COURT FILE NO.: 03-BN-12453

DATE: January 20, 2005

SUPERIOR COURT OF JUSTICE – DIVISIONAL COURT – ONTARIO

RE: 876761 Ontario Inc, Appellant (Plaintiff)

and

MAPLEWOOD RAVINES LTD. et al, Respondent (Defendants)

BEFORE: LANE, MOLLOY and DONOHUE JJ.

COUNSEL: Robert C. Harason, for the Appellant

Kenneth Hood, for the Respondents

HEARD: January 18, 2005

E N D O R S E M E N T

[1] The plaintiff sued the two defendant companies for $5 million for damages, arising from the defendants’ alleged breach of a right of first refusal on development properties. The defendants counterclaimed against the plaintiff and various related companies and individuals, for $5 million for, inter alia, slander of title and inducing breach of contractual relations. The plaintiff moved for judgment on its claim, and for a dismissal of the counterclaim against the defendants other than the numbered company. The plaintiff’s summary judgment motion was dismissed by Herold J. for reasons released on April 4, 2003. The parties then made written submission with respect to costs. In an endorsement released on May 14, 2003, Herold J. found that the defendants were entitled to their costs of the motion on a substantial indemnity basis, and he fixed those costs at $40,000.00. The appeal before this Court is solely with respect to that costs award.

[2] We see no basis for interfering with the motion judge’s conclusion that the defendants were entitled to their costs, nor with the scale of costs awarded. Our only difficulty is with respect to the quantum of the costs award.

[3] In his reasons dismissing the plaintiff’s motion, the motion’s judge found that the plaintiff’s motion was totally devoid of merit. The material on the motion was voluminous and the argument of the motion took virtually two full days of court time. The motions judge held that the plaintiff’s ultimate success was entirely dependent upon disputed facts and credibility findings on numerous issues. He allowed costs on a substantial indemnity basis. This is the norm, unless the unsuccessful moving party can establish that it was reasonable to have brought the motion. It is clear from the Reasons of the motions judge that he did not consider the motion to have been reasonably brought. It was open to him, on the motion record before him, to have come to that conclusion and, after two days of argument, he was well in a position to make that determination. We see no basis to interfere with his determination, and uphold his finding that the defendants were entitled to their costs on a substantial indemnity basis.

[4] The plaintiff argued that the defendants were primarily successful, based on their arguments with respect to waiver, which had not been originally pleaded. Herold J. permitted an amendment to add the issue of waiver, ruling that this issue was well covered by the evidence on the motion, was the subject of extensive discoveries, and did not catch the plaintiff by surprise. The plaintiff submits that the defendants were granted an indulgence, which resulted in their success on the motion, and they should therefore be deprived of costs, notwithstanding their success. In our view, the motions judge disposed of the underpinning of this submission when he held that the issue was no surprise to the plaintiff, and had already been the subject of evidence on the motion and examinations for discovery. In these circumstances, the amendment was not a mere indulgence, but rather required by the Rules. There is no evidence of any prejudice to the plaintiff, and the plaintiff did not request an adjournment to prepare submissions on the waiver issue. In these circumstances, we see no grounds to interfere with the motion judge’s decision that it was not appropriate to deprive the successful defendants of their costs.

[5] The defendants submitted written submissions on costs, along with a Bill of Costs and supporting docket entries. The total amount claimed by the defendants, on a substantial indemnity basis inclusive of disbursements and GST, was $40,926.40. In his responding written submissions, counsel for the plaintiff asserted there was an approximately $8500 discrepancy between the amount recorded in the defendants’ dockets and the amount claimed in the bill of costs. He submitted that the bill should be reduced by at least $8500, to adjust for this arithmetic error. In reply submissions, counsel for the defendants flatly denied there had been an error, and asserted that “the Plaintiff’s counsel has miscalculated the hours docketed and that fundamental error is carried through his calculations”. Even on the factum filed on this appeal, defence counsel referred to this as an “alleged arithmetical error”, and submitted that there was no error by Herold J. because he refused to embark on a mathematical line-by-line critique in arriving at a costs award, that was both fair and reasonable. It was not until pressed in the course of oral argument on the appeal before us that counsel for the defendants finally conceded that in fact plaintiff’s counsel was right. Defence counsel made an arithmetical error in his first submission, which resulted in a claim that was for $8500 more than was reflected in the time shown in the dockets. Not only was this not disclosed to the motion’s judge, he was told the reverse, apparently because defence counsel did not even bother to check the math to see if plaintiff’s counsel was correct.

