NEWMARKET COURT FILE NO.: CV-09-096078-00

DATE: 20130308

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ML DRYWALL LTD., Plaintiff

AND:

ANGELO ABBRUZZESE, MICHAEL ANTHONY MANAGEMENT & CONSULTING INC., and FOREMOST MORTGAGE HOLDING CORPORATION, Defendants

BEFORE: THE HON. MR. JUSTICE P.H. HOWDEN

COUNSEL: P. Summers, Counsel, for the Plaintiff

F. Souza, Counsel, for the Defendant Angelo Abbruzzese

HEARD: by written submissions

ENDORSEMENT RE COSTS

[1] I have read the submissions from counsel on the issues of costs and pre-judgment interest. They break down into three issues. They are:

(i) prejudgment interest rate;

(ii) partial and substantial indemnity versus solely partial indemnity scale; and

(iii) time claimed is excessive and rates claimed are at full indemnity and not substantial indemnity scale.

[2] I am of course fully aware of my discretion and the principles that must guide me. Most importantly, in fixing costs, I am not engaging in a line by line assessment but rather I am seeking to determine what is a fair value for the work required, one that is not beyond the reasonable and legitimate expectations of the losing party. Boucher v. Public Accountants Council (Ontario) (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291(C.A.); Davies v. Clarington(Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66.In dealing with pre-judgment interest, I must be guided by the contract between the parties which may include the billing invoices for work done, as well as the Courts of Justice Act R.S.O. 1990,c.C.43, sections 127 and 128 and the interest tables in the Act.

(i) Pre-judgment Interest Rate.

[3] The rate provided for causes of action arising in July 2009 is 0.5%. I do not accept that the rate should be 2% because the plaintiff sent invoices including the 2% rate some three months after the contract was made which mentioned no such rate. I see no reason not to apply the rate set out in the Courts of Justice Act which is 0.5% (rounded in accordance with the statutory regulation).

(ii) Scale of Costs

[4] The plaintiff made a written offer 2.5 years before the trial. He offered to settle for $80,000 all in, whereas judgment has been granted in the plaintiff’s favour in the sum of $80,675.62 plus approximately $1400 in PJI and costs. At that time, the plaintiffs’ costs stood at approximately $5000 and I am sure the defendants’ costs would have been in the same range. Now, after two sets of discoveries, pre-trials and trial, the parties are looking at a range of costs between $25,000 and $78,000.

[5] The first point to be made here is that it is clear that the plaintiff has received a judgment after trial that is more favourable than the offer. This case therefore comes within the terms of rule 49.10 of the Rules of Practice which provides:

Where an offer to settle,

(a) is made by a plaintiff at least 7 days before the commencement of the hearing;

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

(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.

[6] The defendant Mr. Abbruzzese submits through his counsel that, given the small differential between the amount awarded and the amount of the offer, this is a case where the court should order otherwise than the S.I. scale suggested in rule 49.10. He also suggests that the defendant did not act in any reprehensible way so as to require the exceptional imposition of S.I. costs.

[7] On the second point, there is no suggestion in my reasons nor in the submissions of Mr. Summers that S.I. costs are being requested as a penalty for bad conduct. That is not this case. The plaintiff seeks to have the court follow rule 49.10 because of his pre-trial offer.

[8] I think what the counsel for the defendant is getting at in his first point is either that the offer fails to include any real element of compromise in a case where credibility was involved completely regarding the alleged $20,000 cash payment and where some element of credibility was also involved regarding the interpretation of the contract and particularly some of the extras claimed. In the case cited by counsel for the defendant, Niagara Structural Steel (St. Catharines) Ltd. v. W.D. Laflamme Ltd. (1987), 1987 4149 (ON CA), 58 O.R, (2d) 773, the Ontario Court of Appeal ruled that rule 49.10 sets out what is meant to be a general rule, that exceptions to it should not be so common as to discourage predictability of costs consequences and frustrate the policy incentive to settle embedded in the rule. In this case, the plaintiff’s offer did give up some PJI and most of his actual costs. As well, at the time, both parties would or should have known that this would involve significant costs if it did not settle because of the relatively large number of witnesses involved and the lack of any written record of certain things like the extra claimed for the basement ceiling and for the supposed cash payment amounting to about one-third of the total contract up-front.

[9] Following the principles in Niagara Structural Steel and in Boucher, as well as the purpose of rule 49,10, I cannot find in this case any reason approaching the requirements of the interests of justice to warrant a departure. The plaintiff will have his costs on the PI scale to June 3, 2010 and on the SI scale thereafter.

(iii) Costs are based on Excessive Time Claims and Excessive Hourly Rates

[10] I have reviewed the draft bill of costs and obtained a sense of the time entries. I agree that SI costs do not mean full indemnity, as it appears from what Mr. Summers says in para 16 in his main submissions. He has reduced the overall amount to match the amount billed the client, is what I am taking from that paragraph. As a result, I will reduce the fees element of the bill by 12% on this account, to put it on a SI scale, not full indemnity.

[11] In view of the extended number of pre-trial examinations, detailed undertakings, more than one pre-trial and the requirements of the trial which involved extensive examinations of the principals and examinations of seven other witnesses as well as reply evidence and a motion to re-open by the defendant, this is clearly a case requiring significant award of costs and both parties would have expected that. One factor I must weigh also on any case where a party claims excessive costs is the party’s failure to submit his own accounts for his legal work throughout the proceeding. Taking a global view of what was involved here as well as the 12 percent reduction to account for SI costs as opposed to full indemnity, , I find to be a reasonable and legitimately expected amount of costs for the work required on the scales as proposed to be $50,000 plus HST for fees. For disbursements, the amount claimed is awarded, being $5,134.16 plus HST.

[12] I see no problem with the form of the draft judgment submitted to me now that para 5 was removed, as requested by Mr. Souza. As I would prefer that counsel do the arithmetic, I suggest that Mr. Summers add the PJI, the fees, disbursements, and the HST on both and complete the amount in the judgment, correct para 3 referring to GST (if it indeed is HST as submitted in the plaintiff’s brief), and send the draft judgment in the normal way to Mr. Souza for his approval. It can then be signed by the Registrar. If there is a need for some reason I do not see now to settle this judgment, Mr. Summers may request of the Trial Co-ordinator in Barrie a date on which he can attend with Mr. Souza to settle it.

[13] I thank counsel for their diligent assistance as officers of the court.

HOWDEN J.

Date: March 8, 2013