Court File and Parties
COURT FILE NO.: CV-10-410156
DATE: 2013-10-08
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: MIKE AHMADI, Plaintiff
AND:
METROLINX and GO TRANSIT, Defendants
BEFORE: Stinson J.
COUNSEL:
George Tsimiklis, for the plaintiff
David M. Golden, for the defendants
HEARD: In writing
COSTS ENDORSEMENT
1In my reasons for decision released April 19, 2013, I dismissed the plaintiff’s action and directed the parties to make written submissions regarding costs. This endorsement addresses the issues raised in those written submissions.
liability for costs
2The defendant GO Transit was successful in the action. In the ordinary course, as the successful party, the defendant should be entitled to an award of costs as against the plaintiff. The plaintiff does not dispute that the defendant is entitled to an award for costs.
scale of costs
3The position of the defendant is that, in view of the conduct of the action by the plaintiff, the defendant should be awarded substantial indemnity costs from the commencement of the action. In the alternative, the defendant seeks substantial indemnity costs from September 6, 2012, when a formal offer to settle was served in which the defendant offered to agree to a consent dismissal of the action without costs upon the delivery of a release in a form proposed by the plaintiff’s previous solicitors.
4The position of the plaintiff is that the cost award to the defendant should be on a partial indemnity basis only up to February 14, 2012, at which time the plaintiff was prepared to consent to a dismissal without costs. The plaintiff submits that the parties should bear their own costs thereafter, including the trial.
5The widely divergent positions of the parties reflect the somewhat unusual nature of this case. It involved an action for specific performance by the plaintiff vendor to compel the purchase of a parcel of land by the defendant, a public agency of the Government of Ontario. As noted, the action was dismissed. In various agreements and offers to purchase relating to the property, purchase prices in the range of $460,000 to $950,000 were indicated. The former was the price paid by the plaintiff to acquire the land in June 2010; the latter was the price at which the plaintiff offered to sell the land and settle his lawsuit against the defendant in October 2010. The offers to settle made by the parties in 2012 amounted to proposals to dismiss the action, without costs. Since the plaintiff obtained no judgment, the costs consequences provisions under rule 49.10 do not apply; nevertheless, I am entitled to take into account the parties' efforts to settle as part of my discretion in awarding costs.
6The defendant seeks an award of substantial indemnity costs throughout, on the basis of the plaintiff’s conduct of litigation. Such a punitive award of costs is rare and exceptional. Such costs are generally awarded only where there has been "reprehensible, scandalous or outrageous conduct on the part of one of the parties". Young v. Young, 1993 34 (SCC), [1993] 4 S.C.R. 3 at para. 251.
7Although punitive or aggravated damages for "bad faith conduct" were claimed and not proven at trial, this conduct was not the gravamen of the plaintiff's claim. Simply stated, the plaintiff relied upon the existence of an agreement of purchase and sale; the defendant denied that any such agreement came into effect. I agreed with the defendant’s position. I do not consider this is a case in which an unproven allegation of fraud was made that justifies a punitive award of costs. I therefore do not consider that the plaintiff's behavior was sufficiently egregious to warrant such a sanction. On this basis I conclude that, for the period up to the date of the plaintiff's February 14, 2012 offer, the defendant is entitled to an award of partial indemnity costs only.
8As noted, on February 14, 2012, the plaintiff offer to settle the litigation on the basis that the action would be dismissed without costs. The defendant was prepared to accept that offer, subject to receipt from the plaintiff of a general release from the plaintiff. The plaintiff was not prepared to execute a release in the form proffered by the defendants' lawyer, since the plaintiff felt that the release should be confined to the claims advanced in this case. Nevertheless, the defendant specified a general release as its requirement for settlement (and its willingness to forgo any claim for costs to that date). The parties could not come to terms and, as a result, the settlement was not consummated.
