Court File and Parties

COURT FILE NO.: CV-21-662346 AND: Kalair v. Khan COURT FILE NO: CV-21-679056 AND: Panchbhaya v. Siddiqui COURT FILE NO.: CV-21-661270 AND: Panchbhaya v. Central 1 Credit Union COURT FILE NO.: CV-21-673261

2023 ONSC 1525 DATE: 20230306

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: MULTICULTURAL CONSULTANCY CANADA INC., UN GROUP INC., YUSUF PANCHBHAYA and OMAR KALAIR, Plaintiffs

AND:

CENTRAL 1 CREDIT UNION, MOYA FINANCIAL CREDIT UNION, WILLIAM CALDER, LINDA JEFFERY, STEPHEN ELLIS, VICKIE SACCO, SUZANNE FISHER, SANDRA BARROW, PETER COLLINS, JENS LOHMUELLER, ANDRE SCHROER, ART CHAMBERLAIN, DIRK HAACK, DON ROLFE, CHARLES MILNE, PETER UFFELMANN, DAN O’CONNOR, DANIEL A. BURNS, JOHANNE CHARBONNEAU, FORREST DRINNAN, TERRY ENNS, SEAN JACKSON, SCOTT KENNEDY, DOUG LANG, EMMETT MCGRATH, J. PHILIP MORE, PATRICE PRATT, TRACY REDIES, DAVE SITARAM, JACK SMIT, TAMARA VROOMAN, FRED WAGNER, JACK WHITTAKER, OFFICE OF THE SUPERINTENDENT OF FINANCIAL INSTITUTIONS, FINANCIAL SERVICES REGULATORY AUTHORITY OF ONTARIO, BC FINANCIAL SERVICES AUTHORITY, BORDEN LADNER GERVAIS LLP, GRANT THORNTON LLP CANADA, MARK THOMSON, UM FINANCIAL INC., AYA FINANCIAL INC., ABDUSSAMAD KHAN, REHAN SAEED, TALAL CHEHAB and KALIM KHAN, Defendants

AND RE: OMAR KALAIR, Plaintiff

AND:

BASIL KHAN, Defendant

AND RE: YUSUF PANCHBHAYA, Plaintiff

AND:

SHAHZAD SIDDIQUI, Defendant

AND RE: IMAM YUSUF PANCHPBHAYA

AND:

CENTRAL 1 CREDIT UNION, CREDIT UNION CRENTRAL, CUCO COOPERATIVE ASSOCIATION, GRANT THORNTON LLP, 3734366 CANADA INC., GRANT THORNTON LIMITED, GRANT THORNTON CORPORATE FINANCE INC., GRANT THORNTON CONSULTING, GRANT THORNTON INTERNATIONAL LIMITED, THORNTON GROUT FINNIGAN LLP, MARK THOMSON and MICHAEL CREBER, Defendants

BEFORE: W.D. Black J.

COUNSEL: J. Richard Forget, for the Plaintiffs in CV-21-662346 Thomas M. Sieber & Jordan Palmer, for the Plaintiffs in CV-21-673261-00CP Neil A. Rabinovitch & Kristin AuCoin, for the Defendant Grant Thornton LLP Canada Deepshikha Dutt & Rabita Sharfuddin, for the Defendant Central 1 Credit Union and Directors Philip Underwood, for the Defendant Financial Services Regulatory Authority of Ontario Danny Urquhart, for the Defendant BC Financial Services Authority Stewart Phillips & Alyson E. Sutton, for the Defendant Office of the Superintendent of Financial Institutions Susan M. Sack, for the Defendants Talal Chehab & Kalim Khan, Basil Khan and Shahzad Siddiqui

HEARD: In Writing

Costs ENDORSEMENT

Overview

[1] On November 7-9, 2022, I heard motions brought by all of the corporate defendants in these cases and a number of the individual defendants, all seeking a dismissal of these claims.

[2] By endorsement dated December 13, 2022, I granted these motions, and dismissed all claims.

[3] I did so in strong terms.

[4] I found that the claims were statute-barred, were subject to res judicata and issue estoppel, were abuses of process and constituted collateral attacks.

[5] I also found that the claims were devoid of merit, were substantially repetitive of earlier unsuccessful versions of the same alleged causes of action, and were an unjustified and unacceptable drain on the parties’ resources and the overtaxed resources of this Court.

[6] As a result, I found that the moving parties are all entitled to their costs of these motions, and invited argument as to whether such costs should be on a scale higher than partial indemnity.

[7] The parties proceeded to deliver written costs submission. All defendants who filed costs submissions seek costs on a full indemnity scale. The plaintiffs appear to accept their obligation to pay costs, but suggest a lower scale than full indemnity.

