 endorsement (the Endorsement) set out the background to this matter in some detail. I will not repeat the entirety of that background but some context is necessary to understand the issues in this motion.

[6] The first motion was brought in a proceeding which began as an oppression application in which the Abuzours sought relief against against various respondents with whom they had done business. Heydary and Heydary Hamilton acted for the applicants in that litigation.

[7] The title of proceedings of the original oppression application (and, therefore, this motion) is actually:

Samira Abuzour, Hasan Abuzour and 2227560 Ontario Limited, Applicants

and

Youssef Harb, Trade Secret Group Holdings Inc., B&Y Property Holdings Inc. Trade Secret Web Printing Inc., Trade Secret Printing Inc., Premier Quality Printing Inc., and Zeinard Inc., Respondents

There is no evidence before me that leave to amend the title of proceedings was ever granted. At some point, parties or the court started using the title of proceedings which appears on the material filed in the first motion and in this motion. No separate proceeding has ever been initiated by the Abuzours against Heydary or Heydary Hamilton for fraud or negligence in the performance of professional services. I will return to this issue in the course of my analysis below.

[8] In any event, the oppression application was settled between the parties. Part of the settlement involved the payment of $3.6 million to the Abuzours, which was to be made by certified cheque, bank draft or wire transfer to Heydary Hamilton in trust.

[9] Heydary Hamilton received $2.1 million in cash and $1.5 million by way of 24 bank drafts. These bank drafts were deposited by Heydary Hamilton and cashed in April 2013. Nevertheless, Heydary Hamilton did not release the trust funds to the applicants on the basis of concerns about the legitimacy of the bank drafts.

[10] In June 2013, C. Campbell J. ordered Heydary Hamilton to comply with the settlement and ordered the respondents in the oppression proceedings to indemnify Heydary Hamilton in respect of any claim that might be made by the payors of the bank drafts. Heydary Hamilton still did not release the trust funds. The Abuzours, therefore, brought a motion for an order requiring Heydary Hamilton to release the $3.6 million being held by Heydary Hamilton on their behalf.

[11] The motion came before Thorburn J. on November 14, 2013. Thorburn J. initially ordered Heydary Hamilton to release funds by 5:00 p.m. the next day in the amount of $2.1 million, plus interest, to the Abuzours.

[12] The funds were not paid. Javad Heydary, the sole officer and director of Heydary Hamilton, left Canada for Dubai on the evening of November 15, 2013 and never returned. On November 18, Thorburn J. ordered Heydary and Heydary Hamilton to provide, by 5:00 p.m. that day, a certified cheque in the amount of $2.1 million to new counsel for the Abuzours, together with confirmation that the remaining $1.5 million was in Heydary Hamilton’s trust account and would not be removed until further order of the court. Neither the cheque nor the confirmation was delivered.

[13] A contempt motion was returnable on November 20. Heydary did not attend. The contempt motion was adjourned to November 29. He did not attend on November 29 either. In reasons released December 4, 2013, Thorburn J. found Heydary and Heydary Hamilton in contempt of court for deliberately failing to comply with her November 14 and 18, 2013 orders.

[14] The Abuzours then brought a motion for an order for the release of the remaining $1.5 million held by Heydary Hamilton on their behalf. The motion was opposed. Thorburn J. did not accept Heydary Hamilton’s submissions that the funds should not be released. She found that Heydary Hamilton’s grounds for refusing to release the funds were without merit. She found that the $1.5 million being held in trust for the Abuzours rightfully belonged to them and ordered Heydary Hamilton to release the $1.5 million to the Abuzours.

[15] It now appears that Heydary unlawfully withdrew the funds from the Heydary Hamilton account; neither Heydary nor Heydary Hamilton has ever paid the Abuzours in accordance with the Thorburn Orders. The total amount owed under the Thorburn Orders is well in excess of $3,650,000.

Standing

[16] The applicants argue that the moving parties have no standing to bring this motion (and would have had no standing to appear on the first motion). They say the garnishment proceeding was between LawPro, as insurer with obligations to indemnify Heydary and Heydary Hamilton and them as judgment creditors under the Thorburn Orders. In the balance of these reasons, I shall use the encompassing term “Heydary” to refer to the individual and the firm, unless the context requires otherwise.

