Court File and Parties

COURT FILE NO.: 2511-17 DATE: 2018/08/22 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DAN ANDERSSON and LEO CANADA INC., Plaintiffs AND: GERALDINE AQUINO and ATIF KAMRAN, Defendants

BEFORE: Justice I.F. Leach

COUNSEL: Matthew B. Lerner and Chris Kinnear Hunter, for the plaintiff Mr Andersson Simon Bieber and Jordan Katz, for the plaintiff LEO Canada Inc. John K. Downing, Keegan Boyd and Jack Masterman, for the defendant Mr Kamran No cost submissions filed on behalf of the defendant Ms Aquino

HEARD: In writing

Endorsement

Introduction

[1] On February 5, 2018, I released my substantive decision – since reported as Andersson v. Aquino, [2018] O.J. No. 616 (S.C.J.) – dealing with a motion brought by the defendant Mr Kamran for an order removing Siskinds LLP as counsel of record for the plaintiffs, and compelling Siskinds LLP to search for and produce specified documents.

[2] Ms Aquino indicated her support for Mr Kamran’s motion.

[3] The motion was opposed by the plaintiffs.

[4] For reasons set out in my decision, I agreed with much of the position advanced on behalf of Mr Kamran, and granted relief that included:

• an order removing Siskinds LLP as counsel of record for the plaintiffs in this litigation;
• an order requiring the plaintiffs to have separate legal representation in the litigation; and
• an order addressing the documentary disclosure concerns, (albeit not in the manner requested by Mr Kamran), through mandated steps that would close the pleadings, (subject to later amendment requests), define the parameters of relevance, and lead to finalization and service of affidavits of documents so as to engage the procedures contemplated by Rule 30, all while requiring initial disclosure of certain specified documents within 30 days.

[5] Because my decision had been reserved, the parties had no opportunity to address costs when the motion was argued. In my endorsement, I therefore invited written cost submissions, pursuant to an indicated timetable, if the parties were unable to reach an agreement concerning costs.

[6] In the meantime, for the benefit of the parties, I also indicated my following preliminary views regarding costs, subject to hearing from counsel:

• I felt care should be taken to ensure that the costs properly attributable to this motion were segregated properly from those incurred primarily, or in any event, in relation to other outstanding motions.
• As Mr Kamran was substantially successful on this particular motion, I saw no reason why costs should not follow the event, with costs of this particular motion being made payable forthwith.
• Although Ms Aquino supported Mr Kamran, no independent material was prepared or filed on her behalf, insofar as this particular motion was concerned. Moreover, at the hearing of the motion, counsel for Aquino essentially maintained a “watching brief”, making no submissions apart from briefly indicating agreement with the submissions made by counsel for Mr Kamran. Barring further information to suggest otherwise, I therefore was not inclined, in the circumstances, to award costs of this particular motion to Ms Aquino.
• It seemed to me that costs of this motion should be payable by Mr Andersson alone; i.e., as opposed to having LEO Canada Inc. bear responsibility for any portion of those costs. The corporation nominally was a respondent to Mr Kamran’s motion and opposed it. However, that formal position almost certainly was the result of Siskinds LLP proceeding on the basis that Mr Andersson necessarily should be taken as speaking for himself and LEO Canada Inc., in turn leading to Siskinds LLP accepting a retainer to represent both plaintiffs in this litigation. For the reasons set out in my substantive decision, that should not have been done. In the circumstances, my preliminary view was that the corporation accordingly should not be required to bear the costs of that improper approach. That preliminary view was reinforced by the reality that any costs payable by the corporation effectively would be borne by its shareholders, and in this case those shareholders unquestionably would include at least one of the defendants. [1]

[7] The parties apparently were unable to reach any agreement concerning costs of this particular motion, which in turn led to the tendering of written cost submissions as contemplated by my endorsement.

[8] On or about February 20, 2018, written cost submissions, (with attachments including correspondence sent by Ms Aquino’s counsel to Siskinds LLP on November 2, 2017, an offer to settle served jointly by the defendants on December 1, 2017, a cost outline supported by redacted dockets, and numerous cost authorities), were delivered on behalf of Mr Kamran.

[9] For whatever reason, (but perhaps reflecting acceptance of my indicated preliminary views concerning cost entitlements), Ms Aquino apparently chose not to seek costs of the motion. In any event, I received no written cost submissions tendered on her behalf.

[10] On or about March 4, 2018, as the deadline for delivery of the plaintiffs’ responding written cost submissions was approaching, I independently realized that the deadline for responding written cost submissions from the plaintiffs required modification, in fairness to the plaintiffs. In particular, the orders made on February 2, 2018, effectively had deprived the plaintiffs of readily available legal counsel to consider the matter and ensure preparation of responding written cost submissions by the originally stipulated deadline.

[11] In the circumstances, I sent a letter to all parties indicating that, barring any further order of the court, obtained on notice to the plaintiffs, the deadline for delivery of the plaintiffs’ responding written cost submissions would be extended to two weeks from the date on which a Notice of Change of Lawyers (or Notice of Intention to Act in Person in relation to Mr Andersson), had been served by each plaintiff.

