Court File and Parties
Court File No.: CV-16-562702 Date: 2017-03-24 Superior Court of Justice - Ontario
Re: Michelle Cherny, Mirella Cherny and Elena Cherny And: John Edvard Pollari and Janis Elizabeth McLeod
Before: Madam Justice J. T. Akbarali.
Counsel: Mark A. Ross and Sharon Sam, for the Plaintiffs Christopher Salazar, for the Defendants
Heard: In writing
Endorsement
1The plaintiffs brought a motion for a mareva injunction seeking relief regarding the sale of a property owned by the defendants in Barrie. The motion was originally brought before Matheson J. on January 31, 2017. Matheson J. expressed some concern that the record did not include evidence establishing the amount of damages claimed, and that it appeared that the damages claimed would not be in the range of the equity in the property. The motion was adjourned to February 15, 2017, and came before me at that time.
2The motion alleged that there was a risk of dissipation of the defendants’ assets outside the jurisdiction, based on the plaintiffs’ discovery that the defendants were selling the Barrie property, and also selling some furniture and their car. The plaintiffs’ motion materials included evidence that the defendants had told the plaintiffs that they intended to move to the United States in the future.
3Prior to the first attendance, plaintiffs’ counsel, Mr. Ross, emailed the motion materials to the defendants, who were self-represented. He invited the defendants to telephone him. They did not.
4The plaintiffs subsequently attempted to serve the materials on the defendants personally. There are indications that the defendants evaded service. Mr. Ross also mailed copies of the materials to the defendants.
5Mr. Ross attended at Civil Practice Court to secure a date for the motion. Prior to the attendance, Mr. Ross managed to reach Ms. McLeod by telephone. She hung up on him. Thereafter, she did not answer his phone calls or return his voicemail messages.
6The afternoon before the return of the motion before me, Mr. Ross received a call from Mr. Salazar, a lawyer who was assisting the defendants, although not then formally retained. Mr. Salazar advised that the defendants were purchasing a new property in Bruce Mines, Ontario, and provided a copy of an unsigned Agreement of Purchase and Sale showing a closing date of March 31, 2017.
7Mr. Ross had questions about the Agreement of Purchase and Sale, but Mr. Salazar refused to answer them. Mr. Ross attempted to negotiate terms to a brief adjournment to allow the parties to address these questions, and offered to attend at the motion on his own to secure an adjournment, Mr. Salazar refused the terms. Thus, Mr. Ross and the defendants, but not Mr. Salazar, attended before me on February 15, 2017. At that hearing, I delivered a handwritten endorsement in which I set out the defendants’ reluctant agreement to answer Mr. Ross’s questions about the Bruce Mines purchase. I issued a brief no dealing order on the property. I ordered a case conference to proceed before me on February 16, 2017.
8At the case conference on February 16, 2017, Mr. Ross confirmed he would be seeking instructions not to proceed with the mareva injunction. He indicated that, with some difficulty, the questions he sought to have answered had been answered satisfactorily, the Bruce Mines purchase appeared to be legitimate and there was no basis for a mareva injunction. Mr. Salazar indicated that costs of the mareva injunction had to be addressed, and argued that the motion had to be abandoned.
9The following week, Mr. Ross confirmed his instructions not to proceed with the mareva injunction. Because the parties could not agree, I set out a schedule to deal with submissions on the proper manner of disposing of the motion and costs. This endorsement deals with these two issues.
The Disposition of the Motion
10Under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, a motion can be abandoned (r. 37.09) or disposed of by a judge granting the relief sought, dismissing it or adjourning it (r. 37.13). The defendants argue it is not open to the plaintiffs to withdraw the motion.
11The defendants argue the motion is properly abandoned, and rely on r. 37.09(3) which provides that where a motion is abandoned, a responding party is entitled to costs unless the court orders otherwise.
12In order to be abandoned, r. 37.09 contemplates that the moving party delivers a notice of abandonment or that the moving party does not appear at the hearing. Neither of those circumstances has occurred here. I see no basis for a judge to order that a motion has been abandoned.
13I thus conclude that, given the plaintiffs’ candid admission that they cannot establish a basis for a mareva injunction in view of the defendants’ purchase of the Bruce Mines property, the motion ought to be dismissed.
14I also note that the precise manner of disposing of the motion is not the key issue. The parties’ dispute centres on costs. Whether a presumption of costs accrued in favour of the defendants because of r. 37.09(3) or because costs follow the event, the real issue is how I should exercise my discretion to deal with costs. I turn to that issue now.