[17] Further, the applicants argue that the moving parties have not been sued. They may never be sued. Accordingly, the applicants say the moving parties’ interest is purely hypothetical.

[18] I am unable to agree with the applicants’ argument on this issue. The effect of the relief sought, and granted, on the first motion was to exhaust the limits of the Policy. The moving parties are insureds under the Policy. They have a direct financial interest in a proceeding, the result of which is to exhaust their coverage under the Policy.

[19] It is true that the moving parties have not been sued. However, on March 6, 2014, the applicants counsel wrote to Heydary and numerous other professional corporations and lawyers, including the moving parties, seeking full recovery of their outstanding trust monies. Mr. Adilman said, in that letter:

We have instructions to commence legal proceedings against each of you unless a resolution is reached on behalf of our clients in the next short while.

I urge each of you to retain counsel and/or notify your respective liability insurers of this claim and instruct them to contact me in the next two weeks, with a view to attempting to achieve a confidential global settlement in short order. Failing such resolution, we are instructed to proceed with the claim without further notice.

[20] There is no doubt that Mr. Adilman’s March 6, 2014 letter constitutes a claim within the meaning of the Policy, triggering an obligation on the part of LawPro to investigate and conferring on LawPro the right to make a settlement of the claim.

[21] The applicants, however, have not sued the moving parties. When asked why the applicants have not yet sued the moving parties, Mr. Adilman offered no explanation, other than to say, in effect, “one thing at a time.”

[22] The moving parties have taken the position that their motion would be unnecessary if the applicants would provide them with a release. The applicants have refused to provide any release. Mr. Adilman’s explanation for this was that a release would be “catastrophic” with respect to other insurance issues that are in play in the Abuzour’s efforts to recover their money.

[23] In the circumstances, the risk of the moving parties being sued by the applicants cannot be regarded as hypothetical. The applicants’ counsel has been retained and instructed to commence legal proceedings against the moving parties. There is already a threat of suit without further notice. The applicants have provided no undertaking to the Court that they will not commence proceedings against the moving parties and will not provide a release if they are paid the full amount of the available coverage under the Policy. The applicants are of course under no obligation to do either. However, there is no impediment to them commencing an action against the moving parties. It must be assumed, therefore, for the purposes of this motion that since the applicants can commence an action against the moving parties, they will.

[24] The applicants rely on references in my Endorsement to the issue of whether the moving parties had or had not been sued. Those references, however, were in a different context – whether a crystallized, final judgment should take precedence over a nascent duty to defend. Accordingly, I do not think any comments made in my Endorsement touching on this issue are relevant to the present problem of standing raised on this motion.

[25] It is clear, in my view, that the moving parties had a serious financial stake in the first motion. They were “affected” by the relief sought within the meaning of Rule 37.14. They have, in my view, a continuing, significant financial stake in this motion, such that they have the status to bring it.

Were the Moving Parties Unable to Participate by Virtue of Inadequate Notice?

[26] The applicants argue that the moving parties have not established that they failed to appear at the first motion because they had no or inadequate notice.

[27] The applicants did not serve the moving parties. Rule 37.07 provides that a notice of motion “shall be served on any party or other person who will be affected by the order sought.” As I have found that the moving parties are persons affected by the order sought, it necessarily follows that they ought to have been served. That does not end the matter, however.

[28] The first motion was scheduled on July 31, 2014 and a timetable was established. The applicants’ motion record was served on LawPro on August 8. Law Pro’s responding record followed shortly thereafter. LawPro’s deponent was cross-examined by the applicants’ counsel on September 11.

[29] The moving parties were first notified of the motion by counsel for LawPro on September 15, 2014. The moving parties were advised that LawPro was opposing the motion on the basis that the Policy was not subject to garnishment. Limited particulars were provided.

[30] The applicants point to prior correspondence between the moving parties and LawPro in which LawPro made it clear to the moving parties that: a) there was only one policy covering this claim with a total limit of $1 million; the applicants’ claim exceeded $3 million; and c) as a result, the moving parties and others named in the March 6, 2014 demand letter had personal exposure in the event proceedings were initiated by the applicants against them.