[12] In due course, each plaintiff retained new (and separate) legal representation.

[13] On or about July 10, 2018, responding written cost submissions, (with attachments including a plaintiff bill of costs and numerous cost authorities), were delivered on behalf of Mr Andersson.

[14] On or about July 12, 2018, responding written cost submissions, (without any attachments), were delivered on behalf of the corporate plaintiff.

[15] On or about July 13, 2018, reply written cost submissions then were delivered on behalf of Mr Kamran.

Party Positions

[16] I have reviewed and considered the above submissions in detail and at length, and the following overview should not suggest otherwise. In broad terms, however, the parties’ respective positions may be summarized as follows:

• Mr Kamran submits that costs should follow the event, but seeks costs only from Mr Andersson and opposes any suggestion that the corporate plaintiff pay or contribute to any cost award. Relying in part on the aforesaid offer to settle, Mr Kamran asks that he receive costs of the motion from Andersson on a partial indemnity basis to the date of the offer, and on a substantial indemnity basis thereafter. Having regard to various relevant factors set forth in Rule 57.01, it is suggested that those costs be quantified in the amount of $30,542.76, inclusive of HST.
• Mr Andersson does not dispute that Mr Kamran achieved a measure of success on the relevant motion, and that Mr Kamran accordingly should receive some award of costs. However, Mr Andersson says those costs should be borne by the plaintiff corporation or, in the alternative, that those costs should be borne equally by the two plaintiffs. He disputes the suggestion that costs should be awarded on a substantial indemnity basis, particularly before the case management meeting during which I decided that this particular motion would be given priority hearing over others, including the plaintiffs’ motion for injunctive relief. Having regard to other Rule 57.01 considerations, (including reasonable party expectations and suggested failures by Mr Kamran’s counsel to delegate tasks appropriately to more junior counsel, students or paralegal staff), it is submitted that the costs sought by Mr Kamran are excessive in any event, and that a more reasonable and appropriate all-inclusive quantification of costs would be $12,500.
• The plaintiff corporation, through its new counsel, effectively limits its submissions to opposing any suggestion that it bear any responsibility for costs awarded in relation to this particular motion. (In doing so, it essentially relies on my preliminary views in that regard, set forth above.) The plaintiff corporation otherwise takes no position in relation to Mr Kamran’s entitlement to costs, Mr Andersson’s obligation to pay costs, or the quantum of any cost award.
• Again, no written cost submissions were received on behalf of Ms Aquino. She accordingly has not sought costs in relation to this particular motion, and no one has suggested that she bear any responsibility for costs of the motion.

[17] Before further consideration and assessment of these respective positions, I pause to note a number of general principles applicable to such cost determinations.

General principles

[18] Pursuant to section 131 of the Courts of Justice Act, R.S.O. 1990, c.C.43, as amended, and subject to the provisions of an Act or rules of court, “the costs of and incidental to a 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 the costs shall be paid”.

[19] This is supplemented by the provisions of Rule 57.01, subsection (1) of which lists a broad range of factors the court may consider when exercising its discretion to award costs pursuant to section 131.

[20] Our courts repeatedly have emphasized that cost awards must not be a simple mechanical or mathematical calculation; e.g., focused merely on details of time spent multiplied by hourly rates, or a tabulation of disbursements actually incurred.

[21] Rather, all cost claims are subject to the “overriding principle of reasonableness”, as applied to the factual matrix of the case, pursuant to the ultimate “cross check” required by such authorities as Boucher, Moon and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC (2005), , 75 O.R. (3d) 638 (C.A.), and Anderson v. St Jude Medical Inc. (2006), , 264 D.L.R. (4th) 557 (Ont.Div.Ct.).

[22] The overall goal is to award costs in an amount that is “fair and reasonable for the unsuccessful party to pay in a particular proceeding”, rather than a sum tailored to an exact measure of the actual costs of a successful litigant. See Boucher v. Public Accountants Council for the Province of Ontario, , [2004] O.J. No. 2634 (C.A.), at paragraph 26, and Zesta Engineering Ltd. v. Cloutier, , [2002] O.J. no. 4495 (C.A.), at paragraph 4.

Entitlement

[23] As noted above, no one disputes that Mr Kamran is entitled to some measure of costs in relation to this particular motion.

[24] I independently agree, having regard to the reality that Mr Kamran succeeded in obtaining significant requested relief through his motion.

[25] Mr Andersson raises legitimate points about the degree of that success. However, I think, (as Mr Andersson’s own submissions essentially suggest), that such concerns are more appropriately addressed in this case by factoring relative success into cost quantification rather than entitlement.

[26] As indicated in my earlier endorsement, my preliminary view was that Mr Kamran was substantially successful on this particular motion, and that costs accordingly should follow the event. My views in that regard remain unchanged, after hearing from the parties.

[27] My preliminary view that such costs should be borne by Mr Andersson alone, without any contribution from the plaintiff corporation, also remains unchanged.

