Stikeman v. Gottlieb, 2020 ONSC 3446

COURT FILE NO.: CV-15-11103-00CL

DATE: 20200604

ONTARIO SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

BETWEEN:

Stikeman Elliott LLP Plaintiff

– and –

Myron I Gottlieb Defendant

Mark Dunn and Carlie Fox, for the Plaintiff Norm Emblem, for an Affected Party

Myron I Gottlieb, In Person, Defendant

HEARD: February 11, 2020

L.A. Pattillo J.

Introduction

1On August 30, 2019, following a four-day trial, I released reasons for judgment allowing Stikeman Elliott LLP’s action against Mr. Gottlieb and granting Stikeman a permanent injunction preventing him from disseminating his draft letter of May 2, 2018, which, similar to earlier drafts, I found to be defamatory to Stikeman and two of its partners. Mr. Gottlieb failed to establish a defence to the action entitling him to publish his allegations.

2The reasons for judgment were released only to the parties as a result of a sealing order that had been granted at the outset of Stikeman’s action and continued by me through to the conclusion of the trial.

3At the conclusion of the reasons, I directed that the parties obtain a mutually agreeable date to address both whether the sealing order should remain in place in light of my reasons for judgment and costs.

4On February 11, 2020, I heard submissions from counsel and Mr. Gottlieb on both the continuation of the sealing order and costs, following which I advised the parties orally that I intended to vacate the sealing order but only in respect of my reasons for judgment and my reasons in Stikeman’s motion to exclude the public from the trial and that I would provide brief reasons for my decision. I also reserved the issue of costs. These are my reasons in respect of both issues.

Background

5As my judgment has not been released publicly, a brief background in respect of the action and the sealing order is necessary. A more detailed discussion of the facts is contained in my reasons for judgment of August 30, 2019.

6In August 1998, Mr. Gottlieb, along with Garth Drabinsky, was suspended as an officer of Livent Inc. (a public company) by its board of directors based on information that had come to light involving improper amortization and expense manipulation of Livent’s financial statements. Stikeman acted for Livent and conducted an investigation of the alleged improper activities which led to the suspensions. Stikeman also later acted for Livent in various civil actions involving Mr. Gottlieb.

7Subsequently, in addition to being terminated from Livent on November 18, 1998, over the next 10 years, Mr. Gottlieb was involved in criminal charges both in Canada and the United Sates as well as civil actions and regulatory proceedings concerning the issues which first came to light in August 1998.

8On March 25, 2009, Mr. Gottlieb was convicted of two counts of fraud and one count of forgery and subsequently sentenced to four years and six years respectively, to be served concurrently. On September 13, 2011, the conviction was upheld by the Court of Appeal, but the sentence was reduced to three years and four years respectively, again to be served concurrently.

9In 2006, Mr. Gottlieb commenced a civil action against numerous parties, including Stikeman, its partners and employees involved in Stikeman’s August 1998 investigation into the accounting irregularities at Livent. The action, which was based on malicious prosecution, was summarily dismissed in 2007 as being premature.

10In November 2013, following his release from prison, Mr. Gottlieb sent an email to Stikeman’s Chair of its executive committee, requesting a meeting to discuss his “findings and plans pertaining to Stikeman Elliott and specific partners”. Stikeman elected not to respond to the email.

11In August 2015, Mr. Gottlieb again wrote to Stikeman. He enclosed a 13-page draft letter alleging that Stikeman and one or more of its partners engaged in conduct which was not only contrary to the Rules of Professional Conduct but also contravened the Criminal Code during its involvement as Livent’s counsel beginning in August 1998. He sought both “national and international accountability” for Stikeman’s misconduct and stated that if the matter was not resolved to his satisfaction by September 11, 2015, he would send his letter to Stikeman’s clients and other parties involved in transactions with Stikeman whose names were listed on a 103-page document he also enclosed.

12In response, on September 10, 2015, Stikeman commenced this action asserting claims of defamation and unlawful means and seeking a permanent injunction restraining Mr. Gottlieb from making written or oral statements that harm Stikeman and specifically from acting on or engaging in any of the activities and initiatives set out in his August 2015 communication.

