CITATION: Marton v. Wood Gundy Inc., 2013 ONSC 1246

COURT FILE NO.: 92-CU-59570

DATE HEARD: February 25, 2013

ENDORSEMENT RELEASED: March 12, 2013

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: THEODORE G. MARTON, TINA MARTON, NATASHA MARTON, a minor, by her Litigation Guardian, Theodore G. Marton, and SANTO PASSARELLI, Executor of the Estate of Rita Passarelli v. WOOD GUNDY INC., ANGELO PAPAS, DONALD MORRIS and STEPHEN DUNN

BEFORE: Master R. Dash

COUNSEL: Atoosa Mahdavian, for the plaintiffs

Laura Paglia and Rebecca Wise, for the defendants Wood Gundy, Dunn & Morris

Orie Niedzviecki, non-party

REASONS FOR DECISION

[1] This is a motion by the defendants to compel the plaintiffs’ previous lawyers to attend examinations as witnesses under rule 39.03 in aid of a motion to dismiss this action for delay. The action is 20 years old and the plaintiffs have had four different law firms represent them before retaining their current lawyers. In their supporting affidavits, the plaintiffs blame the delay on their previous lawyers, swearing that they relied on their lawyers to prosecute the action but little was done.

[2] The defendants seek to examine five of the plaintiffs’ former lawyers (or members of their firms) who represented the plaintiffs over the first 17 years of this action and have served them with summonses to witness. One of those lawyers, Mr. Niedzviecki, brought a cross- motion to strike the summons served on him and filed affidavit evidence.

[3] The action was commenced on September 24, 1992 and concerns investment losses suffered by the plaintiffs in 1991.

Delay Blamed on the Lawyers

[4] In his affidavit, the plaintiff Theodore Marton makes the following statements generally about his previous lawyers:

• “During the span of this lawsuit, we repeatedly hired different lawyers to try and advance our case. We relied on the lawyers to prosecute the action but unfortunately, despite our efforts, very little was done, which we did not realize or understand.”

• “The plaintiffs have not intentionally delayed a determination of the issues in dispute on the merits. Quite the contrary, we have paid a tremendous amount of money...in legal fees over the years...Given the history I have outlined above, the difficulties experienced with the various lawyers we hired, it would be extremely unfair to dismiss the plaintiffs’ action for delay.”

• In 2006 that the plaintiffs were told that the defendant Papas, who was in default of delivering a defence since 1992, could and should have been noted in default. Mr. Marton states: “None of the other lawyers before had explained to us” that the plaintiffs could have noted Papas in default and sought default judgment yet none of them had taken steps to do so. “The delay in noting Mr. Papas in default is not attributable to the plaintiffs. We had no way of knowing. We relied on our lawyers.”

[5] The plaintiff Tina Marton also swore an affidavit in which she states:

• The plaintiffs “paid a tremendous amount of money in legal fees over the years...Unfortunately, however, the lawyers we hired and on whose assistance we relied did not advance the case. The delay that has been caused has not been intentional nor is it inexcusable.”

[6] Theodore Marton also describes problems specific to each law firm as follows:

(a) The plaintiffs were represented by William Reid (initially sharing space with the plaintiff’s real estate lawyer and then with the Moishe Reiter law firm after July 7, 1993). Mr. Reid issued the statement of claim on September 24, 1992 and represented the plaintiffs through examinations for discovery conducted in April 1995; however after that time “the matter seems to have fallen into a holding pattern. This was not due to the lack of any enthusiasm on the part of the plaintiffs. There was some delay because Mr. Reid left Mr. Reiter’s office and as such, no one specifically was dealing with the matter.” As a result they began to look for a new lawyer.

(b) The plaintiffs met lawyer Jack Berkow of the law firm Berkow Cohen in January 1998, but did not retain him until the spring of 2000 (because they needed to raise money for the retainer). The plaintiffs granted Berkow Cohen a mortgage for $50,000 as security for the trial retainer. There is some confusion as to what work was done by Mr. Berkow and what was done by his then third year associate, Mr. Niedzviecki. Mr. Niedzviecki dealt with the plaintiff’s responses to undertakings. In or about March 2002 “the plaintiffs had a falling out with their lawyers” and Mr. Niedzviecki was counsel on a motion to have Berkow Cohen removed as lawyers of record on April 12, 2002 at which time the order was granted.

