COURT FILE NO.: CV-12-0238-00; CV-12-0438-00

DATE: 2021-01-21

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

CV-12-0238-00

Gina Gustafson and Juanita Curle

Mr. M. Holervich for the Applicants

Applicants

• and -

Bruce Johnson, Allan Curle, Norall Group Inc. and Norall Group Contracting Inc.

Respondents

Mr. M. Cupello for Bruce Johnson and non-party, Janette Johnson

No one appearing for respondents Allan Curle and the Corporations

CV-12-0438-00

Allan Curle, Bruce Johnson, Jeanette Johnson, Norall Group Inc. and Norall Group Contracting Inc.

Plaintiffs

-and-

Gina Gustafson, Juanita Curle, Holly LeBrun, Carl Gustafson and D.J. Gustafson Engineering Ltd. c.o.b. as Aegus Contracting

Defendants

Mr. M. Cupello for Bruce Johnson and Jeanette Johnson; no one appearing for the remaining plaintiffs

Mr. M. Holervich for the defendants Gina Gustafson and Juanita Curle; Carl Gustafson appearing personally and for D.J. Gustafson Engineering and as agent for Holly LeBrun

HEARD: By written submissions

at Thunder Bay, Ontario

Table of Contents

Reasons on Costs. 2

Introduction. 2

The Application. 5

Positions of the Parties in the Application. 5

Ms. Gustafson and Ms. Curle, Applicants. 5

Mr. Curle, Respondent 7

The Corporations, Respondents. 7

Mr. Johnson, Respondent 8

Ms. Johnson, Non-Party to Application. 10

The Law of Costs: General Principles. 11

Costs Against Non-Parties. 14

Should Costs Claims be Struck Because of Failure to Meet Filing Deadlines?. 15

Should Costs be Apportioned?. 20

Costs for Motions in the Application. 22

1. Motion to Deliver up Cheque. 22

2. Motion to Sign Company Cheques. 24

3. Motions for Audit and Consolidation of Application and Action. 26

4. Motion to Stay Audit and Contempt Motions. 29

5. Motion to Schedule Audit Motion. 30

6. Motion to Deliver Corporate Chattels. 31

7. Motion to Add Jeanette Johnson as a Party. 33

8. Motion for Indemnification. 35

9. Motion for Interim Distribution of Surplus. 35

10. Motion to Pay Ms. Johnson’s Surplus into Court on Notice to the Canada Revenue Agency 37

11. Motion to Postpone Payment to Ms. Johnson. 40

12. Garnishment Hearing. 42

The Action. 44

Position of Ms. Gustafson and Ms. Curle, Defendants. 44

Position of Mr. Gustafson, D. G. Gustafson Engineering Ltd., and Ms. LeBrun, Defendants. 45

Position of Mr. Curle, Plaintiff 48

Position of the Corporations, Plaintiffs. 48

Position of Mr. Johnson and Ms. Johnson, Plaintiffs. 49

Costs for Motions in the Action. 51

1. Motion for Interim Order Preserving Status Quo. 51

2. Motion to Produce Retainer Agreement 52

3. Motion to Pay Corporate Debts and Dividends. 55

Table of Contents continued

4. D.J. Gustafson Engineering Motion to Dismiss the Action Entirely. 58

5. Motion to Dismiss the Claims of the Corporations. 60

6. Motions for Contempt and Stay of Contempt 62

7. Motion to Schedule Contempt Motion. 65

8. Motion to Appoint a Case Management Judge. 66

Offer to Settle. 68

Costs of the Application and the Action. 72

Costs of Ms. Gustafson and Ms. Curle. 72

Costs of Mr. Gustafson, D.J. Gustafson Engineering Ltd., and Ms. LeBrun, as Represented Parties 79

The Law of Costs as Applied to Self-Represented Parties. 83

What is a Reasonable Costs Award for Mr. Gustafson as a Self-represented Litigant?. 86

Madam Justice H. M Pierce

Reasons on Costs

Introduction

[1] These reasons will consider costs of an application to wind-up two corporations and a related action, including costs claimed by unrepresented parties. The court must also determine costs reserved on motions in the two proceedings that were argued, dismissed without being argued, or abandoned.

[2] The reasons for judgment in the application are reported at Gustafson v. Johnson, 2016 ONSC 2804, 131 O.R. (3d) 203.

[3] The application was launched in 2012 and decided in 2016. Appeals were subsequently taken to the Divisional Court and the Court of Appeal, where they were dismissed with costs assessed by the appellate courts. Further litigation involving the winding-up of the corporations ensued after the appeals were completed.

[4] Each costs award in these reasons is inclusive of HST and disbursements, unless otherwise stated. The parties are entitled to set-off their liability for costs against any entitlement they may have to costs from the same party.

History of the Litigation

[5] Carl Gustafson, Allan Curle, and Bruce Johnson started engineering and construction corporations at which they were employed. The corporations’ shares were transferred to their spouses in the following proportions: Gina Gustafson, 35%; Juanita Curle, 49%; and Jeanette Johnson, 16%.

[6] Ms. Gustafson and Ms. Curle became concerned about mismanagement of the corporations. In the spring of 2012, they retained Mr. Holervich to apply to the court to wind-up both corporations. In these reasons, I will refer to Ms. Gustafson and Ms. Curle as “the applicants” when referring to the application.

[7] Mr. Gustafson fell out with Allan Curle and Bruce Johnson; he supported the application but was not a party to it. Mr. Gustafson had his own corporation, D.J. Gustafson Engineering Ltd., which carried on business as Aegus Contracting.

[8] The application was opposed by Mr. Curle, Mr. Johnson, and Mr. Johnson’s spouse, Ms. Johnson, who is a non-party and a minority shareholder. The applicants commenced their application, naming Bruce Johnson, Allan Curle, and the corporations as respondents. The individual respondents retained Mr. Hacio as their counsel.

[9] Next, Mr. Curle and the Johnsons retained Mr. Hacio to commence an action for damages. I will refer to Mr. Johnson, Ms. Johnson and Mr. Curle as “the plaintiffs” in the action. Even though the corporations are also shown as plaintiffs, they did not take any role in the action.

[10] The plaintiffs sued Ms. Gustafson, Ms. Curle, Holly LeBrun (an office manager for the corporations), Mr. Gustafson, and his corporation D.J. Gustafson Engineering Ltd. (which operated as Aegus Contracting). The plaintiffs claimed damages of $3,000,000. They alleged that the defendants had realized profits from the corporations, or that the plaintiffs had suffered losses.

[11] The plaintiffs accused the defendants of breach of contract, breach of fiduciary duty, breach of an obligation to act in good faith, unjust enrichment, inducing breach of contract, intentional interference in contractual relationships, misappropriation of business opportunities, breach of trust and confidence, civil conspiracy, oppression as defined in the Ontario Business Corporations Act, R.S.O. 1990, c. B.16, and unlawful interference with the plaintiffs’ economic and other interests.

[12] The plaintiffs also claimed $1,000,000 in punitive, exemplary and aggravated damages.

[13] Mr. Gustafson, his corporation, and Ms. LeBrun were initially represented in the action by Mr. Matson.

[14] The litigation that ensued was prolonged and bitter. In addition to commercial issues, there was a sub-text of a marital dispute. Ultimately, the application was argued in 2016, while the action languished. Reasons for judgment in the application were issued on April 26, 2016. The court held that Juanita Curle held 49% of the corporations’ shares, Gina Gustafson, 35%, and Jeanette Johnson, 16%.

[15] The respondents in the application and Ms. Johnson appealed to the Divisional Court and the Court of Appeal. Because Mr. Curle had been declared a vexatious litigant in his matrimonial litigation with Ms. Curle in 2014, the Court of Appeal refused his motion for leave to appeal the application.

[16] All appeals were finally disposed of by September 25, 2018.

[17] After argument in 2019, the action was dismissed for delay.

[18] Unfortunately, Mr. Hacio died in February 2019. The court regrets his loss. The Johnsons retained the Cupello firm to represent them. Mr. Curle did not retain counsel after Mr. Hacio’s death. He did not appear in either proceeding after the appeals were disposed of.

[19] After October 2017, Mr. Gustafson represented himself and his corporation, and appeared as agent for Ms. LeBrun.

The Application

Positions of the Parties in the Application

Ms. Gustafson and Ms. Curle, Applicants

[20] The applicants claim costs of $455,810.93, including tax and disbursements, plus costs of motions in their application to wind-up the corporations and in defending the action against them. These costs do not include costs claimed on the motions in the application and the action, for which separate bills of costs have already been filed, nor costs in the appeals to the Divisional Court and the Court of Appeal. Costs at the appellate level have already been decided.

[21] The applicants maintain that the respondents’ opposition to the application was unreasonable and vexatious, aimed at avoiding a determination of the case on the merits. As well, they point to vexatious conduct in motions for which they claim costs. For that reason, they claim enhanced costs in the application.

[22] The applicants also submit that the real litigant opposing the winding-up of the corporations was Jeanette Johnson, a minority shareholder. They allege that Bruce Johnson is insolvent and was put forward as Ms. Johnson’s “straw man” in order to avoid cost consequences to her. They point to Ms. Johnson’s changing positions on the nature of her shareholding, first disputing that she was an owner, then claiming that she held shares for her husband, then arguing that she held them in trust for her family.

[23] The applicants observe that although Ms. Johnson was represented by counsel from 2012 in the action, she took no steps to be added as a party to the application and refused the applicants’ invitation to be added.

[24] However, when the hearing of the application commenced, she complained that she was not a party. After the application was determined, she used her status as a non-party as a ground for appeal in the application.

[25] Aegus Contracting is the trade name of Mr. Gustafson’s company. It stepped in to complete the contracts left unfinished by Norall Group Contracting Inc. when Norall abandoned its contracts.

[26] The applicants contend that in the fall of 2016, Ms. Johnson engaged them in a protracted debate about payment of the Aegus invoices as part of the winding-up. Then, in February 2017, she took the position that because she was not a party to the application, she would take no position with respect to the invoices. Mr. Johnson and Mr. Curle continued to oppose payment of the Aegus invoices. Rather than incur the expense of a trial over the issue, Aegus abandoned its claim for payment.

[27] The applicants state that in 2014 and 2015, they offered to pay Ms. Johnson her full 16% share entitlement, with no costs, an offer that was refused. Consequently, they argue that costs should be ordered against Ms. Johnson as a non-party.

[28] The applicants point to obstructive behaviour by Mr. Johnson, Ms. Johnson, and Mr. Curle in the appeal proceedings. As costs were dealt with at the appellate level, it is not necessary to further consider the matter.

[29] In summary, the applicants seek the following orders:

1. costs in the application (including motions for which bills of costs have not already been filed) on a full or substantial indemnity basis; and

2. costs incurred in the application payable by the shareholder, Jeanette Johnson, as a non-party.

Mr. Curle, Respondent

[30] Mr. Curle took no part in the litigation once the appeals had been exhausted. He made no submissions on costs.

The Corporations, Respondents

[31] The corporations were not represented and therefore took no position in the application or on costs.

Mr. Johnson, Respondent

[32] Mr. Johnson argues that the applicants’ costs submissions should be struck because their delay in filing and their breach of the peremptory filing deadline is contumelious and unconscionable.

[33] In the alternative, Mr. Johnson submits that the applicants’ claim for costs is excessive, inflated, and demonstrates over-preparation. He contends that the costs are not proportionate to the issues and could not have been reasonably expected when compared to his own costs.

[34] Further, Mr. Johnson complains that he cannot differentiate between the costs of the application and the action. His own counsel charged him $90,000.00 for work on the application to February 22, 2019, and therefore he submits that an award of $60,000.00 in costs on a partial indemnity scale would be appropriate, should costs of the application be awarded. He also notes that no effective offer was in place with respect to the application or motions and therefore the rule calling for substantial indemnity costs does not apply.

[35] With respect to the motions, Mr. Johnson submits that the applicants’ claims for substantial or full-indemnity costs are unwarranted. In some instances, motions were not argued or were abandoned, or were of so little consequence that his own counsel did not bill for them.

[36] Mr. Johnson argues that, in some instances, the motions lacked merit, such that he claims his own costs. He also claims costs of preparation for and attendance at the costs hearings scheduled for February 6 and July 7, 2020, neither of which proceeded because the applicants were not ready. As to the motion for indemnity for legal fees, he submits that costs should follow the event once the court has ruled on this outstanding motion.

[37] In summary, Mr. Johnson seeks the following orders in the application:

1. costs of the application payable equally by Mr. Curle and Mr. Johnson, fixed at $60,000.00 plus HST and disbursements;

2. costs of the motion to deliver up the $662,000.00 cheque payable equally by Mr. Curle and Mr. Johnson fixed at $840.00 plus HST and disbursements;

3. costs of the motion for interim distribution payable equally by Mr. Curle and Mr. Johnson fixed at $6,500.00 plus HST and disbursements;

4. that the parties bear their own costs the following motions:

a) to sign company cheques;

b) for audit and consolidation;

c) to stay audit motion;

d) to schedule audit motion;

e) to deliver up chattels;

f) to add Jeanette Johnson as a party; and

g) to postpone payment of surplus funds; or alternatively, the applicants pay his substantial indemnity costs fixed at $1,548.10, to be set off against costs owed by Mr. Johnson;

5. that the applicants pay Mr. Johnson’s costs of the motion to pay surplus into court on notice to the Canada Revenue Agency fixed at $650.00, to be set off against any costs he is found owing;

6. that the applicants pay Mr. Johnson’s costs on account of their delay fixed at $5,011.55 to be set off against any costs Mr. Johnson is found owing; and

7. costs of the motion for indemnification to be determined after the motion is decided, payable to the successful party on a partial indemnity scale.

Ms. Johnson, Non-Party to Application

[38] Jeanette Johnson argues that since the applicants did not name her as a party to the application at the outset, she had no obligation to name herself. She asked to be added as a party when the application proceeded to Divisional Court and then to the Court of Appeal, where costs against her were ordered. These costs have been paid.

[39] Ms. Johnson disputes that the applicants are entitled to claim costs against her retroactively before she attained party status in the litigation. She contends that the applicants’ attempt to name her as a party after the application was decided was unnecessary and vexatious, as she could have been added before the ruling was made.

[40] Ms. Johnson disputes that her husband is a “person of straw” in the application as he was named as a respondent in the application. She submits that she did not put him forward to shield herself from costs liability, as required by the “person of straw” test.

