SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: 00-1433 (Hamilton)
DATE: 2012/10/10

RE: Future Health Inc. operating as Trauma Services as continued by its Trustee in Bankruptcy, Scott, Picheilli & Graci Ltd. (Plaintiff) v. The Economical Mutual Insurance Company (Defendant)

BEFORE: The Honourable Mr. Justice R.A. Lococo

COUNSEL:
Lou Ferro, for the Plaintiff
Lee Samis, for the Defendant

HEARD: By written submissions

E N D O R S E M E N T – C O S T S

I. Introduction

[ 1 ] The Economical Mutual Insurance Company is the defendant in an action brought by Future Health Inc., through its Trustee in Bankruptcy, Scott, Pichelli & Graci Ltd. Upon Economical’s motion, I ordered Future Health to pay into court a total of $200,000 as security for costs. [1] Costs of the motion were left to be determined based on written submissions.

[ 2 ] As the successful party on the motion, Economical seeks payment of its costs by Future Health on a partial indemnity basis within 30 days. Economical has filed a costs outline claiming partial indemnity costs in the amount of $35,814.93, including disbursements and tax.

[ 3 ] In its submissions, Future Health did not dispute that Economical, as the successful party on the motion, should be awarded its costs on a partial indemnity basis. However, Future Health disputed the amount and the timing of payment requested by Economical. In particular, Future Health made the following submissions:

(a) Extent of success on motion: Economic was only partially successful on its motion, and any cost award in its favour should be reduced accordingly.

(b) Quantum of costs claimed: The amount claimed by Economical for costs was excessive and well beyond what one would reasonably expect for a motion of this nature.

(c) Timing of payment: Any cost award should be “in the cause” since the security for costs order would provide protection for recovering costs at the end of the action.

[ 4 ] I will deal with each of these submissions in turn.

II. Extent of success on motion

[ 5 ] On a motion for security for costs, I agree that a relevant factor in determining the extent of a moving party’s success on the motion would be the amount ordered to be paid into court as compared to the amount requested by moving party. However, in my view, the fact that the amount ordered was only two-sevenths of what was suggested by Economical would not be a significant factor in this case in determining the amount of Economical’s costs of the motion that should be paid by Future Health.

[ 6 ] On the motion, Economical requested that a significant amount be paid into court as security for costs given the significant expenses it would have to incur in order to proceed with document production and discovery for this action. I was satisfied that it would be time-consuming and expensive for Economical to do so, and ordered that a significant amount of money should be paid into court. In its submissions, Economical suggested $700,000 as the appropriate amount, while acknowledging the difficulty in setting a specific amount without knowing in advance the volume of documentation involved. Given the speculative nature of the evidence as to the amount that would be required to proceed, my decision was to set the amount of security at $200,000 payable in stages, and also provide for payment into court of such additional amount as the court determines is just upon further motion by Economical. Economical was therefore substantially successful in its motion, and in my view reduction in the amount to be awarded for costs based on lack of success would not be warranted. As well, I agree with Economical that, taking into account the material filed and the oral submissions of counsel, determination of the appropriate amount of security for costs did not consume a significant part of the time and resources expended on this motion.

III. Quantum of costs claimed

[ 7 ] I also considered Future Health’s position that the amount claimed by Economical for costs was excessive and well beyond what one would reasonably expect for a motion of this nature. As noted previously, the amount claimed in Economical’s costs outline was $35,814.93 on a partial indemnity basis, including disbursements and tax. That amount would be in excess of the costs that would normally be expected to be incurred on a security for costs motion of this nature. In effect, Economical conceded as much, since its motion materials estimated its expected partial indemnity costs for this motion to be $14,000.

[ 8 ] I agree with Economical, however, that a higher costs award is justified in this case. Economical’s motion materials were drafted in July 2011, one year before the hearing of this motion over two days in July 2012. In light of subsequent events, that estimate turned out to be low, principally for reasons beyond Economical’s control.

[ 9 ] Among other things, Future Health’s responding affidavits were filed well after the deadlines in the timetable set by previous order. As a result, cross-examinations had to be conducted on an expedited basis in a condensed timeframe, which added to the costs.

[ 10 ] As well, in setting the amount of costs in this case, it is appropriate to consider the complexity of the proceedings. While the legal issues to be considered on the security for costs motion were not themselves complex, the action itself involves extensive allegations against Economical as part of an alleged conspiracy involving a number of other individuals and entities. A significant issue on the motion involved consideration of the merits of the main action, given Future Health’s position that it was not able to provide security for costs because of impecuniosity or financial hardship. Ultimately, my decision was that Future Health had not satisfied the required onus, but the need to consider this issue expanded the scope of the motion.

[ 11 ] Future Health also argued that costs awarded should not include amounts claimed in relation to two other motions brought by Future Health (returnable the same day) that Future Health elected not to proceed with. I disagree. At the hearing of the security for costs motion, Future Health advised Economical and the court that it was not proceeding with the other two motions returnable that day. It was necessary for Economical to be prepared to respond to the abandoned motions on the assumption that those motions were proceeding. I can see no justification for reducing the amount awarded for costs by an amount attributable to the abandoned motions motions.

[ 12 ] In light of the foregoing, I have reviewed the costs outline prepared by Economical’s counsel and found the amounts claimed to be generally reasonable. However, I consider it appropriate to adjust the amount awarded to take into account some apparent duplication of effort between the two lawyers referred to in the costs outline. I also find an adjustment to be justified based on the amount that Future Health as the unsuccessful party should reasonably be expected to pay in all the circumstances for costs on this motion. Taking these factors into account, I fix Economical’s costs of the motion at $25,000.

IV. Timing of payment

[ 13 ] I have also considered Future Health’s argument that any costs award should be in the cause. In this regard, I am directed by paragraph 57.03(1) (a) of the Rules of Civil Procedure [2] on a contested motion to fix the costs of the motion and order them to be paid within 30 days unless a different order would be more just.

[ 14 ] Future Health argued that any costs should be ordered to be paid in the cause since the security for costs order would provide protection for recovering costs at the end of the action. However, I note that no such protection is provided until the full amount ordered is actually paid into court, which has not occurred at this stage. In any case, I am not satisfied that there is any sufficient basis to depart for the usual rule for a contested motion that costs are to be fixed and ordered to be paid within 30 days.

V. Conclusion

[ 15 ] Accordingly, an order will go requiring the Plaintiff to pay the Defendant’s costs of the motion, fixed at $25,000 inclusive of disbursements and tax, within 30 days.

The Honourable Mr. Justice R.A. Lococo

DATE: October 10, 2012

COURT FILE NO.: 00-1433 (Hamilton)
DATE: 2012/10/10
SUPERIOR COURT OF JUSTICE - ONTARIO RE: Future Health Inc. v. Economical Mutual Insurance Company BEFORE: The Honourable Mr. Justice R.A. Lococo COUNSEL: Lou Ferro, for the Plaintiff Lee Samis, for the Defendant, Economical Mutual Insurance Company ENDORSEMENT – COSTS Lococo J.

DATE: October 10, 2012

[1] Future Health Inc. v. Economical Mutual Insurance Company , 2012 ONSC 4308 .

[2] R.R.O. 1990, Reg. 194 .