Court File and Parties

2022 ONSC 1661

Court File No.: CV-19-00143216 Date: 20220316

Ontario Superior Court of Justice

BETWEEN:

BPR LITIGATION LAWYERS and JUSTIN BAICHOO, BARRISTER & SOLICITOR, Plaintiffs – and – GLOBEDEX FINANCIAL CORP., BENNY SIU WAI CHEUNG also known as BENNY WAN and KARINE KA WU, Defendants

Counsel: Justin P. Baichoo, for the Plaintiffs Daniel Chodos, for the Defendants

Heard: March 4, 2022

Costs Endorsement

McCarthy J.

Introduction

[1] The parties return before me to argue costs, the remaining issue from the Defendants’ now resolved motion to set aside a noting in default and default judgment obtained by the Plaintiffs in November 2020.

[2] Given that the Plaintiffs’ cross-motion to strike portions of the Defendants’ supporting affidavits has now become largely, if not entirely moot, I have determined that the court should consider costs in respect of both the resolved motion and the cross-motion. Should any remnant of the cross-motion pertain to the Defendants’ materials on their contemplated motion to strike the pleading, the Plaintiffs retain the right to argue entitlement to costs on those motions.

[3] I received submissions both orally and in writing.

[4] The Defendants seek costs at a substantial indemnity rate in the amount of $86,870.92 consisting of $72,588.00 for fees, $9,436.44 for HST and disbursements of $4,846.48. In the alternative, they seek costs on a partial indemnity basis in the amount of $72,022.27 consisting of $59,447.60 for fees, HST of $7,728.19 and disbursements of $4,846.48.

[5] For its part, the Plaintiffs seek their costs thrown away in an amount that the court deems reasonable. They do not suggest an amount. They contend that the Defendants conduct should in any event deprive them of an award of any costs. They also object to the quantum of costs being sought by the Defendants including the disbursements.

The Defendants’ Position

[6] The Defendants argument comes down to three main points:

[7] First, the motion was made necessary by the Plaintiffs’ sharp practice in obtaining default judgment when it was obvious that the Defendants were defending the action;

[8] Second, the Plaintiffs added significant, unnecessary, and unreasonable complexity to the proceeding by serving a voluminous responding record, even more voluminous supplementary materials and extensive cross-motion materials. With 900 pages of material to sift through, the Defendants were obliged to expend significant hours just reviewing the responding and cross-motion materials. Plaintiffs’ counsel then proceeded to waste two full days on lengthy and pointless cross-examinations on affidavits.

[9] Third, the settlement reached on February 24, 2022, was essentially identical to the settlement proposals made by the Defendants 15 months earlier. The issue on the motion could have been resolved at the very outset. Instead, the Defendants were put to the time and expense of pushing the motion process forward and responding to a cross-motion which never went ahead.

[10] The issue was of great importance to the Defendants who were faced with a default judgment against them for more than a year.

The Plaintiffs’ Position

[11] The Plaintiffs argue that the Defendants should have provided a defence to the claim when one was demanded. The Defendants failed to bring the motion to set aside promptly. Under Rule 21.02, such a failure can be considered by the court in awarding costs. As well, the Defendants’ affidavits in support of their motion contained much inadmissible content which the Plaintiffs were fully within their rights to challenge. In response to the Plaintiffs’ stance, the Defendants abandoned numerous paragraphs of the three impugned affidavits in preparation for the scheduled motion. The “file” has in any event been “over lawyered” by the Defendants who now claim exorbitant fees which are out of all reasonable proportion to the motion.

Discussion

[12] Our courts have consistently held that substantial or full indemnity costs may be awarded against a plaintiff taking inappropriate default steps when a party clearly intends to defend the proceedings and was taking steps to bring a motion to strike the plaintiff’s pleadings; see 2289878 Ontario v. Gourmet Gringos, 2016 ONSC 6204.

[13] In the case at bar, the Plaintiffs do not deny knowing full well that the Defendants were intent on defending the claim. True, they did have the right to insist on a statement of defence, and there is nothing in the rules which prevents a party moving to strike a pleading from filing a defence. In my view, however, both common sense and economy of effort would weigh in favour of a motion to strike being brought before the filing of a defence. There is no point in preparing and filing a defence to a claim that may be struck, partially expunged, or extensively amended.

[14] In LeBlanc v. York Catholic District School Board, 2002 ONSC 37923, [2002] O.J. No. 4641 (Ont. S.C.J.), at para. 22, Blair R.S.J. noted that “It is well accepted that the bringing of a motion before the court to obtain a stay or the dismissal of an action is recognized as a step in the defence of the proceeding.”