9The plaintiff argues that, in view of the defendant's intransigence, no costs should be awarded from that point forward. I disagree. In proposing a settlement on a "without costs" basis, the plaintiff was seeking to put an end to litigation that he had commenced and to escape the obligation that otherwise might be imposed upon him to pay costs to the defendant. If the plaintiff had sought to discontinue the action at that time, he would have been exposed to an award of costs in favor of the defendant. While the defendant was prepared to forgo any cost award at that time, it wanted the assurance that the plaintiff would not pursue any other claims against it: in effect, that was the price stipulated by the defendant in consideration for its willingness to forgo any claim for costs.
10In my view, if anyone, it was the plaintiff who was intransigent in declining to come to a settlement in February 2012. While the plaintiff has alluded in his submissions to his other potential dealings with the defendant as being a justification for not wanting to give a general release, nothing specific was identified as warranting his reluctance to provide the general release requested by the defendant. In the absence of such justification, and in light of the defendant’s experience with the plaintiff up to that time (in resisting a claim for specific performance of what I determined to be a non-existent agreement of purchase and sale), the defendant’s request for a general release is quite understandable.
11I therefore conclude that the settlement negotiations in February 2012 should have no impact on the entitlement of the defendant to recover partial indemnity costs subsequent to that date.
12Further settlement negotiations took place in the summer of 2012, also without success. The defendant made a formal offer to settle on September 6, 2012. In that offer, the defendant proposed the action be dismissed, on consent, with prejudice, and without costs. The defendant sought from the plaintiff a release in the form that the plaintiff had been prepared to sign back in February 2012.
13The defendant's September 2012 offer to settle was not accepted by the plaintiff. Instead, the matter proceeded to trial on October 2, 2012. The ultimate outcome was a dismissal of the plaintiff’s claim. The defendant submits that, in these circumstances, an award of substantial indemnity costs is warranted for the period subsequent to September 6, 2012.
14I disagree with the defendant's position. As the Court of Appeal made clear in Davies v. Clarington (Municipality), 2009 ONCA 722 at para. 40: "Apart from the operation of rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made." Save in very narrow circumstances (such as in S & A Strasser Ltd v. Richmond Hill (Town) (1990), 1990 6856 (ON CA), 1 O.R. (3d) 243)), a rule 49.10 offer by a defendant cannot justify an award of substantial indemnity costs where the action is subsequently dismissed.
15I therefore conclude that the cost award to which the defendant is entitled throughout the proceeding is an award on a partial indemnity basis.
quantum
16In Andersen v. St. Jude Medical, Inc. (2006), D.L.R. (4th) 557, the Divisional Court examined the jurisprudence and summarized the principles that should govern the exercise of the court’s discretion when fixing costs, at paragraph 22 [case citations omitted]:
The discretion of the court must be exercised in light of the specific facts and circumstances of the case in relation to the factors set out in Rule 57.01(1) ….
A consideration of experience, rates charged and hours spent (formerly a costs grid calculation) is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case: Boucher. The quantum should reflect an amount the court considers to be fair and reasonable rather than any exact measure of the actual costs to the successful litigant ….
The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining an amount that is fair and reasonable: Rule 57.01(1)(0.b).
The court should seek to avoid inconsistency with comparable awards in other cases. "Like cases, [if they can be found], should conclude with like substantive results" ….
The court should seek to balance the indemnity principle with the fundamental objective of access to justice ….
A discretionary decision of a case-management judge in a class proceeding is entitled to a very high level of deference ….
17I turn now to a consideration of the factors set out in rule 57.01(1).
(0.a) The principle of indemnity
18On a partial indemnity basis, the defendant seeks fees of over $121,000, disbursements of more than $42,500 and HST of approximately $21,000, for a total claim for partial indemnity costs of slightly more than $185,000. Total actual docketed fees were approximately $175,000. This translates to a partial indemnity claim equal to approximately 69% of the full indemnity claim. In my view that ratio is somewhat high when comparing partial indemnity to substantial indemnity recovery. On this basis alone, the defendant's claim should be reduced. The submission of the plaintiff is that far too much time was spent by defendant’s counsel and, in effect, the file was "over lawyered". The plaintiff therefore submits that the award of costs should be significantly reduced from the amount claimed. I will consider these submissions of the plaintiff below, when I address the other factors enumerated under rule 57.01(1).
