BARRIE

COURT FILE NO.: CV-08-0709

DATE: 20130801

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

CARLA HANISCH

Plaintiff

– and –

THOMAS WILLIAM MCKEAN and JANE MARIE RITA LESAUX

Defendants

Gabrielle K. Kramer, for the Plaintiff/Defendant by Counterclaim

Douglas Snider, for the Defendant Thomas William McKean

James A. Ironside, for the Defendant/Plaintiff by Counterclaim Jane Marie Rita LeSaux

AND BETWEEN:

JANE MARIE RITA LESAUX

Plaintiff by Counterclaim

-and-

CARLA HANISCH

Defendant by Counterclaim

HEARD: by written submissions

REASONS ON COSTS

DiTOMASO J.

BACKGROUND:

[1] The trial of this matter proceeded on November 23, 26, 27, 28, 30 and December 3 and 4, 2012 (seven days) without a jury.

[2] My Reasons were released on May 9, 2013.[^1]

[3] The plaintiff Carla Hanisch was successful at trial. In accordance with my Reasons for Judgment, the positions of the parties reflected two essential issues to be determined:

(a) Whether a prescriptive easement existed between Ms. Hanisch’s farm and the Lesaux property; and

(b) whether Dr. McKean was liable to pay damages claimed by Ms. Hanisch.

[4] To determine these primary issues, there were a variety of relevant sub-issues and factors that were considered.

[5] Regarding Dr. McKean, those sub-issues were:

(1) Did Dr. McKean disclose the shared waterline to Carla Hanisch at the time of the purchase?

(2) Was the shared waterline a latent defect?

(3) Was Dr. McKean liable for fraudulent misrepresentation or, in the alternative, for negligent misrepresentation?

(4) Was Dr. McKean liable to the Plaintiff Carla Hanisch for damages?

[6] The claim against Dr. McKean was essentially for damages based upon fraudulent or negligent misrepresentation. Dr. McKean had abandoned his opposition to Ms. Hanisch’s claim that he did not have a prescriptive easement. Up until October 2012, Dr. McKean had vigorously maintained that there was an easement. However, after October 2012, he consented to Ms. Hanisch’s request for a Declaration that no such easement existed.

[7] Ms. Hanisch pursued her action against Ms. Lesaux. Ms. Hanisch sought a Declaration against Ms. Lesaux that there was no prescriptive easement to use the waterline originating on Ms. Hanisch’s farm which waterline serves as Ms. Lesaux’s property.

[8] In turn, Ms. Lesaux counterclaimed that she was entitled to a declaration for prescriptive easement to use the waterline and she also sought an injunction preventing Ms. Hanisch from taking any steps that would interfere with the quality or quantity of water running through that easement.

[9] At trial the following issues related to the claims involving Ms. Lesaux:

(1) Did Jane Lesaux have a claim to a prescriptive easement?

(2) Was Jane Lesaux entitled to an injunction?

[10] Ms. Hanisch was successful on these issues which were determined in her favour at trial. Judgment was given as follows:

(a) The Lesaux counterclaim was dismissed;

(b) Ms. Hanisch was entitled to the Declaration sought in her Amended Statement of Claim against both Ms. Lesaux and Dr. McKean;

(c) Ms. Hanisch was entitled to consequential damages from Dr. McKean as a result of his negligent misrepresentation in the amount of $25,500 with prejudgment and post-judgment interest; and

(d) Ms. Hanisch’s claim for punitive and aggravated damages was dismissed.

[11] Counsel agreed that the issue of costs would be determined by written submissions.

[12] I received, reviewed and considered the written submissions and supporting documentation from all of the parties.

[13] The following are my Reasons on Costs.

POSITION OF THE PARTIES

Position of Carla Hanisch

[14] Ms. Hanisch submits that she is entitled to costs on a partial indemnity scale up to August 14, 2012 at which time she delivered a Rule 49 Offer. Thereafter, she claims to be entitled to substantial indemnity costs. In total, she claims that she is entitled to joint and several costs against the Defendants Dr. McKean and Ms. Lesaux in the total of $301,895.02.

