Court File and Parties
Newmarket Court File No.: CV-15-124012-00 Date: 20160415 Ontario Superior Court of Justice
In the matter of the Construction Lien Act R.S.O. 1990, c.C.30, as amended
Between:
Allcon Concrete & Haulage Ltd. Lien Claimant/Plaintiff – and – Klein-Rose Homes Inc. Owner/Defendant
Counsel: Rocco A. Ruso and Colin Holland, for the Lien Claimant/Plaintiff William Friedman and Patrick Bakos, for the Owner/Defendant
Heard: In writing
Decision on Costs
SUTHERLAND J.:
Introduction
[1] On February 23, 2016, I released my decision on the section 47 of the Construction Lien Act [1] (the “CLA”) / summary judgment motion brought by the defendant, Klein-Rose Homes Inc. (“Klein-Rose”). In that decision, I dismissed the motion brought Klein-Rose.
[2] I invited the parties to provide me with their submission as to costs. I have received those submissions and below is my decision.
Legal Principles
[3] In dealing with costs under the provision of the CLA, the court must first review the legislation. Section 86 of the CLA deals with the awarding of costs in construction lien proceedings.
[4] Section 86 reads:
- (1) Subject to subsection (2), any order as to the costs in an action, application, motion or settlement meeting is in the discretion of the court, and an order as to costs may be made against, (a) a party to the action or motion; or (b) a person who represented a party to the action, application or motion, where the person, (i) knowingly participated in the preservation or perfection of a lien, or represented a party at the trial of an action, where it is clear that the claim for a lien is without foundation or is for a grossly excessive amount, or that the lien has expired, or (ii) prejudiced or delayed the conduct of the action, and the order may be made on a substantial indemnity basis, including where the motion is heard by, or the action has been referred under section 58 to, a master, case management master or commissioner. 2006, c. 21, Sched. C, s. 102 (3).
Where least expensive course not taken
(2) Where the least expensive course is not taken by a party, the costs allowed to the party shall not exceed what would have been incurred had the least expensive course been taken. R.S.O. 1990, c. C.30, s. 86 (2).
[5] Section 67 of the CLA states that the procedure in an action under this legislation shall be as far as possible a summary character “having regard to the amount and nature of the liens in question”. Subsection 3 states that except where there is no inconsistency, “the Courts of Justice Act and the rules of court apply to pleadings and proceedings under this Act.”
[6] Accordingly, the Rules of Civil Procedure [2] as to the issue of costs do not apply if there is an inconsistency with the CLA, namely, section 86.
[7] In dealing with costs under the CLA, I agree with the statements of Master Polika in SIPGP No. 1 Inc. v. Eastern Construction Co. [3] wherein he stated:
The costs to be awarded in the performance bond action, an action brought under the ordinary procedure set out in the Rules of Civil Procedure are governed by section 131(1) of the Courts of Justice Act, which provides, that costs are in the discretion of the court, and that the court may determine by whom and to what extent the costs shall be paid.
Rule 57.01(1) of the Rules of Civil Procedure sets out a non-exhaustive list of factors which the Court may consider in exercising its discretion, in addition to the result in the action and any offer to settle made in writing. Rule 1.04 (1.1) provides that in applying the rules the court shall make orders that are proportionate to the importance and complexity of the issues and the amounts involved.
In a lien action brought pursuant to the provisions of the Construction Lien Act the court’s authority to award costs, is set out, in section 86 of the Construction Lien Act, as being in the court’s discretion, and that a costs order may be made on a substantial indemnity basis subject to the limitation set out in section 86(2). That limitation is, where the least expensive course is not taken by a party, the costs allowed to a party shall not exceed what would have been incurred had the least expensive course been taken.
Section 67(3) of the Act provides that, except where inconsistent with the Act, the Courts of Justice Act and the Rules of Civil Procedure apply to pleadings and proceedings under the Act. Given that the provisions of Rule 57.01(1) are not mandatory, I find that Rule 57.01(1) is not inconsistent with the Construction Lien Act and that the non-mandatory and non-exhaustive conditions set out therein may be considered in fixing costs in a lien action. Rule 1.04(1.1), however, to the extent that it is mandatory, is inconsistent with section 86 of the Construction Lien Act. Because of its mandatory nature, it impinges on the court’s discretion set out in section 86. However, I find proportionality is, nonetheless, a non-binding factor which can be considered by the court in exercising its discretion as to costs, very much akin, although not alike, the limitation set out in section 86(2).
Established principles applicable to fixing costs are, that the court should not engage in a purely mathematical calculation of hours times rate, but rather, the costs award should reflect a fair and reasonable amount, and that in coming to that amount, the court should consider the reasonable expectation of the parties as to costs of the proceeding they are involved in.
