Court File and Parties
COURT FILE NO.: 2511-17 DATE: 2019/05/02 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 John K. Downing, Keegan Boyd and Jack Masterman, for the defendant Mr Kamran Lindsay Board, for the defendant Ms Aquino No cost submissions filed on behalf of the plaintiff LEO Canada Inc. No cost submissions filed on behalf of the non-party Learning Enterprises Organization Limited (also known as “LEO UK”)
HEARD: In writing
Endorsement
Costs of Contempt Proceedings
Introduction
[1] The background and context of this litigation have been canvassed in detail in a number of earlier endorsements and decisions relating to this matter, [^1] and I accordingly will not repeat that information here.
[2] For present purposes, suffice it to say that this particular endorsement relates to legal costs associated with contempt proceedings initiated by the defendant Mr Kamran. By way of summary in that regard:
- Mr Kamran brought a motion to have the plaintiffs found in contempt of court, (for various alleged breaches of an earlier order made in relation to this matter by Justice Templeton), and the motion formally was resisted by the plaintiff Mr Andersson and by LEO Canada Inc, the plaintiff corporation.
- In accordance with the standard practice followed in relation to such motions, Mr Kamran’s contempt motion was addressed in a bifurcated manner; i.e., with the court dealing first with a “liability phase” of the motion, (to determine whether and how the plaintiffs or either of them were in contempt), before proceeding to a later “penalty phase” of the motion, (to determine whether or not the plaintiffs or either of them had purged their contempt, and the determination of a just and appropriate order to address any established contempt).
- For reasons outlined in Andersson v. Aquino, [2018] O.J. No. 495 (S.C.J.), I found that the plaintiffs should be found in contempt in relation to some but not all of the various complaints raised by Mr Kamran in his contempt motion. In particular:
- I found all essential elements of civil contempt established in relation to Mr Kamran’s complaint that Mr Andersson had breached provisions of an order made in this litigation by Justice Templeton, (on November 17, 2017), prohibiting certain communications and disclosure, but exercised my residual discretion to decline making a formal finding of contempt in that regard.
- I found the plaintiffs in contempt of a court-ordered obligation, (contained within the same order of Justice Templeton), to provide Mr Kamran with access to files, data and records of the plaintiff corporation; a finding grounded in the failure of the plaintiffs to provide evidence of any good faith efforts to comply with the obligation in question, and provide Mr Kamran with access to such files, data and records.
- I found the plaintiff corporation in contempt of another court-ordered obligation, (contained within the same order of Justice Templeton), to provide Mr Kamran with monthly written reports of the plaintiff corporation’s financial position.
- In relation to Mr Kamran’s complaint that Mr Andersson had failed to operate the plaintiff corporation jointly with Mr Kamran, (in the manner ordered by Justice Templeton in the same order), I found that the essential elements of civil contempt had not been established.
- In making those rulings during the “liability phase” of Mr Kamran’s contempt motion, I also directed that the matter move on to a “penalty phase” hearing, (scheduled by counsel in consultation with the London trial co-ordinator), to determine a just order to address the contempt that had been established; a determination that would take into account intervening efforts, (if any), made by the plaintiffs to purge that contempt.
- The contempt aspects of this proceeding came before me again on June 21, 2018, at which time Mr Kamran was eager to proceed with full argument of the “penalty phase” of his contempt motion, (let alone plaintiff cross-motions for declarations that the previously established contempt had been purged), while Mr Andersson sought an adjournment, (opposed by Mr Kamran), to address additional material that had been served late by Mr Kamran. I decided that an adjournment was necessary and appropriate in the circumstances.
- The contempt aspects of this proceeding were before me again on August 1, 2018, at which time the parties argued the “penalty phase” of Mr Kamran’s contempt motion and addressed cross-motions brought by each plaintiff for, (amongst other things), declarations that their respective contempt had been purged. I formally reserved my decision in relation to all three motions.
- On August 3, 2018, I released an unreported endorsement which, (amongst other things), addressed the “penalty phase” of Mr Kamran’s contempt motion vis-à-vis the plaintiff corporation, as well as the plaintiff corporation’s cross-motion for relief that included a declaration that the plaintiff corporation had purged its contempt. I found and declared that the plaintiff corporation had purged the contempt identified in my earlier ruling, held that the appropriate penalty for the corporation’s earlier contempt was an absolute discharge, and made an order setting aside my earlier order finding and declaring that the plaintiff corporation was in contempt.
