Court File and Parties
COURT FILE NO.: FS-15-00083320-0000 DATE: 2024 11 15
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Sara FATAHI-GHANDEHARI R. Scocco, for the Applicant Applicant
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Stewart WILSON S. Chhina, for the Respondent Stewart Wilson
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Elizabeth WILSON The Respondent Elizabeth Wilson, self-represented
- and -
Abrahams LLP P. Simm and B Phillips, for the Respondent Abrahams LLP Respondents
HEARD: In writing
REASONS FOR JUDGMENT
LEMAY J.
[1] This has been a long and difficult case. It has spanned ten years and produced seven (7) separate Court of Appeal decisions and eighteen (18) reported Superior Court of Justice decisions. In July of this year, I released an omnibus decision (2024 ONSC 4275) that addressed a number of key issues. As a result of that decision, most (but not all) of the litigation between and involving the parties is resolved. The remaining issues are as set out in my decision of October 21st, 2024 (2024 ONSC 5846).
[2] As part of my July 31st, 2024, decision, I directed that the parties were to provide costs submissions on the issues that I had decided. I have now received those submissions and can now fix the costs of the various steps before me.
[3] In terms of those submissions, I should note that almost all the parties provided their costs submissions in a timely manner. The one exception was the Respondent and his mother, Ms. Elizabeth Wilson, who was also involved in this litigation. Ms. Wilson’s counsel was in the process of getting off the record. As a result, I extended the time for costs submissions. I have received a short e-mail from Ms. Wilson setting out both her position and that of the Respondent in respect of costs. I will consider it in my analysis.
Brief Background
[4] My July 31st, 2024, decision sets out a detailed background of the case. I do not intend to repeat it here. However, I would note that I had five issues to determine in my decision, as follows:
a) Should I reconsider and change the decision in respect of the bailiff?
b) Given the decision in the matrimonial litigation, what issues remain to be decided in respect of the Respondent’s other claims against the Applicant?
c) What rights does the Respondent’s mother, Elizabeth Wilson, have as a result of her purchase of the Respondent’s claims in certain actions? Do the decisions in the matrimonial home bind her more generally?
d) Should the actions against Abrahams LLP and Mr. Siddiqui be allowed to continue?
e) Do I have jurisdiction to enforce the costs orders of the Court of Appeal?
[5] On the fifth issue, I determined that I had the jurisdiction to enforce the costs orders of the Court of Appeal. However, I also determined that the Respondent was entitled to set-off any costs orders that he was owed at the Court of Appeal against the Applicant’s claim. By my calculations, that did not leave the Applicant with much money left owing to her. Therefore, from my perspective, this issue was not a success for either party. It also did not consume much time. Therefore, I am of the view that neither the Applicant, nor the Respondent nor Ms. Wilson should recover costs for the litigation of this issue. However, this has a very small effect on the overall costs in this matter.
[6] What flows from all of this is that there are three separate costs issues that have to be dealt with:
a) The costs in respect of the bailiff issues where the bailiff was entirely successful.
b) The costs in respect of the issues between the Applicant, the Respondent and the Respondent’s mother in which the Applicant was almost entirely successful.
c) The costs between the Respondent and his mother on the one hand and Abrahams LLP and Mr. Siddiqui on the other hand in which the Abrahams parties were successful in having the claim dismissed.
[7] I will deal with each issue in turn. First, however, I will set out some general principles in respect of costs awards.
General Principles
[8] The first question I have to grapple with is which set of rules should be applied to this case. Most of the action in this case is a family law case. The enforcement of the Bailiff’s bill arises as an outgrowth of the family law case. Similarly, the civil litigation engaged in by the Respondent (and the Applicant) is an outgrowth of the matrimonial litigation. Rule 1.02(1.1) of the Rules of Civil Procedure and Rule 1(5) of the Family Law Rules would allow the family law rules to apply on either agreement of the parties or on a motion. I have neither in this case. There is also no case-law, at least that I am aware of, on the subject of which rules govern in a hybrid case such as this one.
[9] However, I am of the view that principles that I should apply should be from the Family Law Rules for all the actions except for the Abrahams action. In that case, the Rules of Civil Procedure should apply. I reach that conclusion because all of the litigation between the Applicant and the Respondent (and the Respondent’s mother) is an outgrowth of the matrimonial dispute between the two of them. It is, therefore, appropriate to address those issues under the Family Law Rules. The Abrahams action, however, is a separate action that relates to a claim against a third party. It was pursued as a civil action, and the relief sought on the motion before me was sought under the Rules of Civil Procedure. It is, therefore, appropriate to assess the costs for this part of the litigation in accordance with the Rules of Civil Procedure.
[10] That being said, there are some similarities between the two systems. First, and foremost, the principle that the successful party should be entitled to their costs animates both sets of Rules, and it applies in this case.
[11] Then, there are the purposes of the costs rules. For family law, the purposes of modern costs principles are set out in a number of decisions, including Serra v. Serra, 2009 ONCA 395 and Beaver v. Hill, 2018 ONCA 840, (2018) 143 O.R. (3d) 519. Serra sets out the three primary goals of modern costs awards, as follows:
a) To partially indemnify successful litigants for the costs of litigation;
b) To encourage settlement; and
c) To discourage and sanction inappropriate conduct by litigants.
