Court File and Parties

COURT FILE NO.: CV-16-3453-00 and CV-16-5654-00 DATE: 2020 07 22

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ERNEST GROH D. Loucks, Counsel for the Plaintiff (until October, 2018) Plaintiff

• and -

DORIS STEELE and JOAN F. WOLFE also known as KITTY WOLFE and GABRIELLE GROHOTOLSKI, S.G. TRUCKING INC., and S.E.G MANAGEMENT INC., THE ESTATE OF SIEGMUND GROHOTOLSKI, deceased P.D Stern, Counsel for Doris Steele and Joan F. Wolfe D. Elliott and E. Mamay, Counsel for Gabrielle Grohotolski Defendants

AND BETWEEN:

ERNEST GROH D. Loucks, Counsel for the Plaintiff (Until October 2018) Plaintiff

• and -

DORIS STEELE and JOAN F. WOLFE, also known as KITTY WOLFE, 1275921 Ontario Inc., carrying on business as Motion Endeavours, TIM QUOCKSISTER, SILVER ARROW CARS LTD. and GULL WING MOTOR CARDS INC. P.D Stern, Counsel for Doris Steele and Joan F. Wolfe D. Elliott and E. Mamay, Counsel for Gabrielle Grohotolski C. Belsito, counsel for Tim Quocksister and Silver Arrow Cars S. Hutchison and A. Smith, Counsel for Gullwing Motor Cars Defendants

HEARD: In writing

REASONS FOR DECISION

LEMAY J

1On October 8th, 2019, I released reasons in the summary judgment motions brought in respect of the claims of Mr. Groh against the Defendants. These claims covered two separate actions that were case-managed by me and addressed together. My reasons for dismissing Mr. Groh’s claims are reported at 2019 ONSC 5831. The counterclaims brought by a number of the Defendants against Mr. Groh were not addressed by those reasons.

2The counterclaiming parties were to advise as to whether they wished to proceed with their counterclaims. Some of them wish to do so. In addition, most of the Defendants are seeking costs. The purposes of this endorsement are to address both the costs submissions and the process for addressing the counterclaims.

Background

3The history of this motion is set out in my reasons from October 8th, 2019. In this proceeding, Mr. Groh has made a series of claims to the ownership of assets owned by his mother and the hotel business jointly owned by his mother and father. Those assets included a 1973 Dino Ferrari (“the Yellow Ferrari”). He was unsuccessful in all of those claims.

4In addition, Mr. Groh made claims that the Defendants Motion Endeavours, Tim Quocksister and Silver Arrow improperly resold the Yellow Ferrari. That claim was dismissed. A number of the Defendants, including Mr. Quocksister and Silver Arrow brought counterclaims against Mr. Groh. Those counterclaims remain outstanding.

5These claims followed an earlier action (see 2017 ONSC 3625) which Mr. Groh brought against his mother, Gabriella Grohotolski as well as the Defendants Ms. Steele and Ms. Wolfe. In that action, Mr. Groh alleged that Ms. Steele and Ms. Wolfe were mismanaging his mother’s affairs. He sought a capacity assessment and the removal of Ms. Steele and Ms. Wolfe as his mother’s attorneys for property. That action was previously dismissed.

6When I released my October 8th, 2019 reasons, I provided any party seeking costs with forty-five (45) days to provide written submissions, as well as advising me as to whether they wished to continue with their counterclaims. I have received costs submissions from all of the Defendants except for Gull Wing Motor Cars. In addition, Mr. Quocksister and Silver Arrow are seeking to have their counterclaims adjudicated. Mr. Groh has not provided any responding submissions to the costs submissions of the parties, although he was given an opportunity to do so. I will deal with each issue in turn.

7Before doing so, I note that no party besides Mr. Quocksister and Silver Arrow sought to bring forward a counterclaim. As per paragraph 211 of my October 8th, 2019 reasons, any other counterclaims are dismissed without costs.

