ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 25009/09
DATE: 2013-01-16
BETWEEN:
Nordlund Family Retreat Inc.
Plaintiff (Defendant by Counterclaim)/Applicant
– and –
Ben Plominski
Defendant (Plaintiff by Counterclaim)/Respondent
Frederick J. Skeggs, for the Plaintiff (Defendant by Counterclaim)/Applicant
Paul A. Johnson, for the Defendant (Plaintiff by Counterclaim)/Respondent
HEARD: September 20, 2012
E.J. koke J.
DECISION ON COSTS
[1] This was a motion for summary judgment by the plaintiff, Nordlund Family Retreat Inc. (“Nordlund”).
[2] In its statement of claim Nordlund requested a declaration that an agreement it entered into for an easement over the defendant’s lands was binding on the defendant and for a vesting order of the easement. The defendant, Ben Plominski (“Plominski”) counterclaimed for an order requiring Nordlund to sever a parcel of land from its property and transfer it him, or in the alternative to pay him damages equal to the value of such parcel of land, estimated to be in the range of $150,000.00 together with exemplary and general damages.
[3] In its motion for summary judgment the plaintiff also requested an order for leave to amend its statement of claim.
[4] I determined that this was an appropriate case to be dealt with by way of summary judgment and my Reasons for Judgment were released on October 5, 2012.
[5] In my reasons for judgment I invited both parties to file written submissions with respect to costs. Both parties have filed extensive written submissions on this issue, together with replies to each other’s submissions. I have reviewed the submissions, and considered the factors set out in Rule 57.01(1) of the Rules of Civil Procedure. I wish to comment on what I consider to be the following two main issues which have been raised by the parties:
a) The degree of success of each of the parties;
b) Whether the conduct of the defendant was so reprehensible that the plaintiff should be awarded costs on a substantial indemnity basis;
Degree of Success
The Plaintiff
[6] A review of paragraphs 100.1 through 100.6 of my Reasons for Judgment reveals that the plaintiff was entirely successful in its claim for a declaration that there existed a binding agreement between the parties entitling it to an easement over the defendant’s lands and for a vesting order of the easement. The plaintiff was also successful in its request that the statement of claim be amended.
The Defendant
[7] In his counterclaim Plominski claimed to be entitled to a transfer and conveyance of lakefront land on Nordlund’s property having a frontage of 250 – 300 feet or in the event that the court was unable to order such a transfer, damages equal to the fair market value of the land which were estimated to be in the range of $150,000. Plominski also claimed exemplary and punitive damages in the sum of $150,000 and general damages of $250,000.
[8] In claiming that he was entitled to this lot or payment of the fair market value in lieu thereof Plominski relied on a document signed in August, 2007 by him and his spouse and Donald Nordlund and his spouse which was entitled a “Summary of Understanding” (referred to in the Reasons for Judgment as the “Severance Summary”).
[9] The Severance Summary provided that the plaintiff would take steps to sever a lakefront building lot for the defendant. Upon the transfer of such a lot to the defendant the defendant would pay the plaintiff the sum of $15,000 and contribute to the construction costs of the roadway to the severed lot.
[10] I concluded that the Severance Summary comprised a valid and binding agreement between the parties and that the entire terms of the agreement to sever a lot are contained within the four corners of this agreement.
[11] Based on this finding the defendant now argues that he achieved success in relation to his counterclaim. In fact he argues that Plominski was more successful in the outcome of the motion than was Nordlund. He makes this argument notwithstanding the fact that in paragraph 103 of my reasons I specifically dismiss the counterclaim.
[12] What the defendant fails to consider in his argument is that prior to commencing the counterclaim Plominski was aware that all times Donald Nordlund was prepared to honour the severance agreement, according to its terms.
[13] My decision was based to a significant degree on the considerable amount of correspondence which was exchanged between the parties prior to Mr. Nordlunds death in October, 2009. In his last letter to Plominski dated February 23, 2009 Donald Nordlund stated the following:
We have never represented the severance would be easy or quickly obtained. We believe, however, that there is a fair chance of achieving severance when the approval authority is moved. Again, I repeat we will give it our very best efforts.
[14] Although Plominski argues that he was advised that the application for severance had been rejected by the Sudbury office, this is clearly not the case. In a letter to Plominski dated January 22, 2009 Donald Nordlund states:
On the issue of the severance if rejected, we of course, have never been able to guarantee success. All we can do is give it our best efforts which we are prepared to do. In the event of failure I assume there is an appeal process which can be utilized. Colin Trivers represented us on the first filing for a severance which was filed in the Sudbury offices. We all agreed to follow the recommendation of the Sudbury office to withdraw our application and resubmit when the approving authority was moved to Blind River.