[15] In the alternative, she claims costs allocated between the two Defendants on a partial indemnity scale to the date of the Offer and on a substantial indemnity scale thereafter allocated one-third to Ms. Lesaux and two-thirds to Dr. McKean as follows:

(a) Total $102,298.34 to be paid by Jane Lesaux; and,

(b) Total $204,596.68 to be paid by Dr. McKean.

Position of Dr. McKean

[16] Dr. McKean submits that this case was not particularly complex and no costs ought to be payable by him. He submits that Ms. Hanisch bear her own costs. His primary argument is that the claim was excessive from the outset and allegations of fraud were not proven He took steps to dig his own well and thought the matter was resolved.

[17] He submits a consideration of all of the factors associated with Ms. Hanisch’s claim should lead the court to conclude that Dr. McKean is not liable to Ms. Hanisch for costs whatsoever.

Position of Jane Lesaux

[18] Ms. Lesaux submits that while there were complex issues that existed between Dr. McKean and Ms. Hanisch, Ms. Lesaux was compelled to participate in this trial when her issues with Ms. Hanisch were narrow and uncomplicated. Ms. Lesaux disagrees that there ought to be a cost apportionment allocated two-thirds to Dr. McKean and one-third to her. She vigorously opposes any costs being awarded on a joint and several basis. She contends that the majority of the issues at trial were related to Dr. McKean and Ms. Hanisch and that there were no commonality of issues. She disputes the amount of costs claimed by Ms. Hanisch and submits that a costs allocation between Dr. McKean at 90 percent and herself at 10 percent would be most reasonable. Ultimately she submits that reasonable costs assessed against her should be in the range of $10,000 upon reflection of all the provisions of rule 57.01.

ANALYSIS

Entitlement

[19] As against Dr. McKean and Jane Lesaux, the Plaintiff Carla Hanisch is entitled to her costs. She was the successful party at trial and costs follow the event. I completely reject the position of Dr. McKean that there should be no costs payable by him in this matter and that Ms. Hanisch should bear her own costs. There is nothing in this case that should cause this court to depart from the basic principle that the successful party, Ms. Hanisch is entitled to her costs. I will deal with the challenges and objections to the amount of those costs when I consider quantum and allocation.

Effect of Rule 49 Offer

[20] Contained in Ms. Hanisch’s Costs Brief at Tab 5 are copies of various Offers to Settle in this case.

[21] At Tab 5A can be found the Plaintiff’s original Offer dated May 10, 2012 which was open for acceptance until the commencement of trial. This initial Offer was withdrawn and replaced with an Offer to Settle dated August 14, 2012 served on the Defendants’ counsel.

[22] The initial Offer of May 10, 2012 put forth the following terms:

1. The Defendant William McKean (“McKean”) shall install a well on the property of the Defendant, Jane Marie Rita LeSaux, with the water flow of not less than four (4) gallons per minute, and 0 e-coli per 100 ml, and 5 or less Coliform per 100 ml, in the 3 samples taken 3 weeks apart.

2. The defendant, Jane Marie Rita LeSaux, shall thereafter release her interest in any water easement that she has claimed over the lands of the plaintiff, and over the lands of McKean, to the property owned by the defendant, Jane Marie Rita LeSaux.

3. McKean shall pay the plaintiff’s partial indemnity costs, incurred to date in the amount of $88,000.00.

4. The parties hereto shall execute a Mutual Full and Final Releases in a form reasonably required by their respective counsel.

5. The parties shall consent to an Order wherein the Claims, cross-claims and Counterclaims as between the plaintiff and the defendants, shall be dismissed without costs.

