Court File and Parties

BARRIE COURT FILE NO.: CV-11-0151

DATE: 20130911

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: BRADHILL MASONRY INC., Plaintiff

AND:

SIMCOE COUNTY DISTRICT SCHOOL BOARD AND B.W.K. CONSTRUCTION COMPANY LIMITED, Defendants

BEFORE: THE HON. MR. JUSTICE P.H. HOWDEN

COUNSEL: C. Wagman, Counsel for the Plaintiff

B.D. Moldaver, Counsel for the Defendant, B.W.K. Construction Company Limited

HEARD: By written submissions

ENDORSEMENT ON COSTS

[1] Judgment was granted in this case in favour of the claimant Bradhill Masonry Inc. (“Bradhill”) in the sum of $27,450.95 plus HST which I understand totals $31,019.57. It had claimed $42,724.67 against B.W.K. Construction Company Limited (“BWK”) and the Simcoe County School Board (“Board”) by way of a claim under the Construction Lien Act (“CLA”). BWK was the general contractor. Bradhill contracted with BWK to do masonry work. BWK had its own contract with the owner of the school property, the Board.

[2] There are two aspects to the costs of this action. One is the claim for costs by the more successful party Bradhill. The other is the costs of the Board, said to be in the sum of $7,500, which were charged to and paid by BWK pursuant to its contract with the Board.

[3] The claimant Bradhill suggests that due to its success at trial, and because the judgment was less favourable to the defendant than the claimant’s offer to settle of January 17, 2013, it should be entitled to its costs of the action. The costs as claimed total $31,360 (rounded) on a partial indemnity basis and $42, 970(rounded) for substantial indemnity.

[4] The defendant takes the initial position that the costs of the action cannot be finally determined until the issue of the Board’s costs “and any additional costs in favour of BWK are quantified”. For some reason, the settlement of the Board’s involvement in this action did not include who was to be responsible for the Board’s costs. The Minutes of Settlement did refer at section 2 to “$7,500... (which) represents the School Board’s costs which they claim under their contract with BWK”. Mr. Moldaver refers somewhat vaguely in his submissions on costs to an amount of $1500 which he says was incurred by BWK “on account of the costs in vacating the Claim for Lien”. The only actual billed amount in this regard is $ 332.43(including HST) charged by Goldman Sloan for registration on title of the order for payment into court of the claim and vacating of the claim for lien against the school property. Despite the lack of a draft bill of costs providing the usual information to assist in fixing costs, BWK claims $1,500 on this account from Bradhill.

[5] Despite my clear statement in the Reasons for Judgment that the bills or accounts for whatever was claimed as costs by the Board or BWK on account of this lien action were to be filed as part of the submissions on costs, no draft bill of costs is filed by Mr. Moldaver outlining who and when and how much time were involved in preparing the application material and attendance ex parte at court. There seems to be an assumption that BWK is simply entitled to these amounts. The accounts from the solicitors who represented the Board in the action are now filed with the court. They total $8039.36 (HST included), of which all but $22.02 is for fees. BWK claims over against Bradhill for $7,500 as the amount of the Board’s costs which were charged to BWK.

[6] As for the costs claimed by Bradhill, the defendant submits through counsel that Bradhill should not be entitled to any costs because success was divided. If costs are awarded, BWK views the costs as claimed as excessive for several reasons which I will cover briefly later. In conclusion, Mr. Moldaver stated:

BWK submits that no costs be awarded. If costs are awarded to Bradhill BWK seeks leave to make further submissions once the issue of the School Board Costs have been resolved.

If the court is inclined to fix and award costs to Bradhill then said costs should not exceed $16,500.00 all inclusive.

[7] Earlier in his submissions, before getting into the quantum of Bradhill’s costs claim, Mr. Moldaver stated that “the plaintiff is entitled to no costs but certainly, any cost claim should be modest and reduced or notionally set off against BWK’s costs at trial.”

1. BWK’s Claims for Costs : (a)The Board’s Costs and the Boucher Principles of Fair Value for the Work Done and Legitimate Expectations of the Payor

[8] BWK seeks payment to it by Bradhill of $1,500 on account of the obtaining and registration of the order vacating the claim for lien from title. It also seeks from Bradhill $7,500 to indemnify itself at least in part for payment of the Board’s costs. I will deal first with the claim for $7,500 on account of the Board’s costs.

