NEWMARKET CITATION: Chan v. Chan, 2024 ONSC 739
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Yam Ni Eunice Chan, Plaintiff
AND:
Po Yuk Chan et al, Defendants
BEFORE: C. M. SMITH, J.
COUNSEL: Scott Au and Allen Chao-Ho Chang, Counsel for the Plaintiff
Demetrios Yiokaris and Niki Manwani, Counsel for the Defendant, Anant Jain Michael Myers and Parjot Benipal, Counsel for the Defendant, Ying Wang
HEARD: In writing
COSTS ENDORSEMENT
Overview
1I am asked to make costs awards on each of the four motions I heard in this matter in August and September 2023. Those motions were as follows:
The August 3, 2023, oral motion brought by the plaintiff for leave to admit further evidence, which I dealt with in my endorsement of that date.
The motion of the Jain defendants to vacate the original Mareva order, and the motion of the plaintiff for a Norwich order, both of which were heard September 8, 2023, which I dealt with in my endorsement of October 31, 2023, cited as Chan v. Chan et al, 2023 ONSC 6143.
The mortgage validity motion of the defendant, Ying Wang, heard September 19, 2023, which was also dealt with in my October 31, 2023, endorsement.
2I will deal with each of those matters in turn after a consideration of the relevant and applicable legal principles regarding costs awards generally.
Relevant legal prnciples re: costs awards
3Rule 57.01 sets out a non exhaustive list of general principles for consideration in awarding costs. Of that list I consider the following to be particularly germane to this case:
the principle of indemnity including the experience of, and rates charged by, counsel for the successful party;
the amount of costs the unsuccessful party could reasonably expect to pay;
the amount claimed and the amount recovered;
the complexity of the proceeding;
the importance of the issues;
the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; and
whether any step in the proceeding was (i) improper, vexatious or unnecessary, or (ii) taken through negligence, mistake or excessive caution.
4Costs orders are said to have three fundamental purposes or objectives, those being: (1) to indemnify successful litigants for the costs of the litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behavior by litigants: see for example, Fong v Chan, 1999 2052 (Ont. C.A.) and Serra v. Serra, 2009 ONCA 395.
5The primary objective of a costs order should be the determination of a fair and reasonable amount the unsuccessful party in the particular proceeding ought to pay. It should not be simply a reflection of the successful party’s bill of costs. One governing principle should always be what the unsuccessful party could reasonably expect to pay in costs: see Boucher v. Public Accountant’s Council for the Province of Ontario, [224] O.J. No. 2634, and see Moon v. Sher, 2004 39005 (ON CA), [2004] O.J. No. 4651.
6The last question to be asked in any costs analysis is whether the result reached is fair and reasonable: see Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. No. 4495.
7Proportionality and reasonableness are considered to be “touchstone considerations” in the determination of a suitable costs award: see Beaver v. Hill, 2018 ONCA 840 at para. 12.
8Unsubstantiated allegations of fraud or other improper conduct had been found to justify cost awards on a substantial indemnity basis: see Jazz Air LP v. Toronto Port Authority, 2007 6457 at paras 10-1#.
9The Ontario Court of Appeal has ruled regularly on the issue of costs awards in cases, such as this one, which involve allegations of fraud. In the case of 2651171 Ontario Inc. v. Brey, 2022 ONCA 205, the court held that “unfounded allegations of fraud may attract serious consequences as a form of chastisement and a mark of the courts disapproval because of their extraordinarily serious nature that go directly to the heart of a person's very integrity.”
10Similarly in the case of Apotex Inc. v. Egis Pharmaceuticals, (Gen. Div.) 1990 68290 (ONSC), the court found that a substantial indemnity cost award was warranted in a case where the motion lacked merit and included allegations of fraud. Courts have adopted a similar approach in cases involving motions for injunctive relief which are withdrawn without explanation; see for example Kunst v. Tulk, 2003 10950 (ONSC).