13On September 11, 2015, Stikeman obtained an interim ex parte order from Newbould J. enjoining Mr. Gottlieb from disseminating his August 2015 communication including the draft letter and sealing any document filed in the action as confidential and not part of the public record pursuant to s. 137(2) of the Courts of Justice Act, R.S.O. 1990, c. C-34.

14On October 5, 2015, the interim injunction and sealing/protective order was continued until the trial of the action. In his endorsement granting the order, Newbould J. applied the higher test required for injunctions involving allegations of defamation and concluded that Mr. Gottlieb’s material was “clearly defamatory of Stikeman and there is no evidence that it could be justified.” He also noted that there was considerable evidence of malice on the part of Mr. Gottlieb. There was no discussion concerning the sealing order apart from stating at the conclusion that the file would continue to be sealed.

15Two weeks before the scheduled start of the trial, Stikeman brought a motion before me for an order to exclude the public from the trial of the action pursuant to s. 135(2) and (3) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”). In accordance with the court’s Consolidated Practice Direction, Stikeman sent notice of its motion to the media but no one appeared from the media on the motion.

16I allowed Stikeman’s motion, in part, based on the test set out in Dagenais v. Canadian Broadcasting Corp., 1994 CanLII 39 (SCC), [1994] 3 S.C.R. 835 and R. v. Mentuck, 2001 SCC 76, [2001] 3 S.C.R. 442. As many of Mr. Gottlieb’s allegations against Stikeman were already in the public record, I concluded that the courtroom should not be closed to the public for the trial. However, in order to prevent dissemination or publication of Mr. Gottlieb’s allegations in his May 2, 2018 letter (the most recent version) prior to the conclusion of the trial, I ordered a limited publication ban in respect of the trial preventing the publication of the alleged defamatory statements in the letter together with the continuation of the sealing order until the end of the trial.

17The limited publication ban, and my order were posted on the courtroom door at the start of the trial. Despite an open court, no one from the public or the media attended the trial.

Sealing Order

18While Newbould J.’s endorsement does not specifically refer to the test in Sierra Club v. Canada (Minister of Finance), (2002) SCC 4 concerning the sealing of documents, I am satisfied, based on his reasons, that he clearly had the test in mind in granting and continuing the order. Based on the evidence before him of Mr. Gottlieb’s intention to publish his defamatory statements in the absence of evidence of justification together with the relief claimed by Stikeman of a permanent injunction to prohibit publication, a sealing order was necessary to prevent the serious risk of Mr. Gottlieb’s defamatory allegations being disseminated prior to judgment thereby rendering Stikeman’s action moot. Further, given the allegations, the salutary effects of the order (preserving the right to a fair trial) outweighed its deleterious effects (restricting the public’s right to information).

19Stikeman submits that the sealing order which was granted on an interlocutory basis before a final determination of the issues in the action should continue to apply as those issues have been finally determined in Stikeman’s favour at trial. Accordingly, the Sierra Club test continues to be satisfied such that a permanent sealing order is necessary.

20Mr. Gottlieb has no objection to the record being sealed, including my reasons for judgment except for my endorsement concerning Stikeman’s motion to exclude the public from the trial and the agreed statement of facts filed by the parties at trial (except for paragraphs 50 and 51).

21The Affected Party obtained a permanent injunction against Mr. Gottlieb in February 2016 following a trial arising out of somewhat similar allegations by Mr. Gottlieb. A permanent sealing order was granted in that action. The Affected Party submits that any order lifting the sealing order in this case must not impact the sealing order in its case.

22In that regard, Stikeman submits, along with the Affected Party, that the sealing order should be continued given the court record, including the record at trial, contains a number of documents that are subject to the Affected Party sealing order.

