Court File and Parties
COURT FILE NO.: CV-19-623185 DATE: 2020/02/13
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Crown Crest Financial Corp. Plaintiff
- and -
ERIC SABBAH Defendant
Counsel: F. Paul Morrison and Ben Peel for the Plaintiff Brian N. Radnoff and Dylan E. Augruso for the Defendant
HEARD: In writing
REASONS FOR DECISION - COSTS
PERELL, J.
[1] In this action, the Plaintiff, Crown Crest Financial Corp., alleged that the Defendant, Eric Sabbah, who is a licensed paralegal, unlawfully obtained its confidential business records and misused the information to recruit 14 claimants to sue Crown Crest in 15 Small Claims Court actions. Further, Crown Crest alleged that Mr. Sabbah wrongfully induced the claimants to sue Crown Crest in Small Claims Court for breaches of contracts to sell or lease heating, ventilation and air conditioning ("HVAC") equipment. Crown Crest alleged that Mr. Sabbah misrepresented the law to induce the claimants to sue Crown Crest.
[2] In its action, Crown Crest advanced causes of action for defamation, unjust enrichment, abuse of process, maintenance and champerty, inducing breach of contract, and intentional interference with economic relations. However, Crown Crest withdrew all of those causes of action except: (a) inducing breach of contract; and (b) intentional interference with economic relations.
[3] Pursuant to rule 21.01 (b) of the Rules of Civil Procedure,[^1] Mr. Sabbah brought a motion for an order striking out the claims for inducing breach of contract and intentional interference with economic relations without leave to amend for not showing a reasonable cause of action. Mr. Sabbah also asked that the Statement of Claim be struck out as an abuse of process.
[4] I granted Mr. Sabbah’s motion to strike out the claims for (a) inducing breach of contract; and (b) intentional interference with economic relations. I concluded that it was plain and obvious that the various causes of action were not legally viable on grounds of public policy. I concluded that in the circumstances of the immediate case, the actions were an abuse of process because the causes of action depended upon the inadmissible evidence of the privileged communications between Mr. Sabbah and the 15 Small Claims Court claimants.
[5] I, however, granted leave to Crown Crest to deliver a Fresh as Amended Statement of Claim.[^2] My analysis of the material facts pleaded led me to conclude that Crown Crest might be able to plead a cause of action for breach of its privacy and for a misappropriation of its confidential information. I, therefore, granted leave to Crown Crest to deliver a Fresh as Amended Statement of Claim to plead these causes of action.
[6] Mr. Sabbah was the successful party on the motion, and he claims costs of $21,804.92, all inclusive, on a substantial indemnity basis, or in the alternative, he claims costs of partial indemnity costs of $15,676.36, all inclusive.
[7] For the reasons that follow, I award Mr. Sabbah costs of $17,750, all inclusive, on a partial indemnity basis.
[8] While Mr. Sabbah arguably might be entitled to costs on a substantial indemnity basis, my review of the Bill of Costs and the costs submissions of both parties leads me to the conclusion that had Mr. Sabbah not raised the matter of substantial indemnity costs but simply had asked for $21,804.92 on a partial indemnity basis, the appropriate award and one within the reasonable expectations of Crown Crest would have been $17,750, all inclusive of counsel fee, disbursements and taxes.
[9] The court's discretion in awarding costs arises under the authority of s. 31(1) of the Courts of Justice Act,[^3] and is to be exercised by a consideration of the factors in rule 57.01(1) of the Rules of Civil Procedure.[^4] These factors include the principle of indemnification, the reasonable expectations of the parties, the complexity of the proceeding, the importance of the proceeding, and the conduct of the parties in litigation.
[10] The traditional discretionary principles developed for costs awards are codified in rule 57.01(1), which states:
Factors in Discretion
57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(iii) any other matter relevant to the question of costs.
[11] The most general rule about costs, not to be departed from without good reason, is that costs at a partial indemnity scale follow the event, which is to say that normally costs are ordered to be paid by the unsuccessful party to the successful party on a partial indemnity scale.[^5]
[12] A critical controlling principle for the awarding of costs is that the sum awarded reflect the fair and reasonable expectations of the unsuccessful litigant.[^6] The overriding principle in awarding costs is reasonableness.[^7]
[13] The assessment of reasonableness is discretionary and very much dependent upon the circumstances of each case. In some cases, it may be reasonable for the successful party to make exhaustive efforts and to commit enormous legal resources, and in those cases, it might be said that the unsuccessful party could reasonably expect to pay those costs. In other cases, however, the successful party may have been well served by giving his or her lawyer instructions to make exhaustive efforts, but it might be disproportionate and unreasonable to expect the unsuccessful party to pay those costs, even if he or she would have expected or anticipated that his or her foe would have marshalled those legal resources.[^8]
[14] Independent of a decision on the appropriate scale of costs in the exercise of my discretion in the immediate case, I regard the following three circumstances as particularly important in the exercise of my discretion.