Application of the relevant legal principles
1. The motion of the plaintiff for leave to admit further evidence
11In my endorsement on this motion dated August 3, 2023, I denied the plaintiff leave to admit further evidence over and above that which was contemplated at the time the litigation schedule was established. I found the plaintiff did not provide any good explanation for why the material was not included originally.
12The defendant, Anant Jain seeks his costs of this particular motion on a partial indemnity basis in the amount of $4,187.65.
13The plaintiff submits any costs award made against her for this particular motion should be on a partial indemnity scale. She submits she brought the motion in an attempt to admit relevant evidence supportive of her case and that she did so without any improper motives such as trying to delay the matter.
14The successful party on a motion is presumptively entitled to a costs award, however, the proportionality and reasonableness of that award are key considerations. Here Mr. Yiokaris and Ms. Manwani billed their time, a total of 19.4 hours, at the hourly rates stipulated by LawPRO. Those rates are unquestionably reasonable, particularly so in downtown Toronto. Their written materials and oral submissions were of the highest calibre. However, this was an oral motion brought by the plaintiff which was straightforward and not particularly complex. That being the case, I find the amount of time expended on this particular motion by counsel for Mr. Jain to be excessive. I therefore order the plaintiff pay the defendant Jain his partial indemnity costs of this motion, which I fix at $2,500, within 30 days.
2. The motion of the defendant Jain to vacate the Mareva order and the plaintiff’s motion for a Norwich order
15Mr. Jain was the successful party on each of these motions. His success on his own motion to vacate the Mareva order rendered the plaintiff’s motion for a Norwich order moot. He seeks his substantial indemnity costs which amount to $167,728.17, inclusive of HST and disbursements.
16Again, as the successful party Mr. Jain is presumptively entitled to a costs award. There are however, three essential questions which I must consider, those being, (i), what scale of costs should be ordered, (ii), whether the rates charged and the time expended by counsel for Mr. Jain are reasonable and proportionate, and (iii) what is the fair and reasonable costs award in the circumstances of this case.
(i) Partial or substantial indemnity?
17The plaintiff submits the quantum of the costs sought by Mr. Jain is unreasonable. The plaintiff suggests her own conduct in the litigation was not “reprehensible” such as to justify an award of costs on the substantial indemnity scale. She also argues the original motion for injunctive relief was necessary in order to allow her the maximum opportunity to preserve and recover her assets.
18Mr. Jain seeks his costs on a substantial indemnity scale. He argues the plaintiff’s original motion for injunctive relief was based on unsubstantiated allegations of fraud and unjust enrichment, allegations which were subsequently withdrawn by the plaintiff prior to the hearing of these motions. Mr. Jain also argues the plaintiff was guilty of misconduct which again justifies a costs award on a substantial indemnity basis.
19In my endorsement on these motions, I expressed a number of concerns about the plaintiff’s conduct and decision making. Those concerns are set out at paragraphs 7, 8 and 20 of my endorsement. I do not propose to reproduce all of them here, but I will note three particularly troubling features of the plaintiff’s conduct in this matter, each of which I would characterize as highly improper, those being as follows:
The plaintiff was less than frank and forthright in her original ex parte motion before Justice Christie on January 25, 2023.
The plaintiff made some disturbing allegations of fraud and misconduct against Mr. Jain and his law firm, which were later withdrawn without apology or explanation.
The plaintiff refused Mr. Jain’s reasonable request for access to funds to cover the minimal living expenses of he, his wife, and his daughter.
20Anyone considering an application for injunctive relief must bear in mind injunctions are an extraordinary remedy typically granted in only extraordinary circumstances. Injunctive relief is typically sought on a very sudden and urgent basis as was the case here. However, before pursuing such relief parties should be sure of their ground and be ready, willing, and able to put their best foot forward. Where, as here, the plaintiff fails to do so, and where, as here, the injunctive relief is ultimately found to be without merit or otherwise not warranted, the responding parties, who generally are called upon to respond to such applications on short notice, are entitled to their costs. Such were the circumstances that obtained in the case of Henry Schein Arcona Inc v. Mullin, 2000 CarswellOnt 3515, where the responding parties were awarded their costs on a solicitor and client basis.
