Court File and Parties

COURT FILE NO.: CV-21-00003595-0000 DATE: 2023 03 06 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Healthplex Pharmacy Inc., Applicant AND: Premananda Panda and 2460783 Ontario Inc. c.o.b. as Maritime Pharmacy and Gurleen Khehra and Rinkal Patel and Tejal Patel, Respondents

BEFORE: Justice P. A. Daley

COUNSEL: S. Laubman and J. Stonehouse, for the Applicant J. S.G. Macdonald and R. Anmol, for the Respondents

HEARD: Heard in writing

COSTS ENDORSEMENT

[1] The respondents’ motion to stay or dismiss this application was largely unsuccessful as set out in my reasons for decision in Healthplex Pharmacy Inc. v. Premananda Panda et al., 2022 ONSC 6986.

[2] The applicant seeks its costs of the motion, and the respondents seek their costs thrown away arising from the applicant's decision to proceed with an application rather than an action.

[3] The applicant’s proceeding was commenced in the fall of 2021 and at the applicant’s request an early case management conference was scheduled. The applicant urged upon the court that as a result of an alleged public health risk relating to operation of a pharmacy run by the respondents an expedited and urgent injunction hearing date was required.

[4] In paragraph [10] of my reasons for decision, I outlined the chronology of events that occurred following the preliminary urgent case conference before Tzimas J, November 30, 2021.

[5] On the respondents' motion to stay or dismiss the application, they put forward several grounds, all of which were dismissed as outlined in my reasons for decision.

[6] One of the grounds advanced on behalf of the respondents was that the proceeding was improperly instituted as an application rather than an action, as the relief sought, and the evidentiary record adduced by the applicant were not compliant with the requirements of rule 14.5(3).

[7] In advance of the return of the respondents' motion, new counsel on behalf of the applicant conceded that the proceeding should be converted to an action. The applicant otherwise disputed all other grounds for the respondents' motion.

[8] Even without the concession of the applicant that the proceeding was improperly instituted, it was clear from the entirety of the record that the applicant had chosen an improper procedural route to advance its claims.

[9] The applicant seeks costs on a substantial indemnity basis in the amount of $66,070.51.

[10] The respondents seek their costs thrown away because of the improperly instituted proceeding in the all-inclusive amount of $69,300.25.

[11] It has been submitted on behalf of the applicant that it is premature at this stage to determine if any costs have been thrown away and whether the respondents are entitled to compensation in respect of such costs. In the event it is determined that costs have been thrown away, it is submitted that those costs be limited to the time devoted to responding to the applicant's claim for an injunction.

[12] I have determined that the question of costs thrown away resulting from the conversion of the application into an action are properly addressed now and should not be deferred to another court.

[13] The respondents were awarded costs thrown away on certain attendances because of needless adjournments arising from the applicant's misguided approach to this litigation. Those costs awards in the total sum of $5000 must be taken into account at this time.

[14] As to applicant's costs as claimed, I have concluded that they will be determined on a partial indemnity basis, as the offer to settle delivered by the applicant did not engage the provisions of rule 49. Furthermore, while the applicant was largely successful on this motion, it did not achieve full and complete success given its concession that the proceeding was improperly instituted as an application.

[15] Considering rule 57.01, on the face of the record there may be a significant amount of money at stake in this litigation.

[16] The issues in dispute on the motion were moderately complex, specifically in relation to the alleged nondisclosure of the settlement entered into with one of the parties.

[17] The motion was of a high degree of importance for the applicant as the viability of its action was at risk on this motion.

[18] While not determinative of a fair and reasonable award of costs, there are two circumstances which must be addressed relating to the conduct of the applicant in the way it has pursued the litigation.

[19] It is evident that the applicant's former solicitors attended at the respondents' place of business during this litigation, while the parties were represented by counsel, and engaged in conversation with the respondents' representative. Clearly this was improper and beyond the proper mandate of any counsel, recognizing their code of professional conduct.