[12] Beaver concludes that the ‘close to full recovery’ approach adopted in some case-law is, in most cases, inconsistent with the fact that the Family Law Rules expressly contemplate full recovery in specific circumstances. Therefore, costs are generally recovered on a partial indemnity basis. In addition, Rule 2(2) of the Family Law Rules also sets out a fourth principle, which is to ensure that cases are dealt with justly. See also Selznick v. Selznick, 2013 ONCA 35. Similarly, the Rules of Civil Procedure envision partial indemnity costs in most circumstances.
[13] There are no offers to settle in this case, so the applicability of the rules under both regimes in respect of offers does not have to be addressed. However, the one other issue that does have to be addressed is that of bad faith conduct. Under the Family Law Rules, bad faith conduct attracts an award of full indemnity costs, fixed and payable immediately (see Rule 24(8) of the Family Law Rules).
[14] The meaning of bad faith in the family law context has been described in Jackson v. Mayerle, 2016 ONSC 1556, (2016) 130 O.R. (3d) 683. In that decision, the Court noted (at paras 56-60):
[56] But Rule 24(8) requires a fairly high threshold of egregious behaviour, and, as such, a finding of bad faith is rarely made (S. (C.) v. S. (M.), [2007] O.J. No. 2164; Piskor v. Piskor, [2004] O.J. No. 796; Cozzi v. Smith, [2015] O.J. No. 2926, 2015 ONSC 3626 (S.C.J.)).
[57] In S. (C.) v. S. (M.), supra, Perkins J. defined bad faith as follows [at para. 17]:
In order to come within the meaning of bad faith in subrule 24(8), behaviour must be shown to be carried out with intent to inflict financial or emotional harm on the other party or other persons affected by the behaviour, to conceal information relevant to the issues or to deceive the other party or the court. A misguided but genuine intent to achieve the ostensible goal of the activity, without proof of intent to inflict harm, to conceal relevant information or to deceive, saves the activity from being found to be in bad faith. The requisite intent to harm, conceal or deceive does not have to be the person's sole or primary intent, but rather only a significant part of the person's intent. At some point, a party could be found to be acting in bad faith when their litigation conduct has run the costs up so high that they must be taken to know their behaviour is causing the other party major financial harm without justification.
[58] Bad faith is not synonymous with bad judgment or negligence. Rather, it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. Bad faith involves intentional duplicity, obstruction or obfuscation: Children's Aid Society of Peel Region v. F. (K.J.), [2009] O.J. No. 2348, 2009 ONCJ 252; Biddle v. Biddle, [2005] O.J. No. 1056; Leonardo v. Meloche, [2003] O.J. No. 1969; Hendry v. Martins, [2001] O.J. No. 1098.
[59] There is a difference between bad faith and unreasonable behaviour. The essence of bad faith is when a person suggests their actions are aimed for one purpose when they are aimed for [page699] another purpose. It is done knowingly and intentionally. The court can determine that there shall be full indemnity for only the piece of the litigation where bad faith was demonstrated (Stewart v. McKeown, [2012] O.J. No. 4851, 2012 ONCJ 644; M. (F.D.) v. W. (K.O.), [2015] O.J. No. 903, 2015 ONCJ 94).
[60] To establish bad faith, the court must find some element of malice or intent to harm (Harrison v. Harrison, [2015] O.J. No. 1533, 2015 ONSC 2002 (S.C.J.)).
[15] Similar principles are adopted in the approach to costs in civil rules. Absent an offer to settle, it is very difficult to obtain anything beyond partial indemnity costs under the Rules of Civil Procedure either. However, substantial indemnity costs can be awarded where the conduct of a party is worthy of sanction. The Court of Appeal has outlined the underlying principles in Davies v. Clarington (Municipality) et al., 2009 ONCA 722, 100 O.R. (3d) 66, at paras. 28-31 as follows:
[28] The first issue is whether the trial judge erred in relying on the February 2005 offer as justification for an elevated costs award. This court, following the principle established by the Supreme Court, has repeatedly said that elevated costs are warranted in only two circumstances. The first involves the operation of an offer to settle under Rule 49.10, where substantial indemnity costs are explicitly authorized. The second is where the losing party has engaged in behaviour worthy of sanction.
[29] In Young v. Young, 1993 SCC 34, [1993] 4 S.C.R. 3, [1993] S.C.J. No. 112, at p. 134 S.C.R., McLachlin J. described the circumstances when elevated costs are warranted as "only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties".
[30] The same principle was expanded upon in Mortimer v. Cameron (1994), 1994 ONCA 10998, 17 O.R. (3d) 1, [1994] O.J. No. 277 (C.A.), at p. 23 O.R., where Robins J.A., speaking for the court, set out the restricted circumstances in which a higher costs scale is appropriate with reference to Orkin, at para. 219. [page75 ]
An award of costs on the solicitor-and-client scale, it has been said, is ordered only in rare and exceptional cases to mark the court's disapproval of the conduct of a party in the litigation. The principle guiding the decision to award solicitor-and-client costs has been enunciated thus:
[S]olicitor-and-client costs should not be awarded unless there is some form of reprehensible conduct, either in the circumstances giving rise to the cause of action, or in the proceedings, which makes such costs desirable as a form of chastisement.
