Court File and Parties

Court File No.: CV-14-615-00SR Date: 2020-05-19 Superior Court of Justice – Ontario

Re: David Aldebert c.o.b. as Mercury Enterprises, Plaintiff And: Country Boy Services Inc. and Neil Stewart, Defendants

Before: Ricchetti, RSJ.

Counsel: S. Turk, counsel for the Plaintiff E. Braganza, counsel for the Defendants

Heard: May 15, 2020 by videoconference

Endorsement

THE MOTION

[1] This is a motion by the Plaintiff seeking enforcement costs of $20,648.58 and to permit such costs, if any, be added to and recoverable from the monies received by the Sheriff in response to Notices of Garnishments.

Background

Court Payment Orders

[2] On February 2, 2016, the Plaintiff obtained a cost order against Country Boy Services Inc. (“Country Boy”) in the amount of $3,000 plus interest at the rate of 2% per annum. (“Cost Order”)

[3] On June 16, 2016, the Plaintiff obtained a judgment against Country Boy in the amount of $34,785.31, plus $6,413 in costs and post judgment interest at 2% per annum. (“Judgment”)

[4] Collectively, the principle amount of the Cost Order and the Judgment will be referred to as the “Outstanding Amounts".

Execution of the Outstanding Amounts

[5] No payment was made by Country Boy towards the Outstanding Amounts.

[6] There were some efforts to negotiate a resolution. Such efforts did not result in a settlement.

[7] While much has been submitted that Country Boy made no payment towards the Outstanding Amounts or any reasonable proposal, neither are a basis to award unreasonable or unnecessary execution costs or to award a higher standard of costs on this motion.

[8] The Plaintiff, while initially intending to proceed with an examination in aid of execution, did not do so, even when the settlement discussions failed. No Notice of Examination was ever served on Country Boy. Why? The Plaintiff states he had “serious concerns as to whether or not Mr. Stewart would be forth right in an examination” and “was concerned that Mr. Stewart would simply incorporate another entity to continue with his business”. The Plaintiff does NOT have evidence to substantiate these concerns other than his belief.

[9] As a result, rather than proceed to an examination in aid of execution, the Plaintiff made a deliberate choice to retain counsel who would and did engage a Private Investigator in 2018 to obtain information about Country Boy’s business, primarily the names of its customers so that Notices of Garnishment could be served.

[10] The cost of the Investigator’s report was $7,030.58. The invoices include many “surveillance hours”, mileage, and project coordination. The report essentially identifies a number of places that Country Boy appeared to provide services. Corporate and property searches were done. Notices to Garnish were issued. A small amount was recovered.

[11] In 2020, the Plaintiff discovered, by chance, that Country Boy provided services to CSL Group Ltd. Notices of Garnishment were served. Indeed, monies were owed by the CSL Group Ltd. to Country Boy over a number of months.

[12] CSL Group Ltd. paid monies to the Sheriff and acknowledged that further monies will be paid at the end of this month.

[13] The amount paid and payable to the Sheriff exceed the Outstanding Amounts by a significant amount.

[14] The Plaintiff now seeks to recover all of its legal fees and disbursement expenses to collect on the Outstanding Amounts.

[15] The sole issue on this motion is: what additional amount, if any, is the Plaintiff entitled to for costs of the execution?

THE POSITION OF THE PARTIES

[16] The Plaintiff seeks execution costs of $20,648.58 plus the costs of this motion. The disbursements include:

a) $7,030.58 for the private investigator fees; b) $686 for property searches; c) $469 for corporate searches; d) $992 for issuing Notices of Garnishment; e) $1,992.60 for process server; f) More than $7,700 for legal fees to the end of February 29, 2020; and g) HST.

[17] Country Boy submits that, in addition to the Outstanding Amounts and post judgment interest, the Plaintiff is only entitled to recover as costs of execution:

a) Filing fees for garnishments - $992; and b) Costs as per Rule 60.19(2)(a) of $50 times 7 garnishments - $350.

