) ) BENO I T KANDOLO, RACHEL SITA-MENGA, SOPHIE OLANGI, VIVIANE LESEYA et FONDATION OLANGI WOSHO Applicants – v. –, 2013 ONSC 73

CITATION : Kandolo v. Kabelu, 2013 ONSC 73 COURT FILE NO.: 12-53721 DATE: 2013/01/03 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: ) ) BENO I T KANDOLO, RACHEL SITA-MENGA, SOPHIE OLANGI, VIVIANE LESEYA et FONDATION OLANGI WOSHO Applicants – and – JEAN VENANCE KABELU ET DEBORAH ETSHOKO KABELU Respondents ) ) ) ) ) ) ) ) ))))) Ronald F. Caza/Marcia A. Green, for the Applicants François Kabemba, for the Respondents ) ) HEARD: By written submissions DECISION REGARDING COSTS R. Smith J.

Overview [ 1 ] The applicants (the “Kandolo group”) brought an application to determine whether the respondents (the “Kabelus”) were entitled to unilaterally revoke their written resignation as Directors of the Foundation, after the resignations had been received by the Foundation.

This was the main issue argued in the application and it was resolved in favour of the applicants. [ 2 ] A further finding was made that the remaining Directors had the authority to administer and represent the Foundation after the Kabelus had resigned, and that the Kabelus could no longer give instructions in the name of the Foundation following their resignations as Directors. Those findings flowed from the finding that they could not unilaterally revoke their resignations as Directors.

In addition, I found that any items taken from the Foundation by the Kabelus on February 29, 2012 should be returned to the Foundation. I also held that the Kabelus were not and could not be the owners of the Foundation which was a charitable non-share capital corporation. Positions of Parties [ 3 ] The applicants submit that costs should be awarded on a premium basis because of the unreasonable tyrannical conduct of the Kabelus in this matter. Pastor Kabelu decided to revoke his resignation as a Director of the Foundation in order to obtain repayment of monies he claimed he was owed by the Foundation.

The Kabelus also resorted to self-help both by taking control of the Foundation, after they had resigned as Directors and by removing objects from the building owned by the Foundation, including the computers and information contained therein. I do not find that a premium is appropriate in the circumstances. [ 4 ] In the alternative, the applicants seek costs on a substantial indemnity basis because of the unreasonable conduct of the Kabelus.

The applicants submit that they were required to bring this application because of the unreasonable conduct of the Kabelus and that the Kabelus have unreasonably caused needless legal expenses to be incurred by their actions. The applicants further submit that they were completely successful and they have achieved a more favourable result than their offer to settle dated May 8, 2012. [ 5 ] The applicants seek an award of costs in the amount of $131,120.81, inclusive of HST on a premium basis plus disbursements bringing the total to $138,220.38.

In the alternative, the applicants seek costs on a substantial indemnity basis in the amount of $125,108.20, including HST and disbursements. The amount claimed for fees on a substantial indemnity basis is $118,009.63, inclusive of HST plus disbursements and the amount on a partial indemnity basis is $91,785.00, inclusive of HST plus disbursements of $7,098.57. [ 6 ] The Kabelus seek an award of costs in their favour or alternatively they submit that both parties should bear their own costs.

The respondents make this submission on the basis that the Kabelus’ efforts since 2000 have built up the Foundation and also they advanced their own personal funds to the Foundation to assist in the purchase of a building for a place to worship. [ 7 ] The Kabelus submit that it would be unfair and unjustly enrich the Kandolo group if they are ordered to pay costs to the Foundation, in addition to having to return to the Foundation the articles previously removed by them. The Kabelus submit it would be unfair to them to leave the church empty handed after ten years of hard work by them.

They submit that they would be deprived of the fruits of their labour for many years which would be unjust. The Kabelus deny that they illegitimately or illegally took possession of the articles of the Foundation on February 29, 2012 and state that they removed the property of the Foundation in order to prevent the Kandolo group from leaving all of the Foundation’s items with the building to unjustly enrich the purchaser of the building. [ 8 ] I do not have any evidence to support the submissions made by the Kabelus in para. [7] above and I do not accept their explanation or reasoning.

The Kabelus appear to still believe that they were the owners of the Foundation.

They were not the owners of the Foundation because it is a charitable non-share capital corporation and is a distinct legal entity from them personally. [ 9 ] The respondents also submit that they made a reasonable offer to settle on or about the March 29, 2012 namely that the Foundation pay them the full amount of the debt the Kabelus claimed was owing, and to divide the sale proceeds from the building into two shares, and each group to continue the mission and the objectives of the Foundation separately. [ 10 ] The Kabelus further submit that the applicants violated the injunction granted by Maranger J. and mislead Beaudoin J. to obtain a date for an urgent motion.

