COURT FILE NO.: CV-21-00657210-000

DATE: 20220513

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE MATTER OF AN APPLICATION PURSUANT TO RULE 14.05(2) OF THE ONTARIO RULES OF CIVIL PROCEDURE, R.R.O. 1990, Reg.194 AND SECTION 241 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985 c. C-44

BETWEEN:

ROSE ALCAMO, WAYNE FRIAS, ATIF SIDDIQUI, MARINA SILOV-MARCAN ESTATE TRUSTEE FOR THE ESTATE OF ZELJKO MARCAN, SRINIVASA DONKENA and FRANCIS HARTMAN

Applicants

• and –

JOHN WALT, also known as JOHN GORDON HOWARD WALT, SYLVIE TREMBLAY, also known as SYLVIE TREMBLAY-WALT and ENEIGHBL INC.

Respondents

Corey Bergstein for the Applicants

J. David Keith for the Respondents

HEARD: In writing

PERELL, J.

REASONS FOR DECISION - COSTS

[1] This is a costs decision. For the reasons that follow, I award the Respondent Sylvie Tremblay $15,000 all inclusive.

A. Factual Background

[2] In this application, the Applicants, who are the shareholders of the Respondent Eneighbl Inc. are Rose Alcamo, Srinivasa Donkena, Wayne Frias, Francis Hartman, Zeljko Marcan, represented by his widow Marina Silov-Marcan, and Atif Siddiqui.

[3] Mr. Marcan passed away after the commencement of this Application, and Ms. Silov-Marcan, the Estate Trustee for the Estate of Zeljko Marcan did not pursue any claim. The following costs order excludes any liability against the Marcans.

[4] The Applicants sued Eneighbl, the Respondent John Walt, and the Respondent Sylvie Tremblay, who is Mr. Walt’s spouse for: (a) damages for misrepresentation and fraudulent misrepresentation; (b) damages for breach of fiduciary duty; (c) damages for misappropriation and conversion of funds; (d) an oppression remedy; (e) damages for negligence; (f) disgorgement for unjust enrichment; and (g) damages for breach of contract with respect to Mr. Walt’s promise to redeem the Applicants’ respective shareholdings in Eneighbl. The Applicants were seeking in the aggregate damages of more than $2.5 million.

[5] I awarded: (a) Ms. Alcamo a judgment without costs of $70,500 against Mr. Walt and a judgment without costs of $1,100 against Eneighbl both with interest; (b) Mr. Donkena, a judgment without costs of $10,000 against Mr. Walt with interest; (c) Mr. Frias a judgment without costs of $86,167.28 against Mr. Walt and a judgment without costs of $3,562.28 against Eneighbl; (d) Ms. Hartman a judgment without costs of $20,000 against Mr. Walt with interest; (e) Mr. Siddiqui a judgment without costs of $11,500 against Mr. Walt with interest to be determined by a motion in writing.[^1] I dismissed the Application against Ms. Tremblay with costs.

[6] I made these determinations because:

a. the only proven claims against Eneighbl were Ms. Alcamo’s and Mr. Frias’ claims for reimbursement;

b. the only proven claims against Mr. Walt were:

i. Ms. Alcamo’s, Mr. Frias’ and Mr. Siddiqui’s loan claims; and,

ii. the Applicants’ respective claims for breach of oral and written contracts that Mr. Walt breached when he failed to redeem their shares at their original purchase price.

c. There are no proven claims against Ms. Tremblay.

[7] The Respondents were all represented by the same law firm and in her Bill of Costs, Ms. Tremblay submits that she is entitled to indemnification of all of the Respondents’ legal costs and that it is not possible to break out the costs exclusively associated with her having been joined as a respondent.

[8] In addition to claiming $1,500 for the costs of her costs submissions, Ms. Tremblay requests costs of:

a. $73,903.38 on a full indemnity basis comprised of fees of $61,577.50, plus $8,005.08 HST, plus disbursements of $4,320.80, or

b. $66,945.12 on a substantial indemnity basis comprised of fees of $55,419.75, pus $7,204.57 HST, plus disbursements of $4,320.80, or

c. $46,070.35 on a partial indemnity basis comprised of fees of $36,946.50, plus $4,803.05, plus disbursements of $4,320.80.

