Court File and Parties
CITATION: Tailored Foam Solutions v. Martindale, 2018 ONSC 1592
COURT FILE NO.: 37/17
DATE: 20180312
ONTARIO
DIVISIONAL COURT
BETWEEN:
Tailored Foam Solutions (2013) Inc.
Plaintiff
–and–
Patricia Martindale, Estate Trustee for the Estate of Len Martindale
Defendant
–and between–
Patricia Martindale, Estate Trustee for the Estate of Len Martindale
Plaintiff by Defendants’ Claim/Respondent
–and–
Warren Williams
Defendant by Defendant’s Claim/Appellant
–and between–
Warren Williams
Plaintiff by Defendant’s Claim/Appellant
–and–
Tailored Foam Solutions (2013) Inc. and Patricia Martindale, Estate Trustee for the Estate of Len Martindale
Defendants by Defendant’s Claim/Respondent
Counsel:
Kathleen Montello, for Patricia Martindale, Estate Trustee of Estate of Len Martindale
Steven Pickard, for Warren Williams,
HEARD: February 20, 2018
Reasons for Decision
Leitch J.
[1] The moving party, Warren Williams (“Mr. Williams”), seeks an order granting him leave to appeal the costs endorsement of Deputy Judge Kristen L. Hales, dated November 26, 2017.
Proposed issues of appeal
[2] Briefly stated, the issues to be determined on Appeal, according to Mr. Williams, are as follows:
a) Whether the learned Deputy Judge erred in law when applying section 29 of the Courts of Justice Act;
b) Whether the learned Deputy Judge erred in law when she ordered that Mr. Williams pay a net cost award when, according to Mr. Williams, he was the wholly successful party in the entirety of the matter;
c) Whether the learned Deputy Judge erred by awarding costs against Mr. Williams in favour of Tailored Foam Solutions (2013) Inc.;
d) Whether the learned Deputy Judge erred in not providing reasons for the costs award in favour of Tailored Foam Solutions (2013) Inc. and holding the amount was $4,486.55 when the claim was for $11,000.00, which exceeds the 15 percent limit in section 29 of the Courts of Justice Act; and
e) Whether Mr. Williams should be paid costs as the only wholly successful party and if so, by whom and how much?
Background facts
[3] Three small claims court actions were tried together.
[4] In Claim #1, the plaintiff claimed $11,000 against Patricia Martindale and the Estate Trustee for the estate of Len Martindale (the “Martindale Defendant”). This claim was dismissed.
[5] In Claim #2, the Martindale Defendant issued a defendant’s claim against Mr. Williams for the amount claimed by the plaintiff against the Martindale Defendant—in essence a third-party claim. This claim was also dismissed because the plaintiff’s claim against the Martindale Defendant was dismissed.
[6] In Claim #3, Mr. Williams made a claim against both the Martindale Defendant and the plaintiff.
[7] Part 1 of Claim #3 was a claim by Mr. Williams against Mr. Martindale for $23,191, which amounted to the balance of credits and “extra” work completed by Mr. Williams for Mr. Martindale that was work completed separate to the work at issue in Claim #1, Claim #2, and Part 2 of Claim #3. Part 1 of Claim #3 was partially successful. Mr. Williams was awarded $11,000.
[8] Part 2 of Claim #3 involved a claim by Mr. Williams against the plaintiff for the same amount claimed in Claim #1, but was only claimed in the event that Claim #1 was successful. Part 2 of Claim #3 was dismissed because Claim #1 and Claim #2 were dismissed.
[9] The Martindale Defendant sought costs against the plaintiff and was awarded costs. This cost award is not the subject of the appeal.
[10] The Deputy Judge awarded no costs to Mr. Williams in relation to Claim #2. This cost award is also not the subject of the appeal.
The costs orders that Mr. Williams seeks leave to appeal
[11] The Deputy Judge found that Mr. Williams was entitled to “some costs” as against the Martindale Defendant in relation to Part 2 of Claim #3. She noted that Mr. Williams “was successful in the amount of $11,000, and pursuant to r. 19.02 of the Rules of Small Claims Court and s. 29 of the Courts of Justice Act”, she found him “entitled to 15 percent of the amount awarded, which is $1,650”. She also found that his counsel was entitled to a counsel fee in the amount of $500. She therefore awarded Mr. Williams $2,150, inclusive of HST and disbursements payable forthwith by the Martindale Defendant. Mr. Williams seeks leave to appeal this costs order.
[12] Mr. Williams submits that the Deputy Judge erred in her application of r. 19.02 of the Rules of Small Claims Court and s. 29 of the Courts of Justice Act, because these sections limit the cost award to 15% of the amount claimed. Mr. Williams submits that the amount awarded for costs in Part 1 of Claim 3 is insufficient.
[13] The plaintiff, as a defendant to Mr. William’s action in Part 2 of Claim #3, requested its costs. The Deputy Judge noted that Mr. William’s claim was dismissed as against the plaintiff entirely and she awarded the plaintiff costs in the amount of $4,486.55 payable by Mr. Williams. Mr. Williams also seeks leave to appeal this costs order.