- On February 5, 2019, I released an endorsement dealing with the remaining “penalty phase” aspects of Mr Kamran’s contempt motion, and addressing Mr Andersson’s cross-motion seeking a declaration that he too had purged his identified contempt. [^2] For the reasons detailed therein, my findings included the following:
- that Mr Andersson had purged his contempt, warranting a formal order and declaration to that effect;
- that the appropriate penalty for Mr Andersson’s previously identified contempt should be a fine of $5,000.00, payable to the Provincial Treasurer for Ontario; and
- that the circumstances warranted a further order setting aside my earlier order of contempt vis-à-vis Mr Andersson, upon his payment of the aforesaid fine, and his service and filing of proof that the said fine had been paid.
[3] Because my decisions relating to Mr Kamran’s contempt motion and the contempt-related cross-motions of the plaintiffs had been reserved, the parties effectively had no opportunity to address costs when the motions were argued on their merits.
[4] In the circumstances, while offering a number of preliminary observations concerning costs of the motions, the last endorsement noted above invited written cost submissions if the parties were unable to reach an agreement in that regard.
[5] I thereafter received separate written cost submissions filed on behalf of Mr Kamran, Mr Andersson and Ms Aquino. No cost submissions were tendered on behalf of the plaintiff corporation, or on behalf of LEO UK – whose counsel was permitted to make submissions during the hearing on August 1, 2018, despite being a non-party, pursuant to Rule 13.02 of the Rules of Civil Procedure.
Party Positions
[6] I have reviewed and considered the above cost 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 seeks an all-inclusive amount of $130,000 in costs from Mr Andersson, on a partial indemnity basis, in relation to the liability and penalty phases of his contempt motion’ i.e., “the contempt proceedings”, which Mr Kamran says should be viewed as a whole. Mr Kamran submits that no separate or segregated costs should be awarded to Mr Andersson in relation to the penalty phase of Mr Kamran’s contempt motion, or Mr Andersson’s cross-motion.
- Mr Andersson concedes that Mr Kamran is entitled to costs of the liability phase of Mr Kamran’s contempt motion, but says those costs should not exceed an all-inclusive amount of $10,000; an amount that pales in comparison to the costs sought by Mr Andersson. In particular, Mr Andersson says that he should receive costs of the penalty phase of Mr Kamran’s contempt motion, and the costs of his own cross-motion, totalling $117,998.12 on a partial indemnity basis. Moreover, Mr Andersson seeks those costs not only from Mr Kamran, but also from Ms Aquino on a joint and several basis.
- Ms Aquino does not claim costs in relation to any of the contempt-related motions, and very much opposes any suggestion that she should be ordered to pay costs in that regard. She takes no position as to any costs that may be awarded as between Mr Kamran and Mr Andersson.
- Again, no written cost submissions were received on behalf of the plaintiff corporation, nor on behalf of LEO UK. From that failure to tender any such submissions, I assume that neither party was seeking any costs in relation to the contempt-related motions. Nor did any party ask or suggest that costs should be awarded against either corporation in relation to those motions.
General Principles
[7] Before further consideration and assessment of the cost positions outlined above, I pause to reiterate a number of general principles applicable to such cost determinations.
[8] 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”.
[9] 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.
[10] 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.
[11] Rather, all cost claims are subject to the “overriding principle of reasonableness”, as applied to the factual matrix of the case, pursuant to a required ultimate “cross check” in that regard. [^3]
[12] 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. [^4]
Entitlement
[13] As no costs for or against LEO Canada Inc. or LEO UK were sought or requested, as far as the contempt-related motions were concerned, I confirm for the sake of clarity that no such costs are awarded.
[14] In my view, there similarly should be no costs awarded for or against Ms Aquino, in relation to those motions. In that regard:
- As noted above, Ms Aquino did not seek any such costs.
- The sole target of Mr Kamran’s request for costs was Mr Andersson.
- The written cost submissions filed on behalf of Mr Andersson expressly ask that costs awarded to Mr Andersson “be paid by both defendants, jointly and severally”. However, I see no reason why Ms Aquino should bear responsibility for any adverse cost award, as far as the contempt-related motions are concerned. She brought no such motions, and filed no responding material of her own in relation to such motions. When the motions were argued, Ms Aquino’s counsel maintained what was really a “watching brief”, and did not make any substantive submissions. While Ms Aquino did swear a supporting affidavit relied upon by Mr Kamran, in relation to the contempt proceedings, costs of motions normally are borne by participating parties, not witnesses.