23In order for the sealing order to continue, the test in Sierra Club must continue to be met. Stikeman must establish the sealing order:

a) is necessary in order to prevent a serious risk to an important interest, including a commercial interest, in the context of litigation because reasonable alternative measures will not prevent the risk; and

b) the salutary effects of the confidentiality order, including the right of civil litigants to a fair trial, outweigh its deleterious effects, including the effects on the right to free expression, which includes the public interest in open and accessible court proceedings.

24In my view, subject to what follows, compliance with the Affected Party sealing order clearly meets the test in Sierra Club. Such an order is necessary to prevent breach of that order. Further, the record involves significant references to the Affected Party and its documents that redaction or culling of the record in this action is not feasible. I am also satisfied that the salutary effects of continuing the sealing of the record to comply with an order of the court outweighs its deleterious effects.

25I take a different view however with respect to my reasons for decision in the action, specifically my reasons for judgment, my reasons in Stikeman’s motion to exclude the public from the trial and these reasons.

26In my view, central to the granting of the sealing order in this action was the necessity to ensure the parties right to a fair trial by preserving the remedy sought. Publication of the allegations in advance of trial would render the relief claimed by Stikeman moot. As those allegations were present in the court record, the injunction against Mr. Gottlieb was not sufficient to prevent publication by third parties who, in the absence of a sealing order, could obtain access to the open court file.

27That situation no longer exists. The trial has occurred, and the remedy sought by Stikeman in the action has been granted. The allegations in the May 2, 2018 letter have been found by me to be not only defamatory but to have been made with malice by Mr. Gottlieb. In reaching those findings, I reviewed the allegations based on the detailed evidence presented by both sides and totally vindicated Stikeman and its partners and employees who were involved from any wrongdoing concerning Mr. Gottlieb.

28Stikeman agrees that if my reasons for judgment are read in their entirety, it is clear that Mr. Gottlieb’s allegations have been completely rejected and Stikeman has been fully vindicated. Its concern is the risk that the reasons will not be given a full and fair reading with the result that the harm to Stikeman will not be eliminated.

29I consider that risk to not be serious within the meaning of Sierra Club. As noted in Dagenais at para. 34, the risk must be real, substantial and well-grounded in the evidence. It must be a serious danger sought to be avoided. I consider the risk of publication of the allegations in the absence of my findings of defamation and malice very unlikely given the time which has transpired since the events in question, the fact that no media attended at the motion to exclude the public from the trial or at the trial and my reasons for judgment.

30Stikeman submits, as was noted in Hill v. Church of Scientology, 1995 CanLII 59 (SCC), [1995] 2 S.C.R. 1130 at para. 180, that it is not possible to know the extent of the impact on Stikeman if the reasons are released. In other words, vindication does not eliminate the defamatory allegation. While that proposition is true in respect of situations where, as in Hill, the defamatory remarks were made and published in advance of trial and the vindication comes later following trial, that is not the case here where the allegations and the vindication are dealt with at the same time, before widespread publication.

31Reasons are a very important part of the open court principle. I am mindful of the words of Binnie J. in R. v. Shepard, 2002 SCC 26, [2002] 1 S.C.R. 869 at para. 22:

There is a general sense in which a duty to give reasons may be said to be owed to the public rather than the parties to a specific proceeding. Through reasoned decisions, members of the general public become aware of rules of conduct applicable to their future activities. An awareness of the reasons for a rule often helps define its scope for those trying to comply with it. The development of the common law proceeds largely by reasoned analogy from established precedents to new situations.

32Further, I am satisfied that my reasons for judgment as well as my reasons herein and in respect of Stikeman’s motion to exclude the public from the trial do not refer to the Affected Party and accordingly do not breach of the Affected Party sealing order.

33For the above reasons, therefore, the sealing order in this action will be extended until further order of the court save and except for my reasons for judgment dated August 30, 2019, my reasons dated May 7, 2019 and these reasons.

Costs

34In support if its claim for costs of the action, Stikeman has submitted a Bill of Costs detailing partial indemnity costs totalling $825,771.35 (fees of $693,087.30; disbursements of $37,683.81; and HST of $95,000.24) and substantial indemnity costs of $1,217,365.68 (fees of $1,039,630.95; disbursements as above; and HST of $140,050.92).

