SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 08-CV-367746
DATE: October 2, 2012

RE: KOFFMAN LARKING FINE HOMES LTD., Plaintiff

AND:

MARY REICH SHECHTMAN and ALAN SHECHTMAN, Defendants

BEFORE: Master Polika

COUNSEL: Stefan Wolpert, for the Defendants

HEARD: In Writing

ENDORSEMENT

1 . The defendants ask that I fix costs of this action in their favour on a full indemnity basis in the amount of $10,832.25.

2 . On August 15, 2011, while seized with the trial of this action by way reference pursuant to the provisions of the Construction Lien Act, I heard the motion brought by the defendants seeking an order discharging the claim for lien of the plaintiff, dismissing the action, striking out the plaintiff’s defence to counterclaim, paying out the monies posted by the defendants as security for the claim for lien in lieu of the defendants’ lands and premises and costs of the action on a full indemnity basis or in the alternative on a substantial indemnity basis.

3 . I endorsed my disposition on the motion record as follows:

August 15, 2011

Plaintiff has not complied with my order of June 15, 2011. On that basis interim report to go:

(a) Discharging plaintiff’s claim for lien ;

(b) Dismissing plaintiff’s action;

(c) Striking the plaintiff’s defence to counterclaim;

(d) An order paying out security posted by the defendant together with accrued interest;

(e) Costs of the motion reserved to be dealt with on disposition of the counterclaim;

(f) Fixing Monday August 29, 2011 at 11:00 a.m. for the purpose of settling the interim report and dealing with the counterclaim and pre-trial fixed for August 22, 2011 cancelled.

4 . On August 29, 2011 I settled the form of the interim report and fixed the hearing of the assessment of the defendants’ counterclaim for 10:00 a.m. August 14, 2012.

5 . The court was advised at the beginning of August, 2012 by telephone by defendants’ counsel that the defendants were not proceeding with the hearing of the assessment of their counterclaim. This was followed the following week by defendants’ counsel’s letter dated August 9, 2012 enclosing a costs outline. In the letter counsel asked that I fix costs at 50% of $21,664.50, the full indemnity costs of the defendants. It was submitted that it would be appropriate to allocate 50% of the costs to the action and 50% to the counterclaim “because there was no clear way to divide the work performed for the action from the work performed for the counterclaim.”

6 . This is an action brought to enforce a claim for lien pursuant to the Construction Lien Act . The action was commenced on December 3, 2008 seeking payment of $67,965.00 and in default sale of the defendants’ lands and premises. Pleadings were exchanged with the defendants delivering a counterclaim claiming $275,000.00 for breach of contract.

7 . On June 24, 2010 Master Short made the order vacating the claim for lien and certificate of action when the defendants posted security in lieu of their lands and premises in the amount of $67,965.00 for the lien plus 25% on account of costs. The defendants were thus deprived of the use of those funds until the funds were paid out pursuant to my interim report. Any claim in that respect should have been advanced by the counterclaim which the defendants decided not to pursue.

8 . On October 19, 2010 the plaintiff by motion obtained a judgment in Form 16 under the Construction Lien Act from Justice Roberts referring the action for trial by the Master at Toronto. On November 8, 2010 Master Short fixed the 1 st pre-trial for directions before me for December 6, 2010.

9 . On December 6, 2010 I held the 1 st pre-trial for directions. Plaintiff’s counsel filed proof of service of the Notice of Trial and order of Master Short with me and the trial commenced by way of reference before me. The proceeding was somewhat unusual in that plaintiff’s counsel disclosed that he had received his instructions from one 50% shareholder of the plaintiff and that the other 50% shareholder might not be in accord with the action being brought. I adjourned the pre-trial directing that at the next pre-trial a timetable would be established for the reference and that counsel should be prepared to address the same.

10 . At the 2 nd pre-trial for directions on February 4, 2011 the issue of the plaintiff’s instructions still was not been resolved. I gave directions respecting the exchange of affidavits of documents and the delivery of a Scott Schedule by the defendants relating to their counterclaim and a response by the plaintiff and again adjourned the pre-trial.

11 . At the 3 rd pre-trial for directions on May16, 2011 the issue of the plaintiff’s instructions was still unresolved. I extended the time for delivery of sworn affidavits of documents and for delivery of the plaintiff’s response to the defendants’ Scott Schedule and ordered that the two principals of the plaintiff attend the next pre-trial to address the future conduct of the plaintiff’s claim.