[41] If the court orders her, a non-party, to pay costs, she submits that the costs claimed are excessive and unreasonable, and reflect over-preparation. She argues that the bill of costs is vague, and proceedings are undifferentiated, such that she is unable to understand or respond to the costs claimed.

[42] With respect to the motion for indemnification, Ms. Johnson submits that it would be unconscionable to order costs against a non-party for litigation in which she did not participate.

[43] Ms. Johnson objects to claims for substantial or full indemnity costs when there were no applicable offers to settle and no reprehensible conduct on her part. She also submits that the applicants’ delays in making costs submissions increased her costs, for which she seeks $4,435.00 plus HST and disbursements.

[44] In summary, Ms. Johnson seeks the following orders:

1. striking the applicants’ claim for costs due to continuing delays in meeting filing deadlines;

2. dismissing costs claimed against her as a non-party;

3. costs of $3,000.00 payable by the applicants for responding to claims against her as a non-party;

4. full indemnity costs of $5,011.55 due to the applicants’ failure to meet filing deadlines;

5. alternatively, costs of the garnishment hearing payable to the applicants on a partial indemnity basis fixed at $5,000.00 plus HST and disbursements; and

6. costs of the indemnification motion to be determined after that motion is decided, payable to the successful party on a partial indemnity scale.

The Law of Costs: General Principles

[45] It is trite law that costs are in the discretion of the judge, a discretion that is guided by r. 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and common law principles. Notwithstanding the length of these reasons, assessment of costs is intended to be a summary proceeding.

[46] The main factors informing the discretion of the court are outlined in r. 57.01 as follows:

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 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

(j) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

(k) any other matter relevant to the question of costs.

[47] In determining costs, the court must determine what is a fair and reasonable amount for the unsuccessful party to pay: Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 26. One measure of what a losing party could reasonably expect to pay is what that party was billed by his or her own counsel.

[48] Costs are usually awarded on a partial indemnity scale unless there has been reprehensible, scandalous or outrageous conduct by a party that the court wishes to sanction by ordering enhanced costs. As the Supreme Court of Canada observed in Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3 at p. 134, per Justice McLachlin (as she then was):

…the fact that an application has little merit is no basis for awarding solicitor-client [substantial indemnity] costs; nor is the fact that part of the cost of the litigation may be paid for by others….

[49] In Hubertus Debruijn, Select Genetics LLC v. Velthuis Farms Ltd., 2019 ONSC 3806, at para. 34, the court observed that when the Registrar dismissed the plaintiff’s claim for delay, there was no determination as to the merits of the claim or counterclaim. In these circumstances, along with other considerations, the court awarded partial indemnity costs.

[50] In this case, the action was not dismissed by the Registrar, but by the court after hearing argument about delay. Therefore, the reasoning in Hubertus has no application.

Costs Against Non-Parties

[51] The court has statutory jurisdiction under s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, to award costs against a non-party if the “person of straw” test is met. In 1318847 Ontario Ltd. v. Laval Tool and Mould Ltd., 2017 ONCA 184, 134 O.R. (3d) 641, at paras. 59-61, the court explained that the “person of straw” test is satisfied if:

1. the non-party has status to bring the action;

2. the named party is not the true litigant; and

3. the named party is a person of straw put forward to protect the true litigant from liability for costs.

[52] In 1318847 Ontario Ltd., at para. 61, the Court of Appeal made the following observation about the “man of straw” test:

The proper inquiry under the test is whether the intention, purpose or motive of the non-party in putting the named party forward was to avoid liability for costs [emphasis in original]. The named party must have been “injected into the situation for the purpose of providing a costs screen” or “for the purpose of insulating a non-party from potential cost liability.” [Citations omitted.]

[53] In my view, Bruce Johnson is not a “straw man” for Jeanette Johnson simply because he was not inserted into the application by her; it was the applicants who named him as respondent in the application. Although they might have named or added Ms. Johnson as a party in the initial stages of the litigation, they did not. Therefore, Mr. Johnson does not qualify as a “straw man” inserted as a party in the application to shield Ms. Johnson from costs.

[54] By contrast, Ms. Johnson is named as a plaintiff in the action and is therefore exposed to the risk of costs.

[55] However, that is not the end of the matter. In addition to its statutory jurisdiction to make a costs award against a non-party, the Superior Courts of record have an inherent jurisdiction to control their own processes and protect them from abuse. This inherent jurisdiction includes the power to award costs against non-parties “where the non-party has initiated or conducted litigation in such a manner as to amount to an abuse of process”: 1318847 Ontario Ltd., at paras. 65-66.

[56] The applicants argue that Ms. Johnson abused the process of the court by taking various conflicting positions about whether she was a necessary party to the application and then claiming that the judgment should be set aside because she was not named as a party.

[57] While I agree that this conduct could be considered an abuse of process, the fact is that it largely occurred during the appeal process, for which her liability for costs has already been determined.

[58] Accordingly, I do not accept the argument that costs should be imposed in the application against Ms. Johnson as a non-party – with one qualification. In motions and proceedings during the application in which Ms. Johnson took a direct role, in the sense that she made filings and submissions, her liability for costs will be assessed.

Should Costs Claims be Struck Because of Failure to Meet Filing Deadlines?

[59] The Johnsons submit that the costs claims filed by Mr. Holervich and Mr. Gustafson should be struck because they disregarded the court’s filing deadlines for their costs submissions, some of which were peremptory. They argue that this failure caused delay, increased costs and wasted the court’s resources.

[60] In support of their argument, the Johnsons cite Jourdain v. Ontario (2008), 2008 CanLII 22130 (ON SC), 91 O.R. (3d) 465, a case in which the plaintiff filed an amended notice of motion after a peremptory filing date was ordered on consent. The responding parties relied on Symbol Yachts Ltd. v. Pearson (1995), 102 F.T.R. 215 (Fed. T.D.), to argue that failure to comply with a peremptory order is generally considered contumelious conduct giving rise to a presumption that the party ought not to be allowed to proceed.

[61] The Johnsons submit that in Jourdain, at para. 29, Mr. Justice Platana applied seven factors from Hytec Information Systems Ltd. v. Coventry City Council, [1996] EWCA Civ 1099, [1997] W.L.R. 1666 (Eng. C.A.), to the facts of Jourdain in deciding to permit the breaching party to continue, subject to costs.

[62] Justice Platana accepted the plaintiff’s arguments that the amended notice of motion was essential to his case. He also concluded that the client should not be penalized for the sins of his counsel.

[63] The Johnsons cite paragraph 16 of London Eco-Roof Manufacturing Inc. v. South River Developments Ltd., 2019 ONSC 1183, 97 C.L.R. (4th) 360, as authority for their argument. Referring to the Rules of Civil Procedure as the foundation for ensuring that cases are tried on their merits, processed, and heard in an orderly way, the court added:

…The difficult issue, in any particular case, is to determine when non-compliance reaches the point that it can no longer be excused. The Court, and society as a whole, have an interest in ensuring that the system remains viable. If the Rules can be ignored with impunity, they might as well not exist.

[64] The history of scheduling the costs argument follows.

[65] As I have said, in 2012, after the application to wind-up the corporations commenced, Mr. Curle, Mr. Johnson, and Ms. Johnson retaliated by suing the applicants and others. The action was dismissed for delay after a status hearing on August 1, 2019.

[66] The Johnsons point to the applicants’ failure to meet the filing deadline of September 9, 2019, for the costs motions scheduled on September 18 and 19. The submissions were served under cover of letter dated September 10, 2019. Counsel for the Johnsons states that the submissions were not actually received until September 12 and did not include a bill of costs or costs outline.

[67] The costs hearing did not proceed on September 18 and 19. Apparently, the Johnsons did not object to this delay.

[68] Instead, on September 13, 2019, Mr. Holervich booked February 6 and 7, 2020, to argue costs. The date was selected on consent.

[69] Mr. Holervich failed to provide a bill of costs before February 6; consequently, the two-day hearing was adjourned. The court issued a scheduling order requiring the applicants to serve their bill of costs and materials for the costs hearing by March 20, 2020.

[70] The responding parties were given until April 20, 2020, to serve and file their materials, with the filing dates peremptory to all parties. With the consent of counsel, the court scheduled the costs argument for four days, commencing July 7, 2020.

[71] Despite the peremptory order, the applicants’ materials were not served in full until June 30, 2020. Mr. Gustafson’s materials were served on July 7. The failure of the applicants/defendants to meet their filing deadline made it impossible for the Johnsons to prepare and file responding materials in time for the peremptory hearing.

[72] The court accepted the filings presented by the applicants and Mr. Gustafson at the hearing as written submissions, and ordered the Johnsons to serve and file their responding materials within 30 days, after which the applicants and Mr. Gustafson would have seven days to file any written response.

[73] The Johnsons were the next parties to miss their filing deadline. Despite the fact that I am the case management judge and seized of these cases, the Johnsons filed their request for an extension electronically, as a consent motion. By chance, this motion came to my attention.

[74] After hearing argument, on August 14, 2020, I granted an order permitting the Johnsons until September 4, 2020, to file their written submissions. The applicants and Mr. Gustafson were permitted a further seven days to file their reply materials. All materials have now been filed.

[75] In this case, unfortunately, the breaches of filing dates are not one-sided: they have been committed by counsel for all parties and Mr. Gustafson. It would be inequitable to strike the costs submissions of the applicants and Mr. Gustafson when the Johnsons defaulted on their filing date subsequently.

[76] In my view, striking costs submissions of the claimants only would result in a windfall to the Johnsons to which they are not entitled as the unsuccessful parties in the litigation. Such a sanction is out of proportion to what is in issue, including the magnitude of costs claimed over eight years of aggressive litigation. In effect, such an order would penalize the clients for the sins of their counsel.

[77] Apart from costs thrown away, the Johnsons have not identified any prejudice they have suffered by the delay in arguing costs. In my view, the applicable sanction to highlight the court’s disapproval lies in costs thrown away.

[78] The Johnsons submit that they are entitled to full indemnity costs of $5,011.55 for costs thrown away as a result of the defendants’ delay. I note that their bill of costs refers to “costs incurred as a result of the applicants’ delay.”

[79] If the Johnsons were blameless in complying with filing deadlines, I would be more sympathetic to their position that full indemnity costs are warranted. However, the Johnsons also sought an extension of their filing dates.

[80] Mr. Curle did not retain counsel or appear at either return date. Therefore, he is not entitled to be indemnified as he had no costs thrown away on these occasions.

[81] The result of the applicants and Mr. Gustafson and Ms. LeBrun not meeting their filing deadlines was that eight days of court time were wasted for which no explanation was offered.

[82] In my view, this constitutes reprehensible conduct for which substantial indemnity costs are warranted.

[83] The Johnsons were not able to file responding material, being either short-served or not served at all with the applicants’/defendants’ costs submissions. New filing dates were not seriously contested. No other legal argument was made. Therefore, their costs are limited to their appearances at court to make submissions about scheduling plus some preliminary communication in advance of those dates. Because Mr. Holervich’s filings encompass both the application and the action, his clients will bear the burden of paying greater costs, compared to Mr. Gustafson and Ms. LeBrun, who are parties in the action alone.

[84] Ms. Gustafson and Ms. Curle shall pay to the Johnsons costs fixed at $2,000.00; Mr. Gustafson and Ms. LeBrun shall pay the Johnsons’ costs fixed at $1,000.00. The applicants are not entitled to be indemnified for these costs.

Should Costs be Apportioned?

[85] The Johnsons submit that any liability for costs should be apportioned between Ms. Johnson, Mr. Johnson and Mr. Curle individually. This submission is made in Mr. Curle’s absence. It is an attempt to reduce the Johnsons’ liability for costs by one third and to leave collection of costs to the opposing parties.

[86] The Johnsons also contend that any costs awarded in the respondents’/plaintiffs’ favour should be paid to Mr. Johnson and Ms. Johnson exclusively, and not to Mr. Curle.

[87] No justification is offered for either submission. These submissions are opportunistic. Bruce Johnson, Jeanette Johnson, and Allan Curle jointly retained and instructed Mr. Hacio to prosecute the action and he did so. All of them participated in the action together.

[88] Mr. Johnson and Mr. Curle jointly instructed Mr. Hacio to defend the application. Their joint participation extended to delivering an offer to settle after the application was decided and undertaking appeals from the judgment. Mr. Curle was represented by the same counsel in the litigation until the death of Mr. Hacio. Ms. Johnson, the spouse of one of the respondents, filed affidavits on occasion and attended court from time to time; she was clearly aware of the status of proceedings in the application.

[89] In deciding how to conduct the litigation, the respondents jointly assumed the risk of costs. If the Johnsons felt that their objectives in the litigation conflicted with those of Mr. Curle, exposing them to costs, it was open to them to retain separate counsel.

[90] Previous costs orders in favour of or against these parties were not apportioned. There can be no justification now for re-writing that history and denying Mr. Curle any entitlement he may have to a share in costs; nor can there be any justification for reducing the Johnsons’ liability to pay costs by a third because Mr. Curle was involved.

[91] If the Johnsons find this unfair, they may negotiate a resolution as between themselves and Mr. Curle. It is not the responsibility of the successful parties to do so.

[92] Therefore, any liability for an award of costs herein shall be joint and several unless otherwise ordered.

Costs for Motions in the Application

1. Motion to Deliver up Cheque

[93] In the spring of 2012, litigation involving Norall Group Inc. was settled in Alberta. Without the knowledge or consent of Ms. Gustafson, Mr. Gustafson, or Ms. Curle, Mr. Johnson picked up a cheque payable to the corporation in the amount of $662,726.89. Upon his return, he failed to deposit it into the corporate bank account and refused to surrender the cheque to the applicants, who were the directors and principal shareholders in the corporation.

[94] The applicants served a motion requiring the respondents to deliver up the cheque. Mr. Gustafson, who had split with Mssrs. Johnson and Curle, filed an affidavit in support of the motion. It was only after service of the motion that Mr. Johnson surrendered the cheque.

[95] Mr. Johnson submits that he believed the applicants and Mr. Gustafson had launched a hostile takeover of the corporations. He maintains that the motion was premature since he had not retained counsel and would not have been able to appropriate the funds to his own use.

[96] On June 28, 2012, a consent order was granted requiring payment into court of the funds. Certain procedural orders with respect to the application were also made. The order reserved costs of the motion relating to the cheque to the judge hearing the application.

[97] The applicants seek full indemnity costs of $3,320.79 inclusive of tax and disbursements. They submit that the conduct of Mr. Johnson was “self-serving and egregious.” At that time, Mr. Holervich charged his client’s $300 per hour, while junior counsel in his office billed a modest $80 per hour.