[31] The applicants argue that the moving parties should have known of their alleged stake in the outcome of the first motion and, if they were concerned, ought to have participated. Even with late notice, the applicants argue, the moving parties could have sought an adjournment to enable them to participate fully.

[32] The applicants also argue that the inference to be drawn from the moving parties’ acquiescence in September and October is that they were content to “hitch their wagon” to LawPro’s position on the first motion. Having done so, the applicants argue, the moving parties cannot now complain that the result was not what they would have liked.

[33] While there is much to be said for the applicants’ argument, the evidence also supports the conclusion that the level of reporting and information flow from LawPro to the moving parties was less than exemplary. I am not satisfied that the circumstances of this case require that someone in the moving parties’ shoes be left to their remedies, if any, against the entity which arguably failed in its obligations to them.

[34] In addition, it lay within the applicants’ power to put the entire issue beyond doubt. They could (and ought to) have served the moving parties, thus eliminating entirely the risk of the problem that has now arisen.

[35] Finally, a factor in the analysis of whether the moving parties failed to appear due to inadequate notice is whether the moving parties are proposing to contribute anything materially new to the analysis which must be made to determine whether the Thorburn Orders created a garnishable obligation against LawPro as the issuer of the Policy. I will return to this issue in greater detail below but I have concluded that the moving parties are proposing to make an argument going to the heart of the issues on the first motion. This argument, not advanced by LawPro at the first motion, addresses whether the Thorburn Orders created any obligation on LawPro to respond under the Policy at all.

[36] LawPro’s disclosure to the moving parties of the issues and arguments that would be advanced on the first motion and, in particular, the precise nature of LawPro’s arguments in opposition to the motion, did not, I find, afford the moving parties adequate time to consider their position. In the unique circumstances of this case, I am not prepared to visit upon the moving parties the consequences of LawPro’s choices about what to argue at the first motion and how and when to reveal same to its insureds. I find the moving parties failed to appear due to a failure of adequate, meaningful notice of the first motion.

[37] For these reasons, I find that the moving parties have met the threshold required under Rule 37.14 to bring this motion.

Should The Order be Varied or Set Aside?

[38] This brings me to the moving parties’ arguments on the merits. They argue four points which, they say, were not argued in the first motion and which are, or ought to be, dispositive of the motion in their favour. These arguments are:

(1) the Thorburn Orders are not covered by the Policy because they do not involve damages arising out of a claim where the liability of the insured is the result of an error, omission or negligent or fraudulent act in the performance of or the failure to perform professional services for others;

(2) the March 6, 2014 demand letter was a claim under the Policy. The notice of garnishment was delivered well after the applicants’ “claim.” The moving parties therefore say that, under the ‘first past the post’ principle, their rights as insureds under the Policy come before any rights of the applicants arising by way of notice of garnishment;

(3) garnishment is an equitable remedy. In the circumstances of this case the equities favour the moving parties; and

(4) in the alternative, if the Order is not set aside, it should be varied to provide that, in exchange for payment of the proceeds of the Policy to the applicants, the applicants must provide a release of all claims against the moving parties.

Do the Thorburn Orders Engage Coverage Under the Policy?

[39] To address the question of whether the Thorburn orders fall within coverage under the policy, it is necessary to review the specific coverage provisions.

[40] Part I of the Policy contains the following coverage:

A. Damages

To pay on behalf of the INSURED all sums which the INSURED shall become legally obligated to pay as DAMAGES arising out of a CLAIM, provided the liability of the INSURED is the result of an error, omission or negligent act in the performance of or the failure to perform PROFESSIONAL SERVICES for others.

[41] Part V contains various important definitions:

CIVIL SUIT means an action, application or arbitration in which a CLAIM for DAMAGES is asserted against an INSURED

CLAIM(S) means:

(i) a written or oral demand for money or services; or

(ii) a written or oral allegation of breach in the rendering of or failure to render PROFESSIONAL SERVICES

received by the INSURED and resulting from a single or related error(s) and omission(s) or negligent act(s) in the performance of or failure to perform PROFESSIONAL SERVICES.

