Court File and Parties

CITATION: Hamilton Cab Company Inc. v. Gill, 2017 ONSC 4545

COURT FILE NO.: 15-54037

DATE: 2017/07/26

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: HAMILTON CAB COMPANY INC., Plaintiff

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JASPAL GILL, 1826548 ONTARIO INC., 1830259 ONTARIO INC., 1734958 ONTARIO INC., PARVINDER GILL, and MICHELE THOMAS, Defendants

AND RE: JASPAL GILL, 1826548 ONTARIO INC., 1830259 ONTARIO INC., and 1734958 ONTARIO INC., Plaintiffs by Counterclaim

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HAMILTON CAB COMPANY INC., JAGTAR CHAHAL and JOHN DEAN, Defendants by Counterclaim

BEFORE: The Honourable Mr. Justice Robert B. Reid

COUNSEL: M. Abradjian, Counsel for the Plaintiff and Defendants to Counterclaim Hamilton Cab Company Inc. and Jagtar Chahal

O. Ogunniyi, Counsel for the Defendants/Plaintiffs by Counterclaim

M. Bordin, Counsel for the Defendant to Counterclaim John Dean

HEARD: April 18, 19 and 20, 2017; Decision rendered May 1, 2017

COSTS ENDORSEMENT

[1] The plaintiff, Hamilton Cab Company Inc. (“Hamilton Cab”), and the defendant by counterclaim, John Dean, both sought summary judgment against the defendants and plaintiffs by counterclaim, Jaspar Gill and the related numbered companies. I will refer to the responding parties collectively as “the Gill defendants”. The moving parties did not seek relief against the defendants, Parvinder Gill and Michele Thomas.

[2] The moving parties were successful. I ordered that Hamilton Cab have summary judgment in its favour for possession of the mortgaged properties and for $470,487.62 plus prejudgment interest at 5% from November 28, 2014 to May 1, 2017 against the Gill defendants. As well, Hamilton Cab was awarded judgment against the Gill defendants for additional debt in an amount to be determined on a reference pursuant to the guarantees dated February 24, 2015. I also ordered by summary judgment that the counterclaim by the Gill defendants against John Dean be dismissed.

Background:

[3] For about twenty years, Hamilton Cab and the Gill defendants engaged in a commercial relationship with one another. Hamilton Cab carried on business as a broker between taxi operators such as the Gill defendants and taxi plate owners. The Gill defendants operated up to 70 taxis in the City of Hamilton under Hamilton Cab’s banner. They used its dispatch services and leased taxi licenses through Hamilton Cab. In addition, since about 2010, Hamilton Cab equipped taxis operated by the Gill defendants with electronic funds transfer terminals for the processing of debit and credit transactions and charged a fee for that service.

[4] Pursuant to their business relationship, debt was incurred by the Gill defendants in favour of Hamilton Cab.

[5] Hamilton Cab relied on a forbearance agreement which provided the Gill defendants with time to repay their obligations to Hamilton Cab subject to terms and conditions. Those terms included the provision of additional security in the form of a mortgage over certain properties owned by the Gill defendants. In addition, the Gill defendants executed guarantees of the debt. A term of the forbearance agreement was that the Gill defendants agreed to consent to judgment with respect to any claim commenced by Hamilton Cab in relation to the outstanding amount.

[6] The mortgage in the amount of $470,487.62 provided that, upon default of payment, Hamilton Cab could take possession of the mortgaged property.

[7] The guarantees related to all indebtedness of the Gill defendants to Hamilton Cab in an unrestricted amount.

[8] Based on default of payment by the Gill defendants under the forbearance agreement, Hamilton Cab sought and received summary judgment in the amount set out in that agreement and also an order for possession of the mortgaged premises. Based on the guarantees, Hamilton Cab sought judgment for the full amount of the indebtedness claimed. I agreed that Hamilton Cab was entitled to judgment but, since the amount was in dispute, a reference was ordered.

[9] The claim by the Gill defendants against Mr. Dean arose as a result of him providing independent legal advice to the Gill defendants relating to the forbearance agreement, mortgage and guarantees.

[10] The Gill defendants denied the propriety of the independent legal advice and included John Dean in their counterclaim, alleging professional negligence.

[11] Mr. Dean sought and received a dismissal of the counterclaim against him.

