CITATION: McDowell v. Fortress Real Capital Inc., 2017 ONSC 5760

COURT FILE NO.: CV-16-560268CP

DATE: 20170928

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ARLENE McDOWELL

Plaintiff

– and –

FORTRESS REAL CAPITAL INC., FORTRESS REAL DEVELOPMENTS INC., JAWAD RATHORE, VINCENZO PETROZZA, EMPIRE PACE (1088 PROGRESS) LTD., BUILDING & DEVELOPMENT MORTGAGES CANADA INC., ILDINA GALATI, DEREK SORRENTI, SORRENTI LAW PROFESSIONAL CORPORATION, OLYMPIA TRUST COMPANY and MICHAEL CANE

Defendants

Mitchell Wine for the Plaintiff

Martin Sclisizzi and Ziad Yehia for the Defendant Empire Pace (1088 Progress) Ltd.

Proceeding under the Class Proceedings Act, 1992

HEARD: In writing

PERELL, J.

REASONS FOR DECISION - COSTS

[1] In this proposed class action, Empire Pace (1088 Progress) Ltd. brought a pleadings motion to strike various claims or paragraphs from Arlene McDowell’s Statement of Claim and to have the action dismissed against it. There were companion pleadings motions in three other proposed class actions that had some common parties and many common issues and legal themes. The motions were argued together over two days.

[2] I granted Empire Pace (1088 Progress) Ltd.’s motion; see McDowell v. Fortress Real Capital Inc., 2017 ONSC 4789. The Reasons for Decision in the other motions were: Martino v. Fortress Real Capital Inc., 2017 ONSC 4790; McDowell and Aversa v. Fortress Real Capital Inc., 2017 ONSC 4791; and, Madryga v. Fortress Real Capital Inc., 2017 ONSC 4792.

[3] In the result, the claims against Empire Pace were struck out without leave to amend. Empire Pace seeks partial indemnity costs of $59,486.96, inclusive of disbursements. This claim represents 45% of counsel's rates for the motion and for the action.

[4] By way of comparison, it may be noted that: (a) I awarded the Defendants FFM Capital, Rosalia Spadafora, Krish Kochhar, Tony Mazzoli, and Saul Perlov, whose pleading motion was settled save for costs, the sum of $17,500 all inclusive; (b) Adi Developments (Link) Inc. and Adi Development Group Inc. claim approximately $65,000, all inclusive, for the motions and for the dismissal of the action against them; and (c) Olympia Trust Company claims approximately $41,000, all inclusive, on a partial indemnity basis and approximately $61,000, all inclusive, on a substantial indemnity basis for the motions.

[5] To explain why it claims approximately $60,000 for a pleadings motion, Empire Pace submits that: (a) it was the successful party; (b) it is out of the action; (c) the motion was complex and of considerable importance because it would have brought its project to a halt; (d) it accommodated Plaintiffs’ counsel, who sought an adjournment that resulted in some costs being thrown away; and (e) there is no reasons to deny it costs.

[6] For her part, Ms. McDowell submits that the costs claimed by Empire Pace are excessive and beyond the reasonable expectations of the unsuccessful party on what was just a pleadings motion. She submits that the amount of the award would be contrary to the fundamental objective of access to justice. In regard to the allegedly excessive claim for costs, Ms. McDowell makes the following points:

a. She is a person of modest means seeking access to justice for a group of investors who all lost money that they could not afford to lose.

b. Had she been the successful party on the pleadings motion, her Bill of Costs would have been for $37,682.73, of which the fee portion was $33,176, HST was $4,335.18, and disbursements $175.55, approximately $42,000, all inclusive. The Bill of Costs was for services associated with eight motions brought by the Defendants in the four proposed class actions. Ms. McDowell submits that it should have been expected that the Defendants’ lawyers respectively would have done less work than the Plaintiffs’ lawyers. She submits that it was reasonable for her to expect that the Costs Outline of each of the Defendants would be less, not more, than the Costs Outline of her own counsel.

