Nuco Jewelry Products Inc. v. Lynott, 2016 ONSC 6997

CITATION: Nuco Jewelry Products Inc. v. Lynott, 2016 ONSC 6997

COURT FILE NO.: CV-15-532577

DATE: 20161110

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Nuco Jewelry Products Inc. and R. Christopher Lux

AND:

Linda Judith Lynott

BEFORE: S.F. Dunphy, J.

COUNSEL: Sandra Dawe, for the Defendant/Moving Party

Talia Gordner for the Plaintiff/Responding Party

HEARD: In Writing

Costs ENDORSEMENT

[1] The defendant moved for an order pursuant to Rule 21.01(3)(d) of the Rules of Civil Procedure striking out the claim as against her in its entirety on the basis that it is frivolous, vexatious or an abuse of process. She was partly successful in that I granted a stay of the proceeding and required the plaintiff, in effect, to use the “front door” to add the defendant to an existing action (the “Weeks Action”). My decision is reported at Nuco Jewelry Products Inc. v Lynott, 2016 ONSC 5532. The parties have provided me with their written submissions on costs as requested and my decision and reasons on the matter of costs is set forth below.

[2] As I observed in my reasons, success on this motion was divided. The defendant sought a “knock-out” blow to defeat the claim entirely. That was over-reaching. The claim was not dismissed and will proceed in some fashion assuming the plaintiffs choose to pursue it. However, I did find that the plaintiffs were wrong-footed in their approach and fashioned a narrow order to remedy the situation in a manner that prejudices neither side. The defendant will have her day in court on the limitation issue while the plaintiffs will not be prejudiced by the potential expiry of limitation periods after they struck out on the wrong procedural path.

[3] I have reviewed the submissions of both parties. I also reviewed the positions of the parties on the motion extensively in my reasons.

[4] I am mindful of the cases cited by the defendant to the effect that the costs should normally follow the result and the fact that many of her arguments did not succeed does not detract from the fact that overall she found the one that did and achieved a measure of success: Wesbell Networks Inc. v. Bell Canada, 2015 ONCA 33 and Moore v. Getahun, 2015 ONCA 443. I ought not to apply hindsight too harshly to the decisions made to pursue multiple avenues in the hope that at least one would lead to the desired outcome. While many of the defendant’s approaches were unsuccessful, a core issue she sought to address being the procedural “work around” on the limitations issue that the plaintiffs had devised was one where she was unquestionably successful.

[5] The plaintiffs for their part made submissions that highlight the frustration they have experienced in trying to obtain the smallest degree of co-operation from the defendant. This has led them to conclude they have grounds to believe she is part of what they claim to be a fraud perpetrated by the former management of the company as complained of in the Weeks Action. While I may sympathize with the plaintiffs in their frustration and even expressed puzzlement at the lack of elementary co-operation the defendant offered in providing information to her former client about her activities on its behalf, this cannot be a significant factor in my assessment of costs of this motion. That is a matter to be gone into when costs of the action itself are dealt with. At this stage, I cannot say who will prove successful on any substantive issues. There may be fraud or there may not. I cannot assume the question either way for the purposes of assessing costs.

[6] The parties’ outlines of costs reflected a broadly similar number of hours expended by both parties. The plaintiffs’ claimed substantial indemnity costs on the motion amounted to $25,265.33 while the successful defendant’s claimed costs amounted to $29,475.71. Their disbursements ($599 vs. $2,371) are largely differentiated by the volume of materials copied and produced and by the cost of examinations conducted.

[7] This motion was brought at the defendant’s initiative and raised issues that were not only not successful but that consumed a very major portion of the total time expended by both sides. The defendant was, in my view, over-reaching and incurred (and caused the plaintiffs to incur) a significant amount of costs to pursue a “knock-out” blow that was not reasonably available. The issues on which the defendant failed were not merely “in the alternative” arguments that offered another road to the same desired result – they raised issues that posed an existential threat to the plaintiffs’ case that they were obliged to take seriously and defeat. The plaintiffs were entirely successful in thwarting this threat to their right to purse the claim. In this sense, success truly was divided.

[8] In the circumstances, I am of the view that the fairest outcome is to order both sides to bear their own costs of this motion.

[9] Order accordingly.

S.F. Dunphy, J.

Date: November 10, 2016