Court File and Parties

DIVISIONAL COURT FILE NO.: 411/03

DATE: 20050419

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: 876761 Ontario Inc. Plaintiff (Appellant) -and- Maplewood Ravines Ltd., et al. Defendants (Respondents)

AND RE: Maplewood Ravines Ltd. et al. Plaintiffs by Counterclaim (Respondents) -and- 876761 Ontario Inc. et al. Defendants by Counterclaim (Appellants)

HEARD: Written submissions January 31, February 10, 18, 2005.

BEFORE: Lane, Molloy and Donohue JJ.

COUNSEL: Robert C. Harason, for the Appellants; Kenneth G. Hood, for the Respondents.

ENDORSEMENT AS TO COSTS

[1] On January 21, 2005, we released reasons allowing this appeal as to costs awarded by Herold J. and reducing the award from $40,000 to $25,000. We have now received submissions as to the costs of the appeal.

[2] We will award no additional costs for the proceedings leading up to the appeal. Those costs were dealt with forever and in their entirety by the orders already made. We agree with Mr. Hood that topping those amounts up means all costs orders are open-ended and that would be nonsense. It is sheer sophistry for the appellants to assert that they are not asking for more costs than O'Connor J. and Herold J. gave them, but in the next breath to ask that the "shortfall" be taken into account.

[3] This is not a case for substantial indemnity costs on the basis of the offers. If the appellant had offered to settle just for the amount of the arithmetical error, we would see this as supporting substantial indemnity costs, but that is not the case. Nor do the offers actually made support such an order. They are not within R. 49 and, while they are properly considered under R. 57, they were too far off the mark to invoke the higher level of costs

[4] There is, however, a further factor. Counsel for the respondent (not Mr. Hood) made an $8500 arithmetic error in calculating the docket amount on which Herold J. made the order under appeal and thereby unwittingly misled the court. When it was pointed out to him that he had erred, he not only did he not apologize and offer to correct it, he insisted he was not wrong. He took that position before Herold J., and again on the leave motion and again in his factum before us. Mr. Hood admitted to his colleague’s error during argument. We have already commented adversely upon this conduct in paragraphs 5 and 8 of our reasons. We are now invited by the appellants to order substantial indemnity costs of the appeal on the basis of it. We decline to do so for several reasons.

[5] First, we have already directed that, in any event of the action, the defendants should receive no costs for their submissions on costs before the motion judge.

[6] Second, the amount claimed for substantial indemnity costs is $25,820.47, which substantially exceeds the amount realistically at stake in the appeal. This was a small appeal and cannot carry large fees, however righteous the appellants see their cause. If it is true, and it is, that many cost appeals are prohibitively expensive, then they should not be brought if the proceeds are not going to exceed the transaction costs. Appeals over modest amounts, which cost twice the amount at issue, ought not to be encouraged by making the respondent pay substantial indemnity costs for the appellant's luxury of bringing an uneconomic appeal.

[7] Finally, such an award is contrary to the sense of proportionality, the overall sense of what is reasonable, called for by such cases as Zesta Engineering[^1] and Boucher[^2].

[8] Nevertheless, in all the circumstances, a significant award of costs in favour of the appellants is called for, which we fix at $10,000 plus disbursements as claimed at $1612.25 and G.S.T.

Lane J.

Molloy J.

Donohue J.

DATE: April 19, 2005

[^1]: Zesta Engineering v. Cloutier (2002) 2002 45084 (ON CA), 164 O.A.C. 234 (C.A.) [^2]: Boucher v. Public Accountants Council, 2004 14579 (ON CA), [2004] 71 O.R. (3d) 291