ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-12-108282-00
DATE: 20130327
BETWEEN:
Bank of China (Canada)
Plaintiff
– and –
Ocean Sands Developments Limited, Ermidio F. Alves and 255 “B” Rutherford Road South Limited Partnership
Defendants
Martin Greenglass, for the Plaintiff
Ritchie J. Linton, for the Defendants
HEARD: February 25, 2013
COSTS RULING
gilmore J.:
Overview
[1] This was a motion for summary judgment brought by the plaintiff, Bank of China (the “Bank”), requesting judgment in relation to a loan advance to the defendant, Ocean Sands Development Limited (“Ocean”), in its capacity as the principle debtor, and as against the defendant, Ermidio F. Alves (“Alves”), in his capacity as guarantor of the obligations of Ocean.
[2] The matter was heard on February 25, 2013, and by way of reasons released on March 8, 2013, the motion for summary judgment was granted. The parties were requested to provide written submissions on costs, which they have now done and I have reviewed.
Positions of the Parties
[3] The Bank seeks substantial indemnity costs, inclusive of fees, disbursements and HST, totalling $47,227.93. The fee portion of that amount is $38,388.75.
[4] The Bank submits that they have had success, and costs should follow the event. The success is clear, as not only was the ruling to the effect that the loan facility advanced by the Bank was payable on demand and that the Bank was entitled to make demand without monetary loan default, but the court ruled further that there were loan defaults in relation to the non-financial terms and covenants related to the loan facility in question. The success is therefore substantial and significant.
[5] The court found that the Bank did not act in bad faith, but rather allowed time for the defendants to arrange refinancing and when that was not forthcoming, put the matter properly before the court.
[6] At the conclusion of the motion, when brief costs submissions were made, the Bank reminded the court that in the event of success, they would be seeking not only the costs of the motion, but also costs of the action. It is significant that the costs outline provided by the defendants also includes the costs of the action, and that the time spent as set out in the bill of costs for both counsel varies only by 4 hours.
[7] The rates charged by counsel are reasonable given the length of time they have been in practice and their experience. Mr. Greenglass was called to the bar in 1976 and charges $475.00 per hour on a substantial indemnity basis. Mr. Linton was called to the bar in 1978 and charges $450.00 per hour on a substantial indemnity basis.
[8] The Bank submits that since the hours and rates submitted by the Bank and the defendants are similar and reasonable in the circumstances, the main issue for the court to decide is whether costs should be on a partial or substantial indemnity basis. The Bank points out that substantial indemnity costs are claimed by the Bank, as the ability to recover such costs is a contractual right under the security documentation. Both the mortgage security and the standard charge terms provide for full indemnity costs. In addition, the general security agreement contains the ability to recover costs. As such, cost recovery on a substantial indemnity basis would not be disproportionate. The bank also seeks to recover the fees for Sun and Partners ($7907.00) who, after discovering the technical defaults of the defendants took certain steps, including formal demands to the defendants.
[9] Finally, the Bank points out that the fees sought are proportional as they represent 1.3 per cent of the total judgment.
[10] Mr. Linton on behalf of the defendants took the position that no costs should be awarded because the Bank’s counsel persisted in repeating the allegation that Mr. Alves lied. On that issue, the reasons for judgment set out as follows, “I prefer to take the view that Alves simply had a different perspective on those circumstances”. Mr. Linton argues that the allegation that Mr. Alves lied on his statutory declaration was not made out and therefore costs should be awarded on a substantial indemnity basis in favour of the defendants.
[11] In the case of DiBattista v. Wawanesa Mutual Insurance Co. (2005) https://www.canlii.org/en/on/onsc/doc/2005/2005canlii41985/2005canlii41985.html, 78 OR (3d) 445, the court held that unfounded allegations of fraud, dishonesty or other improper conduct seriously prejudiced the character or the reputation of a party, and therefore costs should be awarded on a substantial indemnity basis in favour of that party.