[98] Mr. Johnson argues that there was no reprehensible conduct to warrant enhanced costs. He submits that costs should be limited to a partial indemnity scale. He submits that the fees claimed, $2,880.00, are excessive because the hearing was less than an hour in duration and the respondents did not file any responding material. Mr. Johnson asks that the applicants’ costs be fixed at $1,115.59 inclusive of tax and disbursements.

[99] Mr. Hacio charged the respondents $1,403.00 in fees for this motion.

[100] The reasonable expectations of the losing party as to liability for costs is a consideration when assessing quantum of costs. One measure of that expectation is legal fees charged by their own counsel. In this case, however, the respondents’ counsel did not draft materials, and apparently did not attend court. Mr. Hacio billed for 3.9 hours whereas Mr. Holervich and his junior billed for a total of 10.7 hours. This is to be expected since the applicants had the burden of developing a litigation strategy, bringing an emergency motion, drafting and serving materials, and negotiating with opposing counsel.

[101] Mr. Johnson’s ill-considered actions in withholding the cheque triggered the application and destroyed any prospects of an early settlement of corporate affairs, with ruinous effects for all concerned. Nevertheless, I am not prepared to conclude that full indemnity costs are warranted. Once the motion was launched, and with the benefit of legal advice, he surrendered the cheque. Accordingly, Mr. Johnson and Mr. Curle shall pay to the applicants their partial indemnity costs fixed at $2,281.19.

2. Motion to Sign Company Cheques

[102] The applicants claim full indemnity costs of $4,187.09 from the individual respondents for the motion to compel them to sign company cheques.

[103] The history of the motion is as follows. When the application commenced in 2012, the protocol for paying expenses was that Mr. Johnson, Mr. Curle, and Mr. Gustafson would all sign the company’s cheques. Cheques requiring signatures by Mr. Johnson and Mr. Curle were left at Mr. Hacio’s office.

[104] By June 2012, Mr. Johnson and Mr. Curle began refusing to sign corporate cheques for employee wages (for which the directors were liable) or other expenses, such as accounting and legal fees, and subcontractor invoices. The corporation was so cash-strapped that the applicants resorted to selling its equipment in order to raise the cash to cover payroll expenses. Ms. Gustafson also paid more than $5,000 of payroll expenses out of her own pocket when alternate funds were not available.

[105] The motion returned to court at least seven times to encourage Mr. Johnson and Mr. Curle to sign the necessary cheques.

[106] The court record shows that in June 2012, Ms. Gustafson initially swore an affidavit of seven pages plus several pages of exhibits. When the respondents again refused to comply, she swore a second affidavit in August 2013 of five pages plus twelve pages of invoices. The motion returned to court. At least one formal order adjourning the motion was entered in the court record in 2013.

[107] Mr. Hacio charged the respondents $4,101.00 in fees in connection with this ongoing motion. His dockets show two court attendances concerning the matter. Apparently, he did not draft responding material.

[108] Mr. Johnson submits that the motion was unnecessary and “completely avoidable.” He contends that his refusal to sign cheques was based on the lack of supporting information. Interestingly, the other signatory to the cheques, Mr. Gustafson, made no complaint about a lack of supporting information for cheques he was asked to sign.

[109] Mr. Johnson also submits that the motion never returned to court to be argued in a reasonable or timely way. He contends that because the motion was never argued, but was dismissed on consent with no offer to settle served, the parties should bear their own costs.

[110] I do not accept Mr. Johnson’s contention that the motion was unreasonable. It was obviously an effective tool to secure cooperation in the day-to-day management of the corporations’ affairs. It would have been unreasonable to argue the motion so long as the respondents were cooperating.

[111] In my view, the conduct of the respondents in refusing to sign corporate cheques for accounts payable and payroll was improper. Mr. Johnson cannot rely on his lack of legal advice for this conduct. The respondents engaged in a pattern of obstruction that compromised the orderly functioning of the corporations for an improper purpose, compelled the applicants to respond with a court proceeding, increased the costs for both sides, and wasted court time. There can be no doubt that the respondents intended these consequences. In these circumstances, substantial indemnity costs are warranted to show the court’s disapproval.

[112] Mr. Johnson and Mr. Curle are ordered to pay to the applicants their costs fixed at $3,548.64.

3. Motions for Audit and Consolidation of Application and Action

[113] The applicants claim full indemnity costs of $503.25 for these motions. There are no dockets filed for Mr. Hacio in relation to these motions.

[114] In late January 2016, Mr. Johnson and Mr. Curle served motions seeking orders:

1. consolidating the application and the action;

2. appointing Grant Thornton to liquidate the remaining corporate assets; and

3. requiring Grant Thornton to conduct an audit of the financial transactions of the corporations from March 6, 2012.

[115] These motions were served with a contempt motion, all returnable at the peremptory hearing of the application on March 23 and 24, 2016.

[116] The respondents’ motion for an audit was supported by Jeanette Johnson’s affidavit falsely alleging that the applicants had failed to make ongoing financial disclosure about the corporations to the individual respondents. In my view, she is liable as a non-party for causing additional costs.

[117] Gina Gustafson refuted the allegation with a responding affidavit attaching detailed evidence of financial disclosure made to Ms. Johnson’s counsel over the years. The preparation of this affidavit is not included in Mr. Holervich’s bill of costs for these motions.

[118] Mr. Johnson submits that the parties should bear their own costs because the applicants did not respond to the motions, which were never argued and were ultimately dismissed on consent without a finding. This is not correct. The substance of the motions were dealt with inferentially as follows:

[119] At paras. 100 and 101 of the reasons for judgment in the application, the court observed that the corporate assets were limited to a few vehicles, construction equipment and miscellaneous items. It concluded that retaining a professional liquidator to sell the few remaining chattels would involve delay and unreasonable expense.

[120] In para. 102 of the reasons for judgment, the court ordered the applicants to sell the remaining chattels. Thus, the court made a finding with respect to the respondents’ motion to engage Grant Thornton to liquidate assets.

[121] Further, in reasons delivered on the status hearing that dismissed the action for delay, the court commented on the contempt and consolidation motions. At para. 49, the court concluded that “…the rationale for serving the motions at the eleventh hour was strategic and intended to delay the hearing of the application.”

[122] After the application was heard, the motion for consolidation was moot. The application judgment required the applicants to arrange for taking of accounts of the corporations; inferentially, the motion for a forensic audit was also then moot.

[123] Mr. Johnson argues that the motions were brought in an attempt to save costs and court resources, and “not for any vexatious or illegitimate purpose.” He adds that the time incurred was minimal and success was divided, as the respondents succeeded in having a case management judge appointed. This is an attempt to conflate the results of the case management motion, for which costs have been determined, with the audit and consolidation motions.

[124] It was unreasonable to seek consolidation of the action and the application four years into the litigation when the action, compared to the application, was not nearly ready for trial.

[125] Had the plaintiffs desired a consolidation of the application and the action, they would not have waited until the application was on the point of argument to bring this matter forward. It is obvious that these motions were designed to delay the hearing of the application. None of these motions advanced the litigation; none were in the interests of the corporations.

[126] The motions to involve an accounting firm in liquidation and audit of the corporations was ill-considered, unreasonable, and, if granted, would have delayed the winding-up of the corporations at great additional expense. They were improper, vexatious and unnecessary – obviously brought to derail the hearing of the application.

[127] In these circumstances, substantial indemnity costs are warranted. Mr. Johnson, Ms. Johnson, and Mr. Curle shall pay the applicants’ costs fixed at $508.50.

4. Motion to Stay Audit and Contempt Motions

[128] The applicants claim full indemnity costs of their motions to stay the audit and contempt motions in the amount of $4,837.40 inclusive of tax and disbursements. The individual respondents were not billed by their own counsel for this work.

[129] These motions were served as a response to the respondents’ motions for an audit and for contempt which have been previously addressed.

[130] Mr. Holervich advised Mr. Hacio that the audit and contempt motions could not proceed on the peremptory application dates. A flurry of correspondence passed between counsel. Nevertheless, Mr. Hacio indicated his intention to proceed. Thus, the applicants served motions to stay the audit and contempt motions in order to protect the time set aside to hear the application.

[131] Mr. Johnson submits that there should be no costs for these motions because they were unnecessary. He submits that the applicants never “properly” responded to the respondents’ motions for audit and consolidation of proceedings, the motions were never argued, no offer to settle was served, and the motions were dismissed on consent.

[132] Mr. Johnson adds that because there was no finding on the merits of the motions, it is impossible to determine the successful party.

[133] Indemnity for costs is not limited to cases that are argued in court; whether a motion is argued is simply one factor to be considered in assessing costs. In this case, it was reasonable to expect that the applicants would vigorously resist any effort to hijack their peremptory application dates that had been set, on consent, in November. Indeed, a cool breeze blew when it became evident to the court that the respondents were attempting to re-cast the issues to be heard by the application judge. To that extent, Mr. Holervich was successful in protecting the peremptory dates for his clients. The force of the respondents’ motions was largely spent once the application was heard.

[134] The costs incurred in seeking orders for stay were the result of the respondents’ litigation strategy, assisted by Ms. Johnson. Mr. Holervich’s bill of costs shows that his notices of motion to stay the audit and contempt motions constituted an effective shield against Mr. Hacio’s motions. Mr. Holervich took instructions from his clients, drafted motions and two affidavits, served a return of motion and attended at court. Accordingly, the applicants shall have their costs on a substantial indemnity basis.

[135] Mr. Johnson, Ms. Johnson, and Mr. Curle shall pay to the applicants their costs fixed at $4,034.54.

5. Motion to Schedule Audit Motion

[136] The applicants seek full indemnity costs of $913.60 for the respondents’ motion to schedule the audit motion.

[137] Mr. Johnson submits that since this motion was never argued and was dismissed on consent with no finding made, the parties should bear their own costs. Mr. Hacio did not bill the respondents for his work on this motion.

[138] As I discussed in the motion to schedule the contempt motion on February 25, 2016, Justice Newton ordered that the audit motion and the contempt motion would not be heard during the application, but would be spoken to after the application was heard. Costs were reserved to me. This order shut down the respondents’ motion for an audit; it was a finding by the court in which the applicants prevailed. They are therefore entitled to their partial indemnity costs.

[139] Mr. Johnson, Ms. Johnson, and Mr. Curle shall pay to the applicants their costs fixed at $653.14.

6. Motion to Deliver Corporate Chattels

[140] The applicants claim full indemnity costs of $6,657.83 for their motion in June 2016 to deliver up corporate chattels.

[141] The history of the motion is as follows: in December 2015, the respondents agreed that the assets of the corporations could be liquidated. They never conceded that the corporations could be wound-up.

[142] The application judgment ordered the remaining corporate chattels liquidated.

[143] Mr. Holervich wrote to Mr. Hacio in May 2016 asking the respondents to deliver any remaining chattels in their possession. The respondents and not their counsel replied, announcing that their pending appeal of the judgment stayed the liquidation order. They objected to Mr. Holervich’s correspondence with Mr. Hacio and demanded that he deal directly with them.

[144] The applicants determined that a motion was necessary to force the issue. They served their motion for delivery of chattels, following which the respondents complied and the assets were sold. The motion was not argued; it was dismissed at the August 2016 case conference with costs reserved.

[145] Mr. Hacio billed the respondents $418.00 in fees for this motion. His account is comprised entirely of clerk time. Mr. Hacio did no drafting and did not attend court.

[146] On the other hand, Mr. Holervich took instructions from his clients on several occasions, drafted a motion and supporting affidavits, including exhibits, and communicated with counsel and other parties. Nine such communications are attached to the costs record.

[147] Mr. Johnson argues that there was never any finding by the court in the motion, and therefore it is impossible to determine the successful party. He submits that the parties should bear their own costs for the motion. He also submits that the costs claimed are excessive.

[148] As I have said, indemnity for costs is not conditional upon a matter being argued. The respondents’ refusal to deliver up all the chattels in their possession, even though they consented to liquidation of corporate assets, made the motion necessary and reasonable. In fact, it proved to be an effective tool to exact compliance and allowed the remaining assets to be liquidated. It does not now lie in Mr. Johnson’s mouth to say otherwise.

[149] The motion was, of course, moot once compliance was achieved. Even though the motion was not argued, the applicants were successful. The fact that the respondents advised the court that they consented to liquidation of assets in March and then obstinately refused to do so in May is an indication of bad faith. They escalated costs, delayed resolution of the winding-up, and wasted the court’s time.

[150] Mr. Johnson and Mr. Curle shall pay the applicants’ substantial indemnity costs in the amount of $5,606.37.

7. Motion to Add Jeanette Johnson as a Party

[151] The applicants seek full indemnity costs of $5,030.63 for their motion to add Jeanette Johnson as a party to the application. The motion was returnable in July 2016, after the application determined that Ms. Johnson owned 16% of the corporate shares.

[152] Mr. Hacio billed the respondents $38.00 in fees for this motion. They submit that the costs claimed by the applicants are excessive. They also argue that each party should bear their own costs as there was no determination of the successful party in the motion.

[153] The applicants invited Ms. Johnson to be added as a party to the application, but she never responded to that invitation. Nor is there any evidence that she sought to be added as a party, even though she was represented by Mr. Hacio in the companion action, swore an affidavit in the contempt motion, and was presumably well-aware of the status of proceedings.

[154] The applicants point to contradictory positions Ms. Johnson took before the application was argued about who owned these shares. The corporate records showed her as a shareholder. In March 2012, she signed a declaration that Bruce Johnson was the shareholder. Then, in January 2016, she deposed that she held her shares in trust for her family.

[155] As events developed, Ms. Johnson moved before the Divisional Court to be added as a party to the appeal. Her motion was unopposed, and she was added as a party. She argued that the application judgment should be set aside because she was not added as a party. When the Divisional Court dismissed her appeal, Ms. Johnson sought leave to appeal to the Court of Appeal. Costs were determined at the appellate level.

[156] The applicants saw Ms. Johnson’s appeals as evidence of continuing obstruction in the winding-up.

[157] They contend that the contradictory positions of Ms. Johnson, her failure to respond to an offer to acquire her interest in the corporations, and her opposition to the application gave them reason to expect continued resistance to the winding-up. It was for that reason that they moved in July 2016 to add Ms. Johnson as a party to the application. The motion was adjourned to a case conference on August 2016. The motion was not dealt with then; it was dismissed at the May 2019 case conference without being argued.

