SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: CV-09-393195
DATE: 20120829

RE: SIRRON SYSTEMS INC. , Plaintiff

AND:

INSYGHT SYSTEMS INC., SLAWOMIR A. WOLSKI, MICHAEL CRAWFORD, BOSKO LONCAR also known as BOB LONCAR and ROBERT FONTAINE , Defendants

BEFORE: Stinson J.

COUNSEL:
Paul H. Starkman , for the plaintiff

Michael G. Emery , for the defendants

HEARD: By written submissions

ENDORSEMENT AS TO COSTS

[ 1 ] On January 30, 2012, counsel for the plaintiff and for the defendants Wolski, Crawford, Loncar, and Fontaine (the "moving defendants") appeared before me to argue a motion for summary judgment brought by the moving defendants. Considerable material had been filed in advance. Four affidavits were filed by the moving defendants. The plaintiff filed three affidavits. A total of eight separate cross-examinations were conducted. There were multiple transcripts and voluminous productions. Numerous issues were raised by the factums filed by the parties, including whether the moving defendants were relieved of their obligations to the plaintiff (their former employer) by reason of an alleged fundamental breach by the plaintiff of their employment contracts. The matter was one of considerable factual and legal complexity and the evidence filed was voluminous and sometimes conflicting.

[ 2 ] At the outset of the motion, I raised with counsel my concern whether the complexities of the matter, particularly having regard to the large volume of evidence and the disputed allegations of fact that were material for determination of the issues, were such that the case was appropriate for a resolution by a motion for summary judgment. In particular, I expressed my concern that, given the volume of material, it was unlikely that I would be able to have a full appreciation of the evidence and the issues on the motion sufficient to dismiss the action as against the moving defendants.

[ 3 ] Following my comments, counsel for the moving defendants indicated that he was withdrawing his clients' motion for summary judgment. Counsel for both sides agreed to address the issue of the costs of withdrawn motion by way of subsequent written submissions. This endorsement contains my decision as to costs based on the parties' written submissions.

liability for costs

[ 4 ] The first point to decide is whether an award of costs is appropriate. In the ordinary course, where a motion is withdrawn or abandoned, the responding party is entitled to an award of costs. The moving defendants, however, ask that I make no order as to costs or that I direct the issue of costs be reserved to the trial judge.

[ 5 ] In my view, neither of these suggestions is appropriate in the present case. I acknowledge that, after the moving defendants had decided to bring a motion for summary judgment, and prior to the argument before me, the Court of Appeal for Ontario released its comprehensive decision regarding 2010 amendments to the Rules of Civil Procedure and clarified the bases upon which motions for summary judgment should be decided under the new regime: see Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764 , (2011) 108 O.R. (3d) 1. That decision was released on December 5, 2011, less than two months prior to the appearance before me.

[ 6 ] While Combined Air may have clarified the fashion in which the courts are now to approach motions for summary judgment, in my view that development should not alter the ordinary costs consequences of a withdrawn motion. Here, the moving defendants chose to make a full frontal attack on the case against them, by way of a motion for summary judgment. They opted to try to litigate the case, including disputed contentions of fact, in a summary fashion. While the motion was never argued, under either the new or the old case law relating to summary judgment, I seriously doubt that it could have succeeded under either regime. In my view, it should have been apparent early on that the complexities of the case were such that a summary judgment motion was unlikely to resolve the case. Despite that fact, the moving defendants opted to continue in that fashion.

[ 7 ] Although (as I will discuss later) the parties have now agreed that some of the effort put into the summary judgment process (such as the examinations conducted) may be used in connection with the main litigation, it remains the case that considerable time, energy and expense were swallowed up by the summary judgment process. The moving defendants had to know that, if they were unsuccessful, they would likely be called upon to compensate the plaintiff for the costs of the motion. Having lately come to the recognition that their motion was unlikely to succeed and having withdrawn it at the 11 th hour, does not entitle the defendants to avoid the obligation to pay costs that they otherwise would have faced.

