ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-09-0512
DATE: 2013-03-27
B E T W E E N:
J.I.L.M. ENTERPRISES & INVESTMENTS LIMITED
Christopher Hacio, for the Plaintiff
Plaintiff
- and -
INTACT INSURANCE (formerly called ING INSURANCE COMPANY OF CANADA) and AON REED STENHOUSE INC.
Umberto Agostino and Robin Clinker, for the Defendant and Intact Insurance
Defendants
HEARD: Via written submissions
Mr. Justice D.C. Shaw
Decision On Costs
[1] This is a decision on the costs of a summary judgment motion.
[2] On May 8, 2009, fire damaged the Dorion Inn which was owned and operated by the plaintiff.
[3] The plaintiff made a claim under a policy of insurance with the defendant, Intact Insurance. It included a claim for $825,296.32 for the replacement costs of contents that were destroyed or damaged in the fire.
[4] Intact denied the claim for contents on the basis that the policy did not include contents coverage. The plaintiff brought the within action against Intact.
[5] Intact brought a motion for partial summary judgment to dismiss the plaintiff’s claim for the replacement cost of the lost contents. Intact was successful on the motion. It seeks its costs of the motion from the plaintiff.
Submissions
[6] Intact seeks costs, on a partial indemnity scale, of $21,621.00 for fees, plus HST thereon of $2,810.73, and disbursements of $905.68, plus HST of $101.24, for a total of $25,438.65.
[7] The plaintiff sets out the following concerns about Intact’s claim for costs:
• two counsel worked on the file when only one counsel was required;
• the total number of hours spent by Intact’s counsel was excessive;
• Intact’s counsel underestimated the length of their submissions, which therefore caused the motion to be heard over the course of two days, requiring counsel to prepare twice to argue the same motion;
• Intact’s counsel filed numerous documents on the motion which were not relevant and not referred to;
• the amount claimed by Intact is unreasonable.
[8] The Costs Outline filed by Intact shows that 32.6 hours were spent by Mr. Agostino, at a partial indemnity rate of $275.00 per hour, for a total of $8,965.00, and that 85.6 hours were spent by Ms. Clinker at a partial indemnity rate of $175.00 per hour, for a total of $11,984.00. There is also $672.00 claimed for clerk time at $80.00 per hour.
[9] Mr. Agostino has 27 years experience. Ms. Clinker has six years experience.
[10] Intact submits that the rates and hours claimed by its counsel are reasonable and comparable with the partial indemnity rates of $245.00 per hour shown in the plaintiff’s Costs Outline. Counsel for the plaintiff, Mr. Hacio, has docketed 74.85 hours. Mr. Hacio has 22 years experience. His partial indemnity rate is $245.00 per hour. The plaintiff’s Costs Outline also shows clerk time of 27.40 hours at $66.50 per hour.
[11] Intact submits that although two counsel appeared on its behalf on the motion, there was no duplication of time.
[12] Intact submits that the amount of its claim for costs was within the reasonable expectation of the plaintiff. Mr. Hacio’s Costs Outline claims $23,000.00 for partial indemnity costs, plus HST. Mr. Hacio shows disbursements of $502.29, plus HST.
[13] Intact submits that the summary judgment motion drastically reduced the issues to be decided at trial.
[14] Intact submits that the plaintiff acknowledges in its own Costs Outline that the issues were complex and required experienced counsel.
[15] Intact also submits that the plaintiff should have acknowledged that there was no contents coverage in the policy and that its only claim was against its broker.
[16] In Serra v. Serra (2009), 2009 ONCA 395, 66 R.F.L. (6th) 40 (Ont. C.A.), at p. 42, the Court of Appeal reiterated the fundamental purposes which modern costs rules are designed to foster, as set out in Fong v. Chan (1999), 1999 2052 (ON CA), 46 O.R. (3d) 330 (Ont. C.A.), at para. 22:
(1) to partially indemnify successful litigants for the costs of litigation;
(2) to encourage settlement; and
(3) to discourage and sanction inappropriate behaviour.
[17] In Anderson v. St. Jude Medical Inc., 2006 85158 (ON SCDC), [2006] O. J. No. 508 (Ont. Div. Ct.), at para. 22, the Divisional Court set out the principles to be applied by the court in exercising its discretion (citations omitted):
The discretion of the court must be exercised in light of the specific facts and circumstances of the case in relation to the factors set out in Rule 57.01(1).
A consideration of experience, rates charged and hours spent is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case. The quantum should reflect an amount the court considers to be fair and reasonable rather than any exact measure of the actual costs to the successful litigant.