Costs
15The defendants, who did not file materials and whose counsel attended only a telephonic case conference, seek their costs on a substantial indemnity scale in the amount of $2,900.99. The plaintiffs seek the costs that they identify as being aggravated by the defendants’ response to the motion in the amount of $3,456.67. I note that the defendants’ counsel seeks higher fees, but no disbursements.
16Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C-43, provides that “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”.
17Rule 57.01 sets out relevant factors to be considered in the exercise of my discretion under s. 131 of the Courts of Justice Act.
18The defendants argue that the plaintiffs’ motion was improper, vexatious or unnecessary, or taken through negligence, mistake or excessive caution. They rely on Yang v. Mao, [1995] O.J. No. 1323 (Ont. Gen. Div.) where the court ordered solicitor and client costs on an abandoned mareva injunction.
19The plaintiffs argue that the defendants’ response to their motion – first ignoring it, then refusing to provide answers to their reasonable concerns about the purchase of the Bruce Mines property – led to an increase in costs and was not a proportionate response.
20I have concluded that this is an appropriate case to order that each party bear their own costs.
21First, I find that the plaintiffs had a reasonable basis to bring the mareva injunction. I do not accept the defendants’ argument that the motion was improper, vexatious or unnecessary, or taken through negligence, mistake or excessive caution. That the motion turned out not to have grounds does not mean it was not properly brought. The plaintiffs learned that the defendants were disposing of many of their assets and had reason to believe they might be leaving the jurisdiction.
22I also find that the plaintiffs’ questions about the legitimacy of the Bruce Mines transactions were reasonable. For example, the agreement of purchase and sale was unsigned. The defendants refused to confirm whether they had counsel to act on the purchase. Amendments to the agreement of purchase and sale had not been provided. The deposit on the deal was low. Mr. Ross acknowledged a low deposit might be appropriate in Bruce Mines, but he sought confirmation the deposit was made, which the defendants refused to provide. The agreement had a condition with an expiration date of February 30, 2017, a day which does not exist. As it turned out, there were answers to these questions, but the reluctance of the defendants to provide simple information raised a reasonable concern on the part of the plaintiffs about the legitimacy of the deal. I do not find that the position the plaintiffs took on the return of the motion before me, or at the case conference, was unnecessary, abusive or vexatious.
23I have reviewed the significant correspondence that went between Mr. Ross and Mr. Salazar about the Bruce Mines purchase. Throughout, I find that Mr. Ross was doing his utmost to procure a practical and cooperative solution to the problem. In contrast, Mr. Salazar was unnecessarily aggressive, sarcastic and unhelpful, going so far as to suggest that his clients would seek costs against Mr. Ross personally on the return of the motion.
24The defendants, first by evading service and refusing to engage with Mr. Ross, and then by their counsel’s needlessly aggressive response to reasonable questions, turned what should have been a simple matter to resolve into an unnecessarily costly and complicated matter. The proportionate response to the motion would have been for the defendants to provide the answers to the plaintiffs’ reasonable questions. The defendants’ position that the plaintiffs were not entitled to this information is not tenable. Had the defendants filed responding material on the mareva injunction, they would have sought to establish the legitimacy of the Bruce Mines purchase. It was more economical and more proportionate to provide the answers to the plaintiffs directly. Eventually they did so, but not without unnecessary difficulty.
25I do not find the Yang case to be helpful. In that case, the plaintiffs abandoned their motion for a mareva injunction after the defendants filed responding material which revealed that some of the documents filed by the plaintiffs had been forged. In this case, the plaintiffs have been candid and reasonable. Yang is not applicable here. Moreover, Yang allows that a court may exercise its discretion to award costs on an abandoned mareva injunction on an elevated scale. It does not mandate that I do so. The discretion is the court’s to exercise as it considers appropriate in the circumstances.
26Although I am critical of the defendants’ handling of this motion, I am not prepared to order the defendants to pay the plaintiffs’ costs. A mareva injunction is extraordinary relief, amounting to execution before judgment. The plaintiffs could not have succeeded on the mareva injunction because the defendants are not dissipating their assets. They are not entitled to their costs on the motion, notwithstanding that the defendants’ conduct unnecessarily increased their costs.
27Accordingly, I order that each party bear their own costs of the motion.
Madam Justice J. T. Akbarali Date: March 24, 2017.