COURT FILE NO.: CV-17-1392
DATE: 2022/07/22
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Maureen Ferraro, Lawrence Hishon, Peter Shannon, Tanja Tudhope and Michael Grove: the Plaintiffs
AND:
Jim Neilas, Chad Martin, Neilas Inc., 1249 Queen E. Inc., Neilas (1249 Queen E) Inc., Neilas (799 College St.) Inc., 799 College Street Inc., Hi-Rise Capital Ltd., Jane Doe and/or John Doe: the Defendants
BEFORE: Justice D.J. Gordon
COUNSEL: Julian Binavince, for the Plaintiffs/Moving Parties
Aaron H. Boghossian, for the Defendants/Responding Parties
HEARD: In writing
SUPPLEMENTARY ENDORSEMENT RE: COSTS
In my reasons for decision released May 12, 2022, as 2022 ONSC 2737, I invited written submissions from counsel on the issues of costs.
This action involved a syndicated loan in a failed condominium project. The investor plaintiffs were completely successful in their motion for summary judgment and are presumptively entitled to a cost award. Having regard to the submissions of counsel, the issues are with respect to the scale of such award and quantum.
Mr. Binavince, counsel for the plaintiffs, seeks a cost award in the amount of $63,286.30, said to represent partial indemnity costs for costs thrown away on the motion to strike the statement of defence, for failure to pay a prior cost award, and substantial indemnity costs for the motion for summary judgment and the action. The bill of costs presented supports the
amount sought. Mr. Binavince refers to the defendants' conduct, as hereafter addressed, in support of a substantial indemnity award.
Mr. Boghossian, counsel for the defendants, submits costs ought to be awarded to the plaintiffs on a partial indemnity scale, suggesting $15,000.00. He says the time recorded by Mr. Binavince is excessive, but does not challenge the hourly rate. Mr. Boghossian also argues that costs can only be awarded for the summary judgment motion and not for the action. Lastly, he refers to Mr. Binavince's request for substantial indemnity costs as being based on a "bald assertion that the defendants caused delay".
Prior to addressing the real issues, I wish to comment on two of the submissions from Mr.
Boghossian. First, when summary judgment is granted and the effect is to end the case against these defendants, the plaintiffs are entitled to costs for the action. Second, delay was not a bald allegation. Rather, it was my conclusion based on the evidence presented.
MOTION
On August 29, 2019, Flynn, J. granted a consent order regarding the defendants' affidavit of documents and other matters, including a cost award of $1,000.00 payable by the defendants.
Being a consent order, it is expected such costs would be paid forthwith. Instead, the defendants delayed payment, doing so only after being served with the motion seeking, in part, to strike the statement of defence. The delay was almost two years.
Mr. Binavince requests costs thrown away on a partial indemnity basis in the amount of
$1,000.18, inclusive of HST and disbursements. Mr. Boghossian did not address this component of the cost claim in his submissions.
- I conclude the request is appropriate, the delay in payment being unacceptable, and the amount sought is reasonable.
SCALE OF COSTS
Pursuant to Section 131(1), Courts of Justice Act, costs are in the discretion of the court. The guiding principles are set out in Rule 57.01, Rules of Civil Procedure. While a successful party is presumptively entitled to partial indemnity costs, the court has the authority to award enhanced costs, substantial or full indemnity, under Rule 57.01(4).
Substantial indemnity costs may be awarded having regard to the conduct of a party prior to and during the litigation. See: Mars Canada Inc v. Bemco Cash & Carry Inc. (2018) 140
O.R. (3d) 81 (Ont. C.A). Ultimately, a cost award is to be fair and reasonable and be within the reasonable expectation of the parties. See: Boucher. v Public Accountants Counsil (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (Ont. C.A).
- Having regard to my Reasons for Decision, the conduct of the defendants warranting consideration includes:
a) Not complying with their duties as trustee by failing to disclose relevant information and documents to the plaintiffs during the investment process, preferring their own interests and failing to enforce the security;
b) Failing to co-operate in scheduling the hearing of this motion in a timely manner;
c) Refusing to answer relevant questions on cross-examination;
d) Refusing to provide an affidavit of documents until directed by the court;
e) Refusing to produce appropriate representatives for the defendant corporations for cross-examination;
f) Refusing to provide complete documentary disclosure; and
g) Denying the validity of their own documents.
At paragraph 7 in my Reasons for Decision, I referred to the defendants' litigation strategy as being "delay, deny and obstruct", as clearly demonstrated in the evidence.
In result, I conclude costs must be awarded on a substantial indemnity scale. Indeed, there is an argument favouring full indemnity costs!
QUANTUM
- This was not a "relatively routine case" as suggested by Mr. Boghossian in his submissions.
Syndicated loans are complex matters, requiring detailed investigation and analysis. The plaintiffs were frustrated by the defendants delay in providing disclosure, particularly by way of an affidavit of documents.
Ultimately, disclosure turned this into a documents case, specifically having regard to the loan commitment that included the guarantee.
The defendants' position relied on the participation loan agreement, ignoring the trust agreement that governed the relationship between the parties. I determined the participation loan agreement and the loan commitment were incorporated into the trust agreement by reference. As a result of the guarantee, there was no defence to the plaintiffs' claim.
Given the defendants' litigation strategy, Mr. Binavince was required to invest significant time in obtaining documentation and reviewing same. This ultimately led to this successful summary judgment motion. Mr. Binavince was well prepared, his prior investigation and research enabling him to present clear and concise submissions on complex matters.
Mr. Boghossian complains about the time dockets of Mr. Binavince, suggesting such are excessive in a number of entries. My role is not to conduct a line-by-line analysis, but, rather, to determine a fair and reasonable cost award. Of some interest, with respect to the motion for summary judgment, Mr. Binavince reports time of 58.55 hours being required while Mr. Boghossian reveals 72.6 hours. Experience matters. The submission as to excessive time is defeated by the comparison of the time dockets.
The hourly rate for Mr. Binavince is higher than for Mr. Boghossian, as expected for senior counsel. As stated above, the hourly rate is not challenged.
In result, I am satisfied the time recorded by Mr. Binavince, and his hourly rate, are reasonable.
It is difficult to assess the reasonable expectation of the parties as to costs, particularly what the unsuccessful party would expect to pay. Mr. Boghossian does not disclose his time records for the action or the expense incurred by the defendant for present and former counsel. Having regard to the time identified for the motion for summary judgment, it is likely the defendants' expense is comparable to that of the plaintiff.
In the circumstances of this case, I conclude a fair and reasonable amount for substantial indemnity costs for the motion for summary judgment and the action is $60,000.00, inclusive
of HST and disbursements. Such amount, together with partial indemnity costs for the costs thrown away on the motion to strike the statement of defence, being a total award of
$61,000.18, is granted to the plaintiffs, payable forthwith by the defendants, Jim Neilas and 1249 Queen E., on a joint and several basis.
Justice D.J. Gordon
Released: July 22, 2022