Court File and Parties

CITATION: Grande Cheese Company Limited v. Silani Sweet Cheese Ltd., 2012 ONSC 385

NEWMARKET COURT FILE NO.: CV-09-096985-00

DATE: 20120117

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: GRANDE CHEESE COMPANY LIMITED, Plaintiff (Responding Party)

AND:

SILANI SWEET CHEESE LTD., Defendant (Moving Party)

BEFORE: MULLIGAN J.

COUNSEL: C.L. Hluchan, Counsel, for the Plaintiff (Responding Party)

H.K. Juriansz, Counsel, for the Defendant (Moving Party)

HEARD: by written submissions

COSTS ENDORSEMENT

[1] The defendant Silani Sweet Cheese Ltd. (“Silani”) brought a motion seeking summary judgment to dismiss the action of the plaintiff Grande Cheese Company Limited (“Grande”). The motion was heard October 12, 2011 and for reasons as set out in my Endorsement of November 24, 2011 Silani’s motion was dismissed. The parties were encouraged to resolve the issue of costs; however, the issue has not been resolved and I have now received submissions from both parties as to costs.

[2] As the successful party, Grande seeks costs of $8,930 on a substantial indemnity basis. Alternatively it seeks costs on a partial indemnity basis of $7,775. Both figures includes disbursements and HST.

[3] Silani opposes the costs sought by Grande and alternatively seeks its own costs on a partial indemnity basis in the amount of $852.02 with respect to two heads of relief claimed within the motion but resolved between the parties and not argued at the motion. Silani also makes reference to various settlement offers for consideration by the court. Silani argues in the alternative that if costs are awarded to Grande, as the successful party they should be restricted to partial indemnity costs in the amount of $2,362.50 as fair and reasonable under the circumstances. When rounded to include disbursements and HST I am satisfied that Silani suggests that if costs are awarded Grande they should be in the range of $3,000.

[4] In its claim Grande sued Silani for $248,768.60. Silani defended the action on the basis that the claim was outside of the applicable limitation period or alternatively that there were set-off issues between the parties in connection with debts allegedly owed by Grande to Silani. Both sides filed affidavits in connection with the motion. As I concluded in my endorsement “I am satisfied that there is a genuine issue for trial, and that is: when did the limitation period commence given the course of dealings between the parties?”

THE SCALE OF COSTS

[5] It is not disputed that as a general rule a successful party is entitled to costs on a partial indemnity basis. In exceptional cases an award of costs on a substantial indemnity basis may be considered. Recent revisions to rule 20 provide guidance on when costs on a substantial indemnity scale may be justified in connection with a motion for summary judgment. Rule 20.06 provides:

The court may fix and order payment of the costs of a motion for summary judgment by a party on a substantial indemnity basis if,

(a) the party acted unreasonably by making or responding to the motion; or

(b) the party acted in bad faith for the purpose of delay.

SILANI’S POSITION

[6] Silani’s position is that Grande should receive no costs. In its cost submissions it submits:

We submit that the plaintiff should be denied any costs for the motion for summary judgment given that the defendant had been led to believe that no genuine issue for trial existed when it served its notice of motion on the plaintiff on August 18, 2011. The fact that the plaintiff finally disclosed information to suggest that the discoverability rule might apply, in its affidavit delivered on September 24, 2011, and in its affidavits thereafter should have no bearing on fixing of costs.

[7] In support of this proposition Silani relies on MCAP Leasing Ltd. Partnership v. Lind Furniture (Canada) Ltd. [2010] O.J. No. 3319. In MCAP Silani relies on Price J.’s finding at para 54:

I do not find that it should have been obvious to MCAP that it stood virtually no chance of success. I agree with MCAP’s submission that I must assess its prospects of success in the context of the pleadings as they existed at the time and not on the basis of the defences as they emerged in the affidavits filed in response to the motion. In determining whether a motion for Summary Judgment was reasonably brought, the Court must focus on whether it reasonably appeared to the moving party that there was a genuine issue for trial at the time that the motion was brought, and on the basis of the information known.