(0.b) The reasonable expectations of the unsuccessful party
19Some of the relevant factors as to what is fair and reasonable include:
What would the losing party expect to pay?
What amount of time would be reasonably required to prepare and present the case?
How much did the losing party claim for costs?
What was the losing party charged by his or her own counsel?
What was the amount at stake and the outcome?
20In my direction regarding costs, I expressly invited counsel for the plaintiff to submit the bill of costs he would have tendered on the defendant if he had been successful in the action. The "fee summary" that was submitted seeks $85,000, exclusive of tax. The bill of costs further note that "If the plaintiff’s action was successful at trial, it was agreed that a premium would be negotiated and agreed upon for the benefit of current counsel." As well, both prior to and at the trial, plaintiff’s counsel was assisted by the plaintiff's wife, who is a qualified member of the Ontario bar. No amount of fee is included in the plaintiff’s bill of costs for her time spent in the preparation for and conduct of the trial. As well, on several occasions during the preceding, the plaintiff was self-represented. In view of those factors, it is likely that the plaintiff's "fee summary" had the plaintiff been successful would likely have exceeded $100,000 on a substantial indemnity basis or roughly 60% of the actual docketed fees charged by defendant’s counsel.
21The foregoing analysis suggests to me that the plaintiff had to be aware that he was engaged in an expensive piece of litigation. In particular, by pursuing his claim, he was forcing the defendant to expand significant legal fees. He should therefore have expected that he could be called upon to pay a significant amount of costs to the defendant in the event the lawsuit was unsuccessful. In other words, a cost claim for partial indemnity costs in the magnitude of the quantum sought by the defendant should have been within his reasonable expectations; at the very least, the plaintiff should have expected that the defendant would incur costs equivalent to his.
(a) The amount claimed and the amount recovered in the proceeding
22This lawsuit involved real property valued at between $460,000 and $950,000 (based on the plaintiff’s original purchase and his subsequent offer to sell). The plaintiff sought to force the defendant to pay him for the property, and thus those amounts suggest the amount in issue in the proceeding. Viewed in that context, a claim for fees in the order of $120,000 (or approximately 25% of the low range of the amount in issue) is not grossly excessive, in my view.
(b) The apportionment of liability
23The defendant was entirely successful. This supports the defendant’s claim for costs.
(c) The complexity of the proceeding
24I would describe this case as one of average complexity. The dispute was largely factual. The number of documents was modest. Only a few witnesses testified. The trial was completed in three days, followed by subsequent written submissions. The legal issues were not complex.
25I therefore consider this factor to be relatively neutral.
(d) The importance of the issues
26From the perspective of the plaintiff, this was an important case. He had made a firm purchase of the property at issue and sought to enforce an agreement with the defendant by which he stood to make a substantial profit. He pursued it with commensurate vigor.
27From the perspective of the defendant, the case also raised important issues. As a public agency, it had to be seen to be adhering to appropriate practices relating to the expenditure of public funds. Given the allegations made by the plaintiff, the defendant had little choice but to defend appropriately.
28This factor therefore weighs in favor of a more generous award of costs to the successful party.
(e) The conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding
29The plaintiff had three different lawyers in addition to representing himself for a period of time. On the eve of the original trial date, the statement of claim was amended and the trial was adjourned, with the question of costs thrown away reserved to the trial judge. Costs were incurred reopening examinations for discovery, amending the pleadings and delivering additional affidavits of documents. This ultimately resulted in a delay to the commencement of trial by a full year. The case was scheduled again to go to trial on April 30, 2012. A last-minute adjournment was granted to the plaintiff because his then lawyer removed himself from the record.