[28] It was submitted on Mr Andersson’s behalf that the plaintiff corporation should be responsible for such costs because the conflict of interest considerations I identified in my substantive decision centred in large measure on “lawyer as witness” concerns that would arise in the presentation of necessary evidence relating to the affairs of the plaintiff corporation.

[29] It also was submitted that making Mr Andersson solely responsible for costs of the motion would “doubly punish” him for the plaintiff corporation having retained Siskinds LLP as litigation counsel, especially bearing in mind the additional cost Mr Andersson has incurred in retaining and briefing new litigation counsel.

[30] I disagree.

[31] Such submissions ignore the fundamental reality that all of the conflict of interest concerns I identified -- including but not limited to “lawyer as witness” complications -- stemmed from Mr Andersson proceeding on an improper assumption, embraced by Siskinds LLP, that his interests were synonymous with those of LEO Canada Inc., and that he alone necessarily should be taken as speaking for himself and the corporation.

[32] It effectively was Mr Andersson alone who decided that Siskinds LLP should be retained as litigation counsel in this dispute, that an action should be commenced jointly by himself and LEO Canada Inc., and that Siskinds LLP should represent both Mr Andersson and LEO Canada Inc. in the litigation. Had Mr Andersson not proceeded in that manner, the plaintiff corporation would not have been placed in the situation it was, and indeed might never have been a litigant in what essentially is a dispute between shareholders and/or putative shareholders.

[33] Such submissions also do nothing to address the concern, emphasized in the authorities and my previous endorsement, about the practical effect of having a corporation pay the costs of a dispute between its shareholders and/or putative shareholders.

[34] Costs borne by a corporation effectively are borne by its shareholders. In this case, the shareholders of LEO Canada Inc. unquestionably include Ms Aquino and, depending on the substantive outcome of the litigation, may include both Ms Aquino and Mr Kamran as majority shareholders. I see no reason why Ms Aquino and/or Mr Kamran effectively should be obliged to absorb, through any such shareholding, a portion of responsibility for an adverse cost award payable to Mr Kamran, in relation to a motion, brought by Mr Kamran and supported by Ms Aquino, arising from the conduct of Mr Andersson.

[35] As for the suggestion that Mr Andersson will be “doubly punished” by such a cost award, in my view the submission proceeds on a faulty premise.

[36] As noted by Justice Nordheimer (as he then was) in Lawyers Professional Indemnity Co. v. Geto Investments Ltd., [2002] O.J. No. 921 (S.C.J.), at paragraphs 14-15, courts have emphasized for more than 150 years -- through now ancient decisions such as Harold v. Smith (1860), 5 H. & N. 381 (Eng.Exch.), and more modern appellate authorities such as Clark v. Nash, [1990] B.C.J. No. 727 (C.A.), and Fong v. Chan (1999), , 46 O.R. (3d) 330 (C.A.) -- that the fundamental purpose of cost awards is indemnity of the successful party for legal expenses incurred, and that perceptions of cost awards as some form of punishment therefore are misplaced and inappropriate. In particular:

Costs as between party and party are given by the law as an indemnity to the person entitled to them: they are not imposed as a punishment on the party who pays them, nor given as a bonus to the party who receives them.

[37] Of course, the obligation of Mr Andersson to provide cost indemnification may be unwanted and possibly onerous, particularly when coupled with other simultaneous financial commitments such as the expense associated with the retention of new counsel.

[38] However, from the perspective of Mr Kamran, the need to bring and argue the relevant motion, and incur the associated costs of doing so, no doubt was unwanted and onerous as well. Again, the focus is on his indemnification.

[39] Moreover, as already noted, the situation in which Mr Andersson now finds himself effectively is one of his own making.

[40] For the above reasons, in my view responsibility for the cost indemnification to be awarded to Mr Kamran should be borne by Mr Andersson alone, without LEO Canada Inc. having any responsibility to pay or contribute to such costs.

Scale

[41] As noted above, it was submitted on behalf of Mr Kamran that he should receive at least a portion of his cost indemnification, (i.e., that post-dating the settlement offer served on December 1, 2018), on a substantial indemnity basis.

[42] Leaving aside the possible implications of the settlement offer, in my view there is no basis in this particular instance for awarding any costs on a substantial indemnity basis.

[43] In particular, although the court has a broad discretion in relation to costs, confirmed by s.131 of the Courts of Justice Act, supra, as expanded by Rule 57.01 of the Rules of Civil Procedure, our appellate courts repeatedly have emphasized that awards of costs on a partial indemnity basis generally strike the proper balance as to the burden of costs that should be borne by the “winner”, and that elevated cost awards should be reserved for “rare and most exceptional” cases. See, for example, Foulis v. Robinson (1987), 21 O.R. (2d) 179 (C.A.), and Isaacs v. MHG International Ltd., (1984), , 45 O.R. (2d) 693 (C.A.)

[44] In that regard, the sort of conduct generally meriting elevated cost awards has been described in various ways.

[45] In Young v. Young, , [1993] 4 S.C.R. 3, at p.134, McLachlin J. indicated that elevated cost awards are warranted “only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties”.