35Stikeman submits that having been successful in the action, it is entitled to its costs. It further submits, based on Mr. Gottlieb’s allegations against Stikeman and two of its partners which were found to be entirely false and motivated by malice, costs should be awarded on a substantial indemnity basis.

36In response, Mr. Gottlieb takes no issue with Stikeman’s entitlement to costs. Rather he submits that costs should not be awarded against him on the grounds that he is impecunious with no prospects, given his age, of receiving any money and he has significant health issues.

37Having been entirely successful in its action, Stikeman is presumptively entitled to its costs of the action. While the costs incurred are high, they encompass multiple motions, three days of examinations for discovery, one day of mediation, a judicial pre-trial and a four-day trial. Mr. Gottlieb takes no issue with the quantum of costs claimed by Stikeman.

38In my view, given what was involved, the costs as claimed, including the hourly rates, are reasonable. Further, Mr. Gottlieb, who is a sophisticated and experienced litigant, was aware that Stikeman was incurring significant costs in pursuing the action. Costs which, if he was unsuccessful, he could be liable for.

39Nor should the quantum of costs claimed by Stikeman come as any surprise to Mr. Gottlieb. In August 2016, Stikeman brought an unsuccessful motion against him for security for costs in which it estimated that the costs of proceeding through trial would exceed $1.16 million.

40Substantial indemnity costs are the exception, not the rule. They will be awarded, however, where unsupported and unproven allegations of fraud and dishonesty are alleged. See: Bargman v. Rooney, [1998] O.J. No. 5528 (OCJ Gen Div) at para. 20.

41In the present case, Mr. Gottlieb made allegations of criminal fraud and dishonesty against Stikeman and its two partners (including breaches of the Rules of Professional Conduct) in the draft letters he proposed to send to Stikeman’s clients as well as other major businesses in Canada and the United States. Those allegations which were most serious, were found by me to be unsupported and unproven at trial. While the allegations were not raised by Mr. Gottlieb in an action, I consider the distinction to be one without a difference.

42Mr. Gottlieb’s allegations against Stikeman and its partners are among the most serious that can be made against any lawyer or law firm. Mr. Gottlieb’s conduct in making those allegations with malice and not being able to substantiate them amounts, in my view, to reprehensible conduct entitling Stikeman to substantial indemnity costs.

43While impecuniosity is a factor to consider in awarding costs, along with the factors set out in rule 57 of the Rules of Practice, it is not a shield from liability for costs. As stated in Pittuck v. Garwood/Feller Inc., 2019 ONSC 1521 (SCJ) at para.18, “the unsuccessful party should reasonably expect to be ordered to pay costs, whether impecunious or not.” Particularly in circumstances where the conduct is reprehensible, scandalous and outrageous. See: Massiah v. Justices of the Peace Review Council, 2018 ONSC 3097 (Div. Ct.) at para. 14.

44Mr. Gottlieb by his own admission has been impecunious since at least 2009. Yet he chose to make his allegations against Stikeman and certain of its partners and to persist in those allegations with the intent of harming their reputations. He blamed them for his downfall rather than looking in a mirror.

45From the very outset, Mr. Gottlieb understood the harmful effects of his allegations. As Stikeman points out, over the years he had ample opportunity to end the litigation by agreeing not to distribute his letter. He persisted in his intention to publish it and harm Stikeman, forcing Stikeman to pursue the action and in doing so, incur significant costs. In such circumstances, I give no weight to his impecuniosity or personal circumstances in awarding costs against him.

46For the above reasons, Stikeman is entitled to its costs of the action on a substantial indemnity basis fixed at $1,217,365.68 in total.

47After the argument was concluded, I received a letter from Stikeman’s counsel asking me not to publish my reasons as noted herein for a period of 10 days following release of these reasons to enable Stikeman to consider its options. Accordingly, in the absence of further information, the reasons will be released to the parties today and to the public on June 15, 2020.

L. A. Pattillo J.