Crich Holdings and Buildings Limited et al. v. Becky, 2016 ONSC 1652

CITATION: Crich Holdings and Buildings Limited et al. v. Becky, 2016 ONSC 1652

COURT FILE NO.: 1798/15

DATE: 2016/03/09

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CRICH HOLDINGS AND BUILDINGS LIMITED, and TERRACORP MANAGEMENT INC. and STEPHEN KLEIMAN (Applicants)

And:

JOHN SHANE BECKY, personally, and THE PERSONAL REPRESENTATIVE OF MRS. MARY ILENE BECKY, DECEASED (Respondents)

BEFORE: Justice I. F. Leach

COUNSEL: David M. Sanders, for the applicants

Not participating, although given the opportunity to file written submissions

HEARD: In writing

ENDORSEMENT - COSTS

Overview

[1] On January 25, 2016, I heard and granted, (via orally delivered reasons), the applicants’ request to have the respondents declared vexatious litigants, in accordance with the criteria set forth in ss.140(1)(a) and (b) of the Courts of Justice Act, R.S.O. 1990, c.C.43, as amended.

[2] Pursuant to ss.140(1)(c) and (d) of the same legislation, I also granted ancillary relief, which included a stay of various other proceedings already commenced by the respondents, as well as a restriction on the respondents’ commencement of any further proceedings, unless and until the respondents obtained leave from the court permitting that to happen.

[3] The respondent Mr Becky appeared in person, (representing himself and the estate of his mother as its estate trustee), to participate in the hearing and argument of the aforesaid application. However, Mr Becky deliberately withdrew and left the courtroom prior to delivery of my oral reasons, and the making of a corresponding written endorsement referring to those reasons, specifying and confirming the substantive relief I was granting, and confirming the provisions made during the course of my oral reasons to address the matter of costs by way of written submissions.

[4] In particular, in relation to costs, I specifically confirmed in my written endorsement that, if the parties were unable to agree on costs and the applicants wished to pursue that aspect of the matter, costs were to be addressed in the following manner:

a. the applicants were to deliver written cost submission within two weeks, limited to five pages, (not including any attached bill of costs, settlement offers, or similar material);

b. Mr Becky was then to have two weeks to deliver any responding written cost submissions, similarly limited to five pages, (not including the similar attachment of any bill of costs or settlement offers);

c. the applicants thereafter would have one week to deliver any desired written reply cost submissions, limited to two pages in length; and

d. if no cost submission were received within two weeks from the delivery of my oral decision, there were to be no costs ordered in relation to the application.

[5] I also directed counsel for the applicants to provide Mr Becky with a copy of my written endorsement by mailing it to his post office box, as material sent to that address had come to Mr Becky’s attention in the past.

[6] An “affidavit of compliance with judicial order”, sworn by an employee of counsel for the applicants on February 4, 2016, and filed with the court, confirms that Mr Becky was served with a copy of my written endorsement on or about January 26, 2016, along with other material including an issued and entered Judgment reflecting my decision.

[7] On or about February 5, 2015, the applicants tendered their written cost submissions.

[8] However, as of today’s date, it seems Mr Becky has tendered no responding written cost submissions of any kind.

[9] Such a failure is not altogether surprising, given Mr Becky’s repeated indications to me, during hearing of the underlying application, that cost awards against him essentially were an academic and meaningless exercise, as there was no realistic prospect of his ever being able to satisfy any past or future cost awards made against him or his mother’s estate, owing to alleged impecuniosity.

[10] As I noted during the course of my oral reasons, Mr Becky nevertheless had filed no evidence to substantiate his repeated claims of impecuniosity, in this proceeding or earlier proceedings, despite court suggestions that he do so.

[11] In any event, the applicants having complied with my direction concerning the tendering of written cost submissions, they now are entitled to have the matter of costs addressed without Mr Becky’s input.

[12] I therefore turn to consideration of the written cost submissions and attached bill of costs filed by the applicants, wherein the applicants alternatively seek costs of their application on:

a. a full indemnity basis, fixed at the all-inclusive amount of $11,004.93;

b. a full indemnity basis, fixed in the all-inclusive amount of $10,000.00, as per their notice of application; or

c. a substantial indemnity basis, fixed in the all-inclusive amount of $6,409.00.

Analysis

[13] Costs are to be determined pursuant to the court’s broad discretion confirmed by s.131 of the Courts of Justice Act, R.S.O. 1990, c.C.43, as expanded by Rule 57.01 of the Rules of Civil Procedure.

[14] Having regard to the fact that the application was entirely successful, as well as the general indemnity principle[^1], I see no reason why costs should not follow the event.

[15] In the particular circumstances of this case, I also think it would be appropriate to address such costs on a full indemnity basis.

