ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-10-415070
DATE: April 12, 2013
BETWEEN:
1269016 ONTARIO LIMITED
B. Nicholson, for the plaintiff
Fax: 647-343-7077
Plaintiff (defendant by counterclaim)
- and -
DAVID ELLIS, ASNETH JAMES, HOME TRUST COMPANY[^1] and FERNANDO LEAL
D. Ellis, 166 Caledonia Road, Toronto, ON M6E 4S7, in person
A. James, 166 Caledonia Road, Toronto, ON M6E 4S7, in person
Defendants (plaintiffs by counterclaim)
Master C. Albert
1269016 Ontario Limited (“126”) was successful at trial for reasons released February 7, 2013. In my reasons I fixed a timetable to file written submissions on costs. 126 served and filed written submissions. The defendants, owners David Ellis and Asneth James, filed a letter denying receipt of 126’s costs submissions and stating that 126 is not entitled to costs for failure to serve its written costs submissions.
The issues are (i) whether 126 served its costs submissions on Mr. Ellis and Ms James and (ii) whether 126 is entitled to costs and if so in what amount?
I. Background
126 claimed a construction lien for $27,880.00 for services and materials supplied but not paid for by the owners Mr. Ellis and Ms James. 126 succeeded at trial to the extent of an award of $23,360.00, which is eighty-four (84%) percent of the amount claimed.
Mr. Ellis and Ms James counterclaimed initially for $100,000.00, but that claim was reduced at a pretrial to $40,000.00 for failure to particularize any portion of the counterclaim in excess of $40,000.00. They were successful at trial to the extent of only $4,520.00, which is only four and a half (4.5%) percent of their original couterclaim and eleven (11%) per cent of their reduced counterclaim.
I find that 126 was overwhelmingly successful at trial. Mr. Ellis and Ms James were dismally unsuccessful at trial.
II. Did 126 serve its cost submissions on Mr. Ellis and Ms James?
126 filed an affidavit of service of Lindsay Hope, legal assistant to counsel for 126, attesting to having served 126’s cost submissions on Mr. Ellis and Ms James on February 21, 2013 by dropping off a package with the documentation at their residence at 166 Caledonia Road, Toronto, Ontario M6E 4S7. That is the same address that Mr. Ellis and Ms James provided to the court at the opening of trial as the address to which all communications pertaining to the trial should be delivered. Mr. Ellis and Ms James, in their letter to the court of February 22, 2013, claim that they did not receive the costs submissions of 126.
I accept the affidavit of service of Lindsay Hope as proof that the costs submissions were delivered to Mr. Ellis and Ms James. I do not accept as credible the assertion of Mr. Ellis and Ms James that they did not receive 126’s costs submissions. In my decision released February 7, 2013 I made the following finding, for reasons explained in detail in that judgment:
“Mr. Ellis’ outright fabrications, acquiesced to by Ms James, that the Owners had prepared, served and filed seventeen affidavits of evidence in chief discredits them.”
Throughout this reference Mr. Elis and Ms James have repeatedly asserted that they did not receive documents from 126’s counsel and from the court, and that they delivered documents to 126 and to the court that 126 claims never to have received and that are not in the court file. Their denial of receiving 126’s costs submission is just one more example of a self-serving denial that lacks credibility. My findings on the credibility of Mr. Ellis and Ms James, set out in detail in my reasons of February 7, 2013, continue to apply.
I find that 126 delivered its costs submissions to Mr. Ellis and Ms James within the timeframe ordered by the court.
III. Is 126 entitled to costs and if so in what amount?
Generally costs follow the event and the successful party is entitled to costs. There is no reason to depart from this general principle in this case. 126 asks for costs on a substantial indemnity scale because of the manner in which Mr. Ellis and Ms James conducted the proceeding, causing increased costs to 126.
The court granted many indulgences to Mr. Ellis and Ms James, due to their self-representation and lack of familiarity with the court process. However that is not a basis to award costs on an increased scale.
