SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 10-18356
DATE: 2012/06/11

RE:

Home Trust Company , Plaintiff, Defendant to the Counterclaim

AND:

Maj Pearcey , Defendant, Plaintiff in the Counterclaim

BEFORE: Turnbull, J.
COUNSEL: Amanda Jackson, Counsel, for the Plaintiff
Robert Waddell, Counsel, for the Defendant

Costs endorsement

[ 1 ] The plaintiff successfully brought a motion for summary judgment for payment on its mortgage and for an order dismissing the counterclaim. In the penultimate paragraph of the endorsement issued March 1, 2012, the plaintiff was awarded its reasonable costs on a substantial indemnity basis. While substantial indemnity costs are an exceptional remedy available to the court and only to be awarded in exceptional cases, the parties contracted in paragraph 7.17 of the Standard Charge forms affixed to the mortgage document that the plaintiff was entitled to its costs of enforcement of the mortgage on a substantial indemnity basis in the event of the defendant defaulting on the mortgage. I asked counsel for written submissions, in the absence of agreement on the quantum payable, and I have now received those submissions.

[ 2 ] Counsel for the plaintiff seeks an order requiring the defendant to pay $44,904.07. That figure is broken down in the Costs Outline submitted as follows:

Fees: $34,733.03

H.S.T. $ 4,261.77

Disbursements: $ 4,486.09

Total: $ 43,480.89

[ 3 ] I have reviewed the disbursements claimed and find that they were reasonable and necessary for the prosecution of this matter and I allow them in the amount claimed.

[ 4 ] The real issue between the parties is the amount payable in costs which is attributable to fees.

Position of the Plaintiff

[ 5 ] The plaintiff has urged the court to use the factors listed in Rule 57.01 in assessing costs.

[ 6 ] Home Trust was completely successful in its action, recovering the amount it claimed, and the counterclaim against it was dismissed.

[ 7 ] Home Trust made a number of offers in writing to the defendant to resolve the proceeding, none of which were accepted, including:

• June 17, 2010 – offer in writing to allow the defendant to bring the mortgage into good standing, including capitalization of November, December, and January payments, waiver of legal costs and waiver of cost of Notice of Sale.
• August 16, 2010- offer in writing to allow the defendant to bring mortgage into good standing, including capitalization of November, December, and January payments, waiver of legal costs, waiver of cost of Notice of Sale, and waiver of all NSF and other internal fees. The defendant had only to make payment on or before September 2 nd of the regular monthly mortgage payments which were between February and September 2010.
• September 8, 2010- offer in writing extending the offer of August 16, 2010 to October 2, 2010.
• September 27, 2011- offer in writing based on consent to Judgement in the sum of $394,352.48 (which amount included waiver of pre-payment cost, all NSF and other internal fees), plus costs of $16,575.30. Enforcement of Judgment was to be held for 90 days to permit the defendant sufficient time to seek refinancing with another lender.

[ 8 ] Home Trust was awarded costs on a substantial indemnity basis. The hourly rates charged by the plaintiff’s counsel are between $375.00 and $420.00 per hour. The Costs Guidelines suggest a maximum hourly rate of $300.00 per hour on a partial indemnity basis for a lawyer who has been practicing between 10 and 20 years. Substantial indemnity costs are 1.5 times the partial indemnity rate or $450.00 per hour. As such, Ms Jackson’s hourly rate claimed is reasonable.

[ 9 ] In addition, Judgment was awarded to Home Trust in the sum of $412,934.64 ($387,557.48 as at January 27, 2011 together with accrued interest). Ms. Jackson submitted that costs of approximately $45,000.00 of the action and counterclaim incurred over the course of litigation spanning two years are proportional to the amount recovered.

[ 10 ] Throughout the proceeding, beginning with the Notice of Sale (which provided for legal costs of $1,095.00), the defendant has been kept informed of the increase in legal costs which was occurring because of her delays, including:

• April 7, 2011: advised the defendant that legal costs to that stage were $10,031.03.
• September 27, 2011: advised the defendant that legal costs to that stage were $16,575.30.
• November 8, 2011: advised the defendant that legal costs to that stage were $19,059.60.
• January 16, 2012: advised the defendant that legal costs were $31,073.76.
• January 27,2012: before proceeding with continuation of defendant’s cross-examination, Ms. Jackson raised with counsel (in the defendant’s presence) the possibility of consent to Judgment with time to refinance, and advised of costs to date together with the fact that costs to complete cross-examination would be approximately $3,000.00 and an additional $5,000.00 to argue the motion for summary judgment. At that time, the Defendant was given opportunity to discuss privately with counsel prior to proceeding but the Defendant decided instead to proceed with completion of cross-examination.

[ 11 ] I find that, throughout this proceeding the defendant’s conduct has significantly contributed to the length of the proceeding. Some instances include:

• failing to make payment to Home Trust which would have resulted in an early resolution of the proceeding when she had the financial resources available to do so. - failing to make any attempt to obtain refinancing until October of 2011 after the mortgage had matured. - failing to cooperate with respect to the scheduling of her cross-examination and continued cross-examination. -failing to attend at the scheduled continuation of her cross-examination on Monday, January 23, 2012. The defendant’s counsel called Home Trust’s counsel at approximately 9:20 a.m. on Monday morning (after she was already in Toronto at the examiner’s office) to suggest the cross-examination to be postponed because the previous Friday afternoon he had been advised by the defendant that she had refinancing in place. There was in fact no refinancing in place to payout Home Trust’s mortgage and the result was further delay in completing the cross-examination, further delay in the motion for summary judgment, and increased costs of preparing and attending at a cross-examination on January 23 rd which the defendant had no intention of attending.

