Court File and Parties

COURT FILE NO.: CV-21-00670436-0000

DATE: 2022-08-25

ONTARIO SUPERIOR COURT OF JUSTICE

RE: CDW Canada Inc., Plaintiff

-and-

Md Shahenur Ali, Gretchen Avon Cabuyao and Spacecaps, Defendants

BEFORE: Robert Centa J.

COUNSEL: Ted Frankel and Meghan Rourke, for the Plaintiff

Pulat Yunusov, for the Defendants

HEARD: August 24, 2022 (in writing)

ENDORSEMENT

[1] I have now received the costs submissions from the parties in respect of the plaintiff’s motion for interlocutory injunctive relief in the nature of Mareva and Norwich orders, along with a certificate of pending litigation in respect of property owned by its former employee MD Shahenur Ali and his wife, Gretchen Cabuyao.

[2] On August 2, 2022, I granted much of the relief sought by the plaintiff. The plaintiff presented very strong evidence that Mr. Ali committed civil fraud, breached his contractual and common law duties of fidelity and confidence to his employer, and had been unjustly enriched by his misconduct.

[3] I found that there was a significant risk that Mr. Ali and Ms. Cabuyao will dissipate their assets and that injunctive relief was warranted. I tailored that relief to reflect the passage of time since the apparent misconduct and the commencement of this litigation, the legitimate living expenses of Mr. Ali and Ms. Cabuyao, and their willingness to cooperate with the plaintiff with respect to some of the banking information it wished to obtain.

Submissions of the parties

[4] The plaintiff seeks its costs on a substantial indemnity scale fixed in the amount of $118,417.86 or, in the alternative, partial indemnity costs in the amount of $93,202.47.

[5] The plaintiff submits that it was the successful party on the complex, full-day motion. It notes that the record ultimately included seven affidavits, three cross-examinations, and a full day hearing. The plaintiff submits that the defendants contested all aspects the motion and raised additional technical arguments that, while meritless, further complicated the plaintiff’s motion. The plaintiff relies on the fact that, in December 2021, the defendants rejected the plaintiff’s suggestion that the parties discuss registering certificates of pending litigation on two of the four properties at issue to avoid the motion.

[6] Although the plaintiff did not submit dockets, it provided a detailed breakdown of time spent by each legal professional and the hourly rate charged at the time (which varied over the length of the proceeding) on each of the following steps: procedural, preparation of written materials, cross-examinations, and the hearing of the motion.

[7] The defendants make two submissions. First, the defendants seek their costs of the motion on a partial indemnity scale fixed in the amount of $24,638.33. The defendants allege that the plaintiff’s conduct of the litigation should entitle the defendants to a costs award. The defendants rely on alleged statements between counsel on telephone calls, excerpts from email exchanges, and a post-hearing offer to settle one portion of the matters in dispute. No sworn evidence or even complete documents were provided to me in support of these allegations. The defendants submit that the time spent by counsel for the plaintiff was excessive and that the plaintiff was required to seek indulgences from the court.

[8] In the alternative, the defendants submit that success on the motion was divided and that each party should bear its own costs. The defendants point to the fact that certificates of pending litigation were not obtained over all properties originally listed in the notice of motion and that the plaintiff did not obtain a Norwich order.

[9] Although the defendants did not submit dockets, they provided a detailed breakdown of time spent by their lawyer, the hourly rate charged at the on each of the following steps: preparation of motion materials, preparation for cross-examinations, conduct of cross-examinations, conference calls and emails, and CPC attendance.

Decision

[10] Fixing costs is a discretionary decision under section 131 of the Courts of Justice Act, R.S.O. 1990, c C.43. In Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587, at paras. 59 to 66, the Court of Appeal for Ontario restated the general principles to be applied in the court’s exercise of its discretion to award costs. In exercising my discretion, I may consider the factors listed in rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg 194. These factors include the result achieved, the amounts claimed and recovered, the complexity of and importance of the issues in the proceeding, the principle of indemnity, the reasonable expectations of the unsuccessful party, as well as any other relevant matter.

[11] A proper costs assessment requires the court to undertake a critical examination of the relevant factors as applied to the costs claimed and then “step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable”: Apotex, at para. 60, Restoule v. Canada (Attorney General), 2021 ONCA 779, 466 D.L.R. (4th) 2, at para. 356, citing Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 24.