In this case pretrials and trial were longer and more complicated than they should have been because Mr. Ellis and Ms James failed to co-operated and comply with court orders. Their lack of co-operation and breach of court orders goes well beyond anything attributable to lack of familiarity by a self-represented litigant with court process. Rather, it ventures into the realm of obstructionist behavior. Examples are:
a) Failure to attend the first pretrial on October 11, 2011 after having been served with notice of trial and an order for trial.
b) Failure by Mr. Ellis to attend the October 31, 2011 reconvening of the first pretrial. Ms James attended with a letter from Mr. Ellis stating only that he was out of town, without any explanation.
c) Failure by Mr. Ellis and Ms James to comply with the deadlines ordered on October 31, 2011 to deliver affidavits of documents and particulars of their counterclaim. In fact they never delivered clear particulars of their counterclaim.
d) Failure to serve and file witness statements and disclose the identity of witnesses in advance of trial. Mr. Ellis and Ms James insisted that they had filed 17 witness statements but the statements could not be found in the court file and neither of them could produce copies. Their witness list had only ten names. They called only three of the witnesses listed and then sought leave to call three additional witnesses who were not on their witness list, who had not been disclosed to 126 before trial and who had not provided witness statements.
The consequence of the behavior of Mr. Ellis and Ms James is that trial preparation for 126 was more difficult, additional pretrials were required that ought not to have been necessary, and the trial took longer than it would have taken had Mr. Ellis and Ms James provided disclosure before trial, as ordered, in the form of particulars of their counterclaim and witness statements. All of these factors increased 126’s litigation costs.
As a general principle costs in a proceeding under the Construction Lien Act, as in an ordinary action, are in the absolute discretion of the court[^2]. In fixing costs the court must consider the facts and circumstances of the particular case; it is not a mechanical exercise.
[2] I have also considered the relevant factors described in rule 57.01(1), including:
a) the amount claimed and recovered
b) the complexity of the proceeding;
c) the importance of the issues;
d) whether the conduct of any party shortened or unnecessarily lengthened the duration of the proceeding;
e) the principle of indemnity, taking into account the experience of 126’s lawyer, the rates charged and the time spent;
f) the reasonable expectation of Mr. aellis and Ms James as to quantum they should reasonably expect to pay; and
g) whether costs are in proportion to the proceedings.
[3] Having considered these factors, which in my view are relevant in exercising discretion, I have determined and fixed an appropriate award of costs.
(i) Amount claimed and recovered
126 was overwhelmingly successful in this construction lien reference, achieving almost everything it claimed and successfully defending almost all of the counterclaim, which was largely unproven. I find that it is appropriate in this case for costs to follow the event and for 126 to recover costs.
(ii) Complexity of the proceeding
The factual and legal issues were not complex.
(iii) Importance of the issues
The issues were important to the contractor, 126, who had no choice but to pursue litigation to the bitter end to collect payment for materials and services supplied to improve the home of Mr. Ellis and Ms James.
(iv) Conduct that affected length of proceeding
As already described, the conduct of Mr. Ellis and Ms James throughout this reference increased costs: their failure to attend pretrials and failure to comply with court orders caused re-attendances and increased trial length. Their “trial by ambush” conduct made the trial preparation and conduct of trial much more difficult for 126.
For the litigation steps required by 126 because the conduct of Mr. Ellis and Ms James gave rise to litigation expense that would not have been necessary had they behaved appropriately, I find that 126 is entitled to costs on a substantial indemnity scale. For litigation steps that would have been required regardless of the manner in which Mr. Ellis and Ms James conducted their defence and counterclaim, 126 is entitled to costs on a partial indemnity scale.
(v) Indemnification
I have reviewed the Bill of Costs filed by counsel for 126 and find that the partial indemnity rates claimed are reasonable and reflect the costs and level of experience appropriate for a claim and counterclaim of this nature and quantification. I have also reviewed the Bill of Costs for items claimed and find that the steps for which costs are claimed on a partial indemnity scale are appropriate.
Regarding 26’s entitlement to costs on a substantial indemnity scale for steps taken solely because of the inappropriate conduct of the litigation by Mr. Ellis and Ms James, counsel has not distinguished between actual costs and substantial indemnity costs (which are lower than actual costs). In fixing costs I have made the appropriate adjustment downward for those items for which I find substantial indemnity costs appropriate.
