CITATION: Sgromo v. Polygroup International et al., 2017 ONSC 5324
COURT FILE NO.: CV-16-0565-SR
DATE: 2017-09-12
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
PIETRO, PASQUALE-ANTONIO SGROMO (PETER ANTHONY SGROMO), WIDE EYES MARKETING LTD.,
Unrepresented
Plaintiffs (Responding Party)
- and -
POLYGROUP INTERNATIONAL, (a Hong Kong Corporation); POLYGROUP LIMITED (MACAO COMMERCIAL OFFSHORE), a Corporation duly organized under the laws of S.A.R., People’s Republic of China; POLYGROUP SERVICES N.A., INC., (a United States Corporation); RICKY TONG (an Individual); WILLIAM KAUFMANN (an Individual); SCOTT HERSHOCK (an Individual); LEWIS CHENG (an Individual); ELMER CHENG (an Individual); and PAUL CHENG (an Individual).
Peter W. Choe, for the Defendants
Defendants (Moving Party)
HEARD: Via Written Submissions
Mr. Justice D. C. Shaw
Decision On Costs
Background
[1] This is a decision on the costs of a motion brought by the defendants to dismiss this action for want of jurisdiction.
[2] I granted the motion and dismissed the action. Costs of the motion were reserved, pending receipt of written submissions. Those submissions have been received and reviewed.
[3] My reasons on this costs decision are similar to those released this date in actions CV-16-0566-SR and CV-16-0529-FW. Mr. Sgromo was also a plaintiff in those actions and those actions were also dismissed for want of jurisdiction. Mr. Sgromo’s costs submissions were the same in all three actions.
[4] The facts surrounding the motion to dismiss are set out in my decision reported at 2017 ONSC 2525. I will not repeat the facts here.
[5] The defendants seek their costs on a substantial indemnity scale, of $69,467.85 for fees, plus disbursements and HST. In the alternative, they seek partial indemnity costs of $46,311.90 for fees, plus disbursements and HST.
[6] The plaintiffs’ position is that there should be no order of costs against them.
[7] The plaintiffs submit, first, that the costs claimed by the defendants are excessive. Second, the plaintiffs submit that they are impecunious and that they will be denied access to justice if costs are awarded to the defendant. The bulk of the plaintiffs’ submissions do not deal with the question of costs. Rather, they are a reiteration of their arguments on the merits of the motion to dismiss. I will not address these latter submissions.
Discussion
[8] I will deal with first with the defendants’ entitlement to costs. In my view, there is no basis to depart from the normal rule that a successful party on a motion is entitled to costs.
[9] The cases referred to by the plaintiffs in their submissions on impecuniosity deal with the issue of security for costs. It is in that context that the courts in those cases considered whether an order for costs could impair the ability of a plaintiff to proceed with his action.
[10] In the present case, I expressly determined that the plaintiffs should not be allowed to proceed with their action because of a want of jurisdiction. The plaintiffs cannot now maintain that their ability to proceed with that action will be impaired by a costs order. The action has been dismissed.
[11] Although a court may properly take into consideration a party’s financial situation in the exercise of the court’s discretion on costs, that is not a factor that carries much weight in this case where the plaintiffs compelled the defendants to incur costs to respond to an action that should not have been brought. To hold otherwise, would give license to impecunious parties to bring baseless actions with impunity.
[12] The second issue is the scale of costs to which the defendants are entitled. Should they be substantial indemnity costs, as the defendants request, or partial indemnity costs?
[13] There are generally only two circumstances where costs on the elevated scale of substantial indemnity are warranted. The first pertains to an offer to settle under rule 49.10, where substantial indemnity costs are explicitly authorized. The second is reserved for the rare and exceptional case where the losing party has engaged in reprehensible conduct or there are other special circumstances that justify costs on the higher scale.
[14] In Young v. Young, [1993] 4 S.C.R. 3, McLachlin J. described the circumstances when elevated costs are warranted as:
…only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties.
[15] In Bond v. Brookfield Asset Management Inc., [2011] O.J. No. 2760 (S.C.J.), the defendants submitted that substantial indemnity costs should be awarded because there was no basis on which the plaintiff could reasonably assert that Ontario had jurisdiction simpliciter and no basis for the plaintiff to refute that Ontario was a forum non conveniens. Perell J. held at para. 6:
In my opinion, it would not be a proper exercise of the court’s discretion to order costs on a substantial indemnity basis simply because a party has a weak case or even a very weak case.