6. This Offer is open for acceptance until the commencement of the Trial of this action.

[23] The Defendant Jane Lesaux delivered an Offer to Settle dated April 17, 2012. This Offer can be found at Tab 5B of the Plaintiff’s Costs Brief. This Offer to Settle contained the following terms:

1. The Plaintiff shall provide to the Defendant, Jane Marie Rita LeSaux, a Declaration confirming that the Defendant, Jane Marie Rita LeSaux, has a water easement from the lands of the Plaintiff, over the lands of Thomas William McKean, to the property owned by the Defendant, Jane Marie Rita LeSaux, by way of prescription. Thomas William McKean will confirm and acknowledge such water easement as described above exists over his property.

2. In the alternative to paragraph 1 above the Plaintiff shall install a well on the property of the Defendant, Jane Marie Rita LeSaux, with a water flow of not less than four (4) gallons per minute, and 0 e-Coli per 100 ml, and 5 or less total Coliform per 100 ml, in 3 samples taken three weeks apart. The Defendant, Jane Marie Rita LeSaux, shall thereafter release her interest in any water easement that she has acquired over the lands of the Plaintiff, and over the lands of Thomas William McKean, to the property owned by the Defendant, Jane Marie Rita LeSaux.

3. The parties shall execute Mutual Releases with wording as reasonably required by their respective counsel.

4. The parties hereto shall consent to an Order wherein the Claims and Counterclaims as between the Plaintiff and the Defendant, Jane Marie Rita LeSaux, in the within action shall be dismissed, without costs.

5. If this Offer is accepted by May 15, 2012 there shall be no costs.

6. If this Offer is not accepted by May 15, 2012 the Plaintiff shall be responsible, for the partial indemnity costs of the Defendant, Jane Marie Rita LeSaux, together with HST on legal fees and applicable disbursements.

7. This Offer is open for acceptance until the commencement of the Trial of this action.

[24] It is noteworthy that Ms. Lesaux sought a Declaration from the Plaintiff that Ms. Lesaux had a water easement from the lands of Ms. Hanisch over the lands of Dr. McKean to the property owned by Ms. Lesaux by way of prescription. In the alternative, Ms. Lesaux wanted Ms. Hanisch to install a well on Ms. Lesaux’s property with certain conditions in return for a Release.

[25] At Tab 5C of the Plaintiff’s Costs Brief can be found Ms. Hanisch’s Offer to Settle dated August 14, 2012 which provides:

1. The Defendants shall pay the plaintiff’s partial indemnity costs, incurred to the date of acceptance of this offer.

2. The defendant, Jane Marie Rita LeSaux, shall release her interest in any water easement that she has claimed, or may hereafter claim over the lands of the plaintiff as described in the within action, and over the lands of McKean, to the property owned by the defendant, Jane Marie Rita LeSaux.

3. The parties hereto shall execute a Mutual Full and Final Release in a form reasonably required by their respective counsel.

4. The parties hereto shall consent to an Order wherein the Claims, cross-claims and Counter-claims as between the plaintiff and the defendants, shall be dismissed without costs.

5. This Offer is open for acceptance until one minute after the commencement of the Trial of this action.

[26] Ms. Hanisch did not receive a response to this Offer to Settle by either of the Defendants and the matter proceeded to trial.

[27] Found at Tab 5D is an Offer dated November 21, 2012 made by Dr. McKean which provides as follows:

1. I am writing to confirm that my client offers to pay the plaintiff the sum of $20,000, inclusive of interest and costs, in full and final settlement of the plaintiff’s claim. This offer shall remain open until the commencement of trial.

[28] Counsel for Dr. McKean concedes that this is not an Offer to Settle prepared and delivered so as to properly attract the costs consequences intended by way of Rule 49.

[29] Counsel for Dr. McKean contends that the Offer advanced by Ms. Hanisch dated August 14, 2012 really is not a sufficient Offer as it does not particularize what costs the Plaintiff seeks. I reject this submission. The Offer is sufficient and it does attract Rule 49 consequences. The Plaintiff’s Offer was more favourable than the judgment awarding her $25,500 in damages and a Declaration that there was no easement. The Ontario Court of Appeal has stated that an Offer that provides for ongoing payment of a party’s partial indemnity costs until acceptance of the Offer is a Rule 49 Offer and the Plaintiff is entitled to the benefit of the cost consequences. I find this is consistent with the objective of encouraging offers and to promoting early settlement.[^2]

[30] Further, I find that the August 14, 2012 Offer to Settle was a Rule 49 Offer capable of acceptance.

