SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: 3267/04
DATE: 20120627
RE: Jens Nielsen Custom Contracting Ltd., Plaintiffs v. John Litwin and Heather Litwin, Defendants
AND BETWEEN:
John Litwin and Heather Litwin, Plaintiffs by Counterclaim v. Jens Nielsen Custom Contracting Ltd. and Jens Nielsen, Defendants to the Counterclaim
BEFORE: Fragomeni J.
COUNSEL: Kenneth W. Watts, Counsel for the Plaintiff/Defendants to the Counterclaim
Tudor B. Carsten and Jennifer A. Whincup, for the Defendants, Plaintiffs by Counterclaim
E N D O R S E M E N T re C O S T S
[ 1 ] Jens Nielsen and Jens Nielsen Custom Contracting Ltd. (the Nielsens) brought a motion to prevent John Litwin and Heather Litwin from relying at trial on an expert report from TAK Engineering Ltd. or any information or documentation relating to the remedial work done at the Litwins’ home as recommended by the TAK report.
[ 2 ] The Litwins were successful at the motion and the Nielsens’ motion was dismissed. As such the Litwins seek costs on a substantial indemnity basis in the all-inclusive sum of $24,342.35.
[ 3 ] The Litwins point to the following factors to support their position:
The overall nature of the action is factually complex, however the motion itself was only of moderate complexity;
Preparing for the motion required a review of correspondence going back three years as well as a review of the expert reports, opinions and nature of the remedial work done;
The preparation for the motion was further complicated by the fact that the motion was brought on the eve of trial, years after the events in issue;
The Nielsens had not filed a Factum and as a result the Litwins were required to anticipate and prepare for a wide range of potential arguments;
The motion was very important to the Litwins. The TAK report is critical to their defence as is the information and documentation relating to the remedial work done;
The Litwins were required to deal with the issue of the proper jurisdiction to hear the motion. The Litwins successfully argued that the motion should be heard by the trial judge;
Unnecessary work and research was done to exclude the Affidavit of Lisa Lossner – the Nielsens agreed on the morning of the motion to withdraw her motion for consideration by the Court;
Finally, the Litwins submits that the motion itself should never have been brought in the first place.
[ 4 ] At paragraphs 31 to 33 of their costs submissions the Litwins state the following:
It appears that the Nielsen Entities, having made no attempt to obtain their own expert report, and faced with an imminent trial date, brought the Motion in a last-ditch strategic attempt to compensate for their prior inaction.
Given the Nielsen Entities’ unexplained delay in bringing the Motion, given that the Nielsen Entities had unsuccessfully objected to the TAK Report at two previous pre-trials, and given that the Nielsen Entities had examined John Litwin on the TAK Report and thereby both taken a fresh step and waived any irregularities, it should have been obvious to the Nielsen Entities that the motion would be unsuccessful.
Nonetheless, the Nielsen Entities chose to bring the Motion on the eve of trial, forcing the Litwins to respond to the Motion instead of preparing for the trial itself.
Position of The Nielsens
[ 5 ] The Nielsens submit that an award of costs on a substantial indemnity basis should only be allowed where it has been determined that the conduct of a party was unreasonable and improper. In this case, that test has not been met. The Nielsens submit further that the Affidavit material on the motion was not extensive. Further the Nielsens argue that much of the time spent on the motion is properly allocated to the upcoming trial and much of that work should not be attributed to the preparation of the motion.
[ 6 ] In summary, the Nielsens submit that this was only a one day motion and the very large amount of time being claimed is properly attributable to new counsel becoming familiar with the file and not related to the motion.
[ 7 ] The Nielsens submit that the motion preparation time would represent only 30% of the actual partial indemnity time being claimed of $15,078.00. This would equal 30% x $15,078.00 = $4,523.40.
[ 8 ] Finally the Nielsens argue that any award of costs should be payable after disposition of the trial.
[ 9 ] In their Reply the Litwins make the following comments:
The jurisprudence supports their position that substantial indemnity costs may be awarded where a motion has been brought unreasonably. ( Empire Life Insurance Co. v. Krystal Holdings Inc. ) 2009 Carswell Ont 1376 (Ont. S.C.J.) at para. 19 ; B.S. v. Eberts , 2011 ONSC 6106 (Ont. S.C.J.) at paras. 3 and 5 );
The Litwins did not claim costs for familiarization of the file. The costs claimed only relate to the motion;
The arguments set out by the Nielsens are an attempt to re-litigate the motion. Those arguments were already disposed of on the motion.
Analysis and Conclusion
[ 10 ] I am satisfied that the Litwins are entitled to costs. I am also satisfied that costs ought to be awarded on a partial indemnity basis. Although unsuccessful on the motion I cannot find and conclude that the conduct of the Nielsens rises to a level that warrants a substantial indemnity scale.
[ 11 ] With respect to the quantum of costs reasonable in all of the circumstances, Rule 57.01(1) sets out the factors a court may consider in exercising its discretion. Rule 57.01(1) states:
57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(i) any other matter relevant to the question of costs. R.R.O. 1990, Reg. 194, r. 57.01 (1) ; O. Reg. 627/98, s. 6; O. Reg. 42/05, s. 4 (1); O. Reg. 575/07, s. 1.
[ 12 ] It is important to note that (o.b.) deals with the amount of costs that an unsuccessful party could reasonably expect to pay in relation to this motion.
[ 13 ] In Clarington (Municipality) v. Blue Circle Canada Inc., 2009 ONCA 722 Epstein J.A. set out the following at paragraphs 51 and 52:
In Andersen v. St. Jude Medical Inc. (2006), 2006 , 264 D.L.R. (4th) 557, the Divisional Court set out several principles that must be considered when awarding costs:
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): Boucher , Moon, and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC (2005), 2005 , 75 O.R. (3d) 638 (C.A.).
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: Boucher . The quantum should reflect an amount the court considers to be fair and reasonable rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier (2002), 119 A.C.W.S. (3d) 341 (Ont. C.A.), at para. 4 .
The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining an amount that is fair and reasonable: rule 57.01(1)(0.b).
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": Murano v. Bank of Montreal (1998), 1998 , 41 O.R. (3d) 222 (C.A.), at p. 249.
The court should seek to balance the indemnity principle with the fundamental objective of access to justice: Boucher .
As can be seen, the overriding principle is reasonableness. If the judge fails to consider the reasonableness of the costs award, then the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. In Boucher, this court emphasized the importance of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding at para. 37, where Armstrong J.A. said "[t]he failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice."
[ 14 ] I am satisfied that a fair and reasonable cost order in this matter is $12,500.00 all-inclusive of disbursements and H.S.T.
[ 15 ] An Order shall issue that the plaintiff and Jens Nielsen shall pay to the Defendants, John Litwin and Heather Litwin, costs on a partial indemnity basis, fixed in the all-inclusive sum of $12,500.00, such costs to be paid within 30 days.
[ 16 ] I agree with the Litwins that there is no reason why they should await the disposition of the trial to receive their costs. The trial is now scheduled to commence in January 2013.
[ 17 ] The Litwins were successful at the motion and the success of the motion was critical to their defence. I agree with the Litwins that there are no extenuating circumstances that would make it more just to order that costs of the motion be payable after trial.
Fragomeni J.
DATE: June 27, 2012