Court File and Parties

Court File No.: 08-CL-7349 Date: 2019-06-03 Superior Court of Justice – Ontario

Re: Atlas copco canada inc. , Plaintiff And: david hillier, dirk johannes plate, leo caron, jeanette bourque, maria van noorden plate, paul armand caron, P.A. Caron Courtier d’assurance Inc. and 3870901 Canada Inc , Defendants

Before: S.F. Dunphy J.

Counsel: James D. Patterson and Amanda McLachlan , for the Plaintiff/Moving Party Douglas Cunningham , for the Defendant Responding Party Dirk Johannes Plate

Heard at Toronto: In Writing

Reasons for Decision Re: Costs

[1] On March 13, 2019, the Court of Appeal allowed the appeal of the defendant Mr. Plate against the judgment awarded against him by me dated March 7, 2018 and directed me to fix costs of the original summary judgment motion “in light of this disposition”. The defendant was allowed his costs of the appeal (fixed at $22,000) and the matter was remitted to the Superior Court for trial. My decision and that of the Court of Appeal have been published.

[2] I have received the written submissions of the parties on the matter of costs in accordance with this court’s usual practices and considered them carefully. The following is my ruling on the matter of costs of the original summary judgment motion. For the reasons that follow, I am ordering that costs of the summary judgment motion shall be in the cause.

Background and position of parties

[3] On June 29, 2016, Mr. Plate was convicted by a jury of criminal fraud. On October 25, 2016, he was sentenced to five years in jail and a restitution order in favour of the plaintiff was made in the amount of $77,930.

[4] The successful defendant Mr. Plate points to the fact that summary judgment was set aside and the plaintiff’s motion was thus on its face entirely unsuccessful. Mr. Plate seeks substantial indemnity costs of $44,346.21 arguing that the motion for summary judgment ought was brought unreasonably or, alternatively costs in the amount of $37,944.76 on a partial indemnity basis (both amounts inclusive of disbursements and HST).

[5] The unsuccessful plaintiff Atlas asks that the defendant be denied its costs or, alternatively, that costs of the summary judgment motion be in the cause to be determined by the trial judge.

Analysis and discussion

[6] While the Court of Appeal awarded Mr. Plate his costs of the appeal, no explicit order one way or the other was made in relation to his entitlement to costs of the summary judgment motion before me.

[7] Mr. Plate relies upon rule 20.06(a) of the Rules of Civil Procedure which provides that the court may fix and order costs on a substantial indemnity basis if “the party acted unreasonably by making or responding the motion”. He argues that the plaintiff brought a partial summary judgment motion because it proceeded against him alone without also proceeding against the co-defendants and that the motion was unreasonable from its inception given the failure of the plaintiff to adduce any evidence apart from the evidence of the criminal trial proceedings and outcome.

[8] The partial summary judgment objection raised by Mr. Plate gained no more traction at the Court of Appeal than it did before me. The plaintiff’s motion against Mr. Plate did not become partial summary judgment simply because its claims against other persons were not also included. Relying as it did upon the findings made in the criminal proceeding alone, there was virtually no prospect of inconsistent findings between a civil ruling on the claim against Mr. Plate and a civil ruling on the claims against the other defendants. If there was a risk of inconsistent findings arising from the motion, it was between findings that might be made in future on the trial of the other defendants and those already made at the criminal trial – no fresh findings of fact would arise from the allegedly partial summary judgment hearing.

[9] The motion as framed was not a doomed partial summary judgment motion from the start.

[10] Neither was it unreasonably brought for any other reason.

[11] The plaintiff advanced its summary judgment motion primarily upon legal arguments arising from what it alleged were admissible and/or binding findings made against Mr. Plate in the criminal trial process. It was successful at first instance. It is hard to see how such a motion can be characterized as unreasonably advanced.

[12] I will not make so bold as to say that rule 20.06(a) can never be applied to a moving party where summary judgment has been overturned on appeal. Nevertheless, success on the motion at first instance argues quite strongly against a finding that the motion was unreasonable in its conception unless the initial judgment be also characterized as unreasonable. The Court of Appeal has made no such finding and I decline to do so here.

[13] I cannot find that rule 20.06(a) applies here. The motion was reasonably brought and appropriately and narrowly framed. There was no risk of inconsistent verdicts and the issues raised were almost exclusively legal ones that had the potential to dispose of the matter. The plaintiff did not seek to determine any facts in dispute so much as determine what pleaded facts were open to dispute.

