Court File and Parties

Court File No.: C-1217-06
Date: 2012-10-15
Superior Court of Justice - Ontario

RE: James Edward Wiebe, Plaintiff

AND:
Jenkins Indoor Plant Services Inc., Defendant

Before: The Honourble Mr. Justice D. A. Broad

Counsel:
Bernard T. Verbanac, for the Plaintiff
J. Sebastian Winny, for the Defendant

COSTS ENDORSEMENT

[ 1 ] In my Endorsement released August 9, 2012 I invited counsel to make written submissions respecting costs. Those submissions have now been received and the following is my disposition respecting costs.

[ 2 ] Counsel for the non-party Paul Schaefer, who the plaintiff sought to add as a defendant and to have immediate judgment against, seeks costs on a substantial indemnity basis in the sum of $14,441.00 inclusive of HST and disbursements (based upon a fee component of $12,450.00). He argues that the motion to add the non-party, and to seek immediate judgment against him, with no pleaded claim and no opportunity to defend, was ill-conceived and doomed to failure and on that basis should attract a sanction by means of the imposition of substantial indemnity costs.

[ 3 ] In the alternative, counsel for Mr. Schaefer seeks partial indemnity costs totalling $9,751.94 inclusive of HST and disbursements, based upon a fee component of $8,300.00.

[ 4 ] Counsel for the plaintiff submits, on the authority of Murphy v. Alexander 2004 103 OAC 325 (CA), at para. 55, that the general costs recovery rule that costs follow the event, is not an absolute rule, nor is success in an action the only relevant factor to be considered in determining an appropriate and just costs disposition. On this basis he argues that, although successful on the motion, Mr. Schaefer should be denied his costs on the basis that, to paraphrase, he is or was the “equitable owner” of the corporate defendant, and his interests are aligned with it.

[ 5 ] I agree that the general rule that costs should follow the event may be departed from in an appropriate case, I do not agree that this is one. The plaintiff’s approach on the motion and in his costs submission ignores the fundamental principle in our corporate law of limited liability – that, absent a statutory provision or another established principle by which the corporate veil may be pierced, a shareholder, director or officer of a corporation is not, as such liable for the fault or breach of duty of the corporation, even if closely-held.

[ 6 ] The plaintiff argues that he should not be “punished for attempting to retrieve compensation from the parties involved.” An award of partial indemnity costs is not “punishment” against the plaintiff. It is simply recognition of what, as an unsuccessful party, he should reasonably have expected to pay for costs should his motion against Mr. Schaefer be unsuccessful.

[ 7 ] Despite the lack of merit of the motion, there was nothing, in my view, which would take the matter out of the realm of partial indemnity costs, so as to attract an award of substantial indemnity costs.

[ 8 ] Counsel for the plaintiff has not taken issue with the details set forth in Mr. Schaefer’s Costs Outline on a partial indemnity basis. Given the importance of the issues to Mr. Schaefer, I do not view the number of hours at 31.5, nor the hourly rate of $200.00, to be excessive. However, I do not see the basis for inclusion of disbursements for parking, process servers and couriers as they do not appear to be contemplated in these circumstances in the applicable tariff.

[ 9 ] I therefore fix the non-party Paul Schaefer’s costs of the motion, payable by the plaintiff at $8,300.00 in respect of fees, $219.45 for disbursements, and $1,099.60 for HST, totalling in all the sum of $9,619.05.

[ 10 ] The plaintiff, being successful on the motion for summary judgment as against the corporate defendant Jenkins Indoor Plant Services Inc., following its having been noted in default, in an amount which exceeded the plaintiff’s various Offers to Settle, is entitled to substantial indemnity costs against the corporate defendant Jenkins Indoor Plant Services Inc. fixed in the sum of $20,513.12.

D. A Broad J.

Date: October 15, 2012