[15] What was in issue with respect to the defendant’s counterclaim was the interpretation to be given to the Severance Summary; in particular whether the plaintiff was under an obligation to pay the defendant a sum of money equal to the fair market value of the lot in the event the application to sever a lot was unsuccessful. It was this issue which was at the heart of Plominski’s counterclaim.
[16] Plominski argued that in the event that Nordlund was unsuccessful in obtaining the severance of the lot, Nordlund was under an obligation to pay him money equal to the value of the lot. Nordlund, on the other hand, denied that it was under any further obligation to Plominski in the event it was unsuccessful in securing the severance.
[17] I found that the Severance Summary provided in clearly stated terms that the plaintiff’s only obligation was to use its best efforts to obtain approval for the severance, and in the event it was unsuccessful, it was under no further obligation.
[18] At paragraph 79 of my Reasons for Judgment I stated:
In my view the Severance Summary contains all the terms which bind the parties in relation to this severance. In particular, I find that Nordlund did not agree to any additional terms and that he did not agree to pay the Plominskis a sum of money in the event the application for severance was unsuccessful.
[19] The defendant counterclaimed for an order from the court severing a lot in his favour, or in the alternative for a sum of money equal to the value of such a lot. He did not receive this relief. Accordingly the counterclaim was dismissed
[20] In conclusion, Plominski was unsuccessful in relation to his counterclaim.
[21] In summary, I find that the plaintiff was completely successful on the motion. Its request to amend its claim for relief was approved, it received judgment in accordance therewith and the counterclaim was dismissed. The plaintiff is therefore entitled to an award of costs based on having achieved complete success on both his claim and the counterclaim.
Is the Plaintiff entitled to Substantial Indemnity Costs?
[22] The plaintiff argues that the defendant’s conduct was “reprehensible, scandalous and outrageous” and that pursuant to the Supreme Court of Canada decision in Young v. Young[^1] the plaintiff should be awarded substantial indemnity costs.
[23] Clearly, there is a marked contrast in the conduct of the parties. In reviewing the correspondence between the late Donald Nordlund and Ben Plominski one cannot help but be impressed with the generosity expressed by Nordlund to the Plominskis, and the integrity and consideration which marked his dealings.
[24] The same cannot be said for Plominski. As far as he was concerned, there was no such thing as a final agreement. His actions suggest that in his mind an agreement existed simply as basis for a further demand. Each time he was successful in extracting a concession from the well-meaning and increasingly desperate and frustrated Donald Nordlund, this concession just became a stepping stone to the next demand. As Plominski’s realization grew that Nordlund was completely dependent on him for access to his property, and that the easement was of vital importance to Nordlund, the more his demands increased, notwithstanding the fact that the parties had entered into an easement agreement and that Nordlund had paid in advance for this easement.
[25] Evidence of Nordlund’s generosity is found in the way the Severance Agreement was obtained by Plominski. The Plominskis had originally purchased their small lakefront property with their friends, the Zators. When they were unable to obtain approval to sever their property into two parcels because it was too small, it was Donald Nordlund who offered to attempt to sever on Plominski’s behalf a lakefront lot on his property, which was located adjacent to the Plominski/Zator property. His offer could not have been motivated by monetary considerations, because he requested that the Plominskis only pay $15,000 for the lot which Plominski has estimated to be worth approximately $150,000.
[26] Thereafter, Plominski entered into an agreement with the Zator’s to purchase their interest in the Plominski/Zator property. However, when Plominski was unable to raise the necessary funds to purchase Zator’s interest, he approached Donald Nordlund with a request that Nordlund advance him the sum of $45,000 which was the amount the parties had agreed Nordlund would pay Plominski once final approval had been provided for the easement. Donald Nordlund could have used this opportunity to extract additional concessions from Plominski but instead he agreed to advance the hard pressed Plominski the full consideration for the easement.
[27] Thereafter, Plominski began the process of making continual and repeated demands for changes to the easement agreement, in what can only be interpreted as a thinly disguised attempt on his part to prevent Nordlund from obtaining access to his property and to provide Plominski with additional time and opportunity to extract additional consideration from Nordlund.