(c) The plaintiffs then retained lawyer Harvey Margel in April 2002. The plaintiffs state: “During the four years or so Mr. Margel had our file, he appears to have written various letters on our behalf to opposing counsel, to the Master. He also seems to have attended in court and yet, he never corresponded with us, did not give us reports, never sent us even a piece of paper. I called Mr. Margel regularly asking for updates and he always said he was handling matters and not to worry. We believed him. He was our lawyer.” Mr. Margel never went on record, despite reminders from defendant’s counsel to do so, yet the plaintiffs “did not know that Mr. Margel never went on the record...Having provided Mr. Margel with a retainer, the plaintiffs relied on him to officially become our lawyer.” Finally in the spring of 2006 Mr. Margel called the plaintiffs and said words to the effect: “I don’t have time to handle this. You need to get a lawyer...who deals with this stuff.”

(d) In June 2006 the plaintiffs retained Morris Singer of the Singer Kwinter law firm after Mr. Singer received Mr. Margel’s file. (It was Mr. Singer who advised the plaintiffs that none of the previous lawyers took steps to obtain default judgment against the defendant Papas.) It is unknown what Mr. Singer did to advance the file other than to note Papas in default in November 2007, although for a “good two years” Mr. Marton was not in a position to pursue this litigation because of a serious car accident. Mr. Singer passed away in February 2010, but according to Mr. Margel, “nobody from Mr. Singer’s office told us” until the plaintiffs called to find out what was happening. The plaintiffs also state that even though they provided Mr. Singer with a “sizeable retainer”, Mr. Singer (like Mr. Margel) never went on the record. The plaintiffs were not aware of this until late 2010 when Mr. Singer’s son, Jason Singer, told them in the context of telling them they needed to sign a notice of intention to act in person “to get the rest of our retainer back.’

[7] In September 2010 the plaintiffs retained their current lawyers. No complaint is made about their representation of the plaintiffs.

The Test Under Rule 39.03

[8] Rule 39.03(1) provides: “...a person may be examined as a witness before the hearing of a pending motion or application for the purpose of having a transcript of his or her evidence available for use at the hearing.” This is often referred to an examination in aid of a motion.

[9] The test to be satisfied in order to conduct a rule 39.03 examination has been stated by the court of appeal as follows:

The onus is on the party seeking to conduct the examination to show on a reasonable evidentiary basis that the examination would be conducted on issues relevant to the pending application and that the proposed witness was in a position to offer relevant evidence.

[10] The onus on the party seeking the examination is not a heavy one. He need not show that the proposed examination will provide helpful evidence. If he can show that the examination will be conducted on issues relevant to the pending motion and the proposed witness is in a position to offer relevant evidence then he has a prima facie right to conduct an examination under rule 39.03. The onus then shifts to the objecting party to demonstrate that to permit the rule 39.03 examination would be an abuse of process.

Relevance of the Lawyers’ Evidence

[11] In considering what issues are relevant to the motion for which the examinations are in aid, the court should consider the nature of the motion and the grounds for the motion. In this case the examination is sought in aid of a motion to dismiss for delay under rule 24.01(1)(c), which provides that a defendant “may move to have an action dismissed for delay where the plaintiff has failed...to set the action down for trial within six months after the close of pleadings.”

[12] I must therefore ask what evidence is relevant on a motion to dismiss for delay and whether the proposed former lawyers of the plaintiffs are in a position to offer relevant evidence.

[13] An action may be dismissed for delay if the moving party can demonstrate either that “(1) the default is intentional and contumelious; or (2) the plaintiff or his or her lawyers are responsible for the inexcusable delay that gives rise to a substantial risk that a fair trial might not now be possible.” Therefore on the underlying motion to dismiss for delay, as part of the test to be met, the defendants will have to provide evidence that the plaintiffs’ 20 year delay in prosecuting this action was “intentional” or in the alternative that there is an “inexcusable delay” for which the plaintiffs or their lawyers are responsible.

