ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 07-CV-337931
DATE: 20120725
In the Matter of the Construction Lien Act , R.S.O. 1990, c.C-30 as amended
BETWEE N:
ABOVE ALL EMERGENCY SERVICES INC.
Gerard Barosan, for the Plaintiff
Plaintiff
- and -
EDA REUTER
Eda Reuter, the defendant, in person
Defendant
HEARD: June 29, 2012
Master Polika
[ 1 ] On June 12, 2012 I released the reasons for my decision in this reference leaving only the issues of costs, pre-judgment interest, post-judgment interest and the form of my Report outstanding. In that respect in my reasons I provided:
I will determine the issues of pre-judgment and post-judgment interest and costs at a further hearing and at that time I will settle the formal report unless in advance interest, costs and the form of the final report are agreed to by the parties. Any agreed to form of the final report is subject to the approval of the court. “Form 21 – Report Under Section 62 of the Act, Where Lien Attaches to Premises” under the Construction Lien Act should be followed as a guide for the report, but the schedules set out therein are not required as there are only two parties to the Report in this action and no claim for lien has been awarded. The Report will only provide for the discharge of the claim for lien, the award in favour of the plaintiff, interest and costs. If any offer to settle was made that might impact on costs, I should be advised at such further hearing. If the costs remain in issue any party claiming costs shall serve on the opposite party and file with my Assistant Trial Co-ordinator a bill of costs and supporting material as required by Rule 57.01 (5) by no later than Wednesday June 27, 2012.
If the form of the final report is agreed to by the parties, counsel for either party can attend before me alone in advance of June 29, 2012 at any of my 9:30 a.m. ex parte motions courts, to have the report signed. If not, I fix the date and time for the further hearing on pre-judgment and post-judgment interest, costs and to settle the report for 10:00 a.m., Friday, June 29, 2012 before me at a courtroom on the 6 th Floor, 393 University Avenue, Toronto, Ontario when both plaintiff’s counsel and the defendant are required to attend. Confirmation of the report is governed by Rule 54.09 of the Rules of Civil Procedure.
[ 2 ] On June 29, 2012 counsel for the plaintiff and the defendant Eda Reuter appeared before me and addressed the remaining issues. After hearing their submissions I reserved my decision. In addition I advised the parties that when I released my decision on costs, pre-judgment and post-judgment interest I would do so along with a Report. The normal procedure is for the successful party to prepare the report and have it approved by the unsuccessful party and failing approval for the court to settle the report. In the circumstances before me and to save time and costs for both parties I have determined that I will sign the draft Report set out in Schedule A if no request was made from either party in writing by July 30, 2012 objecting to the form and content of the draft Report. If such a request is made I will convene another hearing to address any issues raised.
[ 3 ] The plaintiff served and filed a Bill of Costs supported by a typed list of compiled dockets seeking $26, 187.75 for fees inclusive of GST and $2,551.49 for disbursements inclusive of GST. The total amount sought is $28,739.24 on a partial indemnity basis. The list of dockets does not appear to contain original entries but appears to be a re-compilation from other records and some entries consolidate time expended over a number of days.
[ 4 ] The reference was not a complex one. The law and facts involved were the opposite. Initially the reference was ordered to proceed by way of summary trial but once the defendant proceeded on an in person basis I changed the trial to a mixed summary trial and regular trial.
[ 5 ] The plaintiff advanced a claim for lien for $80,948.19 for unpaid emergency flood services and an additional claim for unpaid storage costs of $40,500.00. I found that the claim for lien was not timely. The claim for unpaid storage costs was added late in the reference and was completely unsuccessful. In respect of the unpaid emergency flood services the plaintiff only succeeded to the extent of $12,797.80 well within the monetary limit of the Small Claims Court. The result underscores that there was a real basis for the defendant to defend the plaintiff’s claim and she was to a very high degree successful in that defence.
[ 6 ] The defendant’s counterclaim for $500,000.00 for damages failed completely as no evidence was led in support of it.
[ 7 ] Based on my involvement in this reference and in conducting the trial I have no doubt that there would have been a different result for both parties, in the case of the plaintiff if appropriate evidence was led as to the fair market value of the services rendered and in the case of the defendant if she had been represented by counsel and appropriate evidence had been led in support of the counterclaim. Unfortunately for both that was not the case.
[ 8 ] In this action after delivery of the statement of defence and counterclaim on September 24, 2007 no further steps were taken to advance the action until May 5, 2009 when the defendant served her notice of motion seeking the return of her personal property. This spurned the plaintiff into action after a hiatus of over a year and a half and on May 9, 2009 it delivered its reply and defence to the counterclaim.