DAMAGES means compensatory damages that the INSURED is legally obligated to pay arising out of a CLAIM, provided the INSURED’S liability is the result of an error, omission or negligent act in the performance of PROFESSIONAL SERVICES for others to which this insurance applies…

[42] Endorsement No. 5 of the Policy extends coverage to fraudulent acts as well. It states:

…any DISHONEST, fraudulent criminal or malicious act or omission (hereinafter referred to as an “OTHERWISE EXCLUDED ACT(S) OR OMISSION(S)”) of an INSURED, or the INSURED’S vicarious or other liability for OTHERWISE EXCLUDED ACTS OR OMISSIONS of others, arising out of the provision of PROFESSIONAL SERVICES for others is deemed to be an “error, omission or negligent act” as referred to in Part I Coverage A and throughout the POLICY…

[43] PROFESSIONAL SERVICES is defined to mean the practice of law and, specifically, those services performed, or which ought to have been performed, by or behalf of an insured in his or her capacity as a lawyer including services for which the insured is responsible as a lawyer acting as a trustee.

[44] The moving parties’ argument is as follows:

1. the applicants’ motions for payment before Thorburn J. were brought in the oppression proceedings;

2. the applicants’ motions were “simply for the payment of trust funds. It was not for a finding that Heydary and Heydary Hamilton had acted dishonestly criminally or negligently.”

3. The Thorburn Orders and the associated endorsements made no findings of negligence or misappropriation in connection with the performance of professional services. They simply contain findings that the applicants were entitled to the money and ordered that the money be paid to them. The Thorburn Orders predated the revelations that Heydary Hamilton did not have, and that Heydary appears to have misappropriated, the money.

4. The Thorburn Orders are therefore analogous to an order for the payment of money because of a fee dispute (which is specifically excluded from coverage under the Policy).

5. The applicants’ claim for damages from negligence or fraud, although threatened, has not yet been acted upon. There has been no proceeding initiated seeking findings of negligence or fraud against Heydary and no judicial disposition has been made against Heydary in that regard.

[45] In essence, the moving parties argue that the motions giving rise to the Thorburn Orders did not involve, or result in a finding that, Heydary was legally obliged to pay damages arising out of a claim where the liability of Heydary was the result of an “error, omission, negligence or fraud in the performance of or the failure to perform professional services.”

[46] To illustrate the point, the moving parties argue that Heydary could not have taken the Thorburn Orders, the instant they were made, to LawPro and insisted that LawPro pay the money. The essential facts necessary to give rise to a claim and liability under the Policy, they say, arose after the Thorburn Orders.

[47] Thus, the moving parties argue that whatever obligations arose under the Thorburn Orders, they did not impose an obligation on LawPro to indemnify Heydary under the Policy. As a result, there was no debt or obligation flowing between LawPro and Heydary to which any garnishment could attach.

[48] The applicants argue that this “new” position was advanced by LawPro at the first motion. Mr. Adilman relies on the cross-examination of Lorne Shelson, LawPro’s deponent, and passages from his own factum filed in the first hearing. Mr. Adilman argues that by finding that the LawPro insurance obligation to Heydary was a debt, my Endorsement disposed of this issue.

[49] I have carefully reviewed LawPro’s factum on the first motion. I do not see the present argument advanced in that factum. Rather, as I said in my Endorsement, “LawPro accepts that the 2013 policy provides coverage for this particular claim.” I find that the moving parties’ present argument on this issue was not made on the first motion. The moving parties are not retreading a path already taken. This argument is not merely a “do-over.” The applicants did touch on part of this argument in their factum but that was not in response to an argument actually made by LawPro, whose factum was filed after the applicants’. The brief reference to this issue in Mr. Shelson’s cross-examination was not referred to during the first motion.

[50] Having said all that, however, I am unable to agree with the moving parties’ argument on the merits. In my view, the obligations resulting from the Thorburn Orders fell with the Policy; they involved a sum which Heydary was legally obliged to pay arising out of a claim, within the meaning of Part I, section A of the insurance coverage under the Policy.

