COURT FILE NO.: CV-21-664585

DATE: 2022 10 07

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: MIDLAND RESOURCES HOLDING LIMITED, Plaintiff

• and -

MICHAEL SHTAIF, Defendant

BEFORE: Associate Justice Todd Robinson

PARTIES: M. Shtaif, acting in person (moving party)

COUNSEL: K. Prehogan and K. Theeuwen, for Midland Resources Holding Limited (responding party)

HEARD: In writing

COSTS ENDORSEMENT

[1] The parties have been unable to resolve costs of Michael Shtaif’s motion argued before me, which I ultimately dismissed. Written costs submissions were exchanged and filed, which I have now had an opportunity to review and consider.

[2] On the motion, Mr. Shtaif sought a declaration that an assignment of the judgment against him in favour of Midland Resources Holding Limited, a company incorporated in Guernsey (“Midland Guernsey”), which was assigned to Midland Resources Holding Limited, a company incorporated in the British Virgin Islands (“Midland BVI”), was “not effectual and unenforceable” against him. He further sought relief declaring two certificates of judgment obtained by Midland BVI invalid for non-compliance with rules 11.01 and 11.02 of the Rules of Civil Procedure, RRO 1990, Reg 194 (the “Rules”), and a post-judgment order dismissing this action for delay and non-compliance with rule 11.03. Mr. Shtaif was unsuccessful on all of the relief he sought.

[3] Midland BVI seeks its costs of the motion on a full indemnity basis in the amount of $35,376.01, including HST and disbursements. Alternatively, Midland BVI seeks its costs on a substantial indemnity scale. Mr. Shtaif submits that costs should only be on a partial indemnity scale, and should not exceed $8,000.00 in line with a reduced costs award previously granted by the Court of Appeal. Alternatively, Mr. Shtaif submits that costs should not exceed $18,900 on a partial indemnity basis.

Challenge to Midland BVI’s standing

[4] Before addressing the costs submissions, I wish to address Mr. Shtaif’s concern with my endorsement dated June 14, 2022 and what appears to be a new challenge to Midland BVI’s standing in this proceeding.

[5] Following release of my decision, Mr. Shtaif sought an extension for his responding costs submissions and, at the same time, noted an error in the title of proceedings in my reasons for decision. Concurrently with granting Mr. Shtaif’s requested extension, I acknowledged that the title of proceedings ought to have read, “Midland Resources Holdings Limited”, which was confirmed from the plaintiff’s name in a case history I had been provided. I noted, however, that it was a typographical error stemming from the fact that all of the materials filed for the motion (including those of Mr. Shtaif) noted “Midland Resources Holding Limited” as plaintiff.

[6] Mr. Shtaif submits that the erroneous reference to “Midland Resources Holding Limited” instead of “Midland Resources Holdings Limited” is “a serious issue of proper standing” with respect to different Midland Group companies identified in his submissions. He asks that my decision be re-issued to reflect the correct party to this action.

[7] Contrary to Mr. Shtaif’s submissions, a typographical error in the title of proceedings in my reasons for decision is not a matter requiring amendment. It has no substantive effect on disposition of the motion. The parties on that motion are correctly described in the body of my reasons. The party names as reflected in the case history were inputted by court staff when creating the new court file number on the civil list following Conway J.’s transfer order. Nothing is before me on why the title of proceedings did not remain the same as it had been under Court File No. 08-CL-7446. Importantly, though, neither party raised any concern with the title of proceedings being incorrect during their motion submissions.

[8] The court electronic system does identify the plaintiff as “Midland Resources Holdings Limited”. My typographical error in missing the “s” in the title of proceedings does not have the effect of amending the formal parties to this action named in the pleadings. As noted in my prior endorsement and above, that error resulted from Mr. Shtaif’s own error in the title of proceedings on his materials, from which the title of proceedings for my reasons was transcribed.

[9] However, having reviewed the matter more closely in light of Mr. Shtaif’s submissions, I am not convinced that the title of proceedings on the materials for this motion and in my reasons are factually in error.

[10] I have reviewed case histories for the prior commercial list court file and the current civil list court file. The case history for Court File No. 08-CL-7446 records the plaintiff as “Midland Resources Holdings Limited”. Nevertheless, Midland Guernsey was the plaintiff at trial. I note that Sanderson J.’s reasons for judgment and issued/entered judgement are both in favour of “Midland Resources Holding Limited” as plaintiff. I am unaware of any amendment to the pleadings substituting “Midland Resources Holdings Limited” as plaintiff.

