Court File and Parties

NEWMARKET COURT FILE NO.: CV-12-109855 DATE: 20200525 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

KALOGON SPAR LTD. Plaintiff – and – STANLEY PAPAGEORGE, ALEXANDRA PAPAGEORGE and BANK OF MONTREAL Defendants

Counsel: J. Frustaglio and A. Pilieci, for the Plaintiff N. Wilson, for the Defendants

NEWMARKET COURT FILE NO. CV-13-116054 AND BETWEEN: STANLEY PAPAGEORGE, 982539 ONTARIO LTD. And SABL. CORP. Plaintiffs -and- DINO COLIVIRAS, ALSO KNOWN AS DINO KOLIVIRAS AND GUS COLIVRIAS, MOURGO INVESTMENTS INC. and KALOGON SPAR LTD. Defendants

Counsel: N. Wilson, for the Plaintiffs J. Frustaglio and A. Pilieci, for the Defendants

HEARD: In Writing

Reasons for Decision on Costs

HEALEY J.:

[1] This decision addresses costs to be awarded following trial, which lasted 17 days and consisted of two actions tried together – a construction lien action and an action for recovery of a debt. It also addresses the costs of a pretrial motion necessitated by the delivery of a revised Scott Schedule from the defendants in the lien action just prior to trial, for which costs were reserved.

[2] In the lien action, the plaintiff Kalogon Spar Ltd. (“Kalogon”) sought payment in the sum of $475,000 arising from the provision of goods and services pursuant to an alleged contract. In a 28-page statement of defence and counterclaim (prepared by counsel other than their trial counsel) the defendants Stanley and Alexandra Papageorge (the “Papageorges”) sought an order discharging the lien, an accounting and tracing order in respect of funds paid to Kalogon, damages for breach of contract, negligence and breach of fiduciary duty to compensate for rectification of defects, deficiencies and loss of profit relating to an alleged joint venture agreement, and aggravated and exemplary damages. The loss of profit claim was quantified in the amount of $300,000; the other claims were to be quantified prior to trial.

[3] In the action for payment of debt arising from loans made to Kalogon, the plaintiff Stanley Papageorge and two corporations controlled by him sought $150,000 plus interest. Kalogon did not deny receiving loans totalling $150,000 from the Papageorge parties, and acknowledged that $100,000 of this amount was secured by a promissory note bearing an interest rate of 12%. What was in dispute was whether the loans were satisfied by Kalogon’s work at the subject property located at 3 Oakbank Street in Thornhill.

[4] By the time of trial, Kalogon (also referred to as Coliviras parties in the Reasons for Judgment) requested the following findings and orders:

(a) that Kalogon was hired by the Papageorges to supply services and materials as a project manager, which transitioned to an agreement for Kalogon to become a project manager at risk/general contractor; (b) there was no joint venture; (c) Kalogon is entitled to payment in the sum of $150,000 plus HST for project management services; (d) there was an agreement on price for 41 of the items in the Scott Schedule (except for lumber and labour), with Kalogon being entitled to payment for each of those 41 items; (e) Kalogon is entitled to payment on a quantum meruit basis pursuant to the value provided by Kalogon’s experts for lumber and labour; (f) in the alternative, Kalogon is entitled to payment based on the actual value of the services and materials supplied by Kalogon for all of the 41 items in the Scott Schedule; (g) the contract was wrongfully terminated by the Papageorges; (h) Kalogon is entitled to judgment in the sum of $436,036.80, plus prejudgment interest from May 1, 2012; (i) Kalogon is entitled to return of the money posted into court as security for costs and all accrued interest; and (j) that the Papageorge parties pay the costs of these actions, including costs of the Scott Schedule motion heard at the commencement of trial.