[28] Initially, Donald Nordlund agreed to accommodate Plominski’s requests. When Plominski complained that he was cutting too many trees in constructing the roadway, Nordlund agreed to plant trees on the property. When Plominski demanded a new survey, Nordlund agreed to undertake the cost of obtaining a new survey. When Plominski requested that the frontage of the severed lot be increased to 350 feet, Nordlund agreed. No sooner did he agree than Plominski insisted that the severed lot be 500 feet wide. Nordlund again reluctantly agreed. When Plominski insisted that the width of the easement be reduced to 16 feet (the easement agreement for which Nordlund had paid $45000 provided for a 32 foot wide easement), Nordlund agreed to do so. When Plominski attempted to return the $45,000 to Nordlund, purportedly because he was afraid that Nordlund would develop his properties and use it for commercial purposes, Nordlund pointed out that the original easement agreement contained a restrictive covenant in which it was agreed that his property would never be used for commercial development. Notwithstanding this covenant, Nordlund indicated that if Plominski required further assurances he was willing to enter into an agreement that no sale of his properties could take place without the prior approval of Plominski.
[29] The correspondence indicates that Donald Nordlund’s willingness to accommodate Plominski’s never ending demands finally ended following receipt of Plominski’s letter of February 15, 2009. In this letter Plominski requested that Nordlund put money in escrow with his lawyer in the event the application to sever a lot was unsuccessful, presumably to compensate him for the value of the lot. In this letter Plominski also informed Nordlund that he had learned that boat access to Basswood Lake may no longer be available in the future, a development which made an easement to Nordlunds water access only lots even more imperative.
[30] Donald Nordlund replied with a letter dated February 23, 2009 stating that time had come for an end to negotiations. He pointed out that he had agreed to everything Plominski had asked for except as he stated “for your latest addition asking for a monetary reward in the event that the petition for severance is denied”. This latest addition of yours has never been in any previous discussions and is totally unreasonable. I reject it and your idea of an escrow account with your attorney.”
[31] Nordlund concluded his letter by confirming that he continued to be prepared to use his “very best efforts” to obtain the severance and that he believed that there was a fair chance of achieving severance when the approval authority was moved. Plominski replied with a letter indicating he was not prepared to complete the easement and permit Nordlund access to his property over his land unless money for the lot was placed in escrow.
[32] In support of his position that Plominski’s conduct was morally reprehensible counsel for Nordlund argues that it was clear from the start that Plominski had no intention of being bound by his contractual obligation to give an easement to the plaintiff. He points out that despite agreeing to pay in advance for the easement, and despite spending thousands of dollars for surveying fees, application fees, roadway clearing and construction costs, all in anticipation of Plominski living up to his contractual obligations, in the end Nordlund had no alternative but to bring an action to enforce the easement agreement.
[33] Counsel for Nordlund uses the terms “extortion” and “blackmail” in reference to Plominski’s letter of February 15, 2009 in which Plominski points out that he has information that boat access to Nordlunds water access properties might be unavailable in the future. This is the same letter in which Plominski introduces yet another new demand, namely that money be placed in escrow on his behalf pending the decision in the severance application.
[34] I agree with Plaintiff’s counsel that Plominski’s actions and conduct throughout were reprehensible. Plominski responded to Nordlunds generous offer to attempt to sever a lot on his behalf by later characterizing this offer as an obligation by Plominski to provide him with a lot, failing which Nordlund was required to pay him a substantial sum of money. Also, notwithstanding Nordlunds very generous offer to help him out by paying him in advance for the easement agreement, in the end Plominski refused to take the necessary steps to complete the application process without additional consideration. Clearly, Plominski’s business ethics leave a lot to be desired, and he demonstrated by his conduct that he could not be trusted to keep an agreement.
[35] Notwithstanding the fact that I find that Plominski’s actions were reprehensible, I am reminded that “reprehensible” is a word of wide meaning. It can include behaviour which is “scandalous, outrageous or constitutes misbehaviour”, in which case it can justify the imposition of substantial indemnity costs.[^2] However, it can also include milder forms of misconduct, meaning simply “deserving of reproof or rebuke”, in which case it may not meet the threshold justifying the imposition of substantial indemnity costs.[^3]
[36] I am also reminded of the fact that substantial indemnity costs should only be awarded in the most exceptional cases, and generally these costs should relate to the conduct of the action and not to conduct which might have been or has been the subject of punitive damages.[^4]
[37] In the circumstances of this case I cannot say that Plominski’s conduct was so exceptionally egregious as to justify an award of substantial indemnity costs. In the circumstances I am awarding the plaintiff costs on a partial indemnity basis.
Fixing the Costs of the Action and Motion for Summary Judgment
[38] Counsel for the plaintiff has filed actual copies of his accounts to his client. I am prepared to use these accounts as a basis on which to fix costs.