[15] For such reasons, I think my present cost determination should be confined to a determination of costs as between Mr Kamran and Mr Andersson.
[16] I approach that determination with a number of general considerations and views in mind. They include the following:
- First, although argument of Mr Kamran’s contempt motion was bifurcated into two stages, (i.e., a “liability phase” and a “penalty phase”, as per the general practice in relation to such matters), [^5] and those stages may have involved some discrete issues, in my view there was but one contempt motion brought by Mr Kamran, and costs should be approached on that basis. That obviously does not negate the possibility of substantially divided success, and corresponding offsetting considerations, having a significant bearing on the determination of a proper overall cost disposition in relation to that contempt motion. [^6] Nor does it eliminate the ever-present possibility of an overall cost award being made against a party who brings a motion, depending on how the court chooses to exercise its discretion after considering the general principles and factors noted above. However, I think it fundamentally inappropriate to approach the matter as if there should be separate formal cost determinations and awards made in relation to the liability and penalty phases of Mr Kamran’s contempt motion.
- Second, although I initially was inclined to make separate and potentially offsetting cost awards in relation to Mr Kamran’s contempt motion and Mr Andersson’s cross-motion, (i.e., the motion seeking a formal declaration that Mr Andersson had purged his contempt and an order setting aside my earlier finding and declaration that Mr Anderson was in contempt), on further reflection I do not think that would be appropriate in these particular circumstances. In that regard:
- From a formal perspective, there certainly were two motions, (i.e., one brought by Mr Kamran and one brought by Mr Andersson), suggesting the need for two separate cost awards.
- In my view, Mr Andersson’s motion nevertheless did not really raise any issues that were not already going to be squarely before the court, in this particular case, during the “penalty phase” of Mr Kamran’s contempt motion. As noted in my endorsement of February 5, 2019, it is well-established that the court’s civil contempt jurisdiction is focused less on punishment and more on coercion, (i.e., to encourage and ensure compliance with court orders), that purging of contempt by a contemnor accordingly is an important mitigating factor to be considered in determining an appropriate penalty for contempt, and that a finding of continued contempt acts as an aggravating factor in that regard. [^7] Whether or not any established contempt had been purged, by the time I heard argument in relation to the “penalty phase” of Mr Kamran’s contempt motion, therefore always was going to be an important and inevitable consideration in that context, regardless of any cross-motions brought by Mr Andersson. Not surprisingly, I therefore also made repeated references, in my endorsement of January 31, 2018, to the reality that I would be considering and effectively making determinations in that regard during the penalty phase of Mr Kamran’s contempt motion. [^8]
- Moreover, I think it arguable that the cross-motion brought by Mr Andersson was premature. In that regard, I note that Rule 60.11(8) of the Rules of Civil Procedure expressly contemplates and permits a motion to “discharge, set aside, vary or give directions in respect of an order” that has been made pursuant to Rule 60.11(5) or 60.11(6) of the Rules of Civil Procedure; i.e., an order that has been made against a person or corporation, after a finding of contempt, to address that contempt. When Mr Andersson brought his cross-motion, a finding of contempt had been made, but I had not yet made any order to address that contempt. [^9]
- In these particular circumstances, I accordingly am not satisfied that Mr Andersson’s cross-motion was necessary or appropriate. To the contrary, it seems to me that the cross-motion essentially was duplicative of existing proceedings already before the court, in that the essential questions raised by the cross-motion, (i.e., as to whether Mr Andersson had purged his contempt and was deserving of an order setting aside my earlier finding of contempt), already would be considered and addressed by Mr Kamran’s motion – as indeed they were. I do not think the court should encourage the bringing of such unnecessary motions by making a separate award of costs in that regard.
- For related reasons, it seems to me that the making of a separate cost award in such circumstances also would result in a party effectively and unfairly benefiting twice from the same consideration. For example, if Mr Andersson’s exposure to adverse costs in relation to Mr Kamran’s contempt motion is reduced because success on that motion was divided, (i.e., insofar as Mr Andersson established that his contempt had been purged, despite strong arguments to the contrary by Mr Kamran), it seems to me that Mr Andersson should not be permitted to rely on that same success in claiming costs of his cross-motion, (i.e., insofar as Mr Andersson established that his contempt had been purged, despite strong arguments to the contrary by Mr Kamran).