[158] In my view, the motion to add Ms. Johnson as a party came too late to secure the applicants’ position and did not advance the litigation. It was overtaken by Ms. Johnson’s motion to be added as a party at the Divisional Court level. Ms. Johnson’s varying and contradictory positions had all been articulated before the application was argued. There is no subsequent evidence of obstructionist behaviour in the winding-up.

[159] For these reasons, there shall be no costs of this motion.

8. Motion for Indemnification

[160] The applicants seek costs from the respondents and Ms. Johnson on a full indemnity scale for their motion for indemnification. Mr. Johnson submits that the motion for costs is premature because the court has not yet determined the motion. I agree with this submission. The motion for costs is adjourned, to be determined in the indemnification motion.

9. Motion for Interim Distribution of Surplus

[161] The applicants seek substantial indemnity costs of $15,768.12 from the respondents and Ms. Johnson for their motion for interim distribution of surplus to the shareholders. They submit that the distribution order should not have been contested.

[162] The applicants moved in August 2018 for an interim distribution of surplus funds in the corporations. The Divisional Court dismissed Mr. Johnson and Mr. Curle’s appeal of the judgment in March 2018 and ordered partial indemnity costs of $25,000.00.

[163] In July 2018, Bruce and Jeanette Johnson moved for leave to appeal in the Court of Appeal. The court dismissed their motions on September 25, 2018. Each was ordered to pay costs of $1,000.00.

[164] The substance of these appeals confirmed that they were not contesting Ms. Gustafson’s claim to her shares and laid to rest any contest to Ms. Curle’s shares. Thus, issues with respect to 84% of the shareholdings were concluded.

[165] Despite the final determination of share-holding, the respondents and Ms. Johnson opposed the applicants’ motion for distribution of corporate funds. Not only did they resist the applicants’ motion, but the plaintiffs renewed their motion to find the applicants in contempt. The plaintiffs had not revisited this motion since March 2016. Mr. Hacio represented Ms. Johnson, as well as Mr. Johnson and Mr. Curle at this motion.

[166] On the return of the motions in September 2018, the court adjourned the contempt motion to November 8 to be spoken to and proceeded to hear the motion for interim distribution. The court also required written submissions to be delivered.

[167] The respondents’ and Ms. Johnson’s position on the motion for distribution seemed to arise from their pending motions for leave to appeal, and their argument that the Court of Appeal had jurisdiction to overturn the application judgment with respect to the Curle and Gustafson shares, even though Mr. Curle and Mr. Gustafson were not parties to the appeal.

[168] By October 23, 2018, Justice Newton was aware that the Johnson motions for leave to appeal at the Court of Appeal had been dismissed.

[169] Justice Newton found that the corporations retained over $1,477,000 in cash. He determined that there would be adequate funds to address outstanding liabilities if an interim distribution to the shareholders of $1 million dollars was made and ordered the distribution in accordance with the respective shareholdings. He ordered that the corporations could directly pay the applicants’ legal fees as part of the distribution.

[170] Even though the Johnsons and Mr. Curle did not prevail on the motion, the Johnsons submit that there were no exceptional circumstances to warrant substantial indemnity costs. They concede that partial indemnity costs should be ordered.

[171] The Johnsons also submit that when compared with the accounts their own counsel charged, $9,152.00 plus tax and disbursements, the applicants’ claim for costs is excessive. They suggest that the sum of $7,906.15 is within their reasonable expectations.

[172] The quantum of the applicants’ bill of costs is directly attributable to the unreasonable position adopted by the respondents and Ms. Johnson, and their efforts to revive the contempt motion for strategic reasons.

[173] Mr. Johnson, Ms. Johnson, and Mr. Curle shall pay the applicants’ substantial indemnity costs fixed at $15,768.12.

10. Motion to Pay Ms. Johnson’s Surplus into Court on Notice to the Canada Revenue Agency

[174] The applicants claim full indemnity costs from the Johnsons in the amount of $6,098.15 for their motion to pay Ms. Johnson’s surplus into court on notice to the Canada Revenue Agency.

[175] The Johnsons submit that the motion was abandoned. Mr. Johnson seeks his costs on a full indemnity basis.

[176] The applicants submit that in January 2016, the Canada Revenue Agency served Mr. Holervich’s firm with two requirements to pay funds payable to Bruce Johnson. These demands were for not more than $169,809.84 and $28,206.33 respectively.

[177] They state that in the appeal proceedings, Ms. Johnson took the position that she held her shares in trust for the benefit of the Johnson family. The applicants were concerned that the requirements to pay attached to any beneficial interest Mr. Johnson had in his wife’s shares. The applicants reasoned that if they paid out Ms. Johnson’s shares to her directly, they and their counsel’s firm were at risk of demands from the Canada Revenue Agency.

[178] In November 2018, the applicants served a motion to pay Ms. Johnson’s share into court. The motion was adjourned until April 2019, when, in conjunction with another motion, it was adjourned to the May 2019 case management conference. Directions were given as to the order in which remaining matters in the application would be heard, including this motion.

[179] The applicants were unprepared to argue any matters, including this motion, on February 6, 2020. Peremptory dates were set to argue remaining matters, including this motion, on July 7, 2020.

[180] On July 7, 2020, the applicants’ motion was abandoned and dismissed on consent. The applicants contend that the conduct of the Johnsons in relation to the corporations made the motion necessary.

[181] The Johnsons argue that the motion was without merit because the Canada Revenue Agency never notified any of the parties that it was pursuing Ms. Johnson for Mr. Johnson’s tax arrears. Mr. Johnson submits that the Canada Revenue Agency would have pursued this means of recovery much earlier had it intended to do so. He characterizes this motion as an abuse of process, designed to prevent Ms. Johnson from receiving her shareholder interest.

[182] The Johnsons submit that r. 37.09(3) of the Rules of Civil Procedure applies. Rule 37.09 provides:

37.09 (1) A party who makes a motion may abandon it by delivering a notice of abandonment.

(2) A party who serves a notice of motion and does not file it or appear at the hearing shall be deemed to have abandoned the motion unless the court orders otherwise.

(3) Where a motion is abandoned or is deemed to have been abandoned, a responding party on whom the notice of motion was served is entitled to the costs of the motion forthwith, unless the court orders otherwise.

[183] In this case, no notice of abandonment was delivered. The motion was filed and counsel appeared at court; therefore subrules (1) and (2) do not apply. However, Mr. Holervich acknowledged to the court that the applicants were abandoning the motion.

[184] In my view, the motion was ill-advised. However, the dockets provided by the Johnsons relating to this motion indicate that they did not draft affidavits or prepare factums in relation to this motion. The dockets are comprised completely of clerk time billed at $95 per hour, which is excessive. An hourly rate of $80 is allowed. No dockets or bill of costs for Ms. Clinker’s time (as Mr. Hacio’s agent) or for Mr. Cupello’s time are included, nor are any disbursements identified.

[185] On the few occasions when this motion was before the court, it was spoken to in conjunction with other matters. Thus, while Mr. Johnson is entitled to his costs, they are minimal.

[186] Ms. Gustafson and Ms. Curle shall pay Mr. Johnson his partial indemnity costs fixed at $500.00.

11. Motion to Postpone Payment to Ms. Johnson

[187] The applicants seek full indemnity costs in the amount of $7,744.10 for their motion to postpone payment of surplus to Ms. Johnson.

[188] The applicants submit that once the Johnsons and Mr. Curle had exhausted their rights to appeal, they became presumptively entitled to recover their costs in the litigation, including against Ms. Johnson. However, the applicants were aware that Mr. Johnson and Mr. Curle were insolvent. Ms. Johnson also refused to pay the $1,000.00 costs ordered by the Court of Appeal in September 2018.

[189] The applicants were concerned that they would never recover any costs owed to them by Ms. Johnson if she obtained a pay-out from the corporations before costs were determined. They also sought indemnification from the corporations for any costs not recovered from the opposing parties.

[190] The applicants contend that, in response to Ms. Johnson’s intention to claim her share entitlement, they served a motion returnable in April 2019 to postpone her distribution, pending determination of costs and indemnification. Justice Newton adjourned the motion to case management in May 2019, where the court gave directions about argument of this and other motions in the application.

[191] The applicants submit that even though the motion was not argued, it served the purpose of a placeholder for the issue, and therefore they are entitled to their costs.

[192] Mr. Johnson submits that the motion was adjourned, never argued, and effectively abandoned. He seeks his full indemnity costs of $2,577.53. Alternatively, he submits that since there has been no finding by the court, there should be no costs.

[193] I do not agree with the Johnsons’ submissions. Although the motion was never argued, it was certainly not abandoned. The amount that Ms. Johnson will be entitled to at the end of the day awaits the final determination of costs. It is a live issue.

[194] In my view, the applicants were justified in attempting to tie up Ms. Johnson’s entitlement to surplus, given her variable positions about who owned the minority share interest, her refusal to pay appellate costs, and her participation as plaintiff in the now dismissed action against Ms. Gustafson, Ms. Curle, and others.

[195] Having succeeded in the application and the action, it is not unreasonable that they should look to Ms. Johnson for a portion of their costs. As the resolution of the remaining issues in the application and the action was evolving, this pending motion served to protect the applicants’ interest in collection of their costs, even though it was never argued.

[196] That said, I do not agree that full indemnity costs are warranted. Time claimed before Justice Newton was 1.1 hours; thereafter, the motion was spoken to at case management along with other proceedings for which time specific to the motion was claimed.

[197] As well, time claimed by Mr. Holervich for file review, document assembly, and drafting, some 13 hours, is excessive.

[198] Mr. Johnson and Ms. Johnson shall pay the applicants their costs fixed at $3,244.44.

12. Garnishment Hearing

[199] The applicants claim full indemnity costs of $11,691.19 from Ms. Johnson for the garnishment hearing of September 2019.

[200] At the garnishment hearing, the applicants brought motions to:

1. terminate two notices of garnishment Ms. Johnson issued to the corporations;

2. prohibit Ms. Johnson from enforcing the interim distribution order of October 23, 2018, pending the court’s determination as to the disposition of her share of the funds; and

3. require the Sheriff of the District of Thunder Bay to repay to Norall Group Contracting Inc. the funds previously remitted to the Sheriff by the garnishee.

[201] In November 2018, the applicants served their motion that funds payable to Ms. Johnson be paid into court on notice to the Canada Revenue Agency, the history of which is discussed above.

[202] In April 2019, the applicants brought a second motion for an order postponing any payment to Ms. Johnson until costs and indemnification issues were determined. Both motions were adjourned to the next case management conference in May 2019. The court endorsed that these motions would be heard with remaining motions in the application.

[203] Next, Ms. Johnson served notices of garnishment on the Credit Union seeking to recover $162,000.00. The Credit Union sent funds to the Sheriff; meanwhile, Ms. Johnson refused to withdraw her notices of garnishment.

[204] The applicants sought a garnishment hearing. Ms. Johnson notes that her counsel was short-served but the applicants refused to agree to an adjournment, thereby increasing the costs.

[205] Justice Nieckarz granted the contested adjournment in August 2019 and awarded costs against the applicants.

[206] The matter could not be heard the following week and was again adjourned, on consent, to September, with filing directions.

[207] Ms. Johnson opposed the interim distribution order. The applicants’ motions to delay distribution to her could have been avoided had they moved to limit the payout to the applicants only.

[208] Ultimately, the court terminated the garnishment notices. Ms. Johnson was prohibited from enforcing the interim distribution order, and the Sheriff of Thunder Bay was ordered to return the funds to the corporation, with costs reserved.

[209] The applicants submit that their hands were forced when Ms. Johnson refused to cooperate, notwithstanding that the court had not yet determined costs and indemnification.

[210] Ms. Johnson submits that even though she opposed the interim distribution order, the order allowed for disbursement of $1 million to all shareholders, and that order was never varied or appealed.

[211] Further, Ms. Johnson submits that costs claimed are excessive, including the clerk’s time. She argues that the bill of costs indicates over-preparation. It is her position that if any costs are awarded, they should be on a partial indemnity basis in the amount of $6,239.94, as she did not engage in any improper conduct.

[212] I agree that partial indemnity is the proper scale of costs in these circumstances. I also agree that the clerk’s hourly rate is excessive and allow $80 per hour.

[213] Costs incurred for the first appearance at the motion, adjourned with costs ordered by Justice Nieckarz against the applicants, are not claimable.

[214] Ms. Johnson shall pay to the applicants their costs fixed at $7,312.44.

The Action

Position of Ms. Gustafson and Ms. Curle, Defendants

[215] Ms. Gustafson and Ms. Curle seek enhanced costs of the action, arguing that it was brought for strategic purposes, with no intention that the court would determine its merits. They contend that, in view of the documentary record showing the transfer of shares to them, there was no realistic prospect that the court would find the majority shares had been stolen.

[216] These defendants also argue that claims for damages were without substance because:

a) Mr. Curle and Mr. Johnson stopped bidding on work in 2011, leaving Mr. Gustafson to finish the corporations’ contracts;

b) Mr. Johnson and Mr. Curle destroyed their creditworthiness and their ongoing ability to operate the corporations;

c) Ms. Johnson’s involvement with the corporations was limited to shareholding and incidental corporate governance; and

d) Ms. Johnson sustained no damages at the hands of Ms. Gustafson and Ms. Curle.

[217] In addition, Ms. Gustafson and Ms. Curle submit that the action was an abuse of process because:

a) the action was never prosecuted;

b) the corporations were improperly named as plaintiffs when the individual plaintiffs had no authority to do so;

c) the plaintiffs attempted to secure control of the corporations by having “independent” counsel appointed for the corporations in the action; and

d) the plaintiffs repeatedly made unfounded allegations about them, with no intention of pursuing a court finding on the allegations.

Position of Mr. Gustafson, D. G. Gustafson Engineering Ltd., and Ms. LeBrun, Defendants

[218] Mr. Gustafson and Ms. LeBrun were initially represented by Mr. Matson until he was removed as solicitor of record on November 2, 2017. Mr. Gustafson then took over his own defence and that of his corporation, D.J. Gustafson Engineering Ltd., in the action. He also appeared as agent for Holly LeBrun. As a result, he seeks costs incurred of $35,177.60 to pay their counsel, and thereafter when he represented himself and Ms. LeBrun, preparing for and appearing in court for that purpose.