[5] The Papageorges requested the following findings and orders:

(a) that the agreement reached between the parties was a joint venture; (b) that no more than $602,000 in expenditures had been substantiated by Kalogon; (c) that there were deficiency costs of $107,000, leaving an amount due by the Papageorges of $495,000; (d) that the Papageorges advanced $896,845 to Kalogon for the work done at Oakbank and the loans; (e) that Kalogon therefore owes the Papageorges $401,845; (f) that as a result of an excessive lien, Kalogon owes damages under the Construction Act equal to 1.2% of $350,000 commencing on February 4, 2014; (g) that Kalogon owes the Papageorges interest at the rate of 12% on the $100,000 promissory note loan and at the Courts of Justice Act rate for the additional $50,000; and (h) that Kalogon pay the costs of these proceedings, including the costs of the Scott Schedule motion heard at the commencement of trial.

[6] The major findings of this court were summarized in the Reasons for Judgment:

1. The purchase of and work done at 3 Oakbank was not part of a joint venture;
2. There was no contract reached by the parties prior to or during construction;
3. Kalogon is entitled to be compensated on a quantum meruit basis;
4. Kalogon was hired by the Papageorges as a general contractor;
5. Kalogon is not entitled to a project management fee of $150,000 plus GST;
6. The value of the work done under Kalogon’s supervision or directly was $1,052,184;
7. There were deficiencies arising under Kalogon’s supervision at a cost of $74,050;
8. The Papageorge parties advanced $896,845 for the work done under Kalogon’s supervision or directly, including the loans;
9. The Papageorge parties owe the Coliviras parties $81,289;
10. No damages are owed to the Papageorge parties pursuant to the Construction Act, R.S.O. 1990, c. C.30;
11. That the money paid into court by the Coliviras parties should be immediately returned to them, plus interest; and
12. That no interest is owed to the Papageorge parties on the loans.

[7] Judgment was granted to Kalogon in the amount of $81,289 plus prejudgment interest pursuant to the Courts of Justice Act, R.S.O. 1990, c. C.43 from the date of the claim. The money paid into court was ordered to be paid out forthwith with interest to Kalogon.

[8] Kalogon takes the position that it was wholly successful with respect to both actions and is entitled to be indemnified for its costs. Kalogon seeks substantial indemnity costs in the total amount of $427,523 or, in the alternative, partial indemnity costs in the amount of $330,474. For the motion concerning the revised Scott Schedule, Kalogon seeks costs on the higher scale in the amount of $3,797 or alternatively, on a partial indemnity basis in the amount of $2,848.

[9] The Papageorges submit that any costs awarded should be modest given the result and the conduct of Kalogon in the proceedings, and should not exceed $75,000 all-inclusive.

[10] The costs of the Scott Schedule motion heard at the outset of trial were reserved. The ruling on the motion was that the Papageorges were permitted to decrease amounts connected to four items on the Schedule. Ultimately, that success on the motion was moot because for each of those four items, the court awarded Kalogon amounts in excess of those admitted by the Papageorges in the revised Scott Schedule.

[11] Many of Kalogon’s cost submissions, particularly in reply, focus on the claims made by the Papageorges in their pleadings in comparison to the orders ultimately made by the court. For example, arguments were made that the Papageorges were unsuccessful in what was an unnecessary debt action because no damages were awarded to them in that action, and no damages were awarded to the Papageorges for their breach of contract, breach of fiduciary duty and lost profit claims in the counterclaim. While these things may be true, on the first day of trial the court required the parties to set out a list of the issues to be tried, which were agreed upon by the parties. The list provided by counsel did not include all the claims set out in the pleadings. As set out in paragraphs four and five herein, the orders being sought by each party at trial had been refined. The maximum jeopardy faced by Kalogon at the end of this trial was $401,845 in damages, $350,000 sought as damages under the Construction Act for registering an allegedly excessive lien, and interest on the loans, plus costs. Kalogon was successful in defeating all these claims.

[12] Kalogon’s entitlement to costs is not disputed. It is clear from a comparison between the findings and the orders that each side was seeking that neither of the parties’ positions were wholly accepted by the court. Overall, however, the position taken by Kalogon aligned more with the court’s findings. The issue for this court now is to decide the amount of costs to be awarded.

[13] It is first necessary to determine whether offers that were made by Kalogon trigger the cost consequences of r. 49 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, under Courts of Justice Act, R.S.O. 1990, c. C.43.