[9] After Bradhill brought its claim forward against BWK and the Board, the usual ex parte order was obtained by BWK to pay the amount of the claim and the required percentage of the claim for costs. Despite the clear words of the CLA that,

(w)here an order is made under clause (1) (a) or subsection (2), the lien ceases to attach to the premises and ceases to attach to the holdbacks and other amounts subject to a charge under section 21 and becomes instead a charge upon the amount paid into court or security posted,

the owner of the project, the Board, was kept in the action until much later. In fact, pleadings were completed and counsel for the claimant examined the Board representative for discovery. It was only after the third pretrial in January 2013, according to Mr. Moldaver, counsel for BWK, that the action ended against the Board by way of Minutes of Settlement. No agreement was made at that time as to payment of the costs of the Board. The amount was mentioned in the Minutes without any allocation to a party of liability to pay the amount set out of $7,500.

[10] The defendant BWK takes the position that the Board was put in the position of having to obtain counsel and defend itself by Bradhill’s naming the Board and maintaining the action against the Board as a defendant up to discovery and pretrial. The Board was initially excused from filing a defence but eventually it was requested and was delivered. Mr. Moldaver relies on the Minutes of Settlement entered by Bradhill as well as the Board and BWK as evidence that Bradhill knew and agreed to those costs. He then states that the contract between Bradhill and BWK incorporates the contract between the Board and BWK, and that contract makes the Board’s costs in the lien action chargeable to BWK by the Board.

[11] Mr. Moldaver states that, as recorded in the Minutes, the last payment on the BWK-Board contract of $21,870.02 was withheld by the Board pending its release from the litigation as a set-off against its costs. He further states that Bradhill maintained from the commencement of the lien action that BWK would seek to charge back the Board’s costs for which it, BWK, would be charged.

[12] The position of Bradhill is that it requested a defence from the Board and would not release it from the action after the order vacating the lien because the defendant BWK was relying on the provision in the contract that BWK need not pay its obligations until BWK was paid in full for the particular draw in full by the Board. Interestingly, Mr. Wagman states that BWK submitted its final invoice to the Board very late where the refusal by Bradhill to complete the brick work in one minor (relative to the large project as a whole) area was known since March 2012. Its final invoice was not submitted until after mid-September 2012. Only when the Board advised that it would pay the final advance to BWK were the Minutes of Settlement entered into.

[13] Frankly, I find the position of Bradhill in insisting on the continuance of the Board to the extent it did to have been unnecessary and uncalled for. Sometimes decisions about how a party advances its claim have to be made and those decisions must be made within the context of the law in the governing statute and the authorities. I think there was more than a little “gotcha” mentality in how Bradhill conducted itself. Mr. Korevaar, the principal of Bradhill, admitted under cross-examination that he knew that because of the contract provisions his claim for lien would stop the flow of funds to BWK, given BWK’s rather (in my view) uninformed and slavish devotion to the “pay when paid” position that it advanced in contradiction to the requirements of the CLA which governed this action. The position of BWK is more correctly described as “no pay until paid”.

[14] Once the amount of the claim and the statutory security for costs were paid into court, the CLA is very clear that the court action by Bradhill was aimed at the moneys in court and not the owner of the project and its building and land. I see no justifiable reason for Bradhill to have insisted on a defence and further participation by the Board in this action. I do not see this view as being taken as one after-the-event. The law is clear, whatever BWK had to say about its contract with the Board based on a term that was contrary to and over-ruled by the CLA, that once the lien claim against the Board’s property was vacated, the Board had no place in this action. There was nothing in the contract with Bradhill that gave BWK the right to ignore a proper claim for lien and refuse to pay on time for the work stages that the claimant did complete and bill for, on grounds that its contract with the Board gave certain rights to the Board as between it and BWK to withhold payment. In my view, the Board was unnecessarily kept in this action and was entitled to payment of its legitimate costs by Bradhill. However, for the following reasons, I find the bills of the solicitors for the Board to exceed the reasonable value for the work that was actually required. The failure of the parties to settle at the time the Board was let out of the action how the Board’s costs were to be paid does not immunize those costs from the court’s responsibility to fix the costs of the action.

[15] I have reviewed the accounts and the time records submitted by the defendant to substantiate its claim for reimbursement for the Board’s costs which it paid without requiring an assessment or taxation of those bills. I am well aware of the limited exposure of the Board in this action which was primarily a claim by a sub-trade against the general contractor for non-payment for work and materials performed. I am also now aware of the unnecessary delay in submitting the final invoice by BWK due to its reliance on the “no pay without being paid” without regard for the requirements of the CLA. I think there was a certain idea of pay-back toward Bradhill by BWK that kept this invoice from being submitted sooner.

[16] Nevertheless, the fact that the Board was unnecessarily proceeded against by Bradhill is the principal cause that the Board was put to the expense of retaining and using counsel’ services.

[17] In reviewing the solicitors’ bills and time records to substantiate the claim by BWK for $7,500 from Bradhill, as I have in reviewing the accounts of Bradhill’s own counsel/solicitors which I will come to shortly, I make the following finding. The amount is without inclusion of HST.