Costs

a) Positions of the Parties

8The Defendants Gabriella Grohotolski, S.G. Trucking, S.E.G. Management Inc. and the Estate of Siegmund Grohotolski (“the Grohotolski Defendants”) seek substantial indemnity costs in the sum of $175,094.24 inclusive of HST and disbursements. These costs are sought on the basis that Mr. Groh engaged in an abuse of process by bringing this action, made unsubstantiated allegations against multiple defendants, failed to follow Court orders and ultimately ignored the proceedings once he had commenced them. In the alternative, the Grohotolski Defendants seek their partial indemnity costs, which are $136,677.24 inclusive of HST and disbursements.

9Ms. Steele and Ms. Wolfe seek substantial indemnity costs in the sum of $113,352.85 inclusive of HST and disbursements. They seek substantial indemnity costs on the basis that Mr. Groh unnecessarily brought multiple proceedings against them, unduly complicated the litigation and challenged their honesty and integrity in these proceedings. In the alternative, Ms. Steele and Ms. Wolfe’s seek their partial indemnity costs, which are $78,316.92 inclusive of HST and disbursements.

10Motion Endeavours, Mr. Quocksister and Silver Arrow seek substantial indemnity costs in the sum of $30,891.94 inclusive of HST and disbursements. They seek these costs on the basis that they offered to agree to a dismissal of the action without costs, and that Mr. Groh acted unreasonably in failing to accept their offer. In the alternative, these Defendants seek their partial indemnity costs in the sum of $19,949.30, inclusive of HST and disbursements.

b) Offers to Settle

11I start by considering the offer to settle made by Motion Endeavours, Mr. Quocksister and Silver Arrow. It was an offer made at 1:50 p.m. on June 15th, 2017, and was an offer to dismiss the claim without costs and it expired at the close of business the next day. This offer clearly does not trigger the cost consequences under Rule 49 of the Rules of Civil Procedure. The offer, inter alia, was not open for acceptance until after the commencement of the motion.

12Therefore, this offer to settle does not trigger any elevated cost consequences. No other party made an offer to settle that I was advised of. As a result, I now turn to consider whether the conduct of Mr. Groh justifies an award of substantial indemnity costs under Rule 57.

c) The Scale of Costs

13All of the Defendants who are seeking costs seek them on a substantial indemnity basis. The key arguments are:

a) Mr. Groh brought a meritless claim. b) Mr. Groh made the claim far more complex than it needed to be, and added irrelevant parties. c) Mr. Groh pursued these claims in order to impose financial and emotional hardship on his mother, Ms. Grohotolski. d) Mr. Groh sought punitive damages against Ms. Wolfe and Ms. Steele., and made allegations that go to the heart of their integrity.

14The question is whether substantial indemnity costs should be awarded on the facts of this case. The Court can award solicitor and client costs under Rule 57. However, the Court will only order substantial indemnity costs in rare and exceptional cases where the conduct of one of the parties is worthy of sanction. See Davies v. Clarington (Municipality), 2009 ONCA 722 at paragraphs 28 and following and Groh v. Steele, 2017 ONSC 4925 at paragraphs 9 to 11.

15In this case, Mr. Groh’s position in terms of the ownership of the property was not justifiable on the facts. Indeed, I accept that the position was “meritless” and that Mr. Groh unduly complicated the case. However, that conduct itself is not worthy of sanction by way of an order for substantial indemnity costs. The test for substantial indemnity costs requires something higher than a party merely advancing an unsuccessful case, even one that has very limited chances of success even from the outset. I do not see anything in terms of the litigation itself that would justify substantial indemnity costs on the facts of this case.

16I should also note that the Grohotolski defendants make the point that this action was not only costly, but it was physically debilitating and emotionally distressing for Ms. Grohotolski. I accept that fact. However, the argument in support of substantial indemnity costs is that Mr. Groh brought this action for the purpose of inflicting financial distress and emotional pain on Ms. Grohotolski. It is quite possible that this was the outcome of the litigation. However, on the record before me I am not prepared to say that inflicting financial distress and emotional pain was Mr. Groh’s only, or even primary, motivation.

17When I read the transcript from Mr. Groh’s cross-examination, I am persuaded that he believed that he was right to pursue this action, although while doing so he ignored facts and advanced improbable theories to support his case (see paragraphs 147 and 161 of my October 8th, 2019 decision). This belief that he was right was not supported by the evidence. However, it does not rise to a level of maliciousness or abuse of process that would justify an award of substantial indemnity costs.

