In this Decision, the Court decided the appropriate Costs following a successful Application by the E & Y Parties to strike the Davison Parties' Counterclaim and prevent further legal action. The E & Y Parties sought solicitor and client Costs, arguing that the Davison Parties made reckless, unsubstantiated allegations of fraud, which harmed the reputations of the E & Y Parties. The Davison Parties contended that Costs should be awarded based on Schedule C, or, if enhanced, by applying a multiplier of three under Column 5.

The Court acknowledged that a successful party is typically entitled to Costs under Rule 10.29, subject to the Court’s discretion under Rule 10.31. In determining the appropriate level of Costs, the Court applied the factors set out in Rules 10.32 and 10.33, and considered the result, complexity, and conduct of the parties. The Court noted that although solicitor and client costs can be awarded for scandalous or outrageous conduct, the allegations made by the Davison Parties, while serious, did not reach the level of reprehensibility required for such an award.

In particular, the Court found that the allegations were made without a sufficient factual basis and were directed at the court-appointed receiver, a reputable accounting firm. The Court considered the lack of evidence underpinning the claims and noted that the allegations appeared to be driven more by animosity toward other Defendants than by any intention to harm the E & Y Parties specifically. Although the Court did not find the conduct egregious enough to warrant solicitor and client Costs, it did determine that an enhanced Costs Award was appropriate due to the baseless nature of the allegations.

Applying a principled approach, the Court awarded Costs under Column 5 of Schedule C, with a multiplier of three, reflecting the seriousness of the unfounded allegations and their impact on the E & Y Parties. Costs were ordered against the Davison parties on a joint and several basis.