[18] I have considered the work actually done and the value of the work required on account of this brief. In my view, the rounded sum of $3,250 accords with the principles in Boucher in the circumstances of this case. I find that this amount is a fair and reasonable value for the work done by the counsel and solicitors for the Board, not $7,500. The fact that BWK paid that amount and thereby paid an excessive amount of costs does not weigh heavily in my deliberations. It decided to pay that amount for its own business reasons without waiting to have the amount of the Board’s costs fixed after the trial or without having the bills assessed by an assessor. Its decision does not bind me in fixing the costs of the parties in this action.

[19] As Bradhill caused the Board to incur these costs, for which BWK became liable by contract, the sum of $3,250 will be charged to any costs found to be owed to Bradhill on account of this action.

2. BWK’s Claims for Costs: (b)Costs of Removal of the Claim for Lien from Title

[20] This item of costs is part of the expenses faced by a party who wants to clear the claim for lien from title to that party’s property. Or, as in this case, it is an expense faced by the general contractor due to its contract with the owner. It is simply an item of costs which forms part of a cost award if it were in the defendant’s favour. Each party faces certain fees and disbursements in an action and this is one of them where the defendant decides to, or is bound by contract to, clear the title. In my view, it is part of the overall award of costs of the action which I will turn to next but which will not be in BWK’s favour and therefore there will be no cost order in this regard.

3. The Award of Costs and the Scale of Costs

[21] The issues are basically twofold:

(i) Is this a case of one party being more successful than the other and its pretrial offer, or is this a case of divided success where no costs should be awarded?

(ii) If the plaintiff is entitled to costs, is the quantum claimed by the plaintiff excessive in light of the factors in rule 57.01 and beyond a fair value for the work required?

[22] It is submitted for the defendant on the first issue that because BWK was successful on one of several issues - its claim for completion of the work - and that accounted for 75% of its “back-charges”, success was divided and no order for costs should be made. What this omits are the number of items in the plaintiff’s claim that were denied in whole or in part unsuccessfully by BWK plus Bradhill’s success on the majority of the back-charges of BWK and its success on the issue raised by BWK of validity of the lien.

[23] The claim was for $43,000 and the plaintiff was granted judgment for $27,450.95 plus HST. In addition, the judgment in the plaintiff’s favour beat the offer made by the plaintiff well before trial and before the period when the bulk of the costs were incurred. The plaintiff’s offer was made in writing dated January 17, 2013 in the amount of $25,500 inclusive of costs and interest. The defendant’s pre-trial offer was made in writing on April 16, 2013, in the amount of $4,000 all in, which was reduced to one of zero by letter of May 8, 2013 from Mr. Moldaver. The defendants’ offers in the face of a claim with evidence to support the majority of it can only be described as dismissive and lacking any real appreciation of the aim of the pre-trial process for early settlement or at least resolution before trial where both parties make a fair appraisal of the strength of their cases.

[24] This is not a case of divided success. The plaintiff was the more successful and in light of its offer which was refused by the defendant, it achieved a more favourable result at trial. The plaintiff is granted costs on a partial indemnity scale to January 17, 2013, and thereafter on a substantial indemnity scale, pursuant to rule 49.10.

[25] Mr. Moldaver’s attempt to treat the Board’s costs of $7,500 as one more issue in the lien trial on which he anticipated success and thereby suggested the net judgment was for less than the claimant’s offer is simply wrong. I do not accept his submission that he should be allowed to make “full argument” later because the judgment cannot be quantified until the Board’s costs and those of BWK for removal of the lien are determined. I ruled during the trial that the costs would all be dealt with in the costs phase and Mr. Moldaver has been given a complete opportunity to submit all his arguments on costs.

[26] As to the quantum of the costs claimed, the defendant’s counsel set out its objections:

• the fees and disbursements regarding the discovery of the Board should not be allowed but if they are allowed, the amounts mentioned by Mr. Moldaver are no different from what is claimed;

• the time and disbursements for the cross-examinations were part of the motion for judgment, not to be included in the costs of the action;

• the amount expended for serving the defendant of over $400 and for photocopies are excessive;

• the claims for preparing the affidavit of documents and for the request to admit and offer to settle are also excessive;

• trial preparation costs should be reduced from $9,000 to $7,000 or $5,000 on a partial indemnity basis.

Looking at the global costs as claimed, Mr. Moldaver submits that they should be limited to $2,500 prior to the offer and $12,500 after that date. The disbursements of over $4,000 should be reduced to $1,500.