[46] In Mortimer v. Cameron (1994), , 17 O.R. (3d) 1 (C.A.), and McBride Metal Fabricating Corp. v. H&W Sales Co. (2002), , 59 O.R. (3d) 97, whose principles were echoed and emphasized again by the Court of Appeal in Davies v. Clarington, 2009 ONCA 722, [2009] O.J. No. 4236 (C.A.), conduct warranting elevated cost awards was described as “reprehensible”, “egregious”, or “acts that clearly indicated an abuse of process”, justifying enhanced costs as a form of chastisement.

[47] In my view, there was no such conduct in this instance on the part of Mr Andersson. Mr Kamran’s request to have some of his costs indemnified on a substantial indemnity basis therefore depends entirely on the import, if any, of the settlement offer served by the defendants on December 1, 2017.

[48] In that settlement offer, the defendants proposed to “settle the motion” brought by Mr Kamran “to remove Siskinds LLP as counsel of record in this proceeding”, (then returnable on December 22, 2017), on terms whereby:

i. the plaintiffs would consent to an order removing Siskinds LLP as counsel of record in this action; ii. the plaintiffs would pay costs of the motion “on a partial indemnity scale and in a combined amount not exceeding $8,000” if the offer was accepted before 5:00pm on December 5, 2017; and iii. the plaintiffs would pay costs of the motion “on a partial indemnity scale in an amount to be agreed upon or assessed” if the offer was accepted after 5:00pm on December 5, 2017.

[49] On its face, the offer also indicated that it would expire one minute after commencement of the motion’s hearing, unless it was withdrawn in writing at some earlier point. It was not withdrawn, and accordingly remained open for acceptance up until the time of the motion’s hearing on January 31, 2018.

[50] Mr Kamran now effectively relies on the offer, and the provisions of Rules 49.02 and 49.10(1), in support of his contention that he should be entitled to partial indemnity costs up until December 5, 2017, and substantial indemnity costs thereafter.

[51] Rule 49.02 reads as follows:

49.02 (1) A party to a proceeding may serve on any other party an offer to settle any one or more of the claims to the proceeding on the terms specified in the offer to settle (Form 49A).

(2) Subrule (1) and rules 49.03 to 49.14 also apply to motions, with necessary modifications.

[52] Rule 49.10(1) reads as follows:

49.10 (1) Where an offer to settle,

(a) is made at least seven days before the commencement of a hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing; and

(c) is not accepted by the defendant,

and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.

[53] For present purposes, I accept the submission, made on behalf of Mr Kamran, but reflected in authorities such as Ford v. F. Hoffman-La Roche Ltd., , [2005] O.J. No. 5427 (Div.Ct.), that in the context of interlocutory motions, the “necessary modifications” to Rule 49.10(1), contemplated by Rule 49.02(2), effectively require a moving party making a settlement offer to be put in the position of “plaintiff” and the responding party to be put in the position of “defendant”.

[54] In my view, that sensibly reflects the legislative scheme, set forth in the original text of Rule 49.10, whereby a party seeking relief is encouraged, by the cost incentives set out therein, to make formal offers of compromise in advance of a hearing, for consideration by the party resisting the granting of such relief.

[55] On that basis, Mr Kamran submits that the relief he obtained through my substantive decision surpassed the outcome suggested by the defendants’ settlement offer, (i.e., insofar as I made an order removing Siskinds LLP as counsel of record in this proceeding but granted additional relief), and that he accordingly should be entitled to his costs on a substantial indemnity basis from the date the offer was served.

[56] In approaching that submission, I certainly am mindful of the need to give proper weight to the policy underlying the rule, (i.e., promotion of settlement), the importance of predictability and even application of the rule, and the need to avoid departures from the presumptive consequences of Rule 49.10 only where the interests of justice require such a departure. See Niagara Structural Steel (St. Catharines Ltd.) v. W.D. Laflamme Ltd. (1987), 58 O.R. (2d) 163 (C.A.).

[57] At the same time, it must also be remembered that the presumptive consequences of Rule 49.10 are not automatic. See K.(K.) v. G. (K.W.) (2008), 2008 ONCA 489, 90 O.R. (3d) 481 (C.A.). Indeed, the rule itself expressly confirms that the court retains a discretion, in appropriate cases, to “order otherwise”.

[58] After considerable reflection, I am not inclined, despite the defendants’ settlement offer, to award any element of costs on a substantial indemnity basis in the particular circumstances of this case.

[59] I say that for a number of reasons, which include the following.

[60] First, the offer is technically deficient, insofar as it fails to make clear whether the defendants were extending a global and non-severable offer, (requiring acceptance by both of the named plaintiffs), or a combination of severable offers forwarded to each plaintiff simultaneously, (capable of individual plaintiff acceptance).

