Diguseppe v. Evanov et al.
[Indexed as: Diguseppe v. Evanov]
Ontario Reports
Ontario Superior Court of Justice
Glustein J.
February 6, 2019
144 O.R. (3d) 375 | 2019 ONSC 910
Case Summary
Civil procedure — Costs — Costs against solicitor personally — Oppression action dismissed on basis that plaintiff lacked standing — Plaintiff bringing untenable motion to amend statement of claim and then failing to meet court-imposed peremptory deadlines — Motion dismissed — Plaintiff's lawyer causing wasted costs to be incurred unnecessarily — Lawyer taking untenable positions and breaching numerous court orders — Costs awarded against plaintiff's lawyer personally on substantial indemnity basis.
The plaintiff's oppression claim was dismissed on the basis that the plaintiff lacked standing. The plaintiff had adduced no evidence that he was a shareholder, officer or director. The plaintiff then proposed to bring a motion to amend his claim, effectively asserting a new claim. The defendants took the position that the claim was statute-barred. The plaintiff failed to meet court-appointed peremptory deadlines for serving and delivering a motion record. He did not lead any evidence in support of extending the limitation period and did not plead any facts in the proposed amended claim that would do so. The motion to amend was dismissed as the proposed claim was statute-barred. The defendants sought an order for the payment of costs personally by the plaintiff's counsel, K, under rule 57.07(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
Held, costs should be awarded against K personally.
K had caused costs to be incurred unnecessarily or wasted. No reasonable counsel should allow a client to assert an oppression claim without inquiring into the plaintiff's status as a shareholder, officer or director. Moreover, it ought to have been obvious to K that the motion to amend, without evidence addressing the limitations issue, could not succeed. K twice failed to attend court after last-minute [page376] cancellations, leaving his client to attend in person. K also caused wasted costs through repeated adjournments and failure to comply with strict deadlines for delivery of materials. Finally, K's conduct in taking untenable positions and breaching numerous court orders warranted substantial indemnity costs.
Galganov v. Russell (Township), [2012] O.J. No. 2679, 2012 ONCA 410, 294 O.A.C. 13, 350 D.L.R. (4th) 679, 217 A.C.W.S. (3d) 537, apld
Other cases referred to
Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3, [1993] S.C.J. No. 112, 108 D.L.R. (4th) 193, 160 N.R. 1, [1993] 8 W.W.R. 513, J.E. 93-1766, 34 B.C.A.C. 161, 84 B.C.L.R. (2d) 1, [1993] R.D.F. 703, 18 C.R.R. (2d) 41, 49 R.F.L. (3d) 117, 43 A.C.W.S. (3d) 410, E.Y.B. 1993-67111
Statutes referred to
Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, ss. 4, 5 [as am.]
Rules and regulations referred to
Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 39.03, (3), 57.07, (1), (2)
RULING on costs.
Fadi Matthew Kazandji, for plaintiff.
Ron Sleightholm, for defendants.
GLUSTEIN J.: —
Defendants' Summary Judgment Motion
[1] The defendants seek summary judgment dismissing the oppression claim, issued on February 28, 2018, brought by the plaintiff Riccardo Di Giuseppe (wrongfully identified in the claim as "Riccardo DiGuseppe") (the "oppression action").
[2] The defendants filed affidavit evidence from the defendant Paul Evanov, setting out that (i) the plaintiff was not a shareholder of any of the corporations referred to in the statement of claim; and (ii) the plaintiff was not a shareholder, officer, or director of 1093461 Ontario Limited ("1093461"), which held a 30 per cent interest in CKDX Radio Limited, which was 70 per cent owned by Evanov Communications Inc. (the renamed Evanov Radio Group, Inc., which was wrongfully identified as Evanov Radio Group in the claim).
[3] Consequently, the defendants asserted that the plaintiff had no standing to bring an oppression claim.
[4] The plaintiff filed no evidence in response to the defendants' motion record, which was served on or about May 4, 2018.
