SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

DATE: 2012-11-27
COURT FILE NO.: CV-11-9537-00CL

RE: Liquid Rubber Industries Inc. and CA Russlar Holdings Ltd., Plaintiffs

AND:

John Bilbija, Doug Bilbija, The John Bilbija Family Trust, The Doug Bilbija Family Trust, Charlotte Janssen, David Shainhouse, Arthur March and Liquid Rubber Engineered Coatings Ltd. Defendants

BEFORE: L. A. Pattillo J.

COUNSEL:
John T. Porter and Kim G. Ferreira , for the Defendants/Moving Parties

A. L. Schein and M. Maurer , for the Plaintiffs/Respondents

COSTs ENDORSEMENT

[ 1 ] On July 31, 2012, I dismissed the Defendants’ motion for summary judgment and indicated that, in the absence of the parties agreeing to costs they could make submissions. In the absence of agreement, I have received and reviewed the parties submissions on costs.

[ 2 ] The Plaintiffs submit that cost should be awarded on a substantial indemnity basis on the ground that the Defendants acted unreasonably in bringing the motion. In that regard, they claim total costs of $111,009.27 made up of fees of $79,855 plus taxes and disbursements of $20,773.12. In the alternative, the Plaintiffs claim partial indemnity costs of $82,836.11 made up of $54,923 for fees plus taxes and $20,773.12 in disbursements.

[ 3 ] The Defendants submit that given the circumstances of the motion, there is no basis for an award costs on a substantial indemnity basis. They further submit that the quantum of fees claimed is excessive given the circumstances of the motion and its result. Finally, they submit that the Plaintiffs should not be allowed their claim of $18,635.11 for an expert given it was unnecessary and the Plaintiffs placed no reliance on the expert in the motion. In the result, the Defendants submit that the Plaintiffs’ costs should be fixed at $20,000 inclusive of disbursements and taxes.

[ 4 ] The action was commenced on September 3, 2010. The Plaintiffs’ claim arises from a share purchase agreement and was initially based on negligent misrepresentation and breach of contract. The Defendants, except the corporate Defendant, denied any misrepresentation or breach of contract and counterclaimed for, among other things, the balance of the purchase price owing. The Plaintiffs raised the allegations in their claim in defence of the counterclaim.

[ 5 ] The Defendants then moved for summary judgment. I agree with the Defendants’ submission that, given the claim as pleaded at that time and the provisions of the share purchase agreement that contained an entire agreement clause, the action was “ripe” for summary judgment.

[ 6 ] Two months into the motion, after affidavits had been filed and cross-examinations held, the Plaintiffs moved to amend their claim to plead fraud, fraudulent misrepresentation and recession. It was on the basis of these claims that the Plaintiffs eventually prevailed on the summary judgment motion.

[ 7 ] The Plaintiffs were successful on the motion and are therefore entitled to their costs.

[ 8 ] In my view, this is not a motion in which substantial indemnity costs should be awarded. Following the recent amendments to Rule 20 concerning summary judgments, Rule 20.06 provides an award of substantial indemnity costs may be made in circumstances where it is found that the moving party acted unreasonably or in bad faith for the purposes of delay. In my view, the Defendants are guilty of neither. I do not consider that it was a foregone conclusion that the Defendants would fail, even after the amendments. It was not plain and obvious that they would not succeed. Nor is there any suggestion of bad faith.

[ 9 ] Turning to the quantum of costs, I am in agreement with the Defendants that costs should only be assessed from the date of the amendments forward. I say this for a couple of reasons.

[ 10 ] First, it was only as a result of the amendments that the Plaintiffs succeeded on the summary judgment motion. Despite the Plaintiffs’ submission, in my view, the Plaintiffs would not have succeeded on the summary judgment motion if they had not amended their claim. The Plaintiffs further submit that the Defendants consented to the amendment motion. Given the mandatory nature of Rule 26.01 dealing with amendments and the absence of any legal limitation to the claims proposed by the amendments, such consent was appropriate. The Plaintiffs submit that the Defendants could have walked away from their motion after the amendment. I agree. But they didn’t and, because they were not successful, they must now pay the costs of the motion from that point forward.

[ 11 ] I also think it is appropriate to award costs from the date of the amendments given the direction in my reasons concerning the continuation of the action. The affidavits and cross-examinations, which all took place before the amendments are to stand as discovery in the action. The successful party in the action will be able to tax the costs of those steps as part of the costs of the action.

[ 12 ] The Plaintiffs’ costs outline breaks the fee items into the following headings: motion for summary judgment; cross-examinations; undertakings; case conference; amended pleadings and motion hearing.

[ 13 ] I have already dealt with the cross-examinations. With respect to the claim for costs of the amendments, no order providing for costs has been produced. In my view, there is no basis to award such costs particularly given the Defendants consented to the amendments.

[ 14 ] The largest fee item is the motion for summary judgment category. It is clear from the narrative that the time claimed goes back to the beginning of the motion. It is impossible from the information I have been given to accurately determine the time spent on the motion by the Plaintiffs’ counsel after the amendment. It would have included the preparation of the factums, the case conference and the motion itself which would have taken one day.

[ 15 ] Turning to the disbursements claimed, I am also in agreement with the Defendants that the expert’s fee claimed by the Plaintiffs is not a proper disbursement at this stage. The expert expressed no opinion in his report. Nor was the report cited or made reference to by the Plaintiffs in their written and oral submissions on the motion. In fact, I accepted the Plaintiffs’ submission that they should not be expected to have to submit an expert report on damages in the absence of production and discoveries being completed. It may or may not be a taxable disbursement following trial.

[ 16 ] In addition, and as a result of my direction concerning the trial, the disbursements claimed by the Plaintiffs for cross-examination transcripts will be taxable in the action, should the Plaintiffs prevail.

[ 17 ] In conclusion therefore, having regard to the above comments, it is my view that a fair and reasonable award for costs for the motion on a partial indemnity basis is $30,000, inclusive of disbursements and applicable taxes. Payable within 30 days.

L. A. Pattillo J.

Released: November 27, 2012