Court File and Parties

COURT FILE NO.: 14-60343 DATE: 20170718 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Yunsheng Du, Plaintiff – and – Jameson Bank, Defendant

COUNSEL: Haiyan Zhang, for the Plaintiff Gavin J. Tighe/Scott K. Gfeller, for the Defendant

HEARD: By written submissions

Costs Endorsement

Beaudoin J.

[1] On February 21, 2017, I heard two motions. The first was the Plaintiff’s (Du) motion to amend the Statement of Claim to assert additional causes of action and to add two new defendants. Although the Defendant (Jameson) consented to some of the Plaintiff’s amendments, the motion proceeded on a largely opposed basis. The second motion was the Defendant’s motion for summary judgment. The Defendant was successful on its motion for summary judgment and I refused the contested amendments and the addition of the new defendants.

[2] As the successful party, Jameson now seeks its cost of the motions and of the action on a partial indemnity basis up to September 11, 2014; namely, from the date of its Offer to Settle and on a substantial indemnity basis from that day forward in the total amount of $132,790.43.

[3] The Defendant submits that the amount claimed by it is fair and reasonable taking into account the reasonable expectations of the parties, and in view of the factors enumerated in 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[4] The Statement of Claim was issued on March 14, 2014. The Plaintiff’s current counsel, Haiyan Zhang, served a notice of appointment of lawyer on August 7, 2015. At that point in time, the pleadings were closed and both documentary and oral discoveries were complete. The Plaintiff then advised of his intention to amend the Statement of Claim to add the new defendants and to assert additional causes of action.

[5] At the same time, the Plaintiff delivered a “Request for Amending Affidavit of Documents.” Jameson maintains that this request made disproportionate documentary demands relating to the impugned wire transfers in issue and subsequent investigation as well as the continuance of Jameson as JIFEC in the sale of Jameson’s assets to AFEX.

[6] Despite numerous demands, it took the Plaintiff nearly a year to provide Jameson’s counsel with a copy of the proposed amended Statement of Claim. This timing was critical since the full potential of the Plaintiff’s claims needed to be assessed prior to proceeding with the motion for summary judgment. The Defendant says that this delay is one example of many where the Plaintiff’s conduct increased the costs and length of this litigation.

[7] The Defendant also cites the Plaintiff’s attempt to add JIFEC as a party which Jameson claimed was entirely unnecessary in the light of its admission that JIFEC was the successor corporation of Jameson and that it would be bound by any judgment and/or damages as may be awarded against Jameson. Despite this, the Plaintiff pursued his motion and production requests.

[8] Jameson notes that the Plaintiff adopted a “scattergun” approach to the litigation. The Statement of Claim and the proposed amendments raised serious factual and legal issues to which Jameson was required to respond. The Plaintiff made serious allegations regarding the competency of the Defendant’s services, asserted breaches of fiduciary and other duties and non-compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, S.C. 2000, c.17, all of which were highly prejudicial to Jameson’s reputation.

[9] These allegations were found by me to be without foundation. Jameson maintains that the Plaintiff unnecessarily complicated the scope of what started out as a straightforward case based on an interpretation of the applicable account agreement. Jameson submits that its costs are reasonable in the circumstances of a full day argument which included multiple volumes of material and supplementary material including the Plaintiff’s 40+ page Factum on the amendment motion. There was also a full day of cross-examinations in advance of the motion being heard. In total, Jameson’s counsel made four trips to Ottawa throughout this proceeding.

[10] Although the Plaintiff’s alleged loss was USD $135,000, the Defendant submits that his approach to this case is more in line with a claim many times that amount. Finally Jameson claims that the hourly rates of its counsel are reasonable in light of his years of experience.

[11] On September 11, 2014, Jameson served an Offer to Settle the Plaintiff’s action on a without costs basis pursuant to Rule 49 of the Rules of Civil Procedure. If not accepted by October 15, 2014, the Offer provided that costs will be payable by the Plaintiff on a partial indemnity from the date of the offer forward in an amount to be agreed-upon or determined following an assessment of same. The Offer remained open for acceptance until one minute after the commencement of Jameson’s summary judgment motion.

[12] The Defendant notes that the Plaintiff refused to propose any compromise. The Plaintiff finally served an Offer to Settle on February 17, 2017 before the motions were to be heard. The Offer required Jameson to pay the all-inclusive amount of CAN $198,000. As a result, Jameson maintains there was little alternative for it other than to vigorously defend this action and bring it to a final disposition on its merits.

[13] Finally, the Defendant notes that the Plaintiff chose to commence this action following a comprehensive assessment of this case by the Ombudsman for Banking Services and Investments and ended up with the exactly same unfavorable result.

[14] In response, the Plaintiff maintains and repeats many of the arguments that he presented on the motion for summary judgment. He argues that the Defendant’s costs should be limited to $10,000. He relies on Shekdar v. K & M Engineering Consulting corporation (Shekdar), 2008 ONSC 57166, but I find that the case has no application here.

