David J. Fong FIRST Applicant DF 51 Consulting Ltd. SECOND ApplICant And: David Rees First Respondent DGR Holdings Limited Second Respondent v. Docket:, 2020 NLSC 69

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Fong v. Rees , 2020 NLSC 69 Date : May 8, 20 20 Docket : 201401G0574 Between: David J. Fong FIRST Applicant DF 51 Consulting Ltd. SECOND ApplICant And: David Rees First Respondent DGR Holdings Limited Second Respondent -AND- Docket: 201501G4379 BETWEEN: DAVID REES FIRST APPLICANT DGR HOLDINGS LIMITED SECOND APPLICANT AND: DAVID FONG FIRST RESPONDENT PAULETTE FONG SECOND RESPONDENT

DF 51 CONSULTING LTD. THIRD RESPONDENT CANADIAN WILDERNESS HOLIDAYS LTD. FOURTH RESPONDENT QUIDI VIDI BREWING COMPANY LTD. FIFTH RESPONDENT Before: Justice Sandra R. Chaytor Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: February 7, 2020

Summary: This is an application seeking trial costs with respect to two oppression actions brought pursuant to the Corporations Act . The actions were heard together with the evidence in one being evidence in the other. The application was brought after the trial decision had been appealed and, in part, varied. The Court of Appeal directed that its conclusions on the merits, be taken into account in the disposition of this application. The Court found that neither party was ultimately successful in advancing his action and therefore each party was entitled to his costs with respect to the other’s action.

With respect to the bulk of costs, the Court determined it was appropriate to allow each party a percentage of costs equivalent to the Court’s assessment of the percentage of time and resources that could reasonably be attributed to each action. The Court concluded that the misappropriation allegations raised in the Fong action had been the main focus of the trial while Rees’ action did not add substantially to the time or complexity of the trial. Costs were apportioned accordingly. The Court further determined that it was appropriate to allow costs from and up to specific stages of the proceedings.

The Court declined to award Rees solicitor-client costs. It was unable to conclude that Fong’s behavior was such as to warrant an award on that basis. Appearances: J. Michael Cabot Appearing on behalf of the Applicant, David Rees

Jerome P. Kennedy, Q.C. Appearing on behalf of the Respondent, David Fong Authorities Cited: CASES CONSIDERED: Portugal Cove-St. Philips (Town) v. Willcott (1997), (NL CA), 150 Nfld. & P.E.I.R. 183,470 A.P.R. 183 (Nfld. C.A.); British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71; Young v. Young, (SCC), [1993] 4 S.C.R. 3; Greeley Estate v. Greeley, 2016 NLCA 26; House of Haynes (Restaurant) Ltd. v. Snook (1995), (NL CA), 134 Nfld. & P.E.I.R. 23, 417 A.P.R. 23 (Nfld. S.C. (C.A.)); Petten v. E.Y.E. Marine Consultants (1998), (NL SC), 179 Nfld. & P.E.I.R. 94, 546 A.P.R. 94 (Nfld.

S.C. (T.D.)); Hamilton v. Open Window Bakery Ltd., 2004SCC 9 STATUTES CONSIDERED: Corporations Act, R.S.N.L. 1990, c. C-36 RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sched. D REASONS FOR JUDGMENT Chaytor, J.: OVERVIEW AND BACKGROUND [1] An uncommon situation presents. Although I was not the trial judge, I have been asked to make an order for costs with respectto the trial of two oppression actions brought pursuant to the Corporations Act, R.S.N.L. 1990, c. C-36 (the “Act”).[1] The actions wereheard together with the evidence in one being the evidence in the other.

The application for costs was brought over 18 months after thetrial judge had rendered his decision. In the intervening period, he retired. A further complication arises in that the trial decision wasappealed and, in part, varied by the Court of Appeal. [2] To familiarize myself with this matter I have reviewed the lengthy decision of the trial judge in which he details the evidence,his findings of fact, and his reasoning.

