Court File and Parties

Court File No.: CV-15-520827 Date: 2016-05-18 Ontario Superior Court of Justice

Between: Andreas Haas, Plaintiff – and – Dhanushan Gunasekaram also known as Dan Gunam, Luca Viscardi, and Shenlu Feng also known as Stephen Feng, Defendants

Counsel: David Alderson and Andrew Ottaway, for the Plaintiff/Responding Party Avrum D. Slodovnick and Raffaele Sparano, for the Defendants, Dhanushan Gunasekaram also known as Dan Gunam, and Shenlu Feng also known as Stephen Feng/Moving Parties James B. Camp, for the Defendant, Luca Viscardi/Moving Party

Before: S.A.Q. Akhtar J.

Endorsement

[1] After successfully resisting a motion to stay his action in favour of arbitration, the plaintiff Andreas Haas seeks costs of the motion.

[2] Haas argues that he should be awarded costs on a partial indemnity basis up to the date of 26 June 2015 and substantial indemnity costs thereafter. The foundation for this submission is Haas’s offer to settle the motion, pursuant to Rule 49.10 of the Rules of Civil Procedure, on the basis of dismissal with $3,000 costs payable by the defendants. Accordingly, he seeks costs in the amount of $37,308.02.

[3] In response, Dan Gunam, Stephen Feng and Luca Viscardi (“the moving parties”), contend that the offer to settle was (a) conditional and (b) non-severable and needed agreement by all three moving parties before it could be accepted. That being the case, they argue that the offer did not properly fall within the confines of Rule 49. They submit that a partial indemnity total of $14,322.74 is the most appropriate costs order in the circumstances of this case. For the reasons set out below, I do not need to decide this point as I find that Rule 49.10 does not apply to the case at bar.

The Rule 49.10 Offer to Settle

[4] Rule 49.10 of the Rules of Civil Procedure R.R.O. 1990, Reg. 194, provides for situations in which a successful plaintiff makes an offer to settle or refuses an offer made by the defendant. It reads as follows:

49.10 (1) Where an offer to settle,

(a) is made by a plaintiff at least seven days before the commencement of the hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing; and

(c) is not accepted by the defendant,

and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.

(2) Where an offer to settle,

(a) is made by a defendant at least seven days before the commencement of the hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing; and

(c) is not accepted by the plaintiff,

and the plaintiff obtains a judgment as favourable as or less favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer was served and the defendant is entitled to partial indemnity costs from that date, unless the court orders otherwise.

[5] Most notably, Rule 49 does not cover the situation in which a defendant, who has made an offer to settle, defeats the plaintiffs claim outright. Haas, as responding party finds himself in the position of defendant for Rule 49 purposes. Up until 2009, the caselaw appeared to suggest that, despite the absence of specific statutory authority in the Rules, a court could award substantial indemnity costs to a successful defendant who had previously offered to settle: see, S.A. Strasser Ltd. v. Richmond Hill (Town) (1990), 1 O.R. (3d) 243 (C.A.); H.L. Staebler Company Ltd. v. Allan (2008), 92 O.R. (3d) 788 (S.C.J.); Dunstan v. Flying J Travel Plaza, [2007] O.J. No. 4089 (S.C.J.); Alie v Bertrand & Frere Construction Co. (2002), 62 O.R. (3d) 645.

[6] More recently, however, in Davies v. Clarington (Municipality), 2009 ONCA 722, the Court of Appeal for Ontario has clarified the position. At para. 40 of the judgment, Epstein J.A. stated:

[…] while fixing costs is a discretionary exercise, attracting a high level of deference, it must be on a principled basis. The judicial discretion under rules 49.13 and 57.01 is not so broad as to permit a fundamental change to the law that governs the award of an elevated level of costs. Apart from the operation of rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made. As Austin J.A. established in Scapillati, Strasser should be interpreted to fit within this framework - as a case where the trial judge implicitly found such egregious behaviour, deserving of sanction.

[7] It seems, therefore, that Haas is only entitled to a substantial indemnity award if I find that the moving parties’ behaviour was “egregious” and “deserving of sanction”. There is nothing to suggest improper motive, vexatious behaviour or any other type of conduct that would warrant substantial indemnity costs in this case.

[8] The motion involved complicated issues which required resolution by the courts. In addition, although unsuccessful, the motion was not frivolous and proceeded with expedition and skill on both sides. Accordingly, Haas’s claim for substantial indemnity fails.

The Rule 57.01 Factors

[9] Rule 57.01 of the Rules lists a number of factors to be considered when a court exercises its discretion to award costs. I find the following to be of relevance in this case:

(a) the complexity of the proceeding (Rule 57.01(1)(c))

(b) the importance of the issues(Rule 57.01(1)(d))

(c) a party’s denial of or refusal to admit anything that should have been admitted(Rule 57.01(1)(g))

[10] In my view this was not a straight forward matter: the issues and surrounding legal principles were complex. Haas had to meet two sets of arguments which, if successful would have had the effect of staying his action. I also accept Haas’ argument that Viscardi’s initial disinclination to admit that he was a party to the Shareholder’s Agreement at issue in this case added to Haas’ costs.

[11] Ultimately costs are a matter of discretion for a trial judge s.131 of the Courts of Justice Act. 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), 71 O.R. (3d) 291, at paras 26, 37.

[12] With these principles in mind, costs are fixed in the all-inclusive amount of $25,500.00. Those costs are to be divided evenly with Gunam, Feng and Viscardi each paying the amount of $8,500.00. These costs are payable forthwith.

S.A.Q. Akhtar J.

Released: 2016-05-18

COURT FILE NO.: CV-15-520827 DATE: 2016-05-18 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: ANDREAS HAAS Plaintiff – and – DHANUSHAN GUNASEKARAM also known as DAN GUNAM, LUCA VISCARDI, and SHENLU FENG also known as STEPHEN FENG Defendants

COSTS JUDGMENT

S.A.Q. Akhtar J.