[31] The narrow grounds justifying a higher costs scale were further reinforced by Abella J.A. in McBride Metal Fabricating Corp. v. H. & W. Sales Co. (2002), 2002 ONCA 41899, 59 O.R. (3d) 97, [2002] O.J. No. 1536 (C.A.) where, at para. 39, she said:
Apart from the operation of Rule 49.10 (introduced to promote settlement offers), only conduct of a reprehensible nature has been held to give rise to an award of solicitor and client costs. In the cases in which they were awarded there were specific acts or a series of acts that clearly indicated an abuse of process, thus warranting costs as a form of chastisement.
See, also, Walker v. Ritchie, 2005 ONCA 13776, [2005] O.J. No. 1600, 197 O.A.C. 81 (C.A.), at para. 105, aff'd 2006 SCC 45, [2006] 2 S.C.R. 428, [2006] S.C.J. No. 45. [Footnote omitted.]
[16] In the civil context, substantial indemnity costs are very much the exception. They are an expression of the court’s disapproval of a party’s litigation conduct: Hunt v. TD Securities Inc., 2003 ONCA 3649, 66 O.R. (3d) 481 (C.A.), at para. 123.
[17] Even where a party unsuccessfully alleges fraud or dishonesty, substantial indemnity costs do not automatically follow: see Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 26. However, there is a difference between hard fought litigation that turns out to be misguided, and malicious and counter-productive conduct. The former will not attract substantial indemnity costs; the latter may very well attract them: Davies, at para. 45. Similarly, substantial indemnity costs can be awarded where one party to the litigation behaves in an abusive manner, brings meritless proceedings, and runs up the costs: see Rousseau v. Scotia Mortgage Corp. et al., 2013 ONSC 677, at para. 23.
[18] Finally, in considering all of these costs awards, the factors set out in Rule 24(12)(a) of the Family Law Rules and Rule 57.01 of the Rules of Civil Procedure must be kept in mind.
[19] With these general principles in mind, I now turn to the specific issues in this case.
Issue #1 - The Costs in Respect of the Bailiff
a) The Outcome of the Merits
[20] The bailiff, Associated Bailiffs, became involved in this case when some of the Respondent’s cars were to be seized pursuant to a Court order. There has been a dispute over the bailiff’s bill ever since. My original decision resulted in the bailiff receiving compensation on a quantum meruit basis, but at a reduced rate to account for some storage issues with one of the cars, a Ferrari. The reduction was approximately twenty-five (25) percent of the bill. I determined that there should be no costs for either party as a result of my original decision.
[21] The Applicant sought to have this decision reconsidered under Rule 59.06 on the basis that I misapprehended the evidence. She sought to have the bailiff denied any compensation whatsoever and to recover $53,000.00 from the bailiff for improper storage of the Ferrari. She also sought $12,000 in costs for the original proceeding in respect of the bailiff.
[22] The issue that I had to address in my July 31st, 2024, decision was whether I should reconsider my original decision. I dismissed the Applicant’s motion in this respect and found that the motion was not properly brought under Rule 59.06. As a result, my original decision stands.
b) Positions of the Parties
[23] The bailiff takes the position that the costs of this matter should be paid on a full indemnity basis because the motion was an abuse of process. As a result, the bailiff seeks costs in the sum of $5,107.60 for the motion to vary my original decision.
[24] The Applicant, on the other hand, takes the position that her approach to this was not inappropriate. The Applicant takes the position that she was simply seeking to address the errors that I had made in my previous decision on the issue. Given the nature of those concerns and in light of the fact that I made no findings in respect of the substance of her claims, she argues that there should be no costs payable to either party. In the alternative, the Applicant argues that if I am inclined to award costs to the bailiff, they should be limited to $1,500.00.
c) Disposition
The Scale of Costs
[25] Counsel for the bailiff has argued that the Applicant’s motion constituted an abuse of process. In this respect, counsel argues that where a proceeding is an abuse of process, its costs should be assessed on a full indemnity basis without needing to find bad faith. In support of that submission, counsel relies on the costs endorsement in Buttarazzi v. Buttarazzi. In that decision, the Court stated (at para. 4):
- My finding per paragraph 68 of the September 17, 2009 endorsement that the Estate’s claim within the Motion heard July 22, 2009 was an abuse of process requires that costs be awarded on a full recovery basis, to be paid immediately. Whether or not that finding is novel (as suggested by the Estate) is immaterial to the application of Rule 24(8). The cases cited by the Respondent in her Submissions as to Costs, inclusive of Piskor v. Piskor, [2004] O.J. No. 796 (S.C.J.) and Paech v. Paech, [2004] O.J. No.5067 (S.C.J.) confirm that the Court is to award a full recovery of costs in circumstances in which a party has acted in bad faith, or has otherwise advanced a claim for an improper purpose.
