Court File and Parties

COURT FILE NO.: CV-12466961 DATE: 20230125 ONTARIO SUPERIOR COURT OF JUSTICE

RE: Aamir Sherwani, plaintiff -and- Terence Fargher, Donald Sanderson, and West Parry Sound Health Centre, defendants

BEFORE: Robert Centa J.

COUNSEL: Aamir Sherwani, self-represented Anne E. Posno, Brendan F. Morrison, and Solomiya Zakharchuk (student-at-law), for the defendant Terence Fargher Lisa Spiegel and Tina Kaye, for the defendants Donald Sanderson and West Parry Sound Health Centre

HEARD: January 24, 2023 (in writing)

COSTS ENDORSEMENT

[1] In 2012, Dr. Aamir Sherwani sued the West Parry Sound Health Centre, Donald Sanderson, the hospital’s chief executive officer, and Dr. Terence Fargher, the hospital’s chief of staff, for defamation and misfeasance in public office. After a nine-day trial, I dismissed Dr. Sherwani’s action in its entirety: Sherwani v. Fargher, 2022 ONSC 2897.

[2] The parties were not able to settle the costs of the action and I have now received costs submissions of all parties.

Submissions of Dr. Fargher

[3] Dr. Fargher seeks his costs of the action on a partial indemnity scale, fixed at $288,000, comprising $199,618 for legal fees and $88,382 in disbursements, all amounts inclusive of HST. This amount represents approximately 44% of his full indemnity costs of $650,973.[^1] Dr. Fargher notes that he is requesting a much smaller amount than the usual request for costs on a partial indemnity scale fixed at 60% of his full indemnity costs ($425,937).

[4] Dr. Fargher submits that he was entirely successful at trial. He notes that Dr. Sherwani made serious allegations against him, which impugned his professionalism and character. Dr. Fargher submits that the amount of costs he seeks is within Dr. Sherwani’s reasonable expectation as he was represented over the ten years from the commencement of the action until the eve of trial and knew or ought to have known that he faced a significant costs award against him if he was not successful at trial. Dr. Fargher notes that Dr. Sherwani made reckless allegations of racism and bias against him that were not supported in the evidence and would support a costs award on an elevated scale.

[5] Dr. Fargher submits that the amount of costs he seeks is fair and reasonable in the circumstances, accords with the principles set out in the Rules of Civil Procedure, R.R.O. 1990, Reg 194, and the jurisprudence.

Submissions of the hospital and Mr. Sanderson

[6] The hospital and Mr. Sanderson seek their costs of the action on a partial indemnity scale, fixed at $250,000, inclusive of disbursements and HST. This amount is approximately 52% of recovery on a full indemnity basis and represents a reduction from the usual request for costs on a partial indemnity scale fixed at 60 or 65% of the total costs incurred.

[7] The hospital and Mr. Sanderson point out that they were entirely successful in defending the action and that there was no evidence that they acted unprofessionally or improperly. They point out that Dr. Sherwani made very serious allegations against them, including that they acted in bad faith, and sought punitive damages. These allegations, once filed in court, had the potential to damage the reputation of the hospital and Mr. Sanderson.

[8] They submit that, as Dr. Sherwani was represented from the commencement of the litigation in 2012 until two months before trial, he must have been aware of the cost of litigation and that he would be exposed to a significant costs order against him if he was not successful at trial.

Submissions of Dr. Sherwani

[9] Dr. Sherwani submits that he incurred a total of $300,000 in expenses for his lawyers, accounting experts, and medical experts. As his lawyer got off the record two months before trial, this amount does not include any legal fees for final trial preparation or the conduct of the trial.

[10] In his submissions on costs, Dr. Sherwani challenged several of the findings of fact I made at trial and continued to disparage Dr. Fargher. He did not take issue with any of the amounts claimed by the defendants or suggest that they were unreasonable.

[11] In conclusion, Dr. Sherwani indicated that intends to appeal the trial decision and requested that his legal fees be awarded to him. Dr. Sherwani has every right to appeal the trial decision and I will not consider that factor in making this costs award.