I have also reviewed the appellate decisions, the transcripts of the evidence from the trial and keyinterlocutory applications, as well as the voluminous court file including briefs and written submissions filed by the parties. I have alsohad the benefit of hearing submissions on this application from the same counsel who represented the parties at trial. [3] David Rees and David Fong were long time business partners. Their last venture together was Quidi Vidi Brewing Company(“QVBC”).

Over time, their relationship became strained and acrimonious. [4] On February 7, 2014, Fong commenced an Originating Application against Rees pursuant to

section 371 of the CorporationsAct, R.S.N.L. 1990, c. C-36 (the “Act”), seeking various remedies for oppression. Fong alleged that during Rees’ tenure as manager ofQVBC, Rees had misappropriated funds from QVBC by way of systematic and ongoing theft and that he had failed to make taxremittances on behalf of QVBC. Fong claimed Rees’ actions constituted oppression and sought, amongst other things, a forensic audit ofQVBC. The Court ordered the forensic audit (consented to by Rees) which was completed by KPMG LLP.

Fong was not satisfied withthe KPMG analysis and subsequently retained forensic auditor, Paul Bradley of Deloitte LLP to conduct a review. [5] After a series of interlocutory applications, the hearing of Fong’s action commenced April 27, 2015 and continued for five

days, ending on May 1, 2015 at which point it was adjourned until the fall.

During those initial days of the trial, evidence was received from Dorothy Keating of Noseworthy Chapman (the then auditors for QVBC), Sean Handrigan (Fong’s personal accountant retained by Fong to conduct a review to determine if a forensic audit was warranted) and Pascal Jolicoeur of KPMG (the lead forensic accountant who conducted the audit). [ 6 ] During the adjournment, in June 2015, Fong brought an interlocutory application to add the corporate parties to his action [2] and to add additional grounds and remedies to the oppression claim including seeking an order directing Rees’ shares be sold to Fong.

The amendments sought were granted. [ 7 ] On August 26, 2015, Rees and DGR Holdings Ltd. brought an Originating Application against Fong and the other named respondents [3] alleging oppression by Fong with respect to various actions taken by him regarding the management and operation of QVBC.

Rees sought a declaration that Fong’s actions constituted oppression and sought remedies including that Fong be removed as a director of QVBC and that a “shot-gun clause” be implemented compelling DF 51 Consulting Ltd. to make an offer to purchase all of the shares of DGR Holdings Ltd. [ 8 ] The trial judge ordered that the two actions be heard at the same time with evidence in one being evidence in the other. The proceedings were not formally consolidated. The hearing continued in the fall of 2015 and finished in May 2016.

It consumed, in total, 50 full or partial hearing days. [ 9 ] Following the conclusion of the trial, the parties filed lengthy written submissions. Fong also filed a supplementary brief to address Rees’ late argument that Fong’s action was itself

an act of oppression. [ 10 ] The trial judge rendered his decision on March 1, 2017. With respect to Fong’s action, he dismissed the allegation of misappropriation of funds by Rees but found that Rees had committed three instances of oppression. Rees’ action was dismissed altogether finding no oppression by Fong against Rees. [ 11 ] The parties were further ordered to file memoranda of argument as to appropriate remedies to be granted for the findings of oppression including the issue of the suitability of a “shot-gun” compulsory buy-out order.

Following submissions by the parties, the Court made a buy-out order whereby the first offer was to be made by Rees within 14 days from the filing of the formal order (June 12, 2017). The Order provided that amendments could be made to it by consent of the parties or further order of the Court. [ 12 ] The June 12, 2017 Order also included that costs of the forensic audit conducted by KPMG were to be paid by QVBC.

Argument on costs of the proceedings was adjourned with leave to the parties to apply to have a date set to be heard on the issue. [4] [ 13 ] On June 20, 2017, Rees filed a Notice of Appeal of the trial decision along with an application for a stay of the buy-out order pending the disposition of the appeal. The Court of Appeal dismissed the application for a stay on July 4, 2017.

In its decision, the Court of Appeal concluded there was a gap in the June 12, 2017 Order in that it did not address the situation where Rees failed to make an offer. [ 14 ] On July 11, 2017, Fong brought an application before this Court seeking directions on the June 12, 2017 Order .

