SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: C-652-12

DATE: 2012-10-29

RE: Casual Restaurant Systems Inc. and
Philthy McNasty’s (Ontario) Inc.

and

Sun Life Assurance Company of Canada

COURT FILE NO.: C-794-12

RE: Sun Life Assurance Company of Canada

and

Philthy McNasty’s Restaurants Inc. and
Casual Restaurant Systems Inc.

BEFORE: The Honourable Mr. Justice P.B. Hambly

COUNSEL:
Gregory Govedaris, Counsel for the Applicants (Casual Restaurant Systems Inc.
Philthy McNasty’s (Ontario) Inc.) and for the Respondent, Casual Restaurant
Systems Inc.

John C. Wolf/Ivan Y. Lavrence/Bradley Philips, Counsel for the Respondent,
Sun Life Assurance Company of Canada and for the Applicant, Sun Life
Assurance Company of Canada

RULING ON COSTS

[ 1 ] I rely on the facts set out in the Endorsement dated October 9, 2012.

[ 2 ] The Tenants were successful in the defence of the Landlord’s motion for security for costs and for an order striking out paragraphs of an affidavit. They were also successful in their motion to convert the Landlord’s application to an action. The Landlord’s offers were to the effect that the Landlord withdraw its motion and that it consent to their motion. There is no mention of costs in the offers. I must assume that the intent was that if the Landlord accepted the offers that there would be no costs. The Landlord proceeded with its motion, defended the Tenants’ motion and was unsuccessful on both. I disagree with the Landlord’s submission that there was no element of compromise in these offers. The only compromise that was open to the tenants was to waive a claim for costs which they appear to have done.

[ 3 ] The Tenants claim substantial indemnity costs at a rate of $400/hour. They claim to have spent 10 hours in preparation, four hours in cross examination and eight hours for attendance in court. Their claim is $8,800. They do not claim HST. There was substantial material, case books and factums. The case was not heard until the end of the day.

[ 4 ] The principles that govern these matters are set out in the Rules of Civil Procedure and the case law as follows:

Rules of Civil Procedure

57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(c) the complexity of the proceeding;

(d) the importance of the issues;

49.10 (1) Where an offer to settle,

(a) is made by a plaintiff at least seven days before the commencement of the hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing; and

(c) is not accepted by the defendant,

and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.

57.03 (1) On the hearing of a contested motion, unless the court is satisfied that a different order would be more just, the court shall,

(a) fix the costs of the motion and order them to be paid within 30 days

Case Law

[ 5 ] In Boucher v. Public Accountants 2004 14579 (ON CA) , [2004] O.J. No. 2634, the Court of Appeal in the judgment of Justice Armstrong 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.

38 In deciding what is fair and reasonable, as suggested above, the expectation of the parties concerning the quantum of a costs award is a relevant factor. … I refrain from attempting to articulate a more detailed or formulaic approach. The notions of fairness and reasonableness are embedded in the common law. Judges have been applying these notions for centuries to the factual matrix of particular cases. (citations omitted)

[ 6 ] In Tri-S Investments v. Vong , 1991 O.J. No. 2292 Justice Feldman (as she then was, now Feldman J.A.) in supplementary reasons stated the following:

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 )

[ 7 ] The Landlord submits that the appropriate amount for costs for both motions is $4,000 based on an hourly rate of $200. These submissions were made after the outcome of the motions was known. In my view, they do not reflect “ the amount of costs that an unsuccessful party could reasonably expect to pay”. The facts were of some complexity. Factums and case books were filed. The application of the law to the facts was of moderate complexity. The outcome of the motions was of importance to the parties. I cannot say that the Tenants were at fault in hiring a process server to serve their materials. With an affidavit of service there can then be no doubt that the other side received it and when it received it. I find that the Tenants’ claim for costs is reasonable and does not inhibit access to justice.

[ 8 ] There will be an order that the Landlord pay to the Tenants $8,800 within 30 days.

P.B. Hambly J.

Released: October 29, 2012