Court File and Parties
Court File No.: CV-21-00670864-00CL Date: 2022-12-02 Superior Court of Justice - Ontario
Re: Commissionaires (Great Lakes), Plaintiff And: Benjamin Alexander and Benjamin C. Alexander & Associates, Defendants
Before: Cavanagh J.
Counsel: Andrew Lokan, for the Plaintiff (Moving Party) Thomas Mathews, for the Defendants (Responding Parties)
Heard: In Writing
Costs Endorsement
[1]
Background
The plaintiff Commissionaires (Great Lakes) commenced the within action on October 25, 2021 seeking declaratory relief in respect of computer files that it alleges were removed by the defendant Benjamin Alexander (its former Chief Operating Officer) between approximately March 2, 2021 and September 21, 2021 and other relief in respect of computer and physical files.
2In this action, the plaintiff brought a motion for relief that included:
a. an interim order requiring the defendants to return all computer files, emails, and electronic data previously stored on the plaintiff’s servers or previously or currently stored on other devices belonging to the plaintiff (defined in the Amended Notice of Motion as the “CGL Computer Files”);
b. an interim order requiring the defendants to provide any CGL physical files caused to be removed by the defendants between March 2, 2021 and September 21, 2021, any devices belonging to the plaintiff, including a laptop provided to Mr. Alexander to use for CGL purposes and the hard drives to the plaintiff,
c. an order, if required, providing for an independent supervising solicitor to review the CGL computer files, any CGL physical files, the laptop or any other devices belonging to the plaintiff to assess any claims of privilege with respect to them.
3In response to the motion, the defendants Benjamin Alexander and Benjamin C. Alexander & Associates (“BCAA”) maintained that the majority of files were personal in nature, privileged, or protected under a written agreement dated June 19, 2019 (the “Agreement”) by which the plaintiff licensed an enterprise security management system from the defendants for a 100 year fixed term. The Agreement provides that the “Intellectual Property” provided under the Agreement “is confidential and/or proprietary to BCAA and COMMISSIONAIRES shall safeguard the intellectual property accordingly”.
4BCAA alleges that the Agreement was breached by the plaintiff. BCAA commenced a separate proceeding on September 15, 2022 for remedies under the Agreement.
5On November 4, 2021, Mr. Alexander’s lawyers returned some documents, including “non-privileged documents from Mr. Alexander’s laptop”. On November 28, 2021, in an affidavit sworn in response to the plaintiff’s motion, Mr. Alexander provided a list of documents withheld. On December 1, 2021, I made an order, on consent, that the defendants would deliver an exact copy of all files on three hard drives (on which documents were stored) by the defendants by December 3, except for those on the laptop, and that the defendants would preserve all files and data on the laptop.
6A consent Order was made dated March 9, 2022 that appointed Julia Wilkes of Adair Crosby LLP as Independent Solicitor (“IS”). The consent Order provides for “counsel eyes only” review of claimed proprietary documents, IS review of privilege claims, and the return of the laptop. The IS determined in July 2022 that 292 documents were privileged, 15 required redaction, 668 were not privileged, and 41 could not be determined. On July 28, 2022, the IS provided a detailed list of the privileged claims and sensitive personal documents claims.
7On October 4, 2022, Mr. Alexander authorized release of the “counsel eyes only” documents, and by November 16 he had delivered the laptop and all non-privileged documents.
8The motion was adjourned on several occasions. At a case conference in the fall of 2022, the motion was scheduled to be heard on November 18, 2022.
9On November 16, 2022, counsel appeared before Osborne J. who made an endorsement confirming advice from counsel that the motion has been resolved. The hearing date was vacated. Justice Osborne directed that costs of the settled motion be determined by me following written submissions by the parties.
[10]
Positions of the Parties
The defendants ask for an order that costs of the motion be in the cause, relying upon the Agreement. Alternatively, the defendants claim costs of $39,322.38 on a substantial indemnity scale or, alternatively, costs of $26,317.49 on a partial indemnity scale.
11The defendants submit that the plaintiff was not successful on the motion because the hearing date was vacated on consent. The defendants submit that had the parties proceeded to a hearing of the motion, the defendants would have succeeded in showing that many of the files provided to the plaintiff were subject to litigation privilege. The defendants submit that the costs claimed by the plaintiff are “grossly disproportionate” and that costs incurred before March 9, 2022 are not relevant to the scope of the motion and should be excluded. The defendants submit that they acted in good faith by returning the files in their entirety to the plaintiff, with a sworn affidavit, to resolve the motion, notwithstanding BCAA’s strong objections to the methodology and findings of the IS.
12The defendants submit that by continuing to pursue the motion, the plaintiff breached a duty of good faith and unnecessarily prolonged the dispute. The defendants submit that, ultimately, the plaintiff obtained documents to which it is not entitled.
[13]
Entitlement to Costs
I do not accept that the defendants are entitled to costs of the motion based on the Agreement. The defendants have commenced a separate proceeding against the plaintiff for relief under the Agreement. The rights and obligations of the parties to the Agreement will be determined in that action.
