Court File and Parties
COURT FILE NO.: CV-14-60497 DATE: 2022/02/24 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 8466718 Canada Inc., Plaintiff AND: 1779042 Ontario Ltd., 1447735 Ontario Inc. and John Ackerman, Defendants
BEFORE: Regional Senior Justice Calum MacLeod
COUNSEL: Stephen Cavanagh, as agent for Ken Dunham, for the Plaintiff (Moving Party) Antonios Antoniou and Ian Sinke, as agents for counsel for the Defendant 1779042 Ontario Ltd. (Responding Party)
HEARD: February 23, 2022
Order and Direction
[1] This is a motion to vary the paragraph dealing with costs in the judgment granted by Justice Kane on March 7, 2018, and formalized by issue and entry on November 7, 2018. It should be noted that an appeal from the judgment (by the co-defendant 1447735 Ontario Inc.) was dismissed on April 3, 2019. There is a cross motion by the Defendant 1779042 Ontario Ltd. to vary or correct the costs endorsement signed by Kane J. on April 13, 2018, which is at variance with the order as issued and entered.
[2] These motions were returnable before me today, but after hearing preliminary argument from counsel, I adjourned the matter to April 1, 2022 at 10:00 a.m. This was to permit counsel for the defendant to cross examine on an affidavit and to file responding material.
Background
[3] This matter went to trial before Justice Kane in March and April of 2017. It arose from a dispute over an asset purchase. The defendant 1447735 Ontario Inc. was the vendor and the plaintiff the purchaser of the assets and goodwill of a bar and restaurant in Brockville. The defendant 1779042 Ontario Ltd. was the owner of the premises and the landlord of the restaurant. Both defendant corporations had the same ownership. The agreement provided for the plaintiff to take on the lease and to carry on business under the same name, “Buds On The Bay”.
[4] Following the trial, Kane J. gave judgment to the plaintiff against 1447735 Ontario Inc. as vendor, granting rescission of the agreement of purchase and sale, return of the purchase price (subject to adjustment to be determined on a reference). He granted judgment against 1779042 Ontario Ltd. terminating the lease and dismissing a counterclaim. He dismissed the action against the owner of the corporations (Mr. Ackerman). He then sought written submissions on costs.
[5] The problem arises because on April 10, 2018, former counsel for the Plaintiff, Mr. Laberge wrote to Justice Kane to advise him that the parties would not be making cost submissions. Instead, Mr. Laberge advised that the parties had agreed that “costs, disbursements and taxes should be fixed in the all-inclusive amount of ninety-five-thousand dollars ($95,000.00), payable by the Corporate Defendants to the Plaintiff.” There is now a dispute about whether or not that correspondence accurately reflected the agreement between counsel although the letter purported to be copied to Mr. Griffiths (former counsel for the defendants).
[6] On April 13, 2018, Kane J. issued an endorsement providing that “on consent of the parties, costs of this trial are awarded to the plaintiff 8466718 Canada Inc., in the amount of $95,000, including disbursements and tax, against the defendants 1779042 Ontario Ltd. and 1447735 Ontario Inc.”
[7] Subsequently a draft judgment was prepared by Mr. Griffiths office and sent to Mr. Laberge for approval. Mr. Laberge apparently made some changes to the draft including paragraph 7 (which deals with costs) and the approved judgment was then submitted for signature. Paragraph 7 differed from the endorsement, however, because it recited that the plaintiff would recover costs from the defendant 1447735 Ontario Inc. and did not mention the defendant 1779042 Ontario Ltd.
[8] I understand that subsequent to the unsuccessful appeal, 1447735 Ontario Inc. went bankrupt. The plaintiff now wishes to enforce the costs award against the defendant 1779042 Ontario Ltd., but the formal judgment does not provide for that.
The Motion
[9] On November 23, 2021, the plaintiff (which had by this time retained Mr. Dunham) launched this motion seeking to rectify the formal order to reflect the costs endorsement. This was brought pursuant to Rule 59.06 of the Rules of Civil Procedure which provides for the amendment of an order that contains a clerical error or requires amendment on a particular that was not adjudicated.
[10] This was the form of the motion to which the defendant 1779042 Ontario Ltd. was responding up until recently. The motion was returnable before me this morning. In response to the original motion, the defendant tendered an affidavit of Mr. Griffiths in which he denies that there was ever an agreement for both corporate defendants to pay costs and deposes that he did not notice the “error” in Mr. Laberge’s letter to Justice Kane. He does not recall having received the costs endorsement.
[11] Mr. Griffiths deposes that the formal judgment accurately reflects what he believed the parties had agreed upon.
[12] On February 17, 2022, Mr. Cavanagh (acting as agent for Mr. Dunham) delivered an amended notice of motion together with an affidavit of Mr. Laberge. The amended motion no longer takes the position that counsel had agreed on costs but instead proceeds on the basis that there was no agreement because counsel misunderstood each other. The plaintiff therefore seeks an order setting aside paragraph 7 of the judgment and asks the court to hear and determine the question of costs which was “neither settled nor adjudicated”. As Justice Kane has retired, the plaintiff seeks that I hear the matter of costs or assign another judge to do so pursuant to s. 123 of the Courts of Justice Act.
[13] At the start of the motion, Mr. Antoniou objected to proceeding on the amended notice of motion and objected to the admission of Mr. Laberge’s affidavit. Although counsel for the plaintiff offered to proceed without the affidavit, Mr. Antoniou persisted in his objection. In his submission I should treat the original motion as abandoned, award costs (thrown away) against the plaintiff and invite the plaintiff to bring a fresh motion.
[14] I disagreed with that approach, but I did grant an adjournment. Firstly, I do not regard the motion as having been abandoned. The plaintiff still seeks to make the defendant 1779042 Ontario Ltd. jointly liable for the costs awarded against 1447735 Ontario Inc. and still seeks a variation of paragraph 7 of the order pursuant to Rule 59. What has changed is the relief sought. Instead of seeking to have the judgment rectified to reflect the endorsement (and the underlying agreement), the plaintiff instead takes the position that there was no agreement and the matter of costs should now be determined.
[15] I agree that the justice of the case requires an adjournment to permit the defendant to recalibrate its response, but in that case, there is no basis to exclude the affidavit of Mr. Laberge. The defendant may deliver a responding affidavit and may cross examine on the Laberge affidavit.
[16] I also agree that the defendant may be entitled to costs thrown away if the motion preparation, including the factum, turns out to be wasted. This may be best addressed following the hearing of the motion.
[17] The court therefore orders and directs as follows:
a. The amended motion is adjourned to April 1, 2022, at 10:00 a.m. to proceed by videoconference. b. The plaintiff may rely upon the affidavit of Mr. Laberge. c. The defendant may deliver a responding affidavit and may cross examine on the Laberge affidavit. The plaintiff may cross examine on the Griffiths affidavit and any responding affidavit if it chooses to do so. d. The defendant shall be entitled to costs thrown away or wasted as a consequence of the amendment of the notice of motion and late delivery of the Laberge affidavit (if there are any such costs) to be addressed following the hearing of the motion. e. Costs of today are also reserved to the hearing of the motion.