- Finally, I am mindful of the reality, (emphasized in the written cost submissions tendered on behalf of Mr Kamran), that courts generally refrain from awarding costs in favour of established contemnors against innocent parties who have brought such contempt to the court’s attention. In that regard:
- It seems to me that such an award does not lie beyond the realm of possibility. Bearing in mind that cost determinations reflect many considerations and are inherently very fact specific, our courts also generally refrain from setting down absolute rules that would fetter the court’s broad discretion in relation to costs, and there may very well be extraordinary cases where the conduct of a party innocent of contempt, in bringing or arguing a contempt motion, relative to the conduct of an established contemnor, warrants an award of costs against that “innocent” party.
- However, counsel for Mr Kamran have emphasized that they found no such precedent in the course of their research into authorities dealing with cost awards in contempt proceedings, and I independently am aware of none. To the contrary, prior decisions have awarded costs to such “innocent” parties, on a substantial indemnity basis, even where established contempt has been purged in advance of “penalty phase” hearings, and where a contemnor successfully has challenged a contempt penalty on appeal. [^10]
- In my view, such a general approach, (i.e., of denying costs to a contemnor), is consistent with the court’s general condemnation of contempt, and the reality that all such proceedings could have been avoided entirely by contemnors appropriately respecting and complying with court orders from the outset. In particular, it seems wrong, from a policy perspective, to award a contemnor costs associated with steps taken to address and purge his or her contempt, and/or to establish that purging of contempt to the court’s satisfaction. Such an approach, effectively allowing contemnors to recover the costs of belated compliance with court orders, would do little to encourage efforts towards such compliance from the moment court orders are made.
- I think that overall cost dynamic should not be forgotten, or artificially distorted, in situations where an established contemnor formally brings a cross-motion similar to that brought by Mr Andersson in this case; i.e., requesting a declaration that the relevant contempt has been purged, and formal setting aside of the original order finding that party in contempt. Form should not be elevated over substance.
[17] For the above reasons, I intend to make no award of costs in relation to Mr Andersson’s cross-motion, and focus instead on an appropriate cost determination in relation to Mr Kamran’s contempt motion.
[18] For the same reasons, and having regard to all the circumstances, I am not inclined to exercise my discretion so as to award any costs of that motion in favour of Mr Andersson.
[19] To the extent Mr Kamran succeeded in having Mr Andersson found in contempt, and in having a sanction imposed in relation to that contempt, I think Mr Kamran is entitled to an award of costs in relation to his motion.
[20] For the reasons outlined below, I nevertheless think there are a number of important considerations that militate in favour of significantly tempering the cost award Mr Kamran has sought in that regard.
Scale
[21] Neither party relied upon any relevant settlement offers that might have a bearing on the scale of costs to be awarded, pursuant to Rule 49.10 of the Rules of Civil Procedure.
[22] The scale at which I choose to award costs in this particular instance therefore should be decided according to general principles, and party submissions in that regard.
[23] General principles in that regard include the following:
- 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, it has been emphasized that awarding costs on a partial indemnity basis generally strikes 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. [^11]
- The sort of conduct meriting elevated cost awards has been described in various ways; e.g., conduct that is “reprehensible”, “scandalous”, “outrageous” or “egregious”, or which clearly indicates an abuse of process, justifying enhanced costs as a form of chastisement. [^12]
- Courts frequently have adopted a practice of awarding substantial indemnity or something approaching complete indemnity costs to a successful applicant in a civil contempt proceeding, on the sensible basis that contempt of court inherently is “reprehensible” conduct, and a person who obtains an order from the court is entitled to have it obeyed without further expense to himself or herself. [^13] Indeed, a number of authorities have indicated that such an approach generally has been regarded as “the rule, not the exception”. [^14]
- Having said that, other authority has emphasized that an award of substantial or complete indemnity costs is not automatic in such cases, but in fact requires a more nuanced analysis; e.g., awarding costs at an elevated scale only if the contempt itself or the conduct of the contempt proceeding evinces a deliberate attempt at frustrating the court’s order, and after an examination of what is fair and reasonable in the circumstances, bearing in mind the reality that the court is still mandated to consider all factors set forth in Rule 57.01 of the Rules of Civil Procedure when exercising its discretion regarding costs. [^15] If the contemnor is suitably contrite, has attempted to purge his or her contempt, has taken steps to minimize costs incurred by the other party, and/or the contempt itself is towards the lower end of the “flagrant and wilful” scale, awarding costs on a partial indemnity basis may be appropriate.