21In my view, the conduct of the plaintiff is in fact rightly described as “reprehensible”. It fits fully within the Canadian Oxford Dictionary definition of that word: ie: “deserving censure or rebuke; blameworthy.” Such conduct calls out for a substantial indemnity costs award.
(ii) Are the rates charged and the time expended by counsel for Mr. Jain reasonable and proportionate?
22As already noted, both Mr. Yiokaris and Ms. Manwani are billing their time on this file in accordance with LawPRO rates, those being $405 per hour for Mr. Yiokaris and $260 per hour for Ms. Manwani. By downtown Toronto standards those rates are extremely reasonable, which accrues to the benefit of the plaintiff.
23The real issue is whether the total time expended by counsel on this file can be described as reasonable and proportionate.
24The plaintiff maintains the time expended by counsel for Mr. Jain on this matter, by my arithmetic some 520 hours, was not reasonable but rather, was “excessive”. The plaintiff also claims the time spent on the motions by Mr. Jain’s counsel significantly surpasses any reasonable expectations she might have as the unsuccessful party.
25Counsel for Mr. Jain argue the time expended reflects the lengthy and rather convoluted process that has unfolded in this matter since its inception in January of this year.
26The factual complexities of the case required the preparation of a wealth of materials, by all parties, the CaseLines page count totalling 11,363 pages. Over half of those materials were filed by Mr. Jain. His motion record consisted of eleven volumes. Mr. Jain swore a number of affidavits in this matter, chief among them being his Asset Affidavit sworn February 28, 2023, which ran to some 41pages, and his affidavit of April 3, 2023, which ran to some 112 pages, not counting exhibits, which themselves run from A through FK. The preparation of such materials unquestionably requires an inordinate amount of time and effort.
27To date, this proceeding has required four full days for cross examination on affidavits, the examination of the plaintiff consuming two of those days. Transcripts were generated which were referred to extensively by counsel for Mr. Jain in their written materials and oral submissions.
28The Jain factum on the motion was 46 pages long, almost half of which was law and argument.
29Without doubt, the materials filed by Mr. Jain were voluminous. They were also detailed, thorough, focussed on the issues, and well written. Ideally, materials filed by counsel in any matter should always be of that calibre, but it is particularly important that be so in circumstances such as these, where the financial well being of all involved parties is in play, and where the potential professional consequences for Mr. Jain could be devastating. Simply put, the stakes for Mr. Jain were such that his counsel were obliged to proceed on a flat out, leave no stone unturned, basis. In such circumstances it is well nigh impossible to determine with any degree of accuracy at what point the effort expended in defending such an action moves from the appropriate to the excessive.
30The amount of time expended by counsel is without doubt substantial, and the resulting account is eye-opening. However, given the overwhelming importance of the matter for Mr. Jain, I am not prepared to find the time expended on his behalf by his counsel was excessive.
31I find the rates charged and the time expended by counsel for Mr. Jain are reasonable and proportional to the gravity and complexity of the matter, and to the high degree of importance of the matter to Mr. Jain.
(iii) What is fair and reasonable?
32Typically, this question revolves around the notion of what the reasonable expectations of the unsuccessful party might be in terms of a costs award. That is often a function and reflection of the unsuccessful party’s own legal fees.
33The Costs Outline of the plaintiff shows Mr. Au and Mr. Chang have substantial indemnity hourly rates of $280 and $200 per hour respectively. It also shows total substantial indemnity fees of $24,387.39, inclusive of HST and disbursements. The plaintiff points to the obvious and significant discrepancy between her own claimed substantial indemnity fees, and those of Mr. Jain, as evidence in support of her contention that Mr. Jain's substantial indemnity fees cannot be said to have been within her reasonable expectations as the unsuccessful party.