[14] The portions of r. 49 to be considered are as follows:

49.10 (1) Where an offer to settle, (a) is made by a plaintiff at least seven days before the commencement of the hearing; (b) is not withdrawn and does not expire before the commencement of the hearing; and (c) is not accepted by the defendant, and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.

(3) The burden of proving that the judgment is as favourable as the terms of the offer to settle, or more or less favourable, as the case may be, is on the party who claims the benefit of subrule (1) or (2).

49.13 Despite rules 49.03, 49.10 and 49.11, the court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.

[15] Kalogon argues that the judgment obtained was as favourable as, or more favourable than, the terms of two offers to settle, both of which were served on November 7, 2018. This was more than seven days before the commencement of trial. Both offers remained open for acceptance until one minute after the commencement of trial: as per r. 49.04(1). Neither was accepted by the Papageorges. Most of the preconditions set out in r. 49.10 are satisfied; the only question is whether the trial results were as favourable as one or both of the offers to settle.

[16] One of the offers would have permitted the Papageorges to elect to pay Kalogon an amount for each of the 41 items that were in dispute in this proceeding, on a severable basis (the “Severable Offer”). It was open for acceptance on a without cost basis if accepted prior to 4:00 p.m. on November 14, 2018. If accepted after that date, but before the commencement of trial, Kalogon would receive its partial indemnity costs to the date of acceptance. The costs would be as agreed on by the parties or as determined by the court.

[17] The second offer to settle would have had the Papageorges pay the sum of $225,000 inclusive of interest, costs and HST (the “Global Offer”).

[18] I find that Kalogon has not met the burden set out in r. 49.10(3). With respect to the Severable Offer, Kalogon’s counsel has gone to some lengths to compare the amounts awarded by the court for each of the 41 items with those contained in the Severable Offer. In the final analysis, the only way that Kalogon could satisfy r. 49.10 (1) would be to show that each of the amounts in its offer were equal to or less than that ordered by the court. Kalogon’s own submissions indicates that this is not so; at para. 29 of Kalogon’s costs submissions it is noted that “for 65.85% of the items, the amount awarded was equal to or greater than, the amount offered.” The total for the amounts contained in the Severable Offer was well in excess of the judgment obtained by Kalogon.

[19] Further, there is a lack of clarity with respect to whether the costs provision in the Severable Offer would only apply if the Papageorges accepted all amounts associated with the 41 items. Presumably that would be the case, as any items not agreed upon would still require a trial, but the wording of the Severable Offer is not certain on this point.

[20] The Global Offer of $225,000 was much higher than the judgment amount of $81,289 plus prejudgment interest, which Kalogon has calculated to be $6,734.29. The Global Offer was also inclusive of prejudgment interest and costs.

[21] Where there is an offer that is inclusive of interest and costs, the proper test is to look at the offer compared to the amount recovered, plus interest and costs up to the date of the offer: Roy v. Regent Autobody Inc., 2006 CarswellOnt 1756, at para. 14; Merrill Lynch Canada Inc. v. Cassina, [1992] O.J. No. 2230 (Ont. Gen. Div.); Mathur v. Commercial Union Assurance Co. of Canada 1988 CarswellOnt 335 (Ont. Div. Ct.); Rushton v. Lake Ontario Steel Co., , 1980 CarswellOnt 370, 29 O.R. (2d) 68 (Ont. H.C.). In Regent the court had evidence from the plaintiff’s lawyer with respect to the amount of costs incurred up to the date of the offer (at para. 22). But Kalogon has given insufficient evidence as to what those costs were at the time the offer was made, or after that point and up to the commencement of trial, to allow for a determination of whether the offer was more favorable to the plaintiff than the judgment. The Bill of Costs submitted by Kalogon does not permit that analysis to be undertaken.

[22] Rule 49.13 provides that despite r. 49.10, the court in exercising its discretion with respect to costs may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer. In Elbakhiet v. Palmer, 2014 ONCA 544, 121 O.R. (3d) 616, the Court, at para. 33, noted that this subrule “calls on the judge to take a more holistic approach”, citing its decision in Lawson v. Viersen, 2012 ONCA 25 (Ont. C.A.), at para. 46. For reasons that will be explained, I do give weight to Kalogon’s offers in arriving at the amount of costs to be awarded. Even in the absence of an offer that attracts the provisions of r. 49.10, the court must not ignore offers that demonstrate a genuine and continuing effort to settle the action, and pre-trial efforts by counsel to expedite the conduct of the trial, when deciding the appropriate order as to costs: Bifolchi v. Sherar (Litigation Administrator of), , 1998 CarswellOnt 1463, 38 O.R. (3d) 772 (Ont. C.A.), at para. 20.

