CITATION: 1162251 Ontario Limited v. 833960 Ontario Limited (M-Plan Consulting), 2016 ONSC 6609
COURT FILE NO.: CV-15-540605
DATE: 20161024
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1162251 ONTARIO LIMITED
Plaintiff
– and –
833960 ONTARIO LIMITED carrying on business as M-PLAN CONSULTING
Defendant
Sean N. Zeitz for the Plaintiff
Anthony Scane for the Defendant
HEARD: In writing
PERELL, J.
REASONS FOR DECISION - COSTS
[1] This is a costs decision after motions for summary judgment.
[2] The Plaintiff, 1162251 Ontario Limited, “the Wives’ Corporation,” and the Defendant, 833960 Ontario Limited carrying on business as M-Plan Consulting, “the Shankman Corporation,” brought motions for summary judgment.
[3] The Shankman Corporation sought by counterclaim to enforce a Guarantee and a General Security Agreement granted in 2013 by the Wives’ Corporation for a $500,000 loan made in 2005 to Danbury Sales Limited, a debtor which has gone out of business.
[4] Practically speaking, the Shankman Corporation was seeking to enforce its claim for repayment of the loan by garnishing $1,084,181.47 which had been paid into court pursuant to the interpleader Order of Justice Conway dated September 25, 2015. The money was paid into court pending a determination of whether the Shankman Corporation was entitled to a share of the funds.
[5] The Wives’ Corporation’s defence to paying any portion of the money held in court was two-pronged. First, although it did sign a Guarantee and a General Security Agreement, it submitted that it did so for a non-existent indebtedness of Danbury Sales. The Wives’ Corporation pleaded that the $500,000 loan to Danbury Sales had been discharged because it had been converted into an ownership interest in another corporation known as Danbury Financial Ltd.; no debt, therefore, nothing to guarantee. Second, the Wives’ Corporation pleaded that the Guarantee and the General Security Agreement were unenforceable because they were not authorized as a matter of corporate law under the Ontario Business Corporations Act, R.S.O. 1990, c. B.16.
[6] The Shankman Corporation disputed both defences and sought to enforce its security.
[7] I agreed with the Wives’ Corporation’s first defence, but not the second, and I granted the Wives’ Corporation’s summary judgment motion. I dismissed the Shankman Corporation’s cross-motion for summary judgment. See 1162251 Ontario Limited v. 833960 Ontario Limited (M-Plan Consulting), 2016 ONSC 5592.
[8] The Wives’ Corporation now seeks costs on a partial indemnity scale of $85,193.44 broken down as follows:
• Fees $67,882
• Disbursements $3,640.92
• Costs Submissions $4,845.86
• HST $8,824.66
[9] In its response to the costs submissions of the Wives’ Corporation, the Shankman Corporation accepted the hourly rates for the legal fees as appropriate.
[10] The Shankman Corporation accepted the claim for costs save for two matters that it submits were incidental to the litigation between the Wives’ Corporation and the Shankman Corporation.
[11] The first matter to which the Shankman Corporation objects is the interpleader motion, which involved the Wives’ Corporation, the Shankman Corporation and two non-parties; namely Eastgate Ford Sales & Service Company and the Interpleader (i.e., 2242937 Ontario Limited), which was holding the funds from the sale of certain properties owned by the Wives’ Corporation.
[12] It appears that the Wives’ Corporation’s lawyer prepared the interpleader motion for the Interpleader.
[13] In addition to submitting that the interpleader motion was extraneous to the claim and counterclaim in the immediate case, the Shankman Corporation states that no costs were sought at the interpleader motion, and it submits that costs could and should have been dealt with at the interpleader motion. The Shankman Corporation submits that costs associated with the interpleader motion are a dead issue that cannot now be revived by the Wives’ Corporation.
[14] The second matter to which the Shankman Corporation objects is related to the interpleader motion. In the contest over the moneys paid into court, while the point was contestable, it appears that if the Shankman Corporation had a claim, then it had priority to the claim of Eastgate Ford. As discussed in my reasons for decision, if the Shankman Corporation had a claim, it had agreed to allow the Wives’ Corporation to hold back for itself $50,000. In the interpleader motion there were negotiations between the Wives’ Corporation and Eastgate Ford and Eastgate Ford agreed to allow the $50,000 to be immediately paid out to the Wives’ Corporation. The Shankman Corporation submits that this agreement constituted a form of third party funding for which the Wives’ Corporation should not be allowed to claim any costs.
[15] The Shankman Corporation, therefore, submits that 28 hours should be deducted from the costs claim for these two matters, which is a deduction of $10,520.30 inclusive of HST.
[16] I agree with the Shankman Corporation with respect to the interpleader motion. Had costs been sought by the Wives’ Corporation for the interpleader motion at the time of that motion, I suspect that costs would have been ordered in the cause of action now before the court, but the request was not made, and it strikes me as unfair to claim these costs now.
[17] I do not agree that there was any third party funding agreement, but regardless of whether or not there was such an agreement, the costs of negotiating this aspect of the interpleader motion were costs associated with that motion.
[18] In short, I agree that there should be a $10,520.30 deduction from the costs claimed.
[19] I would further reduce the costs claim by $4,500 to bring the claim in line with what I regard as being within the reasonable expectations of the parties and to take into account the Shankman Corporation’s partial success in the assessment of costs.
[20] I, therefore, award the Wives’ Corporation $70,173.14 all inclusive.
[21] Order accordingly.
Perell, J.
Released: October 24, 2016
CITATION: 1162251 Ontario Limited v. 833960 Ontario Limited (M-Plan Consulting), 2016 ONSC 6609
COURT FILE NO.: CV-15-540605
DATE: 20161024
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1162251 ONTARIO LIMITED
Plaintiff
– and –
833960 ONTARIO LIMITED carrying on business as M-PLAN CONSULTING
Defendant
REASONS FOR DECISION – COSTS
PERELL J.
Released: October 24, 2016