Court File and Parties

COURT FILE NOs.: 16-59186, 18-64213 DATE: December 18, 2018

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

Verge Insurance Brokers Limited, 172968 Ontario Inc., Marick Bros. Investments Inc. and Mark Sherk Stephen Gleave and Ian Dick, for the Plaintiffs Plaintiffs

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Richard Sherk, Daniel Sherk, Martin, Merry & Reid Limited and Cal Schulz Insurance Brokers Ltd., Andree Senn, Brenda French and Ruth Pluska George Limberis, for the defendant Daniel Sherk Defendants

A N D B E T W E E N:

Deloitte Forensic Inc. and Deloitte LLP Wade Morris, for Applicants Applicants

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Daniel Sherk and Verge Insurance Brokers Limited George Limberis, for the respondent Daniel Sherk; Stephen Gleave and Ian Dick for Plaintiffs Respondents

HEARD: in writing

Endorsement on Costs

Introduction:

[1] There were three recent motions before me, as the case management judge, with regards to the above captioned matters. Two of the motions were resolved on the morning of the hearing; that being the motion by Deloitte as to the amount owing to them, which was unopposed and an appropriate endorsement to that effect has been crafted by counsel on consent. The second motion was by Verge to compel Daniel Sherk to produce a data stick from Digital Defence which Daniel Sherk has now agreed to produce.

[2] The only motion argued before me was brought by Daniel Sherk to have Verge pay the total costs of Deloitte for their work in recreating, preserving, and analyzing various backup tapes of Verge’s electronic activities between 2011 and 2014 for production of relevant documents.

[3] Daniel Sherk was unsuccessful on that motion. (2018 ONSC 5128). Daniel Sherk has sought leave to appeal that decision to the Divisional Court. He requests that any cost award on that motion be stayed pending the outcome of his request for leave to appeal. Such a request was opposed by Verge. I dismissed that request as Verge is entitled to its costs now. If I have erred in my decision on the motion, costs can easily be corrected by the appellate court without prejudice to either party in my view.

[4] The parties were invited to agree on costs, but given the history of this very acrimonious litigation it is not surprising that there was no agreement. As such counsel have provided written submissions on costs for my consideration and ruling.

Facts:

[5] Deloitte has provided forensic expert advice and reports to the parties in this extensive and long running litigation.

[6] They ceased any active involvement in the litigation some time ago.

[7] Deloitte’s retainer was at the request of Daniel Sherk as per the order of Quinn, J. dated March 19, 2015.

[8] A motion was brought before Turnbull, J. who ordered that a portion of the work completed by Deloitte was to be paid by the defendant Verge. This was eventually done by Verge.

[9] The balance of Deloitte’s account has not been paid, and it is a substantial amount. Daniel Sherk took the position that Verge should pay the balance of this account. Not surprisingly, no agreement could be reached, and the issue finally came before me to decide. My decision on this discreet issue was released on September 6, 2018 (2018 ONSC 5128) wherein I ruled that the balance of the Deloitte account was the responsibility of Daniel Sherk.

[10] Verge now requests costs on a substantial indemnity basis in the amount of $79,629.31 plus $18,010.51 for the Deloitte application.

[11] Daniel Sherk does not dispute that Verge is entitled to some costs but that the amounts claimed are excessive. He also urges me to conclude that no costs are payable to Verge on the Deloitte application as their involvement should have been minimal, if at all.

[12] In dealing with the Deloitte application I agree that Verge’s involvement should have been virtually nonexistent once it was determined what portion of the account was the responsibility of Verge for the 13 tapes. I agree that prior to that time, Verge might have had some costs to establish what it owed and what was in dispute, however, in my view that is general preparation for trial that Verge may seek to recover as costs at the end of the litigation if successful. I do not consider that time to be part of the very uncomplicated application of Deloitte’s as to the balance owing to it. Indeed Verge never disputed the amount owing to Deloitte. It only disputed Daniel Sherk’s motion that it was responsible to pay the balance of the Deloitte account. I therefore conclude that Verge’s costs on the Deloitte motion will be fixed at $1500.00 all-inclusive payable by Daniel Sherk.

[13] Verge was completely successful in defeating the motion by Daniel Sherk seeking a ruling that Verge was responsible for the balance of the Deloitte account. In my view Verge is entitled to partial indemnity costs. There was nothing in Daniel Sherk’s motion, in my view, that would justify any sanction by this court such that substantial indemnity costs are justified. See: Davies v. The Corporation of Municipality of Clarington et al., 2009 ONCA 722 as paras. 30 – 31.

[14] I note that the draft bill of costs of Daniel Sherk on a partial indemnity basis is $31,863.00.

[15] This was an uncomplicated motion with only one issue of interpreting two prior orders of judges as to who had the responsibility of paying for this disbursement. The motion was argued in half a day and indeed Verge’s submissions took less than an hour. I agree with the submissions of Daniel Sherk that there appears to be some double counting in Verge’s draft bill. I do not think some of the items are truly part of this relatively simple motion, and they are more general preparation for trial. Most importantly, senior counsel appears to have spent, in my view, an inordinate amount of time on this simple motion that could well have been handled for the most part by junior counsel.

[16] I have reflected on and considered Rule 57.01 as well as S. 131 of the Courts of Justice Act. Proportionality must also come into play in these circumstances. R. 1.04(1), (1.1).

[17] The Court of Appeal has stated that the overriding principle for a court in exercising its discretion when awarding costs is reasonableness. Davies v. Clarington (Municipality) 2009 ONCA 722, [2009] 100 O.R. (3rd) 66 (OCA) at paras. 51 and 52.

[18] As noted by Armstrong J.A. in Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3rd) 291(OCA) the fixing of costs involves more than merely a calculation using the hours docketed and the cost grid. He further stated in para. 24, “In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.”

[19] I conclude that fair and reasonable costs on a partial indemnity basis should be paid by Daniel Sherk to Verge for this motion fixed at $37,500.00 all-inclusive. These costs are payable within 30 days and will be considered a disbursement of Daniel Sherk without prejudice to him arguing before the trial judge that these disbursements should be recoverable from Verge, depending no doubt on the outcome of the litigation.

Arrell, J. Released: December 18, 2018