[ 9 ] During the hiatus counsel claimed time was spent considering a motion to strike. The dockets listing indicates a start time to address this issue of January 14, 2008 to January 21, 2009 totaling 4.6 hours on 5 different occasions during that year. The motion was never brought As an excuse for not moving the action along, the motion to strike is a sorry one. I find that the plaintiff was content to sit with a lien registered against title holding onto the defendant’s possessions and letting pre-judgment interest and alleged storage charges accumulate. The action did not have a real start, other than an exchange of pleadings until the first pre-trial for directions was held in the reference on September 28, 2009.
[ 10 ] The plaintiff’s claim for lien was and is a blot on the defendant’s title from the date of its registration on June 21, 2007 to the present. It was clear from the plaintiff’s own evidence that the claim for lien was out of time and the plaintiff either knew or is deemed to know that to be the case. Given the provisions of section 35 the plaintiff was liable for any damages suffered by the defendant as a result, but fortunately for the plaintiff the unrepresented defendant failed to advance evidence in support of such claim.
[ 11 ] In addition I found that the plaintiff acted wrongly in retaining the defendant’s personal possessions forcing the defendant finally to act. Again fortunately for the plaintiff the unrepresented defendant failed to advance evidence in support of a claim for damages from such wrongful detention.
[ 12 ] Section 86 of the Construction Lien Act governs the award of costs in an action brought to enforce a claim for lien under the Act. In SIPGP No. 1 Inc. v Eastern Construction Co. [1] at paragraphs 8 to 12 I set out the general principles applicable to costs awarded in a reference under the Construction Lien Act as follows:
The costs to be awarded in the performance bond action, an action brought under the ordinary procedure set out in the Rules of Civil Procedure are governed by section 131(1) of the Courts of Justice Act, which provides, that costs are in the discretion of the court, and that the court may determine by whom and to what extent the costs shall be paid.
Rule 57.01(1) of the Rules of Civil Procedure sets out a non-exhaustive list of factors which the Court may consider in exercising its discretion, in addition to the result in the action and any offer to settle made in writing. Rule 1.04 (1.1) provides that in applying the rules the court shall make orders that are proportionate to the importance and complexity of the issues and the amounts involved.
In a lien action brought pursuant to the provisions of the Construction Lien Act the court’s authority to award costs, is set out, in section 86 of the Construction Lien Act, as being in the court’s discretion, and that a costs order may be made on a substantial indemnity basis subject to the limitation set out in section 86(2). That limitation is, where the least expensive course is not taken by a party, the costs allowed to a party shall not exceed what would have been incurred had the least expensive course been taken.
Section 67(3) of the Act provides that, except where inconsistent with the Act, the Courts of Justice Act and the Rules of Civil Procedure apply to pleadings and proceedings under the Act. Given that the provisions of Rule 57.01(1) are not mandatory, I find that Rule 57.01(1) is not inconsistent with the Construction Lien Act and that the non-mandatory and non-exhaustive conditions set out therein may be considered in fixing costs in a lien action. Rule 1.04(1.1), however, to the extent that it is mandatory, is inconsistent with section 86 of the Construction Lien Act. Because of its mandatory nature, it impinges on the court’s discretion set out in section 86. However, I find proportionality is, nonetheless, a non-binding factor which can be considered by the court in exercising its discretion as to costs, very much akin, although not alike, the limitation set out in section 86(2).
Established principles applicable to fixing costs are, that the court should not engage in a purely mathematical calculation of hours times rate, but rather, the costs award should reflect a fair and reasonable amount, and that in coming to that amount, the court should consider the reasonable expectation of the parties as to costs of the proceeding they are involved in.
[ 13 ] I have applied these principles in fixing costs of the reference before me particularly the principle that the costs award should reflect a fair, just and reasonable amount in the circumstances and that in coming to that amount I consider the reasonable expectation of the parties as to costs of this proceeding and as well proportionality, that is, the importance and complexity of the issues and the amount involved.
[ 14 ] The courts discretion set out in subsection 86 (1) as to costs is made subject to subsection 86(2) which provides:
Where the least expensive course is not taken by a party, the costs allowed to the party shall not exceed what would have been incurred had the least expensive course been taken.
[ 15 ] The plaintiff knew or ought to have known that the claim for lien was out of time. The plaintiff knew or ought to have known based on the evidence it adduced that it had little chance of making out its claim for remedial services within the monetary limit of the Small Claims Court. The plaintiff knew or ought to have known there was no basis for its unilateral claim to storage costs. In all of those circumstances the plaintiff knew or ought to have known that both in terms of proportionality and in terms of subsection 86 that the least expensive course was to bring its claim in the Small Claims Court.
[ 16 ] It follows that paying heed to subsection 86(2) costs allowed after application of the principles set out above “ shall not exceed what would have been incurred had the least expensive course been taken”, that is the costs which would have been incurred had the claim been brought in the Small Claims Court .
