ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 4015-13SR
DATE: 2013-10-24
BETWEEN:
Niranjan Kotecha
Applicant
- and -
Affinia Canada ULC
Respondent
Pamela Krauss, for the Applicant
Christopher A. Chekan, for the Respondent
the honourable mr. justice p.b. hambly
RULING ON COSTS
[1] The plaintiff claims costs and prejudgment interest on a judgment in his favour. For convenience I attach as Schedule “A” Rules of Civil Procedure and sections of the Courts of Justice Act to which I make reference in this judgment.
Facts Relevant to Costs
[2] The plaintiff commenced employment with Affinia as a machine operator on June 24, 1991. Affinia gave him notice of termination of his employment after 20 years without cause on July 8, 2011, by letters dated May 16, 2011 and June 6, 2011. The plaintiff is 70 years of age. Affinia provided him with severance pay including pay in lieu of notice of $14,656.92.
[3] Ms. Krauss commenced an action on his behalf by causing a statement of claim to be issued in January, 2013. Affinia filed a statement of defence in February, 2013. Ms. Krauss brought a motion for summary judgment returnable at Assignment Court on May 3, 2013 at 2:00 p.m. in accordance with the local procedure. Mr. Chekan served a subpoena on Ms. Krauss for that date. He stated in his written submissions on costs that he did so in order to be in a position to provide evidence that she had set the date without consulting his availability. He withdrew the subpoena when he discovered that May 3, 2013 was an Assignment Court. He attended at the Assignment Court. He did not explain why he did not apprise himself of the local procedure before he served the subpoena, why this could not have been established by oral submissions supported by copies of correspondence or why his schedule permitted him to attend at the Assignment Court but did not permit him to be available to argue the motion when he was under the mistaken impression that May 3 was for that purpose.
[4] At the Assignment Court he took the position that the summary judgment motion should be heard after he had conducted an examination for discovery of the plaintiff. He was not available until October. He would not provide earlier dates when he would be available to argue the motion without an examination for discovery. Justice Flynn, again in accordance with the local procedure, set the weeks of June 10, 24 and July 28 for the trial coordinator to call the motion to be argued on dates when Ms. Krauss was available and when a judge became available. Mr. Chekan, on behalf of Affinia, filed a motion returnable on June 26, 2013 for leave to appeal Justice Flynn’s order. The trial coordinator called the summary judgment motion to be heard by me on June 25 for a full day. Ms. Krauss filed a motion record with an affidavit from Mr. Kotecha and a factum, in accordance with the practice direction for long motions. Mr. Chekan appeared on the motion. He filed no material on behalf of his client. He did provide case law to support his position. He gave copies to me and to Ms. Krauss in court. I had the leave to appeal motion brought forward. Mr. Chekan did not explain why he was available to appear on the summary judgment motion on June 25 and on the leave motion on June 26 when he took the position before Justice Flynn that he was not available until October.
[5] I heard argument on the leave motion and then I had heard argument on the summary judgment motion. I reserved judgment on both motions. I released my judgment on July 18, 2013. I denied the leave motion. I allowed the motion for summary judgment. I held that the plaintiff was entitled to 22 months’ notice. After giving Affinia credit for what it had paid Kotecha, in lieu of notice and for severance, I awarded him a judgment against Affinia of $69,139.03.
[6] In my judgment, I asked counsel to provide me with written submissions on costs. The plaintiff’s position was set out initially in the costs outline of the plaintiff filed on July 29, 2013 by Ms. Krauss. The defendant’s position is set out in the written submissions of Mr. Chekan filed on August 8, 2013. He pointed out some arithmetic errors in the plaintiff’s costs outline, which Ms. Krauss corrected in her amended costs outline, which she filed on August 9, 2013.
[7] The plaintiff filed an offer on May 19, 2013 in the amount of $50,000. The amount that I awarded the plaintiff substantially exceeds the plaintiff’s offer. The defendant filed no offer. The plaintiff is entitled to partial indemnity costs to the date of the offer and substantial indemnity costs thereafter unless the court orders otherwise pursuant to Rule 49.01.
