ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 49567/07 (St. Catharines)
DATE: 2012-09-20

BETWEEN:

LUCIANO BUTERA, 1515404 ONTARIO INC. operating as NIAGARA MITSUBISHI and CANTERRA PROPERTY HOLDINGS INC.
Plaintiffs

– and –

MITSUBISHI MOTORS CORPORATION, MITSUBISHI MOTOR SALES OF AMERICA, INC., MITSUBISHI MOTORS NORTH AMERICA, INC., MITSUBISHI MOTORS CREDIT AMERICA, INC. and MITSUBISHI MOTOR SALES OF CANADA, INC.
Defendants

Harry Korosis and Peter Nicholson, for the Plaintiffs/Responding Parties

W. Brad Hanna and Richard McCluskey, for the Defendants/Moving Parties

HEARD: August 27 & 28, 2012

the honourable Mr. justice p.b. hambly

RULING ON COSTS

[ 1 ] I rely on the facts set out in my judgment dated August 31, 2006.

[ 2 ] In his application for a Mitsubishi dealership submitted to MMSCAN on March 1, 2002, Butera predicted that he would sell in 2003, 252 new vehicles and 125 used vehicles, 180 new vehicles and 120 used vehicles in his first year of operation and 350 new vehicles and 125 used vehicles in an average year. In my judgment I stated the following:

8 Niagara Mitsubishi never came close to making the sales that were forecast in the pro forma documents that Butera submitted with his application for a dealership. Its sales were as follows:

2002 - 14 new vehicles

2003 - 127 new vehicles

2004 - 100 new vehicles

2005 - 29 new vehicles

[ 3 ] Assuming that there were misrepresentations by the Mitsubishi defendants that gave Butera a cause of action against them, I held that he knew, based on this assumption, that he had a cause of action against them “at the latest” on April 11, 2005. It was on that date that he sent a letter to MMSCAN in which he alleged misrepresentations and negligence against it. I said “at the latest” because it cannot be ignored that Butera had extensive experience in the car sales business and that he was a recently graduated lawyer. The Limitations Act prescribes a two year limitation period from the earlier of the date when the person with the claim knew that he had a claim and “ the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known” that he had a claim.

[ 4 ] Butera’s lack of success could be attributed to several factors – market conditions, inefficient management, lack of support by MMSCAN or misrepresentations by Mitsubishi. Given his experience in the motor vehicle sales business and his legal training I would have thought that Butera would have assessed his position in the business and his legal position much earlier than April 11, 2005.

[ 5 ] Beneath the legal reasoning in this case there is a sad human story. A young man works with his immigrant father for many years in the motor vehicle sales business. He goes to law school. After working for a few months as a lawyer he leaves the profession. Rather than pursuing a career in the law, he attempts to establish a new motor vehicle sales business as his father had done. He attempted to do so with the Mitsubishi brand, which was not established in Canada. It was also not established in the U.S., nearly to the extent that the traditional motor vehicle companies are established. An objective observer might have concluded from the outset that this was a risky business in which to invest. After three years from the commencement of the business it ceased selling motor vehicles and after another year providing service it terminated completely. Butera lost six years when his peers were advancing their legal careers. Nevertheless actions have consequences. Butera elected to sue, well knowing the consequences of his action being dismissed.

[ 6 ] I held that MMCA made no representations to Butera. The plaintiffs never presented any evidence that MMCA had made any representations to Butera let alone misrepresentations. MMSA operated as MMNA. Counsel for the defendants requested, on several occasions, that the plaintiffs discontinue their action against these defendants. They did not do so, which resulted in more work for the law firm which represented all the defendants. The heart of the case was an allegation that the Mitsubishi defendants had made predictions of future performance of Niagara Mitsubishi based on past performance of the Mitsubishi brand in the U.S., which proved to be inaccurate. The law is clear that these predictions are expressions of opinion, which do not give the recipients a cause of action against the makers, if they rely on them to their detriment. The recipients will only have a cause of action if the facts on which they are based are false to the knowledge of the makers. The plaintiffs admitted that they had no information that the figures of past performance by Mitsubishi in the U.S. were inaccurate. They attempted to make a case that these statements were misleading. I held that these arguments had no merit, particularly given Butera’s experience in the industry. The plaintiffs commenced the action after the expiration of the limitation period and then did not pursue it for three years, when they received a status notice from the court.

[ 7 ] The defendants are entitled to partial indemnity costs of both the action and the summary judgment motion. They claim $325,645.78 inclusive of fees, disbursements and taxes. They seek a total of $226,276.50 in fees and $28,509.90 in disbursements. The remainder is GST and HST. The claim for fees is broken down as follows:

Pleadings $ 59,081.00

Affidavit of documents $ 23,776.50

Examinations for discovery $ 61,668.00

Motion for summary judgment $120,981.00

Bill of costs $ 720.00

Total fees $266,226.50

The claim for disbursements includes $14,413.33 for photocopies and $7,190.31 for Quicklaw charges. The factum of the defendants was excellent and the oral submissions of Mr. Hanna were very well done and helpful to the court. I think that the legal argument could have been expressed in the factum without the full plethora of case law that was presented. However, I am aware of the frequently quoted passage from the judgment of Justice Feldman, as she then was, (now Feldman J. A.) in Tri-S Investments v. Vong, [1991] O.J. No. 2292 as follows:

I do not view it to be the court's function when fixing costs to second-guess successful counsel on the amount of time that should or could have been spent to achieve the same result, unless the time spent is so grossly excessive as to be obvious overkill. (quoted with approval by the Court of Appeal by Justice Morden A.C.J.O. in Murano v. Bank of Montreal 1998 5633 (ON CA) , [1998] O.J. No. 2897 at para. 91 )

I do not think that this is a case of “overkill”. I do think that the charge for photocopying is excessive. There is no indication as to how it is calculated. I do not know what arrangement the defendant’s law firm, which is a major Toronto law firm, has with Quicklaw. This is not disclosed. I would have thought that it could get access to the case reports more cheaply.

[ 8 ] The factors in Rule 57.01 apply. The plaintiffs submit that, taking into account the reasonable expectations of the parties, the fees should be fixed at $110,500, the disbursements at $16,192.28 for a total with GST and HST OF $139,950.08. Certainly the issues were of importance to the parties. A judgment against the Mitsubishi defendants could have some precedential value in other lawsuits based on similar arguments. The case was of considerable complexity both factually and legally. The principles of reasonableness and access to justice must be applied. The Court of Appeal in the judgment of Justice Armstrong in Boucher v. Public Accountants , 2004 14579 (ON CA) , [2004] O.J. No. 2634 stated the following:

37 The failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice. The costs system is incorporated into the Rules of Civil Procedure, which exist to facilitate access to justice. There are obviously cases where the prospect of an award of costs against the losing party will operate as a reality check for the litigant and assist in discouraging frivolous or unnecessary litigation. However, in my view, the chilling effect of a costs award of the magnitude of the award in this case generally exceeds any fair and reasonable expectation of the parties.

In that case the Court of Appeal reduced an award of costs that was made on a motion in the amount of $187,682.31, which was the amount submitted in the bill of costs, without deduction to $63,000, inclusive of GST and disbursements.

[ 9 ] Taking into account all the factors and the principles in the case law as best I can, I award the defendants costs against the plaintiffs, inclusive of GST, HST and disbursements, in the amount of $150,000 payable within 30 days.

P.B. Hambly J.

Released: September 20, 2012