Boktor v. Reddy, 2016 ONSC 7503
Court File No.: CV-12-452220 Date: 2016-12-07 Superior Court of Justice – Ontario
Re: Amir Girgis-Boktor, Plaintiff And: Ronald Reddy, Greg Chew, Nexus Health Management Ltd. and PGR Health and Wellness Ltd., Defendants
And Re: Ronald Reddy, Greg Chew, Nexus Health Management Ltd. and PGR Health and Wellness Ltd., Plaintiffs by Counterclaim And: Amir Girgis-Boktor and Manahree Inc., Defendants to the Counterclaim
Before: Stinson J.
Counsel: Derrick M. Fulton, for the plaintiff Ronald Reddy, appearing in person and on behalf of Nexus Health Management Ltd. and PGR Health and Wellness Ltd. David House, for Greg Chew
Heard: at Toronto by written submissions
Endorsement
[1] This decision concerns a motion brought by Mr. Chew to vary a costs award made by me as part of an endorsement in this case that was released on July 23, 2014.
Background
[2] My July 23, 2014 endorsement concerned a motion by the defendants to disqualify Minden Gross as lawyers for the plaintiff. At the close of argument of the motion on June 24, 2014, I reserved my decision. At that time, counsel for the plaintiff provided a costs outline and made submissions regarding costs. The defendants requested and were provided with an opportunity to prepare a written submission as to costs and they did so, followed by a written reply on behalf of the plaintiff.
[3] In my July 23, 2014 endorsement I dismissed the defendants’ motion. I concluded that the motion was an unjustifiable attack on the professional reputation and integrity of plaintiff's counsel (not Mr. Fulton) and that substantial indemnity costs were warranted. Based on the materials filed, I fixed the costs payable by the defendants to the plaintiff at the all-inclusive sum of $50,000 and ordered that sum be paid within 30 days (the “Costs Award”).
[4] No party appealed my July 23, 2014 decision or the Costs Award. Except for a partial payment made by Mr. Chew (as explained below), the Costs Award remains unsatisfied. The plaintiff has indicated that he intends to bring a motion to strike the defendants’ statement of defence on the ground of their failure to pay the Costs Award.
[5] The formal order arising from my July 23, 2014 decision was not settled until a Case Conference heard by me on July 15, 2015. On that date, I approved the formal order in draft form and directed that it not be acted on prior to August 31, 2015. The latter date was chosen in order to provide the parties an opportunity to explore settlement. The formal order arising from my July 23, 2014 decision was issued and entered on July 24, 2015.
[6] At the time they brought and argued the motion to disqualify and at the time of the Case Conference heard on July 15, 2015, none of the defendants was represented by counsel: both Mr. Chew and Mr. Reddy were self-represented; as well, Mr. Reddy, who is not a lawyer, represented the defendant corporations, pursuant to an order obtained by him under rule 15.01(2).
[7] Mr. Chew subsequently retained counsel. In light of the plaintiff’s stated intention to move to strike the statement of defence due to nonpayment of the Costs Award, Mr. Chew paid what he says is his proportionate share, 25% of the Costs Award, or $12,500. In this motion, Mr. Chew seeks an order that he is not required to pay further costs and that he has satisfied his obligations under the Costs Award. He further seeks an order that Mr. Reddy and the two corporate defendants be required to pay the remaining balance of the Costs Award.
Positions of the parties
[8] In essence, Mr. Chew argues that the Costs Award does not provide for joint and several liability for payment of the costs by the defendants. He argues that each defendant should be called upon to pay only a proportionate share: since there are four defendants, each should be required to pay 25%. He therefore argues that he should not be subject to the prejudice of a motion to strike when he has paid his proper share.
[9] Mr. Chew’s motion is opposed by the plaintiff and the other defendants. The plaintiff submits that all defendants participated in the disqualification motion and pursued a joint submission. As such, all should bear responsibility for the consequences of their failed attempt to displace plaintiff's counsel. The plaintiff also notes that, in his original costs submissions, he sought costs on a joint and several basis. Plaintiff therefore argues that the question of joint and several liability is res judicata and that I am functus officio since the order has been signed and entered.
[10] For his part, Mr. Reddy asserts that Mr. Chew was a willing participant in the disqualification motion. He points out that the foundation of the motion was Mr. Chew’s evidence concerning his dealings with the plaintiff’s counsel (not Mr. Fulton). It would therefore not be appropriate for Mr. Chew to be relieved of responsibility for the full costs order.
