COURT FILE NO.: 4265-08, 60766

DATE: 20131122

ONTARIO SUPERIOR COURT OF JUSTICE

RE: J & P Leveque Bros. Haulage Limited v. Her Majesty The Queen (Ontario) et al

BEFORE: The Honourable Mr. Justice David Nadeau

COUNSEL:

• Michael B. McWilliams and Jason Cicchetti, for Bruell
• James LeBer and Marcia J. Oliver, for Leveque
• Henry Weilenmann and Edmund Huang, for Her Majesty The Queen (Ontario) MTO
• Jeffrey S. Percival, for AECOM

REASONS ON COSTS

[1] Pursuant to my findings as explained to the extent required in my Reasons for Judgment dated July 25, 2013, there are several components to the costs submissions received from these parties.

[2] Leveque seeks to recover its costs from MTO on a full indemnity scale. Their submission is $705,434.50 for Fees, $80,095.05 for GST/HST and $77,483.52 for Disbursements, for a total of $863,013.07.

[3] Bruell seeks $435,983.70 from MTO on a mixed partial indemnity and substantial indemnity scale, calculated as $58,033.46 to March 23, 2010, and $342,519.33 thereafter, plus $35,430.91 for Disbursements.

[4] AECOM seeks its costs from Leveque on a mixed partial indemnity and substantial indemnity scale totaling $411,403.06 all inclusive. Alternatively, on a partial indemnity scale AECOM seeks $370,638.16 from Leveque, their submission being $243,625.35 for Fees, $69,132.39 for Disbursements and $57,880.42 for HST.

[5] Leveque submits that if AECOM is entitled to costs that they should be recovered directly from MTO pursuant to a Sanderson Order.

[6] MTO submits that reasonable costs awards would be $250,000 to Leveque and $125,000 to Bruell, both all inclusive of Fees, Disbursements and applicable taxes.

[7] MTO takes no position with AECOM seeking its costs from Leveque, and submits that the request of Leveque for a Sanderson Order is inappropriate here, unwarranted and ought to fail.

[8] The source of my judicial discretion to award costs is found under s. 131 of the Courts of Justice Act, as expanded by rule 57.01.

[9] Section 131 of the Courts of Justice Act states:

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.

[10] Rule 57.01 provides as follows:

57.01 (1) Factors in discretion – 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.

[11] From Davies v. Clarington (Municipality), 2009 ONCA 722, the Court of Appeal for Ontario confirmed the following:

“[14] Rule 57.01(4) allows for elevated levels of costs:

57.01(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,

(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

[15] "Substantial indemnity costs" is defined in rule 1.03 as "costs awarded in an amount that is 1.5 times what would otherwise be awarded in accordance with Part I of Tariff A". This part of Tariff A was once the prescribed grid for "partial indemnity costs", but is no longer in effect. "Full indemnity costs" is not a defined term but is generally considered to be complete reimbursement of all amounts a client has had to pay to his or her lawyer in relation to the litigation: see M. Orkin, The Law of Costs, 2nd ed., looseleaf (Aurora, Ont.: Canada Law Book, 1993) at para. 219.05.

[16] Rule 49 deals with a specific aspect of costs: it is a self-contained scheme that addresses the manner in which offers to settle are brought into play. Its objective is to promote an offer of compromise and visit a cost consequence upon an offeree who rejects an offer that turns out to be as favourable as or more favourable than the judgment awarded to a plaintiff at trial. The parts of Rule 49 relevant to this analysis are:

49.02(1) A party to a proceeding may serve on any other party an offer to settle any one or more of the claims in the proceeding on the terms specified in the offer to settle . . .

COSTS CONSEQUENCES OF FAILURE TO ACCEPT

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.

49.13 Despite rules 49.03, 49.10 and 49.11, the court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.”

[12] On the issue of the limits of the court’s discretion to award costs on either a substantial indemnity or full indemnity scale, that Court explained as follows:

“[40] In summary, while fixing costs is a discretionary exercise, attracting a high level of deference, it must be on a principled basis. The judicial discretion under rules 49.13 and 57.01 is not so broad as to permit a fundamental change to the law that governs the award of an elevated level of costs. 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. As Austin J.A. established in Scapillati, Strasser should be interpreted to fit within this framework -- as a case where the trial judge implicitly found such egregious behaviour, deserving of sanction.”