[15] Relying on the factors set out under Rule 57 of the Rules of Civil Procedure, the Plaintiff maintains that he acted reasonably. He claims to be partially successful on his motion to amend due to the Defendant’s consent. He submits somehow that the motions were more complex for him.

[16] The Plaintiff submits that the amounts claimed by the Defendant are excessive and that the Defendant acted unreasonably. He maintains that the Defendant should have hired Ottawa counsel and that the Plaintiff should only have to pay Ottawa rates - without specifying what these might be. The Plaintiff adds that I should assess the Defendant’s cost claim according to the Costs Grid of the Ontario Court of Appeal.

[17] The Plaintiff maintains that rule 49.10(2) does not allow the Defendant to recover substantial indemnity costs after the date of its Offer and cites St. Elizabeth Home Society v. Hamilton (City), 2010 ONCA 280, 319 D.L.R. (4th) 189, where the Court of Appeal said this at paras. 90-92:

90 Rule 49 sets out the costs consequences of offers to settle. Pursuant to r. 49.10(1), where a plaintiff offers to settle, obtains a judgment at least as favourable as the offer to settle, and meets other procedural requirements, it is entitled to substantial indemnity costs from the date of the offer unless a court orders otherwise. However, there is no corresponding provision entitling a defendant to substantial indemnity costs where it makes an offer to settle that is greater than the amount ultimately awarded. Nor is there any provision providing that substantial indemnity costs can be awarded against a plaintiff where its offer to settle is inordinately high. In our view, therefore, the trial judge erred in relying on the offers to settle for his award of substantial indemnity costs.

91 Moreover, we reject the respondent’s submission that the trial judge’s consideration of the defendants’ offer was justified on the basis of this court’s decision in Strasser to award substantial indemnity costs against a plaintiff where the defendant had made a reasonable offer to settle. In that case, the trial judge had observed that the situation “screams for solicitor and client costs.”

92 However, later decisions of our court have stressed that Strasser should be applied narrowly. In Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 312 D.L.R. (4th) 278 (Ont. C.A.), this court carefully reviewed the jurisprudence since Strasser and concluded, at para. 40, that Strasser should be interpreted as “a case where the trial judge implicitly found such egregious behavior” on the part of the plaintiff that an award of substantial indemnity costs was warranted. It does not, as the respondents suggest, represent a change in the law that solicitor and client costs are only awarded in rare and exceptional cases. (See also Scapillati v. A. Potvin Construction Limited (1999), 1999 ONCA 1473, 44 O.R. (3d) 737 (C.A.) and McBride Metal Fabricating Corp. v. H. & W. Sales Co. (2002), 2002 ONCA 41899, 59 O.R. (3d) 97.)

Conclusion

[18] The Plaintiff unnecessarily complicated this case by attempting to assert every possible cause of action against the Defendant; even going so far as to allege criminal behaviour on Jameson’s part. This should have been a straightforward case with respect to the interpretation of his agreement with the Defendant.

[19] While the amount to the issue was relatively modest, the Plaintiff’s approach was disproportionate and he cannot now claim that Jameson’s costs are too high. The Defendant was entitled to choose Toronto counsel and, in the absence of any evidence of what may be “Ottawa rates”, I cannot make the determination that rates claimed by Defendant’s counsel are excessive.

[20] At the outset of the hearing of the motion, each party provided Costs Outlines as required by rule 57.01(6). The Plaintiff claimed substantial indemnity costs of $21,706.20 to respond to the motion for summary judgment and $15,856.18 support of its motion to amend. These amounts suggest that the Plaintiff could have reasonably been expected to pay as much as $37,000 in costs if he was unsuccessful. His own Costs Outlines do not include the costs of the action.

[21] While the Defendant’s costs of both motions are higher; it must be noted that the Defendant’s counsel has 24 years of experience whereas Plaintiff’s counsel was called in 2015. Moreover, I am satisfied that the Defendant’s counsel had more the onerous task of attempting to respond to the Plaintiff’s expanding demands for production and the broad reach of the proposed amendments to the Statement of Claim.

[22] I decline to depart from the normal rule that would entitle the Defendant to partial indemnity costs as a result of its Offer. While I find that the Plaintiff’s conduct of the litigation was unreasonable, it was not so egregious as to attract an award of costs on a substantial indemnity basis. Nevertheless, the Plaintiff’s conduct unnecessarily extended the amount of time the Defendant had to spend in response to his claims.

[23] I have examined the Defendant’s Bill of Costs and take no issue with the partial indemnity rates claimed or the time spent, and I therefore order the Plaintiff to pay the Defendant $95,495.91, which sum is inclusive of HST and disbursements.

Mr. Justice Robert N. Beaudoin Released: July 18, 2017