c. Since the factual underpinnings of the four proposed class actions is similar, she submits that Empire Pace exaggerates the amount of time required to apprise itself of the other proceedings, and it, in any event, was involved in only one of the four actions.

d. The claims were not vexatious and whatever the frailties of the pleadings, she submits that the Defendants would have been able to understand the case that they were being called on to meet.

e. She submits that her counsel made a genuine and concerted effort to address the criticisms of the pleadings and commendably attempted to resolve the pleadings motion before the hearing.

f. Mr. Sclisizzi, senior counsel for Empire Pace, docketed for 66.6 hours, Mr. Yehia docketed 111.9 hours, Ms. Nosco docketed 19.8 hours and student time is another 33.9 hours. This is a total of 232.2 hours, which she submits is excessive for a straightforward pleadings motion.

[7] Ms. McDowell submits that having regard to the above circumstances and extrapolating from the amount awarded to the FFM Capital Defendants and taking into account that: (a) Empire Pace’s pleading motion was argued and not settled; (b) the seniority of the lawyers involved; and (c) Empire Pace was successful and is no longer a party to the action, the appropriate costs award is $25,000, inclusive of disbursements and taxes.

[8] I set out the principles about costs in class actions in Das v. George Weston Limited, 2017 ONSC 5583 in some detail and I incorporate by reference those principles for the case at bar.

[9] Applying the principles that govern the court’s discretion in awarding costs to the circumstances of the immediate case, the nub of the dispute between Ms. McDowell and Empire Pace is about what Ms. McDowell, as the unsuccessful party, would have reasonably expected to pay for costs of a motion that resulted in Empire Pace being removed as a party to this litigation.

[10] Ms. McDowell characterizes the motion as just a pleadings motion; however, it obviously was much more than that for Empire Pace, whose success is dispositive of this litigation from its perspective but not for the other Defendants against whom the action will continue.

[11] From Empire Pace’s perspective, it was joined to an inherently complicated action that was over-complicated by the manner in which it was pleaded. It was confronted with a very substantial claim, and in my opinion, Ms. McDowell ought to have expected that Empire Pace would defend itself vigilantly. I do not accept the proposition that Ms. McDowell reasonably expected that Empire Pace’s lawyers would do less work in defending it than her lawyers would expend in prosecuting the case against Empire Pace. I disagree that the award to the FFM Capital Defendants or her own Bill of Costs establishes some sort of parameter for the appropriate award for the other parties. I disagree with Ms. McDowell’s submission that it would be contrary to the fundamental objective of access to justice to make a substantial costs award to Empire Pace; defendants as much as plaintiffs are entitled to access to justice and adverse costs consequences are applicable to both plaintiffs and defendants.

[12] I, therefore, disagree with Ms. McDowell’s submission that the appropriate award is $25,000, all inclusive. In my opinion, applying the normal principles for a costs award, the appropriate award is $50,000, all inclusive.

[13] Order accordingly.

Perell, J.

Released: September 28, 2017

CITATION: McDowell v. Fortress Real Capital Inc., 2017 ONSC 5760

COURT FILE NO.: CV-16-560268CP

DATE: 20170928

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ARLENE McDOWELL

Plaintiff

– and –

FORTRESS REAL CAPITAL INC., FORTRESS REAL DEVELOPMENTS INC., JAWAD RATHORE, VINCENZO PETROZZA, EMPIRE PACE (1088 PROGRESS) LTD., BUILDING & DEVELOPMENT MORTGAGES CANADA INC., ILDINA GALATI, DEREK SORRENTI, SORRENTI LAW PROFESSIONAL CORPORATION, OLYMPIA TRUST COMPANY and MICHAEL CANE

Defendants

REASONS FOR DECISION - COSTS

PERELL J.

Released: September 28, 2017