[219] Mr. Gustafson submits that in December 2012, the Johnsons indicated that they would prefer to shut down the corporations rather than continue business with Carl Gustafson or Allan Curle individually. Nevertheless, he argues that Allan Curle and the Johnsons opposed the winding-up process for eight and a half years.

[220] Mr. Gustafson submits that the Johnsons’ motivation was to leverage Jeanette Johnson’s shares into a more lucrative return. He points to the plaintiffs’ offer to settle delivered in May 2017, after the application determined that Ms. Johnson held 16% of the shares. The offer proposed $315,000.00 plus costs of $80,000.00 be paid to Ms. Johnson and $475,000.00 be paid to the “Curle Family Trust.” As to Mr. Curle’s motivation, he believes it stems from a scorched earth approach to his disintegrating marital relationship.

[221] It is his position that a consent winding-up would have preserved the equity of the shareholders, and avoided the extensive time and costs incurred in these proceedings.

[222] Mr. Gustafson identifies the following ways in which Allan Curle and the Johnsons specifically opposed the winding-up:

a) by claiming that an unwritten trust existed in relation to Juanita Curle’s shares that effectively reversed the deed of gift Mr. Curle executed in relation to them;

b) by concealing a payment of $662,000.00 that was due to Norall;

c) by launching an action in retaliation against Ms. Gustafson, Ms. Curle, Ms. LeBrun, Mr. Gustafson, and his corporation; and

d) by claiming first that Bruce Johnson’s shares were held in Jeanette Johnson’s name; then shifting position to assert that Jeanette held the shares in trust for Bruce and his family; then finally arguing that Jeanette is the owner of the shares, arguing in the appellate courts that she was prejudiced by the winding-up application.

[223] Mr. Gustafson argues that the litigation was entirely unnecessary. He contends that the ownership of the Curle shares could have been determined in their divorce proceeding, and that the Johnsons should have agreed to the winding-up. By accepting an early offer to settle, the costly, protracted litigation could have been avoided with essentially the same result.

[224] Mr. Gustafson contends that the Johnsons and Mr. Curle exacerbated the dispute in a number of ways. He points to their refusal of reasonable offers as early as August 2012, and thereafter, that would have resolved the dispute. Specifically, he cites the following conduct of Jeanette Johnson:

Jeanette accepting the shares transferred from Bruce; then claiming the shares were Bruce’s even though they were in her name; then not agreeing to be added as a party, and then complaining that she was not added as a party. Jeanette opposed a request to add her; then opposed a motion to add her; then complained in an affidavit that she was not added; then wouldn’t answer [the] question as to why she did not try to be added; then further complained to the Court of Appeal that she wasn’t added; then she was added with consent; then she appealed complaining that the Application should not have been heard because she was not a party to the Application (though she attended throughout); then when the Divisional Court added her to the appeal and to which she made submissions, she further asked the Divisional Court for leave to appeal that ruling on the basis that she was not a party when the Application was heard.

[225] Mr. Gustafson added that Ms. Johnson was represented by Mr. Hacio before the action was initiated. Mr. Hacio represented the respondents in the application and the plaintiffs in the action.

[226] Mr. Gustafson also cites as obstructive behaviour the plaintiffs’ failure to return vehicles and equipment belonging to the corporations; Mr. Curle’s use of a company vehicle without having a driver’s license; and unreasonable objections to invoices presented by Mr. Gustafson’s corporation to complete Norall contracts.

[227] In summary, Mr. Gustafson and Ms. LeBrun submit that the action was brought for a vexatious purpose to intimidate or coerce the defendants. They claim full indemnity costs of defending the action, by counsel, in the amount of $35,177.60 until November 2016. Thereafter, Mr. Gustafson claims costs at the rate of $120 per hour while self-represented or, alternatively, $100 per hour for representing himself and acting as agent for Ms. LeBrun, for a total amount of $58,800.00 or $46,800.00, respectively.

Position of Mr. Curle, Plaintiff

[228] Mr. Curle was represented by Mr. Hacio until his death. He did not retain counsel thereafter and made no submissions on costs in the action.

Position of the Corporations, Plaintiffs

[229] Although the corporations were listed as plaintiffs in the action, their claims were stayed by the order of Mr. Justice Fregeau on October 7, 2014. Thereafter, they were not represented and took no further part in the action.

Position of Mr. Johnson and Ms. Johnson, Plaintiffs

[230] The Johnsons repeat their argument that the failure of the applicants/defendants to serve their costs submissions in accordance with the scheduling orders of the court amounted to contumelious behaviour, requiring that their claims for costs be struck.

[231] As this argument was addressed in the application, I will not repeat it.

[232] The Johnsons also submit that the costs claimed by Ms. Curle and Ms. Gustafson are excessive and represent over-preparation or duplicate billing by counsel, especially when compared to the accounts submitted to the plaintiffs by Mr. Hacio. They also object to the fees claimed by non-lawyers in the amount of $56,010.00 as not being proper or proportionate to the action. They ask that the bill of costs be reduced by at least that amount.

[233] Further, they ask that the costs claimed for motions in the action be further reduced by a minimum of $2,351.00 reflecting claims for fees by non-lawyers.

[234] The Johnsons submit that the general failure of the defendants to deliver a detailed bill of costs in the action has deprived the court of sufficient information to determine what costs are being claimed.

[235] With respect to Mr. Gustafson’s claim for costs, the Johnsons argue that full indemnity costs of $93,977.60 of an action that did not proceed to trial are excessive.

[236] The Johnsons object that Mr. Gustafson failed to file a proper bill of costs; that he claims for costs of motions already determined; and that he, too, did not meet the filing deadlines. They concede that partial indemnity costs of $10,553.28 inclusive of HST and disbursements are warranted, which they suggest should be paid by the plaintiffs on an equal basis.

[237] In addition, Mr. Gustafson claimed his costs as a self-represented litigant fixed at $46,800.00. The Johnsons object to any award of costs, arguing that he has not shown evidence that he gave up remunerative activity in order to do work ordinarily done by a lawyer.

[238] Alternatively, if Mr. Gustafson is awarded costs as a self-represented litigant, they should only be liable for their proportionate share of $3,444.00 (inclusive of HST and disbursements) based on an hourly rate of $20.

[239] With respect to costs of the action, the Johnsons seek the following orders:

1. striking the defendants’ claim for costs, with no costs to any party;

2. in the alternative to paragraph 1, costs of the action (excluding costs of the motions) to be paid by the plaintiffs on an equal basis to Ms. Gustafson and Ms. Curle in the amount of $20,000.00 plus HST and reasonable disbursements;

3. in the alternative to paragraph 1, costs of the action (excluding costs of the motions) to be paid by the plaintiffs on an equal basis to the defendants, Mr. Gustafson, Ms. LeBrun, and D.J. Gustafson Engineering Ltd. fixed at $10,553.28 inclusive of HST and disbursements;

4. in the alternative to paragraph 1, no costs awarded to Mr. Gustafson, Ms. LeBrun, or D.J. Gustafson Engineering Ltd. for self-representation;

5. in the alternative to paragraphs 1 and 4, the plaintiffs shall pay costs to Mr. Gustafson, Ms. LeBrun, and D.J. Gustafson Engineering Ltd. of $3,444.00 inclusive of HST and disbursements for any fees claimed for self-representation;

6. in the alternative to paragraph 1, the parties shall bear their own costs for the following motions:

a. to produce a retainer agreement;

b. to pay corporate debts and dividends;

c. to dismiss claims of the corporations;

d. for contempt; and

e. to schedule the motion for contempt.

7. in the alternative to paragraph 1, costs of the motion for the 2013 interim order payable by the defendants to the Johnsons fixed at $6,639.90 inclusive of disbursements plus HST;

8. in the alternative to paragraph 1, costs of the motion to appoint a case management judge payable by the defendants to the Johnsons fixed at $3,500.00 inclusive of disbursements plus HST;

9. in the alternative to paragraph 1, costs of the D.J. Gustafson Engineering motion to dismiss the action entirely shall be payable by D.J. Gustafson Engineering Ltd. to the Johnsons fixed in the amount of $500.00 inclusive of HST and disbursements;

10. the defendants shall pay the Johnsons’ costs for having to respond to the defendants’ claims for costs fixed at $3,000.00 inclusive of HST and disbursements; and

11. the Johnsons shall have their costs caused by the defendants’ delay in serving their costs materials, fixed at $5,011.55 inclusive of HST and disbursements.

Costs for Motions in the Action

1. Motion for Interim Order Preserving Status Quo

[240] The motion for an interim order was served in March 2013 by the plaintiffs and resolved by negotiation in April 2013. The interim order was extended from time to time on consent thereafter but was never argued. The order was ultimately dismissed on consent at a case management conference in May 2019 because it was overtaken by the ruling in the application.

[241] The Johnsons submit that they were substantially successful on the motion and seek their partial indemnity costs of $6,639.90 inclusive of disbursements plus HST. The applicants submit that since the order benefitted both sides, there should be no costs.

[242] Although the plaintiffs (including Mr. Curle) initiated this motion, the negotiated order gave Ms. Curle and Ms. Gustafson control over the corporations on an interim basis during the action and the winding-up application. The order preserved the status quo, provided predictable and responsible corporate governance, and sharing of corporate information for the benefit of all parties, including Mr. Gustafson. Of all the interim orders secured during the action, this was probably the most useful. In these circumstances, there will be no costs.

2. Motion to Produce Retainer Agreement

[243] Ms. Gustafson and Ms. Curle claim full indemnity costs of $9,642.73, inclusive of HST and disbursements for a motion to produce a retainer agreement.

[244] The corporations were included as plaintiffs in the action, claiming damages against the defendants.

[245] As directors and majority shareholders in the corporations, Ms. Gustafson and Ms. Curle questioned who had authorized the corporations to be named as plaintiffs. They were also concerned about the corporations’ liability for costs incurred by Mr. Gustafson, his corporation, and Ms. LeBrun, who were named as co-defendants.

[246] On November 12, 2012, Ms. Gustafson and Ms. Curle sent a r. 15.02 request to Mr. Hacio requiring him to deliver a notice declaring whether he commenced or authorized the commencement of the action on behalf of the corporations,. or whether the corporations had done so.

[247] Under the rule, if the lawyer fails to respond to the request, the court may order the lawyer to do so, stay the proceeding, and order the lawyer to pay the costs of the proceeding.

[248] Further, r. 15.02(3) permits the court to stay or dismiss a proceeding not commenced or authorized by the lawyer. Alternatively, r. 15.02(4) permits the court to stay or dismiss a proceeding started without the authority of the client.

[249] Mr. Holervich demanded that Mr. Hacio produce his retainer or other agreement that might require either or both corporations to pay costs, including to Mr. Hacio. Mr. Hacio refused to do so over the next seven months.

[250] Ms. Gustafson and Ms. Curle also served a motion in November 2012 seeking a stay of claims made in the action by the corporations, arguing that the claims were not properly authorized.

[251] Eventually, Mr. Hacio responded to the notice advising that the action was authorized by the majority of directors of the corporations. Mr. Holervich served a motion in July 2014 for production of the retainer agreement.

[252] At the request of Mr. Hacio, the motion was stayed by the court in August 2014 pending the determination of a motion to remove Mr. Hacio as solicitor of record for all the plaintiffs and stay the corporations’ claims. Thus, the retainer motion was never argued. Mr. Hacio billed his clients $476.00 for the retainer agreement motion. Half of that account represents billings for his clerk.

[253] Mr. Matson’s account to Mr. Gustafson for fees from June 9 – August 11, 2014, leading up to the order of August 11, 2014, totaled $2,467.50. This account includes three attendances at motions court: July 24, July 31, and August 11. The first two attendances involved consent adjournments. Although Mr. Matson’s account references review of motion materials and factums, there is no indication that he drafted any for Mr. Gustafson.

[254] I conclude that Mr. Gustafson’s costs were nominal.

[255] Mr. Justice Fregeau heard the motion and stayed the action as against the two corporations. The motion to produce a retainer became moot and was not heard. It was dismissed in May 2019 on consent.

[256] While Mr. Gustafson did not specifically address this motion in his costs submissions, I conclude that there is no reason to deprive him of his costs. Accordingly, Ms. Gustafson and Ms. Curle shall pay Mr. Gustafson and Ms. LeBrun their costs fixed at $600.00.

[257] The Johnsons submit that this motion was completely unnecessary in view of the pending motion to stay the claims of the corporations and that each party should bear their own costs.

[258] I agree with this submission. Having moved to stay the corporations’ claims, the directors’ concern about corporate liability for costs was moot and the motion to produce a retainer agreement redundant. It did not advance the interests of any party to the litigation.

[259] The Curle and Gustafson defendants succeeded on the motion to stay the corporations’ claims and were awarded costs. Therefore, with the exception of costs awarded to Mr. Gustafson and Ms. LeBrun above, the remaining parties shall bear their own costs for the retainer motion that was never argued.

3. Motion to Pay Corporate Debts and Dividends

[260] The 2013 interim order governing the management of the corporations did not cover all emerging issues. Furthermore, the plaintiffs were not inclined to cooperate to resolve new issues.

[261] Late in 2015, Ms. Gustafson and Ms. Curle moved for orders in the action to pay:

1. dividends that had been declared in 2012;

2. legal fees incurred by tax counsel in defending the corporations against charges of tax evasion;

3. D.J. Gustafson for completing the contracts abandoned by the corporations; and also

4. to return three vehicles in the possession of Allan Curle and Bruce Johnson that belonged to the corporations.

[262] On January 14, 2016, the court ordered that this motion be heard together with the application, scheduled to be heard on a peremptory basis on March 23 and 24, 2016. Costs of $250.00 payable in the cause were ordered for what the court considered to be a scheduling dispute between Mssrs. Holervich and Hacio on that day.

[263] The defendants, Ms. Gustafson and Ms. Curle, were successful in the action. Therefore, the plaintiffs shall pay to them the costs of this appearance fixed at $250.00.

[264] The Johnsons submit that each party should bear their own costs for this motion. They contend that the motion was never argued, and was dismissed on consent in August 2016, essentially as abandoned. They argue that the motion duplicated the relief granted in the application and was therefore unnecessary. Alternatively, they submit that the claim for costs is excessive compared to Mr. Hacio’s account to his clients of approximately $1,046.50.

[265] I do not agree with the Johnsons’ submissions. At the hearing of the application, the respondents finally agreed that the assets of the corporation should be liquidated. If this concession had been made much earlier, thousands of dollars in costs would have been saved.

