Court File and Parties

COURT FILE NO.: CV-18-590986 DATE: 2019-10-11

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Courtney Kazembe and Kazembe & Associates Professional Corporation, Plaintiffs AND: Mark Fowler, Delbert Fowler, Cindy Fowler, Joy Colegate, John Hougton, Bonnie Hougton, Vishnu Singh, Re/Max Realty Specialists Inc., Hang Phan, Tamana Atwal, Amarpreet Williams, Karrunawatti Poonai, Alicia Thomas, Cynthia Brereton, Jasmatie Manni, Lokeashwar Persaud, Deonarine Persaud, Jeneveve Persaud, Kalicharran Sulchu, John Smithson, The Ministry of Labour and Community Trust Company, Defendants

BEFORE: Justice Glustein

COUNSEL: Courtney Kazembe, acting in person Alastair J. McNish and Karolina R. Iron, for Re/Max Realty Specialists Inc. Eric Sherkin, for Mark Fowler, Delbert Fowler, Cindy Fowler, Joy Colegate, John Houghton, Bonnie Houghton, and Vishnu Singh

COSTS ENDORSEMENT

Overview

[1] At a hearing on September 10, 2019 I granted summary judgment in favour of Re/Max[^1] for payment of a real estate commission of $142,380 from funds held in court for 908 pursuant to the sale of the Property. The respondents Mark Fowler, Delbert Fowler, Cindy Fowler, Joy Colegate, John Houghton, Bonnie Houghton, and Vishnu Singh (the “Fowler Group”), investors in 908, did not take any position on the motion.

[2] At the conclusion of the hearing, Re/Max sought costs of $13,286.20 on a partial indemnity basis. Kazembe proposed that costs be fixed at $7,000.

[3] At the hearing, both Re/Max and Kazembe submitted that costs should be paid from the funds held in court.

[4] The Fowler Group made submissions as to costs only, asking that the court order the costs to be paid by Kazembe personally, based on their submission that Kazembe’s conduct in opposing the motion was improper and frivolous given what the Fowler Group submitted was Re/Max’s clear entitlement to the commission.

[5] Based on those submissions, I asked the parties to deliver brief written submissions on the issue of the payment of costs. I have now received and reviewed those submissions. My costs endorsement follows below.

Submissions of the parties

[6] Re/Max submits that costs should be paid from the funds in court, without prejudice to the investors’ seeking payment of those costs in their existing action against Kazembe for negligence and breach of trust.

[7] Re/Max submits as follows:

(i) Kazembe could only have refused to pay the commission in his capacity as trustee and for the benefit of the trust. He could not have been acting in a personal capacity when opposing payment of the commission;

(ii) Section 23(1) of the Trustee Act, R.S.O. 1990, C. T 23 codifies trustee deference to expenses “properly incurred in carrying on the trust”, consistent with the indemnification of Kazembe as trustee under the “Bare Trust Agreement”;

(iii) The indemnification of a trustee for all costs and expenses, including legal costs, is granted when the trustee is “acting for the good of the trust, and not for their own benefit throughout the litigation” (Thompson Estate, Re, 1945 CanLII 2 (SCC), [1945] S.C.R. 343, [1945] S.C.J. No. 15 at para. 24; Goodman Estate v. Geffen, 1991 CanLII 69 (SCC), [1991] 2 S.C.R. 353, [1991] S.C.J. No. 53 at paras. 75, 77, and 79);

(iv) Had Kazembe retained counsel, he would have been entitled to indemnification for legal costs from the trust in accordance with the Bare Trust Agreement and the Trustee Act, with any costs award in the trust’s favour partly indemnifying it for legal costs; and

(v) Re/Max should not be placed in the position of enforcing a costs order against Kazembe personally, “who may or may not readily comply”.

[8] Kazembe agrees with Re/Max that the costs should be paid out of the funds in court. He submits:

(i) He “acted on instructions” from 908 as its “duly appointed trustee”;

(ii) He appeared before court on the summary judgment motion “both as a Trustee and counsel for [908]”;

(iii) “There is no evidence tendered that [908] had contested Mr. Kazembe’s dual role as Trustee and lawyer for [908]”; and

(iv) Rule 57.07(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 “is inapplicable in this situation” because (a) “there is no credible material evidence before the Court that [908] had instructed Mr. Kazembe to pay Re/Max the commission it had demanded” and (b) “[t]here is no credible material evidence that Mr. Kazembe acted on his own without instruction, or that he did so in bad faith” (relying on Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3; Triple 3 Holdings Inc. v. Jan, 2006 CanLII 30457 (ON CA), 82 O.R. (3d) 430 (C.A.); and Schwisberg v. Perry Krieger & Associates, 33. O.R. (3d) 256 (C.A.)).