[14] Any evidence which could demonstrate the reasons for the 20 year delay in prosecuting this action and whether the delay was intentional, whether it was excusable and whether it was caused by the plaintiffs or their lawyers would clearly be relevant to the motion to dismiss for delay. It is obvious that the lawyers who undertook the prosecution of the actions would be in a position to provide evidence of the delay and the reasons therefor. That evidence is particularly relevant given that the plaintiffs have averred that they did not deliberately delay the action, they relied on the lawyers to prosecute the action, but despite their efforts little was done by the lawyers, the lawyers failed to keep them informed and they experienced difficulties with the lawyers.

[15] The lawyers would be in a position to give evidence to explain why the action did not progress, what steps were taken in the action and why other steps were not taken, what instructions the plaintiffs gave to move the action forward, whether the plaintiffs were kept informed of the progress of the action, what advice was given as to next steps, whether that advice was followed, and generally whether the plaintiffs themselves played any role in the delay. While issues of solicitor-client privilege and memory must be addressed, there can be no question but that the lawyers representing the plaintiffs over the years could be expected to have relevant evidence on some of the issues relevant to the motion to dismiss for delay – whether the delay was intentional, whether it was inexcusable and who is responsible for the delay.

Abuse of Process

[16] As noted, even if the proposed witnesses could provide evidence relevant to the motion to dismiss for delay, the right to conduct the rule 39.03 examinations will be refused if it amounts to an abuse of process. There will be such abuse if the process “while ostensibly for the purpose of eliciting relevant evidence, is in fact being used for an ulterior or improper purpose, or if the process itself is being used in such a way as to be in itself an abuse”. A rule 39.03 examination also cannot be used “to conduct a general discovery” or “so as to authorize what amounts to a fishing expedition.”

[17] In my view, and subject to my remarks further in these reasons respecting each of the individual proposed witnesses, seeking the examination of five lawyers who represented the plaintiffs over the course of 17 of the 20 year history of this litigation to ascertain the cause for such an inordinate delay is not over-reaching and given the plaintiffs’ own evidence as to the inaction and failure to report of all his previous lawyers, does not amount to a fishing expedition. As long as the defendants do not seek to ask the lawyers about the merits of the plaintiffs’ claim or evidence upon which the plaintiffs will rely to prove their claim, then the examination would not amount to a “general discovery” of those lawyers.

[18] I do not mean to suggest however that all questions concerning communications from the previous lawyers to the plaintiffs as to the strength of their case would necessarily amount to an abuse of process, if such communications played a role in any delay on the part of the plaintiffs or the lawyers. I make no determination as to the propriety of such questions and it would have to be determined at a subsequent motion, if it becomes an issue.

Privileged Evidence

[19] The proposed examinations could also be refused as over-reaching if their purpose is to elicit information protected by solicitor-client privilege. For reasons that follow, I am of the view that questions respecting the actions taken by the lawyers, the reporting to the clients on the progress of the action, advice to and instructions given by the clients about moving the actions forward, whether the inaction was deliberate by either the clients or the lawyers and generally the cause of the delay, while prima facie intruding on the sanctity of solicitor-client privilege, will not do so in the circumstances herein. Whether individual questions go beyond what is permissible and intrude on solicitor-client privilege, will be a matter to determine after the examinations are completed and a court determines if the questions refused were proper.

[20] Solicitor-client privilege protects from disclosure communications between a lawyer and his client made for the purpose of obtaining legal advice. The protection is for communications, not for acts or statements of fact. Actions taken or not taken by the lawyers are facts and not communications. The lawyers can give evidence about what they did or did not do to move the action forward without breaching privilege. On the other hand, communications involving advice and instructions about taking such actions are communications protected by the privilege, unless the privilege is waived.

[21] Solicitor-client privilege is deemed waived when communications between lawyer and client are “legitimately brought into issue in an action”. Privilege is waived when the client puts the advice and conduct of his lawyer in issue. Typically this applies when a client sues his lawyer for negligence, but there is no reason it should not apply also in situations where a client pleads that his lawyer’s negligence or inaction is the explanation for an inordinate delay in an action. The privilege has also been held to be deemed waived where a party pleads reliance on legal advice in justification of actions taken or where a party places his state of mind in issue and has received legal advice to help form that state of mind.

[22] In my view, by blaming the delay on the inaction of their lawyers on whom they relied to prosecute the action and on their failure to keep them informed, the plaintiffs have legitimately brought into issue in the underlying motion to dismiss for delay the communications (and absence of communications) between them and their various lawyers. The plaintiffs have also put into issue their state of mind, namely their belief that the actions were progressing and their reliance on their lawyers that that was being done.