[8] However, a close reading of that case indicates that Price J. did not deny costs to the successful party but rather denied substantial indemnity costs. As Price J. further stated in MCAP at para. 55:

Based on the pleadings, which is all MCAP had from Lind with which to assess its prospects of success when it brought its motion, the outcome was not “virtually certain” or a foregone conclusion. On this basis, I find, for the purposes of Rule 20.06(1) that, even though MCAP was unsuccessful in the motion, it was not unreasonable for it to have brought it. It should therefore not be required to pay Lind’s costs on a substantial indemnity scale. This is also not a case in which it would be appropriate to deprive Lind of the partial indemnity costs that normally follow from its success in the motion.

[9] In the factual circumstances of this case I find that it was not unreasonable for Silani to bring the motion based on the statement of claim it was presented with. I am satisfied that this is not a case where Grande ought to be awarded substantial indemnity costs.

OFFERS TO SETTLE

[10] Silani makes reference to two offers to settle whereby it agreed to discontinue the motion for summary judgment in connection with the first offer if its draft discovery plan was approved. In connection with the second offer, if Grande delivered a sworn affidavit of documents within one week then Silani would discontinue its motion. In connection with both offers, Silani required Grande to pay its costs. However, the costs were not defined. The offer to settle in this case can be considered an offer to settle by a defendant pursuant to rule 49.10(2). However, because the costs as sought by Silani were not set out in the offers to settle I consider the offers ambiguous and not in compliance with the rule. See Hayden v. Stevenson (2010) 88 C.P.C. (6th) 371.

SILANI’S COSTS

[11] Silani seeks costs in connection with the three heads of relief set out in its motion. As Silani sets out in its submissions:

The defendant [Silani] acknowledges that costs generally follow the event, and that its motion for summary judgment was unsuccessful. However, it is respectfully submitted that the motion heard on October 12, 2011, was brought by Silani to address a total of three heads of relief, as follows:

(a) summary judgment dismissing the action and the counterclaim;

(b) in the alternative, an order proving the draft discovery plan of the defendant;

(c) in the alternative, an order compelling delivery of the plaintiff’s sworn affidavit of documents. Despite being unsuccessful in its motion for summary judgment, Silani did succeed with regard to both its motion to expedite the discovery plan and its motion for delivery of the plaintiff’s sworn affidavit of documents.

[12] However, the success that Silani achieved was not achieved at the motion. As it notes in its submissions:

Grande conceded and complied with its obligations with respect to the later two motions in advance of the motion date.

[13] Because the parties resolved those issues in advance of the motion and without reserving the issue of costs I decline to award Silani its costs as sought for the two heads of relief resolved by the parties prior to the motion.

ANALYSIS

[14] It is well settled that the Courts of Justice Act section 131 provides considerable judicial discretion on the issue of fixing costs. Rule 57.01 of the Rules of Civil Procedure sets out various factors that the court can consider in exercising this discretion, including the principle of indemnity, the amount of costs an unsuccessful party could expect to pay, the complexity of the proceedings and the importance of the issues. These principles were highlighted in the Court of Appeal decision Boucher v. Public Accountants Council for the Province of Ontario, [2004] O.J. No. 2634. At para. 6, Armstrong J.A. stated:

Overall, as this court has said, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in a particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.

[15] A consideration of reasonableness is a factor that provides assistance to the court in determining the appropriate level of fees in matters such as this. In Clarington (Municipality) v. Blue Circle Canada Inc., 2009 ONCA 722, [2009] O.J. No. 4236, Epstein J.A. stated at para. 52:

As can be seen, the overriding principle is reasonableness. If the judge fails to consider the reasonableness of 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 the exact nature of the actual cost of the successful litigant.

CONCLUSION

[16] I am satisfied that Grande is entitled to partial indemnity costs and not substantial indemnity costs as sought by Grande. Although Silani submitted that if costs were awarded they should be in the nature of $3,000. Silani did not provide a copy of its own bill of costs for comparison purposes.

[17] After reviewing the submissions from both parties and considering the guiding principles with respect to costs I am satisfied that an award of $7,000 for fees, disbursements and HST is fair and reasonable under the circumstances.

MULLIGAN J.

Date: January 17, 2012