[9] Contrary to rule 57.01 (6) of the Rules of Civil Procedure,[^2] Ms. Tremblay did not provide a costs outline in advance of the hearing. In contrast, the Applicants’ pre-hearing Bill of Costs reveals a partial indemnity claim of $47,521.09, all inclusive, had the Applicants been successful on the application.

B. The Court’s Jurisdiction to Award Costs

[10] The court’s discretion in awarding costs arises under the authority of s. 131(1) of the Courts of Justice Act[^3] and is to be exercised by a consideration of the factors in rule 57.01(1) of the Rules of Civil Procedure. These factors include the principle of indemnification, the reasonable expectations of the parties, the complexity of the proceeding, the importance of the proceeding, and the conduct of the parties in litigation.

[11] The traditional discretionary principles developed for costs awards are codified in rule 57.01(1), which states:

Factors in Discretion

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 of 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

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

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

[12] The most general rule about costs, not to be departed from without good reason, is that costs at a partial indemnity scale follow the event, which is to say that normally costs are ordered to be paid by the unsuccessful party to the successful party on a partial indemnity scale.[^4]

[13] A critical controlling principle for the awarding of costs is that the sum awarded reflect the fair and reasonable expectations of the unsuccessful litigant.[^5] The overriding principle in awarding costs is reasonableness.[^6]

[14] The assessment of reasonableness is discretionary and very much dependent upon the circumstances of each case. In some cases, it may be reasonable for the successful party to make exhaustive efforts and to commit enormous legal resources, and in those cases, it might be said that the unsuccessful party could reasonably expect to pay those costs. In other cases, however, the successful party may have been well served by giving his or her lawyer instructions to make exhaustive efforts, but it might be disproportionate and unreasonable to expect the unsuccessful party to pay those costs, even if he or she would have expected or anticipated that his or her foe would have marshalled those legal resources.[^7]

[15] In Davies v. Clarington (Municipality)[^8] at para. 52, Justice Epstein stated that the overriding principle in awarding costs is reasonableness. She stated:

52. As can be seen, the overriding principle is reasonableness. If the judge fails to consider the reasonableness of the costs award, then the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. In Boucher [Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.)], this court emphasized the importance of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding at para. 37, where Armstrong J.A. said: "[t]he failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice."

[16] The failure to prepare or properly prepare a costs outline as required by rule 57.01 (6) may result in costs being disallowed in whole or in part.[^9]

[17] Subject to the costs consequences provisions of the offer to settle rule, only in exceptional cases are costs awarded on a substantial indemnity scale[^10] or on a full indemnity scale.[^11] Costs on a substantial indemnity scale or full indemnity scale are reserved for rare and exceptional cases, where the conduct of the party against whom costs is ordered is reprehensible or where there are other special circumstances that justify costs on the higher scale.[^12] Where a party pleads but fails to prove that his or her opponent perpetrated a fraud or committed a criminal act or engaged in other dishonest or reprehensible conduct, substantial or full indemnity costs may be awarded.[^13]

C. Discussion and Analysis

[18] This was a serious and complex Application, and I while I do not go so far as concluding it was unreasonable for the Applicants to join Ms. Tremblay, the Applicants knew enough from the outset of the application that their case against Ms. Tremblay was extraordinarily weak. The Applicants should or would have known from the outset that they were exposed to serious costs consequences, likely at a full or substantial indemnity basis, as against Ms. Tremblay, whom they were making serious claims of dishonourable and disreputable conduct.

[19] Ms. Tremblay was successful in defending the Application, and she was successful in rebuffing the allegations of dishonourable and disreputable conduct. She is entitled to her costs on a substantial indemnity basis.

[20] She, however, is not entitled to be the surrogate for the recovery of all the Respondents’ costs, and there should be some reduction of her costs on account of her failure to submit a draft Bill of Costs before the hearing and for her failing to make an effort to differentiate the costs associated with her joinder to the Application from the costs of the other Respondents.

[21] Ms. Tremblay’s costs on a substantial indemnity basis also must be reasonable.

[22] Doing the best that I can based on her Bill of Costs, the costs submissions of the parties, and my own assessment of the evidentiary record, an appropriate substantial indemnity award in the immediate case for Ms. Tremblay is $15,000, all inclusive.

D. Conclusion

[23] For the above reasons, I award Ms. Tremblay costs of $15,000, all inclusive.

Perell, J.

