Court File and Parties

COURT FILE NO.: CV-15-530070 MOTION HEARD: 23 November 2018 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Seabrook et al., Plaintiffs AND: Galty B.V. et al., Defendants

BEFORE: Master Abrams

COUNSEL: M.A. Matus, Counsel for the Moving Parties M.M. Ward, Counsel for the Responding Party

HEARD: November 23, 2018

Reasons for Decision

[1] On behalf of Galty B.V. (“Galty”), Ms. Ward sought an adjournment of the November 23/18 costs hearing. She advised the court that Galty has filed for bankruptcy in the Netherlands. That said, Galty has not yet been declared bankrupt; no Trustee has been appointed; and, Galty continues to provide instructions to Ms. Ward and her firm. The bankruptcy process in the Netherlands is only in the nascent stages and no Order, in Canada, has been made for the recognition of the Netherlander proceeding (pursuant to the provisions of the Bankruptcy and Insolvency Act). That being so, I declined the adjournment.[^1]

[2] La Hougue Financial Management Services Corp. (“La Hougue”) and Pantrust International, S.A. (“Pantrust”) ask of the court that they be awarded $18,573.08 in costs for a motion originally scheduled for May 24/18 that did not proceed. The motion arose from two requests to inspect documents, served on Galty, in respect of documents referenced by the Heinrichs defendants in affidavits filed in support of Galty’s summary judgment motion herein (a motion that has yet to be heard). In January/18, Galty responded to the requests to inspect, with some requests being granted and a large number of requests being refused. La Hougue and Pantrust brought a motion for production of the documents (for which production had been refused) on the basis that the documents were in the power, possession and control of Galty and/or the Heinrichs and are relevant to a proper determination of the issues raised on the summary judgment motion.

[3] After much discussion and after attendances in CPC Court to address the timing of the summary judgment motion and the need to address documentary production issues before the motion can be heard, and in the context of a case conference with me (scheduled to timetable the production motion), counsel advised that Anne Marie Heinrichs would be serving an affidavit of documents by May 7/18.

[4] La Hougue and Pantrust served their motion materials, and a responding record was served by Galty. In that record, Anne Marie Heinrichs confirmed that she would be serving an affidavit of documents which would render the production motion moot.

[5] The May 7th self-imposed deadline (confirmed by the Court on April 17/18) passed, with no affidavit of documents having been served. On May 15/18, counsel for the Heinrichs sent approximately 40,000 pages of documents to the moving parties. No affidavit of documents was served by Ann Marie Heinrichs but the documents sent were said to be relevant documents in Mrs. Heinrichs’ power, possession and control. Ms. Matus says, and I am inclined to agree, that the timing of their production was directly responsive to the fact that a production motion had been brought.

[6] The May 24/18 motion was adjourned to permit La Hougue and Pantrust time to review the documents. Thereafter, La Hougue and Pantrust determined that, with this documentary production having been made, they no longer needed to have their motion heard and decided. They seek costs thrown away, including as they relate to the adjournment request that I declined to grant.

[7] Ms. Ward points out that, while the motion may have been rendered moot by virtue of the May 15/18 production of documents, the documents sought were available to La Hougue and Pantrust in Jersey on terms—terms that La Hougue and Pantrust declined to accept. They were available to them by way of supervised access for which they would have had to pay some costs. They declined to take the time, incur the costs and travel to Jersey. Instead, Anne Marie Heinrich did so. The documents produced by Anne Marie Heinrichs, Ms. Ward says, were not in Mrs. Heinrichs’ possession. They were in her control and power (as much and in the same way as they were in the power and control of La Hougue and Pantrust).

[8] In the circumstances, ought the moving parties to be entitled to costs of their abandoned motion? Yes, but in a lesser amount than has been sought (even though I recognize that the amount sought reflects a discount having been applied).

[9] While it has been suggested that La Hougue and Pantrust had access to the documents at issue, I do not know this to be so. And, the responses to the requests to inspect documents do not say that this is the reason that the requests, at first instance, were declined. Instead, they say that the requests to inspect were/are not proper, simpliciter. The documents were referenced in the affidavits filed in support of Galty’s summary judgment motion and it was reasonable for La Hougue and Pantrust to seek their production.

[10] It was not until after the motion materials were delivered by La Hougue and Pantrust and after responding materials were delivered by Galty that La Hougue and Pantrust knew why the requests to inspect were denied. And, it was only after production of the documents by Anne Marie Heinrichs, with the timing of that production also being responsive to the motion of La Hougue and Pantrust, that La Hougue and Pantrust knew that their motion had indeed been rendered moot.

[11] I have had regard to the submissions made and the costs outline filed by La Hougue and Pantrust. There was no corresponding costs outline filed by Galty, such that it is difficult to gauge reasonable expectations.

[12] The motion was not complex but there was much work that needed to be done to address the issue of documentary production, including: reviewing several hundreds of pages of responses to the requests to inspect documents, preparing motion materials, and reviewing responding motion materials. No costs are being sought for the review of documents produced on May 15/18—at least not as yet.

[13] The issues were important to La Hougue and Pantrust—with it being necessary for them to review and consider documents referenced in the summary judgment motion materials. Whether they could have accessed the documents themselves is not the issue, here. The issue is that these are documents relied upon by Galty. It follows that Galty had access to them in order to reference them. La Hougue and Pantrust, reasonably, sought their own access to these documents through Galty.

[14] I note that, at almost every stage, there were two lawyers and a law clerk doing work for La Hougue and Pantrust--albeit of different levels of seniority and with one or the other taking the lead on each step. Without dockets to review, I can reasonably assume that there was some overlap in efforts made/time spent on the steps taken. Some overlap is inevitable.

[15] In all, and applying a lens of proportionality to the issue of the costs sought, I am fixing costs of the abandoned motion in the amount of $12,573.08 ($10,000.00 + full disbursements) and am ordering them paid to La Hougue and Pantrust forthwith. I decline to award Pantrust and La Hougue any costs attendant on the adjournment request because I think that the request, though denied, was reasonably made. I accept that Galty’s Canadian lawyers thought it prudent that they obtain more information from and about their client before addressing costs, given the bankruptcy filing.

Released: December 6, 2018 (original signed)___________

Master L. Abrams

[^1]: I note that, notwithstanding some skepticism expressed on behalf of La Hougue and Pantrust, I have no reason to believe that Galty’s circumstances were not disclosed to all counsel and the court as soon as Galty’s Canadian lawyers learned of them.