I am unable to make any finding on these issues due to a lack of evidence. The Kabelus submit that they should not be responsible for the costs of proceedings before any other judges in this matter. I agree with the submission unless costs were ordered or reserved or adjourned to me. [ 11 ] The Kabelus argue that the traitorous actions of the Kandolo group have caused them to incur substantial legal costs.

Finally, the Kabelus submit that success was divided because they were successful in their application for a declaration that the two Directors elected at a meeting held in the Congo were not validly elected. [ 12 ] In

summary, the Kabelus submit that their offer to settle was reasonable and should have been accepted and either they should be awarded their costs or neither party should be awarded costs.

Factors [ 13 ] The factors to be considered when fixing costs are set out in Rule 57 of the Rules of Civil Procedure and include in addition to success, the amount claimed and recovered, the complexity and importance of the matter, unreasonable conduct of any party which unduly lengthened the proceeding, scale of costs and any offer to settle, the principle of indemnity, hourly rate claimed, the time spent and the principle of proportionality, and the amount that a losing party would reasonably expect to pay. Success [ 14 ] In this case the Kandolo group was substantially successful on their application.

The main issue was whether or not the Kabelus could revoke their resignations as Directors, after they had been delivered to the Foundation and unilaterally reinstate themselves as Directors and retake control of the Foundation. A decision on this issue determined who were the Directors of the Foundation following the resignations of the Kabelus. [ 15 ] The respondents were partially successful in obtaining a ruling that the replacement Directors elected at a meeting in the Congo were not validly elected however, this formed a minor part of the application and occupied very little time in the proceedings.

Complexity and Importance and Proportionality [ 16 ] The issue of whether a member of the Board of Directors of a charitable non-share capital corporation can unilaterally revoke their resignation after he or she has delivered notice of his or her resignation to the Board was of some complexity. The issues were important to the parties. The factual background was complex as there were multiple parties, two Foundations with the same name, and the documents, by-laws and minutes of meetings were not clearly and precisely maintained.

However, the main issue was a legal question namely whether the Kabelus could revoke their own resignations as Directors and both parties agreed that this matter should be decided by way of an application. Unreasonable Conduct of Any Party [ 17 ] The applicants submit that the conduct of the Kabelus in this proceeding was unreasonable and shocking. The Kabelus first resigned as Directors of the Foundation and then commenced legal action against the Foundation to recover the amount they alleged was owed to them in the approximate amount of $249,000.00.

Subsequently, they changed tactics and discontinued their action against the Foundation, unilaterally revoked their written resignation as Directors of the Foundation and took control of the Foundation. [ 18 ] I find that the Kabelus’ conduct was unreasonable as I found they had no authority to revoke their resignations as Directors of the Foundation after they had delivered their resignations and they had been accepted by the Board.

The Kabelus’ conduct of taking control of the Foundation, completing the sale of the Foundation’s building, and removing articles from the Foundation’s building also constitute unreasonable conduct by the Kabelus. They should have sought directions from the Court instead of using self-help to advance their own personal interest.

[ 19 ] The Kabelus attempt to justify their self-help actions by submitting that they were being wrongfully deprived of the fruits of their efforts over the past ten years. I do not agree with this submission as the property of the Foundation was not the personal property of the Kabelus. The Kabelus worked hard to develop a very successful spiritual organization, namely a registered charitable foundation, which purchased a large building and had a substantial number of members.

However, the Foundation is a charitable non-share capital corporation whose purpose is spiritual in nature namely to promote the “combat spirituel” which is a part of a Christian evangelical group. The Foundation is a registered charity and as such, the Kabelus were not the owners of this charity and therefore could not have been seeking to enrich themselves financially through their efforts to promote the Foundation.

The Foundation may be financially enriched by the efforts and donations of members of the congregation but an individual member is not financially enriched but may be spiritually enriched. [ 20 ] I have no reason to find that any steps taken by the Kandolo group were unreasonable. The Kandolo group was successful in their application which determined the remaining Directors had the authority to manage the Foundation after the resignation of Mr. and Mrs. Kabelu.

I also do not find that there was a conspiracy by the applicants with other members of the Olangi Wosho Foundation to make the Canadian Corporation an affiliate of the Congolese Corporation. Scale of Costs and Offers to Settle [ 21 ] The applicants claim costs on a substantial indemnity basis based on the unreasonable conduct of the Kabelus and because of their offer to settle. The Kabelus appear to have believed that they could unilaterally revoke their written resignations as Directors of the Foundation, even after their resignations had been accepted.