[ 8 ] I therefore conclude that the plaintiff is entitled to an award of costs against the moving defendants in respect of the withdrawn motion. I expressly decline the request by the moving defendants to defer the quantification of costs to the trial judge. The plaintiff has incurred considerable expense in response to the motion and there is no principled reason to depart from the usual requirement that those costs be fixed by the motions judge and payable forthwith. I therefore propose to fix the plaintiff's costs based on the written submissions to date. They will be payable within 30 days of the date of release of this decision.

scale of costs

[ 9 ] The plaintiff does not seek substantial indemnity costs, but rather an award on a partial indemnity basis only. I therefore need not address this issue.

quantum

[ 10 ] In its initial submissions, the plaintiff sought costs of the withdrawn motion of $34,550.97. Subsequently, the parties engaged in negotiations and reached agreement that the examinations that were conducted in connection with the summary judgment could be treated as examinations for discovery. On this basis, the plaintiff has backed out from its cost outline approximately $9,000 worth of fees and disbursements. It still seeks $25,251.07, comprised of fees of $21,432, taxes of just over $2,900, and the balance for disbursements.

[ 11 ] The moving defendants submit that they would only expect to pay $7,861 in costs on a partial indemnity basis, based on the amount of time and expense incurred by their own counsel. They rely on the principles set out in Boucher v. Public Accountants Council (2004), 2004 14579 (ON CA) , 71 O.R. (3d) 291 (C.A).

[ 12 ] There can be no doubt, as stated in that case, that the overriding principle in an award of costs is reasonableness, one element of which is the expectation of the parties concerning the quantum of a costs award.

[ 13 ] When comparing the bills of costs submitted by both sides, it is apparent that considerably more time was spent by counsel for the plaintiff than by counsel for the moving defendants. The moving defendants argue that the time spent by plaintiff's counsel was excessive and that portions of it should be treated as ordinary expenses associated with advancing a case towards trial.

[ 14 ] While there is likely some truth to the defendants' criticism, at the same time, one must bear in mind that the plaintiff was responding to a full frontal assault by the moving defendants that sought to extricate them from the lawsuit. Regardless of the effort the moving defendants chose to put into their motion, the plaintiff was obliged to put its best foot forward in response; any failure to do so could have resulted in a dismissal of its action. It should have been within the reasonable expectation of the defendants that the plaintiff would undertake such an effort as a result. Thus, although the plaintiff's bill of costs seek a substantially higher sum than that contained in the bill of costs of the moving defendants, I do not agree that it is wholly disproportionate nor entirely beyond the reasonable expectations of the moving defendants.

[ 15 ] It is also important to evaluate the costs sought against the criteria specified in rule 57.01(1). More significantly, this was a factually and legally complex motion, involving a large volume of evidence and legal issues arising from them. There were multiple transcripts arising from the various cross-examinations and affidavits. As well, the moving parties included a motion for security for costs which required disclosure of financial information.

[ 16 ] There can be no question that the issues were important. The plaintiff faced the dismissal of its claims against many of the defendants sued. For that matter, the motion was important for those defendants, since they sought to extricate themselves from the litigation. This suggests that the motion was and should have been expected to be hard fought on both sides, requiring a significant allocation of legal resources.

[ 17 ] There was some conduct on the part of the moving defendants that lengthened the proceeding unnecessarily. For example, they disclosed some of their documents on a piece meal basis. They declined to disclose their bank statements which resulted in an interlocutory motion being required. The original summary judgment motion date had to be delayed.

[ 18 ] I am prepared to accept that certain aspects of the motion for summary judgment assisted the plaintiff in preparing for the ongoing prosecution of its claim. To that extent, the moving defendants should not have to pay now for work by plaintiff's counsel which they may never be called upon to pay, if the plaintiff's overall action is not successful. That said, it is difficult to quantify with precision the extent to which work on the summary judgment motion may properly be considered as overall trial preparation.

[ 19 ] Taking into account the foregoing considerations, I conclude that a reasonable sum at which to fix the plaintiff's costs in respect of the withdrawn motion is $17,500, inclusive of disbursements and GST. Although that sum is considerably more than the amount set out in the defendants' bill of costs, I accept that the plaintiff, with good cause, expended a significantly higher sum, and that it was reasonable for it to do so. The reduction from the amount claimed (over $25,000) reflects my concern that some of the time spent will enure to the benefit of the prosecution of the lawsuit in the long run. Otherwise, I am not prepared to be critical of the time and effort expended by plaintiff's counsel.

[ 20 ] The sum of $17,500 shall be paid by the moving defendants to the plaintiff within thirty (30) days.

Stinson J.

Date: August 29, 2012