[5] The plaintiff submitted that he could not obtain evidence because the defendant would not attend for cross-examination. The plaintiff filed no evidence on this issue nor had any correspondence for the court confirming that position. To the contrary, [page377] earlier orders of this court had allowed the plaintiff until January 25, 2019 to conduct cross-examinations.
[6] Further, by my endorsement dated October 9, 2018, the plaintiff was also provided until January 11, 2019 to seek an order from a master to compel the defendant William (Bill) Evanov to attend for a rule 39.03 [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] examination.
[7] The plaintiff took no steps with respect to either Bill or Paul Evanov. Instead, by e-mail on the afternoon of January 25, 2019, Mr. Wise, another counsel engaged by the plaintiff, wrote to defendants' counsel asking for "available dates for Bill and Paul Evanov to be cross-examined between now and the motion returnable February 4". I find that defendants' counsel properly rejected the requests for such cross-examination.
[8] In any event, counsel for plaintiff at the hearing, Fadi Matthew Kazandji ("Kazandji"), did not request an adjournment for cross-examination. If he had done so, I would have refused the request, as this matter was before me on three separate occasions since July 2018 (as I set out in more detail below), so it could not be found that the plaintiff was seeking to exercise a right of cross-examination with "due diligence" as required under rule 39.03(3) of the Rules of Civil Procedure.
[9] Consequently, there is no evidence to maintain the plaintiff's claim. The only evidence is from the defendants and, as such, it is uncontested that the plaintiff has no status to bring an oppression claim against the defendants. For those reasons, I dismiss the oppression action.
The Plaintiff's Amendment Motion
[10] As a response to the summary judgment motion, the plaintiff brought a motion to amend the oppression action, in essence seeking a new cause of action for a declaration that the plaintiff was personally entitled to a 30 per cent interest in the radio assets acquired or developed by Bill Evanov and Evanov Communications Inc. after December 21, 2000, based on an alleged representation by the defendant Bill Evanov made on or about that date.
[11] The issue of the proposed amendment was first raised at the initial hearing of the summary judgment motion before me on July 10, 2018. At that hearing, the plaintiff appeared in person and advised the court that Kazandji could not attend. The plaintiff sought an adjournment of the motion. At that hearing, defendants' counsel advised the plaintiff that the defendants would oppose any amendment to raise a new claim on the basis of the expiry of the two-year limitation period under s. 4 of the [page378] Limitations Act, 2002, S.O. 2002, c. 24, Sch. B (the "Limitations Act"). The motion was adjourned to October 9, 2018.
[12] The plaintiff first served a draft of the proposed amended claim on July 15, 2018, by way of a responding motion record to the summary judgment motion, shortly after the first hearing before me. The defendants' position that the claim on its face was statute-barred was made clear at the initial hearing before me on July 10, 2018, as well as upon receipt of the proposed draft amended claim, through several letters and on subsequent occasions in court.
[13] At the hearing on October 9, 2018, the plaintiff again appeared in person. Kazandji again did not attend. The plaintiff sought an adjournment. By endorsement of that date, I ordered the plaintiff, on a peremptory basis, to serve a motion record by no later than October 23, 2018, seeking the plaintiff's stated intended relief to (i) amend the statement of claim in the oppression action and (ii) seek arbitration. The plaintiff failed to comply with the peremptory timetable.
[14] At a telephone case conference attended by Kazandji and defendants' counsel on November 15, 2018 (scheduled at the request of defendants' counsel after the plaintiff failed to meet the earlier peremptory timetable), I granted one final extension to the plaintiff and ordered:
Plaintiff to serve and deliver motion record to amend statement of claim and seek stay for arbitration by November 30, 2018. No such motion can be brought if the plaintiff does not comply with this timetable.
[15] The plaintiff did not comply with my November 15, 2018 order. Instead, on January 11, 2019, the plaintiff served a motion record seeking to amend the statement of claim. The plaintiff did not seek any relief with respect to arbitration.
[16] The defendants then served a responding motion record opposing the ability of the plaintiff to bring his amendment motion after missing the second peremptory deadline.