[8] I have taken these principles along with the statements of the Court appeal in Serra v. Serra [4] and Boucher et al. v. Public Accountants Council for the Province of Ontario [5] into account in making my decision on costs.
Positions of the Parties
[9] In reviewing the submissions of the parties, neither put forth any evidence that either party has delayed or prejudiced the conduct of this action or has not taken the least expensive course in the conduct of this action.
[10] The plaintiff, Allcon Concrete & Haulage Ltd. (“Allcon”) is requesting costs in the amount of $70,000 on the basis that it was the successful party on the motion and that the defendant has been “unduly aggressive and unreasonable.” Allcon further submits that the motion is akin to a summary judgment motion and that Rule 20.06 Rules of Civil Procedure applies in the circumstances of this motion. Section 39.03(4) (b) of the Rules of Civil Procedure does not because the affiant being examined made flat, unqualified statements in their affidavit and both parties were cross examined.
[11] Klein-Rose submits that, given the nature of this motion and that at trial Allcon’s claim for lien may ultimately be found invalid and/or excessive, no costs should be awarded and those costs should be reserved to the trial judge. Klein-Rose further submits that this is not a summary judgment motion and Rule 20.06 of the Rules of Civil Procedure does not apply but Rule 39.02(4) (b) does apply given that there is nothing in the CLA to find Rule 39.02(4)(b) inconsistent with the CLA. Klein-Rose did not provide a Bill of Costs with its submission to aid the court in assessing the quantum of costs.
Analysis
[12] I will first deal with whether Rule 20.06 or Rule 39.02(4) (b) of the Rules of Civil Procedure applies in CLA proceedings. As far as either Rule limits the Court’s discretion set out in section 86 of the CLA, I find they do not apply. The court has the discretion to award substantial indemnity for costs subject to the limitation in section 86(2) of the CLA.
[13] On the issue of costs, I have reviewed the decisions of Norton Electrical Contractors Associates v. 161975 Ont. Inc. [6] and DCL Management Ltd. V. Zenith Fitness Inc. [7] I agree with the rationale of Master Sandler in DCL Management. The plaintiff was successful on the motion and should be awarded costs. However, the issue of the validity of the claim for lien is still in question.
[14] I believe the just way to deal with costs, and I exercise my discretion accordingly, is to fix the amount of costs to the plaintiff and to provide if the plaintiff is successful at trial or at a summary judgment motion and proves the validity of its claim for lien than the amount I fix be paid to the plaintiff. The amount I fix shall be paid to the plaintiff even if it is not fully successful in the amount it is claiming on its contract claim or is not successful in defending the counterclaim of the Klein-Rose. I make do findings or statement on the quantum of the plaintiff’s claim for lien and the issue of whether the amount of the claim for lien is excessive or not. Any consequences, if the claim for lien is found to be excessive is left to the trial judge or the judge hearing any summary judgement motion brought by the plaintiff.
[15] In assessing the appropriate amount for costs, I do not find Rule 20.06 of the Rules of Civil Procedure as mandatory. I find this Rule is inconsistent with section 86 of the CLA if it is taken as a means of limiting the criteria the court may consider for assessing costs as set out in section 86 of the CLA. With respect to Rule 39.02(4) (d), I do not find that this Rule is inconsistent with the CLA. Both Rules 20.06 and 39.02(4)(d) one of the factors the court may take into consideration in assessing the quantum of costs.
[16] The Bill of Costs of the plaintiff indicates an amount of $61,566.30 on a partial indemnity basis and $86,209.62 on a substantial indemnity basis. I note that the amount claimed for partial indemnity for costs is 71% of the amount for substantial indemnity.
[17] I do not accept the argument of the plaintiff that the defendant “acted unduly aggressive and unreasonable”.
[18] Taking into consideration the factors already stated I find a fair and reasonable amount that the unsuccessful party to pay for costs is $22,000 for fees plus HST, for a total of $24,860 for fees.
[19] The plaintiff has claimed disbursements in the amount of $4,556.95. However, the disbursement claims are not specifically broken down for an amount for each disbursement claimed. I do acknowledge that disbursements were incurred but I cannot accurately determine the amount. I, therefore, am providing an estimated amount of $1,700 inclusive of HST for disbursements. The total I am allowing in costs is $26,560.
Disposition
[20] I order that the defendant, Klein-Rose, pay to the plaintiff, Allcon, the sum of $26,560 for costs of the motion to be paid if the plaintiff is successful at trial or at a summary judgment motion in proving the validity of its claim for lien. The amount of $26,560 shall be paid to the plaintiff even if the plaintiff is not fully successful in the amount it is claiming on its contract claim and/or is not successful in defending the counterclaim of Klein-Rose.
Justice P.W. Sutherland
Released: April 15, 2016