ONTARIO

SUPERIOR COURT OF JUSTICE

2012 ONSC 2041

COURT FILE NO.: 59267
DATE: 2012-03-30

RE: CIT Financial Ltd, Applicant.

and:

Susan Duesling, Douglas Duesling, Continental Carriers Inc. and Ridgley Receivers Inc., Respondents.

BEFORE: Mr. Justice D. R. McDermid

COUNSEL:
K. Daniel Reason, for the Applicant.

P. Quinlan, for the Respondents Duesling, and Continental Carriers Inc.

No one appearing for the Respondent Ridgley Receivers Inc.

HEARD: March 30, 2012.

ENDORSEMENT

[ 1 ] I have now received and considered submissions about costs from Mr. Reason and Mr. Quinlan.

[ 2 ] Mr. Reason seeks substantial indemnity costs in the sum of $41,709.62, including disbursements of $4,324.52 and HST where applicable. Mr. Quinlan submits that an award of $10,000 would be reasonable in all the circumstances.

[ 3 ] The amount claimed in the application was $194,389.44. On the application, the applicant conceded that the amount in issue and for which judgment was being sought was $129,500 of which it was agreed that Continental Carriers Inc. owed $68,500. Therefore, in reality the issues were: was an additional $61,000 owing and who was liable to pay the total amount found to be due?

[ 4 ] Mr. Reason points to an offer to settle in the sum of $125,000 made before the litigation commenced formally as justification for substantial indemnity costs from the date of the offer.

[ 5 ] Rules 49.02 (1) and 49.03 state:

49.02 (1) A party to a proceeding may serve on any other party an offer to settle any one or more of the claims in the proceeding on the terms specified in the offer to settle.

49.03. An offer to settle may be made at any time, but where the offer to settle is made less than seven days before the hearing commences, the costs consequences referred to in r. 49.10 do not apply.

[ 6 ] When the offer was delivered there was no “proceeding” in existence. I interpret r. 49.03 to be governed by r. 49.02 and, therefore, conclude that the words “at any time” in r. 49.03 must mean at any time after a proceeding has been commenced. Therefore, I am not inclined to apply r. 49.10.

[ 7 ] Mr. Quinlan submits that because counsel for the applicant chose to cross-examine Mr. Duesling, r. 39.02(4) (b) is brought into play. However, although r. 39.02(1) refers to “A party to a motion or application”, r. 39.04 begins with the words, “On a motion other than a motion for summary judgment or a contempt order …” The matter before me was not a motion of any kind but an application and, therefore, in the absence of any authority being provided to me, I find that r. 39.02(4) (b) does not apply to the matter before me.

[ 8 ] I have considered all of the subsections of r. 57 and conclude that costs should follow the event. Therefore, the remaining issues are on what scale and in what amount should they be granted?

[ 9 ] I find that the amount sought for costs is grossly excessive. Surely, there must be some reasonable proportionality between the amount in issue and the quantum of costs awarded as anticipated by r. 57.01(a). A party cannot expect to recover costs for every minute docketed by his or her counsel regardless of how many lawyers, students-at-law and law clerks are marshalled to work on a file.

[ 10 ] In this case, I find that partial indemnity costs are appropriate and that the sum of $17,500 plus $3,700 to cover disbursements and HST would be in the reasonable anticipation of the unsuccessful party. The amount awarded for disbursements is less than claimed. The photocopying fees alone are almost $800, which counsel seem to regard as recoverable without explanation.

[ 11 ] Accordingly, the respondents Susan Duesling, Douglas Duesling, and Continental Carriers Inc. shall pay the applicant costs in the sum of $21,200 forthwith.

“ Justice D. R. McDermid”

Mr. Justice D. R. McDermid

Date: March 30, 2012.