Court File and Parties

COURT FILE NO.: CV-21-00004688-0000-00OT DATE: 20221123 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: JOHN DUNCAN CLAUDE MACDONALD, Applicant AND: FRANK FELDMAN, Respondent

BEFORE: VERMETTE J.

COUNSEL: Matthew Macdonald, for the Applicant Andrea Gonsalves, for the Respondent

HEARD: In writing

ENDORSEMENT

[1] On August 22, 2022, I released an endorsement (2022 ONSC 4818) dismissing the Applicant’s motion for: (a) an order transferring the action commenced by the Respondent in the Small Claims Court to the Superior Court of Justice, and (b) an order scheduling a proposed motion by the Applicant under section 137.1 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”).

[2] The parties were not able to agree on costs and have delivered costs submissions.

Positions of the parties

a. Position of the Respondent

[3] The Respondent seeks his costs of the motion on a substantial indemnity basis in the all-inclusive amount of $8,824.17 or, in the alternative, on a partial indemnity basis in the amount of $6,688.81.

[4] The Respondent submits that his complete success on the motion entitles him to costs. He states that the Applicant’s motion was ill-conceived from the outset as the courts have given clear direction that motions under section 137.1 of the CJA are not appropriate in Small Claims Court matters. The Respondent argues that the Applicant’s motion imposed a significant financial burden on him and that the Applicant must bear the cost of his failed tactical effort to move the Respondent’s action from his chosen forum.

[5] According to the Respondent, an elevated scale of costs is justified in this case because of certain statements included in the Applicant’s Factum and Reply Factum and the Applicant’s unfounded allegation that the Respondent somehow acted improperly in opposing the motion to transfer. The Respondent argues that the Applicant’s threat to seek full indemnity costs against him had no basis and suggests an effort to intimidate the Respondent into not opposing the motion. The Respondent submits that the Applicant’s accusations against him unnecessarily increased the legal costs and temperature of the litigation, and that such conduct is deserving of disapproval through substantial indemnity costs.

[6] The Respondent states that the quantum of costs he claims is fair and reasonable. He points out that the rates of the lawyers involved are well below market rates for Toronto litigation boutiques and that no duplication of costs is claimed. He submits that the amount he seeks would be within the Applicant’s reasonable contemplation.

b. Position of the Applicant

[7] According to the Applicant, the only reason for the Small Claims Court defamation proceeding and this motion is the Respondent’s pursuit of unnecessary litigation and, as a result, the Respondent should not receive any costs award.

[8] The Applicant refers to an offer that he made to resolve the Respondent’s defamation action in the Small Claims Court which was not accepted by the Respondent. He argues that all costs emanating from this motion and the defamation proceeding derive entirely from the Respondent’s pursuit of unnecessary litigation and failure to accept the Applicant’s offer. The Applicant states that he tried to avoid unnecessary litigation with his offer and, subsequently, by seeking to bring a motion under section 137.1 of the CJA at the earliest opportunity. I note that the offer in question was made more than six months after the Applicant published his review of the Respondent on Google and approximately six months after the Respondent served a Notice of Libel on the Applicant.

[9] The Applicant submits that since the Respondent could have avoided this motion, his conduct should be sanctioned with a fixed costs penalty now or in the cause. He argues that the Respondent has not proven any of his allegations in the defamation proceeding and that if there is a determination that his defamation proceeding is unnecessary or without merit, it would be unbefitting that he was rewarded with a costs award at this point in the proceedings.

[10] The Applicant points out that he brought his motion under section 137.1 of the CJA in the Small Claims Court and sought to have it heard by a Superior Court judge prior to the release of the Court of Appeal’s decision in Laurentide Kitchens Inc. v. Homestars Inc., 2022 ONCA 48 (“Laurentide”). He submits that the issues raised on this motion involved complicated and unsettled law that changed after the motion was made, and that the decision on this motion provides clarity on this matter to future litigants. He states that in these circumstances, costs against him would not be appropriate.

[11] The Applicant argues that he was reasonable in bringing the motion as he followed the established direction from the Divisional Court in Chopak v. Patrick, 2020 ONSC 5431 and the suggestion of Justice Glustein in the case conference that led to his endorsement scheduling this motion.

[12] The Applicant’s costs outline reflects costs on a partial indemnity basis in the amount of $9,673.01 and costs on a substantial indemnity basis in the amount of $15,908.35.

Discussion

a. Entitlement to costs

[13] The Respondent was the successful party on this motion and is entitled to his costs.

[14] The Applicant wants this Court to conclude that the Respondent is pursuing unnecessary litigation. In order to do so, this Court would have to assess the merits of the underlying defamation claim and the Applicant’s offer to settle, which it is not in a position to do. As pointed out in paragraphs 35-36 of my endorsement dated August 22, 2022, the issue of the merits of the Applicant’s proposed motion under section 137.1 of the CJA was not before this Court on this motion to transfer. Neither was the issue of the merits of the defamation claim. This Court does not have the necessary evidence to evaluate the merits of the claim or the proposed motion. Further, this Court is not in a position to express any views as to whether the Applicant’s offer should have been accepted or not. For instance, if the Respondent suffered damages as a result of the publication of the Applicant’s review during the six-month period before the offer was made, it can be legitimate for the Respondent to turn down an offer that does not include any compensation component. Again, the necessary evidence to make findings on this issue is not before the Court and it is not the role of this Court to rule on the defamation claim and whether it should have been pursued.

[15] The Applicant was not required to bring this motion and to seek a transfer to the Superior Court of Justice. Similarly, he did not have to pursue this motion after the Court of Appeal released its decision in Laurentide in January 2022. (I note that the Applicant’s Notice of Motion is dated March 25, 2022.) The Applicant could have restricted his response to the defamation claim to the forum where it was commenced, i.e. the Small Claims Court. This motion did not advance the litigation and increased the costs of the dispute for all the parties. The Applicant should bear the costs consequences of pursuing this unsuccessful motion.

b. Scale of costs

[16] As has been observed in many cases, costs on an elevated scale are exceptional and are reserved for those situations when a party has displayed reprehensible, scandalous or outrageous conduct: see Quickie Convenience Stores Corp. v. Parkland Fuel Corporation, 2021 ONCA 287 at para. 4.

[17] In my view, the Applicant’s conduct in this case and the statements in his Facta do not rise to the egregious level required to award costs on a substantial indemnity basis. Therefore, the appropriate scale is partial indemnity.

c. Quantum

[18] I have reviewed the Respondent’s costs outline and I am satisfied that the time spent, the lawyers’ rates and the costs sought are fair and reasonable. I note that the partial indemnity costs of the Applicant are higher than the partial indemnity costs of the Respondent. Consequently, the amount of costs sought by the Respondent would have been within the Applicant’s reasonable contemplation.

Conclusion

[19] Taking the foregoing into account, as well as the factors set out in Rule 57.01(1) of the Rules of Civil Procedure and the reasonable expectations of the parties, I find that the fair and reasonable award of costs in favour of the Respondent for this motion is on a partial indemnity basis in the all-inclusive amount of $6,688.81. In my view, this is an amount that the Applicant should reasonably have expected to pay in the event that he was unsuccessful on his motion.

[20] The costs are to be paid by the Applicant to the Respondent within 30 days.

Vermette J.

Date: November 23, 2022