[51] The motion before Thorburn J. involved a “claim.” It was a written demand for money. It was in respect of an “omission,” i.e., the failure of Heydary to pay the Abouzars their money. And, the failure to pay was in the performance of Heydary’s obligation as a lawyer in his capacity as a trustee. This failure to pay as trustee, according to the definitions in the Policy, involved “the performance of or failure to perform professional service” and was therefore within the Policy.

[52] In essence, the moving parties are saying that the applicants must:

(a) commence a new proceeding specifically alleging negligence or fraud against Heydary; and

(b) obtain judgment in that proceeding,

before any indemnity obligation arises on LawPro’s part under the Policy sufficient to support a garnishment order. I am unable to agree.

[53] There is not the slightest hint in all the material before me that Heydary had any defence or lawful excuse for not paying the money. To the extent any attempt at justification was raised in the earlier proceedings, those attempts were rejected by C. Campbell J. and Thorburn J.

[54] The entire premise of the garnishment proceeding, acknowledged on this point by everyone, is that the money was not paid. Thus, while it is true that Heydary could not have taken the Thorburn Orders to LawPro the instant they were made and demanded that LawPro pay the money to the applicants, that is not what happened. Heydary did not pay. He was found in contempt of court for not doing so.

[55] It would be formalistic in the extreme, to the point of absurdity, to require the applicants at this stage to commence and obtain judgment against Heydary in yet another proceeding before being able to make a claim to the benefit of Heydary’s LawPro coverage.

[56] I pause here to note that neither LawPro nor the moving parties argued, in either motion, that the payments ordered by Thorburn J. were not “damages” within the meaning of the Policy.

[57] When asked specifically during the hearing whether there was a plausible argument in support of his position that the required payment was not “damages”, Mr. Radnoff, on behalf of the moving parties, said it was possible but that he preferred the argument that the Thorburn Orders were not in respect of an error or omission or act of negligence or fraud in the performance of professional services.

[58] I also asked Ms. Marrie, counsel for LawPro, who was in attendance on January 19, what position LawPro took on the issues raised by Mr. Radnoff on behalf of the moving parties. Ms. Marrie indicated that she had specifically asked LawPro how to respond to my question and was told to reiterate that LawPro took no position on the issues raised by the moving parties’ motion.

[59] In view of the fact that neither LawPro nor the moving parties specifically relied on the “damages” argument, it may be unnecessary to comment further. Had the issue been more sharply joined on this point, however, I would have been inclined to the view that garnishment is not precluded in this case by the inclusion of the word “damages” in the coverage language of the Policy.

[60] In determining the scope and meaning of the term “damages” within an insurance policy, the following factors should be considered:

(i) the purpose of the protection afforded by the Policy;

(ii) the Policy should be interpreted on the basis of the language that the insurer chose to use, although any ambiguity should be resolved against the insurer; and

(iii) the reasonable expectations of the insured should be taken into account. Literal meanings should not be applied where to do so would bring about an unrealistic result or as a result which would not be contemplated in the commercial atmosphere in which the insurance was contracted.

[61] When interpreting policies of liability insurance, our courts have not been constrained by the textual meaning of “damages.” Rather, the term has been interpreted in accordance with its plain and ordinary and popular sense and has been applied to sums payable by way of compensation in a broad variety of contexts. References to “damages” in policies of insurance should be interpreted so as to give meaning to the contract that would be consistent with the parties’ true intent, Peterborough v. General Accident Assurance Co. (1998) at para. 23 and 24.

[62] In the circumstances of this case, the words of the Superior Court of California are apt:

a reasonable person would certainly understand “legally obligated to pay as damages” to refer to any obligation which is binding and enforceable under the law… we must interpret “legally obligated to pay damages” in accordance with wording in the popular sense…

Vandenberg v. Sacramento County 21 Cal. 4^th^ 815 (1999) Sup. Ct. Calif. p. 31

[63] The public policy dimensions of the mandatory “innocent party” insurance provisions of the Policy were canvassed extensively in my earlier Endorsement. While the Thorburn Orders do not involve an obligation to pay “compensatory damages” in the usual technical, legal sense of the words, “compensatory damages” can mean payment in respect of any “injury.” The failure of a lawyer acting as trustee to pay money to a client, when it has been found due and owing and has been ordered to be paid, can be considered an injury in the context of this Policy. In the unusual circumstances of this case there is, at the very least, a strong, unanswered inference that the non-payment was by reason of Mr. Heydary’s misappropriation.