[26] Counsel for the Applicant argues that this decision is not applicable to the case before me because it requires a finding of bad faith or that a party has advanced a claim for an improper purpose.
[27] The Applicant argues that she pursued a process that was as efficient as possible in order to put these issues before the Court. There are two problems with this assertion. First, having me reconsider the merits of my decision was not a proper way to address concerns with my decision. If the Applicant wants the outcome changed, she ought to have appealed that decision. Second, the process was only efficient in that it allowed me to dispose of a meritless application as quickly as possible. There is no doubt, however, that the time spent on this issue was wasted.
[28] On the first point, while the Applicant’s conduct does not rise to the level of bad faith, the claim was advanced for an improper purpose and is an abuse of the Court’s processes. Specifically, the Applicant did not agree with my findings on the bailiff issue. Instead of pursuing an appeal, she originally sought to have me reconsider my decisions (see paragraphs 72 and 87 of my July 31st, 2024, reasons). When that request was unsuccessful, the Applicant was told she would have to bring a formal motion. However, I also expressed concerns about relitigating this issue in the course of my case management meetings.
[29] The improper purpose in this case is the Applicant’s attempt to re-litigate an issue using Rule 59.06 when the only proper way to approach concerns with the correctness of my decision is to appeal it. This improper re-litigation should attract costs on a full indemnity basis. Bringing this motion was an abuse of process, and an award of full indemnity costs should be made, at least in part, to deter others from engaging in the same improper use of the Court’s processes. X. v. Y., 2016 ONSC 5551 at paras. 122 and 123.
[30] This brings me to my second concern with the Applicant’s position. While the process may have been efficient, given the scope of Rule 59 it was also a motion that was almost certainly doomed to failure from the outset. I view it is a waste of both the bailiff’s time and resources and the Court’s resources. Again, this is the sort of conduct that should attract costs on a full indemnity basis.
[31] Given both of these observations, I am of the view that the Applicant should pay the bailiff’s costs on a full indemnity basis.
The Quantum of Costs
[32] The Applicant argues that, if I am inclined to award costs at all, it should be a modest amount of $1,500.00 all inclusive. I disagree for two reasons.
[33] First, the Applicant’s position is based, in part, on her view that she was pursuing this motion reasonably. In support of that assertion, she points to the fact that I did not comment on the merits of her position. The problem with that argument is that, under Rule 59.06, it would not have been appropriate for me to comment on the merits of the Applicant’s position. I explained why at paragraph 83 of my July 31st, 2024 decision.
[34] Second, the time spent by counsel for the bailiff, as well as the rates charged, are entirely reasonable. This issue was of moderate complexity, as it required consideration of both the facts of the case and of the law under Rule 59.06. In addition, the rates charged were entirely reasonable.
[35] To that end, I note that the Applicant’s bill of costs for the same work shows that the time spent by her counsel on the Rule 59.06 motion was approximately 25 hours, and that her total costs were approximately $7,000.00 inclusive of HST and disbursements. The bailiff spent about ten hours and had a total bill, inclusive of HST and disbursements, of $5,107.60. In other words, the amounts charged by the bailiff’s counsel are within the reasonable expectations of the Applicant, as her counsel charged more for the same file.
[36] Therefore, in the circumstances I am of the view that the Applicant is liable to pay the bailiff the costs of the motion on a full indemnity basis in the amount of $5,107.60. Those amounts are to be paid to the bailiff’s counsel from the monies being held in Court. Any necessary accounting will be done at the end, as the Applicant’s liability for these costs may not be something that is properly charged against the monies paid into Court.
Issue #2 - The Costs as Between the Applicant, the Respondent and Ms. Wilson
a) The Outcome on the Merits
[37] There were three major issues between the Applicant on one hand, and the Respondent and Ms. Wilson on the other hand. They were:
a) Whether the Respondent’s other claims against the Applicant survived the disposition of the matrimonial issues.
b) Whether Ms. Wilson was bound to the outcome on the matrimonial issues, and the answer to the question in paragraph (a), in respect of the litigation that she had purchased from the Respondent’s bankruptcy proceedings.
c) Whether Ms. Wilson was personally bound to the finding in the matrimonial litigation, and specifically the finding that the Smithville property that she held title to was actually beneficially owned by the Respondent.
[38] The Applicant was entirely successful on these issues. The outcome of the proceeding was that the judgment for more than $1 million that the Applicant had obtained in the matrimonial litigation was enforceable against the Respondent’s assets, including the Smithville property.
[39] In the course of my reasons, I made the following findings that are of importance in setting costs:
a) The Respondent was engaged in an abuse of process by attempting to use the action in Court File No. 118/15 to relitigate issues that the Court had already disposed of.
b) Permitting Ms. Wilson to relitigate the claims that had been previously dismissed would be damaging to the integrity of the adjudicative process.
c) Permitting Ms. Wilson to assert that she beneficially owned the Smithville property would be an abuse of process.
