Court File and Parties
COURT FILE NO.: CV-16-11315-00CL DATE: 20170306 SUPERIOR COURT OF JUSTICE – ONTARIO (COMMERCIAL LIST)
BETWEEN:
L-Jalco Holdings Inc. Plaintiff
- and -
Thomas Albert Botly Bell, also known as Dr. Thomas Albert Botly Bell Defendant
BEFORE: F.L. Myers J.
COUNSEL: Kenneth H. Page, for the plaintiff David W. Levangie, for the defendant
READ: March 6, 2017
Endorsement
[1] By reasons dated February 13, 2017, reported as 2017 ONSC 1035, the court set aside a judgment obtained by the plaintiff. The plaintiff has sued the defendant for allegedly obtaining a loan by fraud. In the endorsement, I suggested that it might be difficult to assess where the responsibility for costs ought to lie until a determination is made on the merits as to whether the defendant did indeed commit a fraud on the plaintiff. My concern was that although the defendant won the motion to set aside the judgment that had been obtained by an improper procedure, if a court finds that the defendant committed fraud, perhaps the plaintiff ought to be given some latitude in having tried to obtain a summary disposition especially in light of the modest amount in issue.
[2] Having now received and considered the submissions of the parties, I am satisfied that the plaintiff ought to pay costs to the successful defendant in any event of the cause.
[3] The defendant was successful in setting aside the judgment that the plaintiff had obtained on three separate grounds. Among them was a breach by the plaintiff of its obligation to make full and fair disclosure to the court on a motion made without notice. It induced a judge to grant judgment and to grant an order under s. 178 of the Bankruptcy and Insolvency Act, RSC 1985, c. B-3, by making it appear that it was entitled to default judgment and by failing to bring to the judge’s attention that it was not entitled to default judgment, or to an order under s. 178 of the BIA, or even to move without notice, both in fact and in law. Even if the plaintiff was defrauded by the defendant, it was not entitled to move as it did.
[4] Failing to make full disclosure to a court on a motion brought without notice is a serious matter. It is not one which should be overlooked whatever the equities on the merits. Serious injustice and abuse of the court’s process can result from orders made without notice where the court has not been told the whole story and shown the applicable law. This is a strict duty that requires strict enforcement.
[5] Moreover, the plaintiff ought to have consented to set aside its judgment when the defendant offered to accept that relief without costs. It was readily apparent from the credibility issues raised by the defendant that the plaintiff could not meet the test for sustaining a default judgment even if it could prove default. Even if the plaintiff had a basis to move for default judgment or something analogous, there was no basis upon which the court could decide the credibility issues on a motion to set aside. Accordingly, the result was a foregone conclusion. Under Rule 49.13 of the Rules of Civil Procedure, RRO 1990, Reg. 194 as applicable under Rule 3 of the Bankruptcy and Insolvency General Rules, CRC, c 368, the court is entitled to take the offer into account.
[6] The plaintiff argues that the defendant’s costs outline is too general to allow for a fair assessment by the court at this time. However, in fixing the costs of a motion, it is not the role of the court to assess costs on anything like a docket-by-docket basis. I am just looking for a fair and reasonable amount to indemnify the successful party in the circumstances.
[7] The fixing of costs is a discretionary decision under section 131 of the Courts of Justice Act, RSO 1990, c C.43. 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), 71 O.R. (3d) 291, at paras 26, 37.
[8] The defendant seeks costs of $12,000 on a partial indemnity basis on actual fees and disbursements of over $20,000. In my view this is well within the reasonable range that a civil litigant ought to expect in a seriously disputed motion.
[9] The plaintiff argues that if a costs award is made in favour of the bankrupt defendant, the costs ought to be paid into court in case the defendant’s trustee in bankruptcy wishes to claim that the costs award should fall into the defendant’s estate as after-acquired property. It is not at all clear to me that receipt of an amount to indemnify a person for expenses paid is property in the recipient’s hands. However, if the trustee in bankruptcy has an issue with the defendant, the BIA provides ample mechanisms for that issue to be advanced and resolved among the trustee and the defendant. I see no basis for the court to hold up funds just in case a trustee might have an issue.
[10] Therefore, the plaintiff shall pay the defendant costs of $12,000 inclusive of disbursements and taxes forthwith.