Rule 49 permits a plaintiff to make a global offer to multiple defendants putting the onus on them to come up with a method of sharing the burden of accepting the offer or risking the burden of solicitor/client costs if the offer is not accepted and, overall, the trial result is more favourable to the plaintiff.

[31] I agree that Dr. McKean and Ms. Lesaux accepted this risk by not responding to the Plaintiff’s Offer to Settle and proposing their own Offer by which costs would be allocated as between them.[^3]

[32] I find that the Plaintiff Carla Hanisch is entitled to her partial indemnity costs up to August 14, 2012 and her substantial indemnity costs thereafter as against Dr. McKean and Jane Lesaux. For reasons that follow, those costs are to be quantified and allocated between these two defendants and are not payable on a joint and several basis. The amounts owing by each of them will also be discussed further and they are not allocated equally.

Effect of Rule 57 Factors

[33] Despite her Offer, Ms. Hanisch was put to a costly and complex seven day trial. She was successful against Dr. McKean who did not disclose the shared waterline and negligently misrepresented the property to Ms. Hanisch. His evidence in this regard was entirely rejected. He was found liable for Ms. Hanisch’s damages which were causally connected to his negligent misrepresentation of the latent defect.

[34] I do not accept the submissions of Dr. McKean that this matter was not complex. The evidence consumed more than three days of trial time and resulted in findings that:

(1) Dr. McKean did not disclose the waterline;

(2) the waterline was a latent defect;

(3) the Statutory Declaration was a negligent misrepresentation;

(4) Ms. Hanisch reasonably relied on the misrepresentation;

(5) Dr. McKean owed Ms. Hanisch a duty of care;

(6) the misrepresentation was material; and,

(7) Dr. McKean caused Ms. Hanisch to cancel her turkey quota and suffer losses.

[35] Every aspect of the negligent misrepresentation aspect of the case was vigorously contested by Dr. McKean and in the end Ms. Hanisch’s evidence was preferred (subject to my findings regarding damages).

[36] By failing to disclose the waterline, Dr. McKean placed Ms. Hanisch’s life savings at risk and exposed her to third party liability, including the cost and expense of Ms. Lesaux’s easement claim which Dr. McKean supported.

[37] As for Ms. Lesaux’s claim for prescriptive easement, this court found against Ms. Lesaux in every aspect, concluding that:

(1) The waterline was established with consent;

(2) there was no 40 year user;

(3) the waterline was not open and notorious; and,

(4) a positive obligation imposing significant future risk could not form the subject matter of an easement.

[38] Not only did Ms. Lesaux fail in her burden to establish a prescriptive easement, but also the primary evidence supporting a Declaration that there was no easement came from Ms. Lesaux’s own witness, Bruce McDermid, and the unchallenged evidence of Dr. McKean. Ms. Lesaux’s request for an injunction was not supported by the evidence and was also rejected by the court.

[39] My Reasons for Judgment disclosed that the issues involving Ms. Hanisch and the two defendants were intertwined to a considerable extent and formed an essential part of the factual matrix involving all of the parties.

[40] I reject the submission advanced on behalf of Dr. McKean that somehow the provisions of rule 76.13(3) of the Simplified Rules apply to this case. In the case at bar, the misrepresentation claim against Dr. McKean and the declaratory relief awarded to Ms. Hanisch but denied to Ms. Lesaux were closely interrelated. Rule 76 does not apply to requests for declaratory relief as sought by Ms. Hanisch and Ms. Lesaux or to claims for injunctive relief as pursued by Ms. Lesaux.[^4]

[41] The availability of the simplified procedure pursuant to s.76.02(1) relates exclusively to a Plaintiff’s claim for money, real property and personal property.

[42] Rule 76.13(5) provides that costs sanctions do not apply if the Rule was unavailable because of a counterclaim of another party. Ms. Lesaux’s claims for declaratory relief, injunctive relief and punitive and aggravated damages all took this action outside the parameters of Rule 76.