[40] With that background in mind, I will now turn and deal with the positions of the parties and my disposition of the costs.
b) The Positions of the Parties
[41] The Applicant takes the position that she was successful on these motions, that the conduct of the Respondent and of Ms. Wilson was an abuse of process on every issue, and that she should be entitled to full indemnity costs. The Applicant’s claim for full indemnity costs is $79,836.94, inclusive of HST and disbursements.
[42] The Respondent and Ms. Wilson assert that the Applicant’s costs are excessive and out of proportion to the work that was done. The Respondent and Ms. Wilson state that the matters were case-managed and never proceeded significantly beyond the pleadings stage. As a result, the Respondent and Ms. Wilson suggest that only modest costs awards should be made.
[43] The Respondent and Ms. Wilson were both assisted by counsel throughout the proceedings leading to the July 31st, 2024, decision, although Ms. Wilson is now self-represented. Neither of them has served or filed a costs outline or a bill of costs. I will address that omission below.
c) Analysis and Disposition
[44] The parties’ positions on costs for this portion of the July 31st, 2024 decision need to be put in perspective. The most important point to consider in putting this matter into perspective is the Respondent’s conduct over the course of the entire litigation. Back in 2018, the Court of Appeal criticized him, stating (2018 ONCA 728 at para. 10):
[10] The record amply shows that the appellant has made a procedural morass of this case. The record of non-compliance with customary practice and the rules is so egregious that there is no explanation that the appellant or Mr. Robson could provide that would excuse it. On this basis we refused the adjournment.
[45] This is not the only time that the Court of Appeal has criticized the Respondent for the way he has conducted this litigation. In a decision released in February of 2023 (2023 ONCA 74), the Court of Appeal dismissed the Respondent’s appeal of various decisions. The Court of Appeal summarized the problems with the Respondent’s approach as follows (paras. 4-9):
[4] Mr. Wilson has been found on more than one occasion to have been responsible for the wasteful litigation that has occurred. In a prior appeal decision, 2018 ONCA 728, this court found that “the record amply shows that the appellant [Mr. Wilson] has made a procedural morass of this case”. In the trial decision that is the subject of the Rule 59 application decision that is under appeal, the trial judge, who had also acted as the case management judge, found that “Mr. Wilson has continued to bring motions and advance arguments that seem to serve little purpose other than to complicate and delay this proceeding.” A review of the record confirms the accuracy and fairness of this finding.
[5] Mr. Wilson has also deliberately and wilfully breached court orders, including orders for disclosure, resulting in a finding against Mr. Wilson for contempt on October 10, 2017 (reported at 2017 ONSC 6034), and the striking of his pleadings in the family law matter on September 21, 2018 (reported at 2018 ONSC 5579). The family law action thus proceeded as an undefended trial after the trial judge found that Mr. Wilson’s right to appeal either the finding of contempt or the sentence had been exhausted: 2021 ONSC 3547, at paras. 19-24, aff’d 2022 ONCA 421.
[6] Mr. Wilson has also failed to pay multiple costs orders against him totalling well over $150,000, leaving aside the family law trial costs of approximately $25,000.
[7] Mr. Wilson also has a history of relitigating issues such as the validity of a marriage contract and the refusal of Ms. Fatahi-Ghandehari to answer questions about her alleged “fraudulent” behaviour that have been held to be irrelevant in the proceedings where they were asked. Indeed, despite the trial judge quoting from an earlier judicial decision that Ms. Fatahi-Ghandehari did not have to answer the questions asked because they were irrelevant to the proceedings, Mr. Wilson again claims in support of his written response to this Rule 2.1.01 application that Ms. Fatahi-Ghandehari refuses to answer questions about the alleged frauds.
[8] He has also re-raised issues in overlapping actions. The marriage contract provides an example. It has been raised and disposed of in the family litigation but raised again in related civil litigation. In addition, on May 26, 2021, the case management judge issued an order that “all parties are reminded that no proceeding in respect of the issues in this [family] litigation may be brought before any other judge of this Court”. Yet in March 2022 Mr. Wilson commenced a civil lawsuit alleging that Ms. Fatahi-Ghandehari and her lawyer had brought complaints against Mr. Wilson’s lawyer to the Law Society of Ontario (“LSO”) as a “litigation strategy” in the family law proceedings, but only the LSO was named as a defendant, not Ms. Fatahi-Ghandehari or her lawyer. The case management judge noted that the “overlap in the issues between Mr. Wilson’s claim against the LSO and the issues in his various proceedings against Ms. Fatahi-Ghandehari [was] significant.”
[9] He has also made informal allegations of judicial bias against two judges, and a fraud allegation against Ms. Fatahi-Ghandehari’s lawyer. This type of conduct is a potential hallmark of a vexatious litigant.
[46] In short, the Respondent has, in both this Court and the Court of Appeal, adopted what can best be described as a “scorched earth” approach to the litigation of these matters. In my view, this is egregious conduct that amply justifies an award of full indemnity costs, even under the high test set out in Jackson.