The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining an amount that is fair and reasonable: Rule 57.01(1)(O.b).
The court should seek to avoid inconsistency with comparable awards in other cases. “Like cases [if they can be found], should conclude with like substantive results.”
The court should seek to balance the indemnity principle with the fundamental objective of access to justice.
[18] The Court of Appeal has made it clear that in assessing costs, the overriding principle is one of reasonableness, and that the failure to follow that principle can produce a result that is contrary to the fundamental objective of access to justice (Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (Ont. C.A.), at p. 302.
[19] In Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. No. 4495 (Ont. C.A.), at para. 4 the Court of Appeal did not make a specific finding with respect to the amount of time spent or the rates charged by counsel, and stated:
“In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.”
[20] Rule 57.01(1) of the Rules of Civil Procedure provides:
“57.01 (1) Factors in discretion - 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 on any party that tended to shorten or 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 solicitor; and
(i) any other matter relevant to the question of costs.”
[21] Rule 1.04 (1.1) of the Rules of Civil Procedure provides:
1.04 (1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.
[22] The plaintiff seeks costs on a partial indemnity basis. I agree that this is the appropriate scale. There is no basis to award costs on a substantial indemnity basis.
[23] Partial indemnity costs and substantial indemnity costs are defined in Rule 1.03. Substantial indemnity costs are defined, in effect, as 1.5 times partial indemnity costs. Looked at from the opposite perspective, partial indemnity costs are then two-thirds of substantial indemnity costs.
[24] I take no objection to the substantial indemnity rates of $350.00 and $175.00 shown by Mr. Agostino and Ms. Clinker, respectively, based on their experience. However, two-thirds of those substantial indemnity rates are not the amounts claimed for partial indemnity costs. Two-thirds of $350.00 is approximately $233.00 not $275.00. Two-thirds of $175.00 is approximately $117.00, not $140.00. Calculated on this basis, the fees claimed would be reduced by more than $3,300.00.
[25] I have some concerns with the fact that Intact had two counsel acting on this matter. In my view, it was not a matter that should require the plaintiff to indemnify Intact for the costs of two counsel. On the other hand, my review of the dockets of Intact’s counsel does not reveal a great overlap in time. Each of the two counsel for Intact focussed on a separate issue. However, both counsel did charge for the time spent in court on September 25, 2012. There also appears to be some overlap in preparation and review of the plaintiff’s factum and book of authorities.
[26] Mr. Agostino and Ms. Clinker docketed a combined total of 118 hours.
[27] Mr. Hacio, by contrast, docketed approximately 75 hours, with an additional 27 hours shown for his law clerk.
[28] The time of 118 hours, even taking into account attendance on two, half days to argue the motion, strikes me as somewhat high.
[29] In looking at what the plaintiff, as an unsuccessful party, could reasonably expect to pay for this motion, it is helpful to look at the Costs Outline filed by the plaintiff’s counsel. In that Costs Outline, Mr. Hacio sought partial indemnity costs, if successful, of $23,000.00, inclusive of $502.29 in disbursements, plus HST. This would lead to a total, after HST, of almost $26,000.00. That number is virtually identical to the total fees and disbursements, including HST, sought by Intact, namely $25,538.65. One can only conclude that the amount claimed for costs by Intact was an amount which the plaintiff could reasonably have known it would face if it was unsuccessful on the motion.
[30] As acknowledged by the plaintiff in its Costs Outline, the amount at stake and the consequences of the decision were important and the motion was reasonably complex , requiring experienced counsel.
[31] Although each party submits that the other’s conduct unnecessarily lengthened the duration of the motion, either because the plaintiff failed to accept that the policy provided no contents coverage, or because counsel for Intact exceeded its estimated time for argument, which led to a second day of hearing the motion, I do not find that either party’s conduct was unreasonable.
[32] In my view, having regard to the factors noted above, it would be fair and reasonable to award Intact costs of the summary judgment motion in the sum of $17,500.00, towards fees and disbursements, plus HST.
The Hon. Mr. Justice D.C. Shaw
Released: March 27, 2013
COURT FILE NO.: CV-09-0512
DATE: 2013-03-27
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
J.I.L.M. ENTERPRISES & INVESTMENTS LIMITED
Plaintiffs
- and –
INTACT INSURANCE (formerly called ING INSURANCE COMPANY OF CANADA) and AON REED STENHOUSE INC.
Defendants
REASONS ON MOTION
Shaw J.
Released: March 27, 2013
/mls