Court File and Parties

COURT FILE NO.: CV-21-00659877-0000

DATE: 20221124

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: OZ OPTICS LTD., Plaintiff

AND:

DIANE LESLEY EVANS and SAMUEL EDGAR SCHWISBERG, Defendants

BEFORE: VERMETTE J.

COUNSEL: Michael B. Lesage, for the Plaintiff William E. Pepall and Spencer Jones, for the Defendant Diane Lesley Evans Michael R. Kestenberg, for the Defendant Samuel Edgar Schwisberg

HEARD: In writing

ENDORSEMENT AS TO COSTS

[1] On October 17, 2022, I released an endorsement (2022 ONSC 5890) granting the Defendants’ motions for summary judgment and dismissing the action.

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

Positions of the parties

a. Position of the Defendant Diane Lesley Evans

[3] Ms. Evans seeks her costs of the motion and the action on a substantial indemnity basis in the all-inclusive amount of $55,849.76. In the alternative, she seeks costs on a partial indemnity basis in the amount of $37,484.09.

[4] Ms. Evans states that she was the successful party and that there are no exceptional circumstances that would disentitle her from being awarded costs.

[5] Ms. Evans points out that the Plaintiff made serious allegations of intentional wrongdoing against her, which were a direct attack on her integrity. She argues that the severity of the allegations and the failure to substantiate any of them justifies an award of substantial indemnity costs.

[6] According to Ms. Evans, the Plaintiff had no basis for a claim against her. She submits that the Plaintiff’s case was based entirely on erroneous, irrelevant and failed attempts to attack her character and credibility. She states that the Plaintiff did not advance any evidence to dispute the fact that she suffered a stroke that rendered her unable to practice, nor did it tender any evidence that it had suffered any damages due to her conduct while she was able to practice.

[7] Ms. Evans submits that the Plaintiff engaged in numerous unnecessary steps that increased costs. She refers to the case conference before Akbarali J. and the Plaintiff’s request for an adjournment at that time, as well as the motions to admit additional affidavits and documents and to amend the Statement of Claim which were heard at the return of the motion for summary judgment.

b. Position of the Defendant Samuel Edgar Schwisberg

[8] Mr. Schwisberg seeks his costs of the motion and the action on a substantial indemnity basis in the all-inclusive amount of $49,119.24. In the alternative, he seeks costs on a partial indemnity basis in the amount of $42,945.36.

[9] A review of Mr. Schwisberg’s costs outline reveals calculation errors with respect to the figure of partial indemnity costs. When properly calculated based on the rates and hours set out in the costs outline, the correct figure for Mr. Schwisberg’s partial indemnity costs is $37,034.22.

[10] Mr. Schwisberg’s position and arguments are substantially the same as Ms. Evans.

c. Position of the Plaintiff

[11] The Plaintiff’s costs are in the amount of $35,381.19 on a partial indemnity basis, and $57,903.79 on a full indemnity basis.

[12] The Plaintiff points out that although it was unsuccessful in its claims, the Court declined to express any views as to whether the language contained within the internal emails sent by the Defendants violated the Rules of Professional Conduct, which, according to the Plaintiff, can be indicative of a breach of the duty of care. The Plaintiff also states that there was conflicting authority heading into the motion as to whether the Plaintiff had met its burden on a motion for summary judgment. In light of this, the Plaintiff submits that it had some legal basis for asserting the claims that it did, even if it ultimately fell short in discharging its burden. Therefore, the Plaintiff argues that it should not be responsible for more than 60% of the Defendants’ legal fees.

[13] It is the Plaintiff’s position that the time claimed by the two Defendants is duplicative, as the matter largely involved the same law and arguments for each Defendant. The Plaintiff argues that the Defendants’ combined costs are much higher than they could have been and that the amount could have been reduced had one Defendant taken the lead.

[14] The Plaintiff relies on the case Jagtoo v. 407 ETR Concession Co. Ltd., 2003 10636 (Ont. S.C.J.) (“Jagtoo”) , a case involving two defendants, in support of its position that the amount of costs sought by the Defendants should be reduced.

[15] The Plaintiff requests that the Defendants be awarded costs in a total amount that is closed to the fees incurred by the Plaintiff.

Discussion

a. 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] Certain types of allegations may attract costs on an elevated scale. The Court of Appeal stated the following in Unisys Canada Inc. v. York Three Associates Inc., 2001 7276 at para. 15 (Ont. C.A.):

On the issue of costs we agree with the respondent that the appellant’s conduct in making unsubstantiated allegations of fraud, misconduct, or dishonesty, (or other conduct analogous to the foregoing), is sufficiently reprehensible to warrant awarding solicitor-and-client costs in favour of the aggrieved party [citations omitted]. Conduct of this nature is particularly blameworthy when aimed at the integrity of a lawyer [citation omitted].

[18] It is my view that: (a) the Plaintiff’s conduct in this case does not rise to the egregious level required to award costs on a substantial indemnity basis; and (b) the allegations pleaded in the Statement of Claim are insufficient to justify an award of costs on a substantial indemnity basis.

[19] This case does not involve any allegations of fraud or dishonesty. While the Statement of Claim includes a claim for $10 million for conspiracy with intent to injure, the allegations in the Statement of Claim are principally factual and largely undisputed – there is no meaningful dispute between the parties regarding what happened and what was said. The main issue faced by the Plaintiff on the motions was that the facts of the case do not support the inferences or legal conclusions that the Plaintiff wishes the Court to draw.

[20] I also note that the Plaintiff did not really pursue the tort of conspiracy on the motions for summary judgement. The word “conspiracy” only appears once in the Plaintiff’s Factum (i.e. in a sentence setting out what the Defendants were sued for) and the Factum does not include a section or arguments addressing the tort of conspiracy.

[21] Therefore, I conclude that the appropriate scale of costs is partial indemnity.

b. Quantum

[22] I disagree with the Plaintiff that the fact that there are two Defendants would somehow warrant a reduction of the amount of costs payable by the Plaintiff. The Plaintiff chose to sue both Defendants and must bear the costs consequences of this choice. The circumstances of the Defendants’ departure from the Plaintiff were different. As a result, different defences, affidavits and legal arguments were required, even though there was overlap. Efficiencies were attained to a certain extent as only Ms. Evans filed written materials in response to the Plaintiff’s motion for leave to file supplementary affidavits.

[23] In my view, no general principle can be derived from the Jagtoo case. It is entirely fact-specific and does not provide any guidance that would be relevant in this case. I also note that Jagtoo involved an individual plaintiff with limited financial resources, which is not the case here.

[24] I have reviewed the Defendants’ costs outlines. I find that the rates used by the Defendants’ lawyers are appropriate: they used partial indemnity rates that are 60% of actual rates.

[25] With respect to time spent and the overall amounts sought, I will apply a reduction to the amounts sought to ensure that the overall time claimed is reasonable in light of all the circumstances of this case and to take into account potential duplication of work between the timekeepers involved. I note, however, that the Plaintiff’s own partial indemnity costs are similar to the Defendants’ respective partial indemnity costs, which is a relevant consideration when determining what is fair and reasonable and within the reasonable expectations of the parties.

Conclusion

[26] 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 awards of costs in favour of the Defendants for the action and the motion are on a partial indemnity basis in the all-inclusive amount of $32,000.00 for Ms. Evans and $30,000 for Mr. Schwisberg. In my view, these are amounts that the Plaintiff should reasonably have expected to pay in the event that it was unsuccessful on the action and motion.

[27] The costs are to be paid by the Plaintiff to the Defendants within 30 days.

Vermette J.

Date: November 24, 2022