Court File and Parties

COURT FILE NO.: 43643-10 DATE: 2018-06-26 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Christene Ann Weber, Applicant AND: Sean Robert Hugh Merritt, Respondent

BEFORE: The Honourable Madam Justice L. Madsen

COUNSEL: Glenda McLeod, Counsel, for the Applicant Matthew T. Kelly, Counsel, for the Respondent Joseph A. Irvine, Counsel for the Added Party to the Motion, 1765975 Ontario Inc. (o/a Blue Water Metals)

Costs Endorsement

[1] This Costs Endorsement relates to the Motion for disclosure from a non-party and questioning of a non-party brought by the Applicant on May 10, 2018 for which the decision was released May 24, 2018.

[2] The Applicant, Ms. Christene Weber [“Ms. Weber”], seeks costs on a full recovery basis in the amount of $12,500 inclusive of HST and disbursements, or, if the Court finds that she was only partially successful, costs in the amount of $10,000 plus HST.

[3] The Added Party to the Motion, 1765975 Ontario Inc. [Blue Water Metals], seeks an Order that costs be reserved to the Judge hearing the Motion to Change, or in the alternative that each party bear their own costs.

[4] The Respondent, Sean Merritt [“Mr. Merritt”], who was not a party to the Motion and no Orders were sought against him, seeks an Order that there be no costs against him.

[5] On the Motion, the Court ordered that Blue Water Metals produce some but not all of the disclosure sought by Ms. Weber and ordered questioning of the non-party.

[6] For the reasons set out below, this Court orders that Blue Water Metals pay costs to Ms. Weber in the amount of $7,000 within 30 days.

Law and Analysis

[7] Modern Ontario costs rules are designed to achieve several goals: to partially indemnify the successful litigant; to encourage settlement; and to discourage and sanction inappropriate behaviour by litigants. Serra v. Serra, 2009 ONCA 395 (Ontario Court of Appeal).

[8] Under Rule 24(1) of the Family Law Rules, a successful party is presumptively entitled to costs. A consideration of success is therefore the starting point in determining costs.

[9] Under Rule 24(6) if success is divided, the Court may apportion costs “as appropriate”. Divided success does not necessarily mean equal success.

[10] I find that both parties had some success on this Motion. However, I find that Ms. Weber was more successful than Blue Water Metals.

[11] Ms. Weber sought production of the following documents:

a. A copy of the current Directors and Shareholders Register; b. A complete listing of all clients of 1765975 from January 1, 2015 to present; c. Financial Statements for 1765975 Ontario Inc. for the years 2015, 2016, and 2017; d. General ledgers and/or accounting statements for 1765975 from January 1, 2017 to the present; and e. Monthly banking statements, for all accounts upon which 1765975 is named, from January 1, 2017 to the present.

[12] By the time the Motion was argued, Blue Water Metals had produced the current Directors and Shareholders Register. The Court ordered the production of the client listing and the financial statements as set out in paragraph 11(b) and (c). The Court also permitted the questioning of Blue Water Metals as sought by Ms. Weber.

[13] At the same time, the Court found that the request for the ledgers and banking statements was over-reaching, although the Court noted that those documents might be the subject of production requests on questioning.

[14] Under Rule 24(11) a Court must consider:

a. The importance, complexity, or difficulty of the issues; b. The reasonableness or unreasonableness of each party’s behaviour in the case; c. The lawyers’ rates; d. The time properly spent on the case; e. Expenses properly payable; and f. Any other relevant matter.

[15] Applying the considerations set out in Rule 24(11), this Court finds that:

a. The matter was not unduly complex or difficult but was important to both parties; b. It was not reasonable for Blue Water Metals to take the position that no disclosure other than the Directors and Shareholders Register should be provided. Mr. Merritt’s employment by Blue Water Metals is not an arms’ length arrangement. c. It was reasonable for Ms. Weber to seek disclosure to understand the impact on Blue Water Metals of Mr. Merritt letting his company go dormant in favour of working for his parents’ company. d. While Blue Water Metals submitted that Ms. Weber should have requested the disclosure by letter from the company before bringing her Motion, I note that she requested the disclosure from Mr. Merritt on February 9, 2017. In response, she received a letter from Mr. Merritt’s counsel stating that Mr. Merritt was “not prepared to provide disclosure from his father’s company.” Effectively, Mr. Merritt took a position on behalf of his father’s company, exacerbating the concern regarding the lack of arms’ length relationship between Mr. Merritt and Blue Water Metals. e. The Court was not provided with any Offers to Settle, whether under Rule 18 or otherwise. f. This Court does not have difficulty regarding the lawyers’ rates, given their respective seniority and experience. The Court notes that Ms. Weber’s counsel’s account is quite reasonable, at $12,527.98, particularly given that the Blue Water Metal’s account was $28,570.89.

[16] Ms. Weber’s materials included an Affidavit dated March 2, 2018, which referenced other materials in the Continuing Record. The Court is advised that the Added Party was not served with the other materials referenced in the Continuing Record. This is not appropriate. Blue Water Metals should have been served with all of the material upon which Ms. Weber relied on the Motion.

[17] The Court also notes that Ms. Weber has made reference to post-Motion events in her costs submissions, in particular what she says can be concluded from the disclosure received by her following the Court’s release of the Motion Endorsement. She has also attached that disclosure to her submissions. This is not appropriate. Although in some circumstances, post-determination events may be relevant in assessing costs, to be considered, there must be a proper evidentiary basis. Had Ms. Weber wished to provide further evidence impacting the question of costs of the Motion, she should have sought leave of the Court to file an Affidavit, and the Added Party should have had an opportunity to respond. The Court has disregarded the appended material and the submissions regarding the conclusions to be drawn. See DePace v. Michienzi in which post-determination events were considered where there was a proper evidentiary basis.

Quantum

[18] There is discretion under Rule 24 to award an amount of costs which appears just in all of the circumstances. In assessing costs, the overriding principle is one of reasonableness.

[19] The costs Order should reflect what the Court views as the fair and reasonable amount that should be paid by the unsuccessful party, rather than an exact measure of the actual costs of the litigant.

[20] In the result, this Court finds that overall, the fair and reasonable amount of costs to be paid by Blue Water Metals to Ms. Weber in relation to this Motion is $7,000, inclusive of HST and disbursements, which shall be paid forthwith.

Other

[21] No costs are ordered against the Respondent Sean Merritt.

Madsen J. Date: June 26, 2018