ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-14-504420
DATE: 20151127
BETWEEN:
PAYAM ZARE
Plaintiff
– and –
ALI REZA RAHMANIAN, CARMEL RAHMANIAN, BEHJAT ZIAAEIN and GARY R. GELLER
Defendants
Marco Drudi, for the Plaintiff
Robert Trifts, for Ali Reza Rahmanian & Carmel Rahmanian
HEARD: November 17, 2015
REASONS FOR DECISION
Hood J.
Nature of Motion
[1] On May 22, 2014 the plaintiff on an ex parte motion before Master Dash obtained CPLs over four properties owned by the Rahmanian defendants.
[2] The Rahmanian defendants moved to set aside the CPLs. Cross-examinations took place. The motion was to be heard on March 24, 2014 along with a summary judgment motion by these defendants seeking to dismiss the plaintiff’s claim. It could not proceed on that date due to the inability of the court to provide them with a judge.
[3] Following this the claims against the defendants, Ziaaein and Geller, were dismissed on consent. As well, the plaintiff and the Rahmanian defendants agreed that the CPLs would be vacated from the four properties, and the summary judgment motion would be dismissed without prejudice to the Rahmanian defendants bringing this motion on at a later date. The parties also agreed that the Rahmanian defendants could argue their entitlement to costs for the motion to vacate the CPLs despite the agreement to vacate them. That is what is before me.
[4] While the costs of the motion to vacate is one that should be before a Master I decided to hear it rather than put it off further. The motion to argue the CPL costs had been before Justice Glustein on September 22, 2015 but the court file had been misplaced by the court, through no fault of the parties, and Justice Glustein had been unable to proceed. He adjourned it to be heard before a judge on November 17, 2015.
[5] The defendants in their materials ask for costs to be fixed on a substantial indemnity basis in the amount of $74,915.99 payable within 30 days. Based on the costs outline and the summary of dockets provided the plaintiff is actually seeking costs on a full indemnity basis. The requested figure of $74,915.99 is based on the total hours incurred times the actual hourly rate charged to the defendants. The defendants are seeking complete indemnification at actual hourly rates. While some courts have seemed to conflate full indemnity with substantial indemnity they are two separate scales and are recognized as such under Rule 57.01(4).
Costs Now or Later
[6] The plaintiff asks that the costs for the motion vacating the CPLs be reserved to the trial judge. The parties are presently moving forward with accounting claims against each other. The plaintiff while acknowledging that s. 131 of the Courts of Justice Act gives me complete discretion as to whether costs should be payable now and the quantum of those costs asks that I defer this decision to the trial judge so that the costs of the CPL motion, the summary judgment motion and the trial itself are before one person along with all the facts. In this way, the plaintiff argues, the trial judge will be better able to allocate the costs and fix the scale. As part of this the plaintiff argues that the defendant, Ali Rahmanian, has breached some of his duties, namely his duty to account and perhaps his trust obligations owed to the plaintiff, so that it would be unfair to make a costs award now. He also argues that this will necessarily also impact upon the ultimate quantum as there will be offsets between the parties.
[7] I see no basis to reserve the costs to the trial judge. It is now standard practice to fix costs on a motion along the way and to order them paid within 30 days. This is what Rule 57.03 provides for.
[8] The evidentiary record with respect to the CPLs is complete and before me. It is more efficient to proceed now. Moreover, in considering the question of fairness, it would be more unfair to have the defendants wait until trial to obtain their costs relating to the CPLs than to have the plaintiff pay the costs now. The plaintiff agreed to vacate the CPLs with costs to be argued. Agreeing to have the summary judgment motion costs deferred should not defer the CPL costs. Nor will waiting affect the scale of costs for the CPL motion itself. It will be the same now or later.
[9] If at trial there is a finding that the summary judgment motion was unmeritorious or the defendants breached their trust obligations, the trial judge can make the appropriate costs award. He or she will have to decide on the material then before her or him. I believe it to be appropriate to fix the CPL costs now as part of the control and supervision of the court’s process.
Scale of Costs & Quantum
[10] First I must consider the scale which will provide a framework for the quantum. This must then be reviewed in light of all the circumstances including the factors set out in Rule 57.01(1). Ultimately I must arrive at a figure which is reasonable and fair.