[43] I find that the regular procedure was appropriate and that Rule 76 does not apply. The costs sanctions set out in that rule have no application to this case.

[44] I come now to a consideration of the Rule 57 factors.

[45] On behalf of Dr. McKean it is submitted:

1. There were two separate claims against different Defendants, both of whom should share the burden of the Plaintiff’s costs. (I have found that while there are two different Defendants and two separate claims, these claims are intertwined and that both Defendants shall bear the Plaintiff’s costs in a proportionate amount based on reasons to follow.)

2. The claim was clearly excessive.

3. An allegation of fraud was made against Dr. McKean which was not ultimately proven.

4. Dr. McKean made conciliatory steps including digging his own well in response to the Plaintiff’s demands. (However, that having been said, Dr. McKean did not abandon his claim for a prescriptive easement until October of 2012.)

5. Dr. McKean’s settlement offer, although not attracting Rule 49 cost consequences, was more reflective of the real damages incurred by the Plaintiff than the claims she advanced.

6. The presentation of the Plaintiff’s case was unnecessarily slow and consumed disproportionate trial time both in respect of the amount in dispute and the quality of the evidence presented.

7. Nothing should be allowed for the BDO Report which was ultimately unhelpful and wasted a significant amount of trial time.

[46] On behalf of Dr. McKean, it was submitted that all of these factors taken together spoke to a reduction of the Plaintiff’s costs entitlement to the point that Ms. Hanisch should have no costs from the Defendant Dr. McKean. I have already rejected this notion and again repeat that it has no merit.

[47] Further, any dispute between Dr. McKean and his former lawyer has no bearing on the amount of costs that are payable by Dr. McKean to Ms. Hanisch in this case.

[48] Rather, as is evidenced by my Reasons for Judgement, the issues were of great significance to the Plaintiff Ms. Hanisch. The misrepresentation and easement claims exposed her to substantial future risk of maintaining an unsafe water supply, to unfounded and egregious allegations, and to income loss. The protracted proceedings did cause Ms. Hanisch considerable economic hardship.

[49] Dr. McKean did not consent to the Declaration that there was no easement until October 2012. He was supportive of the claims of Ms. Lesaux for a Declaration.

[50] While Ms. Hanisch did not establish fraudulent misrepresentation, those allegations did not require more trial time than the successful negligent misrepresentation claim. On the facts of this case, it was reasonable to advance the claim for fraudulent misrepresentation. This court found that Dr. McKean was a sophisticated individual who knew that his sworn Declaration was untrue and false. He provided an explanation for his misstatement that was entirely without merit. Dr. McKean was found to be both careless and reckless as to the truth of the Declaration.

[51] Ms. Hanisch did not rely on allegations of dishonesty, but recklessness as to the truth. These allegations against Dr. McKean were not “reprehensible, scandalous or outrageous”. Rather, this court found that they were persuasive, but fell short of establishing fraud. There was no finding that the allegations were unreasonably maintained. Nevertheless, Dr. McKean was ultimately successful in defeating Ms. Hanisch’s claim based upon fraudulent misrepresentation.

[52] However, this having been said, Dr. McKean’s allegations against Ms. Hanisch both before and during trial were without foundation and further supported her claim regarding substantial indemnity costs.[^5]

[53] Ms. Hanisch was successful against both Dr. McKean and Ms. Lesaux. She successfully proved negligent misrepresentation against Dr. McKean and damages in the amount of $25,500. She was successful in defending the claim advanced by Ms. Lesaux for a prescriptive easement and injunctive relief. However, she was unsuccessful in respect of her claim for punitive and aggravated damages against Dr. McKean which claim was dismissed.

[54] Regarding the issue of damages, the Plaintiff’s claim as set out in her Statement of Claim was in the amount of one million dollars. That claim on the basis of her evidence and on the basis of the evidence of Mr. Rickert of BDO was later advanced at trial in the range of $295,000 to $365,000, with a midpoint being $330,000. Considerable time was spent at trial trying to establish a claim of that magnitude covering many facets of Ms. Hanisch’s farm operation, past, present and future.

