Court File and Parties

COURT FILE NO.: CV-18-00077664-0000 DATE: 2023-04-28 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Andreas Foustanellas, Spiros Foustanellas, Evangelia Foustanellas and Alexandros Foustanellas, Plaintiffs AND: Norma Orphanos and Felicia Georgina Zigiris, Defendants

BEFORE: Associate Justice M. Fortier

COUNSEL: J.F. Lalonde, for the Plaintiffs Stephen Cavanagh, for the Defendant/Moving Party, Georgina Zigiris

HEARD: December 20, 2022

Endorsement

Introduction

[1] This motion date was originally scheduled by the Defendant Felicia Georgina Zigiris for an order for a further and better affidavit of documents from the Plaintiffs. However, prior to the hearing of the motion, the Plaintiffs discontinued the action against the Defendant Zigiris.

[2] This is therefore a motion by the Defendant Felicia Georgina Zigiris (the Defendant or “Ms. Zigiris”) pursuant to Rule 23.05(1) for an order for costs of this action following service of the Notice of Discontinuance. Ms. Zigiris seeks costs on a substantial indemnity basis because of the allegations of conspiracy against her.

Background

[3] The Plaintiffs are family members. Andreas Foustanellas, Spiros Foustanellas and Alexandros Foustanellas are brothers, and Evangelina Foustanellas is their mother.

[4] The Defendants Norma Orphanos (“Ms. Orphanos”) and Felicia Georgina Zigiris (“Ms. Zigiris”) are sisters. Ms. Zigiris is Alexandros Foustanellas’ former spouse.

[5] The Plaintiffs brought an action in 2018 against the Defendants, alleging that Ms. Zigiris conspired with Ms. Orphanos to obtain the confidential personal health information of the Plaintiffs, to use the information in a legal action that Ms. Zigiris had commenced against the Plaintiffs. The Plaintiffs allege that Ms. Zigiris’ purpose was to cause harm to the Plaintiffs and their families.

[6] The Plaintiffs’ personal health information was accessed by Ms. Orphanos in January 2018 when she was employed at The Ottawa Hospital. Ms. Orphanos lost her job as a result. Both defendants deny that Ms. Orphanos provided the health records to Ms. Zigiris.

[7] Ms. Zigiris was originally represented by Philip Augustine until Mr. Augustine joined another law firm and a conflict of interest arose. Stephen Cavanagh was retained to defend Ms. Zigiris on July 20, 2022. The action had not gone beyond the pleadings stage at that point.

[8] Upon a review of the file, Mr. Cavanagh determined that only two documents were listed in three of the Plaintiffs’ affidavits of documents – the affidavit of documents of the fourth plaintiff, Spiros Foustanellas, contained two documents and an audio recording. Mr. Cavanagh sought further productions from the Plaintiffs prior to proceeding to examinations for discovery.

[9] Between July 22, 2022 and November 8, 2022, counsel for the parties exchanged several emails about the scheduling of a motion for the production of additional documents and the potential for settlement of the action. A motion was scheduled for December 20, 2022, for a further and better affidavit of documents as no resolution was reached.

[10] On November 8, 2022, the action between the Plaintiffs and Ms. Orphanos was settled and the Plaintiffs discontinued the action against Ms. Zigiris.

[11] Ms. Zigiris is seeking her costs of the action on a substantial indemnity basis because of the serious allegations made against her in the Statement of Claim.

[12] The Plaintiffs oppose the motion, arguing that Ms. Zigiris should have accepted their offer to settle the issue of costs. The Plaintiffs are seeking their costs of this motion.

