ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: SR12265/09
DATE: 2012-01-31

B E T W E E N:

Rosa Bagnulo

Margaret A. Hoy, for the Plaintiff

Plaintiff

• and -

Complex Services Inc.

Mireille Khoraych, for the Defendant

Defendant

The Honourable Mr. Justice B.H. Matheson

COSTS ENDORSEMENT

[ 1 ] This is an endorsement dealing with the costs submissions of counsel.

[ 2 ] I gave written judgment on the 20 th day of September 2011. I set a timeline with respect to the written submissions. The Defendant was to submit its submissions within 45 days after the release of the judgment. The Plaintiff had 15 days after receipt of the Defendant’s submissions to file her costs submissions. The Defendant had 10 days to respond to the Plaintiff’s submissions.

[ 3 ] My decision was released on September 20, 2011. The Defendant’s submissions were filed on November 4, 2011. That was 35 days after my judgment was released. The Plaintiff’s submissions were filed on December 5, 2011. This was some 33 days after the Defendant’s costs submissions were served.

[ 4 ] The court is well aware of the time restraints that counsel are under. At no time did the solicitor for the Plaintiff ask the court for further time.

[ 5 ] The court can expect that if timelines are set for the filing of submissions, those timelines will be met. If there is a problem in meeting those timelines, one would expect a request to be made to extend them. No request was made by the solicitor for the Plaintiff.

[ 6 ] In reading the costs submissions of the Defendant, it would appear that this type of conduct was prevalent throughout the litigation.

[ 7 ] In the Defendant’s submissions a number of issues were raised as to the conduct of the Plaintiff’s solicitor. At no time did the solicitor for the Plaintiff dispute the statements made in the Defendant’s submissions as to the Plaintiff’s conduct.

[ 8 ] I will have more to say about this later in my endorsement.

THE LAW

[ 9 ] Section 131(1) of the Courts of Justice Act reads as follows:

“Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.”

[ 10 ] Rule 57.01 of the Rules of Civil Procedure deals with the general principles of dealing with costs. It reads as follows:

“ 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;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

(i) any other matter relevant to the question of costs.

Costs Against Successful Party

(2) The fact that a party is successful in a proceeding or a step in a proceeding does not prevent the court from awarding costs against the party in a proper case.

Fixing Costs: Tariffs

(3) When the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs.

Assessment in Exceptional Cases

(3.1) Despite subrule (3), in an exceptional case the court may refer costs for assessment under Rule 58.

Authority of Court

(4) Nothing in this rule or rules 57.02 to 57.07 affects the authority of the court under section 131 of the Courts of Justice Act ,

(a) to award or refuse costs in respect of a particular issue or part of a proceeding;

(b) to award a percentage of assessed costs or award assessed costs up to or from a particular stage of a proceeding;

(c) to award all or part of the costs on a substantial indemnity basis;

(d) to award costs in an amount that represents full indemnity; or

(e) to award costs to a party acting in person.

Bill of Costs

(5) After a trial, the hearing of a motion that disposes of a proceeding or the hearing of an application, 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.

Costs Outline

(6) Unless the parties have agreed on the costs that it would be appropriate to award for a step in a proceeding, every party who intends to seek costs for that step shall give to every other party involved in the same step, and bring to the hearing, a costs outline (Form 57B) not exceeding three pages in length. O. Reg. 42/05, s. 4 (3).

Process for Fixing Costs

(7) The court shall devise and adopt the simplest, least expensive and most expeditious process for fixing costs and, without limiting the generality of the foregoing, costs may be fixed after receiving written submissions, without the attendance of the parties.

