Court File and Parties

COURT FILE NO.: CV-18-00598032-00CP DATE: 20210517

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: WILLIAM TATARYN, Plaintiff – and – 2398968 ONTARIO INC., CJS LAW PROFESSIONAL CORPORATION, COREY SAX, DIAMOND & DIAMOND, also known as Diamond and Diamond, DIAMOND & DIAMOND LAWYERS LLP, DIAMOND & DIAMOND PERSONAL INJURY LAWYERS, ISAAC ZISCKIND, JEREMY DIAMOND, JEREMY DIAMOND PROFESSIONAL CORPORATION, SANDRA ZISCKIND, SANDRA ZISCKIND LAW PROFESSIONAL CORPORATION and ZISCKIND PROFESSIONAL CORPORATION, Defendants

BEFORE: E.M. Morgan, J.

COUNSEL: Peter Waldman, Matthew Armstrong, Adam Romain, and Ian Scott, for the Plaintiff/Responding party Milton Davis, Ron Davis, and Teodora Prpa, for the Defendants/Moving party

HEARD: Costs submissions in writing

COSTS ENDORSEMENT

[1] On April 12, 2021, I released my judgment granting the Defendants’ motion under Rule 21.01 of the Rules of Civil Procedure and striking out the Statement of Claim. I allowed the Plaintiff leave to amend the claim, and gave point-by-point guidance on what was wrong with the claim as presented to me in the motion.

[2] Overall, I found the Statement of Claim to be highly flawed and for the most part so confusing that the Defendants would find it nearly impossible to plead in defense. While the claim is a serious one, it required very substantial re-drafting of virtually all of the many causes of action. This made for a rather complex motion; the fact that it was brought under Rule 21 and so did not require an evidentiary record belies its complexity. There were a substantial number of legal issues to be reviewed, and a very confusing pleading, with facts and causes of action entangled in difficult ways, to decipher.

[3] Among other things, I struck out the claims of fraudulent conveyance and fraudulent misrepresentation. Those were pleaded either without adequate supporting facts, or in conjunction with supposedly supporting facts that did not add up to the ingredients of those causes of action.

[4] Under section 131 of the Courts of Justice Act, courts are given discretion to determine the appropriate amount of costs, if any, to be awarded at the end of litigation (or any step in the proceeding). Rule 57.01 of the Rules of Civil Procedure sets out the factors the court will consider in exercising its discretion, such as the complexity of the proceeding.

[5] In addition, the judge is guided by several underlying principles, including that, except in extraordinary situations, the loser pays costs to the winner. Overall, the objective is “to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant”: Boucher v. Public Accountants Council for the Province of Ontario, 2004 CanLII 14579 (Ont CA).

[6] Generally, if one party alleges fraud and fails to withdraw or prove the claim, a higher cost award will be justified. In Baird v Kemp, Legear, 2020 ONSC 7567, the Court explained the rationale for the typically elevated level of costs awarded against a party who unsuccessfully alleges fraud. The policy pertains partly to the claimant having put the defendant to the defense of a serious allegation that should not have been made in the first place. It also pertains to the reputational stain on the defendant imposed by a fraud pleading regardless of the result at the end of the case. In the Court’s words:

Fraud allegations are serious because they allege unlawful conduct. If not proven or withdrawn, they are considered scandalous and reprehensible. They can expose an unsuccessful party to substantial indemnity costs. For this reason, parties who consider making fraud allegations ought to be reasonably confident that they can be proved.

[7] Accordingly, the elevated costs that attach to an unsuccessful fraud claim are not limited to the costs following trial. The policy also applies to a motion where the fraud claims were struck out.

[8] Counsel for the Defendants seek substantial indemnity costs award in the all-inclusive amount of $230,925.44. Counsel for the Plaintiff (supported by the Law Foundation as funder) submits that this case warrants only partial indemnity costs, and that the Plaintiff’s costs on that basis come to $39,137.56. Considering that this was a one-day motion with no affidavit evidence and no time spent in pre-hearing cross-examinations, the Defendant’s request is extraordinarily high. Considering that this was a full day motion on law alone and required legal research and case law on nearly a dozen different causes of action and controversies, the Plaintiff’s request is extraordinarily low.

[9] Plaintiff’s counsel complains that Defendants’ counsel overworked the file. They had a team of three lawyers present in the court for the hearing and they show over 400 billable hours spent on the file. I agree that both of those indicate a very substantial investment of resources into the motion. That said, I would not second-guess Defendants’ counsel on the time and effort that they put into it. They did what they felt it would take to win the motion, and they won it. For the Plaintiff to say that they should have done less just like Plaintiff’s counsel did is not much of an argument.

[10] Of course, everything, including well-prepared lawyering, has its limits. The Court of Appeal has pointed out that while a law firm cannot be criticized for what might have been overpreparation, the losing side does not always have to bear that burden in the costs award: Moon v. Sher (2004), 2004 CanLII 39005 (ON CA), 246 DLR (4th) 440, at para. 33. Rule 57.01(1)(0.b) provides that I am to consider “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.” Defendants’ cost request not only surpasses the Plaintiff’s own estimate of costs, but surpasses any reasonable expectation of costs for this kind of admittedly complicated one-day motion.

[11] Defendant’s Costs Outline shows that of their total claim of just under $240,000, approximately $40,000 relates to the preparation of their costs submissions. While some time and costs can be attributed to that, to increase an already substantial costs request by $40,000 for the task of preparing what I said should be a maximum three pages of written submissions is rather extreme. I will exercise my discretion to substantially discount the amount attributable to preparation of those brief submissions.

[12] The Plaintiff shall pay the Defendants costs in the all-inclusive amount of $200,000.

Morgan J.

Date: May 17, 2021