12 . At the 4 th pre-trial on June 6, 2011 both principals attended and it was disclosed to me that they each had a 50% interest in the plaintiff, that they were in the midst of a shareholder dispute and that one did not want the action to proceed. The defendants’ position was they wanted to proceed with the reference, that is the trial before me. I further adjourned the pre-trial ordering the principals of the plaintiff with counsel to attend.

13 . At the 5 th pre-trial for directions on June 15, 2011 counsel appeared for all parties and for the shareholder who did not want to proceed with the action. It was evident that the solicitor of record for the plaintiff was without instructions as a consequence of the shareholder dispute and impasse. No one objecting I made an order removing him as solicitor of record. In addition I ordered that the plaintiff had 30 days within which to appoint a new solicitor or to obtain an order permitting someone other than a solicitor to represent the plaintiff failing which the action could be dismissed. I made some related orders and adjourned the pre-trial for directions to 2:30 p.m. on August 22, 2011.

14 . On August 15, 2011 the defendants brought their motion and I made the disposition noted above. Once the defendants’ indicated they were not proceeding with the counterclaim the trial of this action was complete save for the disposition of costs. In the result there was no adjudication on the merits of either the claim or counterclaim.

15 . Pursuant to Rule 57.01 (5) the defendants were obligated to deliver a bill of costs in Form 57A. The Rule provides that “After a trial, the hearing of a motion that disposes of a proceeding . . . a party who is awarded costs shall serve a bill of costs (Form 57A) on the other parties and shall file it with proof of service.” Service was not needed in the circumstances before me but a bill of costs was. The defendants chose not to file a bill of costs but instead delivered a costs outline disregarding the requirements of Rule 57.01(5).

16 . Form 57B requires that the format to be followed is that of the items set out in Tariff A with an itemized claim for fees and disbursements supported by dockets or other evidence. If a bill of costs in proper form had been delivered supported as required, one could separate what was claimed on account of the counter5claim as opposed to the action. In certain areas such as preparation of the affidavit of documents which served both the action and the counterclaim the amount claimed could have been further apportioned having regard to the substance and breath of the claims in the action and those in the counterclaim. Also, some items prima facie relate solely to the action or the counterclaim. For example any amounts claimed for preparation of the Scott Schedule would relate solely to the counterclaim.

17 . The costs outline sets out a claim for costs on a full indemnity basis of $21,664.50 inclusive of disbursements and HST of which 50% is sought by the defendants. The amount claimed is broken down into six categories. No dockets are filed in support.

18 . On the material before me the work relating to the action as opposed to the counterclaim broadly consisted of, pleading the defence, bringing an ex parte motion to post security, preparation of the affidavit of documents, attendance at five pre-trials for directions, each attendance less than an hour, preparing and attending on the final motion. The ex parte motion posting security was simple and straight forward . The August 15, 2011 motion was not complex, the sole issue being whether a solicitor had been appointed or order obtained allowing someone other than a solicitor to represent the plaintiff.

19 . The defendants’ cost outline had some breakdown of what was being claimed on either a full indemnity or substantial indemnity basis but not on a partial indemnity basis although partial indemnity hourly rates were set out.

20 . The only reason tendered for seeking costs on a full indemnity basis is that it is the defendant’s position “that the entire action was improper.” There was no material advanced to support the assertion nor was there an adjudication on the merits of the action or the counterclaim. On all the material before me I can find no basis to support fixing costs on either a full indemnity or substantial indemnity basis. Accordingly I have fixed costs on a partial indemnity basis.

21 . I do note the counterclaim as pleaded was in the amount of $275,000.00 as opposed to the claim for lien of $67,975.00. As noted there was no adjudication on the merits of either, in the case of the plaintiff because of the failure of the plaintiff to pursue its action because of the impasse between its two shareholders and in the case of the defendants because of their decision not to proceed to an assessment.

22 . The pleadings were not complex nor were any of the steps taken by the defendants in the action. The success obtained was equal, although the plaintiff was subject to a claim four times as great as its own. The claims were monetary and there were no complex legal questions put in issue.

23 . Costs are not a simple mathematical calculation of rate times hours expended but rather what must be taken into account is the reasonable expectation of the parties as to costs and what is fair and just in the circumstances before me.

24 . Taking into consideration my findings and comments as set out aforesaid I fix costs of the defendants at $6,250.00 inclusive of both GST/HST and disbursements payable by plaintiff to the defendants.

25 . Plaintiff within three weeks to tender to me a draft final report reflecting my disposition for review and signature.

Master Polika