Court File and Parties

COURT FILE NO.: 53982/12 DATE: September 14, 2016 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Verge Insurance Brokers Limited, 172968 Ontario Inc., Marick Bros. Investments Inc. and Mark Sherk Plaintiffs

AND:

Richard Sherk, Daniel Sherk, Martin, Merry & Reid Limited and Cal Schulz Insurance Brokers Ltd., Andree Senn, Brenda French and Ruth Pluska Defendants

BEFORE: Turnbull, J.

COUNSEL: Stephen F. Gleave/ Richelle M. Pollard, for the Plaintiffs George Limberis, for defendant, Daniel Sherk John M. Wigle, for the defendant, Richard Sherk

Cost Endorsement re: Daniel Sherk’s Motion to Compel Production of Backup Tapes

[1] I heard Daniel Sherk’s motion seeking an order to compel Verge Insurance Brokers Ltd. to produce backup tapes. The motion was heard June 6th and by endorsement dated June 16th, 2016, Daniel Sherk was awarded the substantial relief he was seeking on the motion.

[2] In paragraph 39 of the ruling, I found that Daniel Sherk had been successful on the motion and noted that if the plaintiffs had complied with the order of Quinn, J. a motion would not have been necessary. Hence I determined that he should have his costs on a substantial indemnity basis for this motion. I have received written submissions from Mr. Gleave on behalf of the plaintiffs and written costs submissions from counsel representing Daniel Sherk.

[3] The central issue on the motion was whether or not Mark had breached his obligation to disclose documents under the Rules of Practice and under Justice Quinn’s production order of March 19th, 2014 and the Sedona Principles. After hearing full submissions, Mark was successful in obtaining complete disclosure from the plaintiffs, obtaining full indemnification for the costs paid to Deloitte to audit the 13 backup tapes, and ultimately forcing Mark to admit the plaintiffs never reviewed any of the backup tapes and that the plaintiffs’ method of preservation of the tapes contravened the Sedona Principles.

[4] It was only because Dan was able to spend $200,000.00 to have Deloitte audit 13 of the backup tapes that he was able to realize that full disclosure had not been effected in this case because a large number of the backup tapes had never been reviewed for relevant documents by the plaintiffs.

[5] In reviewing the costs outline of the defendant Daniel Sherk, I find that the time spent and the amounts charged and as claimed by Daniel Sherk, are generally reasonable. Mr. Limberis was called to the bar in 2003 and has 13 years’ experience. He claims 72.20 hours at $420.00 per hour on a substantial indemnity basis. Mira Mounir was an associate with this firm called to the bar in 2016. She has claimed 94 hours of work at $140.00 per hour on a substantial indemnity basis.

[6] In considering the factors under Rule 57.01(1) of the Rules of Civil Procedure, the amount claimed and the amount recovered in the proceeding was significant. Daniel Sherk received indemnification for the $200,000.00 he had to pay to Deloitte to undertake the review of the first 13 backup tapes. In my view the issues were very important for Daniel Sherk in light of the allegations made against him and the nature of the case being brought by him. I do not find that the conduct of any party necessarily shortened or lengthened the duration of the proceeding. While certain ancillary issues were raised by counsel for the plaintiffs, who did not deal with the main issue of disclosure, they did not take a substantial period of time.

[7] In his submissions with respect to costs, Mr. Gleave has fairly raised no dispute over the hours or rates charged by counsel for Daniel Sherk.

[8] Mr. Gleave did suggest that the order ultimately granted was not what was sought in the notice of motion. While strictly speaking that may be true, as a motions judge appointed under Rule 37.15 of the Rules of Civil Procedure, it is incumbent on me to give directions and make such orders as are necessary in order to permit the most expeditious and least costly resolution of the litigation. In my view, there was no surprise and the ultimate order was encompassed in the context of the motion brought by Daniel Sherk.

[9] In the case of Ziskos v. Miksche, [2007] O.J. No. 4276 (S.C.J.) Spies, J. of our court wrote as follows:

“This is consistent with the factors set out in Rule 57.01 which include the conduct of any party that tended shorten of to lengthen unnecessarily the duration of the proceeding, whether any step in the proceeding was unnecessary or taken through excessive causation and a parties denial of or refusal to admit anything that should have been admitted. These factors should be considered in addition to the more commonly considered factors and the complexity of the proceeding, the importance of the issues and the principle of indemnity.”

[10] I have ordered substantial indemnity costs payable by the plaintiffs in this matter because in my view, they did not act reasonably in accordance with the Sedona Principles and their production obligations under the Rules to review all backup tapes for relevant documents. Initially, Mark Sherk indicated that the backup tapes had been reviewed and ultimately that position was shown to be incorrect only due to the perseverance of counsel for Daniel Sherk and of course Daniel Sherk himself.

[11] I have reviewed the disbursements summary provided by counsel for Daniel Sherk and I find the disbursements assessable and reasonable.

Conclusion

[12] The defendant Daniel Sherk shall have his costs of the motion which are fixed on a substantial indemnity basis at $46,854.92 as claimed. Those costs include the sum of $2268.00 sought for costs submissions. I find those costs reasonable as well.

[13] It is ordered that the plaintiff shall pay Daniel Sherk the sum of $46,854.92 within 30 days of this order.

Turnbull, J Date: September 14, 2016