Andriano v. Napa Valley Plaza Inc., 2011 ONSC 2168

CITATION: Andriano v. Napa Valley Plaza Inc., 2011 ONSC 2168

DIVISIONAL COURT FILE NO.: DC10-00256-00

COURT FILE NO.: CV-08-091704

DATE: 20110406

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

BETWEEN:

VINCENZO ANDRIANO

Plaintiff

– and –

NAPA VALLEY PLAZA INC.

Defendant

Patrick Di Monte, for the Plaintiff

Arleen Huggins, for the Defendant

HEARD: March 24, 2011

RULING

MULLIGAN J.

[1] The plaintiff (“Andriano”) brings a motion seeking leave to appeal the costs order of Justice P.D. Lauwers dated November 19, 2010. The defendant (“Napa Valley”) opposes the leave application on the basis that this is not one of the rare cases where a judge’s discretion in fixing costs should be interfered with.

Background Facts

[2] It is not necessary for me to provide a detailed discussion of the background of this matter. Napa Valley brought a summary judgment motion which was heard October 4, 2010. Napa Valley was successful on the motion for detailed reasons issued by the motion judge on October 13, 2010. The judgment was not appealed. Costs were reserved and both parties made submissions in writing. On November 19, 2010, the motion judge issued a stand-alone costs endorsement, providing detailed written reasons, awarding Napa Valley costs in the amount of $39,000.

Position of the Parties

[3] It is the position of Andriano that leave ought to be granted with respect to this costs order so the matter can be adjudicated by the Court of Appeal. Andriano submits that the costs award is unreasonable and approximates costs on a substantial indemnity scale where partial indemnity would be warranted under the circumstances. Andriano acknowledges that costs are within the discretion of the motion judge but such discretion must be exercised judicially, applying the principles of reasonableness, proportionality and the expectation of the losing party. Andriano also draws the court’s attention to Napa Valley’s Bill of Costs and submits that there is a substantial amount of over-preparation involved which should not be vested on the losing side.

[4] Andriano relies on Amherst Crane Rentals Ltd. v. Perring (2004) 18104 (ONCA) for the proposition that an award of costs that appears to be an award on a substantial indemnity scale is an error in principle which can be reversed on appeal. As Feldman J.A. stated in Amherst Crane at para. 38:

Under Rule 57.01 of the Rules of Civil Procedure, the first factor to be taken into account in considering an appropriate amount to award for costs is the amount in issue. The rule reflects the principle that the costs must be commensurate with the value of the law suit to the parties. In that light, an award of costs of $30,000 on a partial indemnity scale constitutes an error in principle, and rather appears to be an award on the substantial indemnity scale. I would grant leave to appeal the award of costs and reduce the award to $15,000.

[5] In that decision, which was not a stand-alone costs appeal, the amount at issue was apparently $53,678.28.

[6] In this case, Andriano claims that the amount in issue was about $90,000.

[7] Napa Valley argues that Andriano has not met the test in its argument to grant leave, which is required pursuant to s.133 of the Courts of Justice Act. Napa Valley argues that such discretion should be exercised sparingly, and only in the face of a palpable and overriding error by the judge awarding costs. It further argues that a leave application is not a trial de novo, and this court should not give consideration to what it views as a fair and reasonable costs award.

[8] Napa Valley also argues that Amherst Crane has no application to this case. First of all, it was not a stand-alone costs order. The Court of Appeal reviewed the motion judge’s ruling, and leave to appeal costs was just one aspect of the appeal. Second, Napa Valley further submits that in this case, the amount at issue was far more than $90,000. In fact, it was required to defend itself with respect to cross-claims of over $300,000.

Analysis

[9] Section 133(b) of the Courts of Justice Act provides as follows:

No appeal lies without leave of the court to which the appeal is to be taken,

(b) where the appeal is only as to costs that are in the discretion of the court that made the order for costs.

[10] The test for leave to appeal an order of costs was succinctly stated by the Court of Appeal in McNaughton Automotive Limited v. Co-operators General Insurance Company, [2008] ONCA, 597. At paras. 23-27 the court stated:

Appeals in which the sole issue of costs lie only with leave of the court: see Courts of Justice Act, R.S.O. 1990, c.C-43, s.133(b).

24 In Brad-Jay Investments Ltd. v. Szijjarto, 2006 42636 (ON CA), [2006] O.J. No. 5078 at para. 21 (C.A.), this court said:

Leave to appeal a costs order will not be granted save in obvious cases where the party seeking leave convinces the court that there are “strong grounds upon which the appellate court could find that the judge erred in exercising his discretion.”