The Law and Analysis

The Law

[13] Rule 23.05 provides as follows:

23.05 (1) If all or part of an action is discontinued, any party to the action may, within thirty days after the action is discontinued, make a motion respecting the costs of the action. [1]

[14] The principles that the court is to consider on a motion for costs under Rule 23.05 are set out in the decision of Master R. Dash in Enerworks Inc. v. Glenbarra Energy Solutions Inc. [2] and can be summarized as follows:

a. Is there some evidence that “discloses a bona fide cause of action, that is not frivolous, and vexatious and which the plaintiff had some justification to commence, having regard to the conduct of the defendant”? [3] b. Commencing an action without a bona fide claim could be considered as a step in the proceeding that is improper, vexatious or unnecessary. [4] c. In most cases, the defendant would be entitled to costs if the plaintiff commenced the action without justification and bona fides. [5] d. The court has complete discretion to fashion a costs award that is in the interests of justice. [6] e. When a plaintiff commences an action in the event that liability might later be proven, and then elects to discontinue the claim, the defendant can be considered as being successful in the action even though there has been no decision on the merits The plaintiff should in most circumstances be responsible for the costs of the defendant that has been let out of the action. [7] f. Where unsubstantiated allegations of fraud or “improper conduct seriously prejudicial to the character or reputation of a party” are advanced without merit, the court may, depending on the circumstances, award costs on a substantial indemnity scale. Whether the allegations were advances recklessly or with an improper motive are important considerations. [8]

Analysis

i- Bona fides

[15] In this action, the Plaintiffs claimed damages against the defendants in the sum of $800,000.00 for “intentional infliction of mental distress”, “intrusion upon seclusion”, and “civil conspiracy”. The Plaintiffs also sought punitive, aggravated, and exemplary damages for the alleged malicious conduct.

[16] In their Statement of Claim, the Plaintiffs alleged that Ms. Zigiris conspired with Ms. Orphanos to obtain the confidential personal health information of the Plaintiffs and that the information was “intended to assist the legal claims of the defendant Felicia Zigiris against the Foustanellas and to cause the plaintiffs distress, humiliation and anguish.” [9] Further, the Plaintiffs describe this conspiracy as one where the Defendants’ predominant purpose and predominate concern were to harm the plaintiffs and their families.

[17] Ms. Zigiris argues that the proceeding against her is a vendetta by her ex-husband and his family based on completely unsubstantiated allegations of improper conduct.

[18] The Plaintiffs argue that they were in fact the victims and were justified in commencing the action against Ms. Zigiris based on the evidence they had at the time. The Plaintiffs contend that it was understandable that there would be a suspicion on the part of the plaintiffs that the accessing of their medical records was a concerted effort on the part of the Defendants to try to embarrass and humiliate the Plaintiffs.

[19] The only evidence produced by the Plaintiffs in support of their claim against Ms. Zigiris are two letters each, and in the case of Spiros Foustanellas, an audio recording “taken by Foustanellas”.

[20] The first letter listed in each of the Plaintiffs’ affidavits of documents is a letter from A. Lavigne, Privacy Office with The Ottawa Hospital, dated July 10, 2018. In the letter, Ms. Lavigne notifies each plaintiff of the privacy breach. The only mention of Ms. Zigiris is as Ms. Orphanos’ sister and her relationship to the individual Plaintiff. Each letter confirms that the personal health information was not disclosed to anyone. For example, paragraph 2 of the letter from Ms. Lavigne to Spiros Foustanellas states as follows:

Our audit shows that Ms. Orphanos accessed your file on January 28, 2018. In the course of our investigation, we asked Ms. Orphanos why she accessed your file. She advised that she knew you as her sister’s (Felicia) ex-husband’s brother, and that she accessed your file for her own purposes. We have no information to suggest that she copied your personal health information, or disclosed it to anyone. In fact, Ms. Orphanos confirmed that she did not. TOH dealt with Ms. Orphanos swiftly and appropriately. She is no longer employed by TOH. [10]

[21] The second letter produced by the Plaintiffs is a letter to Ms. Lavigne from the Information and Privacy Commissioner of Ontario, dated January 4, 2019, with respect to the breaches. There is no mention of Ms. Zigiris nor that the health information was disclosed to her.