[11] It thereby appears that there may have been an error in data entering the plaintiff’s name by court staff in the commercial list file. If so, then that same error may have been carried forward in data entry for the new court file created on the civil list. Unless there has been an amendment or order substituting the name of the plaintiff, then it is an administrative matter to raise with the court office for correction. Data entry errors happen, but they do not result in legal amendment or substitution of parties to a proceeding from those reflected on issued pleadings. Only a formal amendment by consent or court order could do that.

[12] In any event, Mr. Shtaif’s argument appears to be a matter of form, not substance. Although his costs submissions seek to cast doubt over whether Midland BVI or Midland Resources Holdings Limited is the party taking steps against him in Ontario, the record before me is clear that Midland BVI is taking those steps, was the target of Mr. Shtaif’s motion, and was the entity responding to it. Nothing before me supports that an entity named “Midland Resources Holdings Limited” is seeking to enforce the judgment of Sanderson J. against Mr. Shtaif in either Ontario or Alberta or has been assigned that judgment. Both the instrument of transfer and the second certificate of judgment clearly identify Midland BVI (i.e., Midland Resources Holding Limited) as the assignee, not Midland Resources Holdings Limited. The evidence before me is that Midland BVI obtained the certificates of judgment. Although no order to continue has been obtained in this action, I held one was not required. Similarly, all of the post-assignment proceedings in Ontario and Alberta against Mr. Shtaif to which I have been directed involve Midland BVI.

[13] Also, if Mr. Shtaif asserts that the plaintiff is properly “Midland Resources Holdings Limited” and, accordingly, there is a legitimate issue of Midland BVI’s standing to oppose his motion, then the time to raise that challenge was during motion argument, not during costs submissions. Since Midland BVI’s standing was not challenged at the time of the motion, I give Mr. Shtaif’s current apparent challenge no effect.

Scale and quantum of motion costs

[14] Mr. Shtaif’s costs submissions spend little time directly addressing the costs claim by Midland BVI or the factors in subrule 57.01(1) of the Rules. The majority of his submissions are spent effectively justifying the reasonableness of bringing his motion. I directed that costs submissions should not exceed four pages. Mr. Shtaif’s submissions are seven pages.

[15] Mr. Shtaif submits that, in the prior appeal from Morgan J.’s decision to the Court of Appeal, Midland BVI claimed $11,424.30 in costs against Mr. Shtaif, but was only awarded $8,000. Mr. Shtaif submits that the appeal addressed the same issues of law as this motion, but Midland BVI has not explained how it now requests more than three times the costs claimed in the Court of Appeal. Mr. Shtaif thereby submits that a similar $8,000 is appropriate here.

[16] I give no effect to that submission. Midland BVI prepared 600 pages of responding materials and a factum tailored to the motion before me. While similar arguments were made before the Court of Appeal (as I observed in my reasons for decision), there is nothing before me supporting that Midland BVI recycled its materials from the Court of Appeal and is disingenuously claiming duplicate or inflated time. Mr. Shtaif has added over 100 pages of appendices to his costs submissions, including previously filed materials, but has included nothing to substantiate that Midland BVI’s materials and arguments in the Court of Appeal reasonably were or could have been adapted for use on this motion at reduced cost.

[17] Midland BVI submits that full indemnity costs are warranted in the circumstances of this case. It argues that Mr. Shtaif advanced unfounded allegations of fraud against Midland BVI and its counsel and pursued a motion that not only constituted a collateral attack on prior judicial decisions, but was also generally an abuse of process. Mr. Shtaif submits that there is no reason to depart from the general rule that partial indemnity costs are typically awarded, and submits that no more than 60% of Midland BVI’s substantial indemnity claim should be awarded.

[18] I have discretion to make an award of costs up to full indemnity in circumstances where there has been egregious misconduct or abuse of process by a party in the course of proceedings: McCabe v. Roman Catholic Episcopal Corporation, 2019 ONCA 213 at para. 77.

[19] In support of full indemnity costs, Midland BVI relies on the decision of Trimble J. in X v. Y. In that case, Trimble J. observed that where a proceeding is an abuse of process, costs may be assessed on a full indemnity basis without the need to find bad faith. A party who brings a proceeding for an improper purpose must “feel the sting of costs in the full measure, in part to punish the improper use of the Court’s process, in part as a warning to others”: X v. Y, 2016 ONSC 5551 at paras. 122-123.