Decision on the Merits:

[12] It was admitted that Mr. Gill on his own behalf, and on behalf of the Gill defendants, signed the forbearance agreement.

[13] The Gill defendants alleged that they had signed acknowledgments of indebtedness without knowing that the indebtedness existed, and that they did so for the specific purpose of assisting Hamilton Cab to mislead its bankers.

[14] I concluded that the evidence of the Gill defendants to that effect was not credible. There was no supporting evidence of any kind either by documents or from other deponents to provide corroboration of Mr. Gill’s position.

[15] I accepted the evidence that Mr. Dean fully apprised Mr. Gill of the consequences of signing the documents and that he specifically negotiated with counsel for Hamilton Cab to minimize or clarify their effect.

[16] There was an allegation that Mr. Dean breached a solicitor’s standard of care. However, and in any event of my finding that Mr. Dean acted properly, there must also be a causal connection between the breach and the damages suffered for there to be a genuine issue requiring a trial. The Gill defendants believed incorrectly that they were entitled to damages simply because of a breach of duty. There was no allegation that the Gill defendants would not have signed the forbearance agreement, mortgage and guarantees if the independent legal advice procedure had been different. There was no suggestion that Mr. Gill failed to understand the nature, consequences, and risks associated with signing the documents. In effect, he knew what he was doing. As a result, there was no causal connection alleged between the failure to give independent legal advice according to the standard suggested by the defendants’ expert and the obligation of the Gill defendants to repay a debt owed to Hamilton Cab and secured by a mortgage and guarantees.

Costs:

[17] Hamilton Cab seeks an order for costs based primarily on its success in the summary judgment motion. In addition, it claims that the Gill defendants created unreasonable delays and took unreasonable positions, unnecessarily protracting and complicating the action. In addition, it notes that the terms of the mortgage provided for substantial indemnity costs. Finally, it notes that when fraud or its equivalent is claimed but not proven, those allegations can result in a substantial indemnity costs order. Hamilton Cab seeks costs on a substantial indemnity basis in the amount of $98,757 inclusive of HST plus disbursements in the amount of $8,943.30, also inclusive of HST.

[18] Mr. Dean also seeks substantial indemnity costs. He claims the total amount of $74,203.11 or alternatively partial indemnity costs in the amount of $54,903.50. Both those sums are inclusive of HST and disbursements. He relies on the failed allegations of professional negligence, misrepresentation, bad faith and the equivalent of fraud, the latter because of an allegation by the Gill defendants that he created false diary entries. He notes that the reputation of a lawyer is of significant importance and an unsuccessful attack on the lawyer’s integrity, as in this case, should be the basis for a substantial indemnity award.

[19] For their part, the Gill defendants acknowledge the success of the plaintiff and Mr. Dean which is presumptive of an award of costs. However, the Gill defendants submit that the amounts claimed are excessive, out of proportion to the amount of the claims, and should be awarded on a partial indemnity basis only. They submit that partial indemnity costs should be awarded to Hamilton Cab in the amount of $30,000 plus disbursements and HST for a total of $44,005.93. Likewise, they submit that partial indemnity costs should be awarded to Mr. Dean in the amount of $34,163.10 plus disbursements and HST for a total of $54,903.50.

[20] There is no dispute that I have jurisdiction to award costs pursuant to section 131 of the Courts of Justice Act, R.S.O. 1990, Chap. C.43 and that the factors to be applied in the exercise of that discretion are as set out in Rule 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[21] I agree that there should be a costs award in favour of the successful moving parties and the only issues are the quantum and the scale of costs.

[22] Mr. Dean made an offer to settle dated April 28, 2016 prior to the commencement of any cross examinations and the retainer of any experts. That offer proposed a dismissal of the counterclaim against Mr. Dean on a without costs basis. However, I note that the offer expired on May 9, 2016. Although I am entitled to take it into consideration under the provisions of Rule 49.13, I find it has little significance in my decision since it was not available for acceptance when the summary judgment motion was argued.

[23] The Gill defendants did not file a bill of costs despite my order of May 1, 2017 that they do so and as such, I am unable to balance the claims made by the successful parties against the costs incurred by the unsuccessful parties. This makes a proportionality assessment difficult, and I am not prepared to make an assumption against proportionality based simply on the unsupported allegations of the Gill defendants.

