Reasons for Decision on Costs

Court File No.: CV-24-97057
Date: 2025/02/10
Ontario Superior Court of Justice

Between:
Kristine McGinn, Applicant
– and –
Stephen Bleeker, Assurance Home Care, and Stephen Bleeker, in his capacity as Trustee of the Janice R. McDonald Family Trust, Respondents

Applicant Counsel: Kevin Caron, Sean Grassie, and Emma Williams
Respondent Counsel: Christopher P. Morris and Mira Nemr
Heard: In writing

Justice Brian Holowka

Overview

[1] On November 18, 2024, I granted an order referring the applicant’s claims to arbitration under the Shareholders’ Agreement and the Notice of Arbitration. At the hearing, the respondents consented to that referral.

[2] Additionally, I granted the following relief:

a. An injunction maintaining the status quo ante between the parties as it existed on September 5, 2024;
b. An injunction restraining the respondents from interfering with the applicant’s ability to access the premises, databases, email accounts, cloud-based services, and all other facilities or property of Assurance, pending arbitration;
c. An injunction restraining the respondents from taking any further steps to interfere with the applicant’s status and rights as a director, officer, and employee of Assurance, pending arbitration; and
d. An injunction restraining Mr. Bleeker from making any statements to employees or third parties regarding the disputes described herein, in particular, Ms. McGinn’s personal circumstances with Assurance.

[3] The applicant now seeks costs on a substantial indemnity basis.

[4] The issues before me are as follows:

a. Should costs be fixed in the cause, or should there be an award of costs payable forthwith?
b. Are substantial indemnity costs appropriate in the circumstances?
c. Should a costs award be made against Mr. Bleeker only?
d. What is the appropriate quantum of costs?

[5] For the following reasons, I have concluded that costs should be payable forthwith on a partial indemnity basis by the respondents to the applicant. I fix costs payable to the applicant in the amount of $47,769.39, including fees, disbursements, and HST, payable within 30 days of the release of this decision.

Position of the Parties

Position of the Applicant

[6] The applicant submitted that the application before me should not have been necessary—but the respondents left her no choice but to seek injunctive relief to protect her rights. Elevated costs are warranted to express disapproval of Mr. Bleeker’s high-handed conduct. She seeks substantial indemnity costs in the amount of $70,971.56.

[7] The applicant submitted that the following facts militate in favour of an elevated costs award:

a. The applicant was entirely successful.
b. Though the respondents did not oppose part of the relief sought (the referral to arbitration), this was not conceded until six days before the application.
c. Mr. Bleeker engaged in high-handed conduct. He allegedly took unlawful steps to strip the applicant of her rights and ability to maintain oversight of Assurance pending a proper adjudication of the issues. This necessitated an urgent case conference and expedited injunction hearing. This should have been resolved without court intervention; instead, significant costs had to be incurred by the applicant to obtain urgent court relief.
d. The issues raised were important. Mr. Bleeker sought to lock the applicant out of the company, jeopardizing her interests as a director, employee, and shareholder of Assurance. He terminated her email access and excluded her from the company's day-to-day operations. Finally, he made troubling misrepresentations to staff in a transparent effort to undermine the applicant’s authority and to provide a veneer of a justification for his conduct.

[8] The applicant submitted that Mr. Bleeker should pay the applicant’s costs personally. She submitted that an individual director and shareholder could not use corporate funds to defend litigation claims of oppression from a governance dispute with another stakeholder. Here, she submitted that the dispute in this application was not between Assurance and the applicant—it was between Mr. Bleeker and the applicant. She submitted that if costs are awarded against Assurance, the applicant will effectively be made to pay her own costs, and the value of her shares in Assurance will be depleted accordingly. She maintained that this outcome would be manifestly unfair.

Position of the Respondents

[9] The respondents submitted that the preferable course for awarding costs of an injunction is to make an award in the cause as there has been no final determination of the parties' rights—costs should be left to the arbitrator after the arbitration hearing on the merits. The respondents submitted that this is the preferable course of action, particularly as the court did not find that the respondents’ actions amounted to oppressive conduct.

[10] They also argued that elevated costs are inappropriate in the present circumstances as they are meant to sanction egregious, malicious, and counter-productive conduct. The respondents submitted that the court made no finding of this kind.

[11] Furthermore, the respondents argued that there is no basis to make a cost award against Mr. Bleeker only. The respondents say the applicant’s reliance on Naneff v. Con-Crete Holdings (1993), 11 BLR (2d) 218 (Ont. Gen. Div. Commercial List) and Waxman v. Waxman was misplaced. The respondents submitted that findings of oppressive conduct were made in these cases, unlike the present circumstances.

[12] Finally, the respondents argued that the quantum of costs sought by the applicant is excessive when considering reasonable expectations of the parties for an application for injunctive relief, where the merits of the underlying disputeare not adjudicated.

Analysis

The Cost Award Should be Paid Forthwith

[13] The respondents argued that the typical costs award for an injunction application pending a hearing on the merits is to make an award of costs in the cause. There is conflicting jurisprudence on the exercise of the judge’s discretion on this issue.

[14] It is well established that costs usually follow the event—a successful party should be entitled to an award. Section 131 of the Courts of Justice Act provides that costs are at a judge’s discretion, subject to the provisions of the legislation.

[15] Rule 57.03(1) of the Rules of Civil Procedure provides that “on the hearing of a contested motion, unless the court is satisfied that a different order would be more just, the court shall, (a) fix the costs of the motion and order them to be paid within 30 days…”

[16] This rule does not detract from the court’s residual discretion to determine what costs order would be just.