[61] In that regard, our courts have emphasized that non-severable offers made to multiple plaintiffs are unacceptable and contrary to Rule 49 because they raise the danger of defendants encouraging plaintiffs to play their possibly divergent interests off against each other; a concern that resonates in this instance where, for the reasons outlined in my earlier endorsement, there the interests of Mr Andersson and LEO Canada Inc. did not necessarily coincide. If one plaintiff cannot accept the offer without one or more other plaintiffs accepting the offer, the offer is not regarded as proper or sufficient to engage Rule 49.10. See, for example: Dryden v. Campbell Estate, [2001] O.J. No. 4095 (S.C.J.); Wilson v. Quinn, [2002] O.J. No. 120 (S.C.J.); Lumsden v. Delpeche, [2003] O.J. No. 2248 (S.C.J.); Onisiforou v. Rose (1998), , 41 O.R. (3d) 737 (C.A.); and Mayer v. 1474479 Ontario Inc., 2014 ONSC 2622, [2014] O.J. No. 1984 (S.C.J.).

[62] Of course, a technical deficiency does not necessarily make any settlement offer irrelevant. To the contrary, in addition to the broad cost discretion conferred on the court by s.131 of the Courts of Justice Act, supra, Rule 49.13 of the Rules of Civil Procedure expressly confirms that, despite a number of identified rules, (including Rule 49.10), the court, in exercising its discretion with respect to costs, “may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer”. [Emphasis added.]

[63] However, I think the failure to make the offer severable has importance in these particular circumstances.

[64] Second, I am mindful of the admonition, repeatedly emphasized by our courts, and our Court of Appeal in particular, that the underlying policy of Rule 49 requires that settlement offers must be clear – indeed, “crystal clear” – before Rule 49.10 and its presumptive cost consequences will be engaged. Uncertainty or lack of clarity in any aspect of an offer may prevent a party from showing that the judgment obtained was “as favourable as the terms of the offer to settle, or more or less favourable”, as the case may be, under Rule 49.10(3). See, for example, Malik v. Sirois, , [2003] O.J. No. 3488 (C.A.), and Rooney v. Graham (2001), , 53 O.R. (3d) 685 (C.A.).

[65] In this particular instance, the express substantive terms of the settlement offer focused exclusively on one particular aspect of the motion; i.e., the defendants’ desire for an order removing Siskinds LLP as counsel of record in the proceeding.

[66] However, there were numerous other important outstanding issues raised by Mr Kamran’s motion, such as:

• whether the plaintiffs could be represented by the same counsel, whoever that new counsel might be;
• whether the plaintiffs were obliged to make certain desired documentary disclosures; and
• whether various extraordinary measures to govern and police document disclosure efforts were required because of implicit if not explicit suggestions that the plaintiffs and various lawyers employed at Siskinds LLP could not be trusted to carry out their duties honestly, and comply with orders of the court, as officers of the court, without such extraordinary oversight.

[67] In my view, the defendants did not make it sufficiently clear whether their offer “to settle the motion”, by an order simply removing Siskinds LLP as existing counsel of record was:

a. intended to bring finality to the other significant issues Mr Kamran had raised – for example, by the defendants formally abandoning and/or forever waiving any objection to representation of Mr Andersson and LEO Canada Inc. by common counsel, as well as their right to pursue their stated desire for certain documentary production, and/or their right to pursue court directions that such disclosure would proceed in a certain manner subject to extraordinary procedures and oversight; or b. merely intended to terminate the current motion before the court, (e.g., by the initial step of removing Siskinds LLP as counsel of record), while leaving it open to the defendants to raise such additional issues again at a later date, (e.g., after the plaintiffs had retained new counsel).

[68] Having regard to the substantive submissions I received, (e.g., emphasizing inherent and unavoidable conflict of interest implications of common plaintiff representation in this case, as well as the perceived vital importance of the documentary disclosure sought by the defendants), I find it hard to imagine that the former was the defendants’ intention. However, if it was not, it is difficult to see how the settlement offer promoted the sort of finality to all disputed matters, raised by the motion, that Rule 49.10 is designed to encourage.

[69] For present purposes, the central point now being emphasized is that the settlement offer lacked sufficient clarity in relation to fundamentally important matters.

[70] Presented with such uncertainty, I do not think Mr Andersson and his then counsel of record should be faulted for failing to accept the settlement offer, effectively leaving the other significant issues raised by the motion outstanding.

[71] At the very least, it was important to have the question of possible common representation resolved as well, before the plaintiffs were put in the position of having to retain counsel.

[72] Similarly, faced with inflammatory suggestions in Mr Kamran’s motion material that the plaintiffs and particular lawyers assisting them could not be trusted to act honestly and abide by production orders of the court, I think it quite understandable that the plaintiffs and their former counsel may have wanted such disparaging suggestions laid to rest at the earliest opportunity.

[73] In my view, a third reason for not applying the presumptive consequences of Rule 49.10 is the extraordinary broader context in which this particular motion was brought and argued, which justifies a discretionary departure from the presumptive consequences of Rule 49.10 in any event.