[11] In my view the plaintiff wisely agreed to vacate the CPLs. There was a clear lack of full and frank disclosure in seeking the CPLs on an ex parte basis. I have no doubt that if the plaintiff had presented Master Dash with the information set out in paragraphs 50(a) – (m), and repeated at paragraphs 57 and 58(a) – (m) of the defendants’ factum, or even some of it, Master Dash would not have granted the CPLs on an ex parte basis and the plaintiff then would have had the choice of seeking the CPLs on notice.
[12] The case law (see: United States of America v. Friedland, [1996] O.J. No 4399 and United States of America v. Yemec, 2007 65619 (ON SCDC), [2007] O.J. No. 2066) sets out why this is so. The plaintiff does not disagree with this.
[13] In Friedland and Yemec the courts awarded costs against those who had failed to provide full and frank disclosure in seeking an ex parte injunction on a substantial indemnity basis and not a full indemnity basis. It is clear in the matter before me that the plaintiff failed to make full and frank disclosure in obtaining the CPLs. No case law was provided to me by the plaintiff as to what would be required to award the higher level of full indemnity costs. I however believe it to be appropriate in circumstances which are far more exceptional than those justifying substantial indemnity costs. The conduct of the one party must be egregious or reprehensible. I cannot find that the plaintiff’s conduct reached this higher level worthy of sanction. In argument, the respondents proposed that the plaintiff’s conduct was deliberate and designed to financially drain or at least cripple the defendants. I make no finding on that other than to point out that Ali Rahmanian makes one reference to this in his affidavit at paragraph 100, that the CPLs caused him financial hardship, a far cry from being almost financially drained and crippled. In any event, he has his remedies for damages under s. 103(4) of the Courts of Justice Act to pursue if so advised.
[14] The defendants, in their costs outline, as mentioned previously, suggest that I carry out a mechanical exercise of multiplying the hours docketed of 106 hours by an hourly rate of $550 to arrive at a number of approximately $62,000 for fees. To this is added HST and disbursements. The defendants indicate that approximately 30 hours have been redacted from the summary of dockets which was provided. These 30 hours relate to the summary judgment motion and the defence of the case leaving 106 hours for the CPL motion. The plaintiff argues that when the settlement, as previously set out, was reached on February 19, 2015, following the examination of the plaintiff, his counsel’s actual fees for everything in the litigation amounted to approximately $30,000. He argues that a more reasonable amount for the costs of the CPL motion is $10,000 to $15,000.
[15] In fixing costs, the discretion under s. 131 is to be exercised in accordance with the factors listed in Rule 57.01 even while fixing costs on a substantial indemnity basis. This is what the Divisional Court did in Yemec. The Court is to consider all the factors including indemnity for the defendants, the expectation of the plaintiff and the complexity of the issues. The defendants argue that they had to do the “heavy lifting” on the motion in order to disclose the failure to make full and frank disclosure. They succeeded and this too is a factor to consider within the exercise of my discretion. Overall, the court is to consider what is fair and reasonable in all of the circumstances.
[16] The hourly rate of $550 is inappropriate as the costs are not being fixed on a full indemnity basis. The plaintiff did not provide a costs outline although he did provide a client ledger. His costs appear to be less and while I should not overly second guess the time spent by counsel for the defendants, I must be aware of the reasonable expectation of the plaintiff. I also have to try to balance the indemnity principle with the fundamental objective of access to justice.
[17] In stepping back and considering what is fair and reasonable I conclude that what the defendants are seeking is somewhat excessive. If one applies an hourly rate more in line with a substantial indemnity rate as opposed to the actual rate and considers the time actually spent arguing the motion, the fees are closer to $45,000 than $62,000. While the defendants have redacted 30 hours of time that still leaves 106 hours. Of this I believe there will be some duplication and some of the time spent on the CPL motion will by its very nature be useful in defence of the claim.
[18] I am of the view that fees in the amount of $35,000 for the CPL motion including the motion before me are fair and reasonable. This amount includes the motion argued before me. To this should be added the disbursements claimed and the appropriate HST. This total amount is to be paid within 30 days of today’s date.
HOOD J.
Released: November 27, 2015
COURT FILE NO.: CV-14-504420
DATE: 20151127
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
PAYAM ZARE
Plaintiff
– and –
ALI REZA RAHMANIAN, CARMEL RAHMANIAN, BEHJAT ZIAAEIN and GARY R. GELLER
Defendants
REASONS FOR DECISION
Hood J.
Released: November 27, 2015