[8] Ms. Krauss, on behalf of the plaintiff, claims substantial indemnity costs throughout at the rate of $275 per hour applied to the time that she has spent on the case. She states in her amended costs outline that she spent 20 hours before the offer was served, 28 hours after it was served and 2.5 hours in drafting her costs submissions. She requests four hours for her clerk at the rate of $50 per hour. She claims a counsel fee of $2,200 for her attendance on the motion. The plaintiff claims a total of $16,150.00 for fees and $655.09 for disbursements for a total, with HST, of $19,347.75.
Defendant’s Argument
[9] Mr. Chekan, on behalf of Affinia, submits that the plaintiff should be denied costs completely or in the alternative if the plaintiff is awarded any costs it should be on a much reduced scale. He submits the following:
- Ms. Krauss, on behalf of the plaintiff, did not file a bill of costs in Form 57A pursuant to Rule 57.01(5). She filed only a costs outline in Form 57B pursuant to Rule 57.01(6). He submits that the wording of these rules is mandatory. The failure of a successful party to comply with them should result in a complete denial of costs. He submits that Rule 20.06 and the Courts of Justice Act s. 131 do not “trump” these rules.
I disagree. Rule 57.01(1) refers to the court’s “exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider” the provisions that follow. Rule 57.01(4) states that nothing in Rule 57 affects the authority of the court to award costs under s. 131 of the Courts of Justice Act. In my view, the authority of the court to award costs under s. 131 of the Courts of Justice Act must be guided by the factors set out in Rule 57 but is ultimately untrammeled.
- A memorandum from the Court of Appeal described as “Information for the Profession” dated July 1, 2005 sets out maximum rates of lawyers depending on their experience to be used in fixing costs. For lawyers with less than 10 years’ experience, it states that the maximum rate is $225 per hour. Rule 1.03 defines substantial indemnity costs at 1.5 times partial indemnity costs. Ms. Krauss has 7 years’ experience. Mr. Chekan takes 70 % of these figures, adjusts for inflation and arrives at $181.22 for Ms. Krauss’s partial indemnity rate and $271.83 for her substantial indemnity rate. This memorandum is clearly entitled to the greatest respect. However, I do not regard it as binding either on the rates to be used or on a requirement to assess costs on a claim for hours spent at a particular rate based on the experience of the lawyer. In my years of experience as a trial judge I have encountered some very experienced lawyers who have performed badly and some young lawyers who have done superb work. The performance of Ms. Krauss in this case is in the latter category.
The Court of Appeal has also made clear in case law that costs should be fixed that are “fair and reasonable” taking into account proportionality and access to justice (see the decision of the Court of Appeal in Boucher v. Public Accountant, 2004 20534 (ON SC), [2004] O.J. No. 2630 at paras. 24 and 37). In Zesta Engineering v. Cloutier, 2002 25577 (ON CA), [2002] O.J. No. 4495 the Court of Appeal stated the following:
4 As indicated in our reasons for decision, the appellant is entitled to its costs of the proceedings in this court. Having considered the submissions of the parties, we hereby fix those costs on a partial indemnity basis at $36,000, all inclusive. Our reasons can be briefly stated. We have considered the bills of costs submitted by the appellant. However, we make no specific finding with respect to the amount of time spent or the rates charged by counsel. In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.
In Tri-S Investments v. Vong, [1991] O.J. No. 2292 Justice Feldman (as she then was, now Feldman J.A.) stated the following:
A judge's function in fixing costs (as contrasted with the role of an assessment officer on a full assessment) is to perform a summary analysis of the cost of the services of counsel for the successful party, then to apply the party/party scale of indemnification to that figure. The purpose of the summary analysis is for the trial or motions judge, familiar with the nature of the proceeding as well as with its substantive and procedural complexity, to ensure that the magnitude of the claimed costs is in keeping with what is warranted in the circumstances. I do not view it to be the court's function when fixing costs to second-guess successful counsel on the amount of time that should or could have been spent to achieve the same result, unless the time spent is so grossly excessive as to be obvious overkill. (quoted with approval by the Court of Appeal by Justice Morden A.C.J.O. in Murano v. Bank of Montreal 1998 5633 (ON CA), [1998] O.J. No. 2897 at para. 91)
- In her costs outline Ms. Krauss claims costs on a substantial basis prior to her filing an offer to settle. Mr. Chekan makes the submission that by so doing she has “sworn” falsely because according to Rule 49.10 the plaintiff is not entitled to substantial indemnity costs before filing an offer to settle. He submits at para. 71 of his written submissions that “a party that attempts to deceive a Court into awarding that party costs to which it is not entitled should receive no costs”. Ms. Krauss, in both her cost outline and her amended costs outline, “swore” to nothing. What she did was “to certify that the hours claimed have been spent, that the rates shown are correct and that each disbursement has been incurred as claimed” in the words of the prescribed form. These extravagant submissions are of no merit.