[74] I endeavoured to summarize that rather complicated context in my endorsement released on January 31, 2018, since reported as Andersson v. Aquino, [2018] O.J. No. 495 (S.C.J.); a context which, in my view, makes it inappropriate to consider this particular motion and the defendants’ settlement offer in isolation. In particular:

• This was one of many simultaneous motions before the court, with considerable uncertainty at the outset as to which motion or motions would be given priority.
• From their perspective, the plaintiffs had a vested interest in holding on to their current counsel of record, in order to proceed as quickly as possible with their outstanding motion for interlocutory injunctive relief; relief which was said to be of critical and urgent importance.
• When I effectively was called upon to exercise initial case management over this matter, and determine which motions would be given immediate hearing priority, I decided that Siskinds LLP would be permitted to argue certain matters, (e.g., the defendants’ contempt motion and the possible need for early modifications to the initial interim order made by Justice Templeton), notwithstanding the outstanding conflict of interest concerns raised by Mr Kamran’s motion seeking removal of Siskinds LLP as counsel of record in this proceeding. I did so because, in my view, the pressing need to have those issues addressed and resolved, after argument by fully represented parties, outweighed the urgency of addressing the alleged conflict of interest concerns, the addressing of which looked likely to result in considerable delay if the plaintiffs were indeed required to retain and instruct new counsel.
• While it is easy in hindsight to say that the outcome of the motion to remove Siskinds LLP immediately as counsel of record was a foregone conclusion, at the time the settlement offer was served, and up until the time of my decision, the plaintiffs continued to ask and hope that Siskinds LLP would be permitted to remain on the record at least temporarily, until the plaintiffs’ motion for urgent interlocutory injunctive relief could be argued and decided. Given my earlier exercise of discretion, that was not an inherently unreasonable or forlorn hope. It arguably might have been, had the motion been brought in isolation. The actual context for consideration of the defendants’ settlement offer, and argument of the motion, nevertheless was significantly different.

[75] For such reasons, I think all costs awarded to Mr Kamran in relation to this particular motion should be on a partial indemnity basis.

Quantification

[76] In arriving at a global determination of a quantified cost award that is “fair and reasonable” in relation to this particular motion, having regard to all the circumstances, my considerations include but are not limited to those outlined below.

AMOUNT CLAIMED AND RECOVERED – RULE 57.01(1)(a)

[77] Rule 57.01(1)(a) permits the court to consider “the amount claimed and the amount recovered in the proceeding”.

[78] As stated, the wording of that factor nominally focuses on financial amounts claimed and recovered, which obviously has no literal “fit” in the circumstances of this particular motion. However, the broader underlying consideration is the degree to which a party to a proceeding or step in the proceeding may or may not have been successful in obtaining requested relief.

[79] I already have noted my preliminary review that Mr Kamran achieved substantial success on the motion. In particular, Siskinds LLP was removed as counsel of record, the plaintiffs were required to obtain separate representation, and I ordered certain productions to be made immediately – with further measures ordered to facilitate progress towards other disclosure.

[80] However, Mr Kamran was not entirely successful. In particular, for the reasons set forth in my substantive decision, I denied Mr Kamran’s request for more sweeping immediate production orders, and the imposition of extraordinary measures to supervise/oversee disclosure of documents by Siskinds LLP, including requested directives that certain lawyers at Siskinds LLP effectively be excluded from having any further meaningful involvement with the matter. Again, I instead made more modest directions, designed to engage the normal procedures of Rule 30.

[81] If one looks at the matter in a quantitative rather than qualitative way, Mr Kamran arguably obtained the majority of the relief he was seeking.

[82] In my view, however, the extraordinary production and oversight measures sought by Mr Kamran were significant, particularly insofar as they involved obvious suggestions of determined dishonesty on the part of the plaintiffs and identified lawyers at Siskinds LLP who are officers of the court.

[83] In that regard, I agree with current counsel for Mr Andersson that those suggestions were not supported by the record, and needlessly inflammatory.

[84] From my objective perspective, this sadly was an instance where pronounced animosity and distrust between litigants unfortunately contaminated the manner in which counsel were dealing with each other, which in turn led to the making of inappropriate attacks on the personal integrity of counsel. In my view, successful opposition to such inappropriate suggestions, and their formal rejection, certainly was not a matter of marginal importance.

[85] In short, while Mr Kamran obtained substantial relief, success on the motion nevertheless was divided in significant respects.

PRINCIPLE OF INDEMNITY – RULE 57.01(1)(0.a)

[86] Rule 57.01(0.a) permits the court to consider, in exercising its cost discretion, “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”.

[87] As noted above, Mr Kamran’s written cost submissions included a costs outline, which makes it clear that indemnification is being claimed only for legal fees, and not for any disbursements.

[88] The costs outline also includes information concerning the years of experience of the various lawyers involved in the motion, as well as an indication of their respective hourly rates, and corresponding partial and substantial indemnity fee rates used for calculations.

[89] The responding cost submissions tendered on behalf of Mr Andersson do not question that lawyer experience, or take issue with the reasonableness of the various rates outlined in Mr Kamran’s costs outline. For present purposes, I therefore will accept the indicated rates as well – although it seems to me that, at least here in London, they arguably push the boundaries of recoverable hourly rates in certain ways, such as the hourly rate charged for the services of lawyers with less than 10 years of experience.

[90] The submissions filed on behalf of Mr Andersson nevertheless do take issue with the amount of hours spent on various tasks by certain lawyers, on the basis that certain work (and administrative tasks in particular) reasonably should have been delegated to more junior lawyers or paralegal staff.