(vi) Reasonable expectation of the payor
Mr. Ellis and Ms James knew or ought to have known and expected that if they were unsuccessful at trial then they would likely be liable for costs of the opposite party. Cost consequences were discussed during the pretrial process.
Mr. Ellis and Ms James consulted a lawyer from time to time in respect of this proceeding. Whether they had an actual expectation as to the quantum of costs, they ought to have had a reasonable expectation of their obligation to pay costs if unsuccessful at trial.
Not having filed any substantive submissions despite the opportunity to do so, there is no evidence or argument before the court to suggest that Mr. Ellis and Ms James did not reasonably expect to be ordered to pay costs in the amount quantified by this order if unsuccessful.
(vii) Proportionality
The claim was for $27,880.00 and the original counterclaim was for $100,000.00. The reduced counterclaim was for $40,000.00. That means that in the first instance the “swing” of what was in issue was $127,880 and by trial the “swing” was $67,880.00. The costs fixed by this order are proportionate to the amounts in issue at trial.
IV. Quantifying Costs
I find that 126 is entitled to:
a) Costs on a partial indemnity scale for steps taken that would ordinarily have been taken regardless of the level of co-operation of the defendants, and
b) Costs on a substantial indemnity scale for steps taken that were required only because of the behaviour of Mr. Ellis and Ms James in respect of breach of court orders, failure to attend court ordered events, denial of service of documents that were served on them, failure to deliver documents ordered delivered and failure to identify all of their witnesses before trial and provide witness statements.
I accept the hourly rates for partial indemnity fees as shown in the Bill of Costs of counsel for 126 as appropriate for a lawyer of Mr. Nicholson’s experience. An appropriate substantial indemnity rate is $250.00, not the actual rate of $300.00 per hour as claimed in the Bill of Costs.
In fixing costs I have taken into account the number of hours and hourly rates claimed in the Bill of Costs. I find that 126 is entitled to partial indemnity costs for the litigation steps described in the Bill of Costs, except for the steps described in the next paragraph for which substantial indemnity costs are appropriate.
Substantial indemnity costs are allowed for obtaining the judgment of reference. That step in the ordinary course is completed on consent in writing without requiring a court attendance. In this case Mr. Ellis and Ms James refused to consent and an attendance was required. On the attendance no reasonable explanation was given to oppose the motion and judgment of reference was given.
Substantial indemnity costs are also appropriate for one of the pretrial attendances. At least one additional attendance was required because of breaches of orders by Mr. Elllis and Ms James.
Substantial indemnity costs are also appropriate for one of the three days of trial because of the delay caused by the failure by Mr. Ellis and Ms James to disclose in advance of trial the identity of all of their witnesses and witness statements setting out the anticipated evidence of each witness. Without this information in advance of trial additional trial time was required for 126 to deal with these witnesses and respond.
Taking all of these factors into account I find that an appropriate amount for fees is $10,000.00 plus HST of 13 percent for a total of $11,300.00. I find that the disbursements claimed are reasonable and allow disbursements of $935.91 including HST. The total costs payable by Mr. Ellis and Ms James jointly and severally to 126 is $12,235.91 including HST. This judgment for costs bears post-judgment interest at the rate of three (3%) per cent from the release date of these reasons to the date of payment.
V. CONCLUSION
For these reasons costs are fixed at $12,235.91 payable by Mr. Ellis and Ms James jointly and severally to 1269016 Ontario Limited.
This judgment for costs bears post-judgment interest at the rate of three (3%) per cent per annum from the date of release of these reasons to the date of payment.
Master C. Albert .
Released: February 7, 2013
COSTS
COURT FILE NO.: CV-10-415070
DATE: April 12, 2013
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1269016 ONTARIO LIMITED
Plaintiff (defendant by counterclaim)
- and -
DAVID ELLIS, ASNETH JAMES, HOME TRUST COMPANY and FERNANDO LEAL
Defendants (plaintiffs by counterclaim)
COSTS
Master C. Albert
Released: April 12, 2013
[^1]: The action was discontinued against mortgagees Home Trust and Leal
[^2]: Courts of Justice Act, R.S.O. 1990, c.C.43, s.131; Construction Lien Act, R.S.O. 1990, c.C.30, s.86