Court File and Parties

COURT FILE NO.: CV-21-667944 DATE: 20220204 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: 1162268 ONTARIO LIMITED o/a NEW YORKER DELI Plaintiff

AND: MOHAMMED SHOROF UDDIN, SIVAPRAGASAM SIVANESWARAN and 12826046 CANADA INC. o/a UNCLE SID'S DELI, Defendants

BEFORE: S.F. Dunphy J.

COUNSEL: Timothy M. Duggan and Spencer F. O’Toole, for the Plaintiff Joseph Figliomeni, Margarita Dvorkina and Darren Frank, for the Defendants

HEARD at Toronto: In Writing

REASONS FOR DECISION - COSTS

[1] I heard and released my decision dismissing the plaintiff’s motion for an injunction on September 23, 2021. There can be few greater testaments to the persistence of hope in this troubled world than the frequency with which judges release decisions reserving the matter of costs while urging the parties to resolve the question through discussion despite the vanishingly rare occasions where this actually results in a resolution. This was one such occasion. The parties were unable to resolve either the case or the quantum of costs to be awarded. They each uploaded their written submissions to Caselines in accordance with my directions and, having reviewed those submissions, I am now rendering my decision on the matter of costs.

[2] In disposing of the injunction application, I found that the low hurdle of “serious issue to be tried” had been cleared by the plaintiff but the “strong prima facie case” hurdle necessary for the mandatory injunction sought had not. I also found that neither the balance of convenience nor the adequacy of damages as a remedy test favoured the granting of an injunction. Satisfying none of the three criteria for the issuance of the injunction sought, the motion was dismissed.

[3] As the successful party, the responding defendants are presumptively entitled to their costs. Every presumption is of course rebuttable and the moving party seeks to do so in this case arguing that the defendants’ cross-motion (seeking various oppression remedy relief) was also not successful. The plaintiff suggested that costs ought to be borne by the parties or, in the alternative, to be in the cause given this circumstance of allegedly divided success.

[4] I cannot agree with that submission. Success was by no means divided. The respondents were decisively successful. This was not a close-run thing. The defendants won and won decisively. The defendants’ cross-motion for relief was neither argued nor determined before me. The non-decision in that case cannot be equated with divided success. At the highest, the moving party defendants accepted my suggestion at the opening of the hearing that the relief sought (the appointment of Monitor over the plaintiff corporation) offered only the prospect of a pyrrhic victory given the likelihood that the patient (in this case, the plaintiff corporation) would likely expire on the operating table given the modest scale of the business involved and the costs likely to be entailed were I to accede to the request to appoint a Monitor. Further, when the matter was scheduled by Myers J. on September 18, 2021, he pointedly did not schedule the cross-motion of the defendants for a hearing leaving the matter of whether or not to hear the proposed cross-motion to my discretion. In the result, the defendants did not press the issue and the hearing proceeded without regard to the cross-motion.

[5] The defendants are plainly entitled to their costs. The issues to be determined are the scale of those costs and their amount and whether costs ought to be payable by a third-party in this case.

[6] The successful defendants incurred “actual” costs of almost $45,000 based on which a partial indemnity claim of $27,500 is advanced in the alternative with the primary claim being for substantial indemnity costs of $35,000 payable by the plaintiff’s principal.

[7] The defendants claim for substantial indemnity costs is founded primarily upon the conduct of the plaintiff, in particular the refusal of plaintiff’s counsel to offer reasonable cooperation in preparing this matter for a hearing and the refusal of the plaintiff to produce its witnesses for cross-examination despite the explicit timetable for doing so ordered by Myers J. at the case conference of September 18, 2021.

[8] I am persuaded by the defendants’ arguments on this point. Injunctions can be among the most expensive and stressful experiences in the litigation world. Timelines are compressed, the pressures are enormous. It is a given that the clients are at loggerheads – that is why injunctions are sought. There is the prospect of significant and potentially irreparable harm looming for which urgent relief is sought. In such cases, a high degree of civility and cooperation between counsel is required if a fair hearing is to be held in the limited time available. While assessing degrees of fault by examining tit-for-tat email exchanges after the fact is a difficult matter, the lack of a reasonable and cooperative approach on the plaintiff’s part to preparing its own injunction for a timely hearing is glaring. In particular, the failure to produce its own affiants for cross-examination in the teeth of an explicit judicially-ordered timetable is not to be lightly overlooked. I am of the view that substantial indemnity costs are justified in this case.

[9] The rates charged by both parties to their own clients were broadly similar. The plaintiff takes issue with the number of hours claimed by the defendants by reason of the presence of three counsel for much of the proceeding. I note that the plaintiff’s own Costs Outline is manifestly incomplete as it contains no indication of the hours or rates of his own junior counsel or his clerks or the actual amounts actually charged to his client. I am not prepared to second guess in hindsight the strategic choices made by defendants’ counsel in facing a time-intensive urgent injunction application. There is a lot of work to be done and sometimes having all hands on deck and present to hear a cross-examination, for example, is more efficient than trying to fill them in after the fact for the purposes of whatever part of the research and drafting has been allocated to them. I have enough experience in injunctions from both sides of the bench to observe that the hours, rates and amounts claimed by the defendants are broadly reasonable in circumstances such as these.

[10] The defendants shall be awarded their substantial indemnity costs in the amount of $35,000, inclusive of HST and disbursements.

[11] The defendants sought an order that the principal of the plaintiff corporation should be personally liable for the costs to be paid. This was premised on her status as the “prime mover” in the litigation and the fact that the defendants are also minority shareholders in the plaintiff corporation and thus will be indirectly “paying” a portion of their own costs.

[12] In my view, no order for personal liability is appropriate in this case. The corporate remedies of the defendants as minority shareholders have not yet been decided and it will certainly be open to any judge determining that case to take into account legal expenses incurred by the plaintiff corporation in taking up arms against its minority shareholders, including the costs awarded here.

[13] The plaintiff corporation is therefore ordered to pay the defendants’ costs on the motion fixed at $35,000 all inclusive.

S.F. Dunphy J.

Date: February 4, 2022