[23] Solicitor-client privilege will also be deemed waived “where the interests of fairness and consistency so dictate”. In my view, if the plaintiffs can resist a motion to dismiss for delay by blaming the delay on the conduct (including inaction) of the lawyers on whom they relied and the advice (or failure to advise) of those lawyers, fairness dictates that the defendants should be permitted to test that assertion by examining the lawyers as to their conduct and advice.

[24] Finally I must take into account that even when being examined as to non privileged facts or on communications over which privilege has been waived, “there is a general policy against the practice of calling counsel for the opposing party to testify against his or her client. This should be avoided wherever possible...It should only be permitted in extraordinary circumstances which require a showing of high materiality and necessity...One of the factors is whether there is availability of other witnesses to give evidence or there are other means by which the fact can be proven.”

[25] The court of appeal put it this way when a prosecutor called the defendant’s lawyer as a witness at trial:

Whether as a matter of custom or policy, issuing a summons to counsel for the opposite party to testify against his or her client is virtually unheard of and it should not be done absent the most exceptional circumstances.

At a minimum, such circumstances would require a showing of high materiality and necessity (assuming that the proposed evidence is otherwise admissible). Although not exhaustive, necessity in this context will involve considerations such as the importance of the issue for which the testimony is sought, the degree of controversy surrounding the issue, the availability of other witnesses to give the evidence or other means by which it may be accomplished (such as the filing of an agreed statement of fact), the potential disruption of the trial process and the overall integrity of the administration of justice.

[26] While this rule seeks to prevent examination of current counsel so as not to disrupt the ongoing solicitor-client relationship and to avoid a lawyer being put in an untenable position where he is both counsel and witness, I believe it also has force, although perhaps with less immediacy, when considering the examination of a party’s previous lawyers.

[27] In this case, the only persons who know what really was or was not done to advance the litigation in the 17 years before current counsel was retained and why are the plaintiffs and the former lawyers. No-one else can provide that information. The evidence is not only relevant to a motion to dismiss for delay but is highly material and necessary. The plaintiffs have given evidence by affidavit blaming the delay on the former lawyers and not on any action, inaction or instructions on their own part. Fairness dictates that the defendants be entitled to test that assertion by examining the very lawyers on whom the plaintiffs place the blame. There is no other witness who can testify as to whether Mr. Marton’s version of events is accurate. That combination of factors, in my view, amount to exceptional circumstances.

[28] I also take into account that the defendants do not seek to examine current counsel and that examination of past counsel will not disrupt the trial process or representation on the underlying motion.

[29] I am therefore of the view that an examination of the plaintiffs’ former lawyers does not constitute an abuse of process. While I have given my views on the nature of the questions to the former lawyers that would be permissible, such as acts that are not communications and communications over which privilege has been waived, and suggested certain limitations on how far the defendants may take such questioning, I do not purport to rule in advance on the propriety of any individual questions. One good example, as previously mentioned, is a question respecting the lawyers’ advice as to the strength of the plaintiffs’ case as it relates to any delay resulting from that advice. Whether a specific question is relevant or is protected by solicitor-client privilege or litigation privilege should be determined after the question is framed and after objection is made at the examination and the reasons given for the refusal to answer. Once there is an evidentiary framework, a ruling can be made a subsequent motion whether a claim of privilege has been established and whether a question refused must be answered.

[30] In other words the precise question must be asked and refused before the court can make a determination on the issues of relevance and privilege respecting the question or line of questioning.

The Lawyer Witnesses: Memory and Raising Privilege

[31] I must now consider the lawyers’ responses to each of the five summonses. Before looking at the individual responses, I will deal with two themes referenced by some of the lawyers: (a) I have no memory of this file and (b) the evidence sought is privileged.

[32] It is understandable, at least with respect to those lawyers whose representation ceased a number of years ago, that their memory of this specific file may be impaired. None of the lawyers, however, have indicated what steps they may have taken to refresh their memories, if any. The lawyers of course may be able to refresh their memory by examining the file as it existed during their period of representation, including possibly the files of the lawyers that preceded them. The evidence is unclear whether and to what extent the previous lawyers transferred their files to successor lawyers, whether they retained all or part of the file, or copies of their file, whether in hard copy or electronically, and whether in storage or otherwise. It may be that they kept their personal notes of discussions with clients (which are rarely transferred to successor lawyers) and/or their correspondence with their clients and others by which their memories could be refreshed. If there is a cost to retrieve files from storage, those costs should be borne by the defendants.