Applicable principles

[12] In Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587, at paras. 59 to 66, the Court of Appeal for Ontario restated the general principles to be applied when the court exercises its discretion to award costs. Fixing costs is a discretionary decision under section 131 of the Courts of Justice Act, R.S.O. 1990, c C.43. In exercising my discretion, I may consider the factors listed in rule 57.01 of the Rules of Civil Procedure. These factors include the result achieved, the amounts claimed and recovered, the complexity of and importance of the issues in the proceeding, the principle of indemnity, the reasonable expectations of the unsuccessful party, as well as any other matter relevant to costs.

[13] In 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, at para. 10, Perell J. helpfully identified five purposes served by modern costs rules:

Modern costs rules are designed to advance five purposes in the administration of justice: (1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements [internal citations omitted]

[14] A proper costs assessment requires the court to undertake a critical examination of the relevant factors as applied to the costs claimed and then “step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable”: Apotex, at para. 60, Restoule v. Canada (Attorney General), 2021 ONCA 779, 466 D.L.R. (4th) 2, at para. 356, citing Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 24. The overarching objective is to fix an amount of costs that is objectively reasonable, fair, and proportionate for the unsuccessful party to pay in the circumstances of the case, rather than to fix an amount based on the actual costs incurred by the successful litigant: Apotex, at para. 61; Boucher, at para. 26.

[15] While the reasonable expectation of the parties concerning the amount of a costs award is a relevant factor that informs the determination of what is fair and reasonable, it is not the only, determinative factor and cannot be allowed to overwhelm the analysis of what is objectively reasonable in the circumstances of the case. To hold otherwise would result in the means of the parties artificially inflating costs with the concomitant chilling effect on access to justice for less wealthy parties: Apotex, at para. 62.

[16] Costs that are reasonable, fair, and proportionate for a party to pay in the circumstances of the case should reflect what is reasonably predictable and warranted for the type of activity undertaken in the circumstances of the case, rather than the amount of time that a party’s lawyer is willing or permitted to expend: Apotex, at para. 65. The party required to pay the successful party’s costs “must not be faced with an award that does not reasonably reflect the amount of time and effort that was warranted by the proceedings”: Gratton-Masuy Environmental Technologies Inc. v. Building Materials Evaluation Commission (2003), 2003 CanLII 8279 (ON SCDC), 170 O.A.C. 388 (Div. Ct.), at para. 17.

Result

[17] Although Dr. Sherwani requested that I award his legal costs to him, there is no basis for me to do so. Dr. Sherwani was the unsuccessful party at trial. There is nothing about this case that would justify me making a costs order against the successful parties under rule 57.01(2).

[18] I agree with the defendants that all of the factors listed in rule 57.01 that apply to this case support a significant costs award in their favour:

a. The defendants were entirely successful, and the action was dismissed in its entirety (rule 57.01);

b. The rates claimed by the defendants’ lawyers are reasonable given their year of call, subject matter expertise and demonstrated trial skills (rule 57.01(0.a);

c. Although the defendants’ lawyers spent a large number of hours on this action, that is reasonable given its ten-year lifespan and the number of issues raised by Dr. Sherwani (rule 57.01(0.a);

d. In his statement of claim, Dr. Sherwani claimed $5 million in damages plus $1 million in punitive damages. At trial, Dr. Sherwani presented an expert report that indicated he had loss of income damages of $3.43 million. He recovered no damages, but this was a very significant claim that Dr. Sherwani knew would be met with a formidable defence effort (rule 57.01(a));

e. This proceeding was complex. The parties called four expert witnesses. Dr. Sherwani sued in defamation and misfeasance of public office. The case raised complex issues involving the Limitations Act, the jurisdiction of the court over claims arising out of privileges disputes, and related to the evidence tendered in support of Dr. Sherwani’s damages claim (rule 57.01(c));

f. The issues were incredibly important to all the parties. Dr. Sherwani made very serious allegations about Dr. Fargher, Mr. Sanderson, and the hospital. The allegations impugned their professionalism and character. The defendants lived with these allegations hanging over their head for more than a decade. Dr. Sherwani alleged that the defendants were motivate by malice, acted in bad faith, and acted for the purpose of deliberately causing him harm. In his submissions, he accused Dr. Fargher and Mr. Sanderson of racism. Having made such serious allegations, Dr. Sherwani knew or ought to have known that the defendants would spend significant resources to defend the claims (rule 57.01(d));

g. I do not find that the defendants took any unnecessary or excessively cautious steps, or refused to admit anything that should have been admitted that would justify a reduction in the amount of the costs award (rules 57.01(e) and (f));