After hearing from the parties, the trial judge amended the Order including allowing a further period of time for Rees to make an offer failing which a Calculation Valuation Report was to be carried out. [ 15 ] Rees proceeded with an appeal of the findings of oppression against him in the Fong action and of the dismissal of his own oppression action against Fong.

Fong did not appeal, thus leaving unchallenged the trial judge’s dismissal of his allegations of misappropriation of funds by Rees. [ 16 ] The Court of Appeal rendered its decision October 29, 2018, determining that neither party’s claim of oppression succeeded. Thus, Rees’ appeal regarding the findings of oppression by him against Fong was allowed as the Court of Appeal held the trial judge had erred in concluding that Rees’ conduct was such as to warrant an oppression remedy pursuant to

section 371 of the Act . Rees’ appeal of the trial judge’s dismissal of his action regarding oppression by Fong against him was dismissed. The Court of Appeal also upheld the trial judge’s decision with respect to QVBC paying the cost of the forensic audit. As such, these costs are not included in this decision on costs. [ 17 ] Given the partial success of each party on the appeal, the Court of Appeal ordered the parties to bear their own costs on appeal. The decision was silent regarding trial costs. [ 18 ] On December 18, 2018, Rees brought this application seeking costs of the trial.

He contends that he was the successful party in that he was able to defend all allegations made against him, particularly the misappropriation allegations which he submits consumed a large portion of the trial. Given the nature of the allegations made against him, he seeks costs on a solicitor-client basis. [5] [ 19 ] In response to Rees’ application for costs, Fong filed a memorandum seeking his costs on the basis of having been the successful party at trial.

On the hearing of this application he moved from this position and asserted that each party should bear his own costs, except for the July 11, 2017 application for which he seeks solicitor-client costs. [ 20 ] On May 8, 2019, this application was set for a status appearance. At that time, the applications judge inquired whether jurisdiction for the application rested with this Court or the Court of Appeal. The parties sought further direction from the Court of Appeal on the jurisdictional issue.

The Court of Appeal gave direction that as no order had been made regarding costs in the trial division, the Court of Appeal had not dealt with the trial costs. The Court of Appeal gave leave for the parties to return to this Court for a disposition on trial costs and gave direction to the Court to take into account the Court of Appeal’s conclusions on the merits of the case. It stated: In the circumstances, it follows that the General Division, not the Court of Appeal, is the appropriate venue to determine the issue of costs in the General Division.

Of course, given the Court of Appeal’s variation of the Trial judgment on the merits, any costs disposition

in the General Division would have to take account of the Court of Appeal’s conclusions on the merits. [21] The following are the issues to be determined: 1. What is an appropriate order of costs? 2. What, if any, is an appropriate order of costs with respect to the July 11, 2017 post-trial application by Fong? [22] For the reasons that follow: 1. Rees is awarded party-party costs as against Fong up to August 26, 2015, the date Rees commenced his action, to be taxedpursuant to Column 3 of the Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sched. D. 2.

Fong shall bear the cost of the fees and disbursements with respect to the retainer of Deloitte including the attendance fees ofPaul Bradley. 3. Fong is awarded party-party costs as against Rees for the drafting and filing by Fong of the supplementary post-trial brief tobe taxed pursuant to Column 3. 4.

With respect to all other costs incurred in either action from August 26, 2015 to March 1, 2017, the filing date of the trialdecision, Rees is awarded 75% of his costs on a party-party basis as against Fong to be taxed pursuant to Column 3, and Fong is awarded25% of his costs on a party-party basis as against Rees to be taxed pursuant to Column 3. 5. The parties shall bear their own costs incurred after March 1, 2017. 6. Costs awarded are with respect to one counsel. 7.

Given the mixed results, the parties shall bear their own costs with respect to this application. analysis Issue 1: What is an appropriate order of costs? General Principles and Rules of Court [23] There are well-established general principles or rules of practice regarding the awarding of costs.