[6] It is obvious that the motion’s judge relied on the submissions of defence counsel that counsel for the plaintiff was wrong in this submission. The defence claimed costs of $40,926.40. The motions judge did not make any specific rulings on the various issues raised by the plaintiff as to the amounts claimed by the defendants. He noted, however, that he saw “no error whatsoever in the proposal made by counsel for the [defendants]” and then awarded costs of $40,000.00. This was virtually a full recovery by the defendants of everything claimed.

[7] In our view, there is a clear error in the costs award with respect to this $8500. Due to the arithmetical error made by the defendants, and the defendants’ denial they had made such an error, the motion’s judge fundamentally misapprehended the facts before him, with the result that the costs award was $8500 more than it otherwise would have been.

[8] Counsel for the plaintiff submits the defendants should be deprived of any costs on the motion, not because their counsel made the original error (which is acknowledged to be inadvertent), but because counsel for the defendant unreasonably represented to the court that no error had been made. We recognize this is a matter for concern. Counsel should be scrupulous to ensure that the Court receives accurate information, before being called upon to make a decision affecting people’s rights. Innocent mistakes are unavoidable. However, when an alleged error is drawn to the attention of counsel, counsel has an obligation to double-check the accuracy of the information provided. That said, we think the proposed sanction of completely depriving the successful defendants of all costs on the motion goes too far. At a minimum, the error should be corrected, and the $8500 deducted from the costs award. In addition, we are of the view that, regardless of the outcome of the action, the defendants should be deprived of any costs whatsoever in respect of the time spent on the costs submissions to the motion’s judge Otherwise, however, we do not feel any further sanctions are warranted.

[9] The bill of costs submitted by defence counsel included preparation time and attendance before O’Connor J. on March 19, 2003, and Templeton J. on March 26. On both occasions the matter was adjourned without any endorsement as to costs. The case law is clear that unless the judge before whom a matter is heard makes a specific order as to the costs of that appearance, he or she is to be taken to have ruled that no costs are recoverable by either party in respect of that appearance: Delrina Corporation v. Triolet Systems Inc. (2002), 2002 11389 (ON CA), 58 O.R. (3d) 339 (C.A.). Since the motions judge awarded virtually all of the costs claimed, it would appear the cost award includes the appearances on March 19 and March 26. This is a legal error, which in our view requires correction. It is not possible to tell from the dockets how much time was spent on those hearing dates in preparation time, as opposed to attendance time. However, even some of the preparation time was referable solely to the appearance before the particular judge that day, and not recoverable. Although the amount of the reduction for this factor is not capable of being calculated precisely, it is a factor to be taken into account in considering the overall reasonability of the costs awarded.

[10] As we have already noted, the motions judge granted virtually all of the costs claimed, without any comment on the points made by counsel for the plaintiff (except for a colourfully worded statement indicating that in fixing costs he would not be drawn into a close analysis of the minutiae). There is, of course, a considerable difference between the exercise carried out by an assessment officer in assessing costs and that of a judge in fixing costs. The former is a more detailed analysis. However, that does not mean that the judge fixing costs is not required to consider the same factors relevant to the quantum of costs recoverable. With respect, it does not appear to us that the motions judge looked at the costs claimed with a critical eye, or considered the relevant factors. This, in our view, constitutes legal error: Moon v. Sher (2004), Carswell Ont 4702 (C.A.); BNY Financial Corp-Canada v. National Automotive Warehousing Inc., [1999] O.J. No. 1273 (S.C.J.).

[11] The motion’s judge allowed lead counsel’s time at $300.00 an hour on a substantial indemnity basis. That was counsel’s actual billing rate to the client, and is within the amount allowable on the costs grid. A lower hourly rate might have been justifiable in the circumstances, but we would not interfere with the motion judge’s exercise of discretion in this regard.