[24] The bills of costs submitted by the successful parties do not show either unreasonable time spent on the matter or excessive hourly rates.

[25] The amount at stake in the claim by Hamilton Cab was substantial. This is indicated by the actual amount recovered with the potential for more damages to be assessed in the reference.

[26] Although I found the counterclaim against Mr. Dean not to be supported by the facts, the allegation was that he should be responsible for all of the damages that might be ordered against the Gill defendants. Coupled with the attack by the Gill defendants on his reputation as a lawyer, there was a substantial potential liability to him, and the issues were correspondingly very important.

[27] I turn now to the conduct of the parties in the litigation.

[28] The actions of the Gill defendants resulted in a delay in the completion of this matter and increased costs. Mr. Gill failed to attend two of his scheduled cross examinations, failed to attend to examine Hamilton Cab’s representative until compelled, and took the position that documents already provided by Hamilton Cab to the Gill defendants needed to be produced again before the matter could proceed. The Gill defendants resisted the scheduling of the summary judgment motion until they brought a third party records motion. I refused to accept that position and the summary judgment motion was scheduled. Despite the gap of about five months between scheduling and hearing, no third party records motion was brought by the Gill defendants which is indicative of their prior position being only a delaying tactic. At the motions hearing, the Gill defendants attempted to have the matter adjourned based on matters outstanding from the cross examinations in November 2016 which had not been pursued by the Gill defendants. That adjournment request was denied.

[29] The Gill defendants raised a variety of defences to the claims by Hamilton Cab, none of which were accepted. Those defences included:

a. non est factum,

b. a breach of the Mortgage Brokerages, Lenders and Administrators Act, 2006,

c. a denial that the Gill defendants actually signed the documents in question,

d. a denial of the amounts outstanding,

e. the invalidity of the mortgage because no funds were advanced,

f. an allegation (as I have already noted) that the documents were signed as a sham designed to satisfy Hamilton Cab’s bankers that Hamilton Cab had an significant amount of accounts receivable supporting its line of credit,

g. fraudulent misrepresentation, and

h. breach of fiduciary relationship.

None of those defences were successful but all had to be responded to by the plaintiff.

[30] I accept that the mortgage in question provided for substantial indemnity costs where enforcement was necessary.

[31] As to the counterclaim against Mr. Dean, the Gill defendants secured expert evidence as to Mr. Dean’s breach of a lawyer’s standard of care. In response, Mr. Dean secured his own expert who provided an opinion to the contrary. Significant time was devoted in cross-examinations and in submissions to the factual disputes relating to the actions taken by Mr. Dean. In my opinion, that exercise was both expensive and time-consuming but without value because of the failure on the part of the Gill defendants to link the alleged breach to causation and damages.

[32] The claims by the Gill defendants that Mr. Dean fabricated diary entries after the fact to support his defence of the counterclaim were equivalent to allegations of fraud. They were unsupported and ultimately failed. It is one thing to allege that a lawyer failed to meet a required standard of care in the provision of legal advice. It is another and much more serious attack on a lawyer’s reputation to submit that the lawyer was guilty of fraud. Mr. Dean is a solicitor with 43 years’ experience. The majority of his practice is in the area of real estate. It is no surprise that he needed to fully and vigorously defend the claims made against him which I found were unjustified.

[33] The complexity created in this case by the variety of defences raised by the Gill defendants and the counterclaim by them against Mr. Dean, the need for cross examinations on affidavits and ultimately case management by me required the joint involvement of both Hamilton Cab and Mr. Dean.

[34] Based on the foregoing, and a consideration of all the factors set out in Rule 57.01, I am satisfied that there should be an award of substantial indemnity costs payable by the Gill defendants to Hamilton Cab and to Mr. Dean.

[35] As to quantum, I see no reason to deviate from the amount claimed by the successful parties in their bills of costs and as a result, there will be an order that the Gill defendants pay to Hamilton Cab the sum of $98,757 inclusive of HST for fees plus disbursements in the amount of $8,943.30, also inclusive of HST for a total of $107,700.30, payable within 30 days. As well, there will be an order that the Gill defendants pay to John Dean the sum of $51,242.40 for fees plus disbursements of $14,455.25 plus HST of $8,505.46 for a total of $74,203.11, payable within 30 days.

Reid J.

Date: July 26, 2017