[15] The first circumstance is that Mr. Sabbah was the successful party on the motion and the normal rule is that the successful party is entitled to costs on a partial indemnity basis. I appreciate that the parties engaged in a debate about whether Mr. Sabbah was “totally successful”. This debate focused on the circumstance that I granted leave to Crown Crest to amend its Statement of Claim. That circumstance, however, does not diminish the fact that Mr. Sabbah was the successful party and that circumstance does not in and of itself call for any diminishment of costs.
[16] The second circumstance is that in its responding factum, served four business days before the motion, Crown Crest abandoned its causes of actions for defamation, unjust enrichment, and maintenance and champerty, and at the start of the hearing, it abandoned its cause of action for abuse of process. This conduct forced Mr. Sabbah’s lawyers to incur wasted time and expenses to prepare written and oral submissions. Crown Crest’s conduct unnecessarily lengthened the duration of the proceeding, and this circumstance calls for some recognition in the quantum of costs.
[17] Third, the issues raised by Crown Crest’s Statement of Claim as it was pleaded were very important to Mr. Sabbah and indeed threatened his livelihood, and as the claim was cast, the claim interfered with the access to justice of Mr. Sabbah’s Small Claims Court clients.
[18] I found the claims to be an abuse of process because of this intrusion on solicitor and client privilege. Mr. Sabbah submits that these circumstances call out for a punitive costs award. Mr. Sabbah submits that courts have ruled that substantial indemnity costs are justified when a defendant is successful on a motion to dismiss an action for an abuse of process.[^9] He also argued that the claims amounted to unproven allegations that besmirched his reputation and integrity and this also justified a punitive costs award.
[19] I need not, however, rule on these submission’s about substantial indemnity costs because if I had awarded costs on a substantial indemnity basis, I would not have awarded more than $17,750, which for the above reasons is an appropriate award on a partial indemnity basis.
[20] Keeping in mind that awarding costs is not a mechanical exercise of calculating hours and hourly rates, I regarded the above three circumstances as justifying a costs award of $17,750, all inclusive, on a partial indemnity basis.
[21] Order accordingly.
Perell, J.
Released: February 13, 2020
COURT FILE NO.: CV-19-623185 DATE: 2020/02/13
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
CROWN CREST FINANCIAL CORP. Plaintiff
- and -
ERIC SABBAH Defendants
REASONS FOR DECISION - COSTS
PERELL J.
Released: February 13, 2020
[^1]: R.R.O. 1990, Reg. 194. [^2]: Crown Crest Financial Corp. v. Sabbah, 2019 ONSC 7114. [^3]: R.S.O. 1990, c. C-43. [^4]: R.R.O. 1990, Reg. 194. [^5]: McCracken v. Canadian National Railway, 2012 ONSC 6838; Hague v. Liberty Mutual Insurance Co., 2005 CanLII 13782 (ON SC), [2005] O.J. No. 1660 (S.C.J.); Pike's Tent and Awning Ltd. v. Cormdale Genetics Inc. (1998), 27 C.P.C. (4th) 352 (Ont. Gen. Div.); Bell Canada v. Olympia & York Developments Ltd. (1994), 1994 CanLII 239 (ON CA), 17 O.R. (3d) 135 (C.A.). [^6]: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 at para. 24 (C.A.); Stellarbridge Management Inc. v. Magna International (Canada) Inc., 2004 CanLII 9852 (ON CA), [2004] O.J. No. 2102 at para. 97 (C.A.); Zesta Engineering Ltd. v. Cloutier (2002), 2002 CanLII 25577 (ON CA), 21 C.C.E.L. (3d) 161 at para. 4 (Ont. C.A.); McGee v. London Life Insurance Co., [2008] O.J. No. 5312 at paras. 5-8 (S.C.J.); Caputo v. Imperial Tobacco Ltd. (2005), 2005 CanLII 63806 (ON SC), 74 O.R. (3d) 728 at paras. 23-25 (S.C.J.). Lee v. General Motors Co. of Canada, [2004] O.J. No. 2245 (S.C.J.). [^7]: Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 at para. 52 (C.A.). [^8]: Das v. George Weston Limited, 2017 ONSC 5583 at para. 65, var’d 2018 ONCA 1053. [^9]: Canadian International Petroleum Corp. v. Dover Investments Ltd., 2016 CarswellOnt 21732 (C.A.); Said v. University of Ottawa, 2014 ONSC 771; Aba-Alkhail v. University of Ottawa, 2013 ONSC 6070.