[ 17 ] Section 29 of the Courts of Justice Act provides that an award of costs in the Small Claims Court other than disbursements shall not exceed 15% of the amount claimed. The monetary jurisdiction of the Small Claims Court set out in Ont. Reg. 626/00 is $25,000.00, therefore it follows that the maximum costs claimable shall not exceed 15% of $25,000.00, that is $3,750.00.
[ 18 ] In respect of disbursements the same principle applies and the allowed disbursements as well “shall not exceed what would have been incurred had the least expensive course been taken”. On that basis certain disbursements relating to the advancement of the claim for lien which would not have been incurred if the proceeding had been brought in the Small Claims Court have been disallowed by me. The claim for court fees for filing a notice of motion are as well disallowed as no such fees are charged by the court in an action under the Construction Lien Act nor could any such fee have been paid or if paid should not have been paid . The advancement of this filing fee claim raises the specter that the claims for disbursements are not based on actual disbursements made but rather are a pro forma claim based on what is likely to have been expended. There is a claim for mileage in a lump sum amount without indication of mileage for whom, at what rate and for what purpose. There is a similar lump sum amount claimed for parking and an omnibus claim for photocopies, laser copies, telephone and fax charges, all without particulars. None of these as tendered are proper and acceptable. After considering the disbursements claim I allow $550.00 inclusive of GST as the reasonable claim for disbursements.
[ 19 ] For the above reasons I fix costs payable by the defendant to the plaintiff of the action in the amount of $4,300.00 inclusive of fees, disbursements and GST.
[ 20 ] The plaintiff claims both pre-judgment interest and post-judgment interest at the rate of 2% per month, 26.82% based on the Emergency Authorization Form signed by the defendant.
[ 21 ] In my reasons I made the following findings of fact in relation to the Emergency Authorization Form:
Mr. Cigna deposed that Mr. Reuther gave him the go ahead to proceed immediately and that he stated he had full power of attorney but no power of attorney was ever produced. Mr. Cigna then states he relied on Mr. Reuther’s advice and thereafter only communicated with and took instructions from Mr. Reuther. As no issue was raised by the defendant over whether her son was authorized to give instructions I did not need to address the “power of attorney issue”. The Emergency Authorization Form was taken by the defendant’s son to her and returned signed by her. I accept Ms. Lopez-Haynes evidence that the work would not have commenced without the executed form.
The only written agreement between the parties is the one page preprinted “Emergency Authorization Form” filled in by the plaintiff’s representative stating that Alex Reuther and the defendant authorized the plaintiff to complete the work enumerated therein as a consequence of a flood on three floors of 354 Hillcrest Avenue. There were no terms in the form addressing what rates would be charged for any of the work and services provided by the plaintiff for labour, equipment, materials and storage. There was a provision stating that the defendant authorizes the plaintiff to invoice her for the necessary emergency services 31 days from the date of billing if insurance does not honour payment. The provision also authorized and directed her insurance company to make payment to the plaintiff. There was also a provision that provided for 2% monthly late payment charge (26.82% per annum) on overdue balances. The written form was signed by the defendant alone and was dated March 16, 2007.
[ 22 ] The Emergency Authorization Form enumerated the services which the plaintiff was authorized to perform but did not set out a price or cost for those services or the labour and materials to be used. It is comprised of three parts. The first set out particulars such as the name address and telephone number of the owner, the flood date and location and particulars of insurance. The particulars respecting insurance was not completed. The second part set out the authorized work by ticking boxes describing particular services. The third part relates to insurance, invoicing of the insurer and of the owner, if the insurer failed to pay. Tacked on at the end of this part is a statement relating to late payment charges as follows: “Late payment charges of 2% (26.82 % per annum) will apply monthly on overdue balances.”
[ 23 ] Considering the terms of the Emergency Authorization Form as a whole and given that portions were not completed I find that as between the parties the only meeting of the minds was that the plaintiff was authorized to provide the enumerated services ticked off. As such I find there was no binding agreement providing for the charging of interest as sought on any overdue balances.
[ 24 ] If I am incorrect in that respect implicit in any such term is the requirement that the charges made and invoiced by the plaintiff were legitimate and payable, not partially legitimate and payable. This requirement was breached by the plaintiff and as such the agreement respecting late payment charges, assuming there was one, was at an end as of the invoicing.
[ 25 ] Here a claim for lien was advanced together with the monetary claim and an action commenced. The defendant had only two choices, pay or defend. She chose to defend and was largely successful. It is not just that she now be penalized by an onerous claim for interest. It was patent on the plaintiff’s own material that the claim for lien was out of time. It was also patent that there was no agreement as to rates and the plaintiff had the obligation to not only invoice at fair market value but also prove at trial the fair market value of the rates and charges invoiced, which for the most part it failed to do. There could not be any proper invoicing in such circumstances. Until those rates and charges as invoiced charged were shown to be legitimate and payable there was no obligation to pay and as such no claim for interest could be advanced.
