IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:	Mills v. Szolnyanszky,
	2008 BCSC 589

Date: 20080509
Docket: 06-2944
Registry: Victoria

Between:

Devon Mills

Petitioner

And:

Margaret Szolnyanszky and
Mill Bay Storage S.T.D. Ltd.

Respondents

Before: The Honourable Mr. Justice R. D. Wilson

Reasons for Judgment

Counsel for the Petitioner:	P. F. Waller
Counsel for the Respondent Margaret Szolnyanszky:	C. E. Beveridge
Date and Place of Trial/Hearing:	April 10, 2008
	Victoria, B.C.
Supplementary Submissions Received:	April 17, 2008 and May 2, 2008

I.

[1]                Mr. Mills seeks an order that Ms. Szolnyanszky pay the costs of this proceeding.

[2]                Mr. Mills contends that he was wholly successful, and, there is no principled basis to depart from the general rule that costs follow the event.[1]

[3]                This costs controversy was precipitated by the following history of the disputes between Mr. Mills and Ms. Szolnyanszky, between the spring of 2005 and the autumn of 2007.

II.

[4]                At all material times, Mr. Mills and Ms. Szolnyanszky held, in equal number, the issued shares in Mill Bay Storage S.T.D. Ltd.  Ms. Szolnyanszky and her husband, Tom Szolnyanszky, were the directors of the company.  Mr. Szolnyanszky also acted as the manager of the company's business operations.

[5]                In April 2005, Mr. Mills moved to terminate Mr. Szolnyanszky's position as manager of the company.  Not surprisingly, a confrontation between the shareholders resulted.  A rapid deterioration reached the point of deadlock.

[6]                Among other steps taken to reach a compromise resolution, Ms. Szolnyanszky offered to sell her shares to Mr. Mills for $350,000.  Absent that solution, Ms. Szolnyanszky proposed a sale of the company, as a going concern.

[7]                Disputatious correspondence, and meetings, followed through the balance of 2005.  Absent a compromise, Ms. Szolnyanszky commenced proceedings in February 2006, under Victoria Registry No. 06-0399.  In that proceeding, she sought, among other relief, an order that the company be liquidated and dissolved.  Mr. Mills opposed the relief sought and, in April 2006, made an offer to Ms. Szolnyanszky to purchase her shares for a consideration of $125,000.

[8]                The disputatious correspondence endured.  In June 2006, Mr. Mills commenced this petition after proposing a valuation of the shares to establish a base for the presentation of an offer for the purchase of Ms. Szolnyanszky's shares.  The particulars of that dispute, and the intricacies of it, are not important to this decision.  But, in result, a compromise resolution was unachievable and both petitions were set for hearing on 29 September 2006.

[9]                After spirited submissions by both parties, I ordered that the shares of the company be valued.  The costs of the valuer, which was a matter of lively contention, were to be borne by the company.  Further, in the event the parties were unable to agree on the identity of the valuer, then either was at liberty to return for directions.  As well, in the event the parties agreed upon the identity of the valuer, but did not agree on the valuation, either party was at liberty to return to court.

[10]            There was some concern demonstrated by Ms. Szolnyanszky over the financial ability of Mr. Mills to acquire her shares at any realistic price.  Accordingly, a time limit was imposed.  Absent a resolution under those several orders, the order sought by Ms. Szolnyanszky in the proceedings she had initiated, in February 2006, would follow.

[11]            On the matter of costs, at the conclusion of the proceedings, Ms. Szolnyanszky asked for liberty to speak to costs, in the event that I made the order sought by Mr. Mills, after any proposed sale was concluded.  Mr. Mills, on the other hand, sought his costs of the proceedings.

[12]            Following the hearing on 29 September 2006, the parties turned their minds to a compromise resolution of their disputes.  A valuer was agreed upon, and a valuation was produced near the end of February 2007.  The value assigned by the valuer set a range of $590,000 to $670,000, with a mid-point of $630,000.

[13]            Negotiations on the ultimate result carried through to 16 October 2007 when the parties executed a purchase and sale agreement for a consideration of $340,000.

[14]            Throughout the correspondence, which was considerable, only one reference was made to costs.  That reference was contained in a letter from the solicitors for Mr. Mills to the solicitors for Ms. Szolnyanszky.  In part, that letter reads:

... If your client refuses to complete, we will make application to the court for specific performance as well as costs of approximately $20,000.00.

[15]            Then, approaching a month after the matter had been ultimately resolved, Mr. Mills presented Ms. Szolnyanszky with a draft of his bill of costs on his petition.

III.

[16]            Both parties rely, in support of their respective positions, on the following words from paragraph 41 of my Oral Reasons for Judgment of 29 September 2006:

[41]      ... the costs of Mr. Mills' application are adjourned for resolution at the time this matter is returned to court for further proceedings, if necessary.  I will leave it up to the judge hearing that further application to deal with costs.  I will not make an order for costs at this time.

IV.

[17]            At the hearing on 29 September 2006, a number of questions could not be answered.  For example, could the parties agree on the identity of a valuer?  If not, would a further application be necessary?  Second, if the parties could agree on a valuer, then could they agree on the valuation?  If not, then would a further application be necessary?  And third, if the parties could agree on a valuer, and on the valuation, then did Mr. Mills have the financial resources to acquire Ms. Szolnyanszky's shares at the value established?  Or, would a further application be required?

[18]            In my opinion, the orders of 29 September 2006 could be fairly characterized as analogous to interlocutory orders.  While the orders made did provide a framework for a timely resolution of the outstanding dispute, it did not result in a final determination.  As it developed, it was not necessary for the matter to be returned to court for further proceedings.  The resolution of the controversy was wholly within the hands of the parties.

[19]            If the analogy to an interlocutory order is accepted, then the costs of the application would be governed by Rule 57(12).  In this case, in my view, the court did not make any order, "in the cause".  The matter of costs was wholly within the province of the parties.  Costs were, unquestionably, in issue at the time of the hearing.  It was for the parties themselves to resolve that issue.  Failure to do so constitutes a waiver of the claim.

[20]            Furthermore, I am not persuaded that Mr. Mills was "wholly successful", or "substantially successful".

[21]            It must be remembered that, as I found on 29 September 2006, Ms. Szolnyanszky's objective was to recover her investment in the company by a purchase by Mr. Mills of her shareholdings in that company.  On the other hand, the objective of Mr. Mills was to continue to operate the company so that he could realize on the investment he had made in the company.  The nugget of the quarrel was the price to be paid by Mr. Mills to obtain control of the company.

[22]            During the negotiations, Ms. Szolnyanszky asserted that the $125,000 valuation by Mr. Mills was unrealistic.  The valuation, now apparently accepted by both parties, and the agreed up consideration, supports Ms. Szolnyanszky's assertion.

[23]            In my view, there has been divided success as a result of this extended litigation.  Mr. Mills has obtained control of the company, and Ms. Szolnyanszky has received, apparently, fair value for her shares.  In result, there are no costs payable by or to either party on the applications of 29 September 2006.

[24]            The petitioner's application is dismissed with costs.

                   "R. D. Wilson, J."                    

The Honourable Mr. Justice R. D. Wilson