Court File and Parties

COURT FILE NOS.: 07-CV-333901PD1, 07-CV-332316PD DATE: 20240129 ONTARIO SUPERIOR COURT OF JUSTICE

Court File No. 07-CV-333901PD1 BETWEEN: SHARI KRIESER and GEORGE KRIESER Plaintiffs – and – GREGORY EVAN SELIGMAN, VINTAGE LANDSCAPE CONTRACTORS LIMTED, GREENSTONE GARDENS INC., G,E,S. CONSTRUCTION LIMITED, EDUARDO LEAL, 1415952 ONTARIO INC. and JOHN DOE NO. 1 Defendants

Court File No. 07CV-332316PD2 BETWEEN: SHARI KRIESER Plaintiff GREGORY EVAN SELIGMAN, G.E.S. CONSTRUCTION LIMITED, GREENSTONE GARDENS INC., 1665610 ONTARIO INC., and BONAVISTA POOLS LIMITED Defendants

AND BETWEEN: G.E.S. CONSTRUCTION LIMITED, GREENSTONE GARDENS INC. Plaintiffs by Counterclaim -and- SHARI KRIESER and GEORGE KRIESER Defendants by Counterclaim

Counsel: Les O’Connor, Kenneth Prehogan and Alfred Pepushaj Lawyers for the Plaintiff/Defendants by Counterclaim Shari Krieser and George Krieser Michael L. Shell and Glenn Brandys, Lawyers for the Defendants/Plaintiffs by Counterclaim, Gregory Evan Seligman, G.E.S. Construction Limited, Greenstone Gardens Inc. and 1665610 Ontario Inc.

HEARD: March 14, 15, 16, 17, 18, 21, 22, April 7 and 19, May 3, May 18, November 4, 15, 18 and 21, 2022 and January 23, 24, 25, 26, 27, 30, 31 and February 1, 2, 3, 6 and 7, March 24 and 27, 2023

G. DOW, J.

Reasons for Decision on Costs

[1] This matter proceeded to trial over 29 days between March 14, 2022 to March 27, 2023. It involved difficulties in the construction of a luxury custom home between the builder/landscaper (“GES defendants”) and the owners (“the Kriesers”). Construction occurred between January, 2004 and April, 2007.

[2] My Reasons were released on October 23, 2023 (2023 ONSC 2015) and found the Kriesers breached the contracts with the GES defendants. The Kriesers’ claims were dismissed and outstanding amounts owed to the GES defendants were awarded. I rejected the Kriesers’ claims to:

a) pierce the corporate veil of the GES parties;

b) find the GES defendants had breached its duty of good faith and honesty;

c) find the GES defendants’ managers had committed the tort of civil conspiracy, unlawful conduct and intimidation; and

d) find conduct that required an award of punitive damages or estoppel by representation.

[3] As a result, the GES defendants were awarded $92,580.90 (of which the Kriesers admitted they owed $58,653.52 from April, 2007 at the trial) with regard to its counterclaim. Greenstone Gardens was awarded $20,084.90 in its counterclaim against the Kriesers for outstanding landscaping expenses.

[4] As occurred with the trial, this matter encountered delays in the proceedings before trial such that counsel tendered a written chronology regarding same at the commencement of the trial (see paragraph 10 of my Trial Reasons).

[5] The trial was then delayed by counsel for the GES defendants falling ill after the first five days. This required new counsel to be retained. The trial was not continued until some eight months later with different counsel.

[6] The resumption of the trial in November, 2022 was then delayed following a motion by the Kriesers seeking to amend their pleadings which was granted, on terms, which included another two month adjournment.

[7] I urged the parties to agree on pre-judgment interest and costs. I required counsel submit their draft Bill of Costs at the conclusion of the trial. In this regard, the Kriesers claimed $1,232,337.33 for actual fees plus GST (given the duration of the matter), HST and disbursements of $62,747.67.

[8] The GES defendants’ Bill of Costs claimed a total of $574,680.72 using substantial indemnity fees, GST/HST and disbursements.

[9] If the parties could not agree, I provided deadlines for limited written submissions which were received as requested on November 23 and December 19, 2023.

[10] I was made aware of Offers to Settle having been exchanged during the litigation at the conclusion of oral submissions March 27, 2023, without disclosure or details of same.