[64] For these reasons, I would not refuse to exercise my discretion to grant a garnishment order on the basis that the funds did not represent “damages.”

Priority of Claim Over Garnishment?

[65] Here the moving parties argue that the ‘first past the post’ principle which I cited in the Endorsement should operate in their favour. This is because, they argue, a “claim” was made against them before the applicants served their notice of garnishment.

[66] I am unable to give any credence this argument. The Thorburn Orders, and Heydary’s failure to abide by those Orders, took place in November and December 2013. The applicants served their demand on March 6, 2014. The “post” was a garnishable obligation on LawPro to indemnify Heydary. I have found that this “post” was passed when Heydary failed to respond to the Thorburn Orders in November and December 2013.

[67] As the passage quoted in my Endorsement from the judgment of Farley J. in Laidlaw Inc. (Re) 2003 O.J. No. 1135 (S.C.J.), para. 13, said:

I do not see there is any provision in the subject policies which would allow or require [the insurer] to consider claims or potential claims which have not been finally determined by judgment or settlement as opposed to its obligation to pay claims which have been finally determined.

[68] The moving parties’ argument is a minor tweak to an argument already made and rejected at the first motion.

Equities Favour The Moving Parties

[69] This argument was the principal argument advanced by LawPro at the first motion. The moving parties argue that the liability case against them is weak but that they may have to incur significant costs if they are sued.

[70] It would be impossible and improper to try to resolve, on this motion, an action that has not been brought. While the moving parties have elaborated somewhat on the argument made by LawPro at the first motion, their argument is, at its heart, exactly the same argument advanced on their behalf the first time. My analysis of this issue in the Endorsement has not changed.

[71] If the moving parties are right, then the Abuzours would be foolish indeed to spend the limited recovery they may from LawPro’s Policy in fruitless litigation. But that must be for another day.

Require a Release

[72] A further refinement of the ‘equitable jurisdiction in a garnishment’ argument advanced by the moving parties is that if the remaining Policy limits are paid to the Abuzours, they should, as a quid pro quo, be required to provide the moving parties with a full and final release.

[73] The theory for this argument seems to be that if the matter of the “claims” against the moving parties were being settled on the basis of the payment of the insurance proceeds, LawPro and the moving parties would insist on a release.

[74] The moving parties are concerned that if the garnishment stands then the applicants will have a war chest with which to sue others, including the moving parties, yet the moving parties will have been deprived of their contractual right to a defence because the Policy limits will have been exhausted.

[75] The legal precedents submitted in support of the argument for a judicial release are derived from class action settlements and CCAA plans of compromise. These are very different circumstances from the case at bar.

[76] In my view, no basis has been shown to impose a release in favour of persons who have not been sued when the Abuzours have neither received full recovery of their loss nor reached a compromise of their claims acceptable to them.

[77] There is always a legal framework within which discretion must be exercised. The moving parties have not provided any legally recognized basis upon which I could impose a release on the Abuzours in the present circumstances.

Conclusion

[78] In conclusion, I find that the moving parties had the right to bring this motion but that they have not shown sufficient cause to set aside or vary my prior Order. Their motion is therefore dismissed.

Costs

[79] Significant additional cost was incurred as a result of the manner in which the issues raised on this motion came before the court. All these issues should have been raised at the first motion.

[80] Although the Abuzours were the successful party, this is one of the rare cases in which costs, in my view, ought not to follow the event.

[81] I say this because all three parties involved in this dispute, the Abuzours, LawPro and the moving parties displayed some level of culpability for the unfortunate, halting manner in which the issues were brought before the court. While it is true that the moving parties could have been more proactive in asserting their rights before or at the time of the first motion, it is also true that LawPro might also have been more proactive in keeping its insureds apprised of these disputes. And, most importantly, the Abuzours could have avoided all this duplication and excess cost had they but served the moving parties in the first place.

[82] For these reasons, I make no order as to costs.

Penny J.

Date: January 29, 2015