- Even if costs are awarded on a substantial or complete indemnity basis, that does not mean that the successful party can claim whatever costs may have been charged to him or her by his or her solicitors for work done on the matter. [^16] In particular, a court’s willingness to provide a litigant with “full indemnity” for his or her reasonable litigation expense must not be construed as a “blank cheque” that will necessarily ensure recovery of all fees and disbursements voluntarily incurred in dealing with a particular step in the litigation, regardless of whether the chosen litigation measures were reasonable and proportionate. [^17] In other words, costs awarded on a substantial or complete indemnity basis are still subject to the “overriding principle of reasonableness”, as applied to the factual matrix of the case. [^18]
[24] In this particular instance, the task of deciding the appropriate scale on which to award costs is made easier by the respective cost submissions of Mr Kamran and Mr Andersson both indicating that costs of the contempt proceedings should be awarded on a partial indemnity basis – despite both submissions referring to the possibility of costs being awarded on an elevated basis.
[25] In any event, I independently find that it would be appropriate to award costs of these contempt proceedings on a partial indemnity basis. In particular, for the detailed reasons set forth in my endorsement released on February 5, 2019, (which I accordingly will not repeat here), I found that Mr Andersson’s relevant contempt fell at the lower end of the scale, and that Mr Andersson moved promptly and successfully to purge his contempt once he had retained new legal representation.
Quantification
[26] In arriving at a global determination of a quantified cost award that is “fair and reasonable” in relation to these particular contempt proceedings, 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)
[27] Rule 57.01(1)(a) permits the court to consider “the amount claimed and the amount recovered in the proceeding”.
[28] Although the wording of that factor nominally focuses on financial amounts claimed and recovered, 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.
[29] In my view, success in these contempt proceedings was very much divided.
[30] Certainly, in relation to the liability phase of his contempt motion, Mr Kamran succeeded in having Mr Andersson found in contempt, insofar as Mr Andersson had made no efforts to comply with provisions of Justice Templeton’s order requiring that Mr Kamran be given access to files, data and records of LEO Canada.
[31] Having regard to the essential elements of civil contempt which must be established by the higher evidentiary standard of proof beyond a reasonable doubt, that was a significant achievement on the part of Mr Kamran.
[32] That having been said, however:
- As noted above, that finding of contempt was far more restricted than the broader findings of contempt sought by Mr Kamran in his motion.
- At the liability phase of the contempt motion, counsel for Mr Kamran argued strenuously that Mr Andersson also should be held in contempt for engaging in prohibited communications and disclosures, for participating in the failure to provide Mr Kamran with monthly written reports of LEO Canada’s financial position, and for Mr Andersson’s alleged failure to operate LEO Canada jointly with Mr Kamran.
- While all the additional suggested grounds of contempt were significant and important, in my view the potential ramifications of the court finding that Mr Andersson was in contempt of his court ordered obligation to operate LEO Canada jointly with Mr Kamran were particularly serious. At the heart of this litigation lies a struggle for control of LEO Canada. A finding that Mr Andersson was refusing to operate the company jointly with Mr Kamran, as per the court’s interim order, might very well have justified a further order granting interim control of the corporation to Mr Kamran alone.
- Considerable evidence, time and energy were devoted to the additional contempt liability arguments advanced by Mr Kamran, and none of them were successful from Mr Kamran’s perspective. Mr Andersson was instead successful in having those additional allegations of contempt rejected. Indeed, I think it arguable that Mr Andersson was relatively more successful from both a quantitative and qualitative perspective, as far as the contempt liability issues were concerned.
[33] In relation to the penalty phase of his contempt motion, Mr Kamran failed significantly in relation to his wide-ranging efforts to have Mr Andersson found in continuing contempt of court. For the reasons outlined in detail in my substantive ruling, those efforts were based on a number of fundamental misconceptions about the court’s earlier orders, and what needed to be done to demonstrate compliance with those orders.
