ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO. 08-CV-353114PD3
DATE: 20120830

BETWEEN:
690536 ONTARIO INC. carrying on business as T.C. BRICKLAYERS (Plaintiff)

AND :
TRIMARK HOMES LTD., NORDEL CONCRETE & DRAIN LTD. formerly known as 1312504 ONTARIO LIMITED and MARCO PEREIRA also known as AMERICO PEREIRA (Defendants)

BEFORE: M.A. SANDERSON J.

COUNSEL:
Robert C. Harason for the Plaintiff
Richard Cooper for the Defendants Trimark Homes Ltd and Marco Pereira

ENDORSEMENT re COSTS

[ 1 ] In the action, TC Bricklayers claimed payment of a total of $163,502.00 for masonry work performed on four projects (Melrose, Ruscoe, Royal York Road and the Royal York repairs) from Trimark Homes Ltd. (“Trimark”) and Nordel Concrete & Drain Ltd. formerly known as 1312501 Ontario Ltd. (“Nordel”) in contract, and against their principal, Marco Pereira also known as Americo Pereira (“Pereira”), for breach of the trust fund provisions (sections 7 and 9) of the Construction Lien Act .

[ 2 ] Nordel was noted in default.

[ 3 ] After a six day trial, I gave judgment in favour of TC Bricklayers in the sum of $144,112.00. I held that the Defendants Trimark and Periera had breached the trust fund provisions of the Construction Lien Act . Pereira was held personally liable jointly and severally with Trimark to TC Bricklayers.

[ 4 ] Counsel for TC Bricklayers submitted that his firm's work on behalf of the Plaintiff included pleadings and production of documents, two days of discovery of Mr. Pereira (the principal of Trimark), attendance at a half-day examination for discovery of Manuel Costa (the principal of TC Bricklayers), attendance at a half-day mediation, the delivery of four Requests to Admit, formulating and drafting an offer to settle (which was not accepted); and a six day trial during which the Plaintiff called three witnesses and the Defendants called two witnesses.

[ 5 ] My findings at trial turned in large measure on my assessment of the credibility of Mr. Perreira and his wife and of Mr. Costa and his wife; my interpretation of the contemporaneous documents; and a comparison of the viva voce and written documents. I held that the Defendants did not make the cash payments that Pereira claimed had been made. I found that the “declarations” adduced in support of such payments (photocopies only) were not signed by Mr. Costa; I held that Trimark was a trustee under s. 7 and 9 of the Construction Lien Act and that it breached those trusts; and that pursuant to s. 13 of the Construction Lien Act , Mr. Pereira was personally liable, jointly and severally with Trimark, for the breaches of trust.

[ 6 ] Counsel for the Plaintiff submitted that when beneficiaries of trusts successfully sue their trustees, they are generally entitled to substantial indemnity costs: John Fong v. Betty Cheung et al. (2010) ONSC 5262 (Ont. S.C.) at paragraphs 14-16; Maintemp Heating and Air conditioning Inc. v. Momat Developments Inc. (2002) at paragraph 66; and 1379691 Ontario Ltd. v. John Appugliesi et al. (2005) at paragraph 63.

[ 7 ] The Defendants delivered no offer to settle.

[ 8 ] The Plaintiff delivered an offer to settle on November 15, 2011, more than seven days in advance of trial, in which it offered to settle the action by accepting payment of the sum of $150,000.00 plus interest and partial indemnity costs.

[ 9 ] The amount of the judgment was less than the Plaintiff's offer.

[ 10 ] Given my findings of breach of trust and that Pereira prepared false declarations and Trimark relied upon them, substantial indemnity costs are warranted against Trimark and Pereira. I found that Pereira on behalf of Trimark prepared false declarations and purported to adduce photocopies of them in support of the principal defence that TC Bricklayers had been paid in full in the amount of its claim.

[ 11 ] I have reviewed the Plaintiff’s Bill of Costs, time docket summary and disbursements summary.

[ 12 ] In accordance with its Bill of Costs, TC Bricklayers claims costs of the action [inclusive of disbursements and GST] on a substantial indemnity basis of $138,892.19 or on a partial indemnity basis of $103,573.08.

[ 13 ] In awarding costs, the factors set out in Rule 57.01 factors are relevant.

[ 14 ] Results achieved : TC Bricklayers was substantially successful on its claim, obtaining a judgment against the Defendants in the sum of $144,112.00, a declaration of breach of trust, a judgment against Mr. Pereira personally, pre-judgment interest and costs;

[ 15 ] Complexity of the proceedings : The action was not particularly complex. The factual evidence was not overly complicated.

[ 16 ] Importance of the issues : The issues were important to the parties given the non-payment of amounts earned.

[ 17 ] Party’s denial of or refusal to admit anything that should have been admitted : The Defendants refused, until after the commencement of trial, to admit that Manual Costa was in Portugal on March 26, 2003, the date when a declaration upon which the Defendants relied was allegedly signed. That refusal required the Plaintiff to interview and schedule the attendance of three witnesses who were with Mr. Costa in Portugal on that date to give evidence to that effect. In the end it was not necessary to call those witnesses to give evidence because the Defendants admitted at the last minute that Mr. Costa had been in Portugal on March 26, 2003.

[ 18 ] Amount of costs reasonably expected to be paid : Time spent, the principal of indemnity and what the unsuccessful Defendants might reasonably expect to pay. The substantial indemnity hourly rates (lawyers) who performed the bulk of the services detailed in the Bill of Costs, are as follows:

Robert Harason 1980 call $375.00, $400.00, $425.00, $450.00, $475.00 and $500.00 per hour over a 5 year period

Stephen Haller 1979 call $350.00 per hour

Robert Betts 2005 call $225.00 per hour

[ 19 ] In Davies v. Clarington (2009), 2009 ONCA 722 , 100 O.R. (3d) 66 at paragraphs 51-52 , the Court of Appeal reasoned that the overriding principle is reasonableness. Epstein J.A. wrote for the Court:

If the judge fails to consider the reasonableness of the costs award, then the result can be contrary to the objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the Court considers is a reasonable amount that the unsuccessful party should pay, rather than any exact measure of the actual costs of the successful litigant.

[ 20 ] In a claim totalling $163,502, I am of the view that a defendant would not reasonably expect to pay costs of $138,892.19 even on a substantial indemnity basis. I respectfully am of the view that counsel for the Plaintiffs spent an inordinate amount of time in litigating this case. This litigation should not have required the time that was docketed.

[ 21 ] I am of the view that, given the usual complexity of the issues, the amount in issue, the reasonable expectation of the parties, in all the circumstances here, a reasonable costs order on a substantial indemnity scale would be $90,000 inclusive of disbursements and taxes, and I so order.

M.A. SANDERSON J.

Released: