CITATION: York University v. Markicevic and Brown, 2016 ONSC 6561
COURT FILE NO.: CV-12-9758-00CL
DATE: 20161025
SUPERIOR COURT OF JUSTICE – ONTARIO
COMMERCIAL LIST
RE: York University, Plaintiff
AND:
Michael Markicevic, Janet Fleming, Mima Veronica Markicevic, Aleeyah Apparel Inc., operating as A-Tech Construction and Design Inc., Aleeyah Inc., AFC Inc. operating as Arsenal Facility Consulting Inc., Toronto Engineering Company, Guga’s International, Canadian & American Concrete Renovation & Drain-Layer Ltd., Roman Ritacca, Luigi Lato, Phil Brown, Riaz Jadavji, Helen Saoulli Georgiou, Vasos Georgiou, George Saoulli, Georgia Saoulli, Guram Sekhniashvili, Gia Sekhniashvili, John Doe #1, John Doe #2, John Doe #3, Jane Doe #1, Jane Doe #2 and Jane Doe #3, Defendants
BEFORE: Conway J.
COUNSEL: William C. McDowell, Nadia Campion and Brian Kolenda, for the Plaintiff
Lincoln Caylor and Nathan Shaheen, for the Defendants Michael Markicevic, Janet Fleming and Mima Veronica Markicevic
Phil Brown, self-represented
HEARD: In writing
COSTS ENDORSEMENT
[1] York University (“York”) brought an action against Michael Markicevic (“Mr. Markicevic”), Phil Brown (“Mr. Brown”) and others, alleging that they had conspired in carrying out various schemes to defraud York. The trial proceeded only against Mr. Markicevic, Janet Fleming (“Ms. Fleming”), their daughter Mima Markicevic (“Mima”), and Mr. Brown.
[2] By reasons released on June 6, 2016,[^1] I found that Mr. Markicevic and Mr. Brown had engaged in the alleged fraudulent activities and breached their fiduciary duties as senior employees of York. I rejected all of their defences, as well as Mr. Markicevic’s counterclaim against York for negligent investigation.
[3] I granted judgment to York for damages against Mr. Markicevic and Mr. Brown (as well as the “A-Tech Defendants”, who had been noted in default and did not participate in the trial). I granted a variety of declaratory relief, including declarations that the transfer of Mr. Markicevic’s interest in two residential properties to Ms. Fleming and Mima, respectively, were void as fraudulent conveyances. The amount awarded at trial was over $1.8 million, before pre-judgment interest.
[4] I directed the parties to try to resolve the issue of costs. They have been unable to do so. I have therefore reviewed their costs submissions.
[5] York seeks costs on a full indemnity basis in the amount of $1,576,950, consisting of $199,299 for motions decided in January 2013 and $1,377,651 in pre-trial and trial costs incurred since that time. York seeks to allocate costs as between the various defendants as follows: (i) $444,062 payable by Mr. Markicevic, Ms. Fleming and Mima (the “Markicevic Defendants”) on a joint and several basis; (ii) $688,826 payable by Mr. Markicevic, Mr. Brown and the A-Tech Defendants on a joint and several basis; and (iii) the remainder payable by Mr. Markicevic on a several basis.
[6] Mr. Markicevic does not challenge the award of $1,377,651 against him on a full indemnity basis. He disputes the $199,299 in costs that York claims for the 2013 motions. Ms. Fleming and Mima dispute the scale, quantum and apportionment of the costs claimed against them. They submit that they should each be liable for $40,000 in partial indemnity costs for the action. Mr. Brown made no submissions with respect to costs.
The 2013 Motions
[7] In 2012, York brought a motion seeking, among other relief, a Mareva injunction against Mr. Markicevic. The Markicevic Defendants brought their own summary judgment motion to have the action dismissed against them. Justice D. M. Brown (as he then was) heard the two motions together and rendered his decision in January 2013. He dismissed the Markicevic Defendants’ summary judgment motion. He dismissed York’s Mareva motion. However, he granted York leave to issue certificates of pending litigation (CPL) against the residential properties registered in Ms. Fleming and Mima’s names.
[8] Justice Brown reserved the issue of costs to the trial judge.[^2] He ordered that York was entitled to its discrete costs of the summary judgment motion, Mr. Markicevic was entitled to his discrete costs of the Mareva motion, and York was entitled to its discrete costs of the CPL motion. However, Justice Brown noted the “divided success” on the motions, their “interconnectedness” and the difficulty of allocating time as between the various motions for costs purposes.