[47] This brings me to the decision in Yae v. Park, 2013 ONSC 1331. In that decision, the Court stated (at paragraph 14):
[14] Nothing says vexatious like a one billion dollar claim against opposing counsel for defending their client’s rights. However, it is still worth reviewing the factors that courts have identified as grounding an order under section 141(1) of the Courts of Justice Act. In Henry J.’s often cited decision in Lang Michener v Fabian (1987), 59 OR (2d) 353, at para 20 (Ont Sup Ct), seven indicators of a vexatious litigant were set out:
a) bringing multiple actions to determine an issue that has already been determined;
b) bringing an action where it is obvious that the action cannot succeed, or that the action would lead to no possible good result, or if no reasonable person could expect to obtain the relief being sought;
c) bringing an action for an improper purpose, including harassment of opposing parties by multifarious proceedings;
d) bringing an action in which grounds and issues raised get rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who had acted for or against the litigant in earlier stages of the proceedings;
e) continuing with an action that exhibits the above traits even if originally meritorious;
f) failure to pay costs of unsuccessful proceedings taken along the way;
g) persistently taking unsuccessful appeals from decisions rendered against the litigant.
[48] The Respondent’s conduct of this litigation fits virtually all of these various criteria. Further, as I will discuss below, Ms. Wilson has actively aided and abetted in furthering this conduct. It is now time to pay the costs for this conduct and they should be assessed on a full indemnity basis.
[49] If my only concerns were with the Respondent’s conduct, I would have no hesitation in ordering the Respondent to pay the Applicant’s entire costs on a full indemnity basis. However, the fact that the Respondent is a vexatious litigant, and that many of the steps in this proceeding have been taken by the Respondent in bad faith has to be balanced against two unhelpful and irrelevant positions taken by the Applicant on the motion before me.
[50] In that regard, I note the following:
a) The Applicant spent at least some of her time in her submissions arguing that my previous finding that she was relitigating issues was “demonstrably false”. However, I have spelled out (at paragraphs 90 to 96 of my July 31st, 2024, decision) how the Applicant had re-litigated issues in this case. Either way, however, that issue did not need to be litigated by the Applicant in the context of this motion, and she should not be entitled to recover costs for litigating it.
b) The Applicant took the position that “even though this is not a criminal court proceeding, it is this court’s responsibility to find that Elizabeth Wilson’s conduct is criminal, that what she has done constitutes forgery and perjury.” In essence, the Applicant was asking me to make findings of criminal liability in a non-criminal proceeding. As I set out at paragraph 154 of my reasons, this request would have required me to trample on Ms. Wilson’s rights in respect of the criminal law. Again, these arguments did not need to be made. They also had no chance of success, and the Applicant should not recover the costs incurred for making them.
[51] While the Applicant is entitled to her full indemnity costs as against the Respondent and Ms. Wilson, she is not entitled to be compensated for the time and effort that was put into making the submissions I have set out in the previous paragraph. Those submissions were of no assistance in addressing the issues that I was required to decide.
[52] The Applicant’s total bill of costs, inclusive of HST and disbursements, is $79,836.94. Subject to the areas of concern with the Applicant’s position that I have identified, I view this amount as being reasonable. In that respect, I reject the assertion of the Respondent and Ms. Wilson that these costs are excessive and out of proportion to the issues in this case.
[53] This case was made into a procedural morass by the Respondent. In my view, through her participation in various transactions and her failure to produce documents in the proceedings before Price J., Ms. Wilson actively assisted in the creation of this procedural morass. In particular, the transfer of title to the Smithville property and the purchasing of various actions from the bankruptcy estate seemed to be designed to make the case more complicated and any judgment that the Applicant obtained harder to enforce. Further, Ms. Wilson’s refusal and/or failure to provide relevant documents in the hearing before Price J. delayed this matter and made it more complicated. Finally, Ms. Wilson provided misleading materials on this motion (see para. 148 of my July 31st, 2024 decision). These materials appear to have been designed to both confuse and delay the ultimate disposition of the matter. This case was very complex, and the procedure adopted to resolve it was costly and time-consuming. The Respondent and Ms. Wilson should not now be able to avoid the costs for the time that has been wasted in this case.
[54] I also reject the Respondent and Ms. Wilson’s assertion that “with respect to all of the subject actions, the parties were precluded from proceeding in the normal course resulting in the ability of both sides to be able to do only minimal work on the subject files prior to the actions being dismissed.” It should be obvious why I am rejecting this submission, but I will spell it out anyway.
[55] There are eighteen reported decisions on this matter at the Superior Court level and seven separate Court of Appeal endorsements. While the costs of most of those other appearances have been dealt with, the sheer volume of them demonstrates that there has been a great deal of work done on “the subject files”. Indeed, this motion required three case conference appearances and a full day of hearing to address. In addition, the issues were complicated and required detailed consideration of the entire history of the case as well as detailed factums. Finally, the law in terms of abuse of process is also not simple, although I acknowledge that the parties will have been familiar with it from previous proceedings.
[56] The costs sought by the Applicant for this motion are entirely reasonable, with only two deductions. I am of the view that a deduction from the Applicant’s bill of costs of $2,000.00 to account for the divided success on the Court of Appeal issue and $5,000.00 to account for the two arguments that should not have been made on this motion (as described at paragraph 50) produces a fair and reasonable estimate of the costs of this proceeding.
