Tracy v. The Iranian Ministry of Information and Security
CITATION: Tracy v. The Iranian Ministry of Information and Security, 2017 ONSC 943
COURT FILE NO.: CV-14-10403-00CL COURT FILE NO.: CV-14-497414 COURT FILE NO.: CV-13-10204-00CL COURT FILE NO.: CV-13-493290 COURT FILE NO.: CV-14-499468
DATE: 20170208
ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST
BETWEEN:
EDWARD TRACY, by his Litigation Guardian, Charles Murphy and others Applicants
– and –
THE IRANIAN MINISTRY OF INFORMATION AND SECURITY and others Respondents
AND BETWEEN:
CHAD PHILLIP HOLLAND Plaintiff
– and –
THE ISLAMIC REPUBLIC OF IRAN and others Defendants
AND BETWEEN:
ESTATE OF MARLA BENNETT and others Applicants
– and –
THE IRANIAN MINISTRY OF INFORMATION AND SECURITY and others Respondents
AND BETWEEN:
KATIE L. MARTHALER and others Plaintiffs
– and –
THE ISLAMIC REPUBLIC OF IRAN and others Defendants
AND BETWEEN:
AMERICAN CENTER FOR CIVIL JUSTICE, INC., as Assignee for Christine Higgins Plaintiff
– and –
THE IRANIAN REVOLUTIONARY GUARD CORPS Defendant
COUNSEL: John J. Adair and Gordon McGuire, for the Applicants/Plaintiffs, Tracy/Cicippio, and Bennett Colin P. Stevenson and J. Daniel McConville, for the Moving Parties, Iran et al. John B. Laskin, Sarah Whitmore, and Eliot Che, for the Applicants/Plaintiffs Chad Phillip Holland, Katie L. Marthaler and American Center for Civil Justice, Inc./Christine Higgins
HEARD: In Writing
REASONS FOR DECISION - COSTS
HAINEY J.
Overview
[1] The plaintiffs commenced actions in Ontario to enforce U.S. judgments relying upon amendments to the State Immunity Act, R.S.C., 1985, c. S-18 (“SIA”) and the Justice for Victims of Terrorism Act, S.C. 2012, c. 1, s. 2 (“JVTA”). The defendants, (“Iran”), relying upon the principles of state and diplomatic immunity, did not defend any of the actions. The plaintiffs obtained default judgment recognizing the U.S. judgments and a Mareva injunction over Iran’s exigible property in Canada.
[2] Iran brought motions to set aside the judgments and the Mareva injunction.
[3] I dismissed Iran’s motions and allowed a motion for summary judgment brought by the Bennett plaintiffs to enforce their U.S. judgment.
[4] The parties have been unable to settle the costs of these motions and have requested that I determine this issue.
Positions of the Parties
[5] The plaintiffs seek costs on a partial indemnity basis in the following all-inclusive amounts:
• The Holland/ Marthaler/Higgins plaintiffs - $142,970.85. • The Tracy/Cicippio plaintiffs - $96,425.68. • The Bennett plaintiffs - $62,510.73.
[6] Iran submits that it is immune from any order to pay costs for the following reason:
The moving parties submit that they are and remain immune from any order to pay costs. The legislation does not provide for the recovery of costs by a successful party in proceedings concerning the recognition of judgments under section 4(5) of the Justice for Victims of Terrorism Act.
[7] In the alternative, Iran submits that if costs are to be awarded, “they should only be awarded on a partial indemnity scale with reference to the fees set out in the Costs Bulletin.” Although Iran submits that the plaintiffs’ counsel fees should be reduced, it does not take issue with the hours expended by the plaintiffs’ counsel or the amount of disbursements claimed.
[8] Iran submits that the plaintiffs’ counsel fees should be fixed in the following amounts:
- Holland/Marthaler/Higgins plaintiffs - $98,000. (The amount claimed is $130,250.20)
- Tracy/Cicippio plaintiffs - $52,000. (The amount claimed is $64,813.)
- Bennett plaintiffs - $42,000. (The amount claimed is $53,035.50.)
Analysis
[9] In my reasons for decision dismissing Iran’s motions I concluded that the SIA removes Iran’s immunity from the enforcement of the U.S. judgments in Ontario. I also concluded that Iran cannot claim diplomatic immunity in response to the plaintiffs’ attempts to attach its exigible property in Canada under either domestic or international law. For the same reasons I am of the view that Iran is not immune from a costs order in these proceedings.
[10] The JVTA and the SIA are both silent on the issue of costs for civil claims brought under those statutes. However, s. 17 of the SIA provides that “[e]xcept to the extent required to give effect to this Act, nothing in this Act shall be construed or applied so as to negate or affect any rules of a court.” In my view, this includes the rules that govern costs in a civil proceeding.