[16] I have determined that costs should be awarded in this case on a partial indemnity basis. The plaintiff’s conduct, in my opinion, did not rise to the threshold as set out in Young v. Young to warrant the sanction of substantial indemnity costs. That does not mean, however, that I cannot take the plaintiffs’ conduct into account in fixing partial indemnity costs. A party’s conduct is expressly referred to in Rule 57.01(e) (f) and (g) as a factor that the court may consider.
[17] An award of costs is a matter in the discretion of the judge by virtue of s. 131(1) of the Courts of Justice Act, which provides:
Subject to the provisions of an Act or rules of the court, the costs of and incidental to the 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 costs shall be paid.
[18] In Finn Way General Contractors Inc. v. S. Ward Construction Inc., 2014 ONSC 4071, I set out the principles and factors that should guide a discussion on costs:
[19] In Serra v. Serra (2009), 2009 ONCA 395, 66 R.F.L. (6th) 40 (Ont. C.A.), at p. 42, the Court of Appeal reiterated the fundamental purposes which modern costs rules are designed to foster, as set out in Fong v. Chan (1999), 46 O.R. (3d) 330 (Ont. C.A.), at para. 22:
(1) to partially indemnify successful litigants for the costs of litigation;
(2) to encourage settlement; and
(3) to discourage and sanction inappropriate behaviour.
[20] In Anderson v. St. Jude Medical Inc., [2006] O. J. No. 508 (Ont. Div. Ct.), at para. 22, the Divisional Court set out the principles to be applied by the court in exercising its discretion (citations omitted):
The discretion of the court must be exercised in light of the specific facts and circumstances of the case in relation to the factors set out in Rule 57.01(1).
A consideration of experience, rates charged and hours spent is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case. The quantum should reflect an amount the court considers to be fair and reasonable rather than any exact measure of the actual costs to the successful litigant.
The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining an amount that is fair and reasonable: Rule 57.01(1)(O.b).
The court should seek to avoid inconsistency with comparable awards in other cases. “Like cases [if they can be found], should conclude with like substantive results.”
The court should seek to balance the indemnity principle with the fundamental objective of access to justice.
[21] The Court of Appeal has made it clear that in assessing costs the overriding principle is one of reasonableness and that the failure to follow that principle can produce a result that is contrary to the fundamental objective of access to justice (Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (Ont. C.A.), at p. 302.
[22] In Zesta Engineering Ltd. v. Cloutier, [2002] O.J. No. 4495 (Ont. C.A.), at para. 4 the Court of Appeal did not make a specific finding with respect to the amount of time spent or the rates charged by counsel, and stated:
“In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.”
[23] Rule 57.01(1) of the Rules of Civil Procedure provides:
57.01 (1) Factors in discretion - In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding; or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different solicitor; and
(i) any other matter relevant to the question of costs.
[24] Rule 1.04 (1.1) of the Rules of Civil Procedure provides:
1.04 (1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.
[19] The Rules define substantial indemnity costs as an amount 1.5 times what would otherwise be awarded in accordance with Part I of Tariff A. Partial indemnity costs are defined as costs awarded in accordance with Part I in Tariff A. A substantial indemnity rate would approach 90% of the actual solicitor – client rate. See Riddell v. Conservative Party of Canada, [2007] O.J. No. 2577 (S.C.J.). A partial indemnity rate would be, by definition, approximately ⅔ of substantial indemnity costs.
[20] Mr. Peter Choe was the lead counsel for the defendants. He was called to the bar in 1997. His actual hourly rate in 2017 was $700.00. His substantial indemnity rate is shown in the defendants’ Bill of Costs at 90% of his actual rate, at $630 per hour. His partial indemnity is shown at $420 per hour. For the 4.2 hours Mr. Choe docketed on the file in 2016, those actual, substantial and partial indemnity hourly rates are shown in the defendants’ Bill of Costs at $670, $603 and $402, respectively.