18The allegation of abuse of process also focuses on the fact that Mr. Groh brought multiple proceedings when he could have brought one action to deal with all of the property issues. While I agree with that concern, I also note that the multiple proceedings were case-managed in order to ensure that they moved as simply and as easily as possible through the legal system. Therefore, I am of the view that this is a factor that is more appropriately taken into account when considering the quantum of the costs rather than the scale of them.

19This brings me to the issue raised by Ms. Steele and Ms. Wolfe that the claims went directly to the heart of their integrity and, therefore, costs on a substantial indemnity basis should be awarded. In support of this assertion, I was directed to the decision in Baywood Homes Partnership v. Haditaghi, 2018 ONSC 7265 (Ont. Master).

20In Baywood, supra, there is a detailed discussion (at paragraphs 27 and following) of the circumstances in which substantial indemnity costs may be awarded when allegations of fraud or other dishonesty are made. These types of allegations are serious, and potentially very damaging to the reputations of those who are wrongfully accused of engaging in fraud or other dishonesty.

21If a Plaintiff makes an unfounded allegation of fraud, it is typically but not inexorably met with an award of substantial indemnity costs. Although this case is close to the line, I am not persuaded that such an award is justified on the facts before me.

22One of the key allegations of allegedly dishonest conduct that Mr. Groh made was the use of the signature stamp to effect the transfer of the Yellow Ferrari. I ultimately found that its use was appropriate in this case. However, that was not a matter that was determinable without a consideration of all of the facts of the case. In addition, it was not completely unreasonable for Mr. Groh to raise concerns about the use of that stamp, rather than seeking his personal signature to finalize the transfer of the Yellow Ferrari.

23For these reasons, I am not satisfied that any of the Defendants should receive substantial indemnity costs, and I decline to award them.

d) The Quantum of Costs

24Having determined that the costs in this case should be partial indemnity, I must now determine the quantum of those costs. The relevant factors are set out in Rule 57.01, and I have had regard to all of those factors. The most relevant factors in this case are:

a) The reasonable expectations of the parties, especially the losing party. b) The amount claimed and recovered in the action. c) The complexity of the action. d) Any step taken by a party that tended to shorten or lengthen the proceeding. e) The importance of the issues to the parties.

25Some of these factors are more or less important for various Defendants. I will consider each set of Defendants’ costs separately at this point.

26In addition, I note that costs are to be considered on the basis of what is fair and reasonable, and awarded on a global basis (see Beach v. Toronto Real Estate Board, 2010 ONSC 848).

The Grohotolski Defendants

27I start by noting that this proceeding was both factually and legally complex. It required a great deal of preparation and raised a number of legal issues. When the summary judgment motion was argued, it was originally only a motion to address the question of who owned the Yellow Ferrari. However, I required the parties to argue a complete summary judgment motion on all issues in both actions before I could render a decision. This was necessary because the ownership of the Yellow Ferrari was inextricably intertwined with the ownership of the Halton Motel.

28Further, the fact that Mr. Groh’s claims were encompassed in two actions, rather than one action, made this matter more complicated. In other words, commencing two actions was a step that tended to lengthen the proceeding rather than shorten it. Similarly, bringing an action against the third parties who ultimately purchased the Yellow Ferrari was another step taken by Mr. Groh that tended to lengthen the proceeding.

29The issues were very important to the parties. In Ms. Grohotolski’s case, the issues were the question of whether the business she had built with her husband had to be shared with her son. This question had both a significant financial and emotional element to it, which meant that it would be reasonable to expect that Ms. Grohotolski would have defended the action vigorously.

30This brings me to the question of whether the time spent was reasonable. Having viewed the bill of costs provided by the Grohotolski Defendants, I am of the view that the time was entirely reasonable for an action of this nature. In that regard, I would note three points:

a) The cross-examinations in this case consumed considerable time. b) The discovery involved the collection and analysis of documents covering more than thirty (30) years. Preparation of the Affidavits of Documents alone would have been a very challenging endeavour. c) The factual underpinnings of the case were very complex. There was a multiplicity of corporate structures, and the actual facts did not quite correspond with that corporate structure, which made this a difficult transaction to understand. On that point, I would note that summary judgment motions where only one side is present at the final argument do not usually result in 200 paragraph decisions.