[17] The plaintiff (represented by Kazandji) appeared in court at the present hearing and sought leave to amend the claim, despite his failure to comply with strict deadlines imposed through my two earlier court orders. The plaintiff's only explanation for failing to meet the deadlines was a statement in his affidavit that he did so "[b]ecause of my financial limitations and the fact that I have more than one law firm trying to help me with this matter".
[18] Despite the breach of the court orders, I allowed the amendment motion to proceed.
[19] I agree with the defendants' submission, which they raised since July 2018, that the proposed amended claim is statute-barred. The alleged representation was in December 2000, and [page379] there is no pleading as to how the two-year period could be extended on any basis, let alone for 18 years between the alleged representation and the new claim.
[20] Further, despite being fully aware of the issue, the plaintiff filed no evidence addressing how the two-year period under s. 4 of the Limitations Act could in any way be extended under s. 5 of the Limitations Act by "discovery" or "discoverability".
[21] Instead, in a brief affidavit, the plaintiff "cut and paste" the identical affidavit from his July 15, 2018 responding motion record, adding only his explanation as to why he did not comply with my two peremptory timetable orders.
[22] In his affidavit, the plaintiff repeated his earlier sworn evidence from his July 15, 2018 affidavit (quoted verbatim):
There are multiple proceedings and I acknowledge that I am unfamiliar with drafting pleadings. The issued statement of claim herein was drafted by me.
I believe and I have been advised that the fresh as amended claim addresses all of the defendants' concerns raised in their motion for summary judgment.
[23] As the plaintiff failed to lead any evidence in support of extending the limitation period, nor pleaded any facts in the proposed amended claim that would do so, I dismissed the motion to amend.
Personal Costs Against Plaintiff's Lawyer Under Rule 57.07(1)
[24] The final issue before the court was payment of costs personally by plaintiff's counsel, Kazandji, under rule 57.07(1). As required under rule 57.07(2), that relief was sought by the defendants in their notice of motion for summary judgment served as of May 4, 2018.
[25] Further, under rule 57.07(2), I also gave notice to Kazandji in my endorsement of October 9, 2018, of my intention to consider an award of costs personally against him, an endorsement I did not make lightly. I believed that such notice was appropriate since Kazandji failed to appear before me in October 2018 for the second consecutive hearing, with a last-minute cancellation leaving his client to appear as a self-represented party before the court.
[26] Despite the very serious nature of a personal costs order under rule 57.07, Kazandji chose not to retain independent counsel to address the relief sought against him by the defendants, and also raised by notice of the court. Kazandji filed no evidence to address the issues surrounding his conduct.
[27] After having granted summary judgment and dismissing the motion to amend, I then addressed the costs issue with defendants' counsel and Kazandji. [page380]
i) The applicable law
[28] The general principles concerning the award of costs personally against a lawyer are set out in Galganov v. Russell (Township), [2012] O.J. No. 2679, 2012 ONCA 410, 350 D.L.R. (4th) 679 ("Galganov"), in which the court reviewed the relevant case law including Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3, [1993] S.C.J. No. 112, 108 D.L.R. (4th) 193. I summarize the applicable law as follows (quoted verbatim):
(i) "A lawyer whose conduct results in costs being incurred unreasonably, or wasted, may be deprived of his or her costs or required to pay the costs of any other party" (at para. 12);
(ii) "[R]ule 57.07(1) is not simply a codification of the common law. Rather, it is designed to protect and compensate a party who has been subjected to costs being incurred without reasonable cause, not to punish a lawyer" (at para. 14);
(iii) "'[B]ad faith' is not a requirement for imposing the costs consequences of rule 57.07(1)" (at para. 18);
(iv) "[R]ule 57.07(1) requires an examination of 'the entire course of litigation that went on before the application judge so that the application judge can put in proper context the specific actions and conduct of counsel.' This holistic examination of the lawyer's conduct produces an accurate tempered assessment" (at para. 20); and
(v) "Although the conduct as a whole must be considered, a court must consider specific incidents of conduct in determining whether the conduct falls within rule 57.07(1). In [Carleton v. Beaverton Hotel (2009), 2009 CanLII 92124 (ON SCDC), 96 O.R. (3d) 391 (Div. Ct.)], the court confirmed, at para. 20, that a general observation 'does not permit identification of what conduct may have contributed to delay and unnecessary costs.' Further, the absence of specific evidence or circumstances considered in making a general observation precludes meaningful appellate review of the criteria of rule 57.07(1). Above all, the legal test under rule 57.07(1) is not concerned with a lawyer's professional conduct generally, but whether such conduct, including the conduct of the litigation, caused unreasonable costs to be incurred." (at para. 21)
[Citation omitted]
[29] In Galganov, the court set out a two-part test to determine the liability of a lawyer for costs under rule 57.07(1) (at paras. 18 and 22):
The first step is to inquire whether the lawyer's conduct falls within rule 57.07(1) in the sense that it caused costs to be incurred unnecessarily. Rule 57.07(1) refers specifically to conduct that "caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default". The court in [Marchand (Litigation Guardian of) v. Public General Hospital Society of Chatham (1998), 16 C.P.C. (4th) 201 (Ont. Gen. Div.)] held that mere negligence can attract costs consequences in addition to actions or omissions which fall short of negligence . . .
