COURT FILE NO.: CV-17-570254CP
DATE: 20180612
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Rebecca Lee Boal Plaintiff
– and –
International Capital Management Inc., John Sanchez a.k.a. Paul Sanchez, Javier Janchez a.k.a. Javier Andreas Sanchez, Invoice Payment Systems Corp., 1361655 Ontario Inc., 1634792 Ontario Inc., 1876692 Ontario Inc., 2029984 Ontario Ltd., and 2029986 Ontario Ltd. Defendants
Caroline Garrod and David Milosevic for the Plaintiff
Sanj Sood and Patrick Copeland for 1361655 Ontario Inc., John Sanchez, and Javier Sanchez
Proceeding under the Class Proceedings Act, 1992
HEARD: In writing
PERELL, J.
REASONS FOR DECISION - COSTS
[1] Pursuant to the Class Proceedings Act, 1992[^1], Rebecca Lee Boal brings a proposed class action on behalf of 170 investors holding unsecured promissory notes. The notes, which are worth $24 million, were granted by the Defendant Invoice Payment Systems Corp. ("IPS"). The promissory notes were marketed by the Defendant International Capital Management Inc. ("ICM"), a mutual fund investment dealership and financial advisor.
[2] On March 30, 2017, without notice, Ms. Boal obtained a Norwich Order (requiring financial disclosure from third parties about the Defendants' assets), a Mareva Injunction (freezing the Defendants' disposition of their assets), and a certificate of pending litigation over a property municipally known as 940 The East Mall.
[3] Approximately a year later, three of the Defendants, i.e., John Sanchez, Javier Sanchez, and 1361655 Ontario Inc., ("Sanchez Corp. # 1), moved for an Order discharging the certificate of pending litigation and for damages for the registration of the certificate of pending litigation.
[4] On the return of the motion to discharge the certificate of pending litigation, on March 19, 2018, I reserved judgment, but I made an interim Order lifting the certificate of pending litigation on terms.
[5] Subsequently, I released my Reasons for Decision.[^2] I vacated the certificate of pending litigation, and I deferred to the trial the issue of whether Sanchez Corp. # 1 suffered any damages from the registration of the certificate of pending litigation. I concluded that at this juncture of the proceeding where the merits have not been decided, it was premature to decide whether Sanchez Corp. # 1 has suffered damages from the issuance of the certificate of pending litigation.
[6] In my Reasons, I provided that if the parties could not agree about the matter of costs, they could make submissions in writing. I alerted the parties that my inclination was to order costs in the cause.
[7] Sanchez Corp. #1 and Messrs. Javier and John Sanchez now seek costs of $73,579.49, inclusive of disbursements and taxes, payable within 30 days. They assert that the requested costs award is appropriate because: (a) they were the successful party on the motion; (b) they made an offer to settle that had it been accepted would have avoided a significant portion of the costs incurred; and (c) the principle of access to justice warrants an order for costs at this juncture so as to not unfairly advantage the Plaintiff over the Defendants in this proposed class proceeding.
[8] Ms. Boal submits that the costs should be in the cause, and in an amount lower than those requested because the case has profound public interest components. The alleged public interest arises because the Defendants are engaged in a regulated industry, and she submits that a large costs award would have a chilling effect on class actions as a means to achieve access to justice.
[9] Having considered the submissions of the parties, I am not persuaded that my initial inclination of ordering costs in the cause was wrong. I persist in the view that in the particular circumstances of this case that costs in the cause is the appropriate exercise of the court's discretion with respect to costs.
[10] On interlocutory motions, the court has a discretion to order costs to be paid forthwith, but it also has the jurisdiction to order costs in the cause, and I think the case at bar is one such case.
[11] There are several circumstances that underlie this view. I begin with the jurisdictional circumstance that where an interlocutory injunction is sought and either granted or refused, while it may be appropriate to award costs to the successful party on the interlocutory motion, depending on the circumstances of the case, it may also be appropriate to order costs in the cause and the court is not precluded from doing so.
[12] To the jurisdictional circumstance, I add the factual circumstance that the appropriateness of the Norwich Order has never been challenged and while Ms. Boal was ultimately unsuccessful in her Mareva injunction motion, that outcome could and should have been determined in April 2017 and not a year later, when. with a change of counsel and a need to deal with the certificate of pending litigation, the Defendants were motivated to bring their motion. It is understandable that after a year, Ms. Boal would resist the motion to vacate the certificate of pending litigation.
[13] Ms. Boal was unsuccessful in sustaining the court's injunction order, which had expired, and in keeping the existing certificate of pending litigation, but it cannot be said that in the first instance it was unreasonable for her to pursue these remedies on behalf of the putative class members. She was ultimately wrong in resisting the Defendants' motion to have the certificate of pending litigation vacated, but, as I say, this outcome could and ought to have been determined a year ago.
[14] Both parties seem to have been distracted about the Defendants' obligation to disclose information, but this is and was a fruitless and wasteful dispute, because the parties simply should have moved on with the ligation. After the close of pleadings disclosure from the Defendants, would have followed in the normal course.
[15] It is very doubtful that the offer to settle if accepted would have narrowed the issues and the merits of the action remain to be determined. Both the claim and the defence are serious and contentious matters. The Defendants, while successful in having the certificate of pending litigation vacated, were not successful in a substantial aspect of their motion which was to obtain a significant damages award against Ms. Boal for the registration of the certificate of pending litigation. That issue has been deferred.
[16] In all these circumstances, I think the appropriate award is to order costs in the cause.
Perell, J.
Released: June 12, 2018
COURT FILE NO.: CV-17-570254CP
DATE: 20180612
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Rebecca Lee Boal Plaintiff
– and –
International Capital Management Inc., John Sanchez a.k.a. Paul Sanchez, Javier Janchez a.k.a. Javier Andreas Sanchez, Invoice Payment Systems Corp., 1361655 Ontario Inc., 1634792 Ontario Inc., 1876692 Ontario Inc., 2029984 Ontario Ltd., and 2029986 Ontario Ltd. Defendants
REASONS FOR DECISION – COSTS
PERELL J.
Released: June 12, 2018
[^1]: S.O. 1992, c. 6. [^2]: Boal v. International Capital Management Inc., 2018 ONSC 2275.