Court File and Parties

COURT FILE NO.: CV-15-4343-00

DATE: 20201124

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: TRADERS GENERAL INSURANCE COMPANY Plaintiff / Moving Party

AND:

LOUAY KAYES, MOHAMMED KAYES, HASSAN NAZIR KAISS, KHADYJAH KAISS, ALI KAISS, ALIYYAH KAISS, NOUR KAISS SHAHID, JOHN DOE, JOHN DOE NO. 2, AND ABC CORPORATION Defendants / Responding Parties

BEFORE: Justice James Stribopoulos

COUNSEL: Mr. C. Lui and Mr. R. Tinney, on behalf of the Plaintiff Mr. L. Kayes, on his own behalf Mr. M. Kayes, on his own behalf Mr. H.N. Kaiss, on his own behalf

HEARD: In Writing

ENDORSEMENT

[1] The plaintiff, Traders General Insurance Company, successfully obtained summary judgment against the defendants, Louay Kayes and Hassan Nazir Kaiss, but was unsuccessful in seeking summary judgment against Mohammed Kayes: see Traders General Insurance Co. v. Kayes et al., 2020 ONSC 5991. The court invited written submissions from the parties concerning the costs of the motion and the action. Only Traders filed submissions. This is the court’s endorsement as to costs.

[2] In this action, Traders established that Kayes and Kaiss were jointly involved in a scheme to defraud the insurer. In granting summary judgment against them, the court characterized their fraudulent behaviour as “deliberate and reprehensible”: Traders, at para. 50. Traders argues that the nature of the misconduct by Kayes and Kaiss precipitating the litigation justifies an award of costs on a substantial indemnity basis. On that scale, Traders claims costs totalling $49,232.53, inclusive of disbursements and H.S.T.

[3] The court’s authority to order costs is derived from s. 131(1) of the Courts of Justice Act, R.S.O. 1990, Chap. C.43, and Rule 57 of the Rules of Civil Procedure. In deciding the question of costs, I am mindful of each of the factors enumerated in Rule 57.01(1), as well as the court’s authority to order substantial indemnity costs under Rule 57.01(4)(c).

[4] As the successful party on both the motion and the action, Traders is entitled to costs. Although I do not believe the proceedings were overly complex, the issues raised were of considerable importance to Traders because the insurer had been the victim of a fraud. To be sure, the ratio between the costs claimed ($49,232.53 on a substantial indemnity basis and $40,114.47 on a partial indemnity basis) and the total judgment obtained ($126,388.17) appears somewhat incongruent. That said, it is understandable that when an insurer discovers that it has been the victim of fraud, it will pursue such claims, irrespective of the quantum of its loss, with vigour. To do anything less might fail to discourage other would-be fraudsters. In my view, that is not an unreasonable position for an insurer to take and justifies the resources Traders devoted to pursing its claim in this case. It is also to Traders’ credit that it appears to have minimized its costs by having more junior lawyers perform a significant portion of the work. Ultimately, the costs claimed by Traders are fair and reasonable in all of the circumstances of this proceeding.

[5] That leaves the question whether costs should be awarded on a partial or substantial indemnity basis. The Court of Appeal has instructed that “elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made”: Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66, at para. 40. The misconduct justifying an award of substantial indemnity costs may occur either in the circumstances giving rise to the cause of action or in the proceedings themselves: see Ontario Realty Corp. v. P. Gabriele & Sons Ltd, [2009] O.J. No. 5278 (S.C.), at para. 14; Stiles v. British Columbia (Workers' Compensation Board) (1989), 1989 CanLII 235 (BC CA), 38 B.C.L.R. (2d) 307 (C.A.), at p. 311; Mark M. Orkin, The Law of Costs (2nd ed) (Aurora: Canada Law Book, 1987), at § 219.1.

[6] In this case, the conduct of Kayes and Kaiss that precipitated this litigation satisfies the preconditions for ordering substantial indemnity costs. As I noted, in my ruling granting summary judgment in favour of Traders, these defendants participated in a “calculated and prolonged scheme to defraud Traders. Their behaviour was deliberate and reprehensible”: Traders, at para. 50. Although I declined to order punitive damages, the nature of the misconduct engaged in by Kayes and Kaiss does justify an award of costs against them on a substantial indemnity basis.

[7] Accordingly, this court Orders that Louay Kayes and Hassan Nazir Kaiss, on a joint and several basis, pay costs to Traders General Insurance Company for both the action and the motion on a substantial indemnity basis fixed in the amount of $49,232.53, inclusive of disbursements and H.S.T., payable forthwith.

Signed: Justice J. Stribopoulos

Released: November 24, 2020