Firstly, it has long been heldthat costs awards are within the discretion of the trial judge and that discretion has been described as “unfettered and untrammeled”,subject only to applicable rules of court and the need to act judicially on the facts of the case (British Columbia (Minister of Forests) v.Okanagan Indian Band, 2003 SCC 71, at paragraph 42). [24] Rule 55.02 (1) of the Rules, as amended, explicitly states that the costs of any party, the amount of costs and the party by whomcosts are to be paid, are in the discretion of the Court.

Pursuant to Rule 55.02(1)(b), the Court, in exercising its discretion, may allow apercentage of the taxed costs or allow taxed costs from or up to a specific stage of a proceeding. [25] It is also well-established that costs usually follow the cause. Rule 55.03(1) provides that, unless the Court otherwise orders,the costs of a proceeding or of any issue of fact or law therein shall follow the event. This means that in the normal course, a successfulparty is awarded his or her costs.

This is subject, however, to the general rule that any award of costs is within the discretion of the trialjudge. [26] Although the general principle is that costs will normally follow the event, because costs are always in the discretion of theCourt, a successful litigant can never be said to have a “right” to costs. All a party has, in the absence of special circumstances, is a“reasonable expectation” of obtaining an order for the payment of his or her costs. The Court, in exercising its discretion, may departfrom this general principle based on the particular circumstances of the case (Portugal Cove-St.

Philips (Town) v. Willcott (1997), (NL CA), 150 Nfld. & P.E.I.R. 183, 470 A.P.R. 183 (Nfld. C.A.), at paragraph 10). [27] With these principles and Rules in mind, I turn to the question of an appropriate award of costs in these actions.

Should either party be awarded costs? [ 28 ] If I were to be making this decision after the trial but before the appeal, Fong would have had a degree of success as the trial judge found three areas of oppression by Rees. These findings were overturned however on appeal and the Court of Appeal has directed me to consider its conclusions on the merits. Taking the outcome of the appeal into consideration at the time of determining this costs application, neither party has succeeded in its claim against the other.

This might support Fong’s position that each party bear his own costs; however, a close examination of this matter suggests that such an order would not be equitable in these circumstances. [ 29 ] Rees, on the other hand, contends he was ultimately the successful party in that he was able to defend all allegations made against him, particularly the misappropriation allegations and given the grievous nature of these allegations should be awarded costs against Fong on a solicitor-client basis.

Rees, however, was not the only successful party in defending the action brought against him; Fong was also successful in defending Rees’ claim. [ 30 ] In this case, two actions were heard at the same time with the evidence in one being the evidence in the other. At trial, Fong had a degree of success in his action. Following appeal, however, neither party was successful in advancing his action; each was successful however in defending the other’s action.

Following the direction given by the Court of Appeal, I am to take into account its reversal of the success that Fong enjoyed at trial and that neither party ultimately was successful in advancing his action based in oppression. The Court of Appeal did not, however, deal with the trial judge’s dismissal of Fong’s allegations of misappropriation of funds by Rees as Fong did not appeal that finding. At trial, Rees was successful in defending this aspect of Fong’s action. [ 31 ] If these two actions had been heard separately, the cost award for each would be straightforward.

Adhering to the general principle that costs normally follow the event, I would award each party his costs against the other for successfully defending the other’s action and there would be no ambiguity in terms of what that means . The complicating feature in this case is that the actions were heard together with the evidence in one being evidence in the other, but the time and effort expended on each action was not equivalent.

Therefore, I have undertaken an analysis to assess what portion of the trial and resulting costs should reasonably be attributed to each action. [ 32 ] The trial of these actions took 50 full or partial hearing days to complete. Upon reviewing the transcripts of evidence, the written submissions of the parties following trial, and the lengthy decision of the trial judge, it is apparent that the focus of this trial was predominantly on the allegations by Fong regarding the misappropriation of funds by Rees. [ 33 ] This observation is made by the trial judge throughout his decision.

For example, at paragraph 61, the judge wrote: While I have not attempted to calculate what portion of the time in trial was devoted to claims regarding theft of Hospitality Room bar sales versus the other grounds of oppression later asserted by Fong, the Hospitality Room allegations assumed by far the largest portion of trial time. [ 34 ] Further, at paragraph 98 of the decision in dealing with the issue of unrecorded cash sales, he wrote: As mentioned earlier, by far the greatest amount of time and investigation into these allegations centered on sales of beer in the Hospitality Room.