34Typically, the bill of costs of the unsuccessful party is a useful yardstick in the determination of an appropriate costs award. Rule 57.01(6) requires each party to serve and file a Costs Outline on or before the hearing date. This helps to minimize the possibility of parties adjusting their claimed fees once the outcome is known in order to improve their position on costs. In this case the plaintiff chose not to file her Costs Outline until 10 days after the hearing of the motion, by which time the outcome may well have been more apparent to the discerning observer than perhaps would have been the case when counsel first began their oral submissions.
35I have some difficulty with the plaintiff’s Costs Outline. It covers only the two-month period from July 2023, when she retained Mr. Au and Mr. Chang, through the hearing of the motion. It does not include details of the fees incurred by the plaintiff prior to that point, from the inception of this matter sometime in the fall of 2022. The plaintiff’s ex parte motion before Justice Christie, the subsequent initial appearance before me, the five case conferences, and the four days of examinations, all occurred during that period of time. That being the case, I simply cannot conclude the plaintiff’s costs outline is a reliable yardstick for me to use in determining her reasonable expectations as to the quantum of costs she could expect to pay as the unsuccessful party. The only other comparator are the fees incurred by the other parties. Unless the plaintiff’s former counsel was working for free, the plaintiff’s total legal fees must surely be commensurate to some degree with the fees charged by counsel for the other parties.
36As I observed in my endorsement on the motions, this plaintiff is not without financial acumen. She commenced this action knowing she was making some very serious allegations against some very sophisticated parties, including a practicing lawyer, as well as advancing some very substantial monetary claims. I cannot believe the plaintiff could have failed to appreciate the other parties would vigorously defend themselves against such allegations, and would incur substantial legal fees in the course of doing so.
37The fair and reasonable resolution of any dispute is generally found somewhere between the positions of the parties involved. Given the overall circumstances of this case, and in particular the conduct of the plaintiff, I am persuaded the fair and reasonable resolution lies closer to Mr. Jain’s end of the scale.
38As I have already observed, this case also requires a costs award with a deterrent component which means a substantial indemnity costs order.
39I therefore order the plaintiff pay Mr. Jain his substantial indemnity costs for this proceeding to date, including his motion to challenge the Mareva order, and to defend the plaintiffs’ motion for a Norwich order, in the amount of $167,728.17, inclusive of fees, HST and disbursements, within 30 days. That order is without prejudice to Mr. Jain’s right to enforce the plaintiff’s undertaking as to damages.
3. The mortgage validity motion of the defendant Ying Wang
40The defendant, Ying Wang, brought a motion to determine the validity of her mortgage in this matter which was heard September 19, 2023. In my endorsement dated October 31, 2023, I found the mortgage in question to be valid. Ms. Wang is therefore the successful party.
41Ms. Wang now seeks her full indemnity costs of the motion as prescribed by s.8 of the Standard Charge Terms of the mortgage. She seeks the sum of $164,470.09 inclusive of fees, HST, and disbursements.
42In addition to he provisions of the Standard Charge Terms, Ms. Wang also points to the following additional considerations in support of her position;
The plaintiff originally alleged fraud and forgery on Ms. Wang’s part. Those allegations were ultimately withdrawn by the plaintiff when they were found to be without merit based on the evidence adduced during the examinations.
Ms. Wang was required to participate in eight months of various court appearances mandated by the nature and extent of the plaintiff’s claim as well as the number of defendants.
43Ms. Wang also directs me to a number of relevant authorities in support of her position. Of particular note is the recent decision of the Ontario Court of Appeal in Everest Finance Corporation v. Jonker, 2023 ONCA 146, where the court found that contractual provisions providing a mortgagee be entitled to recover costs actually expended in the enforcement of an agreement will generally be enforced. The court found such contractual provisions may not be altered by a judge considering a costs award unless that judge finds excessive rates or time are charged.
44The Ontario Court of Appeal has also recently found that where, as here, unfounded allegations of fraud are made, serious cost consequences may ensue which the court characterized as “a form of chastisement and a mark of the courts disapproval” of such allegations: see 2651171 Ontario Inc. v. Brey, 2022 ONCA 205.