[ 11 ] Justice Molloy in Standard Life Assurance Company v. Elliott, 2007 ONSC 18579 , stated the following at paras. 9 and 10:

[9] Costs on a partial indemnity basis are the norm and are awarded on that scale in the vast majority of cases. The situations in which costs on a substantial indemnity basis are appropriate are rare. However, one of the situations in which such an award is appropriate is where one party to the litigation has behaved in an abusive manner, brought proceedings wholly devoid of merit, and unnecessarily run up the costs of the litigation: Shier v. Fiume (1991), 1991 7188 (ON SC) , 6 O.R. (3d) 759 (Ont.Ct.Gen.Div.); Benquesus v. Proskauer, Rose, L.L.P. , 2005 21097 (ON SC) , [2005] O.J. No. 2418 (S.C.J.); Donmor Industries Ltd. v. Kremlin Canada Inc. (No.2) (1993), 1992 7543 (ON SC) , 6 O.R. (3d) 506 (Ont.Ct.Gen.Div.); Aspiotis v. Coffee Time Donuts Inc. , [1995] O.J. No. 419 (Ont.Ct.Gen.Div.) ; Apotex Inc. v. Egis Pharmaceuticals (1991), 1991 2729 (ON SC) , 4 O.R. (3d) 321 (Ont.Ct.Gen.Div.).

[10] In exercising discretion as to an appropriate costs award, it is relevant to take into account “the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding” and “whether any step in the proceeding was improper, vexatious or unnecessary”: Rules of Civil Procedure, Rule 57.01(1)(e) and (f).

[ 12 ] There are many factors that the court will and must take into consideration in determining whether to award costs on a partial indemnity or substantial indemnity basis. I will deal with the factors when I am dealing with the conduct of the trial both in the preparation of the motions and the trial itself.

[ 13 ] It is interesting to note that the Plaintiff in her costs submissions only partially deals with the Defendant’s submissions. It would appear that she is rearguing the case and not dealing with the issue of costs that were raised by the Defendant.

DEFENDANT’S POSITION

CONDUCT OF THE PLAINTIFF IN PREPARATION FOR TRIAL

[ 14 ] The Defendant raised a number of issues with respect to the level of costs that the court should consider, namely, partial or substantial costs.

[ 15 ] The main issue that I am asked to consider is that of the manner in which the Plaintiff dealt with any attempt to resolve the issue prior to trial. This is basically outlined in Rule 57.01 of the Rules of Civil Procedure .

[ 16 ] On May 13, 2011 the Defendant’s solicitor sent a three-page letter by fax to Ms. Hoy which outlined in detail that the Defendant was going to attempt to plead a limitation defence in part of its defence. The trial had been set for June 13, 2011. It outlined in detail the reasons for the request to make the amendment to its pleadings.

[ 17 ] A further letter was sent by the Defendant’s solicitor on May 13, 2011 enclosing its intended amended Statement of Defence. It asked that the Plaintiff sign the enclosed consent. Failing that, it asked for the Plaintiff to outline her concerns for not agreeing to the amendment.

[ 18 ] The Defendant, by fax dated June 1, 2011, enclosed a notice of motion for the amendment. It also stated that the Defendant would consent to an adjournment if there were a consent to the amendment.

[ 19 ] Reference was made in the letters that the Defendant would be looking for costs if the motion was proceeded with.

[ 20 ] On June 9, 2011 the Plaintiff responded to the request for the amendment. It was a very short letter, which reads as follows, “This will confirm that we are opposed to the Motion”. No reasons were given.

[ 21 ] The Defendant responded by a faxed letter dated June 9, 2011. It asked for reasons for the denial of the request for the amendment. No reasons were given for the refusal to allow the amendment.

[ 22 ] At the start of the trial on June 14, 2011, the motion to amend was heard by the court. After hearing argument the court allowed the amendment to the Defendant’s pleadings.

[ 23 ] The Defendant stated that it prepared for the trial because the Plaintiff did not accept its offer before the start of trial to an amendment if it were granted.

[ 24 ] When the court consented to the amendment, the Plaintiff then asked for an adjournment because she wanted to call a Debbie DiLorenzo. The Plaintiff stated that she was the only person that could address the issue of the Plaintiff’s position with respect to the amendment.

[ 25 ] The court granted the adjournment, and the trial was adjourned to the 25 th day of July 2011, to allow for the calling of this witness.

[ 26 ] The Plaintiff caused to be issued a Summons to Witness on Debbie DiLorenzo. It was dated May 11, 2011. A letter was apparently sent to Ms. DiLorenzo dated June 6, 2011, along with the Summons. On June 6, 2011, Ms. DiLorenzo responded by fax. She acknowledged receipt of the Summons to Witness. She indicated that she had travel plans and would be out of the province from June 8 th to June 20 th .