[15] If the Plaintiffs were under any illusions that the Defendants were not intent on actively defending the claim, those illusions should have disappeared in the wake of the default judgment when the Defendants promptly (within a day of discovering it) proposed a setting aside of the default without costs. This offer was reiterated a short time later once Mr. Wolpert had been obliged to involve LawPro in the mix created by the Plaintiffs. In a letter to Plaintiffs’ counsel dated December 2, 2020, Mr. Silver, the lawyer retained by LawPro on behalf of the Plaintiffs’ counsel, fairly summarized the situation when he stated as follows:

Despite explicitly and clearly being put on notice of the defendant’s intention to bring a motion to strike he claim, your office, without notice, proceeded to note the defendants in default and obtained default judgment.

[16] Mr. Silver went on to cite both appellate jurisprudence and “Principles of Civility and Professionalism for Advocates” [1] in support of the Defendants’ position and their offer to resolve the matter. All to no avail.

[17] I conclude that the Plaintiffs were unreasonable in noting the Defendants in default and in obtaining default judgment in these circumstances. There is no escaping the fact that they knew the Defendants were both represented by counsel and intent on actively defending the claim. The Plaintiffs compounded that unreasonable behaviour by declining to accept the Defendants’ reasonable terms for a prompt setting aside of that default. If that was not enough, the Plaintiffs then resisted the motion, filed copious materials in opposition to it, launched a cross-motion of dubious merit and questionable purpose (the affidavit of solicitor Wolpert in support of the motion to set aside should have been adequate to satisfy the Plaintiffs that the motion would succeed) and along the way, swallowed up two days in cross-examinations on affidavits. Fifteen months on from the default, the Plaintiffs finally relented, accepting the Defendants’ offer to a setting aside of the default but this time with the issue of costs to be addressed. And costs there are. Costs that either did not exist in November and December of 2020 or could only have been a small fraction of what they are now.

[18] The Plaintiffs gained nothing of value for these efforts. On the litigation landscape, they are in essentially the same position now as they would have been had they accepted the Defendants’ offers 15 months ago: the pleadings stage. The matter has not been advanced one iota. I do not accept the Plaintiffs’ argument that had the Defendants offered to provide a statement of defence to the action, they would have accepted their offer. Nowhere in the exchange between the parties is that condition raised. Had a statement of defence been of such pressing importance to the Plaintiffs, they would surely have demanded it as a term of the setting aside. They did not.

[19] I have no hesitation accepting that the motion was important to the Defendants. They had a default judgment hanging over their heads, arising out of a claim that they had full intention of actively defending and in fact attacking. The motion should have been simple. By filing hundreds of pages of materials and launching a cross-motion, the Plaintiffs ensured that it became unduly complex and protracted.

[20] Mr. Baichoo is a lawyer in addition to being a Plaintiff in the action. The court must infer that he understood the cost of litigation, that he knew that the Plaintiffs would face costs if the Defendants’ motion was successful, and that he was familiar with the case law and the general tendency of courts to encourage that matters be decided on their merits; especially when, as here, there are competently represented parties willing to participate in the litigation process.

[21] The principle of proportionality would not be offended by a costs award on a partial indemnity basis in the amount sought by the Defendants. The length of time required to prosecute the motion, the breadth of the responding and cross-motion materials, the duration of the cross-examinations, the failure of the Plaintiffs to accept reasonable and timely offers, the importance of the relief sought by the Defendants, the principle of indemnity and the ultimate outcome of the motion all combine to justify a generous but fair award of costs on a partial indemnity basis. I am not persuaded that an award of substantial indemnity costs is warranted or proportional in this case.

Disposition

[22] Having reviewed the fee items, hours summary, rates and disbursement details provided by the Defendants, I am satisfied that they are reasonable, justified and form the basis for an appropriate costs award. The disbursements are reasonable; they relate to the issues and accompany the steps taken for the motion.

[23] I exercise my discretion, therefore, to order costs to be paid by the Plaintiffs to the Defendants on a joint and several basis in the total amount of $72,022.27. Those costs are fixed and payable forthwith. Order to go accordingly.

Justice J. R. McCarthy

Released: March 16, 2022

[1] “Principles of Civility and Professionalism for Advocates” (February 20, 2020), online: The Advocates’ Society https://www.advocates.ca/Upload/Files/PDF/Advocacy/InstituteforCivilityandProfessionalism/Principles_of_Civility_and_Professionalism_for_AdvocatesFeb28.pdf.