[57] As a result, the Respondent and his mother are jointly and severally liable to pay costs to the Applicant in the sum of $72,836.94 inclusive of HST and disbursements. Given my finding that the Respondent and his mother have behaved in a bad faith manner, the costs are payable immediately, but will be collected in the first instance out of the funds already in Court on account of the Ferrari.
Issue #3 - The Abrahams LLP Action
a) The Outcome on the Merits
[58] As part of the Respondent’s litigation against the Applicant, the Respondent brought an action against the Applicant’s former lawyer and his former law firm. The action was a claim that the Applicant’s former lawyer and former law firm had assisted the Applicant in engaging in fraudulent conduct by misappropriating and hiding money.
[59] I dismissed this action for two reasons:
a) It was a derivative action, and the outcome of the matrimonial litigation dictated the result of this case.
b) It was an abuse of process, as it was an action brought against the other side’s lawyers merely for advancing the other side’s positions. See Yae (as discussed at para. 47, above) and Lochner v. Ontario Civilian Police Commission, 2020 ONCA 720 at para. 19.
[60] I should note two further points. First, I indicated in my reasons (see paragraph 187) that I would not have dismissed the action on the basis of the motion that had been brought under Rules 24 and 48 by the Abrahams parties. Second, the work that had to be done by the Abrahams parties was primarily as a result of the case conferences and various attendances.
b) Positions of the Parties
[61] The Abrahams parties seek costs in the sum of $26,286.47 inclusive of HST and disbursements. This is the entirety of the bill of costs. However, counsel argues that, because there were significant discounts on the rates, I should consider what reasonable partial indemnity costs in this matter are (rather than what the actual bill is) in fixing the costs of this matter.
[62] In this respect, counsel points to the rate of Bradley Phillips, who was the principal lawyer in this matter. He is a 2000 call, and his normal billing rate is $625.00 per hour. However, because this was a LawPRO retainer, his rate was discounted to $325.00, and then $350.00 and finally $405.00 per hour.
[63] As noted above, the Respondent and Ms. Wilson only provided brief submissions. However, they have taken the position that the costs expended by the Abrahams parties are excessive and out of proportion to the efforts required. They have also taken the position that the actions did not proceed significantly beyond the pleadings stage. As a result, they claim that the costs should be limited to a modest amount.
c) Analysis and Disposition
[64] I start with the scale of costs for this action. As described above, bringing an action against the Applicant’s lawyer is one of the hallmarks of a vexatious litigant. When the conduct of the Respondent is considered as a whole, I am drawn to the inescapable conclusion that costs for this action should be awarded on a substantial indemnity basis. The Respondent’s decision to sue the Applicant’s lawyer was, particularly in the context of the rest of the facts in this case, both reprehensible and outrageous within the meaning of Davies.
[65] The question then becomes what should be the quantum of those costs? This requires consideration of the factors set out in Rule 57.01. I will address the most relevant of these factors in turn.
[66] First, there is the question of success. There is no doubt that the Abrahams parties were successful in having the action dismissed. However, they were not successful in having it dismissed under Rule 24 or 48. At least some of the time in this motion was spent pursuing that issue. As a result, there should be some deduction from the overall costs for the time that was spent pursuing this issue.
[67] Second, there is the question of the complexity of the matter. The Respondent and Ms. Wilson argue that the costs award should be modest because the matter was not taken very far beyond the pleadings stage. I disagree for the following reasons:
a) A significant number of case conferences were held in this matter, and counsel for the Abrahams parties was required to attend at all of them.
b) The issues in disposing of the Abrahams action were made more complicated by the underlying history of this matter, and counsel for the Abrahams parties would have been required to absorb and understand that history in order to properly represent his clients.
c) The costs at this point are not just for the motion, they are for the entire action. That action, although it has not moved very far beyond the pleadings stage, still would have consumed considerable time because of the procedural morass created by the Respondent.
[68] Third, there are the reasonable expectations of the parties. As I have noted above, neither the Respondent nor Ms. Wilson provided a bill of costs or a costs outline. I have no idea how much time the Respondent’s counsel spent on this action and, therefore, no basis to assess their reasonable expectations.
[69] However, I do have an outline of the costs of the Abrahams parties. Those show that there were approximately 20 hours spent on the Statement of Defence and related pleadings issues, approximately 5 hours spent on case conferences and approximately 37 hours spent on the preparation of motion materials and the argument of the motion.
[70] The time spent on both the pleadings and the case conferences is entirely reasonable and should be fully recoverable. The time spent on the motion is also reasonable. However, there should be a deduction from the time spent on the motion to take into account the fact that the Abrahams parties were not successful on the Rule 24/48 motion. In my view, compensating for sixty percent of the costs of the motion itself is reasonable. The Respondent should be responsible for substantial indemnity costs on the remainder of the matter.