[266] It is evident that the obdurate refusal of the plaintiffs to cooperate in the payment of corporate receivables and to return vehicles for disposition made the motion necessary, even if it was not argued per se. The motion became a supplementary agenda in the application.

[267] The application judgment adjudicated the substance of several issues identified in the motion: payment of corporate expenses (including the D.J. Gustafson accounts), and liquidation of remaining chattels. Notwithstanding the order for winding-up, the respondents refused to turn over the vehicles, making a renewal of the motion necessary in June 2016. Accordingly, it cannot be said that the motion was abandoned. Its dismissal at a case conference in August 2016 with costs reserved merely recognized that the issues had already been dealt with.

[268] Mr. Gustafson and Ms. LeBrun are not parties to the application and did not participate in its argument. However, they were defendants in the action. Mr. Gustafson was interested in the outcome of this motion which involved payments to his company. Accordingly, the plaintiffs should have some expectation of liability to these defendants for costs on the motion, even if minimal.

[269] Mr. Gustafson and Ms. LeBrun were represented by Mr. Matson at the time. His rate to his clients was $225 per hour. An appropriate partial indemnity rate is $150 per hour.

[270] Mr. Matson’s accounts indicate communication with Mr. Holervich, his clients, and a review of draft motion materials in advance of the January 14 return date. There is no indication that he actually drafted and served motion materials for use at the motion. Mr. Matson’s accounts show that he attended court that day for 1.7 hours. It is not clear whether any disbursements apply to costs on this motion.

[271] Mr. Matson’s account to Mr. Gustafson and Ms. LeBrun for the period encompassing this motion totaled $3,246.96. However, at least half of the account rendered in that invoice post-dates the January 14 appearance and refers to drafting motion materials. I infer that these charges relate to a subsequent motion by Gustafson and LeBrun’s counsel to dismiss the action in its entirety.

[272] In the circumstances, the plaintiffs shall pay Mr. Gustafson and Ms. LeBrun’s partial indemnity costs fixed at $700.00.

[273] The plaintiffs’ refusal to pay the D.J. Gustafson invoices resulted in trial of an issue being ordered to the detriment of corporate and individual interests.

[274] Ms. Gustafson and Ms. Curle claim costs of $8,844.38 inclusive of HST and disbursements for the motion to pay corporate debts and dividends. I agree that these costs are excessive in that the applicants are also be entitled to costs of the application as a whole, and most of these issues were adjudicated in the application.

[275] Mr. Holervich has been a member of the bar since 1987. His hourly rate to his clients during the relevant period was $350. In my view, an appropriate partial indemnity rate for counsel is $250.

[276] The bill of costs shows an hourly rate for the law clerk of $125 per hour. In my view, a partial indemnity rate for an experienced law clerk should not exceed $80 per hour.

[277] Bearing in mind that the substance of the motion was argued in the application, the individual plaintiffs shall pay to Ms. Gustafson and Ms. Curle costs of this motion fixed at $5,000.00.

4. D.J. Gustafson Engineering Motion to Dismiss the Action Entirely

[278] D. J. Gustafson Engineering brought a motion to dismiss the action in its entirety. It is not clear from the costs submissions when the motion was returnable. The motion was never scheduled and never argued. Ultimately, the action was dismissed after a status hearing in August 2019.

[279] The Johnsons seek their costs of this motion fixed at $500.00 inclusive of HST and disbursements. No bill of costs was filed to support their claim.

[280] The Johnsons argue that the motion was vexatious and an abuse of process, brought by D.J. Gustafson “in an attempt to dilute the resources of the defendants in the months leading up to the hearing of the application.”

[281] Undoubtedly, the defendants believed that the plaintiffs were guilty of vexatious litigation by launching an action in response to the application for winding up, then agreeing that the assets of the corporations should be liquidated, but disputing that the corporations should be wound-up.

[282] As the action was ultimately dismissed, it cannot be said that the motion was without merit, only that it was overtaken by the application. In these circumstances, I find that the Johnsons are not entitled to their costs.

[283] Mr. Matson’s account to Mr. Gustafson and Ms. LeBrun shows approximately seven hours of services on a motion billed at $250 per hour. From the timing of the services, I infer that they relate to the motion to dismiss the action. These services date from January 14 – 28, 2016. There is no indication that he appeared in court during this time.

[284] In my view, it is reasonable to expect that defendants in an action would try to have the action dismissed, especially as against a peripheral party such as D.J. Gustafson. If successful, they would simplify the issues and reduce actual costs and the risk of liability for costs.

[285] Mr. Johnson, Ms. Johnson, and Mr. Curle shall pay Mr. Gustafson and Ms. LeBrun their costs on a partial indemnity basis fixed at $750.00.

[286] In addition, Ms. Gustafson and Ms. Curle seek modest costs of this motion to be paid by the individual plaintiffs. Mr. Holervich’s bill of costs claims fees of $516.97. It reflects his review of draft motion material sent by Mr. Matson on January 19, 2016, and review of a motion confirmation. Mr. Holervich did not draft materials and did not appear in court. His hourly rate of $350 is excessive as partial indemnity costs, as is his clerk’s time claimed at $125 per hour.

[287] Mr. Johnson, Ms. Johnson, and Mr. Curle shall pay Ms. Gustafson and Ms. Curle their costs fixed at $300.00.

5. Motion to Dismiss the Claims of the Corporations

[288] Ms. Gustafson and Ms. Curle seek costs against the plaintiffs in the sum of $4,556.03 for a motion to dismiss the claims of the plaintiff corporations.

[289] The background to this motion is as follows: on October 7, 2014, Mr. Justice Fregeau stayed the claims of the corporations in the action on the grounds that they had not been properly authorized. However, the court granted leave to revive the corporate claims if independent counsel was appointed pursuant to a proper resolution of the directors of each corporation. The court also refused to stay the action in its entirety.

[290] In November 2014, the Johnsons and Mr. Curle moved for an order appointing independent counsel for the corporations in the action. That motion was dismissed. The plaintiffs sought leave to appeal the dismissal of their motion; leave was refused in April 2015. Thereafter, the plaintiffs took no further steps to advance claims of the corporations.

[291] In January 2016, Ms. Gustafson and Ms. Curle served a motion in the action to dismiss the claims of the corporations. This motion was served before the application was argued in March 24, 2016. Reasons for judgment in the application were released on April 26, 2016.

[292] The motion to dismiss the claims of the corporations returned to court on May 2016, at which time Regional Senior Justice Shaw appointed myself as a case management judge to hear all remaining motions. On May 24, 2019, after the appeals had been exhausted, the parties were directed to schedule a status hearing in the action. The order specified that if the action was not dismissed, then various motions, including dismissal of the corporations’ claims, would be argued.

[293] The action was subsequently dismissed for delay; thus, this motion became moot.

[294] The Johnsons argue that the motion was unnecessary and an abuse of process since the claims of the corporations had already been stayed by the court. They submit that the motion was dismissed without a finding, as the defendants essentially abandoned the motion. They submit that it is therefore not possible to determine the successful party. The Johnsons advocate that the parties should bear their own costs.

[295] In my view, the motion was unnecessary once the claims of the corporations were stayed on an interim basis. If the applicants required additional reassurance, it came in the dismissal of the motion to appoint independent counsel for the corporations and dismissal of an appeal from that order. There was no realistic possibility that the corporations’ claims would advance in the action.

[296] Thus, the motion to dismiss the corporations’ claims was taken through excessive caution. It did not advance the litigation, particularly after the corporations were ordered wound up. There was no ongoing litigation to move the action forward. This motion merely served as a distraction. Accordingly, the parties shall bear their own costs of this motion.

6. Motions for Contempt and Stay of Contempt

[297] On February 1, 2016, Mr. Hacio served motions for contempt and to consolidate the application and the action. The motions were made returnable seven weeks later, on the peremptory application date. The moving parties sought a finding that Ms. Gustafson and Ms. Curle were in contempt of the interim order dated April 5, 2013, granted in the action, which provided for the management of the corporations.

[298] The contempt motion was supported by the affidavit of Ms. Johnson sworn January 28, 2016. She alleged over 45 breaches of the interim order in the nearly three years that the interim order had been in place. The breaches cited included ordinary management activities, such as payment of rent for the corporations, year-end accounting fees, corporate income tax, and retaining counsel to defend the corporations on tax evasion charges triggered by previous management. However, she made no mention of Mr. Hacio’s email dated July 21, 2014, authorizing the applicants to pay the corporations’ income tax assessments and fine.

[299] The Johnsons submit that although the motion was adjourned several times, it was never argued. Ultimately, it was dismissed when the action was dismissed for delay in 2019. The Johnsons submit that because there was no finding on the merits, each party should bear his or her own costs.

[300] Mr. Holervich responded to Mr. Hacio’s contempt motion by serving a motion to stay the contempt order. He argued that Mr. Hacio could have served his motions before November 2015 and that there was insufficient time to prepare for the contempt motion. Justice Newton agreed with Mr. Holervich. On February 25, 2016. Justice Newton endorsed the record, in part:

…It is not for one party to decide that additional matters can proceed on a date fixed for the hearing of another matter.

[301] Justice Newton ordered that the motions would not be heard on the application dates but would be spoken to after the hearing of the application. He also reserved costs of the appearance before him to be decided by me. There is no indication in Mr. Matson’s accounts that he appeared in motions court on February 25, 2016.

[302] Following Justice Newton’s order, the plaintiffs left the contempt motion in abeyance for two and a half years. They revived it on September 6, 2018, when they sought to argue it at the same time as the applicants’ motion for an interim distribution of corporate funds. Justice Newton adjourned the motion to November 8, 2018, to be spoken to, noting the time constraints of motions days and observing that there was a possibility that the action might be dismissed for delay.

[303] Ms. Gustafson and Ms. Curle submit that between 2016 and 2018, the plaintiffs often raised the pending contempt motion for an improper and collateral purpose, to cast them in an unfavourable light. They seek full indemnity costs for the motion in the amount of $6,428.00. They submit that the motion was patently vexatious, as it led to extended argument and court attendances in February 2016 concerning when the motion would be heard during the application hearing dates.

[304] At the case management conference of May 2019, I ordered that if the action was not dismissed for delay, certain motions would be argued. These included the motions for contempt and stay of contempt. The action was dismissed for delay on August 8, 2019, and the motions fell with it.

[305] Mr. Holervich claims full indemnity costs of $6,428.00 inclusive of tax and disbursements for the contempt motion.

[306] In my view, the motion for contempt was vexatious and without merit. It illustrates the hostility of the plaintiffs that unnecessarily lengthened the proceedings. Neither motion advanced the litigation.

[307] The contempt motion was designed to be a distraction and to leverage the plaintiffs’ position in the litigation. If the plaintiffs had genuine concern about the interim management of the corporation after 2013, they would not have delayed until the eve of the application, nearly three years later, to bring it forward.

[308] Subsequently, the contempt motion was dusted off and dragged out to counter the applicants’ motion for interim distribution of corporate funds. It was designed to distract the applicants for strategic reasons. The plaintiffs must have anticipated that their efforts to delay the hearing of these proceedings would be vigorously resisted.

[309] In my view, substantial indemnity costs are appropriate to sanction the conduct of the plaintiffs. The motion was brought for an improper purpose. It ran up the costs without advancing the litigation. It wasted the court’s time.

[310] Allowing for an hourly rate of $300 for Mr. Holervich and $80 for his clerk, Mr. Johnson, Ms. Johnson, and Mr. Curle shall pay Ms. Gustafson and Ms. Curle their costs fixed at $5,437.56.

7. Motion to Schedule Contempt Motion

[311] Ms. Gustafson and Ms. Curle also claim full indemnity costs of the motion to schedule the contempt motion. The background to this appearance is discussed above. It relates to the parties’ appearance before Justice Newton on February 25, 2016, at which scheduling of the contempt motion was argued and costs were reserved to me. They claim full indemnity costs of $878.57. As I noted above, Mr. Matson’s accounts do not indicate that he was involved in this motion, which did not involve his clients’ interests.

[312] The Johnsons submit that the motion was never argued, never returned to court prior to the dismissal of the action in 2019, and no finding of the court was made on the motion. They submit that the parties should bear their own costs of the motion.

[313] The Johnsons’ position does not accord with the endorsement of Justice Newton made on February 25. Justice Newton ordered that the motions brought by Mr. Hacio would not be heard in conjunction with the application. Thus, Mr. Holervich prevailed in his position. Accordingly, Ms. Gustafson and Ms. Curle are entitled to partial indemnity costs fixed at $618.11, payable by Mr. Johnson, Ms. Johnson, and Mr. Curle.

8. Motion to Appoint a Case Management Judge

[314] The plaintiffs served a motion for appointment of a case management judge in the action and the application. This motion was heard by Regional Senior Justice Shaw in May 2016. Mr. Holervich brought a motion to stay the case management motion; however, part way through the argument, he announced that he had changed his mind and supported the appointment. No offer to settle was made by any party. There is no indication in Mr. Matson’s accounts that he attended before Regional Senior Justice Shaw on May 19.

[315] Regional Senior Justice Shaw granted the motion and appointed me as the case management judge in both proceedings. He reserved costs of the motion to me.

[316] The Johnsons submit that the motion should not have been opposed and therefore substantial indemnity costs should be awarded. They claim $3,500.00 in costs inclusive of HST and disbursements. They indicate that Mr. Hacio billed them approximately $4,402.25 for his services on this motion.

[317] Neither the applicants nor Mr. Gustafson addressed this motion in their submissions. Mr. Matson’s accounts do not identify work on this motion.

[318] Simple opposition to a motion does not, by itself, attract substantial indemnity costs. A party is entitled to be wrong at the end of the day without being liable for enhanced costs. Substantial indemnity costs are reserved for reprehensible conduct sanctioned by the court, proceedings to which an offer to settle apply, improper use of the summary judgment rule (r.20.06), or other special circumstances.

[319] This motion was not complex. Primarily, it involved a discussion of the history of the litigation, as well as outstanding issues to be determined in two interrelated cases.

[320] The Johnsons filed Mr. Hacio’s account to support the costs claimed. Some clerk time before the motion is claimed, but not all of it is related to the motion. The only entry for counsel time is 1.7 hours described as preparation for and attendance at court on May 19, 2016. Mr. Hacio billed $595.00 for that work, which equates with an hourly rate of $350. Subsequent accounts post-date the motion and involve his clerk arranging a case management appointment through the trial coordinator’s office. Mr. Hacio’s next work on the file, according to his billing records, was not until on August 19, 2016.