[11] In this regard, an Offer to Settle dated November 22, 2016 by the GES defendants was referred to in the written submissions. It provided for payment by the GES defendants of $25,000 to the Kriesers, dismissal of the action and counterclaim with regard to all proceedings, an exchange of releases and payment of partial indemnity costs to the GES defendants as incurred after December 1, 2016.

Pre-Judgment Interest

[12] The GES defendants sought full pre-judgment interest from May 7, 2007 to the date Reasons were released at the Courts of Justice Act, R.S.O. 1990 c.C.43, section 128 mandated rate of 4.5 percent per year. This compared to the provision and the Construction Management Contract rate of 2 percent plus prime as charged by the Canadian Imperial Bank of Commerce on demand loans to its most favoured commercial borrowers (of which there was no evidence). The amount using 4.5 percent per year was calculated and claimed to be $83,643.98.

[13] The GES defendants relied primarily on sections of the Courts of Justice Act, supra which provide for the payment of interest from when the cause of action arose and the admission at trial that the Kriesers owed and had withheld $58,653.82 from May, 2007.

[14] The Kriesers submissions agreed with the applicable rate being 4.5 percent per year but sought abatement of interest for periods of time which delayed the matter not due to conduct of the parties.

[15] The first was between July 18, 2007 and June 2, 2009 (685 days) on the basis of counsel for the GES defendants conceded difficulties in providing productions and arranging discoveries as a result of conduct on its part. I agree with that submission and have calculated $9,515.62 to be deducted from the pre-judgment interest award claimed.

[16] The second period was between March 1, 2011 to June 3, 2015 (1555) days when the action was administratively dismissed as a result of the failure by the Kriesers’ (former) counsel to set the action down for trial or seek an extension. On its face, this does not seem to be a reason to reduce the GES defendants claim for prejudgment interest. The GES defendants choose to oppose the motion required to set aside the dismissal. However, I note that in the Supplementary Reasons of (then) Master Muir dated July 10, 2015 (2015 ONSC 4490) the parties agreed there be “no order for the costs” (at paragraph 5). This suggests some merit in the GES defendants’ position opposing the motion. In this regard, the original Reasons of Master Muir (2015 ONSC 3596) contained in the Trial Record before me noted (at paragraph 34) that the plaintiffs had failed to meet three of the four relevant factors to consider. This would appear to the basis for the merit in opposing the motion to set aside the dismissal. As a result, I do not accept any abatement of pre-judgment interest should occur.

[17] The third period was between July 22, 2019 to March 18, 2020 (240 days) where the trial was adjourned, on consent, as a result of the Kriesers’ expert engineering witness inability to attend trial due to hip replacement surgery. I find that was a reasonable and appropriate courtesy for the GES defendants to extend and not appropriate to result in any abatement of the claim for pre-judgment interest.

[18] The fourth and fifth periods of time were between March 18, 2020 to June 13, 2022 (665 days) when the case was adjourned as a result of the COVID pandemic and unavailability of a judge. In the circumstances peculiar to this action, I am prepared to agree pre-judgment interest should not be awarded and reduce same from the amount claimed which, by my calculation, is $9,237.79.

[19] The sixth period of time was between January 14, 2022 and March 14, 2022 (59 days) which was the result of a request by the GES defendants. I find this was also a reasonable and appropriate courtesy for the Kriesers to extend and not appropriate to result in any abatement of the claim for pre-judgment interest.

[20] The final period of time was between March 21, 2022 to November 14, 2022 (238 days) when an adjournment was required due to illness which hospitalized (then) counsel for the GES defendants. Again, this was unforeseen but required in the circumstances and would have similarly been accommodated if the situation had been reversed. This submission has greater traction as part of reducing the claim for legal fees for the new counsel to familiarize themselves with this matter and resume the trial. I would not reduce the claim for pre-judgment interest over this period.

[21] As a result, the claim for pre-judgment interest totalling $83,643.98 is reduced by the above-described amounts ($9,515.62 + $9,237.79 =) $18,753.41 or to $64,890.57.