[39] Plaintiff’s counsel has filed copies of three accounts dated July 5, 2010; February 10, 2011 and October 18, 2012. His hourly rate to his client on the first two accounts was $300 and it was $350 on the third account, together with a counsel fee of $3500 for his attendance on the motion.
[40] Defendant’s counsel has raised numerous issues with respect the accounts, and questions the time allotted to many of the items.
[41] I remind counsel that I am fixing costs, as opposed to assessing them, and in doing so it is not my role to minutely examine and dissect docket entries or to second guess the utilization of personnel and resources by counsel; rather I am required to satisfy myself that the amount that should be paid by the unsuccessful party is fair and reasonable, rather than any exact measure of the actual costs of the successful litigant. In my view the time devoted by plaintiff’s counsel to the various items is reasonable and I am prepared to accept these accounts as an accurate reflection of the time devoted to this matter.
[42] Plaintiff’s counsel is a senior lawyer with over 30 years’ experience and I am fixing the partial indemnity costs on the basis of an hourly rate for counsel of $200 for the first two accounts and $220 for the final account, together with a counsel fee of $2500.
[43] Plaintiff has also billed a fixed amount for each item of correspondence or email sent and received but I am not including these in fixing costs.
[44] The total costs fixed with respect to the Action and Motion for Summary Judgment is as follows:
Fixed Costs and Disbursements for Action and Summary Judgment Motion
July 5, 2010 Account
68.15 hours x $200….. $13630.00
GST at 5%..................... $681.50
Disbursements…………. $789.46
Total………………… $15,100.96
February 10, 2011 Account
47.55 hours x $200….. $9,510.00
HST at 13%................ $1,236.30
Disbursements…………. $395.60
Total………………… $11,141.90
October 18, 2012
54.88 hours x $220……$12,073.60
Counsel fee…………..... $2500.00
HST at 13%.................. $1894.57
Total………………… $16,468.17
Total Costs and Disbursements fixed for Action and Summary Judgment…$42,711.03
Fixing the Costs Thrown Away
[45] The motion for summary judgment was originally scheduled to be heard on May 26, 2011. On that day, Caputo J. ordered, at the request of the defendant, an adjournment of the motion and ordered that the plaintiff have its costs thrown away determined by the motions judge. Counsel for the plaintiff has also filed a copy of his account with respect to these costs thrown away.
[46] In view of the fact that the request for an adjournment was not brought before the court until the day of the hearing I believe it is appropriate to permit these costs to be fixed on a substantial indemnity basis.
[47] Sarah Nordlund, the daughter of the late Donald Nordlund attended in Sault Ste. Marie in anticipation of the motion on May 26, 2012. She is an attorney and lives and practices in Nashville, Tennessee, U.S.A. I am satisfied that it was reasonable for her to be in attendance on that day and in my view it is only fair that the costs to be thrown away include complete reimbursement for her travel and accommodation expenses. I am also including the sum of $1000 per day for Ms. Nordlund to compensate her for some of her lost income for the three days she devoted to travelling to Sault Ste. Marie and returning home.
[48] Included in counsel’s legal account is an amount of $7637.50 representing his fees (23.5 hours) for the time devoted to preparation and attendance on that day. In my view some of the preparation time included in this bill is preparation which ultimately benefited the plaintiff at the hearing and I am therefore reducing the lawyer’s fees to $5000.
[49] I am fixing these costs thrown away as follows:
Costs Thrown Away
Counsel fee……………………………………$5000.00
HST at 13%................................................... $650.10
Disbursements………………………………….$127.00
Sarah Nordlund expenses for Travel,
Accommodation, Lost Wages for three days...$4773.46
$10,550.56
[50] Based on the above, total costs payable by the defendant to the plaintiff are fixed at $53,261.59.
E.J. Koke J.
Released: January 16, 2013
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Nordlund Family Retreat Inc.
Plaintiff (Defendant by Counterclaim)/Applicant
– and –
Ben Plominski
Defendant (Plaintiff by Counterclaim)/Respondent
Decision on Costs
E.J. Koke J.
Released: January 16, 2013
[^1]: Young v. Young 1993 34 (SCC), [1993] 4 S.C.R.3
[^2]: Young, supra
[^3]: Leung v. Leung, 77 B.C.L.R. (2d) 314 p at par. 5
[^4]: Panapers Inc. v. 1260539 Ontario Ltd. (2007), 2007 ONCA 27, 219 O.A.C. 338 (C.A.)