COURT FILE NO.: CV-19-00617279-0000
DATE: 20221014
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JOSEPH HIESS
Plaintiff
- and –
MICHEL ZELNIK
Defendant
Joseph Hiess, self-represented
Ryann Atkins for the Garnishee
HEARD: In writing
PERELL, J.
REASONS FOR DECISION
[1] For the reasons that follow, I enforce the settlement about costs that the Plaintiff, Joseph Hiess, reached with the garnishee, Lynda Reeves.
[2] The details of the background are set out in an endorsement[^1] and a decision[^2] in which, amongst other things, I struck out Mr. Hiess’ notice of garnishment because I held that Ms. Reeves is not indebted to the Defendant and judgment debtor, Michel Zelnik. Because Ms. Reeves, who is Mr. Zelnik’s spouse, benefactor, and guardian angel, is not indebted to Mr. Zelnik, there was no debt to garnish.
[3] In my January 21, 2022 decision, I directed that if the parties cannot agree about the matter of costs, they may make submissions in writing.
[4] On February 7, 2022, Ms. Reeves’ lawyer wrote Mr. Hiess’ lawyer and offered to settle the costs of the garnishment proceedings including an abandoned motion, for $58,958.85 on a partial indemnity basis.
[5] The settlement offer was accepted. However, in a subsequent series of correspondence between the lawyers, it became clear that Mr. Hiess was reneging on the settlement. His position was that he would only pay the $58,958.85 if Mr. Zelnik’s indebtedness to Mr. Hiess was also paid.
[6] Since Mr. Zelnik is penniless and totally dependent on Ms. Reeves and since Ms. Reeves is not prepared to fund Mr. Zelnik, and since Ms. Reeves rather wishes to be paid her costs, she responded to Mr. Hiess’ repudiation of the settlement, with a motion under Rule 49 of the Rules of Civil Procedure. Rule 49.09 provides:
49.09 Where a party to an accepted offer to settle fails to comply with the terms of the offer, the other party may,
(a) Make a motion to a judge for judgment in the terms of the accepted offer, and the judge may grant judgment accordingly; or
(b) Continue the proceeding as if there had been no accepted offer to settle.
[7] On this motion in writing, Lynda Reeves requests an order:
(a) For costs of the garnishment hearing and of the Abandoned Motion on a substantial indemnity basis, payable within 10 business days;
(b) If necessary, permitting Ms. Reeves to continue the proceeding pursuant to Rule 49.09(b) of the Rules of Civil Procedure;
(c) In the alternative, granting Ms. Reeves judgment in the amount of the Cost Settlement in accordance with Rule 49.09(a) of the Rules of Civil Procedure, to be paid within 10 business days;
(d) That Ms. Reeves is entitled to her costs of enforcing any order granted pursuant to (a), (b) and/or (c) above on a full indemnity scale pursuant to Rule 60.19 of the Rules of Civil Procedure;
(e) Ms. Reeves’ costs of this motion, on a substantial indemnity basis; and
(f) Such further and other relief as to this Honourable Court may deem just.
[8] When Ms. Reeves’ motion came on for a hearing on July 12, 2022, Mr. Hiess asked for an adjournment, which I granted. On the occasion of the adjournment, I made the following file direction:
A motion by the Garnishee, came on for hearing this day. The purpose of the motion was to resolve the Garnishee Lynda Reeves’ claim for costs.
Joseph Hiess, the Plaintiff/Creditor is now self-represented. He requested an adjournment in order to file material.
I am granting the adjournment on the following terms:
(a) The motion will now proceed as a motion in writing with a hearing date of September 22, 2022.
(b) Mr. Hiess shall have until September 10, 2022 to file any motion materials, as he may be advised.
(c) There shall be no cross-examinations on any affidavits.
(d) The parties shall file their materials in accordance with the Rules of Civil Procedure and on Ontariocourts.caselines.com.
[9] Mr. Hiess delivered the following submissions:
Your Honour,
I know you took careful deliberation of the issues raised by my counsel and that of Ms. Reeves, and your subsequent ruling, while not in my favor, did highlight some of the unfairness that led to my action against Ms. Reeves. Permit me to highlight what brought us to this point and the reason that I feel that it would be unfair to order me to pay Ms Reeves any costs.
In January 24, 2019, I received a judgement in Quebec against Mr Zelnik for the amount of $1.325M plus interest plus costs. In order to effect the Quebec judgement, we needed the court in Ontario to substantiate the Quebec Judgement. This was confirmed by the Ontario court in July 4, 2019.
Mr Zelnik’s depositions after that date confirmed that he had the means of paying his debt to me until Ms. Reeves stopped supporting him a few days after we served our first summons for a judgment debtor examination on September 4, 2019, specifically because Ms. Reeves did not want any of the money she was paying Mr Zelnik to be used to pay me. This is the crux of why I took the action against Ms. Reeves. His depositions confirmed that Ms, Reeves was gifting Mr Zelnik each month funds ranging between $10,000 and $20,000. This was above his place of domicile, car, travel expenses etc. These gifts began some 10 years ago and continued until September 3, 2021. Ms. Reeves prohibited him from paying back any of the funds that the courts ordered him to pay and then cut him off financially. Our only option was to attempt to garnish those funds. Ms. Reeves took deliberate steps to ensure that no funds, that were legally due to me by her husband, were ever repaid to me.
It is not fair Your Honor, that after getting 2 judgements against Mr Zelnik, for $1,325,000 plus interest and court costs, Ms. Reeves should be able to force me to pay her legal fees after she deliberately prevented payment of amounts due to me. In fairness, Your Honor, I ask that Ms. Reeves bear her own costs in this matter, or alternatively that her fees be made payable by Mr Zelnik, who owes me a much larger amount and could legitimately be made a garnishee of a debt from me.
[10] On a subjective and on an objective level Mr. Hiess’ frustration and feelings of unfairness are understandable - as against Mr. Zelnik.
[11] However, as against Ms. Reeves, Mr. Hiess has no basis to claim unfairness. He sued her. She won. He accepted an unambiguous settlement of the matter of costs. The settlement appears to be fair in circumstances in which Mr. Hiess had his day in court and lost. Ms. Reeves incurred actual costs of $95,816.06 (partial indemnity costs of $58,958.85 and substantial indemnity costs of $77,389.15) and disbursements of $3,681.51. Had he not settled, the normal rules with respect to costs would have applied and the settlement and Mr. Hiess’ plea of unfairness would have availed him not.
[12] The appropriate Order to make in the circumstances of this case is to order Mr. Hiess to pay the $58,958.85 in accordance with Rule 49.09 (a) of the Rules of Civil Procedure plus costs of $5,000, all inclusive, for the motion in writing to be paid within 10 business days plus post-judgment interest at the statutory rate.
[13] Ms. Reeves may take out the Order without Mr. Hiess’ approval as to the form and content of the Order.
Perell, J.
Released: October 14, 2022
COURT FILE NO.:CV-19-00617279-0000
DATE: 20221014
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JOSEPH HIESS
Plaintiff
- and -
MICHEL ZELNIK
Defendant
REASONS FOR DECISION
PERELL J.
Released: October 14, 2022
[^1]: Hiess v. Zelnik, 2022 ONSC 249. [^2]: Hiess v. Zelnik, 2022 ONSC 484.