45I am also mindful of the oft cited decision in Serra v. Serra, 2009 ONCA 395 where the court found costs orders should address a number of goals, including discouraging and sanctioning inappropriate behaviour. That must surely include making unfounded allegations of fraud.
46The plaintiff submits the quantum of costs sought by Ms. Wang is unreasonable. She suggests the hourly rates charged by Ms. Wang’s lawyers are excessive. She points to the Information for the Profession bulletin found at Rule 57 which suggests the maximum hourly rate on a partial indemnity scale for a lawyer of less than 10 years experience, such as Mr. Benipal, should be no more than $225, and no more than $350.00 for a lawyer such as Mr. Myers, who has more than the listed 20 years experience.
47The plaintiff also submits the motion brought by Ms. Wang was not complex. She submits this motion was based on the various documents signed by the plaintiff and on Ms. Wang’s blanket denial of any knowledge or participation in any fraud committed by the defendant Peggy Chan and/or Mr. Jain. That being the case, there were no complex factual or legal arguments to address, the fraud claims having been withdrawn before the motion was heard.
48I do not find the plaintiffs argument regarding the hourly rates of Mr. Myers and Mr. Benipal to be particularly persuasive. The bulletin found in Rule 57 is now 20 years old. Such dated information cannot reasonably be considered to be an appropriate guideline.
49I have also reviewed the recommended fee schedule provided by the Law Society of Ontario on its website. That is also of limited utility. It suggests that counsel with more than 20 years experience charge an hourly rate of $350.00. To suggest that someone with the breadth of experience of Mr. Myers should charge $350.00 an hour flies in the face of reality.
50Mr. Myers bills his time at $750 per hour. To my mind that is an entirely appropriate rate for counsel with over 40 years experience. Mr. Benipal bills his time at $425 per hour which does strike me as high for a lawyer with who was called in 2020. That said, his work on this matter appeared to me to be of a very high caliber such as one might expect from more experienced counsel.
51The plaintiff is correct in her submission the motion in question was not particularly complex. The motion was in fact based largely on the documents signed by the parties, and by Ms. Wang’s assertion she was a good faith lender who was unaware of any fraudulent activity on the part of the defendant Peggy Chan. However, that argument is a double-edged sword.
52The plaintiff advanced a two-prong argument on the mortgage validity motion. She first argued Mr. Jain did not meet his professional obligations in assisting her in this manner and was therefore negligent. Those allegations remain outstanding and will presumably be dealt with at the trial of this matter. Those allegations however are of questionable relevance to the issue of the validity of the mortgage held by Ms. Wang.
53The second prong of the plaintiff’s argument was an amalgam consisting of her own suspicions that Ms. Wang knew the mortgage broker involved had a history of fraudulent behaviour, her assertion of non es factum, as well as arguments regarding unconscionability, unfulfilled conditions, and breach of undertaking by Mr. Jain. I found all of those arguments to be without merit, particularly the assertion of non es factum given the plaintiff’s own admission she was careless when she signed the documents, and given the evidence of Mr. Jain to the effect that he provided the plaintiff with careful advice about the exact nature of each of the documents as she signed them, evidence which was corroborated by his assistant.
54Notwithstanding the absence of any evidence tending to show Ms Wang knew anything about the mortgage broker’s fraudulent activities, and notwithstanding the rather dubious nature of the plaintiff’s other arguments, the plaintiff continued to maintain her position the mortgage was invalid. By doing so she left Ms. Wang with no option but to proceed with her motion. Indeed, the plaintiff maintained that position through the end of the hearing of the motion, even suggesting at the very last minute the motion was premature and should be adjourned in order to allow her the opportunity to cross examine Ms Wang on her affidavit. That was some five months after the motion materials were served on the plaintiff, which would have been ample time to arrange such examinations.