[91] Such concerns are addressed in part, I think, by the indication in Mr Kamran’s reply cost submissions that cost indemnification is being sought only for legal fees charged by lawyers, as the general practice of the law firm representing Mr Kamran is to “not docket or bill for time provided by its support staff”. In other words, (if I understand the situation correctly), certain tasks actually were delegated to and completed by non-lawyers, but Mr Kamran simply claims no cost indemnification in that regard.

[92] That nevertheless leaves, for consideration, concerns about work inappropriately being done by more senior and expensive counsel, and potential over-lawyering. That frequently is a concern in situations such as the one before me, (not atypical of acrimonious high stakes litigation between apparently successful and well-funded parties), where multiple lawyers are involved in the preparation and argument of a motion.

[93] In that regard, I am mindful of the general admonition, voiced by Justice Nordheimer (as he then was) in Basedo v. University Health Network, [2002] O.J. No. 597 (S.C.J.), but embraced by our Court of Appeal in Boucher v. Public Accountants Council (Ontario), supra, at paragraph 27, that “it is not the role of the court to second-guess the time spent by counsel unless it is manifestly unreasonable in the sense that the total time spent is clearly excessive or the matter has been overly lawyered”.

[94] On the other hand, cost indemnification generally is tempered by the need for all involved in our justice system, (including but not limited to those involved in high stakes litigation), to focus on cost control and proportionality, as emphasized by our Rules of Civil Procedure. For example, this is reflected in:

• Rule 1.04(1), the provisions of which include a direction to construe the rules, (and therefore Rule 57.01 as well), in a manner that will promote securing “the least expensive” determination of a civil proceeding on its merits; and
• Rule 1.04(1.1), which obliges the court to apply the rules and make orders, (including those relating to cost awards), in a manner “proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding”.

[95] In this case, assessment of possible over-lawyering is complicated somewhat by the reality that original docket entries frequently were directed to tasks relating to more than this particular motion. Counsel quite properly have made efforts to apportion and segregate the time devoted to this motion after the fact, (e.g., by the application of percentages), but such efforts inherently were belated and no doubt somewhat arbitrary.

[96] For the most part, and considering the hours claimed in preparation for this particular motion in isolation, I do not think it can be said that the hours spent on this particular motion were “manifestly unreasonable” or “clearly excessive”.

[97] However, there are numerous aspects of the docket entries and hours claimed that give me pause, and I think some reasonable discounting should be made in relation to such matters as overlapping review of material and issues by multiple counsel, the conduct of primary legal research by partners, and junior counsel attendance at motions not commensurate with active participation.

[98] More generally, I am mindful of the reality that this motion was not prepared in isolation, but that such preparations effectively were leveraged by work done in relation to other motions, in respect of which costs have yet to be claimed and/or determined; e.g., insofar as evidence filed in relation to those other motions formed, in large measure, the relevant evidentiary context in which this particular motion was argued and decided.

[99] In short, this particular motion, prepared at the same time as others relying on the same underlying factual matrix, should not be viewed as requiring the same level of focused preparation that would have been required had the motion been brought and prepared in isolation.

REASONABLE EXPECTATIONS OF UNSUCCESSFUL PARTY – RULE 57.01(1)(0.b)

[100] As noted above, Mr Andersson filed his own bill of costs, (albeit without supporting dockets), indicating that his own partial indemnity costs attributable to the motion, (calculated at the rate of 65% of his actual legal expense), came to $12,709.92.

[101] The absence of particularized dockets makes it difficult to explore the precise nature of the completed legal work underlying that bill of costs, but it seems clear that there is a significant disconnect between the expectations of Mr Andersson and those of Mr Kamran, in terms of what the reasonable costs of the relevant motion should have been.

[102] Moreover, that disconnect is even greater when one considers that the bill of costs tendered by Mr Andersson does include work done by students and paralegal staff.

[103] Based on the material before me, the disparity also stems in part from the involvement of fewer lawyers on certain tasks, and the use of counsel with significantly lower hourly rates than those of the more senior lawyers at the law firm retained by Mr Kamran.

[104] It appears that counsel retained by Mr Kamran also spent and/or claimed less time in relation to preparation for certain tasks and hearings.

[105] Given the emphasized importance of the representation motion to Mr Andersson, I think it unlikely that the legal work and expenses committed to the motion on his behalf was anything other than an accurate reflection of his views concerning what was reasonable, if not more than reasonable, in the circumstances.

COMPLEXITY OF PROCEEDING AND IMPORTANCE OF ISSUES – RULES 57.01(1)(c) AND RULES 57.01(1)(d)

[106] Rules 57.01(1)(c) and 57.01(1)(d) permit the court to consider, in exercising its cost discretion, “the complexity of the proceeding” and “the importance of the issues”.

[107] For the reasons outlined in my earlier endorsements, I think it obvious that this litigation involves a complex factual matrix, which in turn added complexity to a determination of how undisputed legal principles should be applied in the circumstances.