31Given all of these points, I am of the view that the partial indemnity costs sought by the Grohotolski parties would be within the reasonable expectations of Mr. Groh. As a result, Mr. Groh will pay the Grohotolski Defendants the sum of $136,677.24 inclusive of HST and disbursements. These costs are payable within thirty (30) days of the release of these reasons.

Ms. Steele and Ms. Wolfe

32The claim for costs of Ms. Steele and Ms. Wolfe is supported by many of the same points that I have addressed in considering the costs claims of the Grohotolski Defendants, and the same analysis applies. I adopt it.

33I would add three points to that analysis. First, although I was not persuaded to award substantial indemnity costs to Ms. Steele and Ms. Wolfe because of the attack on their integrity, I am persuaded that Mr. Groh should have expected that they would vigorously defend this action. Being an Attorney for Property comes with important obligations, and any party that attacks the conduct of an Attorney for Property would reasonably expect that person to mount a vigorous defence. This is a factor that supports a higher costs award.

34Second, while there is some duplication in the work between the lawyers representing the Grohotolski Defendants on the one hand and Ms. Steele and Ms. Wolfe on the other hand, this overlap was necessary. One example will suffice to illustrate this conclusion. While many of the documents in the Affidavit of Documents for the different Defendants would be the same, there would undoubtedly have been different copies of those documents in the possession of different Defendants, which would have made the process of putting the Affidavit of Documents together more cumbersome for Ms. Wolfe and Ms. Steele’s counsel.

35Finally, a review of the bill of costs for Ms. Wolfe and Ms. Steele makes it clear that there was an efficient and reasonable division of work between Mr. Stern and his junior counsel, and that there was very little, if any, wasted time. As a result, Mr. Groh will pay Ms. Wolfe and Ms. Steele’s costs of $78,316.92 inclusive of HST and disbursements. These costs are payable within thirty (30) days of the release of these reasons.

Motion Endeavours, Mr. Quocksister and Silver Arrow

36In this case, the amount of costs sought by Motion Endeavours, Mr. Quocksister and Silver Arrow fit within the reasonable expectations of what Mr. Groh would have had to pay. While these parties were less central to the issues to be determined on the motion, this was a two day summary judgment motion that had to be adjourned once and their presence throughout was necessary. The Defendants’ claim for partial indemnity costs of approximately $20,000.00 is not an unreasonable amount.

37Similarly, the amount claimed was the value of the Ferrari, which was between $250,000.00 and $1.2 million. The amount being sought by Motion Endeavours, Mr. Quocksister and Silver Arrow is certainly proportional to the value of the action.

38Finally, it is clear that the action was important to both sides. However, at this point, I am not prepared to accept the assertions of Motion Endeavours, Mr. Quocksister and Silver Arrow that “the claim is of significant importance…. as their reputations in the industry have been compromised as a result of the unfounded allegations made by the Plaintiff.” This is an issue to be determined when the counterclaim is adjudicated.

39This brings me to one final point about the costs. Mr. Belsito has not provided me with a costs outline that indicates precisely what amount of time was spent, or what precise activities were completed. Instead, I have a more general summary of the costs. The problem with this lack of detail is that I cannot determine which portion of the work was for the summary judgment motion and the Statement of Defence and which portion was for the counterclaim.

40I estimate that approximately 20 percent of the time that has been spent by Mr. Belsito in the bill of costs I have been given was time related to the counterclaim. It is excluded from this award of costs but may be claimed if the counterclaim is successful. This is the only deduction that I intend to make from the costs sought. The amounts claimed are otherwise reasonable.

41As a result, I fix the costs of the summary judgment motion at $16,000.00 inclusive of HST and disbursements. Those costs are payable by Mr. Groh to Motion Endeavours, Tim Quocksister and Silver Arrow within thirty (30) days of the release of these reasons.

The Counterclaims

42Mr. Belsito has advised that his clients Mr. Quocksister and Silver Arrow wish to proceed with their claims against Mr. Groh. Mr. Belsito has also advised that it is his preference to have a further date for summary judgment for the counterclaim to be decided.