[33] Ms. Mahdavian advises that she has an incomplete file and does not know what parts of the various lawyers’ files were transferred from one lawyer to the next and ultimately to her and where the files, or those portions of the files that were not transferred to her, currently reside. Perhaps that will be ascertained in the examination process. The plaintiffs themselves should also have in their possession copies of correspondence to or from themselves and their former lawyers. In any event Ms. Mahdavian has given an undertaking to the court that if the examinations are ordered, she will provide to the former lawyers for review whatever parts of the file in her possession would have been in existence at the time of the retainer of the lawyer being examined.

[34] It may also be that the questioning process itself will refresh the memories of the previous lawyers. If on questioning the lawyer does not know or recall the answer to a question, the defendant may have difficulty obtaining useful evidence from them. It is an unknown at this stage, but the defendants should have the right to ask the questions.

[35] On the issue of the former lawyers raising issues of privilege I have already determined that answers to certain questions about actions taken or not taken are not privileged and that privilege over certain communications has been deemed waived. I have also determined that any questions about the propriety of individual questions would be decided upon motion after a question is asked and objected to. That the answers to some questions may turn out to be privileged is not an excuse not to be examined at all.

[36] I would also remind former counsel that during their examination as witnesses, privilege belongs not to them but to their former client. In other words any objection as to the propriety of a question based on privilege must be asserted by the plaintiffs, through their current lawyers, and not by the lawyers under examination.

The Five Summonses

[37] Finally, I consider summonses to the individual lawyers.

(a) Moishe Reiter: His firm was on record from 1993 until either 1998 or 2000, a considerable period of time. The allegation is he did nothing to advance the litigation after Mr. Reid left the firm and the file was in a holding pattern. He does not object to the examination provided he not be required to give privileged information without court order. I have dealt with that objection. His examination is relevant and not over-reaching. He will be compelled to examination.

(b) Jack Berkow and Orie Niedzviecki: Mr. Berkow’s firm was retained from the spring of 2000 until April 2002 and were given security for fees. It appears that Mr. Berkow was the lawyer the plaintiffs retained although Mr. Niedzviecki, then a third year associate with the firm, was delegated responsibility to answer undertakings and represented the firm on the return of a motion to remove Berkow Cohen from the record. Mr. Niedzviecki is no longer with the firm. Mr. Niedzviecki says he remembers nothing about the file and most of the information would be privileged. Mr. Berkow said in one letter that “much of the work” was done by Mr. Niedzviecki and in another that “the file was handled in large part” by Mr. Niedzviecki. Mr. Berkow says he has no recollection of the events in question, but he does not state what he has done to refresh his memory if anything or to seek any portion of the file that may be in storage. He also states he is obliged to comply with solicitor-client privilege raised by Mr. Marton. Given the two-year retainer, in my view it would be over-reaching to require the examination of both Mr. Berkow and Mr. Niedzviecki. I note that Mr. Berkow was the lawyer retained and it appears he had over-all responsibility and carriage although he delegated some tasks to his junior. If the file or any portion of the file was retained it would be available to Mr. Berkow, but not to Mr. Niedzviecki. The defendants should have the right to test Mr. Berkow’s memory particularly if part of the file is available to him. I therefore compel Mr. Berkow to attend the examination and strike the summons served on Mr. Niedzviecki. This is without prejudice to the defendants seeking to examine Mr. Niedzviecki if it turns out that he, and not Mr. Berkow, had carriage of the file.

(c) Harvey Margel: Mr. Margel had carriage of the file (without filing a notice of change of lawyer) from April 2002 until the spring of 2006, again a lengthy period of alleged inactivity. The plaintiffs allege Mr. Margel never reported to them and never advanced the litigation. His evidence would be particularly salient. He takes no position on the motion. He will be compelled to examination.