Their conduct thereafter became unreasonable because they had no authority to revoke their resignation as Directors of the Foundation. The Kabelus attempted to revoke their resignations as Directors to retake control of the Foundation in order to obtain repayment to them of monies owing to them. They were acting in their own personal interest and not in the interests of the Foundation which amounts to unreasonable conduct. [ 22 ] The Kabelus offered to settle with full repayment of the $249,000.00 claimed by Pastor Kabelu when, according to the respondents, the amount owing was approximately $110,000.00.

The applications before me did not address the amount owing to the Kabelus and I made no finding of the amount owing. The items of property removed by the Kabelus belong to the Foundation and the assets would remain with the Foundation unless the members had voted to wind up the Foundation. I did not have any evidence that the members of the Foundation either wished to or had decided to divide into two groups or how many people would have been in each group.

I therefore find that the Kabelus’ offer to settle did not trigger any cost consequences under Rule 49. [ 23 ] On May 8, 2012, the Kandolo group also made an offer to settle as follows: (

a) the Kabelus would start a new Foundation with a different name; (

b) the Kabelus would withdraw their appeal in file C54964; (

c) the Kabelus would produce evidence to support their claim for the loan up to a maximum of $249,000.00 and their amount determined to be owing would be paid; (

d) the Foundation accepted to make an agreement on the amount owing and dedicating the value of the items removed by the Kabelus including the vehicle; and (

e) both actions would be dismissed without costs. [ 24 ] The applications before me did not deal with the amount owing to the Kabelus and therefore the applicant’s offer to settle does not trigger the costs consequences under Rule 49 as there was no amount offered to be paid on the alleged loan of $249,000.00 and this issue was not part of the application and was not decided by me. [ 25 ] As a result, I will award costs on a partial indemnity scale at the highest level because of the unreasonable conduct of the Kabelus.

Hourly Rates, Time Spent and Proportionality [ 26 ] The factual historical situation was complex as well as the actions taken by the Kabelus who took control of the Corporation without proper legal authority by unilaterally revoking their resignations as Directors of the Corporation. The Kabelus do not object to the hourly rate claimed but submit that the time spent was not proportional to the issues involved.

The Kabelus also submit that the applicants mixed together costs from other proceedings where costs were not awarded. [ 27 ] The Kabelus have submitted a bill of costs to August 17, 2012 in the amount of $80,392.00. They have incurred fees of $69,846.67 and disbursements of $2,251.78 plus HST of $8,294.51 for a total of $80,392.96. [ 28 ] Counsel for the Kabelus was charging an hourly rate of approximately of $250.00 per hour which he submits was a reduced rate.

Counsel for the Kandolo group was charging $425.00 per hour and claims a substantial indemnity rate of $382.50 and a partial indemnity rate of $297.50 per hour. I find that hourly rates claimed for senior counsel for the applicants based on his experience are reasonable as are those claimed for Ms. Green who is a lawyer with 16 years of experience. [ 29 ] The costs incurred between February 12 th and April 11, 2012 appear to include some time involving the proceeding before Kane J., myself and Maranger J. I will not award costs for the time spent on proceedings before Kane J. or Maranger J.

Amount the Unsuccessful Party Would Reasonably Expect to Pay [ 30 ] The amount the unsuccessful party would reasonably expect to pay would be at least $80,000.00 based on the time spent by counsel for the Kabelus. Counsel for the Kandolo group were more senior than counsel for the Kabelus and therefore I find that the losing party would reasonably expect to pay an amount somewhat greater than $80,000.00.

Considering the unreasonable conduct of the Kabelus, that there was some partial success on the part of the Kabelus on one minor issue, that some time should be discounted for appearances and proceedings before other judges, I find that the losing party would reasonably expect to pay costs of at least $80,000.00, including disbursements and HST. Disposition [ 31 ] Having considered all of the above factors Jean Venance Kabelu and Deborah Etshoko Kabelu are ordered to pay costs to the applicants fixed in the amount of $65,000.00 plus applicable HST plus disbursements of $7,000.00. R. Smith J.

Released: January 3, 2012 CITATION : Kandolo v. Kabelu, 2013 ONSC 73 COURT FILE NO.: 12-53721 DATE: 2013/01/03 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: BENO I T KANDOLO, RACHEL SITA-MENGA, SOPHIE OLANGI, VIVIANE LESEYA et FONDATION OLANGI WOSHO Applicants – and – JEAN VENANCE KABELU ET DEBORAH ETSHOKO KABELU Respondents DECISION REGARDING COSTS R. Smith J.

Released: January 3, 2012