Ruling on Costs
[10] I find that the conduct of Mr. Chekan in this matter has been unreasonable. This conduct includes serving a subpoena on Ms. Krauss which was unnecessary, failing to provide dates when he would be available to attend at a long motion and failing to provide a factum on the long motion. Instead he attended at the long motion with cases that he provided to the court and to Ms. Krauss as he was arguing his position. Neither Ms. Krauss nor the court had any notice of what he was going to submit. He did not provide a bill of costs which would permit the court to apply Rule 57.01 (0.b) to determine what his client might have expected to pay. In Risorto v. State Farm Mutual Automobile Insurance Co., 2003 43566 (ON SC), [2003] 64 O.R. (3d) 135 at para.10, Justice Winkler (as he then was, now Chief Justice of the Court of Appeal) held that in the absence of a statement of costs of the party against whom costs were to be assessed setting out the time spent and the hourly rate to be applied, "the attack on the quantum of costs, insofar as the allegations of excess are concerned ... is no more than an attack in the air."
[11] Rule 20.06 applies. Ms. Krauss claims to have spent 48 hours prior to arguing the motion and another 2.5 hours preparing the bill of costs. The hours that she spent are reflected in the quality of her work. Her factum and her oral submissions were very helpful to the court. She was completely successful on behalf of her client. She is entitled to an additional sum for having to address the jurisdictional arguments raised by Mr. Chekan on the prejudgment interest issue. I fix costs, including HST, disbursements and the prejudgment interest issue at $21,000 payable by Affinia to the plaintiff, within 30 days.
Facts Relevant to Claim for Pre and Post Judgment Interest
[12] Affinia filed a Notice of Appeal on August 19, 2013. A formal judgment has not been issued and entered. Ms. Krauss sent a letter to me dated September 9, 2013 requesting pre and post judgment interest. The plaintiff claimed this in his statement of claim but it was not dealt with in my judgment. I sent an e-mail to counsel on September 17th requesting written submissions. Ms. Krauss replied by letter dated September 23rd. Mr. Chekan responded with his written submissions dated October 2nd. He took the position that the court was without jurisdiction to make an award of prejudgment interest. I requested by e-mail, dated October 3rd, that Ms. Krauss respond to the jurisdictional arguments advanced by Mr. Chekan. She did so by letter dated October 7, 2013. Mr. Chekan requested an opportunity to respond to her submissions which I granted. He provided his response by written submissions dated October 16, 2013.
[13] Mr. Chekan takes the position that since Affinia filed a notice of appeal before Ms. Krauss, on behalf of the plaintiff, sought prejudgment interest that the court is without jurisdiction to vary the judgment by allowing prejudgment interest. It is his position that jurisdiction is transferred to the Court of Appeal by a party filing a notice of appeal. Only the Court of Appeal can vary the judgment.
[14] The only case that he cites in support of his argument is the trial decision in Axelrod v. Jacob, 1943 CarswellOnt 113 (H.C.J.). In that case Urquart J. declined to vary an order of costs where the variation was sought after a notice of appeal had been filed. However, according to the reported summary of the case he reached the conclusion that he had the power to do so. The case summary states the following:
His Lordship said that he had been concerned as to whether, having endorsed the record and disposed of the case more than a month previously, he was now functus officio, or whether, in any case, in view of the long delay and the pending appeal, he should interfere. He had reached the conclusion that since the formal judgment had not yet been settled, he still had power to vary the terms … (citations omitted)
[15] More recently in Byers v. Pentex, 2003 CarswellOnt 18, the Court of Appeal in the judgment of Justice Borins held that the time for filing a notice of appeal runs from the date that a judgment is issued. Where costs are determined later, the decision rendered on costs does not extend the time for filing a notice of appeal on the merits of the previously released decision. Leave to appeal may be sought within the time provided from the costs decision. On the question of the jurisdiction of the court to amend its judgment, where the judgment has not been issued and entered, the Court of Appeal stated the following:
41 … What these cases, and others, recognize is that the court possesses the power to alter, modify or amend its judgment, or to rectify its own mistake, following the release of its decision and before it has been signed as the formal judgment of court and entered. In other words, the court may reconsider matters properly encompassed in its decision on the merits before it is entered. When the court does so, and alters or modifies its merits judgment, the time for service of the notice of appeal from that judgment commences when that judgment has been altered or modified and entered.