14The defendants were not successful on the motion and they are not entitled to costs. The submissions made by the defendants in respect to costs appear to be those that should have been made if the defendants intended to oppose the relief sought in the motion. Where a motion is settled, a judge is not able to make findings on contentious matters in relation to the merits of the motion.
15The plaintiff seeks costs of this motion on the basis that it was wholly successful because the defendants returned the laptop and all non-privileged documents (as identified by the IS). The plaintiff seeks costs on a partial indemnity scale in the amount of $86,472.36 inclusive of fees, HST and disbursements plus the costs of the IS in the amount of 33,162.58 or, alternatively, two-thirds of this amount ($22,108.45) which, the plaintiff submits, is proportionate to determinations made by the IS in the plaintiff’s favour.
16The March 9, 2022 Order provides that “the Plaintiff shall pay the costs of the IIS in connection with the IRS appointment and review in the first instance, provided that such payment is without prejudice to any future claim for reimbursement or reapportionment”.
17The defendants accept that the motion was settled when they returned the laptop to the plaintiff and confirmed that all files, except those identified by the IS as being subject to privilege, were provided to the plaintiff. This was relief sought by the plaintiff on the motion. I am satisfied that for the purpose of determining costs, the plaintiff should be regarded as the successful party on its motion.
[18]
Quantum of Costs
With respect to the amount of costs claimed, I take into account that whether or not a motion was brought to compel documents to be returned to the plaintiff, a process was needed to identify documents that are properly subject to privilege or that contain sensitive personal information to which the plaintiff is not entitled. The parties negotiated in good faith to find a process to resolve these issues and agreed on the appointment of the IS and the terms of the March 9, 2022 Order.
19The March 9, 2022 Order provides that on receipt of the list of privileged or sensitive personal documents in the categories specified in paragraph 10 of the Order, the parties will review the list in good faith to determine whether they agree the documents on the list should or should not be disclosed. The Order provides that any remaining disputes may be addressed at the return of the motion. The Order provides, in paragraph 16:
- Once all disputed claims have been agreed by the parties or determined by the Court, and those documents that are agreed or determined by the Court to be not subject to disclosure on the motion have been permanently removed from the Laptop, the Defendants will return the Laptop to the Plaintiff, complete with hard drive.
20When the report of the IS was provided, it was open to the parties to accept the conclusions of the IS or object to them and have the issues determined on the motion. The plaintiff accepted the IS’s conclusions. The defendants did not accept them until they settled the motion. As a result of their decision not to accept the IS's conclusions from July 2022 until November 14, 2022, the plaintiff incurred expenses in proceeding with the motion.
21The difficulties presented to a judge who is asked to fix costs on a settled motion are manifest here. This is why, generally, costs should not be awarded when parties settle “except for costs”. See Muskala v. Sitarski, 2017 ONSC 2842. Because both sides seek costs, and Justice Osborne, after hearing submissions, directed that costs of the motion be decided, I do not follow this general approach.
22In my view, given that the parties acted in good faith to agree on a process for identification of the documents that should be produced and those that should not be produced (a process that was required whether a motion was brought or not), costs of negotiating this process or following it should not be awarded as costs of a contested motion.
23I have reviewed the plaintiff’s Costs Outline. The plaintiff seeks costs for services provided beginning in October 2021 including preparation of the motion record, drafting an Amended Notice of Motion, preparing Supplementary Motion Records dated February 8, 2022 and September 27, 2022 and Confidential Supplementary Motion Records. The plaintiff seeks costs for attending numerous case conferences and scheduling appointments, reviewing the responding affidavit evidence, legal research, drafting a factum, and preparation throughout.
24From the Costs Outline, I am not able to determine the amount of time spent by the plaintiff’s counsel at different times during the period from October 2021 until November 2022 when the motion was settled. I am not able to determine with precision the amount of time spent by counsel for the plaintiff in negotiating the terms of the March 9, 2022 Order, communicating internally and with their client, with counsel for the defendants, and with the IS concerning the review process, or evaluating the report of the IS.
25In Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634, the Court of Appeal for Ontario confirmed that, overall, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.
26In my view, it would be fair and reasonable for the defendants to pay a portion of the costs claimed by the plaintiff because a motion was necessary and because, after the IS’s report, the defendants continued to object to the conclusions reached by the IS until the motion was settled, which required the plaintiff to proceed toward a hearing of the motion.
27With this context, and having regard to the factors in rule 57.01 and the principle in Boucher to which I have referred, I fix fees to be paid by the defendants to the plaintiff in the amount of $35,000. I fix disbursements (excluding the amount paid by the plaintiff to the IS) in the amount of the non-taxable court filing fee of $229.
28The plaintiff and the defendants benefited from the work done by the IS. Ultimately, the parties accepted her conclusions. In my view, the costs of the IS should be shared equally. I order that the defendants reimburse the plaintiff for one-half of the amount paid to the IS ($33,162.68/2 = $16,581.34).
[29]
Disposition
I therefore fix costs to be paid by the defendants to the plaintiff in the amount of $56,360.34 comprised of (i) fees of $35,000, (ii) HST on fees of $4,550, (iii) disbursements (not including amounts paid to the IS) of $229, and (iv) one-half of the amount paid to the IS in the amount of $16,581.34.
Cavanagh J.
Date: December 2, 2022