Court File and Parties

COURT FILE NO.: CV-20-00653262-0000 DATE: 2023-11-09

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DAVID SMITH v. ROTALEC CANADA INC. et al.

BEFORE: ASSOCIATE JUSTICE D. MICHAEL BROWN

HEARD: November 2, 2023 (in person)

COUNSEL: N. MacDonald for moving party/plaintiff J. Allingham for the responding defendants

E N D O R S E M E N T

[1] This is a motion by the plaintiff on undertakings and refusals. Shortly after the commencement of the hearing of this motion the parties agreed to terms of an order on the substantive relief sought by the plaintiff, but they could not reach an agreement on costs of the motion. The hearing therefore continued on the issue of costs only. After hearing the parties’ submissions on costs, I gave an oral ruling awarding costs of the motion to the plaintiff in the amount of $15,000, with a written endorsement to follow. This is my endorsement on costs of the motion.

Background

[2] The plaintiff filed the requisition for a long motion hearing for this motion in December 2022. The parties attended before me on a case conference on February 10, 2023 at which time I scheduled the motion to be heard before me for a full-day hearing on June 20, 2023 and set a timetable for the exchange of motion materials. The plaintiff served the motion record for this motion on March 29, 2023, seeking answers to 20 undertakings and 33 refusals.

[3] On April 3, 2023, the defendants retained new counsel. The parties attended a second case conference before me on April 17, 2023 to consider the defendants’ request for an adjournment of the motion as result their change of lawyer. I granted the defendants’ request and adjourned the hearing of the motion to November 2, 2023. In my endorsement adjourning the motion, I directed the parties to meet and confer on or before August 15, 2023 to attempt to resolve or narrow the undertakings and refusals in dispute.

[4] According to the affidavit filed by the plaintiff, plaintiff’s counsel wrote to defence counsel on August 4, 2023 seeking to schedule the meeting to confer. Counsel eventually agreed to have a meeting on August 18, 2023 but that was postponed at defence counsel’s request to August 25, 2023. Counsel spoke on the phone on August 25, 2023 and agreed to meet by Zoom on August 30, 2023, but that Zoom meeting was unilaterally cancelled by counsel for the defendants. In the result, the parties were unable to further resolve or narrow any of the issues at that time.

[5] The plaintiff delivered a supplementary motion record and a factum on October 13, 2023. The plaintiff also uploaded to Case Lines an updated Rule 37.10(10) refusals and undertakings chart showing that the plaintiff was still pursuing answers to 31 of the outstanding undertakings and refusals. The defendant filed no motion record and no factum on this motion. Instead, on October 30, 2023, three days before the hearing of the motion, the defendant served and uploaded to Case Lines an “aide memoire”. The focus of the aide memoire is the correspondence between counsel regarding the confirmation of this motion. The document quotes extensively from correspondence between counsel and court staff and attaches the related emails.

[6] The last tab in the aide memoire is a draft order prepared by the defendant. Although the order is in the form of a consent order, there is no suggestion in the aide memoir and no evidence before me that the plaintiff had, in fact, consented to the form or content of the draft order.

[7] On November 1, 2023, the day before the motion hearing, the defendant uploaded a further aide memoir, this time devoted to the issue of costs. As with the first aide memoir, the aide memoire on costs, summarizes and quotes from correspondence between counsel and attaches copies of emails. The aide memoire on costs further includes the defendants’ legal arguments on the issue of costs. It also attaches the same draft order that was appended to the first aide memoir.

[8] The correspondence between counsel and other documents attached to the defendants’ aides memoire are evidence. Evidence on a motion must be filed in an affidavit. The correspondence and other documents referred to or attached to the defendants’ aides memoir have not been included in any affidavit that is before me on this motion. Further, the defendants’ aides memoire were delivered after the deadlines for the delivery of evidence and factums on this motion as provided both in my endorsement and in the Rules. The aides memoire are not properly before me on this motion. Accordingly, I have not considered these aides memoire in my decision on costs, except to the extent that the legal authorities referenced in the aide memoire on costs were referenced and relied on by counsel for the defendants in his oral costs submissions on the motion.

[9] At the outset of the hearing the parties expressed differing views on the status of the motion. The plaintiff took the position that the motion was proceeding on an opposed basis. The defendants’ position was that the motion was settled except for costs. The plaintiff denied that he had ever agreed to any resolution of the motion. Defence counsel could not point to any evidence of any agreement by the plaintiff to settle. Instead, counsel for the defendants relied on the draft order attached to the aide memoire as evidence that the defendants had agreed to the plaintiff’s demands on the motion.

[10] Plaintiff’s counsel submitted that the proposed draft order had never been provided to her outside of its inclusion in the aide memoir and that the plaintiff had never agreed to its terms. She submitted that her client would never have agreed to the defendant’s draft order as it omitted 14 of the 31 questions that the plaintiff was pursuing answers for on the motion. Defence counsel said he was unaware that questions had been omitted from the draft order. He said it was his understanding that the defendants were agreeing to answer all of the undertakings and refusals at issue. We then took a short recess so defence counsel could seek further instructions.

[11] On return from recess, counsel for the defendants advised that he had instructions to agree to an order requiring the defendants to provide answers to all of the undertakings and refusals sought by the plaintiff on the motion. Plaintiff’s counsel advised that the plaintiff would consent to an order requiring the defendants to provide such answers but the plaintiff was still seeking costs of the motion. The parties agreed that the motion as it related to the substantive relief requested by the plaintiff was now resolved, but that the costs of the motion would be determined by the court.