Analysis
(a) Jurisdiction
[11] Rule 59.06(1) provides as follows:
An order that contains an error arising from an accidental slip or omission or requires amendment in any particular on which the court did not adjudicate may be amended on a motion in the proceeding.
[12] The plaintiff’s costs submissions filed on June 24, 2014 sought an award of costs on a joint and several basis. Despite that request, my endorsement dated July 23, 2014 did not expressly address that issue. Rather, I merely fixed the costs payable by the defendants at $50,000.
[13] It is fair to say that I did not adjudicate on the issue whether the award should be joint, several or joint and several. Thus the principle of res judicata has no application. Although the formal order has been issued and entered, I accept that this is a suitable case for a motion under rule 59.06(1) since (in Mr. Chew’s submission, at least) the July 23, 2014 order “requires amendment in [a] particular on which the court did not adjudicate." I therefore do not accept the functus argument.
(b) Relevant legal principles
[14] The law concerning the subject of joint and several liability for costs was helpfully summarized and analyzed by Platana J. in Meady v. Greyhound Canada Transportation Corp., 2013 ONSC 5568, at paras 85 to 92. That case involved a claim by passengers on an inter-city bus that was involved in an accident when a troubled individual grabbed the steering wheel, causing it to veer off the road. The accident caused one fatality and 32 injuries. Multiple passengers joined as co-plaintiffs in one action against the bus company and the Ontario Provincial Police, asserting that the accident was caused by breaches of duty by each. Following a trial, their claim was dismissed by Platana J. (see 2012 ONSC 657), a decision that was upheld on appeal (2015 ONCA 6).
[15] In his decision as to costs, Platana J. expressly addressed the question whether the plaintiffs should be held jointly and severally liable for the defendants' costs and disbursements. He wrote as follows:
85 The OPP and Greyhound assert that the plaintiffs should be held jointly and severally liable for the defendants' costs and disbursements. In the alternative, the plaintiffs should be jointly and severally liable for the costs and disbursements associated with the issue of liability and severally liable for costs and disbursements associated with the issue of damages.
86 The defendants' primary position flows from the application of the general rule that unsuccessful plaintiffs are jointly and severally liable for costs unless the court, in the exercise of its discretion, orders otherwise. The circumstances where courts depart from this principle tend to fall into one of three categories: (1) the factors established by case law that determine whether plaintiffs acted jointly are markedly absent; (2) one plaintiff had minimal involvement in the litigation and there is an underlying public policy reason to avoid joint and several liability; and (3) an order of joint and several liability would result in gross unfairness to a particular plaintiff given the circumstances of the case (Daniels v. Westfair Foods Ltd., 2006 ABQB 878 at paras. 3, 11, 27, and 28; Anderson v. Amoco Canada Oil & Gas, [1998] A.J. No. 1854 (Q.B.) at para. 19; and Bossé v. Mastercraft Group Inc. (1995), 1995 931 (ON CA), 123 D.L.R. (4th) 161 (Ont. C.A.) at paras. 67-68). The defendants submit that none of these exceptions apply in the circumstances of this case.
87 The articulation of the rule respecting the joint and several liability of unsuccessful plaintiffs was first found in King v. On-Stream Natural Gas Management Inc. (1993), 21 C.P.C. (3d) 16 [King] at para. 17 where Shaw J. reasons as follows:
I think the first point to consider is whether the plaintiffs in bringing this action acted jointly against the Bank. In my view they did. They clearly supported each other in the venture of the court action. The counsel they retained acted for all of them. The goal of imposing liability on the Bank was common to all the plaintiffs. It follows, in my view, that any liability that may be imposed upon the plaintiffs for costs should be joint and several liability, unless there is reason why the court, in the exercise of its discretion, should order otherwise.
88 In coming to this conclusion, at para. 23, Shaw J. expresses some of the same concerns the OPP and Greyhound share in this case:
I do not think that the Bank, having won the action, should be obliged to undertake proceedings against 92 separate parties, each for a minor portion of the costs. The trouble and the risk, should, in my view, rest with the plaintiffs who acted jointly and lost the action. They had to organize themselves when they commenced the action. In doing so, they will have had the opportunity to address the risk of what lay ahead and to provide for the contingency of losing. As between themselves they have at law rights of contribution from each other which can, if exercised, reduce the financial outlay of any plaintiff who may be called upon by the Bank to pay some or all of its costs. When I consider whether the burden of enforcing contribution by each individual plaintiff should rest upon the Bank or upon the plaintiffs, I conclude that the plaintiffs as the losing parties should bear the burden.