[27] Taking these issues in order, the cross-examinations were agreed to be useable as the examinations for discovery in the action. Therefore the amounts claimed are properly claimable now and given the time on the day of attendance, which is not excessive, the amount claimed for fees and cost of the transcripts are also proper and fair.

[28] The plaintiff’s counsel has filed the process server’s invoices. They include extra costs for issuing the statement of claim, unsuccessful attempt at serving BWK as well as service on both defendants and filing of several documents at the Barrie court office as Mr. Wagman’s office is in Toronto. It is not only for service of the claim. Those disbursements were paid by the plaintiff and, except for $37.50 for delivery of the judgment motion, they are allowed.

[29] The photocopy charges appear out of proportion to what was required reasonably for copying. No grounds for that amount are substantiated. That claim is reduced by $500 to $323.57.

[30] I agree also with the objection to the amount claimed for fees for preparation of the affidavit of documents of $1,050 (P.I.) and $1,500 (S.I.). Again no support for the size of that amount is submitted. It is claimed by using the hourly rate of a relatively senior lawyer for 3 hours, whereas the organizing of such a document could properly be done by a clerk after the lawyer’s time instructing the client what to provide. This amount is reduced to $550 on a P.I. basis as it was incurred early in the action.

[31] The amounts associated with the Request to Admit and the Offer to Settle are based on somewhat high time estimates for a senior lawyer without any explanation. I will reduce the amount claimed on this account from $1,750 (P.I.) to $1,200 as a fair value for the work actually required of the lawyer and staff respectively.

[32] For preparation for trial on this case which involved seven claims, several almost nominal, an issue in law over the validity of the lien and not an inordinate number of witnesses for a 4-day trial, I find that 18 hours of preparation plus 17.5 hours of counsel’s time for trial and meeting with the client during the trial is unreasonable and beyond the fair value of what was required. The preparation time for this case should be properly no more than 10 hours and therefore the bill for fees is reduced by $3,000 on this account.

[33] The defendant submits that on a global basis, the defendant submits that costs as claimed and as allowed, even with the reductions that I have made, are out of proportion to the case and that the plaintiff’s counsel, in claiming 26 hours before the offer and 49 hours thereafter, is claiming an excessive amount. Mr. Moldaver requests that costs be limited, if they are awarded at all, to a total in fees of $15,000 and disbursements to $1,500. It was a 4-day trial with a collection of issues, many of which came down to credibility findings regarding the work done and not done and its quality. It is submitted that costs as claimed exceed the Boucher principles (Boucher v Public Accountants Council (Ontario) (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (O.C.A.).

[34] With the reductions that I have allowed, the costs come to:

For fees to January 17, 2013 (P.I.) $10,475.00

For fees after January 17, 2013 (S.I.) $21,300.00

Total fees $31, 775.00

Disbursements $ 3,500.70

These figures do not include HST.

[35] In my view the costs on a global basis for a straightforward case without special complexities seem somewhat high. However, the parties participated in 3 pre-trials. The defendant made offers of $4,000 and then zero which the plaintiff could only reject. The defendant precipitated this trial in my view in doing so. As well, it refused to recognize that the plaintiff had a valid and provable case for all of the plaintiff’s work not paid for and differed over items worth $500 and $150 without any concern for the costs after a trial. The defendant’s own site supervisor gave evidence on several of the items in dispute in support of the plaintiff’s claim; BWK’s so-called strategy was to use terms of the contract which were clearly over-ruled by the CLA to deny this plaintiff what was rightfully his under the CLA. It continues to argue the rightness of its cause on the PST credit which would have unjustly shafted the plaintiff by trying to deduct something the plaintiff had never included in its quote. I have no reason to reduce further the time estimates or the quantum of disbursements than I have allowed, except for fees prior to the offer where Mr. Wagman admits they were not that significant until after the offer was rejected and trial was imminent. The costs prior to the offer should be reduced to a fair amount of $7,000 .

[36] For a trial that was close to one week, costs between $25,000 and $40,000 are no longer unusual. And this raises the last point of some importance. This case was an uneconomic case to try in this court due to the costs for the loser. This was all the more reason for this defendant to have tried to resolve this case. I do not have the accounts billed to the defendant and so I cannot find that the amount of costs of the plaintiff is beyond the legitimate expectations of the parties. In my view, the costs in this case are in line with what one would normally expect following trial of a case of this nature.

[37] Allowing for the costs legitimately claimed by the Board as I have allowed them, I fix costs in favour of the claimant Bradhill as follows:

Fees $28,300.00

Disbursements $ 3,500.70

Total $31,800.70 [or]

Less $ 3,250.00

Total $28,550.70

Costs to be paid forthwith by BWK $28,550.70. So ordered.

HOWDEN J.

Date: September 11, 2013