[14] Mr. Williams takes issue with the cost order for Part 2 of Claim #3. Essentially, Mr. Williams’ argument is that the Deputy Judge erred, because Part 2 of Claim #3 was only made as an “alternative” to Mr. William’s first argument, which was that Claim #1 should not succeed. In other words, Mr. Williams first defence position was that Claim #1 should be struck, which it was, and Mr. Williams submits that as a result, he was “wholly successful at trial” as a result of the success on Claim #1 and Part 1 of Claim #3. Mr. Williams submits that as a result of the success on Claim #1, the “additional claim made in the alternative [Part 2 of Claim #3] was [subsequently] found to not be an issue.”
The relevant statutory provisions
[15] Section 21(2)(b) of the Courts of Justice Act states the following:
A proceeding in the Divisional Court may be heard and determined by one judge where the proceeding,
(b) is an appeal under s. 31 from a person referred to in s. (24)(2) presiding over the Small Claims Court.
[16] Section 31 of the Courts of Justice Act provides as follows:
An appeal lies to the Divisional Court from a final order from a Small Claims Court in an action,
a) for the payment of money in excess of the prescribed amount, excluding costs….
[17] The prescribed amount required for an appeal in the Divisional Court from the Small Claims Court is enumerated in s. 2 of O. Reg. 244/10, which says the following:
A final order of the Small Claims Court may be appealed to the Divisional Court if the order is for, a) the payment of money in excess of $2500, excluding costs….
[18] Section 133 of the Courts of Justice Act requires parties to obtain the leave of the court when appealing only a costs order that was in the discretion of the court that made the order for costs.
[19] Therefore, Mr. Williams must be granted leave in order to appeal the costs orders of the deputy judge in issue.
The method of bringing this motion —in writing or orally?
[20] While motions for leave to appeal are required to be made in writing when the motions are made to the Court of Appeal (Rules of Civil Procedure, r. 61.03.1(1)) and when motions are made to the Divisional Court from an interlocutory order of the Superior Court (r. 62.02(2)), neither section 133 of the Courts of Justice Act, which requires leave to be granted for appeals of costs orders alone, nor section 21(2)(b) or section 31 of the Courts of Justice Act, which require that appeals from Small Claims Court orders greater than $2500 be made to a single judge of the Divisional Court, nor any other section of any Act relevant to the motion for leave make any mention of a requirement for the motion for leave to be in writing.
[21] Therefore, this motion for leave to appeal a final costs order of the Small Claims Court was properly made orally.
Where should a motion for leave to appeal be heard?
[22] Section 20 of the Courts of Justice Act provides that an appeal to the Divisional Court shall be heard in the region where the hearing or other process that led to the decision appealed from took place, unless the parties agree otherwise or the Chief Justice of the Superior Court of Justice orders otherwise because it is necessary to do so in the interests of justice.
[23] This motion was brought in London, whereas the Small Claims Court trial was conducted in Windsor. Mr. Williams is permitted to bring the motion for leave to appeal in London, because London is in the same region as where the Small Claims Trial took place. However, I draw to counsel’s attention that the regional calendar for the Southwest Region provides that “all Divisional Court matters to be heard before a single judge of the Divisional Court, including the Small Claims Court appeals will be heard in the local centre”. Therefore, this motion for leave could have been and the ultimate appeal may be brought in Windsor where the parties reside and operate their businesses and where the counsel of record practice.
Could the leave motion be heard with the appeal itself?
[24] Mr. Williams is entitled to bring this motion to leave for appeal separately from the appeal. Importantly, the Rules of Civil Procedure specifically allow for an appeal in the Divisional Court to be heard after the motion for leave to appeal has been heard and granted. For example, r. 61.03(6), which deals with motions for leave to appeal to the Divisional Court, says that: “where leave is granted, the notice of appeal shall be delivered within seven days after the granting of leave”.
[25] Given the relatively modest amount of money in issue on this potential appeal and the relatively narrow issue in contention, it would have been tempting to deal with the substantive issue on this motion for leave, however, that was not possible because there was an issue with service on the plaintiff as I will next outline.
The service issue
[26] One of the issues on the appeal involves whether the deputy judge erred in awarding the plaintiff costs payable by Mr. Williams.
[27] The plaintiff is clearly a responding party to the appeal. The plaintiff was served with this leave motion by service on the paralegal who acted for the plaintiff at the trial in the Small Claims Court.
[28] Notice of claims in the Small Claims Court can be served on a paralegal pursuant to r. 8.03(5) of the Rules of the Small Claims Court.
[29] However, while service on a paralegal may be valid service for claims in the Small Claims Court, the same is not true for appeals to the Divisional Court. Service of documents in appeals is governed by the Rules of Civil Procedure.