[34] In that regard, Mr Andersson clearly was the more successful litigant, insofar as he persuaded me that his contempt had indeed been purged.
[35] Mr Kamran did succeed in having Mr Andersson subjected to a penalty, (i.e., a $5,000 fine), in relation to his past established contempt. That too was a success, in that an absolute discharge for that contempt was another possible outcome, proposed on behalf of Mr Andersson.
[36] However, Mr Kamran also experienced a significant degree of failure, in that the $5,000.00 fine imposed on Mr Andersson also fell far short of the penalties sought by Mr Kamran. In particular:
- Mr Kamran sought an order compelling Mr Andersson to appear personally before the court to receive an “oral reprimand” for his behaviour. For the reasons outlined in my substantive ruling, I found the suggestion to be inappropriate and unnecessary.
- Mr Kamran also sought an order requiring Mr Andersson to exercise his voting rights, as a shareholder of LEO UK, in favour of a purported “special resolution of shareholders” of that foreign corporation. For the reasons outlined in my substantive ruling, I found the suggestion to be entirely inappropriate, and based on a fundamental misunderstanding of the court’s intentions and jurisdiction.
- Mr Kamran also sought an order imposing a fine of $1,000.00 per day on Mr Andersson, totalling $266,000.00 up to the date of the hearing before me on August 1, 2019. As I explained in my substantive ruling, a fine of that magnitude was exorbitant and entirely inappropriate, having regard to the circumstances and the well-established range of fines for civil contempt in this jurisdiction.
[37] From my objective perspective, Mr Kamran’s approach to the penalty phase of the proceedings was extremely aggressive, and the disproportionate relief sought by Mr Kamran bordered somewhat on the vindictive. Mr Kamran also appeared intent on pressing what seemed to be a strategic advantage in the overall dispute.
[38] One reasonable inference, I think, is that the prospect of complete cost indemnification, (repeatedly identified in Mr Kamran’s motion material), undermined inclinations towards restraint once a finding of contempt had been established.
[39] In any event, Mr Kamran’s notional reach in the penalty phase of his contempt motion substantially exceeded his grasp, in terms of the litigated outcome.
[40] For the policy reasons noted above, I hesitate to characterize a party found guilty of contempt beyond a reasonable doubt, and penalized by a fine, as “successful”. However, the fundamental reality here is that the litigated result of Mr Kamran’s contempt motion was much, much closer to the position or positions advocated on behalf of Mr Andersson. In my view, Mr Andersson accordingly achieved a greater degree of relative “success” in that sense.
[41] Finally, in relation to consideration of relative “success”, I note again that Mr Kamran failed in his efforts to oppose the adjournment sought by Mr Andersson on June 21, 2018. I will return to the implications of that development later in these reasons.
PRINCIPLE OF INDEMNITY – RULE 57.01(1)(0.a)
[42] 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”.
[43] Mr Kamran’s written cost submissions included a costs outline.
[44] It indicates that Mr Kamran incurred a remarkable $216,283.03 in actual legal fees, disbursements and applicable taxes in relation to these contempt proceedings; a figure reflecting legal services provided by a team of four lawyers of varying degrees of seniority, and two law students.
[45] 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.
[46] According to the costs outline, application of those indicated partial and substantial indemnity rates suggests that Mr Kamran incurred substantial indemnity costs totalling $193,990.50, and partial indemnity costs totalling $131,002.63.
[47] As the parties exchanged their cost submissions on the same day, the cost submissions tendered on behalf of Mr Andersson do not question the experience of Mr Kamran’s lawyers, or take issue with the reasonableness of their various rates, as set forth in Mr Kamran’s costs outline. However, as the rates charged by Mr Andersson’s counsel are comparable or greater, I think such challenges would have been unlikely.
[48] For present purposes, I accept the rates indicated in Mr Kamran’s costs outline – although, as indicated in my earlier cost endorsement, it seems to me that, at least here in London, they arguably push the boundaries of recoverable hourly rates in certain ways; e.g., in relation to the hourly rates charged for the services of lawyers with less than 10 years of experience.
[49] If only by way of anticipation, the cost submissions filed on behalf of Mr Andersson nevertheless do highlight a number of possible concerns with the amount of costs sought by Mr Kamran; concerns which I independently shared to varying degrees.