In my view this is a complete answer to Affinia’s position that the court lacks jurisdiction to make an order for prejudgment interest when the judgment has not been issued and entered.
[16] On the merits of the plaintiff’s request, Affinia’s position is that eight weeks statutory notice in the amount of $5,833.60 should be deducted from the award of $69,139.03 giving $63,305.43 as the figure to be used against which prejudgment interest is calculated. I disagree. This figure is included in the $14,656.92 as “pay in lieu and severance pay” that is deducted from the amount of $83,795.05 that would have otherwise been payable to give an amount of $69,139.03, which I allowed. This is apparent from para. 7 of the judgment.
[17] Ms. Krauss submits that the plaintiff is entitled to prejudgment interest from May 16, 2011 to July 18, 2013 which is the date of the judgment. May 16, 2011 is the date when Affinia first gave notice to the plaintiff of the termination of his employment which notice was inadequate as found by my judgment. This is the date when the cause of action arose and the date from which prejudgment interest should run in accordance with s. 128(1) of the Courts of Justice Act. The position of Mr. Chekan, on behalf of Affinia, is that prejudgment interest should run from July 8, 2011 since this was the date that Affinia last employed him. I agree with Ms. Krauss. Her position is in accordance with the facts and the legislation.
[18] Ms. Krauss submits that the tactics of delay and obstruction of Mr. Chekan on behalf of Affinia should result in a doubling of the prejudgment interest rate to be applied from the prescribed rate of 1.3% to 2.6%. The prescribed rate for post judgment interest from July 18, 2013 is 2.6%. I agree with Mr. Cheken that the positions that he advanced had a basis in the law, although I disagreed with him on their applicability to the facts of this case. Mr. Chekan relies on the case of Novakovic v. Kapusniak, 2008 CarswellOnt 2730 in which the Court of Appeal stated the following:
42 A trial judge should consider the conduct of the proceedings and delays attributable to particular parties to those proceedings in determining the rate of prejudgment interest. Prejudgment interest is not, however, intended as a means of punishing or rewarding parties for the manner in which they have conducted the proceedings. Its role is compensatory.
The conduct and delay alleged in that case was on the part of the party claiming prejudgment interest rather than on the party against whom it was to be awarded as is the situation here. Nevertheless I see no reason to depart from the prescribed rate for prejudgment interest.
Result
[19] There will be an order as follows:
Prejudgment interest is allowed on $69,139.03 from May 16, 2011 to July 18, 2013 at 1.3% and thereafter post judgment interest is allowed on the amount of the judgment outstanding at the rate of 2.6%.
Affinia shall pay costs to the plaintiff in the amount of $21,000 within 30 days.
“P.B. Hambly”
Justice P.B. Hambly
Released: October 24, 2013
Schedule “A”
Rules of Civil Procedure
1.03 (1) In these rules, unless the context requires otherwise,
"substantial indemnity costs" mean costs awarded in an amount that is 1.5 times what would otherwise be awarded in accordance with Part I of Tariff A, and "on a substantial indemnity basis" has a corresponding meaning.
General Principle
1.04 (1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.
Proportionality
(1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.
20.06 The court may fix and order payment of the costs of a motion for summary judgment by a party on a substantial indemnity basis if,
• (a) the party acted unreasonably by making or responding to the motion; or
• (b) the party acted in bad faith for the purpose of delay.