[17] I agree with Vermette J.’s statement of the law in Barry’s Bootcamp Canada Inc. v. 100 Bloor Street West Corporation, 2022 ONSC 4331, on the issue of whether costs should be awarded forthwith or in the cause. After quoting paragraphs 2 to 5 of Intercontinental Forest Products SA v. Rugo, she concludes as follows:

Given that there is no invariable rule and that the court retains discretion with respect to costs, there are interlocutory injunction cases where costs were awarded in the cause, and other cases where costs were ordered payable forthwith. The exercise of discretion in a particular case depends on the circumstances of the case. See Accreditation Canada International v. Guerra, 2017 ONSC 932 at para. 14 (Div. Ct.).

[18] While Vermette J. concluded that it was a “virtual certainty” that the case's merits would be decided at an upcoming trial, I did not come to the same conclusion regarding the case before me. There is no basis for me to conclude that the matter will proceed with “virtual certainty” to a full arbitral hearing with a decision being made on the merits. It is within the range of possible outcomes that the present dispute will be resolved through negotiation. In my view, judges can more confidently deal with the application before them than predict future developments.

[19] In my view, making a costs order immediately is appropriate for the following reasons:

a. The injunction aspect of the present dispute may not be dealt with at the arbitral hearing in any meaningful fashion.
b. The applicant was entirely successful on the present application for an injunction.
c. Costs are a necessary consequence of the respondents’ position on the injunction. The respondents only consented to refer the matter to arbitration days before the injunction hearing and were opposed to the balance of the relief sought.
d. It is unfair to deny a successful party the default rule that costs are payable forthwith when there is an apparent disparity in financial resources. The materials reflect that Assurance is funding Mr. Bleeker.

[20] Absent specific justification to depart from the rule that on interlocutory motions, including interlocutory injunctions, costs should be paid forthwith, I exercise my discretion and make a costs award to be paid forthwith.

Elevated Costs Are Not Appropriate

[21] Elevated costs may be warranted where the unsuccessful party has engaged in behaviour worthy of sanction.

[22] Where a party has engaged in reprehensible, scandalous, or outrageous conduct, a court may sanction this conduct through an award of elevated costs: Davies v. Clarington (Municipality), 2009 ONCA 722, at para. 28; Young v. Young, [1993] 4 S.C.R. 3, at p. 134. Substantial indemnity costs are to be awarded “in rare and exceptional cases to mark the court’s disapproval of the conduct of the party in the litigation”: Hunt v. TD Securities Inc., 66 O.R. (3d) 481 (Ont. C.A.), at para. 123.

[23] The kind of conduct that will justify an elevated level of costs is not limited to conduct in the proceedings and can include the circumstances that gave rise to the litigation: Mortimer v. Cameron, 17 O.R. (3d) 1 (C.A.), at p. 23, as cited in Mars Canada Inc. v. Bemco Cash & Carry Inc., 2018 ONCA 239, at para. 43. In Mars Canada, the Court of Appeal for Ontario upheld the motion judge’s award of substantial indemnity costs based on the motion judge’s findings that the appellants had “brazenly breached” the settlements, relied on an “obvious slip” to try to avoid living up to their agreements, altered a document in “a transparent attempt to hide their illicit activities,” and engaged in tactics that increased costs: at paras. 42 and 44.

[24] The applicant was successful on the application for an injunction. In granting the relief sought, I found a serious issue to be argued and that if the injunction were not granted, the applicant would suffer irreparable harm. I did not find that the respondents engaged in oppressive conduct.

[25] The conduct of Mr. Bleeker in not referring the issue between the parties to arbitration but instead unilaterally seeking to dismiss and isolate the applicant from the operations of Assurance, was aggressive, heavy-handed, and undoubtedly troubling. That said, I am not satisfied that the circumstances require me to sanction his behaviour through costs, especially as the full merits of the case have yet to be argued.

[26] I conclude that costs should be awarded on a partial indemnity basis.

A Cost Award Should Not Be Made Against Mr. Bleeker Personally

[27] The applicant submits that the court should prohibit Mr. Bleeker from using company funds to pay for his litigation. She argues that Mr. Bleeker should not be permitted to deplete company resources to pay for litigation resulting from his own unlawful conduct.

[28] In my view, the merits of the matter have yet to be fully argued. Unlike Naneff v. Con-Crete Holdings and Waxman v. Waxman, no finding of oppression has been made. The arbitral panel will determine this issue. As such, I will not require Mr. Bleeker to pay the costs personally.

Quantum of Costs

[29] The respondents submit that costs should be fixed at no more than $35,000.00.

[30] The costs fixed by the court “should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant”: Boucher v. Public Accountants Council for the Province of Ontario, 71 O.R. (3d) 291 (C.A.), at para. 24.

[31] While the time spent by the applicant’s three counsel was considerable, in my view, the time spent, and the quantum claimed are reasonable considering the nature and complexity of the matter as well as its urgency.

[32] The application for an injunction was critically important to the applicant. She had little option but to commence the application considering the conduct of Mr. Bleeker. The applicant would have suffered irreparable harm had the injunction not been granted.

[33] I find that the rates claimed for counsel for the applicant are reasonable having regard to their years of experience. The respondents do not take issue with the rates charged.

[34] The respondents do not challenge the amount of disbursements claimed by the applicant. I find the disbursements claimed by the applicant were properly incurred.

Conclusion

[35] For these reasons, the applicant is entitled to costs on a partial indemnity basis. In all the circumstances, and having regard to the principles enunciated in Boucher, as well as the factors listed in r. 57.01 of the Rules of Civil Procedure, I find that the fees and disbursements claimed by the applicant in respect of the case conference and the court application for an injunction are fair and reasonable. Costs are to be paid by the respondents in the total amount of $47,769.39, inclusive of disbursements and taxes, within thirty days.

Justice Brian Holowka
Released: February 10, 2025