[16] In that regard, I do not do so on the basis of any relevant settlement offers, as it seems no such offers were made. In the circumstances, neither Rule 49.10 nor Rule 49.13 applies to this situation.

[17] However, I do think this is a case which warrants an award of costs on an elevated scale.

[18] In saying that, I am mindful that, although the court has a broad discretion in relation to costs, our appellate courts repeatedly have emphasized that awards of costs on a partial indemnity basis generally strike the proper balance as to the burden of costs that should be borne by the “winner”, and that elevated cost awards should be reserved for “rare and most exceptional” cases. See, for example, Foulis v. Robinson (1987), 21 O.R. (2d) 179 (C.A.), and Isaacs v. MHG International Ltd., (1984), 1984 1862 (ON CA), 45 O.R. (2d) 693 (C.A.)

[19] The sort of conduct meriting elevated cost awards has been described in various ways.

[20] In Young v. Young, 1993 34 (SCC), [1993] 4 S.C.R. 3, at p.134, McLachlin J. indicated that elevated cost awards are warranted “only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties”.

[21] In Mortimer v. Cameron (1994), 1994 10998 (ON CA), 17 O.R. (3d) 1 (C.A.), and McBride Metal Fabricating Corp. v. H&W Sales Co. (2002), 2002 41899 (ON CA), 59 O.R. (3d) 97, whose principles were echoed and emphasized again by the Court of Appeal in Davies v. Clarington, 2009 ONCA 722, [2009] O.J. No. 4236 (C.A.), conduct warranting elevated cost awards was described as “reprehensible”, “egregious”, or “acts that clearly indicated an abuse of process”, justifying enhanced costs as a form of chastisement.

[22] In this case, I believe the conduct of the respondents regrettably but inherently falls within such descriptions and characterizations.

[23] In saying that, I am mindful of the fact that, beyond the failure to file a notice of appearance or other material, the respondents did little or nothing in relation to this particular application that might be regarded as reprehensible, egregious or an abuse of process, in the sense required. The vast majority of the misconduct relied upon by the applicants, in support of their claim for costs on an elevated scale, is the same misconduct relied upon in support of the application on its merits, and relates to misconduct by the respondents in other proceedings, which already has been the subject of judicial comment and cost awards.

[24] However, a vexatious litigant application is somewhat unique in that regard, insofar as its very nature focuses on the conduct of a respondent in relation to one or more other proceedings, and on whether such conduct collectively warrants such extraordinary relief.

[25] For the detailed reasons set forth in my substantive decision, I found that the underlying litigious conduct of the respondents did indeed involve abuse of process, failure to abide by court orders, and other reprehensible conduct such as the commencement of multiple duplicative claims, as well as claims and appeals that were then never pursued, or in respect of which the respondents never made any effort to file supportive evidence.

[26] Such reprehensible and egregious conduct is the sine qua non of a successful vexatious litigant application, and it clearly exists in this case. Such conduct needs to be discouraged.

[27] Moreover, while I generally am reluctant to award of costs on a full rather than substantial indemnity basis, as encouraging an expectation of full cost recovery tends to undermine the “reality check” incentives that otherwise play a valuable role in all litigation, in my view a full indemnity award is merited in this case.

[28] In that regard, I am mindful of the reality that those who bring a successful vexatious litigant application effectively do so not only for the benefit of themselves, but also for the benefit of the court and other litigants. In my view, where there is good reason to bring such an application, (as confirmed by the application’s success), a party performing that service generally should not be obliged to absorb a significant measure of the associated expense without reimbursement from those who made the application necessary.

[29] Having said that, an award of costs on a full indemnity basis does not entail accepting, without question, the costs sought by a successful vexatious litigation applicant.

[30] In other words, taking steps to deal a demonstrably vexatious litigant may be laudable, but it is not an effective licence to run up legal expense with the expectation of cost reimbursement that will not be examined or scrutinized.

[31] In particular, the court is still obliged to consider the discretionary factors set forth in Rule 57.01, as well as the “overriding principle of reasonableness” as applied to the factual matrix of the case, pursuant to the ultimate “cross check” required by such authorities as Boucher, Moon and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC (2005), 2005 1042 (ON CA), 75 O.R. (3d) 638 (C.A.), and Anderson v. St. Jude Medical Inc. (2006), 2006 85158 (ON SCDC), 264 D.L.R. (4th) 557 (Ont.Div.Ct.).

