DATE: 20031212

DOCKET: C37797

COURT OF APPEAL FOR ONTARIO

RE: A. MELVILLE HUNT and MARION M. HUNT (Plaintiffs/ Respondents) and TD SECURITIES INC. c.o.b. as TD EVERGREEN and TD FINANCIAL SERVICES and MARK SCHRAM (Defendants/Appellants)

BEFORE: SIMMONS, GILLESE and ARMSTRONG JJ.A.

COUNSEL: James W.W. Neeb, Q.C. and Julie C. Aldred for the respondents

F. Stephen Finch, Q.C. for the appellants

HEARD: December 19, 2002

On appeal from the judgments of Justice P. B. Hambly, of the Superior Court of Justice, dated January 17, 2002, August 27, 2002 and September 4, 2002, reported at [2002] O.J. No. 474, unreported, and [2002] O.J. No. 3508.

ENDORSEMENT RE COSTS OF THE PROCEEDINGS BELOW

[1] For the reasons that follow, we would order costs of the proceeding below, if demanded, to the Hunts, fixed in the amount of $15,000, and, if demanded, to the Bank, fixed in the amount of $30,000; both sums are inclusive of GST and disbursements.

[2] The general principle that applies when an appeal is allowed is that the order for costs at trial is set aside and the costs of the trial and on appeal are awarded to the successful appellant. However, the court has the discretion to depart from this approach in unusual circumstances. See Kopij v. Toronto (Metropolitan), [1999] O. J. No. 239 (QL) (C.A.).

[1] In our view, the Hunts’ success at trial on the issue of breach of contract, namely, whether Mark Schram sold the Hunts’ BCE shares without their instruction, is a circumstance justifying departure from the general principle.

[2] It is necessary to take into account the Offer to Settle that the Bank served upon the Hunts on April 23, 2001, as it triggered the operation of Rule 49.10(2). Under the terms of that Offer, the Bank offered to settle the proceeding by way of “payment of the sum of $35,000 all inclusive of damages, pre-judgment interest and costs” to the Hunts. The Offer to Settle was made more than seven days before the commencement of trial; it was not withdrawn and did not expire before the commencement of trial; it was not accepted by the Hunts; and, the Hunts ultimately obtained judgment that was less favourable than the terms of the Offer.

[3] In finding that the judgment was less favourable to the Hunts than the Offer, we accept the Bank’s submissions that show the Hunts’ recovery to be approximately $26,000, consisting of $9,374 in damages, $2,281.86 for pre-judgment interest and costs and disbursements of approximately $14,000. The Bank based its calculation of costs on the evidence provided by the Hunts at the costs hearing before the trial judge which was then adjusted to reflect the reasons for decision given by this court in the main appeal. Even if the costs recovered by the Hunts were to be substantially higher than that estimated by the Bank, the amount recovered would be less than the offered sum of $35,000.

[4] Accordingly, the Hunts are entitled to costs on a partial indemnity basis to the date the Offer to Settle was served, namely, April 23, 2001 and the Bank is entitled to its costs of the action thereafter on a partial indemnity basis. We fix these costs at $15,000 and $30,000 respectively.

[5] In coming to this determination, we reject the Bank’s contention that the Hunts are not entitled to any costs because the amount they recovered is within the monetary jurisdiction of the Small Claims Court and/or because the Hunts ought to have used the simplified procedures. In light of the complexity and unsettled matters of law involved, it could not reasonably be known until the conclusion of this matter that the damage award would be within the monetary jurisdiction of the Small Claims Court. Moreover, some of the claims were equitable in nature. For similar reasons, the Hunts were fully justified in not following the simplified procedure.

[6] We reject the Hunts argument that there were unusual circumstances warranting exercise of this court’s discretion to award the Hunts partial indemnity costs throughout. The conduct that is said to so entitle the Hunts is largely that which forms the subject matter of the Hunts’ claims. As was noted in the reasons for decision in the main appeal, costs are not to be used to shore up a damages award.

“J.M. Simmons J.A.”

“E.E. Gillese J.A.”

“R.P. Armstrong J.A.”