Court File and Parties
COURT FILE NO.: CV-14-513534 DATE: 20160530 SUPERIOR COURT OF JUSTICE - ONTARIO
BETWEEN: 1095909 Ontario Inc. and 2162289 Ontario Inc., Plaintiffs AND: Westmount-Keele Limited, Joseph Ieradi and Toronto Standard Condominium Corporation No. 1786, Defendants
BEFORE: Mr. Justice Graeme Mew
COUNSEL: Alan Lenczner QC for Westmount-Keele Limited and Joseph Ieradi Douglas Levitt for 1095909 Ontario Inc. and 2162289 Ontario Inc.
HEARD: In Writing
COSTS ENDORSEMENT
[1] Westmount-Keele Limited and Joseph Ieradi were successful on a summary judgment motion seeking dismissal of the plaintiffs’ action. They now seek their costs of the motion and of the action on a substantial indemnity basis.
[2] In his submissions on costs, counsel for the successful moving parties notes that the plaintiffs’ claim was dismissed on three bases, namely:
- A “Four corners” (or “complete agreement”) clause in the subject contract;
- Releases contained in agreements entered into between the parties which had the effect of releasing the claims subsequently advanced against the moving parties in the action; and
- The expiry of the applicable limitation period prior to the commencement of the action.
[3] While acknowledging that, following amendments to the rules in 2010, it is no longer the default position that an unsuccessful moving party in a summary judgment motion will have substantial indemnity costs awarded against it, I am nevertheless referred to the decision of the Court of Appeal in Smyth v. Waterfall (2000), 50 O.R. (3d) 481 (C.A.) as instructive. That case stands for the proposition that when evaluating costs of summary judgment motions, the court should enquire whether it would be clear to the moving party, acting reasonably, on the basis of the information that it knew or reasonably ought to have known, that there existed a genuine issue for trial. It is submitted that if a responding party knew or reasonably ought to have known that there existed no genuine issue for trial, substantial indemnity costs would be appropriate.
[4] The Bill of Costs submitted by the moving parties in the present case sets out partial indemnity costs (inclusive of disbursements and taxes) of $72,128.46 and substantial indemnity costs of $96,238.14.
[5] The plaintiffs (responding parties) argue that there should be no costs awarded or, alternatively, that if costs are awarded, they should be determined on a partial indemnity basis and that substantial reductions should be applied to the amounts claimed in the Bill of Costs having regard to the rates charged and, they say, excessive time spent by the moving parties’ lawyers. The plaintiffs also invoke the principles of proportionality and the reasonable expectations of the party paying costs.
[6] In support of the argument that there should be no costs awarded, the plaintiffs refer to Mark M. Orkin, The Law of Costs, 2nd ed., looseleaf (Aurora: Canada Law Book, 2010) at para. 205.2:
A ground for disallowance of costs may be found in the conduct of the parties either before or during the litigation. Thus a successful party may be disentitled to all or part of his or her costs if the party has not been free from fault, for example, if he or she has been guilty…unreasonable behaviour during or leading up to the litigation…
Similarly, a successful defendant has been deprived of his costs where he was in a sense responsible for the litigation through the careless handling of his own affairs…or reckless; or where [the] defendant was guilty of bad faith or misrepresentation…
[7] The plaintiffs point to what they describe as an “incorrect” representation made by Mr. Ieradi about the availability of common element parking spaces situated at the condominium development, which lies at the heart of the litigation between the parties. The oral representations alleged to have made by Mr. Ieradi were not borne out by the condominium documents incorporated into the agreement between 1095909 Ontario Inc. and Westmount-Keele Limited which documents, apparently, were not adequately studied or understood by the plaintiffs (or their solicitor) at the time that the first named plaintiff purchased condominium units from Westmount-Keele Limited.
[8] While it is clear that the terms of the condominium documents did not reflect the oral representations allegedly made by or on behalf of the moving parties, the fact nevertheless remains that the first named defendants subscribed to agreements which, if scrutinised, would have made clear what the true situation with respect to common element parking spaces was.
[9] In such circumstances, I see no reason to depart from the usual rule that the successful parties should be awarded costs.
[10] As to the scale of costs, it is only in exceptional cases that an order for substantial indemnity costs should be made. Absent some form of reprehensible conduct, either in the circumstances giving rise to the claim or in the proceedings, which is of such character that justice can only be done by ordering a substantial or complete indemnification of costs, the scale of indemnification should be partial: James v. Stonehocker, [2002] O.J. No. 3820 (S.C.J.) at paras. 5-6; Royal Bank of Canada v. Haywood Welton at para. 3.
[11] Although the moving parties had a strong case, the plaintiffs’ action was not so devoid of merit that an award of costs on a substantial indemnity basis would be warranted.
[12] By reason of the foregoing, the moving parties are entitled to partial indemnity costs.
[13] As a general rule of thumb, partial indemnity costs are often fixed or assessed in an amount that equates with 60% of full indemnity costs. This is not, however, an inviolable practice. The court must balance the discretionary factors set out in rule 57.01(1) of the Rules of Civil Procedure and in the end, arrive at an amount that is reasonable and fair in the circumstances and that bears some relationship to the amount that an unsuccessful party could reasonably expect to pay: Akagi v. Cinergy Group (2000) Inc., 2015 ONCA 771 at paras. 54-55.
[14] The plaintiffs assert that the quantum of costs claimed by the moving parties is excessive. If successful, the plaintiffs would have claimed costs, inclusive of fees, disbursements and taxes of $28,284.06.
[15] One is immediately struck by the fact that the plaintiffs value of their claims for damages as including, but not limited to, $1,668,304 in lost revenue and approximately $1,700,000 in respect of the plaintiffs’ investment in the subject properties. A total, then, of more than $3.2 million and clearly a matter of great importance to the plaintiffs. Set against that metric alone, the claim by the moving parties for partial indemnity costs of $72,128.46, which disposed of the whole action, does not offend the principle of proportionality.
[16] The partial indemnity rate of $350/hr claimed on behalf of senior counsel for the moving parties is less than 50% of his normal hourly rate ($750) and that hourly rate is well within the range of hourly rates charged by senior counsel in Toronto undertaking commercial litigation.
[17] The partial indemnity rate of $225 per hour claimed on behalf of junior counsel for the moving parties, who was called to the Bar in 2012, does raise some concern. Her full hourly rate is $355 per hour. If one applies the 60% rule of thumb, the result would be $213 per hour, which is still higher than what might be regarded as appropriate in this case. Similar concerns arise in respect of some of the other fee earners whose time is detailed in the Bill of Costs of the moving parties.
[18] Although particulars of amounts claimed were neither provided nor sought, some of the items claimed do seem high. For example, printing and binding costs of $2,822.65, or a total of 93.9 hours of fee earners’ time spent on, and in connection with, cross-examinations on affidavits.
[19] Having regard to the foregoing and, in particular, to the factors set out in rule 57.01 of the Rules of Civil Procedure and the principles of proportionality and what would be fair and reasonable for the unsuccessful party to pay (Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d) 291 (C.A.)), I fix the costs payable by the plaintiffs to the successful moving parties on a partial indemnity scale in the all-inclusive amount of $50,000.
Graeme Mew J. Date: 30 May 2016