Court File and Parties
COURT FILE NO.: CV-09-0328-00; CV-09-0467-00; CV-10-0131-00; CV-15-0091-00 DATE: 2023-03-16
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: CV-09-0328-00; CV-09-0467-00; CV-10-0131-00 Cheadles LLP, Applicant v. Walter Zanewycz, Respondent
AND BETWEEN:
CV-15-0091-00 Walter Zanewycz, Applicant v. Cheadles LLP, Respondent
HEARD: In writing BEFORE: Fitzpatrick J.
COUNSEL: Daniel Reason, for Cheadles LLP Howard Manis, for Walter Zanewycz
Endorsement on Costs
[1] An order of December 9, 2022, of Fregeau J. referred back to me the issue of costs in respect of various motions and applications I heard in this matter in 2017 and 2018. Both parties were directed to make written submissions. I received those submissions on March 6, 2023.
[2] The applicant/respondent Cheadles LLP (Cheadles) seeks an order for substantial indemnity costs of $38,137.85. The respondent/applicant Walter Zanewycz (Walter) submits no costs should be awarded.
[3] There are a number of issues to resolve. They are:
- Are costs payable at all?
- If the answer to 1 is yes, should costs be awarded at a substantial indemnity rate? And
- What is the appropriate quantum for costs.
Issue 1: Are costs payable at all?
[4] I presided over a number of attendances of these parties on various applications and motions in 2017 and 2018. The parties provided me copies of the five different endorsements I made on those attendances.
[5] I did not adjudicate on the costs issue for these matters in 2018 because on July 23, 2018, Walter made a consumer proposal. This stayed the various matters that were before me. Ultimately the consumer proposal was voted down and Cheadles applied to place Walter in bankruptcy in February 2019.
[6] The last attendance I had on this matter was on July 26, 2018. Walter had made his consumer proposal three days earlier. He advised the court of same 15 minutes into the hearing. This is reflected in the endorsement. I also provided that if the stay was lifted any further adjudication would involve Cheadles’ cost claim for $38,137.85. In my view, the stay was lifted after the consumer proposal was voted down and the Cheadles cost claim was included in its bankruptcy application. Walter argues that the return of the three motions outstanding at July 26, 2018 is a condition precedent for my adjudicating on the costs claims that had been accumulating for the various attendances to that date. I disagree. The stay was lifted when Walter’s consumer proposal was voted down. In my view, the costs claim now before me was a proper subject of the bankruptcy application made by Cheadles. This was confirmed by the order of Fregeau J. of December 9, 2022, referring these costs claims back to me.
[7] I agree with the submissions of Cheadles that they are entitled to an award of costs for all the various proceedings before me up to and including the July 26, 2018 attendance. They had quantified those costs on a substantial indemnity basis at that time in an amount that is precisely the amount they seek on this attendance. I agree costs are payable by Walter to Cheadles. The current request for costs is not an abuse of process as Walter submits. Accordingly, I now move to a consideration of issues 2 and 3.
Issue 2: Should costs be awarded on a substantial indemnity rate?
[8] Cheadles argues costs should be awarded on a substantial indemnity basis because of the conduct of Walter in the various proceedings before me. Walter does not specifically address the level of costs in his submission.
[9] I have reviewed the various endorsements I made in this matter. It assists me in recalling that I agree with the submissions of Cheadles that costs should be awarded on a substantial indemnity basis. My endorsements, made contemporaneous to the events at issue, indicated the following;
- Walter was not focused in the materials he placed before the Court;
- Walter did not address relevant matters.
- Walter attempted to relitigate matters that had been previously litigated.
- Walter made unsubstantiated allegation of fraud, misrepresentation, professional misconduct, breach of contract and failure to account for trust funds against Cheadles;
- Walter put forward unrealistic claims that burdened the Court and Cheadles;
- Walter’s amendment application was an abuse of process.
[10] In my view, all of this conduct calls for costs to be ordered on a substantial indemnity basis.
[11] I note I took no account of Cheadles’ submissions concerning rulings of Newton J. in respect of matters between Walter and Cheadles. These attendances took place after mine and were irrelevant to any consideration I had to make on this matter.
Issue 3: The appropriate quantum of Costs on a substantial indemnity basis.
[12] To begin, I am of the view that in this matter, Cheadles can only seek costs in respect of one solicitor. That would be Mr. Reason. I am not prepared to order Walter to pay the costs of Harry Van Barvel, Rob Danten, Aiden Nelms and Shannon Davies. This amounts to $8,789.40 of the $38,137.85 claimed.
[13] Ms. Davies is a law clerk. In my view, clerk time in matters like this is in the nature of overhead and is compensated by the hourly rate of the solicitor for whom costs are awarded. In that regard Mr. Reason’s rates of $475 and $485 an hour is very reasonable for a solicitor of some 25 years experience when these matters were heard in 2017 and 2018.
[14] There were five solicitor and client accounts submitted in the materials in support of the bill of costs. A review of these bills was of assistance in determining what is the appropriate quantum that Walter’s estate in bankruptcy should pay Cheadles.
[15] In the bill of costs on this matter the total sought for the work of Mr. Reason on a substantial indemnity rate (90%) is $23,811.75. My review of the five accounts totaling up all of Mr. Reason’s work as reflected in the accounts shows he billed Cheadles on a solicitor and his own client basis $36,856.00. This was made up as follows;
| Account date | Amount |
|---|---|
| May 25/15 | $14,772.50 |
| Aug 25/17 | $6,697.50 |
| Oct 24/17 | $5,510.00 |
| Feb 14/18 | $7,645.00 |
| May 4/18 | $2,182.50 |
| Total | $36,856.00 |
[16] Walter submits that some of the quantum sought is for work that was not before me. He asserts that crossed out portions of the account of May 25 2017, were carried forward to the amounts sought on this attendance. I disagree with the submission regarding the May 25, 2017 account.
[17] My review of the May 25, 2017, account shows that Mr. Reason’s time on that bill totaled $14,772.50. However, the time spent on the non-crossed out portion of the bill amounted to only $2,232.50. Rough math tells me that Mr. Reason has not sought payment for time on the crossed out portion of the May 25, 2017 account in the amounts he seeks now on a substantial indemnity basis. $23,811.75 is not 90% of $36,856.00.
[18] Further, having reviewed the actual accounts particularly those of August 25, 2017, October 24, 2017 and February 14, 2018 it appears there are some entries for Mr. Reason’s work that relate to Divisional Court matters. It appears to me the entirety of the work Mr. Reason did as for the October 24, 2017 related to matters Divisional Court matters.
[19] Some reduction of the $23,811.75 in substantial indemnity costs sought for Mr. Reason’s work is warranted.
[20] There was no issue raised with the disbursement of $1,142.83 sought.
[21] In the circumstances, considering the nature of the matters before me, the principle of indemnity, the amount that Walter should expect to pay as an unsuccessful party, the fact that Cheadles was successful on the matters before me and Walter’s conduct that unduly lengthened the proceedings, I find that the appropriate quantum to award on this matter is $18,000.00 inclusive disbursements plus HST.
[22] Order to go accordingly.
“original signed by” The Hon. Mr. Justice F.B. Fitzpatrick DATE: March 16, 2023