Plaintiff's Offer
49.10 (1) Where an offer to settle,
(a) is made by a plaintiff at least seven days before the commencement of the hearing;
(b) is not withdrawn and does not expire before the commencement of the hearing; and
(c) is not accepted by the defendant,
and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.
Factors in Discretion
57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party's denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(i) any other matter relevant to the question of costs.
Costs Against Successful Party
(2) The fact that a party is successful in a proceeding or a step in a proceeding does not prevent the court from awarding costs against the party in a proper case.
Fixing Costs: Tariffs
(3) When the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs.
Assessment in Exceptional Cases
(3.1) Despite subrule (3), in an exceptional case the court may refer costs for assessment under Rule 58.
Authority of Court
(4) Nothing in this rule or rules 57.02 to 57.07 affects the authority of the court under section 131 of the Courts of Justice Act,
(a) to award or refuse costs in respect of a particular issue or part of a proceeding;
(b) to award a percentage of assessed costs or award assessed costs up to or from a particular stage of a proceeding;
(c) to award all or part of the costs on a substantial indemnity basis;
(d) to award costs in an amount that represents full indemnity; or
(e) to award costs to a party acting in person.
Bill of Costs
(5) After a trial, the hearing of a motion that disposes of a proceeding or the hearing of an application, a party who is awarded costs shall serve a bill of costs (Form 57A) on the other parties and shall file it, with proof of service.
Costs Outline
(6) Unless the parties have agreed on the costs that it would be appropriate to award for a step in a proceeding, every party who intends to seek costs for that step shall give to every other party involved in the same step, and bring to the hearing, a costs outline (Form 57B) not exceeding three pages in length.
Process for Fixing Costs
(7) The court shall devise and adopt the simplest, least expensive and most expeditious process for fixing costs and, without limiting the generality of the foregoing, costs may be fixed after receiving written submissions, without the attendance of the parties.
Courts of Justice Act
Court of Appeal jurisdiction
6.--(1) An appeal lies to the Court of Appeal from,
(a) an order of the Divisional Court, on a question that is not a question of fact alone, with leave of the Court of Appeal as provided in the rules of court;
(b) a final order of a judge of the Superior Court of Justice, except an order referred to in clause 19(1)(a) or an order from which an appeal lies to the Divisional Court under another Act;
(c) a certificate of assessment of costs issued in a proceeding in the Court of Appeal, on an issue in respect of which an objection was served under the rules of court.
Prejudgment interest
128.--(1) A person who is entitled to an order for the payment of money is entitled to claim and have included in the order an award of interest thereon at the prejudgment interest rate, calculated from the date the cause of action arose to the date of the order.
Costs
131.--(1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
Powers on appeal
134.--(1) Unless otherwise provided, a court to which an appeal is taken may,
(a) make any order or decision that ought to or could have been made by the court or tribunal appealed from;
(b) order a new trial;
(c) make any other order or decision that is considered just.
Interim orders
(2) On motion, a court to which a motion for leave to appeal is made or to which an appeal is taken may make any interim order that is considered just to prevent prejudice to a party pending the appeal.
Power to quash
(3) On motion, a court to which an appeal is taken may, in a proper case, quash the appeal.
Determination of fact
(4) Unless otherwise provided, a court to which an appeal is taken may, in a proper case,
(a) draw inferences of fact from the evidence, except that no inference shall be drawn that is inconsistent with a finding that has not been set aside;
(b) receive further evidence by affidavit, transcript of oral examination, oral examination before the court or in such other manner as the court directs; and
(c) direct a reference or the trial of an issue,
to enable the court to determine the appeal.
Scope of decisions
(5) The powers conferred by this section may be exercised even if the appeal is as to part only of an order or decision, and may be exercised in favour of a party even though the party did not appeal.
New trial
(6) A court to which an appeal is taken shall not direct a new trial unless some substantial wrong or miscarriage of justice has occurred.
Idem
(7) Where some substantial wrong or miscarriage of justice has occurred but it affects only part of an order or decision or some of the parties, a new trial may be ordered in respect of only that part or those parties.
COURT FILE NO.: 4015-13SR
DATE: 2013-10-24
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Niranjan Kotecha
- and -
Affinia Canada LUC
RULING ON COSTS
Justice P.B. Hambly
Released: October 24, 2013