2017 ONSC 7710, 2017 ONSC 7710

CITATION : Verge Insurance Brokers Ltd et al. v. Richard Sherk et al 2017 ONSC 7710 COURT FILE NO.: 16-59186 DATE: December 22, 2017 SUPERIOR COURT OF JUSTICE - ONTARIO RE: Verge Insurance Brokers Limited, 172968 Ontario Inc., Marick Bros. Investments Inc. and Mark Sherk A N D: Richard Sherk, Daniel Sherk, Martin, Merry & Reid Limited and Cal Schulz Insurance Brokers Ltd., Andree Senn, Brenda French and Ruth Pluska BEFORE: Arrell, J. (in writing on consent) COUNSEL: Stephen Gleave and Richelle Pollard, for the Plaintiffs John Wigle, for the defendant Richard Sherk The Honourable Mr. Justice H.S.

Arrell ENDORSEMENT ON COSTS INTRODUCTION: [ 1 ] The plaintiffs Verge/Mark Sherk brought this motion for an order seeking the production of a chain of emails dated May 10, 2012 from counsel for Mark Sherk to counsel for Richard Sherk and the subsequent three emails flowing from the initial one. The defendant was opposed on the grounds that the chain was subject to solicitor/client privilege. [ 2 ] I agreed with the defendant and dismissed the motion. [ 3 ] I invited the parties to agree on costs, but if they could not, they could provide brief written submissions and I would rule on the issue of costs.

Not surprisingly, given the history of this litigation, written submissions have been filed. This is my ruling on costs. FACTS: [ 4 ] The defendant, Richard Sherk, was a 50% shareholder in the responding corporation, Verge. The plaintiff Mark Sherk is the brother of Richard Sherk and was the other 50% shareholder in Verge.

[5] Daniel Sherk is the son of Richard and was employed at Verge as a broker. Richard retired from Verge on April 3, 2012. [6] The evidence would indicate that shortly after Richard retired, issues arose between he and his brother which have resulted in thisextremely lengthy and costly litigation. There are two aspects of that litigation. The first aspect of the litigation was seeking adetermination of the value of Richard’s shares.

That has now been settled subsequent to Turnbull J.’s decision of November 30, 2015.The second aspect of the litigation, which was of relevance to this motion, is that of any damages suffered by Mark as a result of allegedactions by Richard and Daniel after Richard’s retirement. Daniel was dismissed by Mark shortly after the issues arose between the twobrothers. [7] Mark alleges Richard and Daniel conspired in an attempt to set up a competing brokerage firm and taking clients from Verge inthe process.

Those allegations are denied. [8] Shortly after Daniel left Verge, there was some discussions about him buying his book of business from Verge. It is in thiscontext that the email in question is understandable. [9] The chain of emails in question were produced to me for my confidential review as suggested in the plaintiff’s submissions to meon September 29, 2017. It is a very short chain of emails. I ruled that the emails were clearly covered by solicitor/client privilege anddismissed the motion. See: Verge v. Sherk 2017 ONSC 7308.

ANALYSIS: [10] The defendant now seeks his costs of this motion in the amount of $16,190.00 on an actual indemnity basis. [11] I note that the defendant, by letter, offered to settle this motion on the basis of a dismissal of the motion and payment of costs of$5775.00. This offer was not accepted with the result that the parties filed written submissions and case law for my review and decision. [12] The position of the defendant is that the motion was without merit from the outset.

The defendant was totally successful andindeed more successful than his offer, when costs are considered, and therefore should have his costs. [13] The position of the plaintiffs is that no costs should be payable, or in the alternative, costs of $3000.00 payable in the cause on apartial indemnity basis. [14] It is significant that the plaintiff’s draft bill of costs on an actual indemnity basis is $14,148.17, and on a partial indemnity basis$8,502.12. [15] The thrust of the plaintiff’s submissions are that these were newly discovered emails and the only way details about them couldbe unearthed, was to bring this motion.

As such the motion was not without merit and indeed necessary for the plaintiff’s case. As wellthe plaintiffs argue the defendant seeks to recover costs of items not strictly related to this motion such as some discoveries, a caseconference, research, and costs of preparing the cost submissions. [16]

Section 131 of the Courts of Justice Act provides that “costs of and incidental to a proceeding are in the discretion of the court,and the court may determine by whom and to what extent the costs shall be paid.” Rule 57.01 of the Rules of Civil Procedure enunciatesthe general factors to be considered by the court in exercising its discretion in relation to costs. I have reviewed those factors. [17] The default rule, however, in resolving costs issues is that the successful party is entitled to its costs.

The principle that costsfollow the event, should only be departed from for very good reasons such as misconduct of the party, miscarriage in procedure, oroppressive or vexatious conduct of proceedings. No such considerations are applicable to the case at bar regarding either party on thisparticular motion. [18] The defendant has been successful on this motion and is entitled to costs. The plaintiffs could have limited their cost exposure byaccepting the offer. They instead did not respond to the offer, nor make a counter offer. The motion in my view had little merit on thelaw.

The plaintiffs indicate that even though they lost the motion, some value was achieved in advancing their case based on informationobtained in the material filed by bringing the motion. I am unable to comment on that aspect of their case, nor is it relevant to mydecision on costs. [19] This was a very simple motion and in my view not a complex area of law. I accept the submissions of the plaintiffs that theamount of time expended by the defence is somewhat excessive, although in reality, not much different than the time spent by theplaintiffs.

I have considered proportionality given this simple issue. [20] The Court of Appeal has stated that the overriding principle for a court in exercising its discretion when awarding costs isreasonableness as was stated in Davies v. Clarington (Municipality), 2009 ONCA 722 , [2009] 100 O.R. (3d) 66 (OCA) at paras.51 and 52. [21] As noted by Armstrong, J.A. in Boucher v. Public Accountants Council for the Province of Ontario (2004), (ON CA), 71 O.R. (3rd) 291 the fixing of costs involves more than merely a calculation using the hours docketed and the cost grid.

Hefurther stated in para. 24, “In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by theunsuccessful parties rather than any exact measure of the actual costs to the successful litigant.” [22] I have concluded that costs of $12,000.00 inclusive of taxes and disbursements is a fair and reasonable amount to both parties. I

also conclude that it is an amount that the unsuccessful party would expect to pay taking into account proportionality and all the other factors mentioned previously in this decision. CONCLUSION: [ 23 ] The plaintiffs will pay to the defendant Richard Sherk, through his solicitor, $12,000.00 for the costs of this motion inclusive of disbursements and taxes, within 30 days of the date of the release of this decision. ___________________________ Arrell, J. Released: December 22, 2017 CITATION : Verge Insurance Brokers Ltd et al. v.

Richard Sherk et al 2017 ONSC 7710 COURT FILE NO.: 16-59186 DATE: December 22, 2017 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: Verge Insurance Brokers Limited, 172968 Ontario Inc., Marick Bros. Investments Inc. and Mark Sherk - and – Richard Sherk, Daniel Sherk, Martin, Merry & Reid Limited and Cal Schulz Insurance Brokers Ltd., Andree Senn, Brenda French and Ruth Pluska ENDORSEMENT ON COSTS HSA