[22] In response to the motion, the Plaintiffs tendered two affidavits of Andrew Donaldson, a lawyer with Mr. Lalonde’s (counsel for the Plaintiffs) law firm. The first affidavit is dated December 14, 2022, and a supplementary affidavit is dated December 19, 2022.

[23] The audio recording referred to in Spiros Fustanellas’ affidavit of documents was produced on the motion and attached to Mr. Donaldson’s supplementary affidavit of December 19, 2022.

[24] A preliminary issue arose with respect to the admissibility of two paragraphs of Mr. Donaldson’s affidavits related to the audio recording.

[25] The Defendant argued that paragraph 6 of the December 14, 2022 affidavit (“paragraph 6”) and paragraph 4 of the December 19, 2022 affidavit (“paragraph 4”), both referring to the audio recording, are inadmissible and should be struck. The objections do not relate to the paragraph attaching the audio recording itself.

[26] For the reasons that follow, I agree that the paragraphs are inadmissible and should be struck.

[27] In paragraph 6, Mr. Donaldson expresses his opinion and argues that “the plaintiff Spiros Foustanellas produced an audio recording containing arguable evidence of the two defendants conspiring with one another to negatively impact the [sic][plaintiffs]”.

[28] In paragraph 4 of Mr. Donaldson’s later affidavit, he provides a brief excerpt from the audio recording, having been informed by J.P. Lalonde, counsel for the Plaintiffs, that the recording contains a discussion between Spiros Foustanellas and someone called “Jeff”. Jeff is allegedly Ms. Orphanos’ husband.

[29] There are two issues with these paragraphs:

a. Mr. Lalonde is arguing this motion on behalf of the Plaintiffs. The evidence on which the Plaintiffs’ arguments rest is Mr. Donaldson’s stated belief that there is arguable evidence to support the Plaintiffs’ case. There is a prohibition against appearing on the affidavit of a member of one’s own law firm where the information and belief of the deposing lawyer is in reality that of the lawyer appearing to argue the motion. [11] b. In addition, the evidence being tendered by Mr. Donaldson in these paragraphs contain opinion and argument and are therefore improper. As held by Master MacLeod (as he was then) in Glasjam Investments Ltd. v Freedman: [12]

35 … An affidavit is supposed to be sworn evidence of facts within the knowledge of the deponent. Opinion and argument are not facts but conclusions and unless the witness is tendered as an expert then the witnesses’ opinion is neither admissible nor probative of anything. Having a law clerk swear that “I am further advised by Mr. R and verily believe it to be true, that it is likely that the Notice ... has been used as a scheme” is simply improper. Even had Mr. R. sworn the affidavit, the court would not be interested in his opinion. Counsel may properly ask the court to reach a conclusion based on facts properly before the court but the fact that counsel believes the conduct of the other party to be improper is neither here nor there. [13]

[30] Part of the audio recording was played during the hearing of the motion. I have since had the opportunity to listen to the entire audio recording.

[31] The audio recording is not of the Defendants. Rather, the audio recording is allegedly a discussion between Spiros Foustanellas and Ms. Orphanos’ husband. There is only one mention of Ms. Zigiris specifically, and that relates to Mr. Foustanellas’ suspicion that “Felicia wants to “fuck” my mother over when she passes”.

[32] In my view, there is no evidence that discloses a bona fide cause of action to justify the commencement of the action against Ms. Zigiris.

[33] The claim against Ms. Zigiris is based on letters that do not implicate Ms. Zigiris, and an audio recording between one of the Plaintiffs and a non-party. In my opinion, the claim was commenced based on the Plaintiffs’ suspicion that Ms. Zigiris conspired with Ms. Orphanos to obtain the confidential personal health information of the Plaintiffs in a concerted effort to harm the Plaintiffs and their families. It is clearly insufficient to allege improper or dishonest conduct based on suspicion or speculation. [14]

[34] For these reasons, I find that the Defendant is entitled to her costs of this action. [15]

ii- Scale of costs

[35] The scale of costs to which Ms. Zigiris is entitled is the next issue to be determined.