[ 27 ] Therefore, the only conclusion is that the Plaintiff’s solicitor was aware that Ms. DiLorenzo would not be available for the trial that was scheduled for June 14, 2011.

[ 28 ] In her response to the Defendant’s costs submissions, the solicitor for the Plaintiff did not refer to the statement that her witness would be unavailable to testify. Nor did she give any explanation for not advising the court.

[ 29 ] The Defendant’s position is that there were other witnesses called by the Plaintiff that had knowledge of the evidence that Ms. DiLorenzo had. I agree.

[ 30 ] The Defendant states that the Plaintiff’s solicitor was late in the service of material according to the Rules of Civil Procedure . The Defendant states that the Plaintiff was late in the service of documents that could have caused further delay. This was not addressed in any way by the Plaintiff in her costs submissions. According to the Defendant, they are as follows:

1. The Plaintiff served her affidavit in support of her position with respect to the amendment and her document brief on June 13, 2011. If the adjournment had not been granted, the court might not have allowed the filing of the affidavit and supplementary document brief.

2. The Plaintiff did not file her Book of Authorities with respect to the amendment until the morning of June 14, 2011, when the trial was to start and the motion to amend was to be heard.

3. The Plaintiff did not file the Trial Record until June 6, 2011. According to the Rules, this should have been filed 10 days before the start of trial. See Rule 48.06(2).

4. Section 35(3) of the Evidence Act requires business records to be served on the opposing party on 7 days notice. These were not served on the Defendant until June 8, 2011, giving the Defendant less than the 7 days required.

[ 31 ] The Defendant, in its argument with respect to costs, states that the Plaintiff called unnecessary witnesses. It is a difficult decision to call or not call witnesses. Counsel may consider that a witness is very necessary to the case at bar, yet that same witness may provide evidence to the other party. I will not take into account the argument that the Plaintiff called unnecessary witnesses.

OFFERS TO SETTLE

[ 32 ] Rule 49.10 deals with the costs consequences of failure to accept an offer to settle. It reads as follows:

Plaintiff’s Offer

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.

Defendant’s Offer

(2) Where an offer to settle,

(a) is made by a defendant 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 plaintiff,

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

Burden of Proof

(3) The burden of proving that the judgment is as favourable as the terms of the offer to settle, or more or less favourable, as the case may be, is on the party who claims the benefit of subrule (1) or (2).

[ 33 ] The Defendant made an offer to settle on May 13, 2011. This was prior to the motion or the trial. In that offer the Defendant offered the Plaintiff the sum of $8,463.66 less deductions required by law. In addition, there was a sum of $1,500.00 for costs. There was no expiry date and it was never withdrawn.

[ 34 ] The Defendant made a second offer on May 20, 2011 to the Plaintiff. It was in the amount of $20,000.00 and had an expiry date of May 26, 2011. It was not accepted by the Plaintiff. This does meet the requirement as set out in Rule 49.10. It may be considered under Rule 49.13, which reads as follows:

“Despite rules 49.03, 49.10 and 49.11, the court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.”

[ 35 ] The Plaintiff made an offer to settle on May 19, 2011 in the amount of $45,102.60. There was no time limit on that offer.

[ 36 ] The court will take into account that this trial was heard pursuant to the Simplified Procedure provided in Rule 76 of the Rules of Civil Procedure .

[ 37 ] Rule 76.13(6) is to be considered in determining the issue of costs. It reads as follows:

“The plaintiff may, in the trial judge’s discretion, be ordered to pay all or part of the defendant’s costs, including substantial indemnity costs, in addition to any costs the plaintiff is required to pay under subrule 49.10 (2) (defendant’s offer to settle).”

[ 38 ] The Defendant served a request to admit on the Plaintiff. There were a number of denials made by the Plaintiff in her response, which were later at trial admitted.

PLAINTIFF’S POSITION

[ 39 ] The Plaintiff, even though unsuccessful at trial, is asking for costs. This is dealt with in Rule 57.01(2), which reads as follows:

“The fact that a party is successful in a proceeding or a step in a proceeding does not prevent the court from awarding costs against the party in a proper case.”