(d) Jason Singer: He had little or no involvement with the file; however he was a lawyer in the same firm as his father, Morris Singer, who was retained from June 2006 until his death in February 2010, never having filed a notice of change of lawyer. It is unknown what Morris Singer did during this lengthy period other than note the defendant Papas in default, but clearly the firm took no further steps after Morris Singer’s death and failed to advise the plaintiffs until late 2010 of the death and that the firm could no longer represent the plaintiffs. Jason Singer can give evidence as custodian of Morris Singer’s records and as well may have knowledge of what happened to the litigation after Morris Singer’s death. He will be compelled to examination.

The Timing of the Rule 39.03 Examinations

[38] Ms. Mahdavian suggests it would be more efficient for the defendants to cross-examine Mr. Marton on his affidavit before the rule 39.03 examinations and obtain clarification of the communications from and actions of the former lawyers. This suggestion has considerable merit. It may serve to narrow the issues on which the lawyers need to be examined and may possibly result in the defendants obtaining relevant non-privileged parts of the previous lawyers’ files for use at the subsequent examinations of the lawyers. The defendants however are constrained by rule 39.02(2) which prohibits a rule 39.03 examination after a party has cross-examined on an affidavit delivered by an adverse party without leave or consent.

[39] Ms. Mahdavian indicates that she will not raise rule 39.02(2) as a bar to any rule 39.03 examination of the lawyers after Mr. Marton is cross-examined. She indicates she will consent to rule 39.03 examinations “if necessary” after the cross-examination of the plaintiffs. In other words, while she is not consenting to a rule 39.03 examination at all, at least at this time, she is consenting to any rule 39.03 examinations as may be ordered taking place after cross-examinations of the plaintiff on his affidavit. She opines that after cross-examination of her clients, the rule 39.03 examinations may become unnecessary.

[40] There is in my view no compelling reason why the rule 39.03 examinations must take place before cross-examinations, other than the constraints of rule 39.02(2) as discussed. The defendants have not suggested they would be prejudiced by such order of examination, and I can think of no reason how they would be prejudiced. To the contrary, and as indicated above, it would be far more efficient to conduct the cross-examinations first. It may not be necessary to grant leave under rule 39.02(2) in light of the plaintiff’s consent however I grant leave out of an abundance of caution. The non-party witnesses may have had reasonable grounds to contest the summonses, as Mr. Niedzviecki has done, but they are not parties to this action or to the motion to dismiss for delay, and have no standing to raise rule 39.02(2) to object to their examination taking place after cross-examinations on the affidavits.

[41] To the extent that Ms. Mahdavian may be suggesting that the court should not make an order at this time to compel the rule 39.03 examinations but rather that such determination should be made after the completion of the cross-examinations of the plaintiffs and it can be seen whether the examinations are still “necessary”, I disagree. The defendants have satisfied me that they are entitled to examine the former lawyers under rule 39.03 and the defendants should not be required to bring a fresh motion at a later date to convince the court that the examinations are “necessary.” What Ms. Mahdavian has convinced me is that the rule 39.03 examinations take place after the cross-examinations of the plaintiffs. I leave it to the good sense of counsel for the defendants, after conducting the cross-examinations of the plaintiffs, to determine which rule 39.03 examinations it still requires and the extent of such examinations.

[42] In summary, four of the five former lawyers will attend for examination under rule 39.03 and the summons to Mr. Niedzviecki will be quashed. The rule 39.03 examinations however will take place after the cross-examinations, if any, of the plaintiffs’ affiants.

Costs

[43] The defendants were successful in obtaining an order for the examination of four of five witnesses under rule 39.03, despite the objections of the plaintiffs. On the other hand, the plaintiffs were successful in obtaining an order that the rule 39.03 examinations take place after cross-examination on the plaintiffs’ affidavits. Indeed, Ms. Mahdavian had invited the defendants as early as September 2012 to conduct the cross-examinations first and she would thereafter consent to the rule 39.03 examinations, but this was qualified with “if necessary.” But for that qualification I would have considered making no costs order or awarding costs to the plaintiffs.

[44] In my view the fair result is that the defendants should have their costs of this motion as against the plaintiffs but payable to them only if they are successful on the motion for which the examination of witnesses was sought, namely the motion to dismiss for delay and subject to any order from the master or judge hearing that motion. The master or judge will be in the best position to determine whether the rule 39.03 examinations and the motion before me were of value to the motion to dismiss for delay.

