Court File and Parties
Citation: Muskala v Sitarski, 2017 ONSC 2842 Court File No.: CV-16-11646-00CL Date: 20170509
Ontario Superior Court of Justice (Commercial List)
Between: Elizabeth Muskala and Louise Muskala Plaintiffs
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Fred Walter Sitarski a.k.a. Fred Starr, Christopher Sitarski a.k.a. Christopher Starr, Josephine Sitarski, Sally Backo, Elm Grove Hotel Limited, The Rhino Bar & Grill Inc. and Beaches Holdings Inc. Defendants
And Between: Fred Walter Sitarski a.k.a. Fred Starr, Christopher Sitarski a.k.a. Christopher Starr, Josephine Sitarski, and Sally Backo Plaintiffs by Counterclaim
- and –
Elizabeth Muskala and Louise Muskala Defendants by Counterclaim
Court File No.: CV-16-11630-00CL Date: 20170509
Ontario Superior Court of Justice (Commercial List)
Between: Bugajski Holdings Inc. Plaintiffs
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Fred Walter Sitarski a.k.a. Fred Starr, Beaches Holdings Inc., Elm Grove Hotel Limited, The Rhino Bar & Grill Inc., Christopher Starr a.k.a. Christopher Sitarski, and Sally Backo Defendants
Before: F.L. Myers J.
Counsel: Lou Brzezinski and Stephen Gaudreau, counsel for the Bugajski Holdings Inc. David Chernos and Stuart Svonkin, counsel for Elizabeth Muskala and Louise Muskala Mark Veneziano and Ahmad Mozaffari, counsel for the defendants in both actions
Read: May 8, 2017
Endorsement
[1] The plaintiffs in these two actions brought motions for nearly identical relief against the defendants. The relief involved production of information by the corporate defendants and their de facto managers under the Business Corporations Act.
[2] The motions settled "except for costs."
[3] At the request of the parties I signed consent orders implementing the settlements including authorizing the parties to file written costs submissions if they were unable to settle costs.
[4] I have reviewed the costs submissions filed. The plaintiffs say that the defendants consented to orders containing all of the relief that they sought. As such, the motions should not have been necessary. The Muskalas seek costs of $15,852.31 on a substantial indemnity basis. Bugajski seeks costs of $23,889.33 on a substantial indemnity basis.
[5] In my view, costs generally should not be awarded when parties settle "except for costs." If costs are sought and are not settled, then there is no meeting of the minds on all of the essential terms of the settlement. If the parties are willing to settle and throw the dice to see what a judge will do with costs, then they are actually willing to settle without costs.
[6] The game of seeking costs in writing on a settled motion has many things wrong with it:
[7] First, if goal of asking for costs is just to get "last licks" and poke the other side in the eye en passant, that is not an action conducive to settlement or to the next settlement down the road.
[8] Second, costs are an incident of the determination of the rights of the parties. They flow from a decision. They are not themselves intended to be the subject of the dispute.
[9] Third, there is usually no way for the court to make the findings of fact that they parties need to support a costs determination. The parties essentially want me to pretend to hear the motion in my chambers on their material and decide what the outcome might have been without hearing from counsel and without the parties undertaking the risk of jeopardy associated with that decision. Then they ask me to assess whether bringing or defending the motion was reasonable. It is all hypothetical since there is no longer a true lis or dispute between the parties. Yet the parties ask the court to balance the factors under Rule 57.01, consider proportionality and reasonable expectations, and, in this and many other cases, ask the court to determine if a party's conduct was reprehensible so as to justify an enhanced award of punitive costs. I cannot tell if the defendants ought to have consented in advance or if they had good reason not to consent until they did. One never knows why people settle without invading the privileged relationship between lawyer and client. Perhaps the defendants had very good defences to the motions but chose to consent for other reasons – such as to establish their bona fides and to buy peace.
[10] Finally, in my view, where the parties are not prepared to incur the time, cost, or risk to argue the motion on the merits just because they have not settled costs, then their efforts to upload the disembodied decision on to the court is equally not a proportional or efficient use of court time.
[11] None of this is new. The relevant law and applicable policy have been discussed recently in a compelling decision written by Broad J. Waterloo North Condominium Corporation No. 161 v. Redmond, 2017 ONSC 1304. At para. 34 of his decision, Broad J. summarized the relevant considerations as flows:
[34] In my view to embark upon this exercise would be, on the authority of Dhillon, Anishinaabe, Blank and McLellan, inappropriate and would risk being manifestly unfair. As noted by Justice MacKenzie in Dhillon, there may be many motivating factors for parties to enter into settlements and the reasonableness or unreasonableness of any party's position in either asserting a claim, abandoning a claim or abandoning a defence or answer to a claim can depend on a myriad of factors. Moreover to embark upon a full examination and adjudication of the merits of the parties' respective substantive claims and defences for the sole purpose of determining the question of costs, when those substantive issues have been settled by the parties, would run counter to the principle in McLellan that costs are incident to a determination of the rights of the parties and are not to be made themselves the subject matter of the litigation.
[12] There may be exceptional cases where a settlement is reached and different considerations lead to a different outcome. But, in this case, I have reviewed the costs submissions and the underlying motion material and exercise my discretion to refrain from awarding costs. In my view the general rule against awarding costs on a settlement should apply in this case for all of the foregoing reasons.
F.L. Myers J.
Date: May 9, 2016