[55] I found that she was resoundingly unsuccessful at trial in advancing her claim for damages for any of those amounts. The evidence was not there to support her claims. To the contrary, the evidence established that her farm operations consistently operated at a loss. Ultimately, she was successful in establishing damages only in the amount of $25,500 which is $500 more than the monetary jurisdiction of the Small Claims Court.

[56] In reviewing the Offers to Settle, it would appear that she was contending only to be paid costs in order to resolve her differences at least with Dr. McKean. The court’s finding of damages in the amount of $25,500 was not based on either her evidence or Mr. Rickert’s evidence that consequential damages were anywhere near the amounts being advanced either before or at trial. I agree with Dr. McKean’s counsel that the amounts being claimed were excessive, unsupportable by the evidence and unnecessarily consumed time at trial. In the end, Ms. Hanisch’s claim for damages was the Achilles Heel of her case which she pursued at trial to the maximum exposing Dr. McKean and Ms. Lesaux, even though there was no claim for damages against her, to unnecessary costs. I will deal with this issue further when I consider the questions of quantum and allocation.

Quantum

[57] Although directed by my Judgment, neither Dr. McKean nor Ms. Lesaux delivered a Costs Outline or Draft Bill of Costs. Having failed to put in their own time dockets and disbursements, these Defendants had not filed any information that would have allowed the court to consider relative costs. As such, attacks as to the excessiveness of the costs claimed by Ms. Hanisch are no more than an “attack in the air”.[^6]

[58] Ms. Hanisch’s total fees charged, exclusive of the amount to prepare the Bill of Costs and Cost Submissions was $225,997. Dr. McKean was charged discounted fees of $108,485 and Ms. Lesaux was charged fees of $69,290. Although not disclosed, the rate may also be discounted. Neither Defendant has disclosed their disbursements or total fee inclusive of taxes charged.

[59] Without Ms. Hanisch admitting that a direct comparison is appropriate, the Defendants have incurred fees of $177,775 relative to the amount of $225,997 incurred by Ms. Hanisch to the close of written argument. It is not unreasonable for Ms. Hanisch to have greater costs since she had the burden of proof and was claiming against two defendants. It is submitted on behalf of Ms. Hanisch that the combined fees incurred by the unsuccessful defendants set a minimum bar for what they should expect to pay to the successful Plaintiff, on account of fees, exclusive of disbursements and taxes.[^7]

[60] Ms. Hanisch was compelled to prove her case against both Dr. McKean and Ms. Lesaux. Dr. McKean’s consent to declaratory relief was very late in coming and he resiled from the withdrawal of some allegations at trial. Ms. Hanisch was put to calling extensive evidence to refute the allegations of Dr. McKean, Mrs. McKean and Ross Wixon, none of whom were found to proffer plausible or helpful evidence. I find the trial could have been shorter but for Dr. McKean’s refusal to admit the obvious. Ms. Hanisch submits that her Bill of Costs is higher because Dr. McKean left to her no option but to prove all the issues to protect her life’s savings. All of Dr. McKean’s conduct giving rise to the litigation, his failure to acknowledge the misrepresentation, the exacerbation of the situation through harmful allegations to the Ministry of Environment, his failure to respond to Ms. Hanisch’s offers all support Ms. Hanisch’s request for an award of substantial indemnity costs post-offer which is proposed by Ms. Hanisch and regarding which, I agree.

[61] This takes me to an examination of the quantum claimed by Ms. Hanisch.

[62] I have reviewed her Costs Brief. I have reviewed the pleadings, discovery of documents, examinations for discovery, offers to settle, mediation and pretrial conference fees claimed. In respect of those headings, I have considered the hours spent and services rendered. On a partial indemnity scale, I calculated fees up to August 14, 2012 making adjustments for substantial indemnity costs (not to be included) in the amount of $47,598.50 which I have rounded to the sum of $47,600. For pleadings, lawyers’ time for three lawyers total 72.2 hours. Law Clerk’s time is an addition 11.8 hours. For Examination for Discovery time for two lawyers total 50 hours with additional Law Clerk’s time of 14.9 hours. For Pretrial Conference, for counsel was 30 hours with Law Clerk’s time of 8.1 hours.