[23] The court has broad discretion in deciding whether to award costs, to whom, and in what amount: s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. However, that discretion is to be exercised in accordance with the provisions of an act or the Rules of Civil Procedure: 1465778 Ontario Inc. v. 1122077 Ontario Ltd., , 2006 CarswellOnt 6582, 82 O.R. (3d) 757 (Ont. C.A.), at para. 25; Andersen v. St. Jude Medical, Inc., , 2006 CarswellOnt 710, 264 D.L.R. (4th) 557 (Ont. Div. Ct.), at para. 20; C.A.S. of the R.M. of W. v. C.T. and J.B., 2017 ONSC 3188, at para. 25.

[24] A consideration of experience, rates and hours spent is appropriate, but is subject to the overriding principle of reasonableness in the context of the particular case. The quantum awarded should reflect an amount that the court considers to be fair and reasonable, rather than any exact measure of the actual costs to the successful party: St. Jude Medical, at para. 49; Zesta Engineering Ltd. v. Cloutier, , 2002 CarswellOnt 4020 (Ont. C.A.), at para. 4: Boucher v. Public Accountants Council for the Province of Ontario, , 2004 CarswellOnt 2521 71 O.R. (3d) 291 (Ont. C.A.), at para. 24; Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66, at para. 20. The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant: Boucher, at para. 26.

[25] Modern cost rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan, , 1999 CarswellOnt 3955, 46 O.R. (3d) 330, at para. 22. In 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, at para. 10, Perrell, J. identified two further purposes: (1) to facilitate access to justice, including access for impecunious litigants; and (2) to discourage frivolous claims and defences.

[26] Rule 57.01 (1) provides that in exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing, the following factors:

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer; (0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed; (a) the amount claimed and the amount recovered in the proceeding; (b) the apportionment of liability; (c) the complexity of the proceeding; (d) the importance of the issues; (e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; (f) whether any step in the proceeding was, (i) improper, vexatious or unnecessary, or (ii) taken through negligence, mistake or excessive caution; (g) a party’s denial of or refusal to admit anything that should have been admitted; (h) whether it is appropriate to award any costs or more than one set of costs where a party, (i) commenced separate proceedings for claims that should have been made in one proceeding, or (ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and (i) any other matter relevant to the question of costs.

[27] Despite the factors set out in r. 57.01, the court’s authority under r. 57.01(1) remains discretionary: Ontario v. Rothmans Inc., 2013 ONCA 353, 115 O.R. (3d) 561, at para. 134; Jamieson v. Kapashesit, 2019 ONSC 2831.

[28] There are numerous factors in this case that impact on the amount of costs to be awarded to Kalogon.

[29] Factors that contribute to increasing the award are the following:

(a) Even after retaining an expert to value the work and materials supplied, the Papageorges refused to accept the values reached by their own expert, even where that expert was able to objectively measure the materials used by Kalogon. For many items, the figures that the Papageorges were prepared to accept widely diverged from that arrived at by their expert. Some of the more glaring examples: the lumber used was valued at $97,143; the Papageorges rejected that and were only prepared to accept $64,490; stone cladding and other stone work was valued at $127,719.38 but the Papageorges rejected that and were only prepared to accept $65,290.54; labour was valued at $122,826.42 but the Papageorges rejected that and were only prepared to accept $55,000. Despite their own expert finding that the total value of the work was $944,421.38, the highest amount that the Papageorges were ever prepared to concede was $567,313. This was unreasonable; (b) The figure of $567,313 appeared for the first time in the Scott Schedule that was delivered on November 1, 2018, just 19 days before the trial was to begin. In its previous Scott Schedule of March 1, 2018 the Papageorges were only willing to accept $424,350; (c) The Papageorges’ characterization of the contractual arrangement as a joint venture was not accepted by the court. Their position increased the amount of evidence presented and lengthened the trial; (d) The Papageorges refused to admit some facts that were patently supported by the evidence. One example of this was the evidence that it was Stanley Papageorge’s choice to clad the entire exterior of the home in limestone, which he denied. This necessitated Kalogon having to call evidence on this issue, including the stonemason who did the work; (e) The only offer made by the Papageorges was made on November 6, 2018, and required payment by Kalogon of $50,000 plus costs on a partial indemnity basis as agreed or assessed; and (f) Kalogon always admitted that it had received loans from the Papageorges totalling $150,000, and agreed that this amount was to be taken into account in the total money received from the Papageorges. Kalogon admitted that it had been paid $808,000, as the Papageorges asserted. Kalogon also did not dispute that the Papageorges paid money directly to a contractor.