[12] The defendants also relied upon Salib v. Cross (1995) https://www.canlii.org/en/on/onca/doc/1995/1995canlii1140/1995canlii1140.html, 27 OR (3d) 255 for the proposition that where a matter is contentious and both parties are to blame, it is proper for a trial judge to exercise his or her discretion in not awarding costs to either party.
[13] Finally the defendants argue that this was a novel fact situation, outside of the norm of the usual debtor/creditor relationship and raises unique issues. As such, the defendant’s position was that their position was neither capricious nor frivolous and required a full hearing and adjudicated result.
[14] In response, the Bank submits that the DiBattista case does not apply. While the defendants are correct that submissions made to the court were to the effect that Mr. Alves lied in two statutory declarations, the court still found that the statutory declarations of Mr. Alves were inaccurate. While the court preferred to take the view that Mr. Alves had a different perspective, the court still accepted the submissions that the statutory declarations were inaccurate and therefore a misrepresentation.
[15] Further, the DiBattista case is one in which the allegations went far beyond those being raised against Mr. Alves and included circulation of the allegations in the newspaper and social media by the plaintiff. No such steps were taken by the Bank in this case, nor did the court rule on whether Mr. Alves intentionally put forward misstatements as that was beyond the scope of what was required to be decided.
[16] The Bank also rejects the submission that no costs should be awarded on the basis of the principles in the Salib case. The Bank’s position is that the facts in the Salib case were quite different in that they were extremely contentious and related to a bitter and drawn out family law dispute. The case at bar is a commercial matter involving contractual interpretations and disputes. The two cases cannot be compared with respect to a court’s discretion to award costs.
[17] Finally, the Bank rejects the defendants’ argument that the issues were novel. The Bank submits that, in fact, the issues were quite straight forward and required findings of fact in relation to certain security and loan documentation. The matters were not unique and certainly not sufficiently so to require a trial in the opinion of the court.
Ruling
[18] I agree with the Bank that costs should follow the event and on the principle of indemnity, the Bank should have its costs.
[19] The Bank should not be deprived of its costs on the basis of either party acting in bad faith. I specifically found that the Bank did not act in bad faith. With respect to Mr. Alves, it was not necessary for me to decide whether or not his actions were intentional. I found that the statutory declarations of Mr. Alves were inaccurate in certain respects, resulting in a misrepresentation to the Bank, which further resulted in the Bank’s entitlement to make demand. That is quite different from the findings in DiBattista where the plaintiff’s allegations relating to the conduct of the defendant insurer were intended to harm its business reputation.
[20] I agree that the hours charged and the hourly rates do not seem unreasonable, given the issues at stake, the experience of counsel, that the matter was argued efficiently and with excellent materials. Neither party attempted to protract the matter or make arguments that did not have merit.
[21] I do not agree with the defendants’ position that the matter was sufficiently novel to require both parties to absorb their costs. In my view, the case did not contain the type of uniqueness that would put it outside the normal principles of indemnity.
[22] That leaves the issue of whether or not substantial or partial indemnity costs should be payable. There is evidence that the Bank is entitled to substantial indemnity costs because of the mortgage security with the standard charge terms and the general security agreement. However, in all such cases, the court retains discretion to ensure that costs awards are proportional. The fact that a contract entitles a successful party to full indemnity costs does not mean that the Courts costs order must align exactly to the bill of costs provided by counsel.
[23] $20,000.00 for fees is an amount which reflects the principle of indemnity but also reflects proportionality in these circumstances. HST is payable on the fees and the full amount of disbursements are allowed being $3,761.07.
[24] As for the amounts claimed for Sun & Partners, I have reviewed the accounts provided. There is no breakdown for hours spent or hourly rates charged. In the circumstances I would allow a further $3,500.00 for their fees plus HST and disbursements.
[25] The total costs ordered may be broken down as follows:
Fees on summary judgment motion $20,000.00
HST on fees 2,600.00
Disbursements on summary judgment 3,761.07
Fees for Sun & Partners 3,500.00
HST on fees 455.00
Disbursements for Sun & Partners 81.75
Total Fees, HST and disbursements payable $30,397.82
Justice C.A. Gilmore
Released: March 27, 2013