[108] I also think it clear that the issues raised by the motion were of fundamental importance to the parties, (and to the court as well), insofar as their determination would control and influence, in large measure, how future steps in the litigation would unfold.

CONDUCT AND/OR STEPS THAT LENGTHENED PROCEEDING – RULES 57.01(1)(e) AND 57.01(1)(f)

[109] Rule 57.01(1)(e) permits the court to consider, in exercising its cost discretion, “the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding”.

[110] Rule 57.01(1)(f) permits the court to consider whether any step in the proceeding was “improper, vexatious or unnecessary”, or “taken through negligence, mistake or excessive caution”.

[111] The submissions filed on behalf of Mr Kamran emphasize that conflict of interest issues were raised by his counsel at a very stage in the litigation, in counsel correspondence and in open court, during initial appearances before Justice Templeton. This is coupled with an argument that Mr Andersson simply should have conceded the points raised in that regard, without the necessity of a motion.

[112] While I am tempted to agree with that assessment, I also am mindful of the dangers of assessing such arguments with the benefit of hindsight.

[113] As noted above, having regard to the broader context of this case, there were additional realities and concerns extending beyond the question of whether Siskinds LLP should be removed as counsel of record, including the additional important question of when that should happen, if such an order was going to be made at all.

[114] Again, during what essentially constituted my initial case management of this litigation, I effectively decided that the need to address other urgent concerns justified, at the very least, a temporary “standing down” of the conflict of interest issues raised by the defendants; i.e., so that the other pressing issues could be addressed immediately by fully represented parties, without the delays that inevitably would follow if and when the plaintiffs were required to retain new counsel.

[115] In the circumstances, (and having particular regard to the plaintiffs’ understandable desire to have their motion for urgent injunctive relief heard and determined as soon as possible), I do not think the plaintiffs’ resistance to Mr Kamran’s motion “unnecessarily” or unreasonably lengthened the duration of the proceedings.

[116] Moreover, all things considered, the representation motion was heard and determined relatively quickly, at an early stage of the proceedings.

[117] As for Rule 57.01(1)(f), I am not inclined to regard any of Mr Andersson’s conduct in relation to the motion as “improper, vexatious or unnecessary”, and the submissions tendered on behalf of Mr Kamran did not really suggest otherwise. Nor was any relevant negligence, mistake or excessive caution on the part of Mr Andersson or his prior counsel identified or relied upon.

[118] As noted above, I nevertheless was disturbed by the implicit if not overt suggestions, in the motion material filed by Mr Kamran, that various lawyers at Siskinds LLP could not be trusted, even as officers of the court, to act honestly and abide by court orders in relation to documentary disclosure.

[119] Again, I think the record did not support such very serious allegations, which in the circumstances were not only unnecessary but also highly inflammatory. In my view, that in turn ensured that the motion almost certainly would be approached in a highly adversarial fashion, with little prospect of civil compromise.

[120] In my view, the making of such allegations should not be lightly disregarded, merely because they were rejected and unsuccessful. To the contrary, I think a measure of cost claim discounting is appropriate as a form of chastisement in this particular instance, and to discourage all concerned from ready resort to any accusations of a similar nature in the future course of what seems destined to be lengthy and hard-fought litigation.

REFUSAL TO MAKE APPROPRIATE ADMISSIONS – RULE 57.01(1)(g)

[121] In due course, it may be established through the litigation that certain disputed events, (e.g., concerning instructions that may or may not have been given by Mr Andersson, and the receipt or non-receipt of executed share transfer documentation), in turn relevant to the need for evidence from lawyers at Siskinds LLP, should have been admitted by one side or the other.

[122] However, at this stage of the proceedings, I am unable to say this was a relevant factor or consideration in the determination of an appropriate cost award in relation to the motion.

ANY OTHER MATTER RELEVANT TO COSTS – RULE 57.01(1)(i)

[123] The only “other” relevant matter identified in the parties’ respective cost submissions was the impact (if any) of the settlement offer served by the defendants, which I already have addressed.

Conclusion

[124] It has been said many times, and in many ways, that discretionary cost determinations are far from an exact science.

[125] Again, the overall goal is to award costs in an amount that is fair and reasonable in relation to a particular proceeding or step in a proceeding, having examined various factors such as those outlined in Rule 57.01.

[126] Having regard to all the circumstances of this particular case, including the various countervailing considerations explored in detail above, and the overriding principle of reasonableness, I think justice will be served if my discretion is exercised so as to award Mr Kamran his costs of the motion, fixed in the all-inclusive amount of $17,000.00.

[127] An order shall go accordingly.

“Justice I.F. Leach” Justice I.F. Leach

Date: August 22, 2018

[1] As noted in my substantive decision, Ms Aquino holds at least one share in LEO Canada Inc., even on the theory of the case advanced to date by the plaintiffs. Of course, if the theory advanced by the defendants ultimately is accepted, then Mr Kamran and Ms Aquino are really the majority shareholders in LEO Canada. That would compound the injustice of making all shareholders of the corporation effectively contribute to payment of costs awarded against the corporation for formally opposing this particular motion.