SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

COURT FILE NO.: CV-14-10519-00CL

DATE: 20150908

RE: ABRAHAM REICHMANN

Plaintiff

AND:

RALPH REICHMANN, personally and in his capacity as Estate Trustee of the Abraham Reichmann Family Trust, ADA REICHMANN, personally and in her capacity as Estate Trustee of the Abraham Reichmann Family Trust, JARWICK DEVELOPMENTS INC., RADA HOLDINGS INC., OLYMPIA TILE INTERNATIONAL INC., RFRE HOLDINGS INC., R.R.F. CORP., R. INVESTMENT CORP., DECORAMIC INTERNATIONAL INC., 932357 ONTARIO INC., and BARRY ARBUS in his capacity as Trustee of the Abraham Reichmann Family Trust, THE CHILDREN'S LAWYER

Defendants

BEFORE: Newbould J.

COUNSEL:
Kenneth Prehogan and Caroline Abela, for the plaintiff

Luis Sarabia and Nathaniel Read-Ellis, for the defendants other than Barry Arbus

ENDORSEMENT

[1] On August 11, 2015 I ordered interim relief to the plaintiff Abraham Reichmann and ordered that he was entitled to his costs. I have now had cost submissions.

[2] The plaintiff claims costs on a partial indemnity basis of $91,593 and applicable HST for fees, disbursements of $64,323.52 and applicable HST, totalling $167,823.61. The defendants say costs all in should be $40,000.

[3] The defendants do not quarrel with the hourly rates charged, which are reasonable and in my view in accordance with local timely standards, but question the seniority of the two lawyers for the plaintiff, being called in 1976 in Quebec and 2002 in Ontario. The defendants contrast this with the lawyers for the defendants who were younger with less experience. I do not think this is a legitimate factor. The fact that less experienced lawyers were involved for the defendants, who lost the motion, is not a necessary standard. The case for the plaintiff was not overpopulated with too senior counsel.

[4] Five witnesses were cross-examined by plaintiff’s counsel. Two were cross-examined by defendants’ counsel. Rule 39.02(4)(b) provides that a party who cross-examines on a motion is liable for the partial indemnity costs of an adverse party unless the court orders otherwise. The defendants assert that the cross-examinations by the plaintiff were largely unnecessary and that I did not refer to any of the evidence in my decision. I am not in a position to say that the costs were unnecessary. Ralph Reichmann had all the cards to play and they were unknown to Abraham. I would not deduct five sevenths of the costs as contended by Ralph. I am satisfied that Abraham is entitled to the costs of the cross-examinations.

[5] I would also not discount the cost award in favour of Abraham by reason of the allegation made by him in his reply pleading that documents had been created after the fact to characterize dividends as gifts or loans. It is said that this pleading is in effect a plea of fraud. However, in this case, the records produced by Ralph and Ada were not entirely contemporaneous records and some were created after the fact by the accountant for Ralph and Ada. I do not see the pleading as necessarily a pleading of fraud. Moreover, a fraud allegation was not pursued on the motion, being an interim motion.

[6] Abraham was successful on his motion. The fact that he did not recover all that he claimed does not detract from that. All of his claims were contested. Rule 57.01 provides factors that must be considered, including what would be reasonably be expected to be paid by an unsuccessful party. In this case, Ralph and Ada took a very hard position towards their son Abraham who was left without any money after many years of funding and who was required to sell his assets other than his home in order to sustain his existence. Ralph and Ada could expect that Abraham would do all that he could to obtain relief.

[7] Ralph and Ada have not put forward a bill of costs indicating what time their lawyers put into this matter. This should be done if a complaint is made about time claimed by an opposite party. See Risorto v. State Farm Mutual Automobile Insurance Company (2003), 2003 43566 (ON SC), 64 O.R. (3rd) 135 and Frazer v. Haukioja, 2010 ONCA 249.

[8] Taking into account the factors in rule 57.01 and what in this case Ralph and Ada could reasonably expect to pay, I fix the costs for fees in this matter at $75,000 plus applicable HST.

[9] Regarding the disbursements, the main objection is with respect to expert fees of $45,369.50 paid to Mr. Errol Soriano. Mr. Soriano was retained to respond to the expert Scott Davidson retained by Ralph and Ada who opined on, amongst other things, the amount of money that will be left in the segregated bank account if Ada’s claims regarding Jarwick are successful. Mr. Soriano also assisted counsel on the cross-examination of Mr. Davidson. I do not view the fact that on the motion I held that Abraham was not entitled at this time to payment from the Jarwick litigation as an answer to the expense of Mr. Soriano claimed by Abraham. Also, as Abraham had never been provided with accounting records of the relevant companies, and as Mr. Davidson opined on those records, it was not at all unreasonable for Abraham to engage Mr. Soriano to determine the validity of the position of Ralph and Ada. At the time, in view of the export report of Mr. Davidson, it could be expected that Abraham would want to challenge that report. I do not fault Abraham for retaining Mr. Soriano in these circumstances and I allow the disbursement.

[10] There is also a claim for a disbursement of $10,125 plus HST, totalling $11,441.25 paid to MNP accounting services. Ralph and Ada question this disbursement which they say was incurred in respect to Ada’s draft 2014 US tax return, which they say was immaterial to the result of the motion. I do not know enough about this disbursement to either allow or disallow it. Further brief written submissions regarding this disbursement are to be provided within ten days on behalf of Abraham in writing if the claim for this disbursement is pursued and brief written submissions in reply are to be submitted within a further 10 days.

[11] Abraham is entitled to the disbursements claimed other than the disbursement of $11,441.25 paid to MNP accounting services. Whether that disbursement is allowed depends on the further submissions received.

Newbould J.

Date: September 8, 2015