[page381]
The second step is to consider, as a matter of discretion and applying the extreme caution principle enunciated in Young, whether, in the circumstances, the imposition of costs against the lawyer personally is warranted. The "extreme caution" principle, as stated in Young, means that "these awards must only be made sparingly, with care and discretion, only in clear cases, and not simply because the conduct of a lawyer may appear to fall within the circumstances described in [r]ule 57.07(1)": Carleton, at para. 15.
ii) Application of the law to the facts of this case
[30] Upon a review of the entire course of these proceedings, as well as specific examples of Kazandji's conduct, I find that it is appropriate to grant the exceptional relief of costs personally against him.
[31] Under the first part of the Galganov test, I find that costs have been incurred unreasonably or wasted, as a result of Kazandji's conduct.
[32] The uncontested evidence before the court was that the oppression action, which was the genesis of all the wasted costs to follow, was drafted by the plaintiff, not by Kazandji. In two separate affidavits, the plaintiff swore that "[t]he issued statement of claim was drafted by me" and "I acknowledge the claim was not properly drafted". Accepting this uncontested evidence, Kazandji permitted the claim to be issued under his law firm's name when he was not involved in drafting the claim.
[33] At the hearing, without any evidence before the court, and with his client in attendance, Kazandji sought to resile from the two separate statements by his client in his affidavits, and advised the court that Kazandji drafted the claim.
[34] However, even if Kazandji drafted the claim, the plaintiff's uncontested evidence was that his claim "was not properly drafted". Consequently, Kazandji's conduct would still have led to wasted costs.
[35] In particular, no reasonable counsel should allow a client to assert an oppression claim without inquiring into the plaintiff's status as a shareholder, officer, or director.
[36] When I raised that issue with Kazandji at the hearing, his answer was that there was a certificate demonstrating the plaintiff's status as a shareholder. If that were the case, it would be negligent for counsel, responding to a summary judgment motion on an oppression claim based on the plaintiff's alleged lack of status as a shareholder, to not file evidence of share ownership.
[37] In any event, the plaintiff filed no evidence to respond to the summary judgment sought in the oppression action. Instead, the plaintiff sought to amend the claim based on his affidavit evidence that "I believe and I have been advised that the fresh as amended claim addresses all of the defendants' concerns raised in [page382] their motion for summary judgment". It ought to have been obvious to Kazandji that such a position, without evidence addressing the limitations issue, could not succeed.
[38] After the initial oppression claim was drafted, Kazandji then continued to cause wasted costs to be incurred. On both July 10, 2018 and October 9, 2018, he failed to attend at court after last-minute cancellations leaving his client to attend in person. Kazandji submitted at the present hearing that he was unable to appear on the prior court attendances, but offered no evidence of other court commitments or any other reason why he could not attend, even though (i) he had notice from my October 9, 2018 endorsement that I was considering an order under rule 57.07(1); and (ii) the defendants requested such evidence in their correspondence to Kazandji.