[50] In particular, while the motion unquestionably was “hard fought”, (and in some respects excessively so by Mr Kamran, for the reasons noted above), the time and quantum of costs devoted to a motion of this nature and duration seems quite high to me. In that regard:
- I am mindful 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. [^19]
- However, I question whether so many lawyers and students really were needed to prepare and argue a motion of this nature on behalf of Mr Kamran. The involvement of so many individuals inherently leads to duplication of effort; e.g., as more than one member of a legal team attends “strategy” meetings or other group discussions, participates in communications, or necessarily updates another member of that team on what he or she has been doing, or what he or she has learned. Of course, parties are free to engage such legal teams out of an abundance of caution, in order to ensure that no legal stone is left unturned, and the practice obviously is common in well-funded, high stakes litigation such as this. However, that does mean that resulting legal charges of such an approach should be visited on a litigation adversary. As indicated in my earlier costs endorsement, 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. [^20]
- As noted in the cost submissions of Mr Andersson, there are reasons why the legal expense associated with the liability phase of Mr Kamran’s motion should have been relatively contained. I independently think those costs reasonably should not have assumed the stated dimensions they did, having regard to the circumstances. The underlying motion material and evidence relating to the contempt issues was not extensive, and it was significantly leveraged by a great deal of work, (including cross-examinations), done primarily in relation to other issues in the litigation, (e.g., the lingering dispute about the suitability of interim injunctive relief), in respect of which costs should not properly be sought or awarded in the current context. [^21] Although Mr Kamran’s counsel have attempted to segregate the work properly attributable to the contempt issues by applying percentage discounts to unsegregated docket entries, it seems to me that the percentages and resulting hours attributed to the contempt proceedings are high and arguably excessive.
- The aforesaid percentages and resulting base times are consistently higher as work done in relation to the contempt motion apparently became more segregated, focused and intensive as the proceeding moved into the “purge and penalty phase” of Mr Kamran’s contempt motion. In particular, I think that reasonably reflects the reality that the contempt motion was the aspect of the litigation then being addressed in relative isolation, compared to earlier stages of the litigation. However, the increased time devoted to the penalty phase of the contempt motion also causes me concern, for the reasons noted above; i.e., insofar as much of that time apparently was being spent developing or advancing positions which I later found to be unreasonable and/or based on misapprehensions of what was intended and required by the relevant court orders, and which did not succeed.
- Finally, I note that significant time and expense apparently was devoted to the abortive hearing on June 21, 2018, in terms of preparation and attendance. For reasons noted above and below, I think there are reasons why Mr Kamran should not recover such costs.
REASONABLE EXPECTATIONS OF UNSUCCESSFUL PARTY – RULE 57.01(1)(0.b)
[51] In support of his claim for costs, Mr Andersson filed a cost outline of his own, albeit without supporting dockets.
[52] That costs outline indicates that, in relation to the “purge” and “penalty” phase of the contempt proceedings alone, (i.e., without including any costs relating to the “liability phase” of Mr Kamran’s contempt motion), Mr Andersson incurred actual legal fees and disbursements totalling $187,807.49.
[53] Applying the hourly rates set forth in the cost outline, Mr Andersson’s substantial indemnity costs of the “purge” and “penalty” phase of the contempt proceedings were said to total $170,355.14, and his corresponding partial indemnity costs were said to be $117,998.12.
[54] In the circumstances, I think it fair to infer that Mr Andersson’s expectations of the costs being incurred, and likely to be sought from the other side, probably equalled or exceeded those of Mr Kamran; i.e., if Mr Andersson’s unspecified added costs of addressing the liability phase of the contempt proceedings also were taken into account.
[55] Of course, that the parties themselves expected to incur and seek such legal costs does not mean that their expectations of what the other would pay necessarily were reasonable.
[56] Again, it falls on the court to apply the “overriding principle of reasonableness”, as applied to the factual matrix of the case, and determine the amount that is “fair and reasonable” for an unsuccessful party to pay in a particular proceeding.
COMPLEXITY OF PROCEEDING AND IMPORTANCE OF ISSUES – RULES 57.01(1)(c) AND RULES 57.01(1)(d)
[57] 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”.
[58] For the reasons outlined in my earlier endorsements, I think it obvious that the overall litigation involves a complex factual matrix, and that the same held true in relation to the particular factual issues argued in the context of the contempt motion.
[59] That in turn added complexity to a determination of how relatively undisputed legal principles relating to civil contempt should be applied in the circumstances.
