Court File and Parties

Court File No.: 16-67194 Date: 2016/10/04 Superior Court of Justice - Ontario

Re: Accreditation Canada International and Accreditation Canada, Plaintiffs And: José Luis Cabezas Guerra, a.k.a. Luis Cabezas et al., Defendants

Before: Justice Patrick Smith

Counsel: Todd J. Burke, Sarah Willis and Zachary DeLong, Counsel for the Plaintiffs Sean P. Bawden, Counsel for the Defendant José Luis Cabezas Guerra, a.k.a. Luis Guerra Ken J. Birchall, Counsel for the Defendants Efficiency on Health Services Canada Inc. and Bieu (Marty) Van Huynh

Heard: via written submissions

Costs Endorsement

Overview

[1] On June 1, 2016 I released my decision regarding the motion brought by the Plaintiffs argued on March 17, 2016. In paragraph 97 of my reasons I granted an interlocutory order in favour of the Plaintiffs enjoining the Defendants from soliciting current and prospective clients of the Plaintiffs.

[2] I have now received and reviewed the written submissions of the Plaintiffs and the Defendant, Mr. Cabeza, on the issue of costs.

[3] The Plaintiffs seeks costs of $179,038.47 and submit that the legal and factual complexity, importance of the issues and conduct of the Defendants justify an order for costs on a substantial indemnity scale. The Plaintiffs refer to rule 57.03 (1)(a) of the Rules of Civil Procedure, which provides that costs of a motion shall be fixed and payable within 30 days of the hearing of a contested motion, unless the court is satisfied that a different order would be more just.

[4] The Defendant, Mr. Cabeza argues that costs should be left for the trial judge to decide or alternatively that: a) an order should be made for an assessment under rule 58 of the Rules of Civil Procedure or b) if costs are ordered, they should be for an amount significantly lower than requested.

Discussion

[5] It is well established that costs usually follow the event. Put another way, a successful party should be entitled to an award of costs. However, interlocutory injunctions are significantly different than other forms of civil orders in that they effectively grant the moving party judgment before the merits of the case are fully adjudicated at trial.

[6] An award of costs is a matter in the discretion of the judge by virtue of s. 131(1) of the Courts of Justice Act, which provides that:

Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent costs shall be paid.

[7] Rule 57.01 allows the court to take into account “any other matter relevant to the question of costs.” Read in conjunction with s. 131 of the Courts of Justice Act, the court therefore has wide discretion.

[8] Rule 57.03 provides that a court may make whatever cost order appears fair and just depending on the circumstances of each case. (See: Intercontinental Forest Products SA v. Rugo, [2004] O.J. No. 4190 (Div. Ct.))

[9] In support of the argument that costs should be awarded in the cause the Defendant, Mr. Cabezas cited the words of Justice Robert J. Sharpe in his text, Injunctions and Specific Performance, where at pages 2 - 91, he wrote:

Where the defendant successfully resists the plaintiff's motion for an interlocutory injunction, costs may be awarded forthwith. It has been held that where the motion was groundless and based upon unfounded allegations of fraud, deceit and conspiracy, it may be appropriate for the court to fix the costs on a solicitor and client scale and require that they be paid forthwith. On the other hand, it would be unusual to award costs of an interlocutory injunction motion to the successful plaintiff prior to trial. As there has been no final determination of the rights of the parties, but rather an order to protect the plaintiff's position pending trial, the preferable course is to reserve the question of costs to the trial judge.

[10] In Quizno’s Canada Restaurant Corporation v. 1450987 Ontario Corp., Perrell J. exercised his discretion and refused to make an order for costs in favour of a Plaintiff who had succeeded in obtaining an interlocutory order stating:

Where a plaintiff succeeds in obtaining an interlocutory injunction it is the preferable (although not inevitable) course to reserve costs to the trial judge, which is to say to make costs in the cause. This is the preferable course because it allows the court to have the benefit of hindsight and to avoid the possible injustice of awarding costs to a plaintiff for having succeeded in obtaining an order to protect his or her position pending trial when the outcome of the trial reveals that that plaintiff’s position was not worthy of having been protected.

[11] This view has been cited with approval in several decisions: Tillsonburg Foamtec Inc. v. Free, [2005] O.J. No. 2255 (Ont. Sup. Ct. J.); Penn-Co Construction Canada (2003) v. Constance Lake First Nation, [2008] O.J. No. 3733 (Ont. Sup. Ct. J.); Erinwood Ford Sales Ltd. v. Ford Motor Co. of Canada Ltd., [2005] O.J. No. 2791 (Ont. Sup. Ct. J.); Rogers Cable TV Ltd. v. 373041 Ontario Ltd., [1994] O.J. No. 844 (Gen. Div.).

[12] The rationale for reserving costs to the trial judge is that a Plaintiff who succeeds in obtaining an interlocutory injunction must give an undertaking as to damages.

[13] The written submissions that are before me contain conflicting positions on several important issues that are relevant to the fixing of costs including: legal and factual complexity, conduct of Mr. Cabezas, duplication of lawyers’ time, improper time and excessive spent on cross-examinations, proportionality of the award sought. It is not possible to make an order that would be fair and just without further evidence. For this reason and the reasons stated above, it is fair and just that costs are left to the trial judge hearing this matter.

Disposition

[14] Costs are ordered in the cause.

Justice Patrick Smith Date: October 4, 2016

Court File No.: 16-67194 Date: 2016/10/04 Ontario Superior Court of Justice

Between: Accreditation Canada International and Accreditation Canada, Plaintiffs – and – José Luis Cabezas Guerra aka Luis Cabezas c.o.b. as Accreditation Council Canada aka Accreditation Council Canada Internation and Efficiency on Health Services Canada Inc. and Bieu (Marty) Van Huynh and Jane Doe and John Doe, Defendants

Costs Endorsement Patrick Smith J. Released: October 4, 2016