Schwark v. Cutting, 2010 ONCA 299

CITATION: Schwark v. Cutting, 2010 ONCA 299

DATE: 20100428

DOCKET: C49746

COURT OF APPEAL FOR ONTARIO

Gillese, Blair and MacFarland JJ.A.

BETWEEN:

Reinhard Schwark and Siegfried Schwark, Estate Trustees of the Estate of Louise Gertrude Schwark, Derek Clayton Bell and Jennifer Margaret Bell

Plaintiffs (Respondents)

and

William Leonard Cutting and Brenda Jean Cutting

Defendants (Appellants)

Paul Amey, for the appellant

Bryan G. Embree, for the respondent

Heard: November 20, 2009

Released: January 27, 2010

On appeal from the judgment of Justice P.B. Hambly of the Superior Court of Justice dated November 13, 2008.

COSTS ENDORSEMENT

[1] For reasons released January 27, 2010, the appeal was allowed and the trial judgment set aside. It had been agreed between counsel at the conclusion of argument that the appellant’s trial costs, in the event the appeal was successful, would be fixed by this court following the release of this court’s decision at which point counsel were to file their submissions made to the trial court.

[2] The trial judge awarded no costs essentially because in his view the plaintiffs could have had, without a trial, what they were granted after trial by accepting the offer of the defendants and as he stated in his reasons “In my view there was no winner. Success was equally divided.”

[3] The appellants seek partial indemnity costs to the date of their offer to settle and substantial indemnity costs thereafter.

[4] I begin with the well-settled proposition that a successful party is entitled to its costs. Here the appellants, who were defendants at trial, have been entirely successful and are therefore entitled, at a minimum, to their partial indemnity costs throughout.

[5] However, the appellants, served a Rule 49 offer and their ultimate success in having the respondents’ action entirely dismissed is a result that is much better than their offer.

[6] Rule 49.10 does not address a situation where an offer is served by a defendant and the plaintiff recovers nothing. This court has held that the rule has no application in cases where the plaintiff fails to recover judgment. See Scapillati v. A. Potuin Construction Ltd. (1999), 1999 CanLII 1473 (ON CA), 175 D.L.R. (4th) 169 (C.A.); S. & A. Strasser Ltd. v. Richmond Hill (Town) (1990), 1990 CanLII 6856 (ON CA), 1 O.R. (3d) 243 (C.A.).

[7] However, rule 49.13 provides, inter alia, that despite rule 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.

[8] Of course the overall discretion of the court toward costs in civil proceedings is set out in s. 131 of the Courts of Justice Act and in rule 57.01.

[9] This court has recently considered the interplay of s. 131 of The Courts of Justice Act, rule 49.10 and rule 49.13. In Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 312 D.L.R. (4th) 278 at para. 40, Epstein J.A. writing for this court stated:

In summary while fixing costs is a discretionary exercise, attracting a high level of deference, it must be on a principled basis. The judicial discretion under rules 49.13 and 57.01 is not so broad as to permit a fundamental change to the law that governs the award of an elevated level of costs. Apart from the operation of rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made. As Austin J.A. established in Scapillati, Strasser should be interpreted to fit within this framework – as a case where the trial judge implicitly found such egregious behaviour, deserving of sanction.

[10] In my view the trial judge in denying costs to the respondents who had been successful at trial, considered their conduct deserving of chastisement. He considered the plaintiffs to have wasted time refusing to consent to amendments to the defendants’ pleadings that should have been accepted and failing to narrow the issues by admitting what was obvious. Further, there was evidence at trial of misconduct on the part of the plaintiffs in their use, or more properly misuse, of the defendants’ property. Indeed the conduct of one of the Schwark children was so egregious that his parents banned him from coming to the cottage for one year. All this in the face of a most reasonable offer by the defendants that would have permitted the plaintiffs continued use of the beach front property. In my view, in all of the circumstances, an award of costs on a substantial indemnity basis from the date of the offer to settle and on a partial indemnity basis prior to the date of that offer is warranted.

Reasonableness of Claim

[11] The appellants seek their trial costs on this basis (i.e., partial indemnity to the date of the offer to settle and substantial indemnity thereafter) in the total sum of $80,755.19 inclusive of disbursements and GST.

[12] The respondents, who also made a Rule 49 offer, submitted Bills of Costs to the trial judge wherein they claimed:

(a) partial indemnity until April, 2008 offer and substantial indemnity thereafter - $89,000.00; and

(b) partial indemnity throughout $78,000.00

[13] In my view it cannot be said that the amount claimed by the appellants is unreasonable nor beyond the reasonable expectation of the respondents.

[14] I would award trial costs to the appellants in the amount of claimed $80,755.19, inclusive of disbursements and GST.

“E.E. Gillese J.A.”

“R.A. Blair J.A.”

“J. MacFarland J.A.”