Court File and Parties

Court File No.: CV-22-00687490-00CP
Date: 2025-01-15
Court: Superior Court of Justice - Ontario

Between:
Marko Stajic, Plaintiff
– and –
Scott Langille, Gerhard Muller, Paul Pathak, Eric Silver, Michael Stein, and John Does 1-3, Defendants

Before: E.M. Morgan

Counsel:
Albert Pelletier, counsel for the Plaintiff
Linda Rothstein, Paul Davis, and Sonia Patel, for the Defendants

Heard: Cost submissions in writing

Costs of Adjournment

[1] The Plaintiff has brought a motion to remove Osler, Hoskin & Harcourt LLP (“Osler”) as counsel of record for the Defendants. That motion was adjourned after a full day of argument.

[2] There is considerable follow-up to be done before the motion returns. This includes further production by the Plaintiff of documents obtained in a related case so that privilege issues can be vetted, surreply evidence to be submitted by the Defendants in response to matters contained in the Plaintiffs’ reply materials, and, possibly, cross-examinations on matters newly raised in reply.

[3] Counsel for the Defendants seek costs of the adjournment. It is their view that the need for an adjournment was so self-evident from the exchange of motion materials, that the Plaintiffs should have acceded to the request without requiring a full day’s hearing to get there.

[4] Counsel for the Plaintiff submits that there is no reason for any award of costs of the adjournment. It is their view that the motion to remove Osler could have proceeded, and that the production/privilege issues that prompted the adjournment are related to the overall action but not essential to the motion and could be addressed at another time.

[5] It is apparent to me that the Defendants deserve some costs. I say this with great respect to Plaintiff’s counsel, but the reply affidavit that they served made an adjournment request eminently predictable.

[6] I do not criticize the content of the Plaintiff’s reply affidavit. It may be that the matters raised there will be important and determinative once the motion is heard on its merits. But the reply affidavit contained allegations of professional misconduct about Osler and, in addition, referenced certain communications that the Plaintiff possesses that are on their face and in their very description Osler’s solicitor-client communications. How could Defendants’ counsel – in effect, Osler’s counsel in the removal motion – not be permitted to respond to the affidavit and assess the materials described therein for privilege?

[7] The Supreme Court in Celanese Canada Inc. v. Murray Demolition Corp., 2006 SCC 36, [2006] 2 SCR 189 reasoned that where one side possesses documents that seem to belong to the opposing side’s lawyers, production and review of documents for privilege must take place before a client’s choice of solicitor can be challenged. Plaintiff’s counsel argued against the adjournment on the basis that, under the circumstances, a review is unnecessary because Osler already had the same large quantity of documents in its possession. That, however, does not suffice.

[8] The Order of Justice Penny, issued in the related proceeding in which the Plaintiff obtained the documents in question, limited the documents’ use; moreover, the circumstances under which the documents were produced to the Plaintiff made it clear that they had not yet been reviewed for privilege. If the Plaintiff is to make use of them, and certainly if the Plaintiff’s affiant references them in his sworn evidence, they must first go through a review to sort out the issues of privilege. Although both sides did considerable legal research to support their respective positions, it seems to me that it was fairly obvious that once the Plaintiff’s reply affidavit was served on Defendants’ counsel, an adjournment would have to ensue.

Counsel for the Defendants has submitted a Costs Outline which shows they incurred $66,658.81 on a partial indemnity scale, $99,546.05 on a substantial indemnity scale, and $110,508.46 on a full indemnity basis. Each of those figures is inclusive of all fees, disbursements, and HST. For their part, counsel for the Plaintiff submits that if costs of the adjournment are to be awarded at all, a relatively small payment of $15,000 would be the appropriate amount.

[9] In support of their request for full indemnity costs, Defendants’ counsel cite 5750351 Manitoba Ltd. v. Lake St. Martin First Nations, 2024 MBKB 125, paras. 41-55 for the proposition that where one party takes a “win at all costs” approach and is unsuccessful, the highest level of costs recovery is called for. While that seems right as a statement of principle, I do not think that it accurately describes Plaintiff’s counsel’s approach here. Plaintiff’s counsel may have been anxious to move the motion ahead as the action, with its companion actions, has been bogged down in procedure and has not made much progress. While Plaintiff’s counsel miscalculated the impact of their reply affidavit, their position was not born of egregious or oppressive conduct.

[10] I would say the same about the Defendant’s request for substantial indemnity costs. That scale of costs is generally applied “only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties. Accordingly, the fact that an application has little merit is no basis for awarding solicitor-client costs”: Young v. Young, [1993] 4 SCR 3, at 134.

[11] The Plaintiff’s position had little merit – an adjournment was needed and Plaintiff’s counsel should have seen that – but opposing it was not reprehensible or scandalous. Plaintiff’s counsel’s position was a product of haste and, perhaps, some frustration with the slow pace of this and related litigation. It was, in other words, a mistaken assessment of the import of the privilege issue and a misjudgment of how important it would be for Osler to respond to allegations made against it; but it was a position taken in good faith on behalf of an impatient proposed class of investors.

[12] Costs are always discretionary under section 133 of the Costs of Justice Act. In my view, given all of the circumstances, costs on a partial indemnity scale are what is called for here. That will satisfy the principle of indemnity set out in Rule 57.1(1)(0.a) without being punitive in its impact or message.

[13] Given the extensive research, preparation, and full day’s argument that went into this hearing, the quantum of partial indemnity costs sought by the Defendants is reasonable. They invested time and effort and got the result they desired from the motion; I do not see any need to inspect each billable hour under a microscope.

[14] The Plaintiff shall pay the Defendants $66,658.81, all inclusive, as costs of the adjournment motion.

Date: January 15, 2025
E.M. Morgan