[321] The individual plaintiffs are entitled to partial indemnity costs for the work related to the motion but not subsequent to it. Ms. Gustafson and Ms. Curle shall therefore pay to Mr. Johnson, Ms. Johnson, and Mr. Curle their costs of this motion fixed at $425.00.

Offers to Settle

[322] As there may be costs consequences when parties make offers to settle affecting the scale of costs awarded, I shall consider offers exchanged in this litigation.

[323] Rules 49.02 and 49.03 of the Rules of Civil Procedure provide that a party to a proceeding may serve an offer to settle at any time. Rule 49.04 stipulates that an offer to settle may be withdrawn or expire before it is accepted in accordance with its terms.

[324] Rule 49.11 permits a plaintiff/applicant to make an offer to settle with any defendant where there are two or more defendants in a proceeding. Thus, Mr. Johnson’s submission that the applicants’ offer to settle could not be accepted because Mr. Gustafson and Ms. LeBrun did not receive the same offer is without merit. The rule specifically provides that an offer need not be served on all parties.

[325] Furthermore, Mr. Gustafson agreed that the corporations should be wound-up. His position was aligned with that of the applicants.

[326] Subject to the qualifications in r. 49.11 dealing with multiple defendants, r. 49.10 describes the costs consequences of failure to accept an offer to settle. With respect to a plaintiff’s offer, it states:

49.10(1) Where an offer to settle,

(a) is made by a plaintiff at least seven days before the commencement of the hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing; and

(c) is not accepted by the defendant, and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.

[327] A parallel provision is made with respect to a defendant’s offer.

[328] In these cases, no party made a r. 49.10 offer as no offer was open for acceptance at the commencement of the application hearing. Nevertheless, offers not engaged by r. 49.10 may be considered under r. 49.13 which gives the court discretion to consider other offers when determining costs. Rule 49.13 states:

49.13 Despite rules 49.13, 49.10 and 49.11, the court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.

[329] In my view, r. 49.13 has application here. Had the applicants’ offers, made early in the litigation, been accepted by the Johnsons and Mr. Curle, they would have provided Ms. Johnson with a reasonable return on her shares and avoided the ruinous costs of further proceedings. If necessary, Mr. and Ms. Curle could have litigated share ownership in their divorce proceeding, narrowing the issues, and saving the shareholders and the corporations considerable costs.

[330] I accept that the applicants and Mr. Gustafson made informal efforts to resolve the corporate dispute with the Johnsons and Mr. Curle before the application for winding-up was launched. For the purpose of determining costs, I have considered only offers made during litigation. As the Divisional Court and the Court of Appeal determined liability for costs in those courts, I have not considered offers to settle at the appellate level.

[331] The history of offers to settle made by the parties after the commencement of litigation is as follows:

1. August 20, 2012: Mr. Arnone, corporate solicitor, proposed a restructuring such that that each of the three shareholders incorporate a holding company to receive her shares in the existing corporations. He proposed that the money in the bank accounts of the existing corporations be paid by way of dividends, and that non-cash assets be liquidated and distributed by way of dividends. Once the money was in the hands of the holding companies, the Norall Company shares would be transferred to Bruce Johnson and Allan Curle at nominal cost, provided there were no tax implications.

Mr. Arnone offered to incorporate for Juanita Curle and Gina Gustafson. He added that Ms. Curle would retain her money in her holding company pending the outcome of her family law dispute with Mr. Curle.

[332] This proposal was not identified as an offer to settle within the Rules of Civil Procedure. It was sent by email to Mr. Hacio on August 20, 2012. He then represented Mr. Curle, Mr. Johnson, and Ms. Johnson.

1. On March 11, 2014, the applicants served an offer to settle addressed to the Johnsons. It provided that the corporations would purchase or redeem Jeanette Johnson’s shares in both corporations for the sum of $213,775.79, a sum represented to be 16% of the net value of the corporations, including cash held by the corporations. In exchange for this payment, Bruce and Jeanette Johnson would waive any future claims against either corporation or any defendant in the action which would be dismissed without costs. As well, Bruce Johnson would consent to a declaration in the application that each of the applicants is a shareholder of each corporation, which would be wound up without costs. Finally, Bruce and Jeanette Johnson would be required to deliver up any vehicles, tools, computers, equipment or other property of the corporations.

[333] This offer was not accepted and was withdrawn on April 17, 2014.

2. On April 9, 2015, the applicants served another offer to settle addressed to the Johnsons. It provided that the corporations purchase Jeanette Johnson’s shares in the corporations for the sum of $205,000.00 less any applicable deductions, including income tax on condition that the Johnsons deliver up any corporate property in their possession and/or account for the disposition of any corporate property formerly in their possession or control. All parties would consent to payment of a dividend declared on November 13, 2012, which payment would be in addition to the purchase price stipulated in the offer.

The Johnsons would consent to dismissal of the action without costs; as well, Mr. Johnson would withdraw his objection to the relief claimed in the application without costs and the Johnsons would take no position with respect to the application for winding-up. The Johnsons, the applicants and the corporations would mutually release each other from any further claims against each other related to the corporations or business carried on by the corporations.

Finally, the Johnsons would indemnify the corporations from costs or charges claimed by Hacio Law or any other party to the proceeding. This offer remained open for acceptance until July 10, 2015, after which it was withdrawn. It was not accepted.

3. On May 19, 2017 [after judgment on the application was rendered declaring Ms. Johnson a 16% shareholder in the corporations and before the appeals were heard and dismissed], Mr. Hacio sent the following offer to settle on behalf of the plaintiffs. It provided that all of the personal property owned by the plaintiffs located at 229 Pearl Street, Thunder Bay, be returned to them immediately.

In addition, the applicants/defendants would pay to the respondents/plaintiffs the total sum of $870,000.00 to be divided as follows: $315,000.00 to Jeanette Johnson, $475,000.00 to the Curle Family Trust for the benefit of the children of Juanita and Allan Curle, with the proviso that these funds would not be considered net family property in the Curle marriage, $80,000.00 to Hacio Law “in trust,” and any remaining money or assets in the corporations would be transferred to the defendants and/or applicants at their discretion.

The action and application would be dismissed without costs; any outstanding motions would be withdrawn without costs. The corporations would be wound-up, with costs payable out of the corporations. The parties would execute mutual releases of claims relating to the application and the action, and any liability relating to the corporations.

[334] This offer was open for acceptance until May 31, 2017. It was not accepted.

Costs of the Application and the Action

Costs of Ms. Gustafson and Ms. Curle

[335] The applicants delivered a 201-page document titled “Main Bill of Costs in CV-12-0238 and CV-12-0438.” Thus, it is a global bill of costs in both the application and the action.

[336] The bill of costs specifically excludes costs of proceedings ordered by the court, costs for motions in the application and action that were determined separately, and any costs incurred in the Divisional Court and Court of Appeal. Costs in the motion for indemnification were to be determined by the court as part of that argument.

[337] The bill of costs begins in March 2012 and finishes on December 4, 2019. No supplementary bill of costs has been filed to deal with 2020.

[338] Mr. Holervich claims substantial indemnity fees, including HST, of $441,502.30, plus disbursements of $14,308.63, for total fees and disbursements of $455,810.93. No objection was taken to Mr. Holervich’s disbursements in either proceeding. The disbursements are reasonable and will be allowed at $14,308.63.

[339] The applicants delivered three offers to settle early in this litigation. Had they been accepted, most of the costs incurred by the parties could have been avoided.

[340] The first offer, dated August 20, 2012, proposed a restructuring that preserved the corporations for Mr. Johnson and Mr. Curle and distributed the assets to the shareholders. While this was not a r. 49.10 offer, it does qualify as an offer that the court may consider under r. 49.13.

[341] There is no indication that the offer was formally withdrawn. Had it been accepted, it would have been a more advantageous outcome for the Johnsons and Mr. Curle.

[342] The second offer, directed to the Johnsons, was made on March 11, 2014. It provided that the corporations would purchase Ms. Johnson’s shares for $213,775.79 in return for delivery of any corporate assets and a waiver of future claims against the corporations or defendants in the action. The action would be dismissed without costs and the corporations would be wound-up, both without costs.

[343] This offer was withdrawn on April 17, 2014. Had it been accepted, the Johnsons would have achieved a better result than they achieved in the application and action.

[344] The applicants served a third offer dated April 9, 2015, on the Johnsons. It provided that the corporations would purchase Jeanette Johnson’s shares in the corporations for the sum of $205,000.00, less any applicable deductions, on condition that the Johnsons deliver up any corporate property in their possession and/or account for the disposition of any corporate property formerly in their possession or control. All parties would consent to payment of a dividend declared on November 13, 2012, which payment would be in addition to the purchase price stipulated in the offer. Mr. Johnson would withdraw his objections to the winding-up in return for releases to be exchanged. As well, the Johnsons would indemnify the corporations from further claims, including legal fees.

[345] This offer remained open until July 10, 2015. It was not accepted. Had it been accepted, the Johnsons would have been in a better position than they are at the conclusion of the litigation.

[346] While these offers were not open for acceptance at the time the application was argued, they show a sustained and timely effort on the part of the applicants to terminate the dispute on reasonable terms. For that reason, I consider them as r. 49.13 offers.

[347] Certain proceedings were not specifically argued by any party in the costs proceeding.

[348] The applicants sought an order for the payment of Mr. MacIvor’s costs. His services were retained to resolve tax evasion charges against the corporations as a result of the previous directors’ failure to pay corporate income tax. Mr. Johnson and Mr. Curle did not consent to payment of the MacIvor accounts. Nevertheless, his invoices were ordered paid following assessment.

[349] On June 1, 2016, the Regional Hearings Officer, Mr. Robert Girard, assessed the MacIvor’s accounts pursuant to my order. Mr. Girard reserved costs of the assessment to the judge. These costs were not specifically addressed in the reserved motions for costs.

[350] It was necessary to retain a tax specialist to deal with the charges. Given the unreasonable resistance of the respondents to payment of the MacIvor accounts, a situation which they created, and the applicants’ success handling the issue, they are entitled to their costs on a substantial indemnity scale.

[351] As well, no party specifically addressed costs of case management conferences. These were convened on August 19, 2016, March 9, 2017, and May 24, 2019. Costs of the March conference were specifically reserved by me; the remaining case management conferences were silent as to costs. In my view, although costs were not reserved, the conferences form part of the costs at large claimable in the proceedings.

[352] Finally, no party made submissions with respect to costs of the status hearing. The history of that motion follows.

[353] Being unable to agree on a litigation timetable, the plaintiffs moved for a status hearing and litigation timetable. The first return was in September 2017. The motion was adjourned to October 2017. It was further adjourned to a date after the conclusion of the Divisional Court appeal. In April 2018, Justice Smith adjourned the status hearing to August 2018, reserving costs.

[354] At the August return date, the status hearing was further adjourned to September 2018 for argument. Costs were reserved to the disposing judge. However, the plaintiffs returned the matter to court in August 2018 asking to vacate the September date since they were seeking leave to appeal the Divisional Court decision to the Court of Appeal. The adjournment was granted with costs reserved to the judge disposing of the status review.

[355] At the case management conference in May 2019, the status review hearing was referred to the trial coordinator for scheduling. It was finally argued in August 2019. On August 8, 2019, the action was dismissed for delay with costs reserved. Thus, the defendants were successful in having the action dismissed. They are entitled to their costs. In view of the initial r. 49.13 offers served by Ms. Gustafson and Ms. Curle, they are entitled to substantial indemnity costs.

[356] I have determined that, with the exception of certain motions for which costs have been ordered, Ms. Johnson should not be liable for additional costs in the application. This reasoning does not, however, extend to her liability for costs in the action, in which she was a plaintiff. As can be seen by the offers to settle directed at buying out her shares, she refused all reasonable offers, and prolonged the litigation, not only in the application, but also in the action.

[357] Mr. Gustafson’s theory is that the Johnsons believed they could leverage the applicants into paying Ms. Johnson more than her shares were worth by doggedly continuing to litigate. After reviewing the plaintiffs’ only offer to settle delivered on May 19, 2017, I suspect he is correct.

[358] If the strategy of parties is to aggressively litigate in order to extract concessions, they should not be surprised if they are ordered to pay enhanced costs if their strategy is not successful. It is a calculated risk. The fact that Mr. Johnson has not yet paid $26,000.00 in costs awarded in his unsuccessful appeals suggests that he does not consider the risk of costs a deterrent.

[359] Mr. Holervich’s time represents the bulk of time claimed in the bill of costs. His hourly rate varies over the litigation from $300 to $350. He has approximately 33 years’ experience at the bar.

[360] Mr. Cupello has 36 years’ experience and charges $350 per hour. When Mr. Hacio, a senior litigator, acted for the plaintiffs, his hourly rate to them was $387.85. I find that Mr. Holervich’s hourly rates are reasonable when compared to those of opposing counsel with comparable experience.

[361] Mr. Holervich made extensive use of law clerks’ services. While a skilled law clerk can be invaluable in a law office, helping to move litigation forward and keeping costs down, hourly rates for the clerk’s work should not be equivalent to those of a lawyer.

[362] In this case, the senior clerk’s time is billed variously at between $125 and $175 per hour. In my view, this is out of proportion to the rates suggested in the Law Society’s current fee schedule for clerks, law students, and junior lawyers, ranging from $90 to $180 per hour. In considering the current recommended rates, I am mindful that this litigation has been ongoing for more than eight years. The tariff recommended for law clerks in 2005 under r. 57 of the Rules of Civil Procedure (as they then read) was $80 per hour.

[363] As well, the senior clerk’s rate far exceeds the hourly rates charged by the firm’s other law clerks who worked on this file; they billed at $80 per hour. I acknowledge that the senior clerk had 40 years’ experience; however, the two other experienced clerks had 10 - 20 years’ experience and still billed at the lower rate.

[364] I conclude that the law clerks’ rates should be fixed at $80 per hour.

[365] With the exception of the reduction in Mr. Holervich’s bill of costs for clerk time, his bill of costs is reasonable. Excluding costs for motions and appeals, the applicants incurred an average of $53,600.00 per year in legal fees.

[366] Using motions activity as a benchmark, there were 12 motions for which costs were argued in the application for winding-up, and eight motions in the action. While this is rough justice, I conclude that the proportion of motions argued indicates the time devoted to the application, some 60%, compared to the time spent on the action, which was not so far advanced. In other words, I conclude that some 40% of the bill of costs involves time spent on the action. Ms. Johnson’s liability for costs attributable to the action is therefore based on this proportion.