Costs

[12] The defendants submit that there should be no costs on the motion given that the parties have settled the substantive issues. The defendants rely on the decision of Justice Myers in Muskala v. Sitarski, 2017 ONSC 2842. In that case, the parties to a motion settled the motion before it was heard. They settled all issues on the motion “except for costs” and filed written submissions seeking the court’s determination of costs. Justice Myers held that costs should not be awarded when parties settle “except for costs.” He identified four reasons why costs should not be awarded in those circumstances:

[7] First, if the goal of asking for costs is just to get “last licks” and poke the other side in the eye en passant, that is not an action conducive to settlement or to the next settlement down the road.

[8] Second, costs are an incident of the determination of the rights of the parties. They flow from a decision. They are not themselves intended to be the subject of the dispute.

[9] Third, there is usually no way for the court to make the findings of fact that the parties need to support a costs determination. The parties essentially want me to pretend to hear the motion in my chambers on their material and decide what the outcome might have been without hearing from counsel and without the parties undertaking the risk of jeopardy associated with that decision. Then they ask me to assess whether bringing or defending the motion was reasonable. It is all hypothetical since there is no longer a true lis or dispute between the parties. Yet the parties ask the court to balance the factors under Rule 57.01, consider proportionality and reasonable expectations, and, in this and many other cases, ask the court to determine if a party’s conduct was reprehensible so as to justify an enhanced award of punitive costs. I cannot tell if the defendants ought to have consented in advance or if they had good reason not to consent until they did. One never knows why people settle without invading the privileged relationship between lawyer and client. Perhaps the defendants had very good defences to the motions but chose to consent for other reasons – such as to establish their bona fides and to buy peace.

[10] Finally, in my view, where the parties are not prepared to incur the time, cost, or risk to argue the motion on the merits just because they have not settled costs, then their efforts to upload the disembodied decision on to the court is equally not a proportional or efficient use of court time.

[13] This circumstances of this motion are distinguishable from Muskala in at least two respects. First, this motion was not “settled” in the usual sense of the word. The substantive issues were resolved when the defendants capitulated to all of the plaintiff’s demands in open court, after the start of the hearing. There was no meeting of the minds on an agreement to settle and there was no compromise by the plaintiff. Second, unlike the case of costs sought in writing after the fact, I am not being asked to render a “disembodied decision” on costs. The plaintiff uploaded all of his materials to Case Lines and confirmed the motion as opposed. All the materials on the motion were before me and I was prepared for the motion to proceed as confirmed. Unlike in Muskala, I have no difficulty in determining what the likely outcome of the motion would have been had it gone ahead. The defendants elected to file no evidence or factum in response to the motion. Nor does it appear that the defendants ever served a responding undertakings and refusals chart as required under subrule 37.10(10)(b). Had this motion gone ahead, the plaintiff would almost certainly have been entirely successful.

[14] Based on the record before me, I find that the defendants had no bona fide intention of opposing this motion. Instead, they adopted a strategy of delay, planning to concede at the last minute but hoping to avoid any cost consequences by application of the principles in Muskala. Such conduct should not be insulated from an award of costs. As a result of the defendants’ strategy the plaintiff has incurred the time and expense of prosecuting this motion through to the start of the hearing. The last-minute capitulation by the defendants means that plaintiff has achieved the same result as he would have achieved if he was entirely successful on the motion. In my view the plaintiff is entitled to the same costs that would have been awarded to him had he been successful on an opposed motion.

[15] The plaintiff filed a costs outline seeking full indemnity costs in the amount of $51,189.00. The costs summarized in the costs outline date back to service of the plaintiff’s affidavit of documents in March 26, 2021, two years before the service of this motion. The plaintiff’s rationale for requesting costs that far back is that the plaintiff has been demanding the information that was the subject of the undertakings and refusals motion since that time. I agree with the defendants that costs incurred prior to the commencement of the motion are a matter for trial and should not be included. I also agree with the defendants that neither full indemnity nor substantial indemnity costs are appropriate. While the delay tactics of the defendants are to be discouraged, the conduct does not rise to the level of reprehensible, scandalous or outrageous conduct that would warrant an award of elevated costs: Davies v. Clarington (Municipality) et al., 2009 ONCA 722 at paras. 28-29. The plaintiff should have his costs of the motion on the partial indemnity scale.

[16] The plaintiff’s costs outlines calculates the plaintiff’s partial indemnity costs back to March 2021 at $31,174.44. When asked to determine what portion of the bill of costs was attributable to work done since the service of the motion, the plaintiff estimated that his partial indemnity costs since service are $17,500 plus HST and disbursements. The defendants submit that a costs award in the $5,000 to $7,500 range would be more reasonable. The defendants have filed no costs outline of their own to support that submission.

[17] In my view, the plaintiff’s partial indemnity estimate is still somewhat above the range of costs that would reasonably be expected by the parties’ given the nature and complexity of the motion. I would put the top end of that range at $15,000 and I award that amount to the plaintiff, inclusive of taxes and disbursements.

[18] At the hearing of the motion, the parties agreed to a form of order in respect of the substantive relief agreed upon with the award of costs left blank. I have amended the order to reflect the costs awarded in this endorsement and have signed the order as amended.

D. Michael Brown, Associate Judge DATE: November 9, 2023