[ 40 ] From a review of the costs submission of the Plaintiff, it is apparent that the Plaintiff is rearguing her case.

[ 41 ] I find that this is not a proper case to award costs to the unsuccessful party, for the following reasons.

1. There is very little to suggest that the Defendant took inappropriate steps in dealing with the Plaintiff that would call for a cost sanction.

2. The Plaintiff is calling for no costs to be awarded for the adjournment at what was to be the start of the trial. She overlooked the fact that the Defendant had asked for the amendment well in advance of the trial, and agreed to an adjournment if the Plaintiff asked for it.

3. The adjournment was asked for by the Plaintiff for the reason that Ms. DiLorenzo was not available. Notwithstanding that, she knew that she was not available at the trial date. The reason for the request for the adjournment was made by the Plaintiff.

4. The Plaintiff did not address many of the issues raised by the Defendant as to the conduct of the proceedings.

5. The Plaintiff did agree that the issues raised at trial were not complex and that the trial was pursuant to Rule 76.

DECISION

[ 42 ] This trial took three days to be heard. I agree with the Plaintiff’s solicitor that the factual issues were not complex. Much of the case dealt with the issues of the Plaintiff’s job changes with the Defendant.

[ 43 ] I find that the Defendant tried to settle this matter without a trial. The conduct of the Plaintiff made it most difficult for the Defendant.

[ 44 ] The Plaintiff’s solicitor was not very responsive to the Defendant’s lawyer’s requests on a number of issues that have been referred to above.

[ 45 ] I find it very difficult to understand why the Plaintiff took the position that she would not consent to the adjournment offer if the amendment were granted. The Plaintiff took the position that her witness Ms. DiLorenzo was not available at the original trial date. Counsel must have been aware that the request for the amendment might be granted.

[ 46 ] The Plaintiff is asking the court to consider her costs on two levels, that is, partial indemnity at $29,352.00, and substantial indemnity at $34,812.00. I am awarding costs to the Defendant and thus do not need to deal with the Plaintiff’s request for costs. It does indicate that the Plaintiff does feel that the amount of costs on a partial indemnity basis is not that far off the amount requested by the Defendant.

[ 47 ] In reviewing the general principles for costs as outlined in Rule 57.01, I make the following findings:

1. The Defendant’s lawyer was called in 2008, so she had about three years of experience. Her hourly rate is stated to be $270.00 on a substantial indemnity basis. I find that a bit on the high side.

2. As stated, the Plaintiff’s claim for costs is not that far off what the Defendant is asking for.

3. The Defendant was successful in the defence of the claim of the Plaintiff.

4. I found that the action was not complex. It dealt with the issue of fixed contract and the various employment positions that the Plaintiff had with the Defendant.

5. The issues were important for both parties.

6. I find that the Plaintiff did not co-operate with the Defendant. She was late in replying, did not adhere to time guidelines, and gave little or no explanation for her conduct.

7. The Plaintiff was the cause of the delay in the trial because she did not prepare for the court granting the adjournment at the start of the first trial date. The Plaintiff was aware that one witness was not available, but did not consent to an adjournment that the Defendant offered.

8. The Plaintiff did not admit many of the issues raised by the Defendant on its request to admit until the trial was being heard.

[ 48 ] I find that there are good reasons for awarding costs above the partial indemnity basis, namely, the manner in which the Plaintiff dealt with requests of the Defendant which caused extra work and a delay in the trial. The court should discourage this type of conduct.

[ 49 ] On the other hand, I find that since the issues were not complex or difficult, the amount of preparation should be lower than it was.

[ 50 ] Therefore, I am setting the costs in favour of the Defendant in the amount of $38,000.00 inclusive of disbursements and H.S.T.

Matheson, J.

Released: January 31, 2012

COURT FILE NO.: SR12265/09
DATE: 2012-01-31

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: Rosa Bagnulo Plaintiff - and – Complex Services Inc. Defendant COSTS ENDORSEMENT Matheson, J.

Released: January 31, 2012