[30] Factors that contribute to decreasing or moderating the award are the following:

(a) Kalogon’s principle, Dino Coliviras, failed to keep proper records and failed to provide accounts to the Papageorges during the project, which led to the court’s finding that this was what created a fundamental loss in trust between builder and homeowner. His handwritten notes were created after the litigation began, and he refused to produce his bank records to substantiate the cost of labour and materials. This was a significant factor impeding settlement of this action, and required both parties to hire experts to attempt to substantiate the value of the goods and services provided by Kalogon, thereby driving up the costs of litigation for both parties; (b) This failure also increased the complexity of the proceeding because Kalogon then had to spend multiple days providing in-chief testimony about virtually every entry on the Scott Schedule, calling witnesses to substantiate some of those costs. The evidence of Dino Coliviras lasted at least eight days. Had Kalogon kept complete, contemporaneous records, the need for days of oral evidence would have been vastly reduced; (c) This failure was also the reason why Kalogon’s witness list at the outset of trial contained 21 listed witnesses, which Kalogon did not pare down until pressured by the court; (d) The Papageorges elected to make effective use of affidavits as the basis of their evidence, although only resorted to that procedure at the time of the continuation of the trial in 2019. Their entire case, which included ten witnesses and accommodated Stanley Papageorge’s serious medical situation, was completed in five days. Kalogon lengthened the trial time required by not resorting to the same procedure; (e) Kalogon also disregarded some of its own expert’s calculation of value, although to a much lesser degree than the Papageorges; (f) Kalogon’s characterization of the contractual terms – a fixed price contact for each item on the Scott Schedule including a 15% overhead fee and a management fee of $150,000 – was rejected by the court; (g) The damages awarded to Kalogon of $81,289 were less than one-fifth of the amount of $436,036 that Kalogon sought to recover in the proceeding; (h) The Papageorges were partially successful on their counterclaim for set-off for deficiencies; (i) The principle of proportionality requires that the costs awarded bear a reasonable relation to the amount recovered and/or the amount claimed in the proceeding; and (j) With tenuous, limited evidence to support the allegation that the Papageorges were intermingling corporate and personal expenses, Kalogon instructed its counsel to involve the legal department of the Papageorges’ franchisor, Tim Hortons. This was collateral evidence that was ignored by this court.

[31] Kalogon submits that this court should have resort to s. 86 of the Construction Act to award costs on a substantial indemnity basis. That section provides:

Costs

86 (1) Subject to subsection (2), any order as to the costs in an action, application, motion or any other step in a proceeding under this Act 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, is frivolous, vexatious or an abuse of process, or is for a wilfully exaggerated 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 a person other than a judge or the action has been referred under section 58. 2006, c. 21, Sched. C, s. 102 (3); 2017, c. 24, s. 57, 63.

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).

[32] As the list of factors in paragraphs 29 and 30 illustrates, there is more than enough room to point fingers in both directions in terms of why this proceeding occurred in the first place, and which party added to its length and complexity. The only interlocutory step taken by the Papageorges was the motion for summary judgment. The motions judge awarded no costs to Kalogon as the successful party, stating in his Costs Endorsement:

While the plaintiff was successful in resisting the defendants’ motion for summary judgment, as was the plaintiff in the Gubert case, the plaintiff in this case provoked the motion for summary judgment by not preparing a proper Scott Schedule for the defendants to respond to. Furthermore, its failure to provide a proper Scott Schedule, the detailed map for organizing construction lien actions, needlessly complicated the motion. In such circumstances, it is not appropriate to award costs to the successful party.

