Court File and Parties

COURT FILE NO.: CV-11-436896 DATE: 20160621 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: HAMPTON SECURITIES LIMITED ON ITS OWN BEHALF and ON BEHALF OF ALL CREDITORS OF JOSEPH TASSONE, Plaintiff/responding party AND: JOSEPH TASSONE and ANNE TASSONE, Defendants/moving parties

BEFORE: Stinson J.

COUNSEL: Colby Linthwaite, for the plaintiff/responding party Jordan Kirkness, for the defendants/moving parties

HEARD: By written submissions, at Toronto.

COSTS ENDORSEMENT

Stinson J.

[1] In my endorsement released March 10, 2016, I granted the Tassones’ motion for partial summary judgment. In doing so I dismissed Hampton's claim against Mr. Tassone for over $600,000 in accumulated trading losses, as well as Hampton's claim for relief against Mrs. Tassone under the Fraudulent Conveyances Act. I have since received written submissions from the parties regarding the costs of the motion.

Liability for costs

[2] At the outset of the argument of the motion, counsel agreed that the motion would finally decide (in favour of one side or the other) the issue of liability for the main claim advanced by Hampton against Mr. Tassone. In that sense, the motion proceeded as if there were mutual motions for summary judgment addressing that issue.

[3] In its written submission, Hampton argues that success was divided and that some of my findings of fact will support the defence of Hampton to the counterclaim for constructive dismissal. I have yet to make any decision in relation to the counterclaim. I therefore disagree that success was divided; to the contrary, the Tassones were entirely successful in defeating the principal claims made against them.

[4] Hampton further argues that some of the allegations in the Statement of Defence which accuse it of attempting to commit fraud and other illegal behaviour, were not pursued or proved on the motion for summary judgment. On this basis, Hampton submits that the Tassones should be disentitled to costs.

[5] I agree that these matters were not advanced during the motion for summary judgment. That said, they may well be material to the remaining issues relating to the counterclaim, which have yet to be adjudicated. I therefore do not consider these so-far unproven allegations to be a basis upon which I should decline to award costs to the parties who were successful on the summary judgment motion.

[6] I therefore conclude that, as the successful parties, the Tassones should recover costs of the motion for summary judgment.

Scale of costs

[7] The Tassones seek costs on a substantial indemnity scale. The ordinary award of costs is an award for partial indemnity costs only. Departure from that ordinary award is warranted only in rare and exceptional cases, in which a party is guilty of conduct worthy of censure either in the events leading up to the litigation or in the course of the litigation itself.

[8] In this case, the only significant complaint of the Tassones is that Hampton failed to provide a comprehensive affidavit of documents in the first instance, and the proceeding was delayed as a result. On the record before me, there is no evidence of misconduct warranting the sanction of substantial indemnity costs however.

[9] I therefore rule that the costs of the motion recoverable by the Tassones should be assessed on a partial indemnity scale only.

Quantum of costs

[10] The Tassones seek partial indemnity costs for fees and disbursements and taxes in the total sum of $48,500.54. Remarkably, in the costs outline submitted by the Hampton in relation to the motion, it sought costs of $47,597.07, in the event it was successful. Thus the cost claims submitted by each side are within $1,000 of each other, or less than a 3% difference.

[11] Despite the foregoing, Hampton submits that the Tassones’ claim for costs is unreasonable. It argues that of the total of 225 hours claimed, only a minor portion relates to the actual argument of the motion. It is the 205 hour balance for preparation of the defence and the motion to which Hampton objects. Hampton's counsel spent approximately 160 hours for preparation, research and argument of the motion. This equates to total fees of $48,421, which for purposes of the bill of costs was reduced to $40,000. Despite spending less time, Hampton's counsel's reduced fees are almost equivalent to those of the Tassones’ counsel, largely due to a difference in hourly rates.

[12] It is beyond argument that this was an important motion. It decided the principal issue in the case. The Tassones’ financial future hung in the balance. The claim against Mr. Tassone was equal to many years of income. Ownership of their matrimonial home was challenged. It is understandable that considerable effort was expended by counsel on their behalf.

[13] On the key issue of whether Hampton could impose liability post-employment for outstanding trading losses, the Tassones were entirely successful. They were similarly entirely successful in relation to the Fraudulent Conveyancing Act dispute.

[14] Hampton argues that some of the arguments advanced by the Tassones were not decided in their favour. It points in particular to the Tassones’ arguments under the Employment Standards Act, upon which I found it unnecessary to rule. I do not agree that by considering, researching and advancing such an argument as an alternative basis for relief, the Tassones should be disentitled to recover costs attributable to that exercise merely because they were successful on other grounds. The ESA arguments were by no means fanciful or specious.

[15] With respect to the defence of fraud and other illegal behaviour, once again I have made no rulings nor was I required to at this stage of the proceedings. Those allegations may or may not prove to be relevant to the counterclaim. At this juncture, however, I would not reduce the Tassones’ recovery of costs on that basis.

[16] Hampton asserts that the Tassones’ Bill of Costs improperly includes charges for time spent on amendments to their Statement of Defence. According to Tassones’ counsel, however, no time has been claimed in respect of amending the Statement of Defence, save and except time for amendments to the Defence that resulted from the Plaintiff's late document disclosure. This objection is therefore without merit.

[17] At the heart of Hampton’s objection to the Tassones’ costs claims is that the amount of time spent is unreasonable. Hampton points out that the actual material filed by the defendants was relatively modest. Hampton submits “the discontinuity between the defendants’ work product and the time claimed is startling."

[18] In my view that submission is unwarranted. In this respect the contrast between the amount of time spent by Hampton’s counsel and that by counsel for the Tassones is notable. While the amount of time spent by one side as compared to the other is different, the dollar value attributable to opposing parties’ lawyers’ efforts is roughly equivalent. It is not unusual that a more junior lawyer who charges a lower hourly rate would end up spending a greater amount of time than would a more experienced lawyer doing the same work whose hourly rate might be higher. The net result would be roughly equivalent bills. This is what transpired here. I do not accept, in the circumstances, that the amount of time spent was excessive, especially in light of the importance of the issues and the fact that Hampton’s principal claims were defeated.

[19] The basic purpose of an award of costs is to award a sum that is fair and reasonable to both sides and within the reasonable expectations of the losing party.

[20] In the present case, Hampton had to know that the Tassones were treating the matter seriously, given its importance. Likewise, Hampton had to know that considerable legal resources would be devoted to defending the claim, not dissimilar to the resources devoted by Hampton’s counsel. It should come as no surprise to the Hampton that a comparable legal expense was incurred by the Tassones.

[21] I therefore conclude that it is fair and reasonable that the Tassones’ partial indemnity costs should be fixed at the amount claimed, namely, $48,500.54, and I so order.

Stinson J. Released: June 21, 2016