1258917 Ontario Inc. (417 Truck Center) v. Daimler Truck Financial, a division of DCF’S Canada Corp., 2012 ONSC 4094

CITATION: 1258917 Ontario Inc. (417 Truck Center) v. Daimler Truck Financial, a division of DCF’S Canada Corp., 2012 ONSC 4094

DIVISIONAL COURT FILE NO.: 11-DV-1723 (L’Orignal)

DATE: 2012/07/12

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Justice R. Smith

BETWEEN:

1258917 ONTARIO INC. carrying on business as 417 TRUCK CENTER

Plaintiff/Defendant by Counterclaim/Respondent

– and –

DAIMLER TRUCK FINANCIAL, a division of DCF’S CANADA CORP.

Defendant/Plaintiff by Counterclaim/Appellant

Robert E. Tolhurst, for the Plaintiff/Respondent

Talar Beylerian/Elaine M. Gray, for the Defendant/Appellant

HEARD: By written submissions

DECISION REGARDING COSTS

[1] 417 Truck Centre (“417”) was a successful respondent in this appeal and seeks its costs on a partial indemnity basis of $15,961.25 ($11,875.00 for fees plus disbursements of $2,250.00 plus HST of $1,836.25).

[2] The appellant submits that the amount under appeal in this matter was only $9,129.02 and involved an appeal from a decision of the Small Claims Court. Daimler submits that it would be unfair and unreasonable to award costs in the amount of $15,961.25 based on the small amount that was in issue. The respondent also submits that the costs exceed the amount that the unsuccessful party would reasonably expect to pay and that 417 should only be entitled to $3,000.00 for costs for legal work plus the disbursements incurred other than the invoice for $2,288.25 from the research lawyer, Ms. Bocska.

Factors

[3] The factors to be considered when fixing costs are set out in Rule 57 of the Rules of Civil Procedure and include in addition to success, the amount claimed and recovered, the complexity and importance of the matter, unreasonable conduct of any party which unduly lengthened the proceeding, scale of costs and any offer to settle, the principle of indemnity, hourly rate claimed the time spent and the principle of proportionality, and the amount that a losing party would reasonably expect to pay.

Success

[4] In this case 417 was successful in responding to Daimler Truck Financial (“Daimler”)’s appeal.

Amount Claimed and Recovered

[5] The amount of the Small Claims Court judgment involved $13,399.00 plus costs fixed by the Small Claims Court of $2927.00. Daimler only contested $9,129.02 of the above amount. The amount involved is not large and this matter was an appeal from a decision of the Small Claims Court. However, the issues raised by Daimler in its appeal were complex and involved conflicting decisions under the Repair and Storage Liens Act , R.S.O. 1990, c. R.25 (“RSLA”).

Complexity and Importance

[6] The issue of priorities between secured creditors in a large Truck and the rights of an unregistered non‑possessory lien holder for repairs under the RSLA were complex. There were also a number of cases of this Court that had reached inconsistent results.

[7] The issue was important to 417 which operates a small garage and sought payment for repairs it made to the Truck on which Daimler held a security interest registered under the Personal Property Security Act, R.S.O. 1990, c. P.10 (the “PPSA”). The decision was important to Daimler and to other secured parties who finance large trucks and also important to the repairers of these vehicles, who acquire unregistered non‑possessory liens in such vehicles for the amount of the repairs.

[8] The facts in this case were somewhat unusual in that 417 acquired both a non‑possessory lien under the RSLA when it performed repairs on the Truck and returned it to the owner without being paid, and subsequently, acquired a possessory lien in the Truck. After the first repairs were completed by 417, the owner of the Truck returned it to 417 for further repairs. 417 completed the additional repairs and retained possession of the Truck and asserted a possessory lien against the Truck for the amount of the additional repairs as well as maintaining its non‑possessory lien against the Truck under the RSLA for the earlier repairs.

[9] Daimler sought to establish the principle that a secured creditor with a registered first priority security interest in a vehicle, under the PPSA, had priority over an unregistered non‑possessory repairer’s lien against the same vehicle, unless the repairer registered notice of its non‑possessory lien claim. Daimler retained counsel from Toronto who argued the appeal in L’Orignal, which indicates to me that the matter was very important to Daimler in establishing a favourable precedent.

Scale of Costs and Offers to Settle

[10] Costs will be awarded on a partial indemnity basis as neither party made any offer to settle or behaved unreasonably.

Hourly rates, Time Spent, Proportionality and Indemnity

[11] Daimler objects to the amount of time spent by Mr. Tolhurst on this appeal and also objects to paying for the nine hours billed for legal research. The total time spent was 56.5 hours. Daimler further submits that its lawyer, Ms. Beylerian spent only 32 hours on the appeal and was more junior as she was called to the Bar in 2010. Daimler therefore submits that the hours expended by 417 on this appeal were out of proportion to the amount in issue and exceeded the amount that would have been reasonably anticipated by Daimler.

[12] Daimler does not object to the hourly rate claimed by counsel for 417 on a partial indemnity basis and I agree that the rates claimed are reasonable for the Prescott Russell area where the appeal was held.

[13] With regards to proportionality, the amount claimed for costs is greater than the amount at issue in the appeal, which was approximately $9,000.00. However, the issues involved were complex and counsel referred to approximately 12 cases, none of which had identical facts to the circumstances involved in this case.

[14] With regards to the principle of indemnity, the successful respondent on appeal should be indemnified for their reasonable costs which they were forced to incur in order to adequately respond to an appeal.

Amount the unsuccessful party would reasonably expect to pay

[15] While the amount involved in the appeal was not large, the matter was important to Daimler who launched the appeal to the Divisional Court seeking to clarify the state of the law to favour secured creditors holding security interests in large commercial trucks, over repairers of these vehicles with unregistered non‑possessory liens under the RSLA.

[16] Daimler is a large sophisticated company and was aware that there were conflicting decisions on the issue of priorities between security interests perfected under the PPSA and the rights of repairers with unregistered non‑possessory repair lien rights under the RSLA. Daimler would also have been aware that this was a complex area of the law.

[17] As a result, I find that notwithstanding that the amount involved was not large, the issues were complex and it was important to Daimler to clarify the law in its favour. Daimler was a sophisticated party who retained counsel from Toronto to travel to L’Orignal for the purpose of arguing this appeal, would have been aware that substantial legal costs would be incurred in this appeal by the responding party. Daimler does not dispute the hourly rate that was claimed.

[18] I will reduce the time claimed for preparation somewhat and I will award the partial indemnity costs for the time spent by the research lawyer retained by 417 to research the issues involved, as I find this was reasonable and necessary in this appeal.

Disposition

[19] Having considered all of the above factors, I order that Daimler pay costs to 417 in the amount of $7,500.00 plus HST plus disbursements of $2,000.00 for a total of $9,500.00 plus HST.

R. Smith J.

Released: July 12, 2012