[8] This endorsement sets out my findings and conclusions on costs.

Various Factors Considered

[9] Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that in exercising my discretion under section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, I may consider a number of factors, including the result in the proceeding, any offers to settle, the complexity of the proceeding, the importance of the issues, conduct of any party that lengthened the proceeding unnecessarily, any improper or vexatious steps, and any other matters relevant to the question of costs.

[10] The guiding principle in determining costs is that the amount awarded must be reasonable in the circumstances (Davies v. Clarington (Municipality), 2009 ONCA 722).

[11] As noted, the plaintiffs in each action concede that the defendants are entitled to their costs. They contest, among other issues, the scale of costs on which costs should be awarded. They argue, based on such decisions as that of Wilcox J. in Mansteel v. Katebian et al., 2022 ONSC 731, that the correct scale of costs which the plaintiffs should be paying in this case should be no more than substantial indemnity, noting that that scale is appropriate even where the Court is faced with actions that are abusive, vexatious, or an abuse of process.

[12] While implicitly acknowledging in those submissions that a substantial indemnity scale would be appropriate here, the plaintiffs point out that, as confirmed in Mansteel, even costs elevated to substantial indemnity levels should be seen as the exception and not the norm.

[13] Again as noted, the defendants each seek costs on a full indemnity scale.

[14] I acknowledge that costs on the full indemnity scale, like substantial indemnity costs but even more so, should be seen as exceptional and rare. In the words of Healey J. in NDrive, Navigation Systems v. Zhou, 2021 ONSC 7772 (affirmed, 2022 ONCA 602):

“Costs on the highest scale being sought by the NDrive parties requires particularly egregious conduct that goes beyond that which would merit an award of substantial indemnity costs….Full indemnity costs are to be awarded rarely and with great caution. In cases in which full indemnity costs have been ordered, the “overriding common thread….is the strong sentiment that the matter, or the issue at least, should never have been brought before the court in the first place, leading to a reaction that the innocent party should not have had to pay a penny toward the cost of litigation.”

Decisions and Reasons re Scale of Costs

[15] Recognizing this very stringent and exacting test, and the related notion that resort to the full indemnity scale should be exceedingly rare, I nonetheless find that it is the appropriate scale for the circumstances of this case.

[16] By reference to the language cited in Healey J.’s decision in NDrive, it is my view that these matters should never have been brought to the court in the first place. More to the point, they certainly should not have been brought to the court for the third time. In other words, as discussed in my December 13, 2022 endorsement, the plaintiffs had been told by this court (and the Court of Appeal for Ontario, and the Human Rights Tribunal) on repeated occasions, including in the dismissal of two earlier and almost identical versions of these same claims, that they were without merit and could not proceed.

[17] What is so exceptional about this case, and what puts it in my view into the sparingly used category of full indemnity costs, is that the plaintiffs have been told, in no uncertain terms, and more than once, that these claims cannot succeed.

[18] By ignoring that repeated and pointed conclusion, I find that the plaintiffs must pay the price on the highest scale.

[19] Evidence of the astonishing extent to which the plaintiffs were tone deaf to the past findings of this and other courts can be found in an offer made by the plaintiffs just a few days before the hearing of the motions.

[20] That offer, now disclosed to me for purposes of my consideration of costs, was that the plaintiffs would settle on the basis that all past Court Orders in the long history of this matter, including the bankruptcies of UM Financial and UM Capital, would be undone. Mr. Kalair on behalf of the plaintiffs advised, in a November 4, 2022 email (three days before the hearing of the motions commenced) that the plaintiffs would insist, in order to settle, that:

“UM be left in the same position it was prior to its receivership in 2011 and that Central acts pursuant to the signed contracts. This can be achieved by overturning previous rulings, restoring the faith of our community in Islamic financing options, and by Central honouring its signed funding facility” and thereby honouring “its $49 million funding facility signed term sheet with UM.”

[21] Separate and apart from, and in addition to the plaintiff’s resolute insistence on ignoring repeated judicial findings and purporting to insist on unrealistic outcomes, there are other reasons why the conduct of the plaintiffs warrants an extreme costs award.

[22] The plaintiffs made wholly unsubstantiated allegations of impropriety against various defendants, including defendant professionals.