[9] The Fowler Group seeks an order that Kazembe pay the costs personally. They submit:

(i) Costs should not be paid by the trust because the Fowler Group has brought an action against Kazembe for breach of trust and negligence, with Kazembe taking the position in his application that he should be paid in priority for his claim of almost $140,000 over the funds on the basis of his role as trustee and/or legal counsel;

(ii) The only reason that the commission was not paid to Re/Max at the time the Property was sold was that Kazembe denied any commission was owing;

(iii) “[Kazembe] did not advise Fowler or any investors at the time of the sale that any commission was owing to Re/Max or anyone else”;

(iv) “The motion was only necessary because of the position taken by Kazembe, who himself did not file any responding materials, did not file a factum or any brief of authorities, and did not cross-examine either of Re/Max’s affiants”;

(v) “[A]part from a small claim … it is only Kazembe who makes a claim to the Funds apart from the investors”;

(vi) Kazembe should pay the costs because he is not a “neutral interpleader” and “[h]is conduct as trustee is the entire reason why Re/Max was not paid the commission at the time the real estate transaction closed”;

(vii) Once Kazembe sought payment of funds to him (after the funds were paid into court), he becomes “a party seeking entitlement to the Funds” and should pay costs personally “having opposed the motion of Re/Max and being the cause of Re/Max being forced to bring the motion”; and

(viii) “[Kazembe] cannot advance claims on his own behalf when he sees fit while also advancing the defence of being ‘just the trustee’ when it suits him or to avoid personal responsibility”.

Analysis

[10] For the reasons that follow, I find that Re/Max is entitled to be paid its costs from the funds in court, but without prejudice to the Fowler Group’s (or other investors’) seeking those costs from Kazembe personally as part of the ongoing litigation.

[11] There is a vehement dispute between the Fowler Group and Kazembe as to his conduct as a trustee and lawyer on behalf of the investors. Kazembe seeks payment of approximately $140,000 from the Funds in priority to the investors for whom he purported to act as trustee and lawyer. The Fowler Group has a lawsuit against Kazembe for significant damages they claim to have suffered as a result of Kazembe’s alleged negligence and breach of fiduciary duty as legal trustee and lawyer. However, those issues can only be resolved in the ongoing litigation.

[12] Re/Max was entitled to payment of its commission and was required to bring a summary judgment motion to obtain it. There is no basis to require Re/Max to wait until the end of the litigation when the purpose of its motion was to recover its commission without being required to participate in the bitter battle between Kazembe and the Fowler Group (and in other related litigation).

[13] Further, an order against Kazembe personally at this point would predetermine the appropriateness of his conduct with respect to this litigation. There is insufficient evidence before the court to determine if Kazembe (i) properly obtained instructions from 908 when responding to the litigation, or (ii) advised Fowler or other investors that commission was owing when the Property was sold.

[14] Also, Kazembe’s impugned conduct in responding to the summary judgment motion would also form part of a negligence claim against him as legal trustee/lawyer, which would need to be determined at trial.

[15] Consequently, the payment of the costs must come from the funds in court held on behalf of the investors. Re/Max should not be prejudiced by the dispute between Kazembe and the Fowler Group. It was the successful party. 908 was the unsuccessful party. Re/Max is entitled to its costs from 908.

[16] However, the Fowler Group’s claims against Kazembe with respect to his conduct of the summary judgment motion need to be determined at trial. The relief sought by Kazembe of an order against 908 without any further protection for the Fowler Group would improperly shelter Kazembe from such claims.

[17] Consequently, while I order that the costs of the motion be paid from the funds held in court, I also order that the Fowler Group may seek to recover these costs in their existing action against Kazembe for negligence and breach of trust.

[18] As to quantum, the motion was not complex. However, the issues of lack of authority raised by Kazembe (purportedly on behalf of 908) caused Re/Max to incur additional costs for preparation of affidavit material.

[19] Based on the above factors, I fix costs at $10,000 inclusive of disbursements and taxes. They shall be payable by 908 within 30 days of this order from the funds held in court, subject to the right of the Fowler Group to claim payment of those costs from Kazembe at trial.

GLUSTEIN J.

Date: 2019-10-11

[^1]: All defined terms are as in my reasons.