[39] Further, while Kazandji sought at the present hearing to blame counsel for the defendants for fixing dates at earlier attendances without consulting him, the evidence before me at the earlier hearings did not support that position. By way of example, in my endorsement dated October 9, 2018, I found that Kazandji "gave no indication he was unavailable in his letter of September 4, 2018 confirming the hearing date".
[40] Kazandji submitted at the present hearing that he had wanted to discontinue the litigation and have the matters raised by the plaintiff in the proposed amended claim addressed in ongoing arbitration involving 1093461, in which the plaintiff sought, in his proposed amended claim, a 30 per cent interest based on the alleged December 2000 misrepresentation.
[41] However, when faced with the reasonable position from defendants' counsel that (i) the oppression action had to be discontinued; (ii) the proposed amended claim was statute-barred; and (iii) there was no arbitration agreement between the plaintiff and Evanov Communications Inc. (only between 1093641 and Evanov Communications Inc.), Kazandji moved forward with the present motions. There was no evidence (nor could there have been since Kazandji chose not to retain independent counsel) that Kazandji instructed his client to discontinue the oppression action and pay costs and that his client ignored such instructions.
[42] Kazandji submitted that he would have been prepared to "walk away" from the oppression action but that the defendants were not willing to accept either that (i) the plaintiff's issues be addressed at arbitration or (ii) the costs of the discontinued action be left to the arbitration. Those positions taken by the defendants were reasonable as there was never any basis for the plaintiff to pursue an arbitration agreement to which he was not a party. [page383]
[43] Kazandji chose to "double down" on the oppression action and to propose an "amended" (in effect, a new) claim. Kazandji came to court at the present hearing and submitted that by amendment, the oppression action could stand. In so doing, Kazandji ignored repeated offers to settle, with costs lower than those sought at the present hearing, even though the defendants expressly advised Kazandji of the lack of status of the plaintiff to bring the oppression action and the limitations issue in the proposed amended claim.
[44] Kazandji also caused wasted costs through repeated adjournments, failures to attend at hearings, and by a case conference required when he failed to comply with the strict deadlines imposed by the court for delivery of materials.
[45] For the above reasons, I find that both parts of the test in Galganov are met. Kazandji caused wasted costs to be incurred unnecessarily. Further, while I adopt [at para. 22] the "extreme caution principle enunciated in Young",I find that"in the circumstances, the imposition of costs against the lawyer personally is warranted", as the costs were incurred directly as a result of Kazandji's conduct set out above. There was no evidence before the court to provide any other explanation for the costs incurred, even though Kazandji had every opportunity to seek independent counsel to assist the court with this serious matter.
[46] The defendants sought costs both personally against Kazandji and against the plaintiff, to be paid jointly and severally. I do not find it appropriate to order costs against the plaintiff, as the only evidence before the court is that he personally drafted the claim which Kazandji then issued as lawyer of record, and that the plaintiff was "advised that the fresh as amended claim addresses all of the defendants' concerns raised in their motion for summary judgment". While Kazandji suggested at the present hearing that there may have been issues of instructions from the plaintiff or from other counsel in the arbitration matter which might have been relevant to whether costs should be awarded against the plaintiff (and possibly relevant to whether costs should be ordered against Kazandji), none of that evidence was before the court, at the choice of Kazandji.
[47] Finally, I find that the conduct of Kazandji in this matter, taking untenable positions and breaching numerous court orders, warrants substantial indemnity costs. I find that the costs of $20,000 (inclusive of taxes and disbursements) sought by the defendants is reasonable, given the numerous court appearances, motions, defendants' factum, and correspondence required in this matter. [page384]
Order and Costs
[48] For the above reasons, (i) I grant the defendants' motion for summary judgment and dismiss the action; (ii) I dismiss the plaintiff's motion to amend the claim; and (iii) I fix costs in this matter at $20,000, payable by Kazandji to the defendants within 30 days of this order.
Order accordingly.
End of Document