2497611 Ontario Inc. v. Wills et al., 2016 ONSC 7389
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: 2497611 Ontario Inc., Plaintiff AND: Joel Peter Wills and Custom Concepts Mfg. Inc., Defendants (Plaintiffs by Counterclaim) AND: Stephen Simon Jr., Agnes Simon, Stephen Simon Sr., Simon Farms, 2497611 Ontario Inc., and MNP Ltd., (Defendants by Counterclaim)
BEFORE: Justice A. K. Mitchell
COUNSEL: B. Blay, for the plaintiff and defendants by counterclaim O. Sabo, for the defendants and plaintiffs by counterclaim
HEARD: In writing
COSTS ENDORSEMENT
Background
1This costs endorsement relates to the defendants’ motion seeking an order setting aside two orders made on motion by the plaintiff without notice to the defendants returnable before the Honourable Justice Morissette on September 29, 2016, namely: (i) a temporary order granting a Mareva Injunction restraining the defendant, Joel Peter Wills (“Wills”), from dissipating any of his assets whether owned jointly or alone for a period of 10 days1; and (ii) a final order granting leave to the plaintiff to issue a writ of delivery with respect to the tangible personal property of the plaintiff, in the possession of the defendants (listed on Schedule A to the order), ordering that Wills and all persons and entities related thereto whether directly or indirectly disclose the location of such property and provide a full accounting of all dealings with such property as of May 24, 2016 and awarding costs of these without notice motions in the amount of $8400. I will refer to these orders as the Mareva Injunction and the possession order, respectively.
2The plaintiff brought a cross-motion to continue the Mareva Injunction indefinitely and opposed the defendants’ motion to set aside the orders.
3The motions were heard on October 26, 2016 and reasons were released October 27, 2016.
4I dismissed the defendants’ motion to set aside the possession order save and except para. 5 of the possession order dealing with costs which I set aside. However, I granted the defendants’ motion to set aside the Mareva Injunction.
5At the conclusion of my reasons, I invited the parties to make brief written submissions with respect to the issue of costs. I have now received and reviewed the submissions of the defendants’ and those of the plaintiff both dated November 9, 2016 and the reply submissions of the parties received on November 16, 2016.
6In summary, the parties seek their respective costs of the motions from the others.
7The defendants claim their substantial indemnity costs of the motions in the aggregate amount of $18,131.84 or, alternatively, partial indemnity costs in the aggregate amount of $13,826.88, in both cases inclusive of disbursements and HST.
8The plaintiff claims partial indemnity costs of the motions in the aggregate amount of $10,487.24 inclusive of disbursements and HST.
9There are no offers to settle to consider.
Position of the Defendants
10The defendants argue that the Mareva Injunction, which was ultimately set aside, was issued on the basis of unfounded allegations of fraud, deceit and conspiracy entitling them to their costs of all attendances before the court to deal with the Mareva Injunction including a “rush” motion returnable on October 7 to have the injunction set aside to allow for the sale of the Wills’ home.
11The defendants seek their costs on a substantial indemnity basis. The defendants argue they should be indemnified their costs at an enhanced level for the following reasons:
- the plaintiff made serious unfounded allegations of fraud, deceit and conspiracy against Wills;
- the plaintiff failed to put the full record before the court with respect to the history of dealings between the parties on the return of the Mareva Injunction brought on an ex parte basis;
- the scope of the Mareva Injunction went far beyond what was needed to protect the interests of the plaintiff in the assets forming the subject matter of the litigation;
- The scope of the Mareva Injunction included freezing the assets of Wills’ spouse, a non-party; and
- The issuance of the Mareva Injunction has put Wills and his spouse through considerable stress and expense in responding to the evidence against them which has threatened their interests far beyond the issues and amounts involved in this litigation.
Position of the Plaintiff
12The plaintiff seeks its costs on a partial indemnity basis arguing it should be indemnified its costs of the motions, including the ex parte motions on September 29, 2016, for the following reasons:
- the motions were necessary and reasonable in light of the defendants’ failure to deliver up possession of the assets to the plaintiff despite the decision of Justice Morissette of August 2, 2016 (the “August 2, 2016 order”) wherein it was declared that the sale of the assets to the plaintiff was valid;
- although inflammatory and unfounded allegations of fraud were made in the affidavit filed in support of the Mareva Injunction, the plaintiff did not pursue its claims of fraud, conspiracy and deceit in argument and conceded the Mareva Injunction should not continue early on in argument on October 26, 2016; and
- the evidence suggested Wills was removing the assets from the Company premises after the August 2, 2016 order.
Analysis
Law and Governing Principles
13The court has a very broad discretion to award the costs of and incidental to a proceeding. The basic provision is in s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c.C-43:
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 the costs shall be paid.
14To guide its discretion, the court must look primarily to the factors set out in r. 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”). Rule 57.01(1) provides that, in addition to the result in the proceeding and any offer to settle or to contribute made in writing, the court may consider:
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed in the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(g) improper, vexatious or unnecessary, or
(h) taken through negligence, mistake or excessive caution;
(i) a party’s denial of or refusal to admit anything that should have been admitted;
(j) whether is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding,
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(k) any other matter relevant to the question of costs.
15The primary guiding principle is whether the costs are fair and reasonable in the circumstances: see Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.); and, more recently, Davies v. Clarington (Municipality), 2009 ONCA 722.
16There is no reason to deviate from the principle that costs should follow success. The challenge before me is to determine the more successful party.
17I find that, on balance, the defendants were more successful on the motions. To the extent not successful, the plaintiff should not be rewarded for their misguided approach to obtaining the relief to which they believed they were entitled, namely, possession of the assets. They approached the desired relief with a chainsaw rather than a scalpel.
18As noted in my reasons, the Mareva Injunction should not have issued at first instance. It was over-reaching in its attachment to assets of value far in excess of the amount of the purchased assets. It extended to the assets of a non-party, namely, Wills’ spouse. There was no evidence of the Wills’ absconding from the jurisdiction with their personal assets or the purchased assets. The motion was returnable on an ex parte basis despite the defendants being represented by counsel and the parties being embroiled in litigation for many months prior.
19The motion for possession was brought as a separate motion again on an ex parte and urgent basis in circumstances where possession is the very relief sought in this action which has been defended by the defendants. Arguably, that motion was, in essence, a motion for partial summary judgment on the plaintiff’s claim and should have been brought with proper notice to the defendants -- it was not.
20There is no excuse for the complete failure on the part of the plaintiff to respect the rules of natural justice. Despite its success in obtaining an order for possession, its failure to abide by the proper process is deserving of costs sanctions.
21However, an award of substantial indemnity costs is not appropriate in the circumstances because the evidence is clear that the defendants did little if anything to abide by the August 2, 2016 order. While not in contempt of that order, they remained in possession of assets to which lawful title had been transferred to the plaintiff. The motions could have easily been avoided had the defendants delivered up the purchased assets to the plaintiff when demanded or at the very latest immediately following the August 2, 2016 order.
Disposition
22I find that the defendants are entitled to their partial indemnity costs of the motions as claimed fixed in the amount of $13,826.88, inclusive of disbursements and HST, payable forthwith by the plaintiff.
“Justice A. K. Mitchell”
Justice A. K. Mitchell
Date: November 29, 2016