[12] As the plaintiff and the defendants each seek a costs award in their favour, I will first assess which party succeeded on the motion. Success on this motion was not divided. The plaintiff was overwhelmingly successful. It obtained an order that froze all of the defendants’ bank accounts, subject only to the usual carve outs for living expenses and legal fees. It obtained a CPL on a condominium owned by the defendants. It obtained asset freezes on three other properties owned by the defendants where a CPL would have potentially destroyed the value of the property or rendered it impossible to renew a mortgage on the family home. It obtained Norwich-like relief, although I directed that the defendants provide the information to the plaintiff rather than the banks. Although the defendants were able to obtain some minor adjustments to the relief sought in the notice of motion, that does not change the fact the plaintiff was clearly the successful party. The plaintiff is presumptively entitled to an award of costs in its favour.

[13] I do not accept the defendants’ submission that the plaintiff should be disentitled to the costs of this motion because of the plaintiff’s conduct. I do not think it appropriate to deprive the plaintiff of its costs based on the unsworn and incomplete information provided to me in the defendants’ costs submissions. Even if I accepted the defendants’ allegations, considered separately or together, they would not amount to “sustained bullying of the defendants and their counsel” such that the plaintiff should be deprived of its costs.

[14] As noted above, an award of costs is discretionary and I am to exercise my discretion in accordance with the guidance provided by r. 57.01 of the Rules of Civil Procedure, which includes r. 57.01(i) “any other matter relevant to the question of costs.” Rule 57.03 provides that costs of a contested motion should be fixed and ordered to be paid within 30 days unless the court is satisfied that a different order would be more just. I am to make a costs order that is fair and just depending on the circumstances of the case before me: Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 24.

[15] A successful party is normally entitled to an award of costs on a successful motion. The cost consequences of a motion for an interlocutory injunction, however, are often treated differently than other motions. In Injunctions and Specific Performance (Toronto: Thomson Reuters Canada) (November 2021), at §2:42, the Hon. Robert J. Sharpe explained the unique aspects of a motion for an interlocutory injunction:

Where the defendant successfully resists the plaintiff's motion for an interlocutory injunction, costs may be awarded forthwith. It has been held that where the motion was groundless and based upon unfounded allegations of fraud, deceit and conspiracy, it may be appropriate for the court to fix the costs on a solicitor and client scale and require that they be paid forthwith. On the other hand, it would be unusual to award costs of an interlocutory injunction motion to the successful plaintiff prior to trial. As there has been no final determination of the rights of the parties, but rather an order to protect the plaintiff's position pending trial, the preferable course is to reserve the question of costs to the trial judge.

[16] In Quizno’s Canada Restaurant Corporation v. 1450987 Ontario Corp., 2009 CanLII 31599 (ONSC), Perell J. exercised his discretion and declined to make an order for costs in favour of a plaintiff who had succeeded in obtaining an interlocutory order stating:

Where a plaintiff succeeds in obtaining an interlocutory injunction it is the preferable (although not inevitable) course to reserve costs to the trial judge, which is to say to make costs in the cause. This is the preferable course because it allows the court to have the benefit of hindsight and to avoid the possible injustice of awarding costs to a plaintiff for having succeeded in obtaining an order to protect his or her position pending trial when the outcome of the trial reveals that that plaintiff’s position was not worthy of having been protected.

[17] In the recent decision of Capital SCL v. Spotless Consultancy, 2022 ONSC 4192, Morgan J. granted and then extended a world-wide Mareva injunction against the defendants based on allegations that the defendant participated in a $2.8 million fraud of the plaintiff. Justice Morgan found that the Mareva had not put an end to the proceedings or that the interlocutory injunction the issues in the action with finality. Justice Morgan observed that the defendant’s assets were now subject to the Mareva injunction until trial, which protected the plaintiffs if they were ultimately successful at trial. In those circumstances, Morgan J. ordered that the costs of the motion be in the cause.

[18] I agree with the approaches taken by Perell and Morgan JJ. see also: Tillsonburg Foamtec Inc. v. Free, [2005] O.J. No. 2255 (Sup. Ct. J.); Penn-Co Construction Canada (2003) v. Constance Lake First Nation, [2008] O.J. No. 3733 (Sup. Ct. J.); Erinwood Ford Sales Ltd. v. Ford Motor Co. of Canada Ltd., 2005 CanLII 23333, [2005] O.J. No. 2791 (Sup. Ct. J.); Rogers Cable TV Ltd. v. 373041 Ontario Ltd., [1994] O.J. No. 844 (Gen. Div.).

[19] In the circumstances of this case, particularly where much of the material used on this motion may be used in subsequent steps in this litigation, I exercise my discretion and order that the costs of the motion before me be in the cause.

Robert Centa J.

Date: August 25, 2022