Court File and Parties

COURT FILE NO.: CV-15-527301 DATE: 20190329

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: John Maxwell and Jonathan Warren, Plaintiffs

• and - 8580162 Canada Corp. c.o.b. as Fresh Home Innovations, 8580197 c.o.b. as Regal Design + Build, Mahdi Ramezanostovan and Ramin Afnani, Defendants

BEFORE: Master Todd Robinson

COUNSEL: J. Goode, for the plaintiffs D. Green, for the defendants

HEARD: March 29, 2019

E N D O R S E M E N T

[1] Two motions were before me today: a motion brought by the defendants seeking to compel the plaintiffs to attend an examination for discovery, and a cross-motion brought by the plaintiffs seeking to compel answers to undertakings. These are the latest motions in this highly litigious simplified procedure action.

[2] At the outset of the motion, counsel advised that the substantive issues on both motions had been resolved by agreement, and that the only outstanding issue was entitlement to costs. Accordingly, on agreement of the parties, I order as follows:

(a) The defendants, 8580197 c.o.b. as Regal Design+Build and Mahdi Ramezanostovan, shall provide their answer to the following question taken under advisement, and previously ordered answered by the order of Master Brott dated July 8, 2016 and the order of Master Sugunasiri dated March 20, 2017, by no later than April 15, 2019:

No. Question No. Page No. Specific U/A or Refusal 47. 1076 175 U/A To provide financial statements showing your profit and loss from 2010 until 2016.

(b) The plaintiffs shall produce themselves for examination for discovery on a date and at a location to be agreed by no later than May 30, 2019, provided that giving the answer ordered in paragraph (a) above shall be a precondition to the defendants proceeding with the examinations.

[3] On the issue of costs, the court is afforded broad discretion in determining costs pursuant to Section 131 of the Courts of Justice Act and Rule 57.01 of the Rules of Civil Procedure to fashion a costs award that the court deems fit and just in the circumstances, or to decline to award costs at all. Notwithstanding that the court here has been asked to make a disembodied costs order in the absence of having determined any of the substantive issues on either of the motions, I have heard and considered the cost submissions of both sides.

[4] Costs outlines were exchanged. Aggregating the costs sought by both sides for moving and responding to these motions, the defendants’ costs outline claims costs totaling $3,835.21 on a partial indemnity basis and the plaintiffs’ cost outline seeks costs totaling $4,174.98 on a partial indemnity basis. Evidently, the costs sought by both sides are within the reasonable expectation of the parties.

[5] Both the plaintiffs and the defendants feel that their respective motions were necessary and reasonable, and that the motion brought by the other was unnecessary and unreasonable. Both feel they are entitled to costs of both motions. Both point to responses or unanswered correspondence in the record that were characterized by each side as necessitating these motions. The defendants say that the outright refusal of the plaintiffs to produce themselves for examination was unreasonable given the fall decision of Justice Brown to set aside a default judgment and related enforcement largely on the basis that the defendants had been ill-served by former counsel and should not be held accountable for the neglect or inattention of that counsel. The plaintiffs counter that argument by stating that, as of December 7, 2018 (when denial to produce the plaintiffs’ for examination occurred, triggering the defendants’ motion), the defendants remained in breach of prior court orders, including requirements to pay costs as ordered by Masters Muir and Sugunasiri. The plaintiffs’ position is, accordingly, that the refusal in such circumstances was reasonable. Email correspondence from defendants’ counsel on December 7, 2018 suggests that the plaintiffs were also in default of costs orders, but plaintiffs’ counsel submitted there was no outstanding costs at that time, and I was not pointed to the costs orders referenced by defendants’ counsel in the email.

[6] The defendants proceeded to prepare a 2-volume motion record, some 3-inches thick, which was served on January 28, 2019. A cross-motion on outstanding undertakings from the defendants, which are the subject matter of prior court orders, was threatened and booked. Answers to undertakings were provided on March 14, 2019, and a responding and cross-motion record was delivered 5-days later on March 19, 2019. Although I challenged plaintiffs’ counsel on why a full cross-motion record was prepared and served without any correspondence as to outstanding undertakings between March 14 and March 19, 2019, the answer seems to lie in the offers exchanged (discussed below), in which a timeline for answers to undertakings was being negotiated, and the service and filing deadline for the cross-motion. The responding and cross-motion record adds another 1-inch to the motion materials. A 2-inch responding cross-motion record was thereafter delivered by the defendants, much of which duplicates what was already in the motion record on the defendants’ motion.