30I therefore conclude that the conduct of the plaintiff affected the duration of the proceedings and increased the costs incurred by the defendant. This factor therefore weighs in favor of a more generous award of costs to the defendant.
(f) Whether any step in the proceeding was improper etc.
31I do not consider this factor to be relevant.
(g) A party’s denial of or refusal to admit anything
32I do not consider this to be a relevant factor.
(h) Whether it is appropriate to award any costs or more than one set of costs
33I do not consider this to be a relevant factor.
(i) Any other matter relevant to the question of costs
34The basic submission of the plaintiff is that the defence was "over lawyered" given the nature of the issues involved in this case. To a limited extent, that submission has force. A significant number of different lawyers were involved in various aspects of the defence. Undoubtedly, some duplication of effort resulted. The plaintiff ought not have to pay for bringing multiple lawyers up to speed. As well, I consider some aspects of the amounts claimed (for example, over $10,000 for pleadings and over $85,000 for trial preparation) to be excessive.
35In his written submission as to costs, the plaintiff suggests that a further relevant consideration is that the defendants never explained to the plaintiff why it was not prepared to purchase the property after the plaintiff took ownership. In truth, the defendant did submit an offer to purchase on August 23, 2010, as noted in my reasons for judgment at page 13. The plaintiff chose not to accept that offer.
36The plaintiff in his written submission as to costs further refers to the financial difficulties that he has encountered subsequent to his purchase of the property. With respect, I do not consider that to be a relevant factor; as a fair reading of the reasons for judgment reveals, in my view, that the plaintiff was the author of his own misfortune. He cannot point to the dilemma in which he placed himself as a basis for avoiding his obligation to compensate the defendant for the costs it incurred in responding to the litigation initiated by him.
Conclusion as to fees
37Having regard to the foregoing considerations, in my view, a fair and reasonable sum at which to fix the legal fees recoverable by the defendant on a party and party scale is $90,000. Adding HST of 13% results in an award for fees of $101,700.
Disbursements
38The defendant seeks to recover disbursements (net of HST) of $42,593.94. Of this, $30,760.09 relates to expert reports. The plaintiff objects to the claim for this disbursement on the ground that expert evidence was unnecessary and, in any event, no expert testimony was tendered at trial.
39With respect to the former objection, based on my review of the exchanges between the parties, as of June 20, 2011, the plaintiff advised that he intended to call an appraiser. The plaintiff further advised that he would object to the admissibility of an expert for the defence. It is difficult to understand the logic of the plaintiff’s position: having been told that the plaintiff intended to call an appraiser (who, presumably, would testify about his valuation of the property) is only natural that the defendant would want to be in a position to respond to that evidence. It was only at trial that the parties ultimately reached the conclusion that it was unnecessary to present valuation evidence. Meanwhile, the defendant incurred this substantial disbursement expense for its own expert.
40Item 26 of Tariff A allows the recovery of a reasonable amount paid for expert’s report supplied to others parties as required by the rules "that were reasonably necessary for the conduct of the proceedings." Given the position taken by the plaintiff that he intended to call his own expert – a position from which he did not formally resile until the commencement of the trial – it does not lie in his mouth to object to the recovery by the plaintiff of the fees incurred by the defendant to respond. I would therefore allow this disbursement claim.
41In relation to the remainder of the disbursements claimed by the plaintiff, I would eliminate the charges for "document scanning", "laser copies", and would thus reduce the award on account of disbursements by $3,548.93 including HST. This reduces the total allowable disbursements (exclusive of the expert reports) to $9,734.26. To the foregoing sum must be added the expert report expense of $30,760.09 plus HST on that sum of $3,998.81, for a grand total of $44,493.16.
Conclusion and disposition
42For these reasons, I fix the costs award payable by the plaintiff to the defendant at $101,700 for fees and $44,493.16 for disbursements, both sums inclusive of tax. Therefore, the total cost award payable by the plaintiff to the defendant is $146,193.16.
Stinson J.
Date: October 8, 2013