Superior Court of Justice - Ontario

Citation: Mars Canada Inc. v. Bemco Cash & Carry Inc., 2016 ONSC 7643 Court File No.: CV-10-406342 Date: 2016-12-06

Re: Mars Canada Inc., Plaintiff And: Bemco Cash & Carry Inc., GPAE Trading Corp., and Aizic Ebert, Defendants

Before: F. L. Myers, J.

Counsel: Jim Holloway, Essien Udokang, and Andrew Chien, for the Plaintiff Patrick Summers, for the Defendants

Read: December 6, 2016

Costs Endorsement

[1] By summary judgment granted November 18, 2016, reported at 2016 ONSC 7201, the court found the defendants liable to the plaintiff for breach of two settlement agreements. The defendants intentionally imported and sold goods bearing the plaintiff’s trade-marks despite expressly agreeing to refrain from doing just that as a result of litigation that the plaintiff brought to stop the same thing once before. The plaintiff seeks costs of this litigation on a substantial indemnity basis as a result of the defendants’ conduct in brazenly breaching their agreements and in their tactics in their defence of this litigation.

[2] The defendants argue that they succeeded in having the plaintiff withdraw several heads of relief that it had sought and that until the plaintiff is able to establish damages at a reference ordered for that purpose, its success is very much in doubt. They also argue that the costs claimed by the plaintiff are excessive and include time related to motions for which costs have already been resolved.

[3] The fixing of costs is a discretionary decision under section 131 of the Courts of Justice Act. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the complexity of the issues (57.01(1)(c)). Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v Public Accountants Council (Ontario), 2004 14579 (ON CA), (2004), 71 O.R. (3d) 291, at paras 26, 37.

[4] Rule 57.01 of the Rules of Civil Procedure identifies the factors a court may consider when exercising its discretion to award costs:

(1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(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 and 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,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it 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, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

(i) any other matter relevant to the question of costs.

[5] In my view, this is a case in which the plaintiff ought to be entitled to indemnity for substantially all of its costs. The defendants did brazenly breach their agreements. Their conduct of this action has reprehensibly maximized costs and delay. Their efforts to undermine their settlement agreements were not honourable. They agreed, for good and valuable consideration, to settle litigation both brought and threatened. The argument that the defendants entered into contracts that were void as against public policy so as to avoid living up to their settlements is deserving of censure. The defendants’ had top notch, specialized legal counsel acting for them or available to them in the settlements. There could be no violation of public policy in agreeing to cease and desist from alleged misuse of the plaintiff’s trade-marks. Moreover, their conduct of the litigation established that they were willing to take any position, no matter how trivial and unreasonable, to try to avoid living up to their word. Bemco took advantage of an obvious slip in the typing of its name in the settlement agreement. Mr. Ebert’s professed lack of memory on that issue was inconsistent with both the contemporaneous documents as well as his own evidence as to his intention in the relevant settlement. His position that he did not receive the second settlement agreement that he had signed was both untrue and the height of technicality. His efforts to shield his ongoing illicit activities through a partnership with a third party and then, after the litigation had commenced, to delete the word “partner” from their agreement, was as transparent as it was unsuccessful. The plaintiff bears no blame for bringing multiple causes of action given the lengths to which the defendants’ would go to try to avoid accountability for their conduct.

[6] The defendants’ kitchen sink approach plainly lengthened the proceedings requiring delay for discovery of voluminous documentation from the plaintiff when the issues in the case truly revolved around the (mis)conduct of the defendant. They made this litigation much lengthier and more expensive than it ought to have been by their fishing expedition and raising trivial grounds of argument.

[7] If the plaintiff proceeds with a reference in damages, the costs of the reference will be for the Master. I do not see the quantum as being especially germane to the costs to which the plaintiff was put in establishing the judgment that it has obtained.

[8] Finally, my task is not to assess the plaintiff’s lawyers’ accounts on a docket-by-docket basis. Rather, the goal is to award a fair and reasonable amount of costs commensurate with the relevant factors laid out in the cases and in Rule 57.01 above including the amount that the defendants ought to fairly have anticipated being incurred in the process. It is significant that the costs at play are not just for the motion but for the entire action. Moreover the defendants cannot fairly seek to impose the quantum of their lawyer’s fees on the plaintiff. The two firm’s briefs were asymmetrical. It is one thing to try to set legal roadblocks and quite another to bear the burden of proof to surmount them. The plaintiff is also entitled to use a more expensive firm as well. I note that the rates charged by the plaintiff’s counsel are reasonable and well within market.

[9] In all, in my view, given the defendants’ hardball tactics, if it was not their actual intention to cause the plaintiff to run up very substantial legal fees, at least they ought reasonably to have anticipated that their conduct would lead to that result. In reviewing the plaintiff’s bill of costs, it is fair and reasonable to require the defendants’, jointly and severally, to pay forthwith to the plaintiff its costs on a substantial indemnity basis of $225,000 all inclusive.

F.L. Myers J.

Released: December 6, 2016