[11] Costs in civil proceedings in Ontario are governed by the Courts of Justice Act (“CJA”) and the Rules of Civil Procedure. Section 95(1) of the CJA provides that Part VII applies to civil proceedings in Ontario courts. This includes s. 131 of the CJA which gives the court discretion to award costs in a proceeding. Rule 57.01 sets out the factors the court should consider in exercising its discretion to award costs.
[12] I do not accept Iran’s submission that because s. 4(1) of the JVTA refers to “additional amounts” and s. 4(5) does not, that this means that costs are not payable in an enforcement proceeding under s. 4(5) of the JVTA. In my view, the term “additional amounts” in s. 4(1) refers to additional heads of damages, such as punitive damages, not to costs.
[13] While the awarding of costs is in the discretion of the court, the general rule is that costs follow the event in an amount that the unsuccessful party could reasonably expect to pay in the circumstances. In this case Iran brought motions to set aside default judgments and a Mareva injunction. The motions were all unsuccessful. I see no reason to deprive the plaintiffs of their entitlement to costs of successfully defending these motions.
[14] The Ontario Court of Appeal made it clear in Davies v. Clarington (Municipality), 2009 ONCA 722 at para. 52 that the overriding principle in the determination of costs is reasonableness. I agree with the plaintiffs that it would be reasonable to award them costs on a partial indemnity basis.
[15] Iran submits that I should fix the plaintiffs’ counsel fees on a partial indemnity basis with reference to the cost rates set out in the Information for the Profession at the preamble to Rule 57 adjusted for inflation. I prefer to follow the Ontario Court of Appeal’s approach in Inter-Leasing, Inc. v. Ontario (Minister of Revenue), 2014 ONCA 683 at para. 5 where the Court of Appeal stated as follows:
I agree with the appellant that the costs rates set out in the Information for the Profession set out in the preamble to Rule 57 of the Rules of Civil Procedure are now out of date, and that amounts calculated at 55% - 60% of a reasonable actual rate might more appropriately reflect partial indemnity, particularly in the context of two sophisticated litigants well aware of the stakes.
[16] The plaintiffs have claimed partial indemnity fees equal to 60% of their actual fees. I am satisfied that this is an appropriate discount to arrive at reasonable partial indemnity fees. I must, however, also be satisfied that the actual fees charged are reasonable in the circumstances of this case.
[17] The factors that I have considered to determine the reasonableness of the actual fees charged by the plaintiffs’ counsel include the following:
• The amount claimed in the proceeding is approximately $1.7 billion. Iran was, therefore, moving to set aside substantial judgments. • The motions raised a number of complex and important issues that had not been previously decided. • There was an extensive motion record. Iran delivered a 95-page factum and a 27-page reply factum. The plaintiffs’ responding facta were equally lengthy. • The motions were heard over three days. • The plaintiffs’ legal work was performed in a cost-effective manner. A good deal of the work was performed by junior lawyers with relatively low hourly rates. • Iran’s actual fees totaled $295,675.37. This amount exceeds the actual fees of each of the two plaintiffs’ counsel.
[18] Having considered these factors, I am of the view that the partial indemnity fees claimed by the plaintiffs are fair and reasonable and ought to have been within the reasonable expectation of Iran.
[19] For these reasons I make the following costs orders:
• The Holland/Marthaler/Higgins plaintiffs are awarded costs of $142,970.85 inclusive of tax and disbursements payable by Iran within 30 days. • The Tracy/Cicippio plaintiffs are awarded costs of $96,425.73 inclusive of tax and disbursements payable by Iran within 30 days. • The Bennett plaintiffs are awarded costs of $62,510.73 inclusive of tax and disbursements payable by Iran within 30 days.
HAINEY J.
Released: February 8, 2017
CITATION: Tracy v. The Iranian Ministry of Information and Security, 2017 ONSC 943
COURT FILE NO.: CV-14-10403-00CL COURT FILE NO.: CV-14-497414 COURT FILE NO.: CV-13-10204-00CL COURT FILE NO.: CV-13-493290 COURT FILE NO.: CV-14-499468
DATE: 20170208
ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST
BETWEEN:
EDWARD TRACY, by his Litigation Guardian, Charles Murphy and others Applicants
– and –
THE IRANIAN MINISTRY OF INFORMATION AND SECURITY and others Respondents
AND BETWEEN:
CHAD PHILLIP HOLLAND Plaintiff
– and –
THE ISLAMIC REPUBLIC OF IRAN and others Defendants
AND BETWEEN:
ESTATE OF MARLA BENNETT and others Applicants
– and –
THE IRANIAN MINISTRY OF INFORMATION AND SECURITY and others Respondents
AND BETWEEN:
KATIE L. MARTHALER and others Plaintiffs
– and –
THE ISLAMIC REPUBLIC OF IRAN and others Defendants
AND BETWEEN:
AMERICAN CENTER FOR CIVIL JUSTICE, INC., as Assignee for Christine Higgins Plaintiff
– and –
THE IRANIAN REVOLUTIONARY GUARD CORPS Defendant
REASONS FOR DECISION - COSTS
HAINEY J.
Released: February 8, 2017