[19] I find that it was appropriate for Dr. Fargher to be represented separately from the hospital and Mr. Sanderson. First, Dr. Fargher was not an employee of the hospital. He was a medical professional who held an appointment as chief of the medical staff. Second, the defamation allegations against Dr. Fargher implicated personal interests of Dr. Fargher separate and apart from the allegations of misfeasance of public office. In my view, it was appropriate for Dr. Fargher to be represented separately from the hospital and Mr. Sanderson. Having sued three defendants, Dr. Sherwani could reasonably expect that she would be required to pay the costs of more than one set of counsel if he was not successful: Harris v. Leikin Group, 2011 ONSC 5474, at para. 31. I find that it is appropriate to award more than one set of costs for this action: rule 57.01(h).

[20] I considered whether or not to reduce the legal fees claimed by the defendants for the trial given the number of lawyers, students, and law clerks participating. I do not think that a reduction is appropriate. This trial proceeded via Zoom, which allowed Dr. Sherwani to participate remotely from his home. While this eliminated his travel, it meant that all documents needed to be uploaded to CaseLines both for my use and for the use of the witnesses.

[21] As Dr. Sherwani was self-represented and did not find it easy to use CaseLines, the task of uploading the documents on which Dr. Sherwani wished to rely fell to counsel for the defendants. Similarly, during Dr. Sherwani’s examination and cross-examination of witnesses, counsel for the defendants called up the documents so that the witnesses could see them. I am very grateful to counsel for the defendants for providing this assistance to Dr. Sherwani. But for this assistance, this trial could never have been completed in the time allotted for it. This assistance, however, placed additional burdens on counsel for the defendants and required them to have additional people at the trial beyond the minimum needed to present their own case. It would be unfair to call on counsel for the defendants to provide such assistance for the benefit of Dr. Sherwani and the court but then to reduce the legal fees they incurred for providing such assistance.

[22] I find that Dr. Sherwani could reasonably have expected to pay the amount of costs claimed by the defendants for this action. Dr. Sherwani submitted that he spent $300,000 in legal fees and fees for experts in this action. That amount does not include any legal fees for the trial or trial preparation as he was not represented at trial or the two months leading up to trial.

[23] It appears to me that Dr. Fargher’s costs for final preparation for trial and the trial itself total $178,829 of his total legal fees of $298,720, both amounts on a partial indemnity basis and exclusive of HST. Based on my calculations, the hospital and Mr. Sanderson’s trial costs totalled about $200,000 of their total costs of $275,451.57, on a partial indemnity basis exclusive of HST.

[24] If Dr. Sherwani spent $300,000 on legal and expert fees, and that amount did not include any trial costs, then I find he must have reasonably expected that the defendants would incur similar fees plus a significant additional amount for the trial itself, which is the most resource intensive phase of many actions.

[25] Finally, my overarching objective is to fix an amount of costs that is objectively reasonable, fair, and proportionate for the unsuccessful party to pay in the circumstances of the case, rather than to fix an amount based on the actual costs incurred by the successful litigant: Apotex, at para. 61; Boucher, at para. 26.

[26] Although I do not quarrel with the time spent by counsel for the defendants, or their hourly rates, or how the individual factors in rule 57.01 support the defendants’ claims, I would not have been prepared to award them their full partial indemnity costs: $425,936.63 for Dr. Fargher and approximately $312,000 for the hospital and Mr. Sanderson. The total, approximately $738,000, would not have objectively reasonable for Dr. Sherwani to pay in the circumstances.

[27] However, to their credit, the defendants significantly moderated their requests for costs. They seek a total of $530,000: $280,000 for Dr. Fargher and $250,000 for the hospital and Mr. Sanderson. In my view, the reduced amounts requested by the defendants are fair and reasonable. The reduced amounts fairly balance concerns of access to justice against all the other factors I discuss above, all of which would support a much higher costs order.

[28] In conclusion, I order Dr. Sherwani to pay the following amounts to the defendants within 30 days of this endorsement:

a. $280,000 to Dr. Fargher, inclusive of fees, disbursements, and all taxes; and

b. $250,000 to the hospital and Mr. Sanderson, inclusive of fees, disbursements, and all taxes.

Robert Centa J.

Date: January 25, 2023

[^1]: The $288,000 total represents the sum of all amounts paid for disbursements and 36% of full indemnity legal fees.