[20] The context of X v. Y was quite different than this case. It involved a bitter family law dispute and much clearer misconduct. However, the principle outlined by Trimble J. is, in my view, no less applicable in civil proceedings. It must still be read in light of the subsequent decision in Net Connect Installation Inc. v. Mobile Zone Inc., 2017 ONCA 766 (not cited by either party), in which the Court of Appeal specifically addressed the circumstances under which elevated costs are properly awarded.

[21] In Net Connect, the Court of Appeal confirmed that an award of costs on an elevated scale is justified in only very narrow circumstances, namely where an offer to settle is engaged or where the losing party has engaged in behaviour worthy of sanction. Substantial indemnity costs was confirmed to be the elevated scale of costs normally resorted to when the court wishes to express its disapproval of the conduct of a party. Full indemnity costs were held to be justified in only rare and exceptional cases where the conduct worthy of sanction is especially egregious: Net Connect, supra at paras. 8-9.

[22] I agree with Midland BVI that Mr. Shtaif has demonstrated both an unwillingness to pay the judgment against him and an intention to delay its enforcement, including rehashing arguments and positions that he has previously raised in this and other courts. Midland BVI submits it is an abuse of process. I agree. Arguments made before me were previously made before Morgan J. and the Court of Appeal and rejected. I held that advancing the same arguments amounted to a collateral attack on those prior decisions. Mr. Shtaif’s ongoing conduct in Ontario and Alberta is consistent with taking whatever procedural steps he can to avoid paying his judgment debt and outstanding costs awards. It is not conduct that the court should condone.

[23] Mr. Shtaif submits that bringing the motion was justified by the fact of conflicting decisions between Morgan J., the Ontario Court of Appeal, and Veldhuis J.A. of the Alberta Court of Appeal. He argues that clarification on the invalidity of the assignment from Midland Guernsey to Midland BVI was required and, accordingly, the motion was not a collateral attack, but rather was about seeking clarity on whether the certificates of judgment were properly issued. He submits that he was “strictly complying” with Veldhuis J.A.’s ruling in seeking such clarification.

[24] I do not accept Mr. Shtaif’s argument. Even accepting that his intention behind bringing the motion was to obtain clarification needed in the Alberta proceedings, his ultimate goal in bringing this motion was to support his overall effort to defeat Midland BVI’s enforcement of the judgment. He was unsuccessful in the motion.

[25] Also, in my view, the decisions of both Morgan J. and the Ontario Court of Appeal had already addressed the validity of the assignment, which Mr. Shtaif challenged again before me in reliance on the comments of Veldhuis J.A. The Ontario Court of Appeal’s decision post-dates the decision of Veldhuis J.A. In their decision, the Court of Appeal specifically commented that there was no basis to set aside the certificates of judgment: Midland Resources Holding Limited v. Bokserman, 2022 ONCA 73 at para. 39. Mr. Shtaif nevertheless pursued this motion, in which he renewed his challenges to the assignment and to the certificates of judgment.

[26] The Court of Appeal has already commented that Mr. Shtaif’s litigation conduct has amounted to abuse of process on more than one occasion. Hourigan J.A. has observed that Mr. Shtaif and Eugene Bokserman (the other judgment debtor under the judgment of Sanderson J.) “have a history of abusing the court process”: Midland Resources Holding Limited v. Bokserman (25 October 2021), Court of Appeal, M52729/C69468 and M52727/C69481 (Ont CA). Similarly, on a second motion for reconsideration, Mr. Shtaif and Mr. Bokserman were specifically held to be abusing the process of the court by “recycling arguments already considered and rejected” by the court: Midland Resources Holding Limited v. Shtaif, 2018 ONCA 743 at para. 4.

[27] Nevertheless, although I agree that Mr. Shtaif’s motion before me was an abuse of process, I am not satisfied that Mr. Shtaif’s conduct is so egregious that it rises to the level of being one of the rare and exceptional cases in which a full indemnity costs sanction is appropriate.

[28] In Net Connect, the Court of Appeal upheld an award of full indemnity costs because it was supported by factual findings that the appellants had moved funds out of the country in an effort to place them out of reach of the respondents and had fabricated evidence. In my view, Mr. Shtaif’s conduct is not the same calibre.