[21] Mr. Benjamin Na also worked on the file. He was called to the bar in 1998. His hourly rates are the same as those of Mr. Choe. I find these rates to be reasonable. Ms. Choe and Mr. Na are each partners in the Toronto office of a large global law firm. Although their hourly rates are greater than counsel of similar experience in Northwestern Ontario, they are within what could reasonably be expected for senior counsel in a large Toronto law firm. The plaintiffs chose to bring their ill-advised action against foreign defendants. They could reasonably have expected that foreign defendants might retain Toronto counsel at Toronto law firm rates.
[22] The plaintiffs served a statement of claim of 253 paragraphs. As I noted in my reasons on the motion, the statement of claim contained extensive, improper pleadings of argument, law and evidence and was far from a concise statement of material facts as contemplated by Rule 25.06.
[23] The statement of claim contained a multitude of vexatious and unnecessary allegations, including allegations that one of the individual defendants was guilty of participating in a conspiracy to murder.
[24] The plaintiffs’ motion material was equally problematic. It was difficult for the defendants to properly respond. I regard the motion as complex.
[25] The conduct of the plaintiffs in not abandoning a motion for injunctive relief until shortly before the hearing of the motion on jurisdiction unnecessarily lengthened and complicated the proceeding, as did the volume and nature of the materials that the plaintiffs filed.
[26] On review of the defendants’ Bills of Costs, there does not appear to be any material overlap between the time docketed by Mr. Choe and the time docketed by Mr. Na. Mr. Na docketed only 2.2 hours. Mr. Choe charged for 106.1 hours. There are also small charges, totalling about $350, for articling student and law clerk time on a partial indemnity scale.
[27] There is a charge for travel to Thunder Bay from Toronto that appears to be at Mr. Choe’s regular hourly rate, which should be reduced.
[28] The disbursements claimed are $5,072.06, of which $3,152.00 is for “Photocopying and Scanning Charges”. There is no breakdown of the photocopying and scanning charges. The Bill of Costs shows $394.05 for “Tabs and Binding Charges,” with no breakdown.
[29] In file CV-16-0529, which involved two motions to dismiss in which Mr. Sgromo was a plaintiff, the volume of material was similar to this file. The Winnipeg solicitors for one group of defendants in file CV-16-529 showed in their Bill of Costs a copying fee for 3,115 pages, at a cost of $0.06 per page, for a disbursement of $186.90. The Toronto solicitors for the other group of defendants in file CV-16-529 showed “Copying and Binding Charges” of $477.25 in their Bill of Costs.
[30] I am not prepared to award disbursements in this file of approximately $3,500 for photocopying and binding, without any details of those entries, especially in light of comparable charges in file CV-16-529 from solicitors for defendants bringing similar motions against the same plaintiffs. Taking into account that there were voluminous materials, I will take notice that the defendants in this case would have had disbursements for significant photocopying. However, because of lack of detail, I will fix disbursements for photocopying, scanning and binding at a notional amount of $500.00.
[31] In my opinion, it is fair and reasonable to award the defendants partial indemnity costs of $35,000 for fees, plus HST thereon, plus taxable disbursements of $2,078.06 plus HST, plus non-taxable disbursements of $342, and an order shall go accordingly.
__“original signed by”
The Honourable Justice D. C. Shaw
Released: September 12, 2017
CITATION: Sgromo v. Polygroup International et al., 2017 ONSC 5324
COURT FILE NO.: CV-16-0565-SR
DATE: 2017-09-12
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
PIETRO, PASQUALE-ANTONIO SGROMO (PETER ANTHONY SGROMO), WIDE EYES MARKETING LTD.,
Plaintiffs (Responding Party)
- and -
POLYGROUP INTERNATIONAL, (a Hong Kong Corporation); POLYGROUP LIMITED (MACAO COMMERCIAL OFFSHORE), a Corporation duly organized under the laws of S.A.R., People’s Republic of China; POLYGROUP SERVICES N.A., INC., (a United States Corporation); RICKY TONG (an Individual); WILLIAM KAUFMANN (an Individual); SCOTT HERSHOCK (an Individual); LEWIS CHENG (an Individual); ELMER CHENG (an Individual); and PAUL CHENG (an Individual).
Defendants (Moving Party)
DECISION ON COSTS
Shaw J.
Released: September 12, 2017
/sab