[18] Initially, Country Boy submitted that the Plaintiff had already over-recovered the sum of $3,127.64, however, during submissions counsel conceded that Country Boy had failed to take into account the outstanding $3,000 Cost Order plus interest on that order.

THE ANALYSIS

[19] The analysis requires two issues to be decided:

a) Is the recovery of execution costs limited to the amounts set out in Rule 60.19 or does the court have discretion to award reasonable costs? b) If the court does have the jurisdiction to award execution costs beyond Rule 60.19, are the costs claimed by the Plaintiff reasonably necessary and proportionate in the circumstances?

Courts Discretion to award unspecified Costs of Enforcement?

[20] Section 131 of the Courts of Justice Act (CJA) states:

Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

(emphasis added)

[21] Rule 60.19 of the Rules of Civil Procedure provides:

(1) A party who is entitled to enforce an order is entitled to the costs of the following steps on a partial indemnity scale, unless the court on motion orders otherwise:

1. An examination in aid of execution.
2. The issuing, service, filing, enforcement and renewal of a writ of execution and notice of garnishment.
3. Any other procedure authorized by these rules for enforcing the order.

(1.1) For greater certainty, subrule (1) includes costs associated with the electronic filing or issuance under these rules of a writ of seizure and sale or any documents relating to the issuance or enforcement of a writ of seizure and sale.

(2) A party entitled to costs under subrule (1) may include in or collect under a writ of execution or notice of garnishment,

(a) $50 for the preparation of documents in connection with issuing, renewing and filing with the sheriff the writ of execution or notice of garnishment; (b) disbursements paid to a sheriff, registrar, official examiner, authorized court transcriptionist or other public officer and to which the party is entitled under subrule (1), on filing with the sheriff or registrar a copy of a receipt for each disbursement; (c) an amount determined in accordance with Tariff A for conducting an examination in aid of execution, on filing with the sheriff or registrar an affidavit stating that the examination was conducted; and (d) any other costs to which the party is entitled under subrule (1), on filing with the sheriff or registrar a certificate of assessment of the costs.

(3) A sheriff or registrar may fix costs under clause (2) (c),

(a) if all the parties consent; or (b) if the lawyer’s fee does not exceed $2,000, exclusive of harmonized sales tax

(4) Under clause (3) (b), the sheriff or registrar shall fix costs of $750 plus disbursements.

(5) When costs are to be fixed by the sheriff or registrar under subrule (3), the party who is entitled to costs shall file a bill of costs with the sheriff or registrar.

(emphasis added)

[22] Country Boy relies on Bertram/Fielding v. Legault, 2010 ONSC 2205. I am not persuaded that the statement in paragraph 4 of Bertram was intended to be as limited as it purports to be and there appears to be no analysis as to whether or why additional reasonable costs could not be awarded by the court where appropriate.

[23] The Plaintiff relies on J. Rodriguez & Associates, P.A. v. CRC Inc., 2007 ONSC 46248 (Master's Court) that costs of enforcing a judgment are recoverable under Rule 60.19. Again, there was no real analysis as to the court’s conclusion.

[24] In my view, this court does have jurisdiction to award reasonable costs incurred in the enforcement of a judgment:

a) Rule 60.19 does not expressly exclude the award of other costs as Country Boy claims. Clear language would be necessary to exclude the court’s inherent jurisdiction to control its process which includes awarding costs of enforcing court orders; b) The wording of s. 131 of the CJA is broad enough to grant a court jurisdiction to award costs incurred in the enforcement of a judgment of the court because enforcing a judgment/court order for payment is an incidental to this proceeding. Further, issuing a garnishment is a “step” in this proceeding.

In 469804 Ontario Ltd. v. 723146 Ontario Ltd., 2002 ONSC 49476 (ON SC), Cullity J. concluded at para. 16 that:

…I do not believe that costs of enforcement, or collection, are costs "of and incidental to a proceeding or a step in a proceeding" for the purposes of s. 131 of the Courts of Justice Act if the meaning of "proceeding" is limited to actions and applications as it is in the Rules of Civil Procedure.