[29] Mr. Shtaif has continued to attempt to use the court process to defeat or delay the judgment against him. Although I found that his arguments amounted to a collateral attack on prior decisions of Morgan J. and the Court of Appeal, it is not, in my view, the same level of egregiousness as seeking to deceive the court or actively diverting assets to defeat a judgment. There is no evidence of any conduct by Mr. Shtaif akin to that before me. Midland BVI has not directed me to any case law where conduct similar to that of Mr. Shtaif has been met with full indemnity costs.

[30] Midland BVI points to Mr. Shtaif’s allegations in his written and oral submissions that Midland BVI and its counsel intentionally misled the court and misrepresented evidence. Mr. Shtaif specifically outlined in his factum that Midland BVI’s “failure to provide full and complete disclosure to the Court on an application without notice and misleading and deceiving the Court, constitutes fraud on the Court, and it is not a curable irregularity.”

[31] I agree that Mr. Shtaif’s written and oral submissions were to the effect that Midland BVI and its counsel had not been forthright with the court when seeking the certificates of judgment. I found those positions to be untenable, since the process of obtaining certificates of judgment was a purely administrative one that did not involve making arguments or decision-making by the registrar. Mr. Shtaif’s allegations were serious, but I do not agree that they support full indemnity costs in and of themselves.

[32] In my view, although full indemnity costs is not warranted in the circumstances of this case, a substantial indemnity costs award is appropriate. Mr. Shtaif’s unsubstantiated allegation that Midland BVI had intentionally deceived the court when obtaining the certificates of judgment is exacerbated by his own conduct in the course of the motion and the fact that his arguments amounted to a collateral attack on prior decisions.

[33] In that regard, the factors in subrule 57.01(1) of the Rules are also relevant to my decision that substantial indemnity costs are warranted. It is not necessary for me outline all of my considerations on each factor in detail (some of which are already addressed above), but I will highlight more significant determinations and observations.

[34] First, Midland BVI correctly asserts that Mr. Shtaif is an experienced litigant who is aware of the costs of litigation and the consequences of unsuccessful motions. Prior adverse costs awards have been significant. His own costs outline for this motion claimed actual costs of $25,443.75, including HST and disbursements, as a self-represented litigant. The costs claimed by Midland BVI, which was represented by counsel on the motion, are thereby within Mr. Shtaif’s reasonable expectations.

[35] Second, Mr. Shtaif’s conduct substantially increased the costs of the motion. He opted to late-serve a motion record comprising well over 600 pages of materials, in response to which Midland BVI served responding materials within one business day of being served. Mr. Shtaif then sought an adjournment of his own late-served motion, which was opposed and which I denied. The motion was improperly booked as a short motion, when it could not reasonably have been completed within two hours given the volume of Mr. Shtaif’s materials and the arguments he intended to and did advance. Hearing argument accordingly required most of the day.

[36] Third, as already discussed, Mr. Shtaif sought effectively to relitigate arguments that he had previously advanced in other courts and that were rejected. In doing so, he refused to admit that his unsuccessful arguments were not properly reconsidered, adding time and cost to the motion. As I have held above, Mr. Shtaif’s attempt to reargue decided issues was an abuse of process.

[37] Fourth, there is no question that the issues on the motion were important to both parties. Success by Mr. Shtaif would likely have procedurally defeated a long outstanding and significant judgment against him. Conversely, it was evidently important for Midland BVI to staunchly oppose the motion in order to be able to pursue collection of the debt.

[38] Fifth, despite Mr. Shtaif’s submissions, I find the hours spent by Midland BVI’s counsel to be reasonable and proportionate to the importance of the issues. The costs outline further reflects an appropriate allocation of time between the senior lawyer, junior lawyer, and law clerk involved in the file. The rates claimed for the lawyers and the law clerk are, in my view, somewhat above what I would normally view as being within reasonable expectations. However, Mr. Shtaif has calculated his own time on the basis of a rate of $450 per hour, so I cannot say that the lawyer rates are significantly above reasonable expectations in this particular case.

[39] For the above reasons, I fix costs of the motion payable by Mr. Shtaif to Midland BVI in the amount $25,000.00, including HST, on a substantial indemnity basis, plus disbursements of $278.21, for a total of $25,278.21, payable forthwith. Order accordingly.

ASSOCIATE JUSTICE TODD ROBINSON

DATE: October 7, 2022