ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-10-0100891

DATE: 20130328

In the matter of the Construction Lien Act, R.S.O. 1990, c. C.30, as amended

BETWEEN:

I. Young & Co. Ltd.

Plaintiff

– and –

Anna Christine Sgro

Defendant

Karey Anne Dhirani, for the Plaintiff

Gregory Hemsworth, for the Defendant

HEARD: Written submissions

COSTS ENDORSEMENT

lauwerS j.:

[1] This was a construction lien action brought by the plaintiff for landscaping work done for the defendant. The decision is reported at 2013 ONSC 910.

[2] As the reasons point out, the central issue was whether the parties agreed to a lump sum contract as maintained by the defendant. I found that there was no lump sum contract, and that the total owed to the plaintiff for work done and materials supplied under the contract was $48,301.08. From this, I held that the deposit of $10,500 must be deducted, leaving a balance of $37,801.08. I then went on to find that there were deficiencies in the plaintiff’s work and that the remedial costs to be offset were $6,825, leaving the sum to be paid to the plaintiff of $30,976.08. I acknowledge the error in the judgment pointed out by the defendant that HST was not exigible on the amounts paid and instead the proper GST rate was five percent of the outstanding balance. The judgment must be amended accordingly.

[3] The plaintiff seeks costs in the amount of $91,416.00 for fees and $5,567.45 for disbursements plus HST for a total of $109,520.68. This is based on the plaintiff’s offer to settle made on July 21, 2011, which he submits entitles the plaintiff to recover largely on a substantial indemnity basis. It remained open for acceptance until one minute after trial. The amount that the plaintiff offered to accept was $20,000 inclusive of taxes, fees and disbursements as partial indemnity costs after August 4, 2011.

[4] The plaintiff bettered its own offer at trial. Under Rule 49.10 of the Rules of Civil Procedure, the plaintiff would be entitled to partial indemnity costs to the date of the offer to settle and substantial indemnity costs thereafter. This is, however, subject to the Court’s overriding responsibility to ensure that the award is fair and reasonable, and also proportionate. See Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), [2004] O.J. No. 2634. These principles apply with necessary modifications where substantial indemnity costs are awarded.

[5] The plaintiff points out that a costs award in the construction lien action can exceed the amount recovered: Bellissimo Excavating Limited v. Ding, 2004 11883 at para. 29. In Brumley v. Bonilla, [2013] O.J. No. 543, Stinson J. stated at para. 27:

In relation to the plaintiffs' claim for fees, while I acknowledge the validity of some of the defendant's points, most of the factors that I have reviewed favour the plaintiffs. The most vexing aspect of this costs dispute is the seeming lack of proportionality between the amount recovered by the plaintiffs and the amount of his costs claim. The principal reason for this and indeed for the length of the trial was the largely ill-founded counterclaim advanced by the defendant, coupled with the fashion in which she conducted her case. In large measure, it is the defendant who must bear responsibility for the amount of time consumed by the trial. Additionally and very significantly, the defendant rejected a settlement offer that was left open for acceptance until the commencement of trial, for an amount that was considerably less than the plaintiffs' final recovery. The Rules provide a built-in sanction in relation to a party’s failure to accept a reasonable settlement proposal. Once again, the defendant must accept responsibility for her own decisions and their consequences.

[6] Counsel points to the result in Crownwood Construction Ltd. v. Omartech Construction Inc. et al, 2005 31991 per Master Albert. The plaintiff recovered about $41,000 at trial but was awarded about $78,000 in fees on the basis that an unsuccessful defendant who engages in litigation strategy that causes costs to escalate should be held fully accountable for the increased costs.

[7] The defendants point to the decision in Capital Drywall Systems Ltd. v. Sceptre Developments Inc. and Zeppa, 2012 ONSC 463 in which Gilmore J. awarded $30,000 in costs inclusive of HST and disbursements on an award of about $60,000. The plaintiff sought full indemnity costs of about $40,000.

[8] Taking into account the factors referred to in the cases, I find that the defendant is the author of her own misfortune in terms of the trial time spent. The counterclaim apart from the claim from deficiencies had no merit. That said, in terms of proportionality I find the plaintiff’s request for costs exceeding $100,000 to be outrageous. I find the number of hours spent by plaintiff’s counsel, even with three trial preparations, to be excessive. I fix the plaintiff’s costs in the amount of $45,000 inclusive of fees and disbursements plus GST or HST as may be applicable, together with post-judgment interest.

Justice P.D. Lauwers

Released: March 28, 2013