[367] In addition to costs for motions already ordered, Mr. Johnson and Mr. Curle shall pay to the applicants their costs of the action and application (including the assessment, case management conferences, and status hearing) as follows:

Fees $422,301.80

• Disbursements $14,308.63

Total costs $436,610.43.

[368] Of the costs ordered in the amount of $436,610.43, and in addition to any costs for motions she is already ordered to pay, Ms. Johnson is jointly and severally liable to Ms. Gustafson and Ms. Curle for costs in the action to a maximum of $174,644.17.

Costs of Mr. Gustafson, D.J. Gustafson Engineering Ltd., and Ms. LeBrun, as Represented Parties

[369] In this case, Mr. Gustafson and Ms. LeBrun retained Mr. Matson to defend themselves and Mr. Gustafson’s corporation in the action. They did not participate in the appeals.

[370] They incurred costs of $35,177.60 for legal services after recovery of costs ordered by the court. This figure includes disbursements and tax of $1,464.27.

[371] One of the difficulties in quantifying the costs incurred by Mr. Gustafson and Ms. LeBrun is that no bills of costs have been filed, either related to the entire action or to individual motions. Rather, they filed 81 pages of accounts sent to them by their counsel, with scant detail about the work to which the accounts relate.

[372] The first account rendered includes time billed by Mr. Johansen, who is much senior to Mr. Matson. His hourly rate on a full indemnity basis was $325. Thereafter, Mr. Matson assumed carriage of the file. His rate varied from $125 per hour in the initial days of 2013 to $250 per hour in his last billing in 2016. In my view, these are reasonable full indemnity rates considering the experience of counsel.

[373] In some instances, Mr. Matson’s accounts do not necessarily coincide with the time frames for specific motions. In other instances, costs have been awarded or refused in motions overlapping with time in Mr. Matson’s accounts.

[374] The court is left to parse out services billed in 27 accounts rendered over three years, compare them to the court record, and subtract any costs awards made in motions.

[375] The accounts are summarized and include an additional invoice dated March 22, 2017, in the amount of $1,113.05. Total fees, disbursements and HST charged to Ms. LeBrun and Mr. Gustafson less costs received equal $35,177.60. These represent costs as between a solicitor and his own client, in other words, full indemnity costs.

[376] Most of the disbursements shown in the accounts are self-explanatory; however, there is no explanation for a disbursement of $640.00 for agency fees.

[377] It is evident from the documentary record and from appearances in court that, generally Mr. Holervich took the lead in defending the parties to the action and Mr. Matson took a secondary role. However, there are exceptions. Mr. Matson was compelled to move to set aside a default judgment against his clients, relief that was granted on consent and for which no costs were ordered. Because they failed to file their statement of defence on time, Mr. Gustafson and Ms. LeBrun are not entitled to recover their costs for moving to set aside the default judgment.

[378] Mr. Matson is also significantly junior to Mr. Holervich, which should be reflected in any comparative costs award. As well, there is evidence of collaboration between Mr. Holervich and Mr. Matson, which was appropriate and undoubtedly reduced the costs for his clients. Accordingly, I would expect that costs incurred by Mr. Gustafson and Ms. LeBrun would be less.

[379] I agree with Mr. Gustafson’s submission that the litigation was entirely unnecessary, particularly if the plaintiffs had accepted the applicants’ offer at the outset of litigation.

[380] I also accept his submission that the Johnsons, Mr. Gustafson, and Ms. Gustafson met in December 2012 in an effort to seek a resolution. This meeting did not constitute an offer to settle in writing as described by the Rules of Civil Procedure.

[381] The refusal of the Johnsons to respond to, let alone accept, offers to settle delivered by the applicants is telling. It certainly appears that they attempted to leverage Ms. Johnson’s minority interest in the company by aggressive litigation and adopting contradictory positions. Mr. Gustafson, his company, and Ms. LeBrun were collateral damage to this improper purpose.

[382] However, there is no evidence that Mr. Gustafson, his corporation, and Ms. LeBrun served offers to settle that would engage rr. 49.10 or 49.13, entitling them to enhanced costs. Therefore, I assess their claims for costs on a partial indemnity scale.

[383] In addition to costs awarded on motions, Mr. Gustafson and Ms. LeBrun are entitled to their costs for the following services which apply to the action at large, and which are documented in Mr. Matson’s accounts:

1. initial instructions, review of clients’ documents, and drafting statement of defence;

2. meetings with clients;

3. review of transcript of cross-examination of Mr. Johnson and Mr. Curle (Mr. Matson did not attend the cross-examinations);

4. review of offers to settle;

5. attendance at two case management conferences;

6. correspondence, email, and telephone calls between clients and counsel;

7. intra-office communications;

8. communication with the court;

9. drafting and approving draft orders; and

10. review of court directions and rulings.

[384] I find that Mr. Gustafson, his corporation, and Ms. LeBrun are entitled to partial indemnity costs for fees, including tax, of $20,000.00.

[385] Total disbursements claimed (including tax) are $1,464.27. Deducting disbursements attributable to motions already dealt with, I assess additional disbursements billed by Mr. Matson as claimable in the amount of $724.51 inclusive of HST.

[386] In addition to costs already awarded for motions, Mr. Johnson, Ms. Johnson and Mr. Curle are ordered to pay Mr. Gustafson, D.J. Gustafson Engineering Ltd., and Ms. LeBrun additional costs for Mr. Matson’s services and disbursements fixed at $20,724.51.

The Law of Costs as Applied to Self-Represented Parties

[387] As I have said, Mr. Gustafson claims costs in the action for himself, his corporation, and Ms. LeBrun as self-represented parties. The court record indicates that although Mr. Gustafson served a motion for leave to represent his corporation, it was never argued. Therefore, he does not have status to appear on behalf of D.J. Gustafson Engineering.

[388] In Fong v. Chan (1999), 1999 CanLII 2052 (ON CA), 46 O.R. (3d) 330, the Court of Appeal determined that self-represented litigants could recover costs, including allowances for counsel fees. At para. 22 of Fong, the court identified three purposes for awarding costs:

1. to indemnify successful litigants for the cost of litigation;

2. to encourage settlements; and

3. to discourage and sanction inappropriate behaviour by litigants.

[389] The court concluded that all these purposes come into play when costs are awarded to self-represented litigants. However, costs are not invariably awarded to self-represented litigants. Costs lie within the discretion of the trial judge. In addition, the case law developed certain parameters before awarding such costs.

[390] The court in Fong emphasized that a self-represented litigant is not entitled to costs on the same scale as a litigant represented by counsel. As well, he or she is not entitled to costs for time and effort that any represented litigant would have to devote to the case, including ordinarily attending court. Rather, costs are limited to compensation for work that would ordinarily be done by a lawyer handling the case and for which an opportunity cost was incurred “by foregoing remunerative activity”: see Fong, at para. 26.

[391] In Izzard v. Goldreich, [2002] O.J. No. 2931 (Ont. Div. Ct.), at para. 7, the court awarded modest costs to a retired self-represented litigant proportional to the amount that was in issue in a Small Claims Court matter. In Izzard, the court inferred an opportunity cost, even though the claimant was retired. Mr. Justice Lane commented, at para. 4:

…the respondent, having sold his business, was retired and had investments to care for, and perhaps other activities. I am not prepared to assume that there was no chance of monetary reward for the time devoted to this appeal….

[392] However, in Mustang Investigations v. Ironside, 2010 ONSC 3444, 103 O.R. (3d) 633, the Divisional Court cited Fong, holding that a self-represented litigant claiming costs must prove that he or she lost income while devoting time doing work ordinarily done by a lawyer. The court held, at para. 27, that there was no authority to award costs absent such evidence.

[393] More recently, case law has evolved with respect to costs awards to the self-represented. Since Fong was decided, there has been a flood of self-represented litigants in courts and tribunals. Some litigants began their cases with lawyers but were left without representation when they could no longer afford the fees. In other instances, litigants who do not qualify for Legal Aid simply cannot afford counsel. This trend, most noticeable first in family law, is now widespread. It has forced the courts to take a more nuanced approach to the subject of costs for self-represented litigants.

[394] In Izyuk v. Bilousov, 2011 ONSC 7476, 7 R.F.L. (7th) 358, a family law case, Mr. Justice Pazaratz considered the Fong case in deciding whether to award costs to a self-represented litigant under the Family Law Rules. He relied on the reasoning in Jahn-Cartwright v. Cartwright, 2010 ONSC 2263, 91 R.F.L. (6th) 301, in which Mr. Justice Price determined that indemnification is not the only consideration in an award of costs.

[395] In Jahn-Cartwright, at para. 40, the court identified access to justice as an additional objective when awarding costs. The Court of Appeal in Fong did not consider access to justice when considering policy objectives in awarding costs.

[396] At para. 40(j) of Izyuk, the court observed that “costs for self-represented parties are not the same as damages for lost income.” It held:

…Remunerative loss is not a “condition precedent” to an award of costs. To require proof of lost income would disqualify litigants who are homemakers, retirees, students, unemployed, unemployable, and disabled; and deprive the courts of a tool required re: administration of justice.

[397] At para. 40(k) of Izyuk, the court recognized that time spent working on a case still has value even if no income is lost. While recognizing that the fixing of costs for the self-represented is more difficult, it concluded:

Lost income may be one measure. But even if no income was lost, the self-represented party’s allocation of time spent working on the case may still represent value.

[398] In citing Jahn-Cartwright, Justice Pazaratz identified some new considerations for awarding costs to the self-represented. The quality of the work and its value to the court should be considered: see para. 40(s). Costs may include time spent on communications, drafting documents, correspondence, preparation and time spent arguing the case: see para. 40(u).

[399] The court’s approach in Jahn-Cartwright has been adopted in other cases. See, for example, Rashid v. Shaher, 2011 ONSC 852, 97 R.F.L. (6th) 213.

[400] In my view, the principle of access to justice as a consideration in costs is not limited to family law cases but applies to all areas of law. As well, in this case, Mr. Gustafson’s submissions had value to the court in various arguments.

[401] Accordingly, I conclude that Mr. Gustafson is entitled to claim costs as a self-represented litigant.

What is a Reasonable Costs Award for Mr. Gustafson as a Self-represented Litigant?

[402] Although their counsel was not formally removed as solicitor of record until November 2017, Mr. Gustafson undertook his own defence after December 2016 when he could no longer afford counsel. He also acted as agent for Ms. LeBrun from that time. By 2017, there was less active litigation in the action; the emphasis had shifted to the application in which Mr. Gustafson and Ms. LeBrun were not parties.

[403] Ms. LeBrun did not appear in court or file documents. There is no indication that she devoted time to her defence.

[404] Mr. Gustafson is a professional engineer and contractor who operates his own company, D.J. Gustafson. His rate for engineering services is $205 per hour. I infer that there is an opportunity cost to him when he devotes time to his case undertaking functions that a lawyer would otherwise perform.

[405] He appeared in court, filed briefs, and made oral and written submissions on many occasions that were relevant and helpful. Ultimately, the action against him and Ms. LeBrun was dismissed. In other words, they are successful parties. I see no reason why they should not recover costs as self-represented parties. The plaintiffs should reasonably expect that a cost claim would be advanced by successful parties, even if they represent themselves. This is no longer a rare event.

[406] The question is: what is a reasonable costs award?

[407] Mr. Gustafson did not claim disbursements when he represented himself and Ms. LeBrun. He claims costs of $46,800.00 for 390 hours of self-representation billed at $120 per hour. Mr. Gustafson submits that the highest level of costs should be awarded because the action was brought for an improper purpose: to intimidate or coerce the defendants into paying more than Ms. Johnson’s shares were worth.

[408] Alternatively, Mr. Gustafson claims costs at $100 per hour for 390 hours. If the rate of $100 per hour is used, the claim becomes $39,000.00.

[409] His costs submission indicates that he spent 2,200 hours on the case when he was represented by counsel. He claimed more than 5,000 emails in the proceeding with counsel and 21 banker’s boxes of documents. While I have no doubt that he spent this time on the case, it is not recoverable as costs. It is indicative of time spent by a client in instructing counsel and assisting with his case. When Mr. Gustafson was represented by counsel, it is his counsel’s work for which costs are claimable. Costs for his own time while he was represented are not.

[410] Mr. Gustafson claims for 390 hours at $120 per hour during 2017 – 2020 when he was self-represented, for a total of $46,800.00. As previously stated, he has not filed either a bill of costs or dockets to support his claim. However, I have the accounts rendered by his counsel earlier in the litigation as a guide.

[411] Recognizing that a costs award is not a substitute for lost income, the courts have awarded a range of hourly rates for costs claims by unrepresented parties. In Izyuk, hourly rates for costs claims cited varied between $20 and $100 per hour.

[412] In my view, having regard for professional work available to Mr. Gustafson at $205 per hour, the higher hourly rate of $100 per hour is appropriate. However, the hours that Mr. Gustafson devoted to his file when he was a client demonstrate that not every hour devoted to one’s case will be attributable to work ordinarily done by a lawyer.

[413] Awarding costs is not a mathematical exercise. Given the status of the action between 2017 and 2020, the leading role played by Mr. Holervich (with costs awarded accordingly), the number of filings made by Mr. Gustafson, his attendances at court, and costs already awarded when he was represented by counsel, I find that Mr. Gustafson is entitled to claim costs for 195 hours at $100 per hour for a total of $19,500.00.

[414] In addition to costs already awarded for motions, and for Mr. Matson’s representation, Mr. Johnson, Ms. Johnson, and Mr. Curle are ordered to pay to Mr. Gustafson additional costs as a self-represented party of $19,500.00.

“original signed by”

The Hon. Madam Justice H.M. Pierce

Released: January 21, 2021

COURT FILE NO.: CV-12-0238-00; CV-12-0438-00

DATE: 2021-01-21

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

CV-12-0238-00

CCCV-12-238-00

Gina Gustafson and Juanita Curle

Applicants

and

Bruce Johnson, Allan Curle, Norall Group Inc.

And Norall Group Contracting Inc. Applicants

Respondents

And

CV-12-0438-00

Allen Curle, Bruce Johnson, Jeanette Johnson,

Norall Group Inc. and Norall Group Contacting

Plaintiffs

And

Gina Gustafson, Juanita Curle, Holly LeBrun,

Carl Gustafson and D.J. Gustafson Engineering Ltd.

c.o.b. as Aegus Contacting

Defendants

Respondents

REASONS ON COSTS

Pierce J.

Released: January 21, 2021

/lvp