[7] In total, some 5-inches of materials were prepared and filed on these motions with an aggregate of 35 working hours of time claimed by the parties. Both sides made submissions as to the necessity of the volume of materials they filed, which outline the history of the proceeding and the exchange of correspondence over the disputed issues. Overall, while the parties may have felt such voluminous materials were necessary, and the time spent reasonable, they are in my view disproportionate to the issues in dispute on these motions. The disproportionate approach by both sides is only exacerbated by the fact that this is a simplified procedure action wherein the plaintiffs claim $74,192 in damages and the defendants have counterclaimed for $100,000 in lost profits and $50,000 in special damages.

[8] Significant in my decision as to costs are the offers to settle, which were not accepted by either side. In particular:

(a) On February 5, 2019, the plaintiffs served an offer to settle the motion whereby the plaintiffs agreed to produce themselves for examination, the defendants were to answer outstanding undertakings and the under advisement by March 18, 2019, and there would be no costs of the motion.

(b) On March 8, 2019, defendants’ counsel wrote confirming that they were prepared to recommend to their clients that they withdraw the motion and make “best efforts” to satisfy outstanding undertakings by April 1, 2019, subject to $1,000 in costs being paid by the plaintiffs, the plaintiffs being produced for examination by April 15, 2019, the pre-trial scheduled for April 4, 2019 being vacated, and no further pre-trial being scheduled until 30 days after the plaintiffs’ examinations. This was not an offer to settle, but rather an indication of what counsel was prepared to recommend.

(c) On March 13, 2019, the plaintiffs counter-offered to settle (although no offer appears to have actually been made by the defendants) by the defendants answering undertakings by April 1, 2019, examination of the plaintiffs proceeding by May 30, 2019, provided the defendants’ answers to undertakings were complete, the pre-trial being adjourned to June 2019, and parties bearing their own cost of the motion, or costs being reserved to the trial.

(d) On March 14, 2019, the defendants counter-offered on the same terms, except that answers to undertakings were to be provided by April 5, 2019 (4 days later than the plaintiffs’ offer), that $1,000 in costs be paid to the defendants, and that the defendants would bear their own costs of a withdrawn stay motion by the plaintiffs (following dismissal of the plaintiffs’ motion for leave to appeal the decision of Justice Brown).

(e) The same day, after receiving the answers to undertakings, but without commenting on which remained outstanding, the plaintiffs further counter-offered that answers be provided by April 5, 2019 (with reasons for any inability to answer any undertakings being given), the plaintiffs be produced for examination by May 30, 2019, provided the defendants’ answers to undertakings were complete, the pre-trial be adjourned to June 2019, and costs of both motions be dealt with in the cause.

[9] No further offers or discussions toward resolution of costs of the motion appear to have continued after the above exchanges. Subsequently, the defendants satisfied all undertakings other than the advisement for which an answer has (again) been ordered, as above, and the plaintiffs agreed to produce themselves for examination, as now ordered. The orders made today, by agreement of the parties, and the separate agreement already reached to adjourn the pre-trial, are the same outcome the parties were discussing in their offers. I agree with both sides that bringing these motions was not unreasonable, although do not agree the time spent and volume produced was necessary or proportionate. However, given the offers, arguing only as to costs was unnecessary.

[10] Proper communication and reasonableness are key to successful and cost-effective litigation. This is especially true both prior to and after motions are brought. Neither occurred here, as exemplified by both the record before the court, but also by the offers to settle exchanged by both parties. Ultimately, having reviewed the exchange of offers and heard submissions of counsel, the only reason either side was in court is because the parties were unable to agree on whether the defendants should be paid costs of $1,000 or if costs should be reserved to the trial or in the cause. That dispute over $1,000 in costs (an amount outstripped by the costs of either counsel alone arguing costs today) versus deferring costs, was the sole reason that any argument proceeded today.

[11] I have weighed the factors in Rule 57.01 and considered the fair and just result as to costs in all of the circumstances. I find that the just result is that both parties bear their own costs of these motions. Accordingly, there shall be no order as to costs.

Master Todd Robinson DATE: March 29, 2019