[33] I conclude that neither s. 86(1) or (2) of the Construction Act should be applied in this case to affect the award of costs.

[34] Further consideration must also be given to Kalogon’s Severable Offer. The court’s final disposition on all 41 items in the Scott Schedule totalled $1,052,184, not including the deficiencies, from which it deducted the $896,845 advanced or paid directly by the Papageorges, leading to an amount owing of $155,339, from which deficiencies totalling $74,050 were subtracted. Kalogon’s Severable Offer says that the total amount of the 41 items was $283,361, but this amount is in error. The accurate total is $1,088,111, very close to the court’s initial figure for the value of goods and services provided. Subtracting the amount of $808,000 acknowledged to have been paid to Kalogon directly, the offer effectively asked for payment of $280,111. It was a reasonable starting point for further negotiations given the stakes involved, but the Papageorges appear to have been firmly entrenched in their decision to make no further payments despite their own expert’s findings.

[35] Yet both parties displayed inflexibility. Many of the 41 items in dispute involved minor amounts or minor differences in what each party was prepared to accept. Neither budged, and so a lengthy trial ensued. But given that the Papageorges were unwilling to entertain any resolution that would have them pay more money, Kalogon had little choice but to proceed to trial. And at the end of the day the evidence supported a quantum meruit assessment that was significantly closer to the position advanced by Kalogon.

[36] As set out earlier, the circumstances of this case raise competing factors in reaching an appropriate cost award. I conclude there is no basis upon which to award substantial indemnity costs. The law is clear that apart from situations involving r. 49 offers, elevated costs are warranted only "where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties" (see Young v. Young, , [1993] 4 S.C.R. 3 (S.C.C.) at p. 134). Fraud was not part of the pleadings, and the misrepresentation claim made by the Papageorges was not one of the triable issues.

[37] The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining an amount that is fair and reasonable: St. Jude Medical, at para. 22; Boucher, at para. 38; Davies, at paras. 51-52.

[38] In terms of their reasonable expectations, the Papageorges were represented by two legal firms throughout these proceedings and brought a motion for summary judgment along the way. In the course of that interlocutory step they received a bill of costs from Kalogon’s lawyers, which would have helped to inform them of the potential costs of a trial and the potential risks of an adverse outcome. For that motion, Kalogon’s lawyers sought costs of $78,189 on a substantial indemnity scale. I infer that the Papageorges had enough information to have been well informed about the costs to expect following a 17-day trial.

[39] Kalogon’s reply submissions deal with the case law surrounding adverse inferences to be drawn when an unsuccessful party does not file a bill of costs. Reference has been made to this court’s decision in M & M Homes Inc. v. 2088556 Ontario Inc., 2019 ONSC 6400 which is currently under appeal. Kalogon also relies on Calin v. Calin, 2019 ONSC 4313, in which the court determined that in the absence of evidence of the defendant’s costs, it was appropriate to draw an adverse inference that the unsuccessful party’s costs were similar to those of the successful party.

[40] Following the filing of those reply submissions, the Papageorge’s counsel attempted to provide the court with its bill of costs, explaining that by oversight one had not been filed because the Papageorges are not seeking costs. Kalogon’s counsel objected to this late filing of the bill of costs. I have not taken the Papageorge’s bill of costs into account given the late filing of that significant document and the court’s direction that one was to be filed along with each party’s costs submissions.

[41] While there is no requirement for the losing party to file a bill of costs, it is preferable. Not filing a bill of costs is a factor that may be taken into account when considering the reasonable expectations of the losing party: Smith Estate v. Rotstein, 2011 ONCA 491, 336 D.L.R. (4th) 112, at para. 50, additional reasons 73 E.T.R. (3d) 191, leave to appeal to S.C.C. refused to 97 O.A.C. 398; Enerworks Inc. v. Glenbarra Energy Solutions Inc., 2016 ONSC 4291, 90 C.P.C. (7th) 287, at para. 80. For example, in Risorto v. State Farm Mutual Automobile Insurance Co., , 2003 ONSC 43566, 64 O.R. (3d) 135, the court rejected the defendant’s attack on the quantum of costs based on allegations of “unwarranted over-lawyering” (at para. 10) where the defendant failed to disclose its own legal bills.