43Given Mr. Groh’s lack of continued participation in this case, I am of the view that a further summary judgment motion for the counterclaims is probably the most appropriate way to proceed. I determined that the original summary judgment motions could proceed without further notice to Mr. Groh (see paragraph 73 of my October 8th, 2019 decision). However, I am of the view that this summary judgment motion may require new materials to be filed. The possible outcomes are also different for Mr. Groh, as he could end up paying damages and not just costs. Therefore, Mr. Groh is entitled to notice of this subsequent summary judgment motion.

44To that end, I am ordering as follows:

a) A copy of this endorsement will be forwarded by my judicial assistant or other Court staff to Mr. Groh by both e-mail and by courier to his last known address. b) Within sixty (60) days of the date of this endorsement, Mr. Quocksister and Silver Arrow are to serve their materials on their motion for summary judgment on Mr. Groh and file them in the Court office. Personal service is required, subject to paragraph (c). c) Counsel for Mr. Quocksister and Silver Arrow are to attempt to serve Mr. Groh personally, and are to determine whether his last known address remains correct. If they cannot serve him in person, then a motion is to be brought before me for substituted service. d) Once the materials from Mr. Quocksister and Silver Arrow are received, Mr. Groh will have sixty (60) days to respond to those materials, by either filing his own responding materials or requesting a case conference to discuss next steps. Mr. Groh will be required to respond to the materials or ask for a case conference within sixty (60) days of receiving the materials, or the Court will make a decision without involving him further. e) If, after being served, Mr. Groh does not contact the Court to schedule a case conference or serve any materials in response to the motion, I will then proceed to hear the motion without further service on Mr. Groh. I will provide the parties with further directions at that time, but I can advise counsel that I expect I will require (at a minimum) a factum for the motion.

Orders

45For the foregoing reasons, I am ordering as follows:

a) Mr. Groh shall pay a total of $136,677.24 inclusive of HST and disbursements to the Grohotolski Defendants. b) Mr. Groh shall pay $78,316.92 inclusive of HST and disbursements to the Defendants Ms. Steele and Ms. Wolfe. c) Mr. Groh will pay a total of $16,000.00 in costs, inclusive of HST and disbursements to Motion Endeavours, Tim Quocksister and Silver Arrow within thirty (30) days of the release of these reasons. d) No other costs are to be awarded, save and except on the counterclaims if they are successful. e) All counterclaims, save and except for those brought by Mr. Quocksister and Silver Arrow are dismissed without costs. f) A copy of this endorsement will be forwarded by my judicial assistant or other Court staff to Mr. Groh by both e-mail and by courier to his last known address. g) Within sixty (60) days of the date of this endorsement, Mr. Quocksister and Silver Arrow are to serve and file their materials on their motion for summary judgment on Mr. Groh. Personal service is required, subject to paragraph (h). h) Counsel for Mr. Quocksister and Silver Arrow are to attempt to serve Mr. Groh personally, and are to determine whether his last known address remains correct. If they cannot serve him in person, then a motion is to be brought before me for substituted service. This motion may proceed in writing, with the filing to be made electronically to the Court office. A copy of the materials filed with the Court office must be sent to my judicial assistant. i) Once the materials from Mr. Quocksister and Silver Arrow are received, Mr. Groh will have sixty (60) days to respond to those materials, by either filing his own responding materials or requesting a case conference to discuss next steps. Mr. Groh will be required to respond to the materials or ask for a case conference within sixty (60) days of receiving the materials, or the Court will make a decision without involving him further. j) If, after being served, Mr. Groh does not contact the Court to schedule a case conference or serve any materials in response to the motion, I will then proceed to hear the motion without further service on or notice to Mr. Groh and further directions will be provided to Mr. Quocksister and Silver Arrow.

46I note that I received a reminder that this decision was overdue from Mr. Belsito’s office yesterday, and he is correct that the decision has been outstanding for some time. However, I can also assure the parties that these reasons have been prepared for some time. However, given that the timelines set out in this decision needed the Court office to be open and scheduling regular business, this decision was held until the Court office had reopened and I was back on a regularly scheduled sitting week.

47Finally, if any other issues need to be addressed, the parties are free to contact my judicial assistant to schedule a conference. However, at this point I believe that these steps will resolve all remaining matters with respect to this litigation.