Costs

[22] The GES defendants sought costs on a substantial indemnity basis throughout the action totalling $574,680.72 given their complete success, the November 22, 2016 Offer to Settle and the bad faith nature of the allegations made against them. As an alternative, the GES defendants sought its partial indemnity costs to the date of the Rule 49 Offer to Settle and substantial indemnity costs thereafter which they calculated to be $554,300.78 inclusive of fees, taxes and disbursements. A second alternative sought was a blended award of costs relying on its Offer to Settle, success in its counterclaim and Rule 49.14 in the amount of $470,827.82 inclusive of fees, taxes and disbursements.

[23] The Kriesers opposed any awarding of substantial indemnity costs prior to the November 22, 2016 Offer to Settle. They sought a reduction or blended costs after the Offer to Settle with regard to defending the action and advancing the counterclaim. The Kriesers also sought a credit for their costs incurred arising from the mid-trial adjournment in March, 2022. Finally, the Kriesers submitted they should not bear the costs of the current GES defendants’ counsel familiarizing themselves with the matter after prior counsel could not continue in March, 2022.

[24] The Kriesers’ calculation of the reduction resulted in the amount of $363,833.17 inclusive of fees, taxes and disbursements.

[25] Regarding the effect of the Rule 49 Offer to Settle, I agree it does not provide for awarding substantial indemnity costs prior to the date of the offer. Whether the GES defendants are considered defendants in the Kriesers’ action against them or the plaintiffs in their counterclaim against the Kriesers, Rule 49.10 does not set out awarding substantial indemnity costs before the date of the Offer to Settle. However, it is clear the result of the trial was less favourable to the Kriesers than had they accepted this Offer to Settle. As a result, it would appear that Rule 49.13 would apply and this Offer to Settle can and should be taken into account in the fixing of the costs of this matter.

[26] Regarding the request to blend the claims for costs between the Kriesers’ action and the GES defendants’ counterclaim, I do not propose to conduct any line by line examination of the GES defendants’ Bill of Costs nor do I believe the law requires same. I agree with the submission of the Kriesers, it is not practical or feasible to differentiate between the costs of defending the action and prosecuting the counterclaim. I agree blending of the costs should occur after the date of the November 22, 2016 Offer to Settle. However, the level of success of the GES defendants should not nor will it be ignored.

[27] Regarding the nature of the claims made by the Kriesers regarding the GES defendants’ conduct, I agree with the submission by the Kriesers it did not reach the level it required to make an award of substantial indemnity costs throughout.

[28] Regarding the costs thrown away by the mid-trial adjournment due to illness, I disagree with the submissions that some significant discount on the recoverable costs should occur. Such costs I find to have been minor, especially when compared to the disproportionately higher level of costs incurred by the Kriesers overall and compared to the costs demand by the GES defendants.

[29] Regarding the costs of current counsel familiarizing themselves with the proceedings after March, 2022, I agree that some portion of the time spent should not be borne by the Kriesers. However, not all of the time spent by counsel between March, 2022 and November, 2022 can or should be deducted as it appears substantial amounts of the efforts described would appear to be on trial preparation and not specifically with familiarization of the proceedings. Further, the time incurred does not appear to be unreasonable.

Conclusion

[30] In fixing costs to be awarded to the GES defendants, I am guided by the partial indemnity fees claimed up to the November 22, 2016 Offer to Settle. Given the complete success of the GES defendants in having the action as against them dismissed and having had success in the counterclaim, I accept that recovery of costs incurred should reflect the success achieved. I have concluded this is a proper case to exercise the discretion afforded to me under Rules 49.13 and 57.01. Given the much larger amount of costs sought by the Kriesers’ had they been successful, this is not a situation where the guiding principle set out by the Court of Appeal in Boucher et al. v. Public Accountants Council for the Province of Ontario et al., [2004] O.J. No. 2634 (at paragraph 26) “to fix an amount that is fair and reasonable for the unsuccessful party to pay in a particular proceeding rather than an amount fixed by the actual costs incurred by the successful litigant” applies.

[31] Here, the amount sought, being substantially less than the amount sought by the Kriesers had they been successful, the Offer to Settle made, the application of Rule 49.13 and the discretion afforded to me under section 131 of the Courts of Justice Act, supra, I fix the costs of the GES defendants payable by the Kriesers in the amount of $415,000 for fees, $50,000 for taxes (both GST/HST) and $12,703.14 for disbursements. The total amount is $477,703.14, payable forthwith.

Mr. Justice G. Dow Released: January 23, 2024