Court File and Parties

COURT FILE NO.: CV-10-407344

DATE: 20130829

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: APBLOUIN IMPORTS LTD., Plaintiff

AND:

GLOBAL DIAPER SERVICES INC., BRENT PEDERSON, and KATE MACEACHERN, Defendants

AND RE: GLOBAL DIAPER SERVICES INC., Plaintiff by counterclaim

AND:

APBLOUIN IMPORTS LTD., and PETER BLOUIN, Defendants to the counterclaim

AND:

MAX A. KING, Third Party

BEFORE: D.G. Stinson J.

COUNSEL:
Shane P. Murphy, for the plaintiff/defendant to the counterclaim

Brent Pederson, in person for Global Diaper Services Inc. and Brent Pederson

No one for Kate MacEachern

No one for Max A. King

HEARD: in writing

COSTS ENDORSEMENT

[1] In my reasons for decision released April 30, 2013, I granted in part the plaintiff's motion for partial summary judgment. I granted a declaration that the plaintiff had successfully effected rescission pursuant to s. 6 of the Wishart Act. I found that the defendant Global Diaper Services Inc. had the obligations imposed by s. 6(6) of the Wishart Act as the franchisor, and that the defendant Brent Pederson had the obligations of the franchisor’s associate under that provision. I was unable to resolve the question of the potential liability of the defendant Kate MacEachern. Most significantly, I was unable to quantify the plaintiff’s claim and I therefore directed a reference to the Master to calculate that sum.

[2] I further directed the parties to make written submissions as to costs, if they could not reach agreement. Since they have been unable to agree, they have now made written submissions. In its bill of costs, the plaintiff calculates its total costs on a partial indemnity basis at $41,483.50. Since the plaintiff achieved only partial success on the motion, however, it is asking for a payment of 50% of those total costs at this stage, on the basis that any costs awarded by me now, will not be claimed again as the matter proceeds.

[3] On behalf of himself and the defendant Global Diaper Services Inc., Mr. Pederson submits that no costs award should be made at this stage. Among other factors, he points to the pending counterclaim, the breach of the noncompetition agreement, the pending third party claim against the defendants' former lawyer, as well as unaccepted offers to settle.

[4] Pursuant to rule 57.03, ordinarily costs of a motion are to be fixed and awarded by the motions judge. In the present case, having regard to the plaintiff’s success on the motion, I would ordinarily be inclined to follow that rule. In the present case, however, to do so might well work an injustice.

[5] According to the submissions of the defendants, they made a reasonable offer to settle. The defendants' submission also indicates that an offer was made by the plaintiff. There is thus the possibility that either offer may attract Rule 49 cost consequences. At this stage, however, the potential quantum of the plaintiff’s recovery has not yet been determined; rather, it is the subject of a reference to the Master. It thus may eventually be determined that, for example, the defendants’ offer exceeded the value of the plaintiff’s claim. In other words, one conceivable result is that the defendants' offer may be for an amount greater than the value of the plaintiff's claim. In that event, rule 49.10(2) would dictate that the defendants are liable to the plaintiff’s costs to the date of their offer, and the plaintiff is liable for the defendants' costs thereafter.

[6] As a result, there is uncertainty as to liability for costs of the motion arising from the uncertainty as to the quantum of plaintiff’s eventual recovery (if any). What is certain is that the litigation will continue, in order to address (a) the liability of the defendant Kate MacEachern, (b) quantification of the plaintiff’s claim, (c) determination and quantification of the defendants' counterclaim and (d) the defendants' third party claim against their lawyer. In the circumstances, I conclude that it is logical to defer any decision on costs until there is greater clarity as to where and at what amount the liability for costs should fall.

[7] I therefore reserve to the judge who ultimately disposes of the matter the decisions as to liability, scale and quantum of the costs of the partial summary judgment motion that was decided by me.

D.G. Stinson J.

Date: August 29, 2013