A great deal of effort was made to determine how many events had been conducted in the Hospitality Room which would have resulted in sales of beer, the revenue for which was alleged to be unrecorded in the general ledger of the company . [ 35 ] At paragraph 177 of the decision, the trial judge further comments: The fact that there were allegations of large dollar amounts misappropriated led to desire to find a proxy for calculating the dollar amount misappropriated as opposed to merely attempting to prove negligent non-recording of sales as breach of a director’s duty.

This additional emphasis on calculating dollar amounts played a huge role in the trial of this matter, both on the part of Fong to prove misappropriation and on the part of Rees to disprove it. [ 36 ] I have also considered the written submissions filed by the parties following trial to get a sense of the focus of the trial.

As referenced in Fong’s written submission, the evidence he relied upon to substantiate the allegation of misappropriation of funds included the expert evidence from the auditors and accountants who testified: Dorothy Keating; Sean Handrigan; the three forensic accountants; Mary Jane Andrews and Pascal Jolicoeur (KPMG); and Paul Bradley (Deloitte).

In addition, in putting forward his argument on the misappropriation issue, Fong relied on the evidence of the following witnesses: Margo Chaytor; Eileen Parsons; Kim Thomson; Rhonda Molloy; as well as the affidavits of five individuals who confirmed cash events held in the Hospitality Room.

Overall, Fong’s primary written submission comprised 208 pages of which 67 pages addressed Rees’ action; 123 pages addressed his own claim, a substantial portion of which is devoted to the issue of Rees’ misappropriation of funds. [ 37 ] Furthermore, based on my review of the transcript of the trial, my assessment is that the main focus and issue that dominated the trial and the attention of the parties was the allegation of misappropriation of funds made by Fong against Rees.

On the other hand, by bringing his claim for oppression, Rees did not substantially add to the time consumed by the trial or its complexity. [ 38 ] Given the foregoing analysis, I find that this is an appropriate case for me to exercise my discretion pursuant to Rule 55.02(1) (b), and allow each party a percentage of his taxed costs equivalent to my assessment of the approximate percentage of time and resources consumed in the advancement and defence of each action.

It is also an appropriate case for me to exercise my discretion by allowing costs from and up to specific stages of the proceeding. [ 39 ] Although it is difficult to calculate with mathematical certainty, it appears that no more than 25% of trial time was expended on the advancement and defence of Rees’ action. In saying this, I am not including the first five days of evidence which occurred prior to the commencement of Rees’ action. Since Rees’ action was not initiated at that time, this evidence was devoted to the prosecution and defence of Fong’s action.

The evidence adduced in those five days could be used as evidence in either action but my review of this evidence and its nature leads me to conclude that the costs of these trial days should be attributed solely to Fong’s action.

[40] I am also of the view that Fong should bear the cost of the fees and disbursements with respect to the retainer of Deloitte andthe attendance fees of Paul Bradley. This includes the cost of the review and report completed by Deloitte as this was a retainer by Fongto pursue his action against Rees, particularly with respect to the misappropriation allegations.

As such, Rees should not have to bear anyportion of the cost of this retainer. [41] Fong submits that a significant amount of time was spent on the issues raised by Rees in his action and then he abandoned thesearguments in his final submission and relied instead on Fong’s pursuit of his action being the basis of the oppression claim. Upon reviewof the trial transcript, I am satisfied that the issues raised by Rees, but not ultimately pursued, did not consume a substantial amount oftrial time.

Furthermore, it is my view that a party evaluating its position after having heard all the evidence at trial and then relinquishingany claims that he believes have not been substantiated can be a prudent course of action and should not be punished by an adverse awardof costs. [42] On the other hand, I accept Fong’s argument with respect to Rees raising the new claim that Fong’s action itself was the subjectof the oppression claimed against Fong as opposed to the issues raised in Rees’ pleading.