[ 12 ] Home Trust submits that the Counterclaim was commenced solely for the purposes of delay. As set out in the summary judgment decision: "...it simply reasserts the allegations made in the statement of defence. It does not disclose a cause of action that has any chance of success at trial..."

Position of the Defendant

[ 13 ] Counsel for the defendant argued that when Ms. Jackson was called to the bar in 2002, some of the fees were billed at a time when she had less than ten years experience. Under the guidelines, the maximum allowable for a lawyer with less than ten years at the bar on a partial indemnity basis is $225.00 per hour and not $300.00 per hour as suggested by Ms. Jackson. Furthermore, he noted that the maximum rates established by the Costs Committee in July 2005 anticipated that the maximum rates would only apply to more complicated matters and to more experienced counsel within each category in accordance with their experience. The defendant further submits that the plaintiff’s motion to enforce the terms of a mortgage in default was not a sophisticated or complicated matter and as a result should not attracted a high hourly rate of up to $450.00 per hour as referred to by the plaintiff in her submissions. I concur with that comment and have taken those factors into consideration in assessing the costs herein.

[ 14 ] Counsel for the defendant further submitted that any dispute as to the issue of costs under the Notice of Sale action should proceed by way of an assessment hearing as governed by Section 43(2) of the Mortgage Act. I reject that submission. First, it is impractical that the amount of $993.20, which is the amount claimed for the preparation of the Notice of Sale, be referred to an Assessment Officer which would result in further delay and legal costs for the parties. One purpose of the Rules of Practice [^1] is to to assist the parties in resolving their disputes in an expeditious and cost effect manner as possible. Furthermore, the amount claimed for the Notice is within the amount allowable on assessment: C877534 Ontario Limited v Toronto Dominion Bank , [2009] O.J. 6113 (assessment officer) .

[ 15 ] The defendant has submitted that the offers to resolve the matter by the plaintiff were heavy handed and not sincere attempts by the plaintiff to resolve the matter. I reject that submission. In the record that was before the Court, it was clear this matter on a number of occasions could have settled by the defendant taking a reasonable position and simply paying the amounts due under the mortgage.

[ 16 ] The defendant argued that the plaintiff’s conduct contributed to inflating its own costs and increased the length of its own proceeding. In that respect counsel pointed to the plaintiff’s delay of approximately 10 months in filing a defence to counterclaim. Furthermore, the plaintiff’s motion for summary judgment was dated March 2011 which was 14 months after the date of the Notice of Sale being issued in January 2010.

[ 17 ] I find that such delays did not in fact increase the costs but were simply an effort on the part of the plaintiff’s counsel to accommodate the defendant and to allow her to either bring the mortgage into good standing and/or refinance the property.

[ 18 ] In summary, counsel for the defendant submitted that the costs sought by the plaintiff were excessive and not reasonable and urged the Court to adjust the amount claimed to reflect the years of experience of counsel, the relatively unsophisticated nature of mortgage enforcement actions, and to place them in line with an action that did not require a trial but which was resolved under a motion for summary judgment.

The Law:

[ 19 ] In Davies v Clarington (Municipality) (2009) 2009 ONCA 722 , 100 O.R. (3d) 66 (C.A.), the court confirmed the overriding principle in assessing costs is that the costs awarded be reasonable in the circumstances, after confirming the following principles articulated in Anderson v. St. Jude Medical Inc. (2006) 2006 85158 (ON SCDC) , 264 D.L.R. (4 th )557:

1. The discretion of the court must be exercised in light of the specific facts and circumstances of the case in relation to the factors set out in Rule 57.01(1).
2. A consideration of experience, rates charged and hours spent is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case. The quantum should reflect an amount the court considers to be fair and reasonable rather than any exact measure of the actual costs of the successful litigant.
3. The reasonable expectations of the unsuccessful party is one of the factors to be considered in determining an amount that is fair and reasonable.
4. The court should seek to avoid inconsistency with comparable awards in other cases. “Like cases” (if they can be found), should conclude with like substantive results”.
5. The court should seek to balance the indemnity principle with the fundamental objective of access to justice.

Analysis :

[ 20 ] I have taken into account the principles enunciated in paragraph 19 and those listed in Rule 57 of the Rules of Civil Procedure.

[ 21 ] I have had the opportunity to review the detailed dockets provided by counsel for the plaintiff. She has docketed approximately 79.7 hours of time. The dates of the services rendered have not been provided to the Court and therefore it is impossible to differentiate between work done 2011 and 2012 when she had ten and eleven years experience at the bar relative to the time incurred before that. I have looked at the nature of the work done and find that virtually all of it is reasonable and related to the progress of this action. I also recognize that to a certain extent there is some estimation of time involved in providing the dockets. For example the preparation time is generally rounded to precise hours (7.0 hours, 3.0 hours, 8.0 hours, 6.0 hours, etc). I therefore allow 70 hours of time relative to plaintiff’s counsel in this matter at the hourly rate $350.00 per hour. This in my view represents a reasonable substantial indemnity rate bearing in mind the complexity of the work and the results obtained and the factors outlined in paragraph 19. Based simply on the hours of Ms. Jackson the fees payable are $24,500.00. I further would allow the sum of $1472.80 for the work done by William Walker.

Conclusion:

[ 22 ] The plaintiff shall have its costs paid to it by the defendant which are fixed in the following amounts:

Fees: $25,972.80

HST: $ 3,376.46

Disbursements: $ 4,486.09

Total Costs Assessed = $33,835.35

Turnbull, J.

Date: June 11, 2012

[^1]: Rule 1.04