25 This court has also said that leave to appeal a costs order, standing alone, is granted only sparingly. See: Inter-Trust Mortgage Investment Corp. v. Robinson, 1999 CarswellOnt 1733 at para. 12 (C.A.).

26 As to the grounds upon which an appellate court should set aside a costs order, Arbour J. said in Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, 2004 S.C.C. 9, [2004] 1 S.C.R. 303 at para. 27:

A court should set aside a costs award on appeal only if the trial judge has made an error in principle or if the costs award is plainly wrong (Duong v. NN Life Insurance Co. of Canada, 2001 24151 (ON C.A.), (2001), 141 O.A.C. 307 at para. 14).

I am also mindful that a costs award is a discretionary order and that the judge of first instance is in the best position to determine the entitlement, scale and quantum of any such award.

[11] In Gottareo Properties (Dome Inc.) v. City of Toronto, 1998, 6184 (ONCA), the Court of Appeal discussed the issue of deference to the motions judge and explained at para. 48:

Deference is desirable for several reasons: to limit the number and length of appeals, to promote the autonomy and integrity of the trial or motion court proceedings on which substantial resources have been expended, to preserve the confidence of litigants in those proceedings, to recognize the competence of the trial judge or motion judge, and to reduce needless duplication of judicial effort with no corresponding improvement in the quality of justice.

[12] In Haley v. Lakeridge Health Corp., [2011] ONCA 55, the Court of Appeal reviewed a motion for summary judgment decision with respect to a class action proceeding. The appellant submitted that the motion judge erred in awarding $260,000 in costs. At para. 80, Sharpe J.A. once again made reference to the deference principle in appellate review of costs orders:

The motion judge gave detailed and comprehensive reasons for making the costs award. Deference must be accorded to his determination of entitlement and quantum of costs.

[13] Although not specifically applicable to leave to appeal costs orders, Rule 62.02(5) provides overarching comments about the importance of some appeals that may transcend the interests of the parties and be of general application to the public and the bar. Rule 62.02(5)(b) provides:

There appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted.

[14] With that factual and legal background in mind, I have had an opportunity to review the costs endorsement of the motion judge awarding $39,000 to Napa Valley. The costs submissions of Napa Valley indicate that it was seeking costs of about $62,000. The motion judge thoroughly reviewed the applicable issues on costs and the principles that have emerged from a number of decisions including Davies v. Clarington (Municipality) (2009) 2009 ONCA 722, 100 O.R. (3d) 66 per Epstein J.A., Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) C.A., 2004 14579 (ON CA), [2004] O.J. No. 2634, Moon v. Sher (2004), 2004 39005 (ON CA), 246 D.L.R. (4th) 440, (Ont. C.A.), Zesta Engineering Ltd. v. Cloutier (2002) 2002 25577 (ON CA), 118 A.C.W.S. (3d) 341 (Ont. C.A.). The motion judge also reviewed the lengthy history of this matter, including various offers to settle submitted by Napa Valley. He ruled that the offer to settle was not a proper Rule 49 offer, but indicated that Napa Valley had made efforts to settle the matter on a reasonable basis. He also made adverse findings about the conduct of the plaintiff, which is a well recognized principle to be considered by courts in awarding costs. The motion judge concluded his costs decision by saying:

Taking all of the costs principles together and looking at the number of hours that Ms. Huggins spent, I conclude that an all in number of $39,000 in costs is appropriate, payable by the plaintiff within thirty days. This award recognizes the defendant’s effort to settle and strikes a balance between partial indemnity costs and substantial indemnity while discounting for excess time.

Conclusion

[15] Leave to appeal costs orders should be granted only sparingly, and I am not satisfied that the plaintiff, Andriano, has met the test. I am not satisfied that there are strong grounds upon which an appellate court could find that the judge erred in exercising his discretion and I see no error in principle in the costs award. Justice Lauwers, as the judge at first instance, was well aware of all of the issues before him on the summary judgment motion. Both counsel had an opportunity to make submissions in writing on the issue of costs, and the costs endorsement reflects a consideration of the submissions of counsel, the facts of the case, and the guiding principles on costs. The plaintiff’s motion for leave to appeal the costs order is dismissed.

Costs

[16] In accordance with submissions from both counsel, costs are fixed at $3,000, payable to the successful party, Napa Valley, within thirty days of the release of this order.

Justice G. Mulligan

Released: April 6, 2011