ONTARIO

SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

COURT FILE NO.: 08-CL-7892
DATE: 2012-01-27

B E T W E E N:

ONCAP L.P. Plaintiff

• and -
  COMPUTERSHARE TRUST COMPANY OF CANADA Defendant

Andrew Gray and Rebecca Wise, for the Plaintiff
Sean F. Dunphy and Jonathan C. Levy, for the Defendant

E N D O R S E M E N T

[1] On December 5, 2011, I dismissed this action by Oncap and awarded costs to Computershare. Computershare claims costs on a partial indemnity basis to November 18, 2011 when it made an offer to settle under rule 49 and on a substantial indemnity basis thereafter.

[2] The plaintiff claimed damages of $11.9 million. In its offer to settle, Computershare offered to settle by paying $1 million inclusive of costs. Rule 49 does not provide for cost consequences if a defendant makes an offer to settle by making a payment of some amount when the action is dismissed in its entirety. Computershare relies upon a line of authorities grounded on S.A. Strasser Ltd. v. Town of Richmond Hill (1991), 1 O.R. (3d) 243 that provides that in these circumstances it is open to a court to award a defendant substantial indemnity costs following the offer. However, in St. Elizabeth Home Society v. Hamilton (City), 2010 ONCA 280 the Court of Appeal essentially closed the door to that line of authorities and held that as rule 49 did not provide for cost consequences in the circumstances in which a defence offer was made and the action was dismissed, costs on a substantial indemnity basis could not be awarded. Epstein J.A. stated that Strasser should be construed narrowly to circumstances in which the trial judge held there to have been egregious behavior on the part of the plaintiff that would permit a substantial indemnity award. There are no such circumstances present in this case and therefore the defendant is entitled only to partial indemnity costs.

[3] Computershare seeks fees on a partial indemnity scale to the date of its offer of $104,086, inclusive of HST. It seeks fees on a substantial indemnity scale thereafter of $81,448 inclusive of HST. While Computershare did not provide figures on a partial indemnity basis, which it ought to have, by applying the applicable partial indemnity rates the figure on a partial indemnity basis is $56,413. Thus the total fees sought inclusive of HST on a partial indemnity scale are $160,499, or rounded to $160,500. Disbursements of $10,904.74 are claimed, for a total claim on a partial indemnity basis for fees and disbursements of $171,405.

[4] The plaintiff contends without any breakdown of how the figure is arrived at that the total cost award inclusive of disbursements should be $80,000.

[5] The plaintiff contends that the time spent by the lawyers for Computershare was excessive and that the amount claimed is well beyond what the parties could have reasonably expected. The plaintiff has not provided any information about the time spent by its lawyers, and while it is not strictly required that it do so, it is something that may be taken into account in fixing the costs of Computershare.

[6] In Risorto v. State Farm Mutual Automobile Insurance Company (2003), 64 O.R. (3 rd ) 135, Wrinkler J. (as he then was) stated:

The attack on the quantum of costs, insofar as the allegations of excess are concerned, in the present circumstances is no more than an attack in the air. I note that State Farm has not put the dockets of its counsel before the court in support of its submission. Although such information is not required under Rule 57 in its present form, and the rule enumerates certain factors which would have to be considered in exercising the discretion with respect to the fixing of costs in any event, it might still provide some useful context for the process if the court had before it the bills of all counsel when allegations of excess and "unwarranted over-lawyering" are made. In that regard, the court is also entitled to consider "any other matter relevant to the question of costs". (See rule 57.01(1)(i).) In my view, the relative expenditures, at least in terms of time, by adversaries on opposite sides of a motion, while not conclusive as to the appropriate award of costs, is still, nonetheless, a relevant consideration where there is an allegation of excess in respect of a particular matter.

[7] In Frazer v. Haukioja, 2010 ONCA 249, it was contended that the trial judge erred in awarding costs against the defendant. LaForme, J.A. for the court stated:

Dr. Haukioja argued before the trial judge that Grant Frazer's counsel docketed almost twice as much time as his own. This, he says is relevant to Dr. Haukioja's reasonable expectations and establishes that he could not reasonably have expected Mr. Frazer's counsel to have invested so much more time than his own.

The answer to this argument is found in the submissions of Grant Frazer that were made to this court.

In making his finding with respect to the application of that part of rule 57.07(1)(0.b) “the amount of costs that an unsuccessful party could reasonably expect to pay…” the trial judge noted Mr. Haukioja’s failure to provide adequate information as to his own legal costs incurred. He also agreed with the observations of Nordheimer J. in Hague v. Liberty Mutual Insurance Co., [2005] O.J. No. 1660 at para.16 that, “the failure to volunteer that information may undermine the strength of the unsuccessfully part’s criticisms of the successful party’s requested costs.” In that regard, his decision is entirely consistent with the authorities, and in particular the dicta of the Divisional Court in Andersen, “the inference must be that the [unsuccessful] Defendants devoted as much or more time and money” as did the successful Plaintiffs: Andersen v. St. Jude Medical Inc., [2006] O.J. No. 508 (Ont. S.C.J.) at paras. 24 to 27.

[8] I am in no position to say that the time spent by the lawyers for Oncap was any less than that spent by the lawyers for Computershare, and this affects in large measure the argument of Oncap that the amount claimed is well beyond what the parties could reasonably have expected.

[9] In support of its argument that excessive time was spent by the lawyers for Computershare, Oncap points out that approximately 104 hours was spent by juniors on the pleadings and 215 hours was spent by Mr. Levy on discoveries that took a little less than two days. It also complains of the hourly rates charged, being partial indemnity rates of $350 for Mr. Dunphy, $180 for Mr. Levy, called in 207 and $160 for Ms. Anger called in 2007. I do not think these rates are unreasonable for this case. I do think Oncap has a point about the number of hours spent on various tasks.

[10] In my view, considering the factors in rule 57.01, including what a party in the position of Oncap could reasonably expect to pay, a fair and reasonable amount for fees, inclusive of tax, would be in the order of $130,000. I see no reasons why the disbursements should not be fixed as claimed, and no objection to them was taken by Oncap. I therefore fix the fees and disbursements, inclusive of HST, to be paid by Oncap to Computershare, at $140,000.

Newbould J.

DATE: January 27, 2012