[32] In this case, having regard to applicable discretionary factors set forth in Rule 57.01(1):

• To some extent, I already have addressed the principle of indemnity, in the context of my remarks concerning entitlement. However, to address the residual aspects of Rule 57.01(0.a):

o The indicated hourly rates claimed for Mr Sanders and Mr Rose seem reasonable and appropriate to me, as do the hourly rates claimed in relation to clerk and student time.

o I generally find the indicated hours to be unsurprising and reasonable in the circumstances, given the difficulties inherent in locating and marshalling information about the respondents’ substantial litigation activity, and presenting that in an intelligible and organized manner, (including appropriate cross-referencing and comparisons), that underscored the vexatious quality and aspects of the respondents’ substantial litigation history.

o Having said all that, I think one must not lose sight of the fact that the application met with little or no effective resistance or opposition, apart from Mr Becky’s attendance at the hearing.

• As for Rule 57.01(0.b) and its mandated consideration of the amount of costs that an unsuccessful party could reasonably expect to pay:

o In this case, the respondents chose not to supply me with any information detailing the time and disbursements devoted to the matter from their perspective.

o As emphasized by such authorities as Smith Estate v. Rotstein, 2011 ONCA 491, [2011] O.J. No. 3075, at paragraphs 50-51, leave to appeal refused, [2011] S.C.C.A. No. 441, and my own comments in Valastro v. The Corporation of the City of London, [2013] O.J. No. 1353, at paragraph 12(b), an unsuccessful party’s failure to supply information concerning its own costs is an important consideration in assessing the parties’ reasonable expectations, and normally permits an inference that the resources devoted to the matter by the unsuccessful party were comparable to those expended by the successful party.

o In this particular case, that inference is demonstrably unrealistic, as there are indications that Mr Becky actually incurred far less expense than the applicants. For example, he chose to personally represent both himself and his mother’s estate, did absolutely nothing in the way of preparing or filing material, and seemed to have spent little or no time reviewing the material that had been served upon him. Indeed, his effort spent in addressing the application seemed limited to his attendance at the hearing, (and even then, only part of the hearing).

o However, as emphasized by the provisions of Rule 57.01(0.b), the focus is on the amount of costs that an unsuccessful party could reasonably expect to pay. In my view, that objective assessment should not be undermined by the respondents’ subjective decision to expend little or no effort resisting the application.

• As for Rule 57.01(1)(c), in my view there was substantial complexity to the matter, at least insofar as the factual matrix was concerned. Again, the applicants were obliged to investigate, compile and organize information generated by the respondents’ substantial litigation activity, and present that information in an intelligible and useful manner.

• I also accept the submission, pursuant to Rule 57.01(1)(d), that the issues raised by the application were inherently important, not only to the applicants but to the court and to other litigants. Neither the applicants nor the system of justice generally should have to tolerate vexatious litigant. In a world of limited court resources, such activity inherently has a detrimental impact on other matters properly demanding the court’s attention.

• As for Rule 57.01(1)(e), I do not think it can be said that the respondents did much to complicate or lengthen the vexatious litigant application itself. As noted above, the respondents actually did little or nothing in relation to the application, apart from Mr Becky’s attendance for part of its hearing. For similar reasons, when considering Rule 57.01(1)(f), the respondents did little or nothing that was improper, vexatious or unnecessary in relation to the application itself. However, as noted above, the underlying conduct of the respondents, which was the inherent focus of the application, involved substantial and repeated demonstrations of such misconduct on the part of the respondents.

• As for Rule 57.01(1)(g), the respondents clearly admitted nothing, and instead put the applicants to the strict proof of all matters relied upon in support of the application.

• As for other possible residual considerations permitted by Rule 57.01(i), in my view, in my view they do not include regard to the respondents’ repeated claims of impecuniosity in this case. As noted in my substantive reasons, the respondents have never tendered any evidence to support such claims, (despite judicial invitation if not encouragement in that regard), and the evidence before me, not contradicted by any responding evidence, suggested that the respondents still owned a parcel of land within the City of London. Moreover, Mr Becky himself acknowledged that he had taken steps to probate his mother’s estate, which suggests that it had value making such steps necessary and/or worthwhile. However, by way of “any other matter relevant to the question of costs”, I do think the applicants should not be permitted, in any event, to recover costs in excess of the $10,000.00 amount they themselves expressly claimed in their notice of application.

[33] On the whole, having regard to the above considerations, the circumstances of the case, the ultimate “cross-check” described above, (to ensure the overriding principle of reasonableness), and the somewhat rare and unusual circumstances of this particular case, I think justice will be done in this matter by an order directing the respondents to pay the applicants costs, on a full indemnity basis, fixed at $10,000.00, (inclusive of fees, disbursements and HST), payable within 30 days.

[34] An order awarding the above costs, on that basis, should go accordingly.

[35] To ensure that this endorsement comes to the attention of the respondents, counsel for the applicants is hereby directed to send a copy of the endorsement to Mr Becky, via the same post office box mentioned in paragraph 5, supra.

“Justice I. F. Leach”

Justice I. F. Leach

Date: March 9, 2016

[^1]: See Rules 57.01(1)(0.a) and 57.01(1)(b).