[71] The Abrahams parties argue that, even if I award costs on a partial indemnity basis, they should still recover most, if not all, of their costs because of the rates that Mr. Phillips charges. In support of this position, they point to a passage from Mantella v. Mantella. In that case, the Court stated as follows (at para. 7):
[7] In this case, because of the rates at which counsel undertook Ms. Murray’s defence, there is little difference between partial indemnity and full recovery costs. The actual fees charged by counsel are not the starting point of a costs analysis. Costs are an indemnity, and thus may not exceed the client’s total liability to her solicitor; the client may not gain a windfall as a result of a costs award. [1] However, in fixing partial indemnity costs, the court does not look at the actual fee arrangement between solicitor and client and discount that arrangement to ensure that recovery is “partial”. Rather, the court considers the pertinent factors laid down in the rules in fixing the amount of recovery appropriate on a partial indemnity basis. So long as the amount is equal to or less than the actual fees and disbursements charged, then the amount arrived at by reference to the factors listed in the rules will be the amount of the award – whether that represents 50% of actual fees, 75% of actual fees, or even 100% of actual fees. If counsel is prepared to work at rates approximating partial recovery costs, that is counsel’s choice. There is no reason why the client’s fee recovery ought to be reduced because she has negotiated a favourable rate with counsel, so long as the total of the indemnity does not exceed the fees actually charged.
[72] This passage was cited with approval by the Divisional Court in Geographic Resources Integrated Data Solutions Ltd. v. Peterson, 2013 ONSC 1041 (Div. Ct.). In my view, it supports the proposition that I should be looking at the factors laid down in the rules to assess costs on a partial indemnity basis. I see no reason why this would not apply to costs fixed on a substantial indemnity basis as well.
[73] To that end, I am of the view that there should be a deduction from the total bill of the Abrahams parties to take into account the lack of success on the Rule 24/48 motion, as described above. When that deduction is made, I am of the view that the costs of the Abrahams parties should be fixed at $20,000.00 inclusive of HST and disbursements.
Conclusion
[74] For the foregoing reasons, I am ordering the following in respect of the costs of the July 31st, 2024 decision:
a) The Bailiff shall be entitled to costs of the motion before me in the amount of $5,107.60. The Applicant shall be liable to pay those costs.
b) The Applicant shall be entitled to costs in the sum of $72,836.94. Both the Respondent and Ms. Wilson are jointly and severally liable to pay those costs.
c) The Abrahams parties shall be entitled to costs in the sum of $20,000.00. Both the Respondent and Ms. Wilson are jointly and severally liable to pay those costs.
[75] There is money that was paid into Court on account of this action from the sale of the Ferrari. I am not certain as to whether it will cover all of the costs that have been ordered to be paid as well as the money that I have previously found is payable to the bailiff. As a result, the monies in respect of the bailiff are to be paid out in the following order:
a) The monies owing to the bailiff, including both the costs and the payment of his account are to be paid out first. The bailiff is entitled to interest at the post-judgment rate on the portion of his account that I have directed he be paid for from December of 2022 until the monies are paid. In my view, the bailiff has first priority because they have a claim under the Repair and Storage Liens Act, R.S.O. 1990 c. R 25. The bailiff did not have to turn over the property until its’ bill was addressed.
b) The monies owing to the Abrahams parties on account of the costs of their action are to be paid out second. I have concluded that I should proceed in this manner as it will result in the Abrahams parties no longer being involved in this action. It will, therefore, simplify matters.
c) The monies owing to the Applicant on account of the costs to date are to be paid out third. The Applicant still has a CPL against the property that I have determined is beneficially owned by the Respondent. As a result, the Applicant has a mechanism to enforce any outstanding costs as against the Respondent and Ms. Wilson.
[76] In the event that the Respondent and Ms. Wilson still owe the Applicant costs after the monies from the sale of the Ferrari are paid out, then those amounts are to be paid prior to the hearing of the motion for the CPL on January 6th, 2025. If those costs are not paid by that point, then I will not hear the CPL motion on that day.
[77] In the event that the costs and other payments do not exhaust the monies paid into Court on account of the sale of the Ferrari, we will discuss what should be done with the remaining proceeds at the hearing on January 6th, 2025. At this point, there is no need for either the bailiff or the Abrahams parties to attend.
[78] On that point, if there is any issue in terms of the interest rate or the calculation of interest for the bailiff’s account, the bailiff’s counsel may write to me, copied to all other parties, to advise only of the existence of the dispute. I will then set a timetable for written submissions.
[79] Finally, the prohibition on communicating with me or my judicial assistant remains in place. For clarity, there is no need or reason for any party to raise any issue with me prior to January 6th, 2025 other than the issue described in the previous paragraph. Over and above the interest issue, the only communications the parties are permitted to provide to my judicial assistant are the electronic copies for the materials for the argument on January 6th, 2025. Anything else will result in a citation for contempt with all of the consequences that would flow from such a citation.
Released: November 15th, 2024 LEMAY J
COURT FILE NO.: FS-15-00083320-0000 DATE: 2024 11 15
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Sara FATAHI-GHANDEHARI Applicant
- and –
Stewart WILSON
- and –
Elizabeth WILSON
- and –
Abrahams LLP Respondents
REASONS FOR JUDGMENT
LEMAY J Released: November 15, 2024