[42] In this case, however, as previously explained there is ample evidence demonstrating that the Papageorges would have been well aware that the costs of proceeding with a lengthy trial would result in costs that, with each passing day, came closer to surpassing the amounts at stake in the proceeding.

[43] The failure to file a bill of costs does not mean that the party against whom costs are sought is barred from critiquing the bill of costs of the successful party. In this case, the Papageorges’ lawyer has drawn to the court’s attention several areas in which the amount claimed is excessive:

(a) 1,427.3 hours of lawyer time has been claimed for this proceeding, which does not include the time spent on the summary judgment motion, undertakings motions, and security for costs motions, for which costs were already determined as part of the motions. This figure is the equivalent of 35 ½ weeks, docketing 40 hours a week solely on this matter. This number of hours is not proportionate to the amounts in dispute; (b) Kalogon's counsel claimed 214.6 hours for discoveries (including review of transcripts and drafting undertakings) in addition to the 45.2 hours claimed by Kalogon's previous counsel. The examinations for discovery conducted by Kalogon's counsel only lasted 1.5 days (the Papageorges were both examined on June 27, 2018 and Dino Coliviras was examined for 2 ¼ hours on September 6, 2018). This would mean Kalogon's counsel spent over five weeks docketing 40 hours per week on 1.5 days of discoveries and associated work; and (c) 896.5 hours have been claimed for trial preparation and attendance. This is the equivalent of over 22 weeks, docketing 40 hours per week. Again, an excessive amount of additional work would have been required as a result of Dino Coliviras’ failure to keep proper records and to provide evidence of his claims in the most straightforward, simple way - through production of invoices, timesheets, cancelled cheques and, failing all of that, bank records. There must be a significant reduction in the costs claimed due to this factor alone.

[44] Costs following trial must bear some proportion to the amounts in dispute: Marcus v. Cochrane, 2014 ONCA 207, at para. 15. In Marcus, Goudge, J.A. also noted that, as expressed in Boucher at p. 299, in the end, the order for trial costs must be fair and reasonable, and that making that assessment is more art than science.

[45] Taking into account all of the circumstances in this case as discussed above, and having examined Kalogon’s bill of costs and disbursements list in detail, I find that a fair and reasonable amount to award to Kalogon for these actions, including the Scott Schedule motion, is $190,000 inclusive of disbursements and HST.

[46] This court has been advised by the Papageorges’ counsel that both Stanley and Alexandra Papageorge are now deceased. Counsel have agreed that the Judgment is to be paid from the Irrevocable Standby Letter of Credit (the “Letter of Credit”) issued by the Bank of Montreal on behalf of Stanley Papageorge and Alexandra Papageorge on April 13, 2015 in the amount of $350,000.00.

[47] With respect to the costs of these actions, they agree that the costs order shall first be paid from the funds remaining in respect of the Letter of Credit after payment of the Judgment. In the event that the amount of the costs order exceeded the amount remaining in the Letter of Credit, counsel agreed that the remaining amount owing would be payable by the following payors, on a joint and several basis:

a) the Estate of Stanley Papageorge; b) the Estate of Alexandra Papageorge; c) 982539 Ontario Ltd.; and d) SABL Corp (collectively referred to as the “Papageorge Parties”).

[48] However, there is enough money posted with the Accountant to pay both the amount of the judgment and the costs order.

[49] This court orders that Kalogon Spar Ltd. and Dino Coliviras shall be paid costs of these actions fixed in the amount of $190,000, payable from the irrevocable standby letter of credit posted with the Accountant of the Ontario Superior Court of Justice in the amount of $350,000.00 pursuant to the Order of Justice Vallee dated April 14, 2015.

HEALEY J. Released: May 25, 2020