[20] Furthermore, the litigation strategy adopted by the applicant at the outset of this proceeding involved an attempt to proceed with an elevated level of urgency based on alleged concerns about public safety risks related to the respondents' pharmacy practice. Four case conferences were held, with all counsel in attendance, to schedule the applicant's urgent injunction motion. As outlined in my decision, that so-called urgent injunction motion never proceeded due to the applicant's noncompliance with an established schedule. This court and counsel opposite were required to address the applicant's urgent injunction request on an expedited basis that at the end of the day appeared to be of questionable merit.

[21] Although these two sets of circumstances do not bear directly on the quantification of the costs that the applicant may be entitled to, they do constitute conduct on the part the applicant which should be considered as "any other matter relevant to the question of costs" as provided for in rule 57.01(1)(i).

[22] The applicant’s costs outline included costs incurred by the applicant in the amount of $3073.60, which relate to fees and disbursements charged by independent counsel retained on behalf of the applicant presumably to provide a second opinion as to the respondents' motion. In my view these fees and disbursements are not properly recoverable on an award of partial indemnity costs.

[23] Having regard to the hourly rates claimed by counsel for the applicant, they are significantly higher than the hourly rates of counsel for the respondent. Counsel for the applicant was called to the bar in 2005 and states his actual hourly rate at $875. Counsel for the respondents was called to the bar in 2004 and states his actual hourly rate $455. Working off those rates to determine reasonable partial indemnity costs, I have concluded that the respondents could not have reasonably expected that, if they were unsuccessful in this motion, fees would be calculated off the actual hourly rate of $875. The hourly rates quoted for associates on behalf of the applicant are similarly much higher than the hourly rate of the associate assisting counsel on behalf of the respondents. Overall, the hourly rates claimed by counsel on behalf of the applicant are excessively high given the dates of call of the lawyers involved.

[24] The applicant's previous counsel's fees, excluding fees of independent counsel retained for his opinion, set out stated hourly rates in keeping with the level of experience of the lawyers involved and represent hourly rates that the unsuccessful respondents would reasonably have expected to be exposed to.

[25] As to the applicant’s counsel's attendance on the motion, there does not appear to be a reasonable basis for the attendance of junior counsel and as such no fee should be allowed for that time incurred.

[26] Having considered submissions on behalf of the applicant and with a view to the factors in rule 57.01 and taking into account the other considerations discussed above, I have concluded that the applicant’s fair, reasonable and proportionate costs on a partial indemnity basis, inclusive of disbursements and applicable taxes is $50,000.

[27] The respondents' claim for costs thrown away includes significant time in respect to the preparation of affidavits, attendance on cross-examinations, and on case management conferences, as well as significant time spent in dealing with the applicant's claim for injunctive relief. As noted above, some costs thrown away were already awarded to the respondents in respect of certain attendances before the court. While some of the time spent over the course of the last year or so in dealing with the applicant's urgent application may still have value going forward in the reconstituted proceeding, it is difficult to accurately assess what legal time may be salvaged.

[28] I have concluded that an award of costs thrown away "on account" is most appropriate in the circumstances of this case: Mountell Investments Limited (Re); Sycor Technology Incorporated v. Kiaer.

[29] On considering the time spent and hourly rates of the respondents' counsel to date and in determining a fair and reasonable portion of the fees and disbursements as costs thrown away thus far in this litigation, I have concluded that a payment "on account" by the applicant to the credit of the respondents in the sum of $25,000, would be appropriate and that ultimately the trial judge or the final court which considers this matter may make any further adjustments in respect of the respondents' costs thrown away based on a more fulsome record.

[30] Thus, taking into consideration the award of costs thrown away "on account" payable by the applicant to the credit of respondents, the respondents shall pay to the applicant the net costs amount of $25,000 all-inclusive.

[31] An order shall issue accordingly.

Daley J. Dated: March 6, 2023