This argument was not anticipated by Fonguntil raised by Rees in his written submission following trial and after which Fong had already filed his submission. As a result, Fongfiled a supplementary brief to address this argument and incurred additional costs in doing so. Ultimately, Fong was successful indefending this claim. Given the lateness in raising this issue, I find fairness dictates that Fong be awarded the costs incurred in thepreparation and filing of the supplementary brief. [43] Following this analysis, I conclude the following to be an appropriate award of costs: (

a) Rees is awarded party-party costs asagainst Fong up to August 26, 2015, the date he commenced his action; (

b) Fong shall bear the cost of the fees and disbursements withrespect to the retainer of Deloitte and the attendance fees of Paul Bradley; (

c) Fong shall have his party-party costs incurred in thepreparation and filing of the supplementary post-trial brief; (

d) With respect to all other costs incurred in either action from August 26,2015 up to March 1, 2017 (the filing date of the trial decision), Rees is awarded 75% of his party-party costs as against Fong; and Fongis awarded 25% of his party-party costs as against Rees. The reasoning for the timeline of March 1, 2017 is explained in the analysis ofthe second issue. [44] Finally, although Rees was represented by two counsel at trial, Fong was represented by one. I am satisfied that the award forcosts should be on the basis of one counsel. Solicitor-Client Costs [45] Rees sought solicitor-client costs.

For the following reasons, I find that a solicitor-client cost award is not warranted in thiscase. [46] In seeking solicitor-client costs, Rees contends that Fong had sufficient information prior to the commencement of the trial toknow there was no theft committed by Rees in that the KPMG forensic audit did not substantiate the allegations. Rees submits thatrather than accept the outcome of the audit, Fong “doubled down” in his efforts to substantiate his allegations against Rees, includingretaining Deloitte to conduct a further review.

Rees argues that Fong chose not to pursue an action in negligence but rather based hisaction in allegations of theft which forced Rees to expend resources to “fend off this attack on his integrity” and caused the protractedadversarial legal battle. [47] In Young v. Young, (SCC), [1993] 4 S.C.R. 3, at paragraph 260, McLachlin J. (as she then was), for themajority, held that solicitor and client costs “are generally awarded only where there has been reprehensible, scandalous or outrageousconduct on the part of one of the parties”. [48] In Greeley Estate v.

Greeley, 2016 NLCA 26, at paragraphs 30-31, the court references the description of the behaviour notedin Young for the awarding of solicitor-client costs. It continues by noting that solicitor-client costs “represent an expression of censureor chastisement”: House of Haynes (Restaurant) Ltd. v. Snook (1995), (NL CA), 134 Nfld. & P.E.I.R. 23, 417 A.P.R.23 (Nfld. S.C. (C.A.)) and serve “a compensatory function”, their “justification… is the misconduct of the other party”: Petten v. E.Y.E.Marine Consultants (1998), (NL SC), 179 Nfld. & P.E.I.R. 94, 546 A.P.R. 94 (Nfld. S.C. (T.D.)). [49] In Hamilton v.

Open Window Bakery Ltd., 2004 SCC 9, the Supreme Court of Canada discussed the appropriateness of an awardof solicitor-client costs in circumstances of unproven or unsubstantiated allegations of fraud and dishonesty. In that case, the trial judgefound that, before the trial started, Open Window Bakery Ltd. had access to information sufficient to conclude that Hamilton had notengaged in dishonest or fraudulent conduct. The trial judge awarded solicitor-client costs to Hamilton after a certain point in theproceeding. The Court of Appeal reversed this award on appeal.

The Supreme Court of Canada noted that while allegations of fraud anddishonesty are serious and potentially damaging, a failure to prove the allegations does not necessarily amount to “reprehensible,scandalous or outrageous conduct” which would support an award of solicitor-client costs.

However, in deferring to the decision of thetrial judge, it noted that pursuit of such allegations while having access to information sufficient to conclude that the other party was notfraudulent or dishonest, but merely negligent, may well support an award of such costs. [50] This case differs from Open Window Bakery Ltd., in that there was no finding by the trial judge that Fong made, or continued tomake, the allegations of misappropriation of funds with access to sufficient information to conclude that these allegations could not besubstantiated. [51] Furthermore, the decision of the trial judge is replete with references to the mutual animosity between the parties – not just thedisdain of Fong against Rees.