[ 26 ] The plaintiff did not prosecute the action expeditious but chose to sit back after invoicing holding the defendant’s possessions at ransom. To award interest at the rates claimed would amount to rewarding such unjustified conduct which I am not prepared to do.
[ 27 ] For those reasons the claim for pre-judgment interest fails. The claim for post-judgment interest commencing at the date of the Report is just but only at the court rate of 3 % per annum and I so find.
[ 28 ] Set out as Schedule A hereto is my draft Report incorporating my decision in the reference and my disposition as to costs, pre-judgment and post-judgment interest. As noted above, if no request is made from either party in writing by July 30, 2012 objecting to the form and content of the draft Report, I will sign the draft Report. If such a request is made I will convene another hearing to address any issues raised. If the request is not made the Report can be picked up by the plaintiff from the Construction Lien Office on the 6 th Floor, 393 University Avenue, Toronto on July 31, 2012 for service. Confirmation of the Report is governed by Rule 54.09. If no motion to oppose confirmation is made the original Report as signed together with the affidavit of service can be tendered by the plaintiff to the Court for entry after which it becomes a final judgment of the Court. As the Report is of benefit to both parties and as the defendant will want to discharge the claim for lien and vacate the certificate of action from title I have ordered that the plaintiff serve a copy of the Report as signed and entered upon the defendant.
Master Polika
Released: July 25, 2012
Schedule A
COURT FILE NO.: 07-CV-337931
ONTARIO SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE CONSTRUCTION LIEN ACT
R.S.O. 1990, Chapter C. 30 , as amended
MASTER POLIKA ) Friday the 28th day
) of June, 2012
B E T W E E N :
ABOVE ALL EMERGENCY SERVICES INC.
Plaintiff
And
EDA REUTHER
Defendant
REPORT
In accordance with the judgment of reference dated August 4, 2009 made in this action this reference proceeded by way of pre-trial hearings for directions on September 28, 2009, March 1, 2010, May 10, 2010, August 9, 2010, November 15, 2010, January 31, 2011, February 1, 2010, April 21, 2011, October 7, 2011 and October 25, 2011 and the trial of this action was heard on February 29 and March 2, 2012, at Toronto in the presence of all parties, the plaintiff represented by counsel, the defendant appearing in person and being represented by her son on the first day of trial the trial proceeding as a partial summary trial and on hearing the representations of the parties on June 28, 2012 as to costs and pre-judgment and post-judgment interest.
ON READING THE PLEADINGS AND THE AFFIDAVITS FILED AS EVIDENCE IN CHIEF AND HEARING THE EVIDENCE ADDUCED IN CROSS-EXAMINATION AND RE-EXAMINATION and the submissions of counsel for the parties:
I FIND AND DECLARE THAT the plaintiff’s claim for a lien under the Construction Lien Act upon the interest of the defendant, Eda Reuter, in the premises described in Schedule A of this report be and is dismissed and that on confirmation of this Report the plaintiff’s claim for lien registered as Instrument Number AT1481287 against the lands and premises described in Schedule A be and is discharged and that the plaintiff’s Certificate of Action registered as Instrument Number AT1512155 registered against the said lands be vacated.
I ORDER AND ADJUDGE THAT the defendant, Eda Reuter, is liable to pay to the plaintiff the sum of $17,097.80 comprised of $12,797.80 for claim and $4,300.00 for costs, disbursements and GST and after confirmation of this Report writs of execution may be issued for the amount of $17,097.80 against Eda Reuter.
I ORDER AND ADJUDGE THAT the balance of the plaintiff’s claims and the counterclaim of the defendant Eda Reuther be and are each dismissed without costs.
AND I ORDER AND DIRECT that on confirmation of this Report that the plaintiff forthwith serve a copy of this Report as signed and entered upon the defendant Eda Reuther and file proof of service with the Court.
This Report bears interest at the rate of 3 per cent per annum from June 28, 2012.
Master Polika
SCHEDULE A
PIN: 10067-0099 (LT)
DESCRIPTION: LT 327, PL 1609 Twp of York; Toronto (N York), City of Toronto
ADDRESS: 354 Hillcrest Avenue, Toronto
COURT FILE NO.: 07-CV-337931
ONTARIO SUPERIOR COURT OF JUSTICE Proceeding commenced at Toronto BETWEE N: ABOVE ALL EMERGENCY SERVICES INC. Plaintiff - and - EDA REUTER Defendant REPORT