With the greatest of respect, I disagree with Justice Cullity’s conclusion. Execution on a payment order made by the court is incidental to the proceeding – what can be more incidental than to enforce a court order for payment? Even Justice Cullity recognized that in certain circumstances costs could be awarded (para 17):

It is, of course, unwise in matters of practice and discretion to exclude the possibility of exceptional cases but I see no justification in the affidavits, and bills of costs, filed on this motion for departing from what I conceive to be the general rule set out in rule 60.19.

c) The wording of Rule 60.19 (2)(d) expressly gives the court the jurisdiction to award further costs, whether assessed by an assessment officer or the court, without being limited to the items in the prior three sub paragraphs. There would have been no need for such wording in (d) if the execution creditor was limited to the items in Rule 60.19(2) (a) through (c); and; d) Lastly, it makes little sense that a judgment debtor could, through deliberate, flagrant or improper actions, take steps to avoid payment thereby causing the judgment creditor to incur additional unnecessary costs by such actions, without a remedy being available to this court. Country Boy’s counsel, eventually during submissions, conceded that the court would have jurisdiction to award costs where a judgment debtor acted in bad faith or forced the judgment creditor to take unreasonable and unnecessary steps to collect on a judgment but submitted that the threshold to award such costs should be high and are not met in this case.

[25] I am satisfied that this court has jurisdiction to award costs of enforcement beyond those set out in Rule 60.19 (2) (a) through (c) where appropriate.

What Costs of Enforcement are Reasonable in this Case?

[26] The Rules of Civil Procedure provide:

1.04 (1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

(1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.

Not akin to Contempt

[27] The Plaintiff submits that “it is a long-standing principle of costs that a person who obtains an Order from the Court is entitled to have it obeyed without further expense to him or herself”. As a result, the Plaintiff submits this entitles the Plaintiff to the full costs of enforcing the Outstanding Amounts. The Plaintiff analogizes this liability for costs to a contempt situation since Country Boy made no reasonable efforts to pay the Outstanding Amounts for over 4 years.

[28] I reject the Plaintiff’s submission that non-payment of a judgment is equivalent to a party’s wilful and flagrant breach of a court order. In any event, there is no evidence beyond a reasonable doubt that this was a wilful and flagrant breach. As stated above, the court does have jurisdiction to award reasonably necessary and proportionate costs to enforce a court order for payment of monies.

Reasonably Necessary and Proportionate

[29] Country Boy takes issue that the investigative (and legal costs associated therewith) are not recoverable. I refer specifically to the Investigator disbursement costs of $7,030.58 and the legal costs associated therewith.

[30] I agree these costs are not recoverable. In my view, these costs were not reasonably necessary because there were other reasonable and less expensive steps available at law (the examination in aid of execution) which would have been a reasonable and proportionate step to take in this case.

[31] The Plaintiff should have proceeded with the examination but instead chose to take a more expensive avenue of a private investigator to obtain the same information which likely could have been obtained on an examination. The Plaintiff speculates that Mr. Stewart would not have been forthcoming in an examination under oath and speculates that Mr. Stewart would simply incorporate another company to avoid the debt (the latter being proven to be erroneous as Country Boy continues 4 years after the Judgment). Both are speculative and neither provides a reasonable basis or excuse for the Plaintiff to hire counsel and investigator.

[32] Had Mr. Stewart refused or failed to attend an examination in aid of execution when properly served or had Mr. Stewart failed to produce relevant documents or had Mr. Stewart given false testimony, the decision to engage counsel, who in turn would retain an investigator, may have been reasonably necessary. But that is not the case in this present proceeding.

[33] While the Plaintiff was at liberty to take such other more expensive steps, that does not make them neither reasonable nor necessary. Further, it does not create a basis for the Plaintiff to recover the expenses of taking such other steps.