89 In Filipovic v. Upshall, [1998] O.J. No. 4498 (Ct. J. (Gen. Div.)) [Filipovic] at para. 11, Chapnik J. echoed the reasoning set out in King in holding the unsuccessful plaintiffs jointly and severally liable for costs. In that case, seven individual plaintiffs and some of their companies brought claims against a firm of solicitors alleging negligence pertaining to a commercial real estate transaction. In the course of her reasons, Chapnik J. indirectly addresses the question of potential unfairness to individual plaintiffs presented by such a cost award. Chapnik J. also proposes the legal recourse available to remedy such unfairness:
As to the matter of joint and several liability, the jurisprudence compels me to make the order against the plaintiffs on a joint and several basis. ... The plaintiffs joined together in pursuit of like remedies arising from the same alleged cause of action and were all represented by the same counsel. In organizing their action, they must have addressed the risk of an unsuccessful result. However, the quantum of costs should be divided in accordance with the proportionate interest of each of the plaintiffs including the corporate plaintiffs in this lawsuit. As between themselves, of course, they have, at law, rights of contribution from each other. Hopefully, the plaintiffs will be able to arrange payment with the defendants individually on an amicable basis. In any event, the order made in favour of the defendants may be enforced on a joint and several basis.
90 I am of the view that there is no reason in these proceedings to depart from the rule that unsuccessful plaintiffs should be held jointly and severally liable for costs. Applying the decision in King, the plaintiffs banded together to prosecute identical causes of action arising from one unfortunate event with one legal proceeding, they were represented by the same lawyers, they relied on the same evidence pertaining to liability, and many called the same expert witnesses with respect to their damages claims. The plaintiffs acted together when it was to their benefit and should also be considered as one when it is to their detriment. To do otherwise would be unfair to the defendants who were left to defend against this joint effort and may now be required to pursue their costs individually.
91 Further, an order of joint and several liability accords with the principles pertaining to the court's exercise of discretion. My consideration of whether a cost award is fair and reasonable involves balancing the respective unfairness to both sides. In this case, as in King, the defendants were successful and should not be forced to obtain the costs to which they are lawfully entitled through twelve separate proceedings. Furthermore, both Shaw J. and Chapnik J. addressed the potential unfairness facing individual plaintiffs from a finding of joint and several liability. In both King and Filipovic, it was suggested that plaintiffs may obtain contribution from each other for any amount recovered from them beyond their proportionate share. This option is available to the plaintiffs in this case as well.
92 Lastly, both Shaw J. and Chapnik J. addressed another factor relevant to my exercise of discretion. Both judges commented that plaintiffs acting as one "must have addressed the risk of an unsuccessful result" (Filipovic, supra para. 89 at para. 11). This is especially so when they are represented by the same counsel. The defendants therefore submit that such an award was within the reasonable expectations of the plaintiffs from the outset, and it should not now come as a surprise that they may be liable for costs on a joint and several basis.
(c) Application of these principles to this case
[16] The cases discussed by Platana J. involved costs awards against unsuccessful plaintiffs. As he noted, “the general rule [is] that unsuccessful plaintiffs are jointly and severally liable for costs unless the court, in the exercise of its discretion, orders otherwise.” As a matter of logic, the same principles should apply to motion proceedings, whether brought by plaintiffs or defendants, where the moving parties pursue the same relief together. In the present case, therefore, my task is to apply the factors listed above to the defendants’ unsuccessful motion to disqualify, and to determine whether there are any reasons why, in the exercise of my discretion, I should order that the Costs Award should not be joint and several.
(1) Did the defendants act jointly in relation to the disqualification motion?
[17] In my view they did. To borrow the language of Shaw J., “they clearly supported each other in the venture” of the motion to disqualify. The goal of disqualifying Minden Gross was common to all the defendants. Although Mr. Chew now asserts that the idea to pursue the motion came from Mr. Reddy and his so-called legal advisors, Mr. Chew was the principal deponent of the evidence relied upon to support the main argument – that he had somehow established a lawyer-client relationship with Minden Gross by reason of the settlement discussions in which he participated.
[18] As well, although Mr. Reddy presented most of the oral submissions on behalf of the defendants, Mr. Chew was present in court throughout the argument and also participated (albeit to a lesser degree) in the oral argument.
