SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: CV-11-441182
DATE: 20120926

RE: STEVEN SOMERVILLE , Plaintiff/Moving Party

AND:

BANK OF MONTREAL , Defendant/Responding Party

BEFORE: Stinson J.

COUNSEL:
Robert L. Colson and Kimberly Boara Alexander , for the plaintiff/moving party

Matthew Latella and A. Shafey , for the defendant/responding party

HEARD: By written submissions

ENDORSEMENT AS TO COSTS

[ 1 ] This endorsement addresses the costs of two motions that were heard by me on March 29, 2012. One was a motion brought by the defendant to set aside a noting in default. I granted that relief on that date. The other was a motion for summary judgment brought by the plaintiff. I reserved my decision and released it in my endorsement dated April 16, 2012. The parties subsequently made written submissions as to costs.

[ 2 ] In this action the plaintiff claimed damages arising from his alleged constructive dismissal by the defendant. He also claimed payment of his bonus for the 2011 fiscal year. The summary judgment motion related to the latter subject. Although the defendant conceded liability for the amount of the bonus sought, the parties disagreed as to the basis for its payment. The plaintiff asserted that he was entitled to be paid the full bonus by way of cash payment, while the defendant asserted that one-third of the bonus could be paid by way of restricted share units ("RSUs"). By the time the matter came before me, the cash versus RSU question was the only outstanding issue on the summary judgment motion. I rejected the plaintiff's argument and found in favour of the defendant on that issue.

[ 3 ] Before the parties could argue the motion for summary judgment, however, I had to deal with the motion by the defendant to set aside the noting in default. Plaintiff's counsel had noted the defendant in default after defendant's counsel had failed to deliver a statement of defence by the time limit prescribed by the Rules of Civil Procedure , RRO 1990, Reg 194, and several additional subsequent deadlines. Plaintiff's counsel asserts that he granted a series of indulgences and was promised delivery of the statement of defence on several occasions, which promises were not fulfilled. Counsel for the defendant submits that, due to other discussions that were ongoing among the parties he was led to believe that he was not under time pressure to deliver his pleading.

[ 4 ] In my view, each side must accept some of the responsibility for the noting in default having occurred. That said, it was apparent throughout that the defendant intended to defend the action and would be delivering a statement of defence. Had counsel for the plaintiff taken the simple step of placing a telephone call to counsel for the defendant, the noting in default and the motion to set aside would not have been necessary. What is even more troubling, however, is that even though the statement of defence was served (albeit after the noting in default had taken place – counsel for the defendant was unaware that his client had been noted in default) counsel for the plaintiff refused to consent to the setting aside. In my view, he improperly refused his consent in the circumstances, and thus forced the opposite party to incur significant costs.

[ 5 ] It is understandable that plaintiff's counsel was anxious to receive the statement of defence and moved the matter along. He was also concerned that he might lose the date scheduled for his motion for summary judgment if no defence had been filed and the defendant had not been noted in default. There may well have been a lack of communication. Once the concerns of plaintiff's counsel had been satisfied – by the noting in default and the service of the statement of defence – his refusal to consent to the setting aside of the noting in default is difficult to fathom. This is a multimillion dollar lawsuit. The defendant plainly intended to defend all along. There are serious questions to be resolved regarding the plaintiff's claim of constructive dismissal, as well as the damages he is seeking. The delay by the defendant was, in context, minimal. It should have been readily apparent to plaintiff's counsel that the noting in default would be set aside. Yet, for seemingly strategic reasons, plaintiff's counsel refused to give his consent, forcing the opposite party to prepare to argue the motion; indeed in addition to conducting a four hour cross-examination of the deponent for the defendant (a lawyer at defendant's firm), counsel for the plaintiff filed a 30 plus page factum on the motion to set aside the noting in default. In my view, all of this was unnecessary and a waste of the parties' and the court's resources.

[ 6 ] In relation to the motion to set aside the noting in default, the defendant (who was granted the relief it sought) seeks substantial indemnity costs. Counsel for the plaintiff submits that no costs should be awarded. Ordinarily, I would agree with plaintiff's position since setting aside a noting in default is an indulgence granted to a defaulting party. In light of the foregoing history, however, in which the noting in default ought not to have occurred and where, at the very least, consent to setting it aside ought to have been forthcoming, a cost award in favour of the successful party is warranted. The total amount sought by the defendant on a substantial indemnity basis is more than $30,000. While I agree that an award on a substantial indemnity basis is appropriate having regard to the conduct of plaintiff's counsel, in my view, that sum is excessive. Fair compensation, consistent with the reasonable expectation of the plaintiff – especially in light of the signal sent by the plaintiff's 30 plus page factum that the motion would be very hard fought – is $9,500. I therefore fix the defendant's costs of the motion to set aside the noting in default at the all inclusive sum of $9,500.

[ 7 ] Turning to the motion for summary judgment, by the time it was argued before me the issue had been narrowed to the simple question whether the plaintiff was entitled to be paid in cash as he asserted or in part by SRUs, as the defendant asserted. The defendant prevailed. As the successful party, the defendant is entitled to costs of the summary judgment motion.

[ 8 ] With respect to the scale of costs, there is nothing out of the ordinary concerning this motion that would warrant a punitive award of costs. I therefore conclude that an award on a partial indemnity costs basis is appropriate.

[ 9 ] In relation to quantum, the defendant seeks partial indemnity costs of more than $43,000, plus taxes and disbursements. The plaintiff submits that a more realistic number would be $15,000 all inclusive, which represents the sum contained in his own bill of costs for the summary judgment motion.

[ 10 ] The motion was of average complexity and required nothing more than average skill and effort on the part of counsel. In relation to the issue that I determined, the defendant was entirely successful. It was an important motion for the plaintiff and was resisted on the same basis by the defendant. A significant sum of money was involved (almost $500,000) but liability was not in dispute, only the form of payment.

[ 11 ] According to the plaintiff's bill of costs, had the plaintiff been successful he would have sought costs in the order of $16,590. The plaintiff submits that that sum is within the reasonable expectation of the parties. I am concerned, however, that not all of the time spent by plaintiff's counsel is reflected in that bill of costs, with the result that the actual effort expended by plaintiff's counsel was somewhat higher.

[ 12 ] By contrast, the amount of time claimed by counsel for the defendant, in my view, well exceeded the reasonable expectation of the opposing party. A total of 82 professional hours are said to have been expended by defendant's counsel. While that amount of time may well have been spent, having regard to the nature of the issue, in my view, it was excessive.

[ 13 ] Taking into account the foregoing considerations, I would fix the partial indemnity costs of the defendant in relation to the motion for summary judgment at the all inclusive sum of $20,000.

result

[ 14 ] I therefore award the defendant $9,500 in relation to the motion to set aside the noting in default and $20,000 in relation to the motion for summary judgment. The total sum of $29,500 shall be paid by the plaintiff to the defendant within 30 days.

Stinson J.

Date: September 26, 2012