[12] It is relevant to take into account the conduct of either party that tended to prolong (or shorten) the proceeding. It is apparent from the comments of the motion’s judge that he considered plaintiff’s counsel to have unduly prolonged the proceeding with excessive attention to detail. That is a factor to be taken into account. On the other hand, counsel for the plaintiff makes a valid point that defence counsel failed to respond to a Request to Admit, even though it later became apparent that many of the facts and documents subject to the request were not contentious. As a result, the plaintiff was required to prove the facts, which resulted in extra time, as well as the wasted time spent on the Request to Admit. That is also a factor to be considered. We do not, however, agree with the plaintiff’s submission that a reduction of costs is warranted by what he alleges to be improper or inflammatory aspects of the affidavit material filed by the defence. Some of that material may have been unnecessary or conclusory in nature, rather than the strict pleading of facts. However, the material was not offensive when taken as a whole and, as noted by the motion’s judge, the plaintiff left no stone unturned, which could well explain the level of detail defence counsel felt to be necessary.

[13] This was a summary judgment motion. The defendants were wholly successful, and the motions judge was of the view there was no merit whatsoever to the motion. The amount of money involved was substantial. However, there was nothing especially complex about the motion itself, or the legal issues involved. That is not a factor that would reduce the costs, but neither are there any factors of complexity to enhance the amount of costs beyond the norm for a motion of this type.

[14] Typically, the time spent is the most critical determinant in the quantum of costs recovered, and this case is no exception. We have no difficulty with any of the time claimed, except for that of lead counsel, Mr. Upenieks. Further, the time spent in reviewing authorities and drafting material for the motion seems reasonable. Where we have difficulty is with the amount of time claimed for preparation for the argument of the motion. According to the dockets Mr. Upenieks spent 8.5 hours preparing for the motion on March 18 (when it was originally scheduled to be heard on March 19), and then a further 4.4 hours on March 19 for preparation and attendance. The motion was adjourned on that date to March 26, which was not such a long adjournment that one would expect all of the previous preparation time to have been thrown away. The dockets show a further 5.5 hours of preparation on March 25, and a further 3.9 hours for preparation and attendance on March 26. Again the adjournment to the actual hearing date was brief. The motion proceeded on April 3 and 4. Between March 27 and April 2, Mr. Upenieks’ dockets show a further 12.8 hours of preparation time. Thus, excluding time spent in preparation on hearing dates, the total time claimed for preparation (over and above the preparation of materials) was 26.8 hours. Given that this is claimed at the actual billing rate of $300.00, this seems somewhat on the high side, and likely includes some duplication.

[15] On the hearing dates April 3 and 4, Mr. Upenieks dockets reflect time totalling 19.1 hours for preparation and attendance. In the bill of costs, the claim for these hearing dates is stated to be $7320.00, being 24.4 hours at $300 per hour. It is likely that this discrepancy in the hours claimed is part of the $8500 arithmetic error pointed out by plaintiff’s counsel. The norm is to award a block counsel fee in respect of the hearing dates, rather than an hourly rate. It is appropriate to treat this as a two-day motion, and an appropriate counsel fee would be $2500 per day. The actual fees claimed, if hourly rates are applied, would be closer to $5730.00, which is not far off the mark.

[16] Finally, apart from simply carrying out the exercise of applying the costs grid to the number of hours reasonably spent, it is necessary to look at the overall costs claim in light of the nature of the motion and the issues involved, and consider whether this amount of costs could reasonably have been expected for the motion: Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. No. 4495 (C.A.). In our view, costs of $40,000 for this motion is excessive in the circumstances.

[17] We have no difficulty with the disbursements.

[18] The arithmetic error of $8500 must be deducted from the claim off the top, bringing the total claim for costs to approximately $32,400. From this, further reduction is warranted to reflect the time claimed for appearance dates for which no costs were ordered, excessive preparation time, and the other factors we have outlined above. Taking all of this into account, in our view the appropriate cost award is $25,000.00. Given the amounts involved, and the extent to which we are now familiar with the facts of the case, we consider it appropriate to simply substitute this amount for the costs awarded by the motion’s judge, rather than remitting it for a rehearing before the motion’s judge, or referring it for assessment.

[19] Accordingly, the appeal is allowed, and costs of the motion before Herold J. are fixed at $25,000.00.

[20] With respect to the costs of the appeal before us, we are advised that there have been settlement offers between the parties which may be relevant to our costs determination. Accordingly, costs of this appeal shall be determined based on written submissions, to be delivered according to a schedule to be agreed upon by counsel.

Lane J.

Molloy J.

Donohue J.

Date: January 20, 2005```