[19] The relief sought was part of a strategy which all defendants chose to pursue. To again borrow the language of Shaw J. the defendants “acted together when it was to their benefit and should also be considered as one when it is to their detriment.” In the wake of the unsuccessful result – and in light of the adverse costs consequences – Mr. Chew now seeks to distance and disassociate himself from that strategy. At the time, however, he was a willing participant. He may be unhappy with his decision to join forces with Mr. Reddy and may blame Mr. Reddy for persuading him to do so, but that is not properly a concern for the plaintiff – or the court.
(2) Did one defendant have minimal involvement in the motion and is there an underlying public policy reason to avoid joint and several liability?
[20] For the reasons I have just articulated, I would not characterize Mr. Chew’s involvement as “minimal”. To the contrary; he was an active co-participant in the disqualification motion, as both a witness and advocate. The mere fact that most of the defendants’ oral submissions were made by Mr. Reddy does not detract from this point.
[21] In relation to public policy considerations, if any, in my view they support upholding the principle of joint and several liability. Our civil justice system includes, as one of its basic tenets, the notion that an unsuccessful party may be called upon to pay costs to their successful opponent. This concept is well-established and is one that serves to encourage settlement, to discourage meritless claims, to restrain frivolous steps in proceedings and to (generally speaking) temper recourse to the courts. If parties – whether self-represented or acting through counsel – can be excused from the cost consequences of steps in which they have willingly engaged on the ground that “my co-defendant encouraged me to do it” these important goals of the “loser pays” costs system will be imperilled.
[22] I therefore conclude that these factors do not warrant departing from the standard approach of joint and several liability.
(3) Would an order of joint and several liability result in gross unfairness to a particular defendant given the circumstances of the case?
[23] Once again, Mr. Chew asserts that he was somehow induced by Mr. Reddy to participate in the disqualification motion – a notion that Mr. Reddy disputes – and on this basis he argues that it would be unfair to him to face joint and several liability. Based on his involvement as a witness and at the hearing, I am not persuaded that Mr. Chew was either an unwilling or unwitting participant. He had to know that he was making very serious allegations that impugned the professional conduct and reputation of the plaintiff’s lawyer. He chose to proceed and to risk the consequences of failure. It does not lie in his mouth to assert that he is surprised by the consequences of the adverse outcome. On this basis, I am not persuaded that imposing joint liability would somehow be unfair.
[24] Moreover, any potential unfairness to Mr. Chew must be weighed against potential unfairness to the plaintiff. If the court grants Mr. Chew’s request, the result would be that each of the moving defendants would separately bear 25% of the responsibility for the Costs Award. In turn, this would mean that the plaintiff would bear the risk of non-collection from each of the remaining three defendants of their separate shares. Two of the defendants are corporations with no known businesses or assets. Indeed, one of the corporate defendants was dissolved; it was recently revived by Mr. Reddy as part of his plan to claim on its behalf the costs of a motion for summary judgment that was initiated by the plaintiff but never argued, in order to claim a set-off of those costs against the defendants’ liability for the Costs Award. Mr. Reddy’s ability to satisfy the Costs Award is unknown. At the very least, granting Mr. Chew’s request would make recovery of half of the Costs Award unlikely, an unfair result for the plaintiff.
[25] I therefore conclude that this factor, too, does not warrant departing from the standard approach of joint and several liability.
Conclusion and Disposition
[26] The legal principles that I have summarized above support the conclusion that, as a general proposition, an order for joint and several liability for costs is appropriate where multiple litigants initiate an unsuccessful proceeding or step in a proceeding. Departure from that standard approach is warranted only where certain specific factors are present. As my analysis indicates, I have concluded that, in the present case, the application of those factors does not support a departure from the standard approach.
[27] I therefore conclude that Mr. Chew’s request to vary the Costs Award in the fashion sought should be refused. The Costs Award should instead be varied to provide expressly that liability for the $50,000 shall be joint and several. Specifically, I order that paragraph 2 of my Order dated July 23, 2014 be amended by adding after the word “hereof” the words “and directs that the liability of the Defendants for the costs hereby awarded shall be joint and several.”
[28] In relation to the costs of Mr. Chew’s unsuccessful motion to vary, at the next telephone case conference in this matter (currently scheduled for 5:00 PM on January 18, 2017), I will hear brief oral submissions as to costs. Any party who will be requesting costs of this motion is directed to submit a costs outline to anyone against whom costs are claimed (and to all other parties) no later than January 11, 2017, and to submit same to me electronically in care of my assistant, by the same deadline.
Stinson J.
Date: December 7, 2016