[23] Beyond the extensive delay and waste of resources associated with resurrecting the same set of claims over and over again, the plaintiffs have repeatedly delayed the progress of this iteration of the claims. Evidence of this delay – which example is a small subset of the delaying tactics employed by the plaintiffs within these proceedings, can be seen in the form of the plaintiffs’ conduct in relation to the timing of the hearing of these motions. As described in my December 13, 2022 endorsement, even in the face of an Order that the November dates would be peremptory against them, which Order was made as a result of their firing of counsel late in the day, the plaintiffs nonetheless made an 11th hour attempt to adjourn the proceedings further, delivering an email requesting that further delay two hours before the start of the hearing, and then repeating that request on each of the three days on which the motion was heard.

[24] The proceedings at issue included claims against the defendants in excess of $50,000,000.00 and, as noted in part above, included claims of conspiracy, bad faith conduct, and a “fraudulent scheme.”

[25] Such allegations, particularly given the amounts claimed had to be taken seriously by the defendants, notwithstanding that essentially the same claims had previously been dismissed by the court.

[26] The plaintiffs, or some of them, have failed to pay substantial costs awards owing by them from a past incarnation of this claim, and in the midst of the motions before me the individual(s) owing those outstanding costs sought to substitute other parties for themselves, presumably with a view to avoiding further costs obligations.

[27] I have also learned that virtually all of the corporate defendants made offers to the plaintiffs, formal and informal, which, if the plaintiffs had accepted such offers, would have left the plaintiffs in a better position than that in which they now find themselves.

[28] Apart from arguing that the scale of costs should be lower than full indemnity given the exceptionality of such an award, the plaintiffs also argue that there is overlap and repetition among the defendants’ collective submissions, and that the plaintiffs’ impecuniosity should temper the award I make.

[29] As discussed below, I have considered, in making the awards that I set out below, the extent to which one defendant took the lead in making submissions. In my view, by riding on the coattails of those submissions to varying degrees, the other defendants have limited the extent of repetition of arguments, and in fact have thereby been relatively efficient in their arguments.

[30] While it may be that the plaintiffs, or some of them, are impecunious, there is no clear evidence before me on that score, and I note that there are lingering and unresolved allegations that some plaintiffs have diverted certain precious metals to offshore locations. While I also have no clear evidence in that regard, I find no reason to modify what I find to be appropriate costs awards on the basis of potentially controversial claims about the state of the plaintiffs’ finances.

[31] For all of these reasons, and for the reasons discussed in my December 13, 2022 endorsement, the Court must send a stern message to these plaintiffs, not only that they time has come to abandon these proceedings, but that the plaintiffs must bear responsibility, by way of costs, for the extreme extent to which their conduct, and their insistence in repeatedly resurrecting these claims, has wasted time and resources.

[32] I find that the defendants who have made costs submissions are each entitled to full indemnity costs.

[33] In terms of the amounts owing, my starting point for the analysis is the costs claimed by GT.

[34] GT took the lead in the submissions before me, and various other parties adopted various of GT’s arguments in the motions. These arguments were clear and cogent, and, both in their own right and because they were adopted without the need for repetition by other parties, led to considerable efficiencies.

[35] As a result, the costs sought by GT are, appropriately in my view, in a somewhat higher amount than those of other defendants.

[36] Indeed, in keeping with the approach taken at the hearing of the motions, other defendants to a large extent embraced and echoed GT’s costs submissions.

Amounts Awarded

[37] Using GT’s costs claim as the “high water mark”, I award costs to the defendants in the following amounts (allocated as indicated to specific actions in which the defendants were named and in which these motions were brought):

a. I accept GT’s costs claims and its allocation of 60% of its costs to the Third Kalair Claim and 40% of its costs to the Class Action (as defined in my December 13, 2022 endorsement). I award GT its costs of $138,632.44 in the Third Kalair Claim and $88,706.44 in the Class Action; b. In the case of Central 1, I award costs of $59,575.00 in the Third Kalair Claim and $34,335.00 in the Class Action; c. For FSRAO, I award a total of $25,707.50; d. For OSFI, I award a total of $26,183.00; e. The costs claimed by BCFSA - $65,823.64 – seem disproportionate to the costs claims of the other regulators (FSRAO and OSFI). While I do not doubt that BCFSA’s counsel spent that time claimed, and while its counsel’s submissions were helpful. I find that the costs claimed by BCFSA should be in keeping with those of the other regulators, and I award $27,500.00; f. For Talal Chehab and Kalim Khan, I award $35,995.27; g. For Basil Khan (in the separate claim against him) I award $28,724.37.

Conclusion

[38] Based on their stated circumstances and their track record in these matters, I have little confidence that the plaintiffs will pay the costs I am ordering herein. Nonetheless I find that these costs orders are warranted in the exceptional circumstances of this matter.

[39] As stated in my December 13, 2022 endorsement, it is time that these claims be brought to an end.

W.D. Black J. Date: March 6, 2023