[63] While I have found that the case involved a certain level of complexity, the hours spent prior to August 14, 2012 are excessive. They are not proportional to the overall complexity of the issues.

[64] I now consider the headings of preparation for trial and costs which are set out in Ms. Hanisch’s Bill of Costs.

[65] The amount claimed for fees in respect of preparation for trial is the sum of $156,641.50 (exclusive of counsel fee claimed in the amount of $19,600). This heading includes the preparation of closing submissions. The time spent by trial counsel totals the sum of 298.7 hours. Junior counsel’s time (two lawyers) totals the sum of 16.5 hours. A law clerk has spent 195.9 hours in trial preparation with a student-at-law spending 12 hours. Again, while I acknowledge that the case had some level of complexity, it certainly did not warrant the time that was spent which I find is excessive. I also take into account that there were meetings and preparation with Mr. Rickert whose evidence I found to be unhelpful and accordingly, I rejected his evidence in total.

[66] Going forward, trial counsel spent 21.3 hours in respect of the preparation of written submissions on costs, research and Bill of Costs with a law clerk spending 33.4 hours. I also find that the cumulative time regarding costs submissions is excessive. At a substantial indemnity rate for trial preparation, trial counsel claims a rate of between $290 and $325 for 33 hours and thereafter her rate is billed out on a substantial indemnity scale at $465 per hour. The authorities are well-settled that the determination of the amount of fees is not a mathematical exercise. It is not simply a calculation of hours spent times rate. In the case at bar, it is definitely not an arithmetical exercise and while I do not doubt the hours were spent and while I do not doubt the rates were charged, both are excessive in all the circumstances. I say the time and hourly rate are excessive particularly in respect of the issue of proving the Plaintiff’s damages which were found to be substantially less than the amounts claimed and advanced at trial.

[67] I have also considered counsel fee claimed by trial counsel for seven days at $2,800 per day totalling the sum of $19,600.

[68] In all the circumstances, in the exercise of my discretion, I am guided by the principles of what is fair, reasonable and proportional given the issues in this case, the Rule 57 factors, the complexity and length of trial, the amount recovered and the cost consequences of any Rule 49 offers.[^8]

[69] The amount recovered by the Plaintiff for consequential damages in the sum of $25,500 was provable only by the court assessing all of the evidence and arriving at this figure. It was not a million dollars; nor was it in the range of $295,000 to $365,000 as claimed by Ms. Hanisch and her expert.

[70] The fees and counsel fee claimed by Ms. Hanisch including GST and HST exclusive of disbursements and GST is the sum of $268,974.30 representing partial indemnity costs to August 14, 2012 and substantial indemnity costs thereafter.[^9] While Ms. Hanisch is entitled to substantial indemnity costs as a result of her Rule 49 offer, this amount is too high.

[71] I have also taken into account that the Plaintiff failed to prove fraud allegations against Dr. McKean although no extra trial time was consumed in advancing this claim. The Plaintiff also failed to prove her claim for punitive and aggravated damages.

[72] I find that the Plaintiff’s claim for total fees inclusive of GST and HST in the amount of almost $269,000 is excessive. In all the circumstances, I would reduce the claim for fees inclusive of GST and HST by 50 percent in the amount of $134,500. I find this amount to be fair, reasonable and proportional considering all of the issues at stake and the ultimate result achieved by the Plaintiff as against both Dr. McKean and Ms. Lesaux.

[73] I now consider disbursements. Disbursements claimed are in the amount of $39,723.75 from which the Plaintiff deducts the sum of $1,803.03 for the Quicklaw/Westlaw item which should not have been included. That amount is hereby deducted.