55The plaintiff eventually withdrew her allegations of fraud against Ms. Wang. The plaintiff could also have conceded the validity of Ms. Wang’s mortgage while still maintaining her claims against the other defendants. Had she done so she would not now be facing these costs consequences. She chose instead to maintain her rather dubious position, even in the face of the express finding in my endorsement of February 9, 2023, that Ms. Wang was a good faith lender and there was no evidence she was aware of any improprieties when she made the loan. The plaintiff must live with the consequences of that decision.
56The plaintiff signed the Standard Charge Terms of the mortgage. She therefore knew, or ought to have known, about the provisions of s.8 of that document concerning recovery of costs of enforcement.
57All of that said though I must still consider whether the time expended by counsel for Ms. Wang was reasonable and if so what portion of that amount should be borne by the plaintiff.
58Counsel for Ms. Wang billed approximately 260 hours in total on this matter. While that may, at first blush, seem like an exorbitant amount of time, it must be remembered that this was more than a routine half day motion. Ms. Wang was named as a defendant in this matter by the plaintiff in January 2023. The plaintiff accused Ms. Wang of fraud and other improper conduct. Ms. Wang was obliged to defend against those allegations which required her to prepare responding materials, under a tight deadline, for the injunctive relief hearing in February. That was addressed in my earlier costs order. Thereafter Ms Wang had to travel the same path as the other parties, including attendance at five conferences before me, preparation for and attendance at four days of examinations, and receipt and review of all materials filed in this matter. Only then could Ms Wang proceed with her mortgage validity motion.
59Ms. Wang was obliged to defend herself against the plaintiff’s allegations of improper conduct while at the same time taking steps to safeguard her $850,000 mortgage loan to the plaintiff. Again, in such high stakes litigation it is difficult to determine how much time is just enough, and how much is excessive. I would not expect any party to make that determination with any degree of exactitude. Rather, I would expect any party engaged in high stakes litigation to pull out all the stops. Therefore, I do not find Ms. Wang’s costs to be excessive.
60Ms. Wang has been billed total legal fees of $164,470. 09 for legal services associated with enforcing her mortgage from March 7, 2023, through the hearing of her motion on September 19, 2023. That amount represents the total of “all costs, charges, legal fees (as between solicitor and client) and expenses…incurred in taking, recovering and keeping possession of the land…” per s.8 of the Standard Charge Terms.
61Given the circumstances before me, and in view of the findings of the Ontario Court of Appeal in the Everest Financial Corporation case, and in the 2651171 Ontario case, both supra, I conclude Ms Wang is entitled to her full indemnity costs.
4. Costs of the defendants, Po Yuk Chan aka Peggy Chan and As Cheng
62Counsel for these defendants, Mr. David Myers, has submitted a Costs Outline as well. Mr. Myers attended most, if not all, of the significant appearances to date in this matter. He did not file any materials or make any submissions. Rather, he was engaged in a watching brief.
63While the outcome of these motions has no doubt narrowed the issues, the matter is nevertheless ongoing. I therefore decline to make a costs award for or against these defendants at this point. Instead I will leave the issue to be determined at the trial.
Conclusion
Order to go as follows:
The plaintiff, Yan Mi Eunice Chan, shall pay the defendant, Anant Jain, his costs of the of the plaintiff’s motion for leave to admit further evidence in the amount of $2500.00 within 30 days.
The plaintiff, Yan Mi Eunice Chan, shall pay the defendant, Anant Jain, his substantial indemnity costs of this proceeding to date, including his motion to vacate the Mareva order, and to defend the plaintiff’s motion for a Norwich order, in the amount of $167,728.17 within 30 days.
The plaintiff, Yan Mi Eunice Chan, shall pay the defendant, Ying Wang, her full indemnity costs of this proceeding from March 7, 2023,, to date, including her mortgage validity motion, in the amount of $164,470.09 within 30 days.
These orders are made without prejudice to the rights of Mr. Jain and Ms. Wang to enforce the plaintiff’s undertaking as to damages.
C. M. SMITH, J.
Date: February 5, 2024