[45] As to quantum, I have taken into consideration that the motion was important to both parties and was of above average complexity. Both parties devoted considerable resources to this motion. The defendants seek $21,087 on a partial indemnity scale inclusive of counsel fee, disbursements and HST. Their actual costs are outlined as $37,930. The hourly rates indicated by defendants’ lawyers on a partial indemnity scale are reasonable and I do not doubt that the time outlined was spent. I am not however prepared to allow all of the costs as claimed in the defendants’ costs outline.

[46] I have reduced the defendants’ costs by matters that are more properly costs of the motion to dismiss for delay rather than the motion to compel the witness examinations. That would include discussions with the non-party witnesses and the disbursements to obtain and serve the summonses. I have reduced what appears to me to be duplication of effort between Ms. Paglia and Ms. Wise. Further, only one counsel fee on the return of the motion is justified. The account must be reduced for the time spent seeking Mr. Niedzviecki’s attendance and opposing his cross-motion. I also reduce the defendants’ costs for the plaintiffs’ significant success with respect to the order of the cross-examinations and witness examinations. Finally, I have considered the issue of proportionality. This is a motion within a motion to dismiss for delay and there may be other motions (for example refusals) before the underlying motion is heard. The overall costs of the dismissal motion are rapidly becoming excessive.

[47] Fixing costs in any event is not simply a matter of multiplying hours by an appropriate hourly rate. In the result the court must consider the factors under rule 57.01(1) and make a costs determination that is fair and reasonable and within the reasonable contemplation of the losing parties. I am of the view that fair and reasonable costs of this motion payable by the plaintiffs to the defendants on the partial indemnity scale be fixed in the sum of $8,500 inclusive of HST and disbursements. Given the plaintiffs’ own costs outline that sum should have been within the plaintiffs’ reasonable expectations.

[48] Mr. Niedzviecki was successful in quashing the summons against him and he should have his costs of the motion and cross-motion from the defendants on a partial indemnity scale. He has claimed $4,099 on a substantial indemnity scale and $3,623 on a partial indemnity scale both inclusive of HST and disbursements. While his substantial indemnity rate is reasonable, his partial indemnity rate does not reflect an appropriate reduction therefrom. His materials were not extensive. I also take into account that the costs he has incurred to avoid this examination are disproportionate to what his costs would have been to simply attend the examination, if ordered, and permit the plaintiffs to raise issues of privilege. In my view costs of $2,200 all inclusive is fair and reasonable and within the reasonable expectations of the defendants. Since Mr. Niedzviecki’s involvement in the motion to dismiss for delay is now over, there is no reason to await the results of that motion or to depart from the presumptive provisions of rule 57.03(1)(a).

Order

[49] I hereby order as follows:

(1) Moishe Reiter, Jack Berkow, Harvey Margel and Jason Singer shall attend for examination as witnesses in aid of the defendants’ motion to dismiss for delay pursuant to rule 39.03 on dates to be agreed, and in the absence of agreement on dates to be set by the defendants in a fresh summons to witness.

(2) These witnesses shall answer all relevant non-privileged questions respecting the issues on the motion to dismiss for delay and with respect to allegations raised in the affidavits of Theodore and Tina Marton. Any objections to questions based on privilege may be made only by the current lawyers for the plaintiffs.

(3) These witnesses shall, if requested by the defendants, retrieve any portion of their files from storage to refresh their memories provided that the defendants agree to pay all retrieval costs.

(4) The plaintiffs shall provide to these witnesses any portion of the files in the possession of the plaintiffs or their current lawyers that would assist the witnesses in refreshing their memories.

(5) The examinations of the witnesses under rule 39.03 as ordered herein shall be conducted only after completion of any intended cross-examinations of the plaintiffs’ affiants unless the defendants advise that they do not intend to cross-examine any of the plaintiffs’ affiants.

(6) The motion by Orie Niedzviecki to quash the summons against him is granted.

(7) The plaintiffs shall pay to the moving defendants their costs of this motion in the cause of the motion to dismiss for delay fixed in the sum of $8,500.00, subject to the discretion of the master or judge hearing the motion to dismiss for delay.

(8) The moving defendants shall pay to the non-party Orie Niedzviecki his costs of this motion and cross-motion within 30 days fixed in the sum of $2,200.00

___________________________

Master R. Dash

DATE: March 12, 2013