[74] I also deduct the amount paid to BDO Canada LLP in the amount of $16,750. This disbursement represents the consultation and expert fees charged in the preparation of the BDO Report by Mr. Rickert. That Report was of absolutely no use to the court and much the same can be said for Mr. Rickert’s evidence. I would also reduce disbursements by $16,750 together with an adjustment for HST at 13 percent. The total reduction for the Quicklaw/Westlaw and BDO items with HST adjustment is in the amount of $20,964.42 rounded to $21,000. I allow total disbursements plus HST in the amount of $18,723.75.

[75] I assess the total amount of costs inclusive of fees, disbursements, GST and HST in the amount of $134,500 for fees plus $18,723.75 for a total of $153,223.75 rounded to $153,225, all inclusive.

Allocation

[76] The Plaintiff Carla Hanisch submits that Dr. McKean and Ms. Lesaux are jointly and severally liable for these costs. In the alternative, Ms. Hanisch seeks costs allocated one-third to Ms. Lesaux and two-thirds to Dr. McKean.

[77] While Dr. McKean had submitted that no costs were payable by him and that Ms. Hanisch should bear her own costs, he also submitted that there was more than one defendant in this matter and there were issues that related only to Ms. Lesaux and not him.

[78] As for Ms. Lesaux, she submitted that costs should be allocated 90 percent to Dr. McKean and 10 percent to her with costs payable by her in the range of $10,000.

[79] I specifically find that whether or not a well could be drilled on Ms. Lesaux’s property has no bearing on the assessment of costs. This was not an issue at trial and no evidence was led. Also, Dr. McKean’s dispute with his former counsel is totally irrelevant to the issue of costs.

[80] I have taken into account the issues at trial as they related to Dr. McKean and Ms. Lesaux. The trial primarily dealt with the issues involving Dr. McKean and to a lesser extent Ms. Lesaux. I would allocate the responsibility for paying costs at 75 percent to Dr. McKean and 25 percent to Ms. Lesaux in the following amounts:

(a) 75 percent to Dr. McKean = $114,918.75

(b) 25 percent to Jane Lesaux = $ 38,306.25

Total $153,225.00

DISPOSITION

It is hereby ordered that the Defendant Thomas William McKean pay to the Plaintiff Carla Hanisch costs in the total amount of $114,918.75. It is further ordered that Jane Marie Rita Lesaux pay to the Plaintiff Carla Hanisch the sum of $38,306.25. Judgment shall go against each of the Defendants for the said amounts together with post-judgment interest pursuant to the Courts of Justice Act.

DiTOMASO J.

Released: August 1, 2013

[^1]: Introduction, Overview and Positions of the Parties and Issues are more accurately described in my Reasons for Judgment dated May 9, 2013 at pp. 3,4,5, and 6.

[^2]: Rooney (Litigation Guardian of) v. Graham, 2001 24064 (ON CA), [2001] O.J. No. 1055 at paras. 43-45.

[^3]: Carleton Condominium Corp. No. 96 v. Coscan Development Corp., [1997] O.J. No. 4091 at paras. 12-14 (Ont.Ct.Gen.Div.).

[^4]: DeRose and Associates v. Cariati, 2007 46707 at para. 6 (ONSCDC) Tab 16; Guzha v. Eclipse Colour & Imaging Corp.; 2005 2400 at para. 10 (ONSC); rule 76.02(1), R.R.O. 1990, Reg. 194; (1998 version).

[^5]: See Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303 at rev. 26 (SCR).

[^6]: Andersen v. St. Jude Medical Inc., 2006 85158 (ON SCDC), 2006 CarswellOnt. 710 at paras. 24-25 (Ont.Div.Ct)

[^7]: Frazer v. Haukioja, 2008 CarswellOnt 7883 at paras. 18-19 (SCJ), aff’d: 2010 CarswellOnt 1996 (OCA)

[^8]: Davies v. Clarington (Municipality) 2009 ONCA 722 at paras. 50 to 56.

[^9]: Plaintiff’s Costs Brief Tab 1, p.1