[14] Mr. Plate has not rested his case for substantial indemnity costs solely upon rule 20.06(a) of the Rules of Civil Procedure. He also invokes rule 57.01 and rule 1.04 on more general grounds of fairness and proportionality. Mr. Plate refers to his comparatively weaker financial capacity to withstand the costs of complex litigation as compared to the bottomless resources he imputes to a multi-national corporation. While I am prepared to assume for the sake of evaluating this argument that such a disparity exists, I have but scant evidence of Mr. Plate’s actual financial resources before me.

[15] The fact that the costs sought would allegedly not impair the plaintiff in the conduct of this case in any material way is neither here nor there. Substantial indemnity costs are primarily awarded in circumstances where the behaviour of the party has fallen significantly below the expected standard in some way warranting sanction. Such an award is intended to send a message. That is simply not the case here. There is no conduct of the plaintiff that I find worthy of sanction.

[16] The plaintiff’s motion sought to eliminate the unnecessary expenditure of funds by both parties on an action whose outcome it viewed as being largely if not completely pre-ordained by the outcome of the criminal trial process. It sought to test that proposition and effectively filed no evidence save that arising from the criminal trial itself. In the end, the plaintiff was not successful in that contention but my ruling as confirmed by the Court of Appeal will greatly narrow the issues that remain to be determined at trial. Instead of a complex multi-week trial entailing significant expense, a narrow focused inquiry into the existence of a fiduciary duty has been mandated that will likely need nor more than a couple of days to be heard. While I can hardly characterize the plaintiff’s motives as altruistic, it is nevertheless the case that both parties will benefit from that outcome in the form of lower costs in getting to a final verdict at trial.

[17] This is not a case where fairness or other considerations warrant the application of substantial indemnity costs as sought by Mr. Plate.

[18] What order ought to be made in these circumstances?

[19] The fact of the matter is that the plaintiff has been conclusively found to be the victim of a crime in which Mr. Plate participated. The criminal trial findings that Mr. Plate occupied a position of trust vis-à-vis the plaintiff and was in charge of its Canadian operations are admissible in evidence. If these and other evidence that may be adduced at trial result in a finding that he owed the plaintiff the duties of a fiduciary, the Court of Appeal has confirmed that he may potentially be found liable for the consequences of a fraud he failed to stop or alert the plaintiff about even if he did not personally profit from it.

[20] While the plaintiff was not ultimately successful in obtaining judgment on a summary basis, it is fair to characterize success on the motion as being divided in fact. Despite the dismissal of the motion resulting from the appeal, the legal issues that stand between the plaintiff and such judgment have been considerably narrowed and the trial needed to resolve those issues greatly simplified as a result. The Court of Appeal upheld a significant number of rulings made on issues raised at the summary judgment. Those resolved issues will greatly simplify the trial and will materially reduce the costs to be incurred by both sides going forward.

[21] I reach this last conclusion as a matter of common sense without feeling it necessary to dive into the weeds of precisely which rulings will give rise to an issue estoppel at trial and which will be merely persuasive obiter on the same issue from the Court of Appeal.

[22] The quantum of costs claimed by the plaintiff – even on a partial indemnity basis – greatly exceeds the costs awarded on the appeal by the Court of Appeal. Having heard the motion below and having seen the volume of material filed, I am aware that a contributing factor to the volume of costs incurred below was Mr. Plate’s desire to demonstrate his innocence of the crime he has been found to have committed.

[23] In the circumstances, I do not consider that it would be fair and just for me to deprive the successful defendant of his costs on this motion. He may yet be successful at trial or the plaintiff may abandon its claim. It would not necessarily be just to deprive him of costs of this summary judgment motion in either of those events. Conversely, it would not be fair and just for me to award Mr. Plate his partial indemnity costs of a motion that has succeeded in carving away from the trial a large number of issues Mr. Plate was intent on raising and in circumstances where the plaintiff has already been conclusively determined to be a victim of a crime perpetrated by him and in connection with which the claim has been brought.

[24] In my view, the fairest outcome will be to award costs of the motion in the cause. If Mr. Plate is successful in defending the action and is awarded his costs, he may include the costs of the motion as part of the trial as a whole to be assessed in the usual way and by the usual criteria. If Atlas is successful and is awarded costs, it too will assess its costs of the motion and trial (but not the appeal) in the usual way and by the usual criteria.

Disposition

[25] Accordingly, I am ordering that costs of the summary judgment motion shall be in the cause. Order accordingly.

S.F. Dunphy J. Date: June 3, 2019