[36] Ms. Zigiris is seeking her costs on a substantial indemnity scale in the sum of $12,136.48 inclusive of HST and disbursements for the action and the motion. Ms. Zigiris argues that she is entitled to costs on a substantial indemnity scale because the Plaintiffs made serious allegations of conspiracy against her, which are allegations without merit.

[37] The Plaintiffs are seeking their costs of this motion on a substantial indemnity scale in the sum of $5,141.53 inclusive of HST and disbursements, arguing that this motion was unnecessary as they had offered to settle the issue of costs of the action on November 11, 2022, for the all-inclusive sum of $4,500.00. The offer was not accepted.

[38] The Plaintiffs contend that their offer to pay the sum $4,500.00 to Ms. Zigiris for her costs was reasonable as the action had not gone beyond the pleadings stage. Moreover, the Plaintiffs submit that Mr. Cavanagh, counsel for Ms. Zigiris, was asked by Mr. Lalonde, counsel for the Plaintiffs, not to incur fees on the matter as he was seeking instructions from his clients.

[39] In the alternative, the Plaintiffs seek to offset their costs of this motion against the costs of the $4,500.00 they have offered to pay to Ms. Zigiris.

[40] Although Mr. Lalonde had asked Mr. Cavanagh not to incur fees in August 2022, the Plaintiffs’ proposal for a resolution of the matter at the end of August 2022 was a dismissal of the action against Ms. Zigiris without costs. This was not acceptable to Ms. Zigiris because of the serious allegations made against her.

[41] While counsel for Ms. Zigiris entered into settlement discussions in the summer of 2022, it was only in November 2022 that the Plaintiffs discontinued their action against Ms. Zigiris. By that time, Ms. Zigiris had had to incur additional legal expenses particularly in relation to the motion to compel production of documents.

[42] Where there are unsubstantiated allegations of improper conduct, dishonesty and conspiracy, as is the case in the present matter, costs may be awarded on a substantial indemnity scale. [16]

[43] As stated by the court in Cushnaghan v. Kwan:

There is ample authority for an award of costs on a higher scale where unsubstantiated allegations of dishonesty, illegality and conspiracy are advanced without merit. While substantial indemnity costs are an exception to the general rule and are awarded only under special circumstances, allegations of this sort can attract an award of substantial indemnity cost. [17]

[44] In my view, the Plaintiffs’ unsubstantiated allegations of conspiracy against Ms. Zigiris, advanced without merit, warrant a higher scale of costs. Moreover, the Plaintiffs’ refusal to retreat at the hearing of this motion from the allegation that Ms. Zigiris had engaged in civil conspiracy, is a factor to be considered when dealing with the costs.

[45] As with all costs of, and incidental to, a proceeding or a step in a proceeding, costs of a discontinued action on a motion brought by any party are within the discretion of the court pursuant to Section 131(1) of the Courts of Justice Act. [18]

[46] In exercising its discretion with respect to costs, the court must be mindful that the fixing of costs is not simply a mechanical exercise; the objective is to fix an amount that is fair and reasonable and proportional in all of the circumstances. [19]

[47] In my view, I find that fair and reasonable costs of the action (excluding the costs of this motion) on a substantial indemnity scale up to the date of the discontinuance of the action on November 8, 2022, is in the sum of $6,500.00 inclusive of HST and disbursements. [20]

[48] I am also granting costs of this motion to the Defendant Felicia Georgina Zigiris on a partial indemnity scale in the sum of $3,500.00 inclusive of HST and disbursements.

Order

[49] I hereby Order as follows:

a. The plaintiffs shall pay to the Defendant Felicia Georgina Zigiris the following: i. Her costs of the discontinued action in the sum of $6,500.00 inclusive of disbursements and HST within 30 days. ii. Her costs of this motion in the sum of $3,500.00 inclusive of disbursements and HST within 30 days.

Marie T. Fortier Associate Justice Fortier

Date: April 28, 2023