The trial judge speaks of the hatred between the parties and the “victory at all costs” attitude of bothparties. At paragraph 320 of the decision he wrote: Mutual hatred, the desire to obtain tactical advantage, and a gross mis-appreciation of the likely expenses and costs of this litigation ledto the protracted struggle.

[ 52 ] In light of these comments and conclusions by the trial judge, I am unable to find that the behavior of Fong should be singled out as being reprehensible, scandalous or outrageous so as to warrant an award of solicitor-client costs.

Issue 2: What, if any, is an appropriate order of costs with respect to the July 11, 2017 post-trial application by Fong? [ 53 ] Fong submits that regardless of the overall award of costs, there should be a separate and distinct award for costs regarding the application brought by him on July 11, 2017 seeking to enforce compliance by Rees of the June 12, 2017 Order to make the first offer. [ 54 ] I note that the July 11, 2017 application was framed as an application “seeking directions on the Order of June 12, 2017”.

In bringing that application, Fong acknowledged that the Order, “clearly envisaged the need for further direction and orders.” The remedy sought by Fong in bringing the application included an order that a valuation report be completed and that Fong be entitled to purchase Rees’ shares at less than the value calculated. [ 55 ] After hearing argument on the July 11, 2017 application, the trial judge amended the June 12, 2017 Order and allowed a further period of time for Rees to make an offer failing which a Calculation Valuation Report was to be carried out.

He also ordered that costs regarding the application could be argued after the completion of the Calculation Valuation Report. No such report was required as Rees made the offer within the revised time period. Before me, Fong submitted that Rees’ non-compliance with the June 12, 2017 Order had been part of an attempt to reap the benefits of QVBC’s summer profits.

There is no evidence to support this assertion. [ 56 ] The fact that the trial judge deferred the argument on costs with respect to the July 11, 2017 application to follow the completion of the Calculation Valuation Report, suggests that the trial judge did not view Rees’ failure to comply with the June 12, 2017 Order to be of such nature in the circumstances so as to warrant an award against him at that time.

Rather it appears the trial judge afforded Rees another opportunity to make an offer, failing which he could likely face an adverse cost award. [ 57 ] Looking at all of the circumstances of Fong’s July 11, 2017 application, I am not persuaded that an award of costs against Rees is warranted. But having said that, I consider that it would not be appropriate to subject any of the post-trial proceedings to the 75/25% disposition I have made with respect to the majority of the trial costs.

That disposition was based on the disproportionate amount of time consumed by the misappropriation allegations raised in the Fong action. The post-trial proceedings, including the July 11, 2017 application, dealt with the oppression issues and resulting remedies. As such, the parties shall bear their own costs incurred from March 1, 2017, the date of the filing of the trial decision, including the costs incurred for the July 11, 2017 application. disposition 1.

Rees is awarded party-party costs as against Fong up to August 26, 2015, the date Rees commenced his action, to be taxed pursuant to Column 3 of the Rules. 2. Fong shall bear the cost of the fees and disbursements with respect to the retainer of Deloitte including the attendance fees of Paul Bradley . 3. Fong is awarded party-party costs as against Rees for the drafting and filing by Fong of the supplementary post-trial brief to be taxed pursuant to Column 3. 4.

With respect to all other costs incurred in either action from August 26, 2015 to March 1, 2017, the filing date of the trial decision, Rees is awarded 75% of his costs on a party-party basis as against Fong to be taxed pursuant to Column 3, and Fong is awarded 25% of his costs on a party-party basis as against Rees to be taxed pursuant to Column 3. 5. The parties shall bear their own costs incurred after March 1, 2017. 6. Costs awarded are with respect to one counsel. 7. Given the mixed results, the parties shall bear their own costs with respect to this application. _____________________________ Sandra R.

Chaytor Justice [3] The action against the Second, Fourth and Fifth Respondents was not pursued. Rees and Fong are the only parties in either action seeking an order as to costs.