Court File and Parties

COURT FILE NO.: CV-18-595745 DATE: 2021-05-25 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: MIDLAND RESOURCES HOLDINGS LTD. (a British Virgin Islands Company), Plaintiff – and – EUGENE BOKSERMAN and ELENA KRASNOV, Defendants – and – MICHAEL SHTAIF, Intervenor

BEFORE: Justice E.M. Morgan

COUNSEL: Kenneth Prehogan, Kayla Theeuwen, and Lia Boritz, for the Plaintiff Gregory Sidlofsky and Adin Wagner, for the Defendants

HEARD: Costs submissions in writing

AMENDED COSTS ENDORSEMENT

[1] On May 3, 2021, I issued reasons for judgment in this action granting summary judgment to the Plaintiff. In the process, I dismissed the Defendants’ motion to adduce new evidence and also dismissed the counterclaim brought by the Defendant, Elena Krasnov. It was a hard-fought motion that had been subject to considerable delay, and in the result the Plaintiff was entirely successful.

[2] Counsel for the Plaintiff seeks costs on a substantial indemnity scale in the all-inclusive amount of $175,378.37. They point out that the case has been plagued by delay caused by the Defendants’ various maneuvers, including firing their lawyers on the eve of the previously scheduled hearing and bringing a motion within the motion seeking leave to submit new evidence that turns out to have been completely rejected. They also submit that the Defendants made unfound allegations of fraud against the Plaintiff, which give rise to an elevated costs award.

[3] In addition, the Plaintiff seeks costs in the amount of $30,486.55 against the Intervenor, Michael Shtaif, who made written submissions in support of the Defendants’ position on the motion for new evidence. As I said in my endorsement of April 9, 2022 granting intervenor status, the Intervenor’s submissions were quite detailed and were addressed to the issue of the status of the Plaintiff and the application of Guernsey law to the present proceedings. They required a considered response by the Plaintiff.

[4] I have received written costs submissions from counsel for the Defendants. They are of the view that the Plaintiff’s request for costs is too high. I was under the impression that I did not receive any costs submissions from the Intervenor, but I have now been alerted by counsel to the fact that he did email his submissions to my assistant. Those submissions were initially not noticed by me, but are now before me and I have taken them into account here. I apologize for my initial misstatement.

[5] The action commenced its life as a relatively straightforward claim of fraudulent conveyance. The Defendants had transferred their family home from joint tenancy in both of their names to Ms. Krasnov alone, and had done so within days of a judgment for $1.5 million being rendered against Mr. Bokserman. That claim was provable on the basis of registry documents and brief affidavits and cross-examinations. What made the matter far more complicated were the failed defenses raised by the Defendants.

[6] In the first place, the Defendants raised a limitation defense. They contended that the fraudulent conveyance action was commenced more than two years after the conveyance. Plaintiff’s counsel produced case law demonstrating that a 10-year limitation period applies rather an a 2-year limitation period.

[7] Plaintiff’s counsel were also put to the trouble of showing that even if a 2-year period applies, the 2 years has not run. As I pointed out in my reasons for judgment, the Defendants took this tack despite having previously stated that the claim was not actionable until after they had exhausted their appeal and motion for re-consideration of that appeal of the underlying action. The fraudulent conveyance claim was issued only 3 months after those appeals were finally dismissed. In other words, the limitation defense was not only inapplicable; it was in direct contradiction to Mr. Bokserman’s (and Mr. Shtaif’s) own prior position. I see it as little more than an attempt to put off the inevitable.

[8] In the second place, the Defendants put forward affidavit evidence with respect to the intent behind the transfer of the Defendants’ home. While not particularly effective or credible, that defense evidence required Plaintiff’s counsel to conduct cross-examinations in order to bring out its weakness.

[9] I do not fault the Defendants for putting up a defense. But Ms. Krasnov swore that it never occurred to her that conveyance of her spouse’s one major asset might thwart an attempt by his judgment creditor to enforce against him. At the same time, she explained that the reason for the conveyance was the financial burden of the very litigation to which she swore she hadn’t turned her mind. That position lacked credibility to such an extent that it appeared cynical.

[10] Finally, there was the motion for leave to tender new evidence brought by the Defendants. One piece of new evidence was an affidavit of a witness to a signature on a transfer of assets document signed in Guernsey. That affidavit lacked disclosure of the witness’ own involvement in litigation as former common law partner of the signatory she deposed she never witnessed. I ruled that I did not believe this witness and would not admit her evidence.

[11] The second ground submitted by the Defendants for submitting new evidence was an alleged error made by the Plaintiff under Guernsey law. This involved some legal research and argument on Plaintiff’s counsel’s part. The transfer sought to be impugned by the Defendants had been authorized by the Royal Court of Guernsey; I found this proposed new evidence to be a form of improper collateral attack on an Order of the Guernsey court.

[12] In their written submissions, Defendants’ counsel makes the overall argument that the matter was not complex and that with respect to all of the issues “the law was well known.” I agree that the law was in a sense well known; that is, it was well known to be contrary to what the Defendants asserted it is. With all due respect, that is not much of an argument. The Defendants lost on every point that they raised. They do not get to pay any lesser costs due to the law having been well known to all, including to themselves.

[13] Turning to the Intervenor’s submissions on costs, there is little on which to comment here. Those submissions are 7 pages in length (despite my having specifically limited them to 2 pages). The majority of those submissions re-argue in point form the position put forward by the Defendants and the Intervenor on the merits and attempt to explain why my decision was wrong. They do not go to the issue of costs, except perhaps by inference that the Intervenor feels that his point was so strong that it does not deserve to be subject to costs. Another page of the submissions is devoted to pointing out prior cases in which self-represented parties, including the Intervenor himself, were awarded costs. None of this is particularly helpful on the issue before me here.

[14] Costs are discretionary under section 131 of the Courts of Justice Act. That discretion is to be exercised in accordance with the guidance provided in Rule 57.01 of the Rules of Civil Procedure. That includes, among other things, the principle of indemnity for the successful party and the safeguard that the amount of costs should not be such as to take the unsuccessful party by surprise: Rules 57.01(1)(0.a) and 0.b).

[15] Messrs. Bokserman and Shtaif are experienced litigation parties. They were specifically noted by the Court of Appeal in their appeal of the underlying case as having pursued many – indeed, an excessive number – of repeated procedures: Midland Resources v. Shtaif and Bokserman, 2018 ONCA 743, at para 14. They certainly are aware of the costs of litigation and the consequences of raising multiple unsuccessful issues. I understand why they do not wish to agree with the Plaintiff’s request, but I doubt that it takes them by surprise.

[16] For convenience I will round off the Plaintiff’s cost figures. Otherwise, I find the Plaintiff’s submissions to be well founded.

[17] The Defendants shall pay the Plaintiff costs in the amount of $175,000. Separately, Mr. Shtaif shall pay the Plaintiff costs in the amount of $30,000. These amounts are inclusive of all fees, disbursements, and HST.

Morgan J.

Date: May 25, 2021