[9] In my view, there was divided success on the 2013 motions. The primary components were the summary judgment motion and the Mareva motion. The Markicevic Defendants lost the former; York lost the latter. Both sides expended significant resources on these motions[^3] and both were unsuccessful. Under the circumstances, I award no costs of the 2013 motions. Each side will bear its own costs.
Scale of Costs
[10] As noted, Mr. Markicevic concedes that a costs award on a full indemnity basis against him is appropriate. Given my findings that Mr. Markicevic was the mastermind of the fraudulent activity at York and that he breached his fiduciary duty to York (a publicly funded institution), and given my complete rejection of all of his defences and counterclaim, I agree that the elevated scale of costs is warranted: see Ottawa Community Housing Corp. v. Foustanellas (c.o.b. Argos Carpets), [2015] ONCA 276, at para. 94; Davies v. Clarington (Municipality), 2009 ONCA 722, at paras. 28-33. Similarly, Mr. Brown, who participated in the A-Tech scheme to defraud York and breached his fiduciary duty, should be responsible for costs on a full indemnity basis, as should the A-Tech Defendants, the other participants in the fraudulent scheme.
[11] However, with respect to Ms. Fleming and Mima, I am not prepared to award costs against them on either a full or substantial indemnity scale. I agree with their submission that there was no finding that they engaged in fraudulent activity when the residences were transferred into their names or that they engaged in behavior worthy of sanction. The focus was on whether Mr. Markicevic intended to defeat his creditors such that the transfers amounted to fraudulent conveyances. The appropriate scale of costs for Ms. Fleming and Mima is partial indemnity.
Quantum and Apportionment
[12] York’s full indemnity costs for the trial are $1,377,651. Mr. Markicevic accepts both the scale of costs and the quantum to be awarded against him. The costs were significant in light of York’s onus to prove the widespread fraudulent activity (the CAC scheme, the A-Tech scheme, the Residences scheme and the fraudulent conveyances) and the need to refute the various defences and Mr. Markicevic’s counterclaim. I consider the costs reasonable under the circumstances and award costs on a full indemnity basis to York in the amount of $1,377,651 against Mr. Markicevic.
[13] The A-Tech scheme, in which Mr. Brown and the A-Tech Defendants participated, was only one of the fraudulent schemes proven at trial. I consider it reasonable for those defendants to bear responsibility for $400,000 of those full indemnity costs (just under 30%), payable on a joint and several basis with Mr. Markicevic.
[14] Finally, with respect to Ms. Fleming and Mima, I disagree with York that they should be responsible for 25% of the overall trial costs. Their role at trial was restricted to the issue of whether the residential property transfers were fraudulent conveyances and, as noted above, that analysis centered on the intention of Mr. Markicevic. Ms. Fleming and Mima each testified for just a few hours of the 25 day trial. No finding of fraudulent activity was made against them, nor were they responsible for any of the damages award. York’s costs of trial, on a partial indemnity basis, were $888,729. I consider it reasonable for Ms. Fleming to be responsible for $60,000 in partial indemnity costs, taking into account the adverse credibility findings made against her. Mima is responsible for $40,000 in partial indemnity costs. I see no reason for Ms. Fleming or Mima to be jointly and severally responsible for costs with any other defendant, given the individual nature of their respective roles in this litigation.
Decision
[15] The overriding principle in awarding costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant: Boucher et al. v. Public Accountants Council for the Province of Ontario et al. (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.).
[16] In exercising my discretion under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C-43 and considering, in addition to the result in the proceeding, the factors in Rule 57.01(1), all as set out above, I make the following costs awards, inclusive of disbursements and taxes:
• Mr. Markicevic, Mr. Brown and the A-Tech Defendants: full indemnity costs in the amount of $400,000, payable on a joint and several basis;
• Mr. Markicevic: an additional $977,651 in full indemnity costs, payable severally;
• Ms. Fleming: $60,000 in partial indemnity costs, payable severally;
• Mima: $40,000 in partial indemnity costs, payable severally.[^4]
[17] All costs are payable within 30 days.
Conway J.
Date: October 25, 2016
[^1]: York University v. Markicevic and Brown, 2016 ONSC 3718
[^2]: York University v. Michael Markicevic, 2013 ONSC 1888.
[^3]: The Markicevic Defendants and York spent $530,600 and $199,299, respectively, on the motions.
[^4]: For clarity, any recovery of costs from Ms. Fleming and Mima shall be deducted from the costs recoverable from Mr. Markicevic.```