[34] I conclude that the legal and investigation costs claimed by the Plaintiff are not recoverable as part of the costs of enforcement.

[35] As a result, the investigator’s costs of $7,030.58 must be deducted.

[36] What amount must be deducted for legal costs?

[37] The Plaintiff incurred legal fees as follows:

a) Account April 30, 2018 – fees $1,700; b) Account dated January 28, 2019 – fees $238; and c) Account dated March 15, 2020 - $6,000 fees from February 2, 2017 to March 18, 2020.

[38] I have no difficulty with the legal fees associated with:

a) the corporate and property searches as these were reasonably necessary to issue the Garnishment Notices even if the information had come to light during an examination; and b) the receipt and carrying out of the instructions to issue the Garnishment notices would have also been otherwise incurred.

[39] I have difficulty with:

a) the many calls and discussions with the client regarding whether and how to proceed with the investigation; and b) the legal costs associated with the investigator.

[40] Having reviewed the Plaintiff’s legal accounts, it is not possible to segregate the amounts that would have been avoided by proceeding with an examination and those which would have been incurred in any event, with any precision.

[41] An examination would not have been a complex, long or expensive process in this case.

[42] Obtaining instructions and carrying out instructions to issue Notices of Garnishment are not complex or difficult, particularly where the same counsel was involved for the Plaintiff before and after the payment orders were obtained.

[43] In my view, on a partial indemnity basis, I am satisfied that legal fees of $3,000, plus HST are reasonable. This is equivalent to 7 1/2 hours at full recovery rates of $400 per hour or roughly 9 1/2 hours at a partial indemnity rate. In my view, much of what was achieved through the investigator, could have been discovered through an examination in aid of execution, for which Rule 60.19 permits costs of up to $2,000 to be fixed by the Sheriff or the Registrar for an examination in aid of execution. I add an additional reasonable amount to include the number of Notices of Garnishments in this case.

Personal Service of the Notices of Garnishment

[44] Country Boy takes issue that the disbursements of personal service on the garnishees is excessive and not necessary since service could have been carried out by ordinary mail. Country Boy does not suggest the garnishment notices were inappropriate or not necessary.

[45] I am satisfied that it is reasonable to have the Garnishment Notices served as quickly as possible because of the type of business Country Boy was engaged in and the fact that the Garnishment Notices only bind the garnishee upon them being served.

[46] In execution by Garnishment Notices, time is of the essence. I do not find this expense to be unreasonable.

The Amount Recoverable

[47] As a result, the following are recoverable as costs of execution:

h) $686 for property searches; i) $469 for corporate searches; j) $992 for issuing Notices of Garnishment; k) $1,992.60 for process server; l) $3,000 for legal fees (excluding this motion); and m) HST on the above amounts.

[48] The total is $7,139.60 plus HST as costs of execution.

Costs of this motion

[49] The Plaintiff seeks costs of this motion at $7,961 (exclusive of HST) on a “substantial indemnity” basis.

[50] Country Boy seeks costs of $6,309.62 on a partial indemnity basis.

[51] I find no basis to award either party a punitive cost award. If costs are to be awarded, they are to be at a partial indemnity basis.

[52] There were no Offers to Settle which would engage cost consequences. Country Boy’s offers do not qualify as it was for less than the amount the court found was payable and it continued to erroneously exclude the $3,000 Cost Order.

[53] In my view, there was mixed success. There was a substantial reduction in the amount awarded to the Plaintiff. Further, there were additional costs awarded which Country Boy refused to include.

[54] No costs awarded for the motion.

[55] If there is a dispute regarding post judgment interest, I may be spoken to.

CONCLUSION

[56] Costs of Execution are fixed at $7,139.60 plus HST and to be added to the amount the Plaintiff is entitled to recover as costs of execution under Rule 60.19.

Ricchetti, RSJ Date: May 19, 2020