[30] Under r. 61.03(1)(b), a notice of motion for leave to appeal to the Divisional Court, such as the motion made in this case, must be served within 15 days of the order to which leave to appeal is sought. Valid service is governed then by r. 16, which requires that service is valid if it is completed personally or by an alternative to personal service. Unlike the Rules of the Small Claims Court, the Rules of Civil Procedure only include service on a lawyer of record and do not include service on a paralegal as valid alternative service.
[31] Therefore, Mr. Williams did not affect valid service of this leave motion by serving the notice of motion on the plaintiff’s paralegal.
[32] Mindful of the fact that this a motion for leave involving only the issue of costs and a relatively modest amount of costs, I am prepared to validate the service of this leave motion pursuant to r. 16.04(1), nunc pro tunc, on the basis that it is appropriate in the interest of justice to do so.
Analysis and conclusions
[33] I begin by noting that in Smith v. MacKinnon, 2017 ONSC 4638, Mew J. considered the principles in r. 62.02(4) on a motion for leave to appeal an order as to costs. However, with respect, r. 62.02(4) does not apply to motions for leave to appeal final orders referencing as it does only interlocutory orders.
[34] It is important to state that the awarding and fixing of costs is highly discretionary and is afforded significant deference, and leave to appeal a costs order is granted sparingly. For example, in House v. Baer, 2017 ONCA 885 at paras. 86–87, the court observed that leave to appeal costs will only be granted in obvious cases where the party seeking leave convinces the court there are “strong grounds upon with the appellant court could find that the judge erred in exercising his discretion” and that “a court should set aside a costs award on appeal only if the trial judge has made an error in principle or if the cost awarded is plainly wrong” (citations omitted).
[35] I am satisfied that leave should be granted in this case.
[36] Firstly, for the costs award associated with Part 1 of Claim 3, the Deputy Judge erred in the wording she used when applying r. 19.02 of the Rules of Small Claims Court and s. 29 of the Courts of Justice Act. Mr. Williams is not “entitled to” 15 percent of the amount “awarded”. Rather, these sections limit the amount of costs permitted to 15 percent of the amount claimed, which is $3,478.65 (15 percent of $23,191 claimed in Part 1 of Claim #3). [However, I note that the costs award could be correct despite the error in Deputy Judge’s wording of the applicable statutory provisions. After all, s. 29 of the Courts of Justice Act does not guarantee a certain amount of costs, but rather only limits the maximum amount permitted. Whether or not the costs award for this portion of Claim #3 was “plainly wrong” will have to be decided during the substantive appeal.]
[37] Secondly, Part 2 of Claim #3 was struck once Claim #1 was struck, and as a result, the court could find on appeal that the Deputy Judge erred in awarding costs against Mr. Williams in favour of the plaintiff. The Deputy Judge did not award costs in relation to Claim #2. Claim #2 and Part 2 of Claim #3 are similar in the sense that each only needed to proceed if Claim #1 was successful.
[38] Further, even if Mr. Williams should pay costs for making his claim in Part 2 of Claim #3, the amount of costs awarded exceeds 15 percent of the amount claimed, which is in contradiction of s. 29 of the Courts of Justice Act. Whether the 15 percent is calculated based on just Part 2 of Claim #3 or on the entire amount claimed in Claim #3, the costs award exceeds the limit in s. 29, because 15 percent of the amount claimed in Part 2 of Claim #3 is $1,610.25 and 15 percent of the total amount claimed by Mr. Williams is $3,750, both of which are less than the costs order of $4,486.55. While section 29 of the Courts of Justice Act says that the Small Claims Court can make a costs order that is greater than 15 percent of the amount claimed if it is “necessary in the interests of justice to penalize a party or a party’s representative for unreasonable behaviour in the proceeding”, the Deputy Judge did not provide any reasons to support the conclusion that Mr. Williams should be penalized for unreasonable behaviour.
[39] Leave to appeal is granted and the notice of appeal shall be served and filed in accordance with r. 61.03(6).
[40] In accordance with the agreement of counsel, costs are awarded to Mr. Williams as the successful party on this leave motion in the amount of $1,000.
“Justice L. C. Leitch”
Justice L. C. Leitch
Released: March 12, 2018
CITATION: Tailored Foam Solutions v. Martindale, 2018 ONSC 1592
COURT FILE NO.: 37/17
DATE: 20180312
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Tailored Foam Solutions (2013) Inc.
Plaintiff
–and–
Patricia Martindale, Estate Trustee for the Estate of Len Martindale
Defendant
–and between –
Patricia Martindale, Estate Trustee for the Estate of Len Martindale
Plaintiff by Defendants’ Claim/Respondent
–and–
Warren Williams
Defendant by Defendant’s Claim/Appellant
–and between–
Warren Williams
Plaintiff by Defendant’s Claim/Appellant
–and–
Tailored Foam Solutions (2013) Inc. and Patricia Martindale, Estate Trustee for the Estate of Len Martindale
Defendants by Defendant’s Claim/Respondent
REASONS FOR JUDGMENT
LEITCH J.
Released: March 12, 2018