Released: May 13, 2022

COURT FILE NO.: CV-21-00657210-000

DATE: 20220513

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ROSE ALCAMO, WAYNE FRIAS, ATIF SIDDIQUI, MARINA SILOV-MARCAN ESTATE TRUSTEE FOR THE ESTATE OF ZELJKO MARCAN, SRINIVASA DONKENA and FRANCIS HARTMAN

Applicants

• and –

JOHN WALT, also known as JOHN GORDON HOWARD WALT, SYLVIE TREMBLAY, also known as SYLVIE TREMBLAY-WALT and ENEIGHBL INC.

Respondents

REASONS FOR DECISION - COSTS

PERELL J.

Released: May 13, 2022

[^1]: Alcamo v. Walt, 2022 ONSC 1913.

[^2]: R.R.O. 1990, Reg. 194.

[^3]: R.S.O. 1990, c. C.43.

[^4]: McCracken v. Canadian National Railway, 2012 ONSC 6838; Hague v. Liberty Mutual Insurance Co., 2005 CanLII 13782 (ON SC), [2005] O.J. No. 1660 (S.C.J.); Pike's Tent and Awning Ltd. v. Cormdale Genetics Inc. (1998), 27 C.P.C. (4th) 352 (Ont. Gen. Div.); Bell Canada v. Olympia & York Developments Ltd. (1994), 1994 CanLII 239 (ON CA), 17 O.R. (3d) 135 (C.A.).

[^5]: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 at para. 24 (C.A.); Stellarbridge Management Inc. v. Magna International (Canada) Inc., 2004 CanLII 9852 (ON CA), [2004] O.J. No. 2102 at para. 97 (C.A.); Zesta Engineering Ltd. v. Cloutier (2002), 2002 CanLII 25577 (ON CA), 21 C.C.E.L. (3d) 161 at para. 4 (Ont. C.A.); McGee v. London Life Insurance Co., [2008] O.J. No. 5312 at paras. 5-8 (S.C.J.); Caputo v. Imperial Tobacco Ltd. (2005), 2005 CanLII 63806 (ON SC), 74 O.R. (3d) 728 at paras. 23-25 (S.C.J.); Lee v. General Motors Co. of Canada, [2004] O.J. No. 2245 (S.C.J.).

[^6]: Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 at para. 52 (C.A.).

[^7]: Das v. George Weston Limited, 2017 ONSC 5583 at para. 65, var’d 2018 ONCA 1053.

[^8]: (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.).

[^9]: Building Solutions International Inc. v. Benazzi, 2014 ONSC 5201; Fram ElginMills 90 Inc. v Romandale Farms Limited, 2014 ONSC 4715; Cango Inc. v D&S Equipment Ltd., [2006] O.J. No. 3046 (Master); Hawley v. Bapoo (2006), 2006 CanLII 24333 (ON SC), 82 O.R. (3d) 382 (S.C.J.), var’d 2007 ONCA 503, [2007] O.J. No. 2695 (C.A.).

[^10]: United States of America v. Yemec (2007), 2007 CanLII 65619 (ON SCDC), 85 O.R. (3d) 751 (Div. Ct.); Foulis v. Robinson, 1978 CanLII 1307 (ON CA), [1978] O.J. No. 3596, 21 O.R. (2d) 769 (C.A.).

[^11]: Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.).

[^12]: Whitfield v. Whitfield, 2016 ONCA 720 at para. 23; St. Elizabeth Home Society v. Hamilton (City), 2010 ONCA 280, supp. reasons 2010 ONCA 479; Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.); McBride Metal Fabricating Corp. v. H & W Sales Co. (2002), 2002 CanLII 41899 (ON CA), 59 O.R. (3d) 97 at para. 38 (C.A.).

[^13]: Catalyst Capital Group Inc. v. Moyse, 2018 ONCA 283; United States of America v. Yemec (2007), 2007 CanLII 65619 (ON SCDC), 85 O.R. (3d) 751 (Div. Ct.); Jazz Air LP v. Toronto Port Authority (2007), 2007 CanLII 6457 (ON SCDC), 84 O.R. (3d) 641 (Div. Ct.); Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303; Toronto-Dominion Bank v. Leigh Instruments Ltd. (Trustee of) (1999), 1999 CanLII 3778 (ON CA), 45 O.R. (3d) 417 (C.A.), leave to appeal refused 188 D.L.R. (4th) vi.```