[60] Having said that, I think those factual disputes and resulting legal determinations also were far more complicated than they needed to be, owing to fundamental misunderstandings on the part of Mr Kamran, (underlying the positions advanced by him or on his behalf, and outlined in my substantive reasons), about what was intended and required by the court’s orders.
[61] As for the importance of the issues raised in the contempt proceedings, I think it clear that they were of considerable importance to both sides; i.e., to Mr Kamran and Mr Andersson.
[62] In particular, from the perspective of Mr Kamran, access to information of LEO Canada was of fundamental importance to his contemplated joint operation of the plaintiff corporation, until the broader substantive dispute in this litigation could be decided. As noted above, having Mr Andersson found in contempt of court also presented significant strategic advantages in the litigation; e.g., insofar as a contemnor normally is not permitted to seek further relief from the court until his or her contempt has been purged.
[63] From the perspective of Mr Andersson, the stakes were extremely high. Leaving aside the strategic implications for the broader litigation, Mr Andersson faced the prospect of condemnation for any established contempt, as well as the possibility of penalties for that contempt up to and including incarceration. In the circumstances, I find it unsurprising that he devoted significant resources to the matter, in an effort to ensure that the outcome of the contempt proceedings was as favourable, (or perhaps more accurately, the least onerous), as possible.
CONDUCT AND/OR STEPS THAT LENGTHENED PROCEEDING – RULES 57.01(1)(e) AND 57.01(1)(f)
[64] 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”.
[65] 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”.
[66] In my view, the only step that causes me concern, in relation to conduct that unnecessarily lengthened the duration of the contempt proceedings, was Mr Kamran’s opposition to adjournment of the hearing scheduled for June 21, 2018.
[67] In that regard, I can appreciate that there was urgency, from Mr Kamran’s perspective, to having his concerns about access to LEO Canada’s corporation information formally addressed, resolved and remedied by the court as soon as possible.
[68] However, Mr Kamran also should have appreciated that the very serious nature of civil contempt proceedings, and the exposure of a contemnor to penalties up to and including incarceration, have certain additional implications. One of those is the right of a contemnor to make full answer and defence, especially where his or her liberty potentially is at stake.
[69] In the circumstances, a heightened sense of accommodation should be demonstrated, I think, when a contemnor reasonably requests a relatively short adjournment to address significant additional material that has been the subject of late service by a litigation adversary.
[70] Because Mr Kamran unsuccessfully opposed Mr Andersson’s reasonable request for an adjournment of the hearing scheduled for June 21, 2018, all concerned devoted time and expense to attending in court that day, and preparing for the possibility of the matter being argued if the adjournment was not granted.
[71] In the circumstances, I have no doubt that the abortive hearing effectively resulted in waste, and/or a duplication of effort, as counsel on both sides were obliged to revisit their preparations again for the rescheduled hearing on August 1, 2018.
[72] In my view, Mr Kamran should not recover those associated costs, and/or an additional allowance should be made for the reality that such costs needlessly were inflicted upon Mr Andersson.
[73] As for Rule 57.01(1)(f), I am not inclined to regard any of Mr Kamran’s conduct in relation to the motion as “improper” or “vexatious”.
[74] For the reasons set forth at length in my substantive rulings, I nevertheless think that many of the positions advanced by or on behalf of Mr Kamran were unnecessary, particularly insofar as they were premised on fundamental misunderstandings of what the relevant court orders intended and required.
REFUSAL TO MAKE APPROPRIATE ADMISSIONS – RULE 57.01(1)(g)
[75] In my view, this was/is not a relevant factor or consideration in the determination of an appropriate cost award in relation to the contempt proceedings.
ANY OTHER MATTER RELEVANT TO COSTS – RULE 57.01(1)(i)
[76] No relevant matters under this heading were identified in the parties’ respective cost submissions. In particular, (and as noted above), there apparently were no relevant settlement offers, insofar as the contempt proceedings were concerned.
Conclusion
[77] As noted in my earlier costs endorsement, discretionary cost determinations are far from an exact science.
[78] 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.
[79] 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 costs of his contempt motion fixed in the all-inclusive amount of $40,000.00.
[80] Again, no costs are awarded in relation to Mr Andersson’s cross-motion.
[81] An order shall go accordingly.
“Justice I.F. Leach” Justice I.F. Leach Date: May 2, 2019