[13] As indicated in M. Orkin, The Law of Costs, 2nd ed., at paragraph 219.05:

In Ontario there are three scales of costs: partial indemnity, substantial indemnity (formerly the solicitor-and-client scale) and full indemnity. Partial indemnity is the default scale. In the usual circumstances an award of costs on a partial indemnity basis is the appropriate award to impose on the unsuccessful party. Elevated costs are warranted in only two circumstances: where there is an offer to settle pursuant to rule 49.10 of the Rules of Civil Procedure and where there is a clear finding of reprehensible conduct on the part of the party against whom the costs award is made.

Full indemnity costs are not a defined term. Full indemnity costs should equate to an award of costs at actual rates. That definition, however, is subject to the qualification of reasonableness. As the Ontario Court of Appeal wrote:

“I wish to note that in ordering costs on a full indemnity basis, I do not wish to be taken as suggesting that there are no “checks and balances” on such costs. At a minimum, such costs are to be reviewed by the court and are limited to those that have been reasonably incurred.”

Full indemnity costs can be awarded only in exceptional circumstances. There appears to be no clear line when a court will award full indemnity costs as opposed to substantial indemnity costs. The court awarded full indemnity costs where justice could be done only by complete indemnification for costs …

Rule 57.01 factors govern whether an award of full indemnity costs is appropriate.

[14] At paragraph 219.1, The Law of Costs further indicates under the sub-heading “Solicitor-and-Client Costs/Substantial Indemnity Costs”:

The court has a general and discretionary jurisdiction to award costs to a successful party as between lawyer and client, or, to adopt the new nomenclature in Ontario, on a substantial indemnity basis.

As a general rule, an order for solicitor-and-client costs is reserved for very limited circumstances. It has been suggested that where a rule of practice specifically authorizes such an order a lower threshold may apply.

Costs on the solicitor-and-client scale should not be awarded unless special grounds exist to justify a departure from the usual scale.

As the court said in Foulis v. Robinson:

“Generally speaking, an award of costs on a party-and-party scale to the successful party strikes a proper balance as to the burden of costs which should be borne by the winner without putting litigation beyond the reach of the loser. There are, of course, cases in which justice can only be done by a complete indemnification for costs.”

An award of costs on the solicitor-and-client scale, it has been said, is ordered only in rare and exceptional cases to mark the court’s disapproval of the conduct of a party in the litigation. The principle guiding the decision to award solicitor-and-client costs has been enunciated thus.

“[S]olicitor-and-client costs should not be awarded unless there is some form of reprehensible conduct, either in the circumstances giving rise to the cause of action, or in the proceedings, which makes such costs desirable as a form of chastisement.”

The Supreme Court of Canada has approved the following statement of principle:

“Solicitor-and-client costs are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties.”

It has been said that the court has an obligation to rebuke rather than appear to condone reprehensible conduct. …

For the principle to apply, the conduct must be unconscionable rather than merely neglectful. The conduct of the offending party must be reprehensible, motivated by bad faith, or bordering on chicanery, the conduct must be egregious, even within the context of hard-fought litigation.

[15] The Offer to Settle of Leveque dated May 3, 2010, considering my judgment in their favour, clearly engages the costs consequences resulting from MTO’s failure to accept as set out in Rule 49.10(1). Leveque also made subsequent offers of settlement which were bettered in the eventual trial decision. MTO clearly is obliged to pay Leveque at minimum partial indemnity costs to May 3, 2010 and substantial indemnity costs from that date, “unless this Court orders otherwise”. Leveque submits that it is exceptionally entitled to costs at a full indemnity scale throughout for the reprehensible misconduct of MTO during this litigation.

[16] Although Rule 49 does not specifically address this situation of Bruell’s Offer to Settle dated March 23, 2010 both as a plaintiff in one of the actions and as a defendant in the other, I also find that in considering my judgment in their favour the costs consequences of MTO’s failure to accept is engaged pursuant to Rules 49.10(1) and 49.13. Bruell also made subsequent offers of settlement which they bettered in the eventual trial decision. Although these offers of settlement were by necessity made to all parties, and none of the parties accepted resolution, Bruell remains entitled to partial indemnity costs to March 23, 2010 and substantial indemnity costs from that date.

[17] In my Reasons for Judgment, I specifically addressed my finding from the trial that there “is convincing evidence that Mr. Weilenmann was pivotal in the development of MTO defence strategies including being extremely influential in instructing Golder Associates pursuant to their Retainer Agreement. Exhibit 37 is but one striking example. Exhibits 30, 34, 35, 36, 38, 40, 41 and 42 display much of the same. For all of the reasons submitted in paragraph 92(c) (i) to (vi) of the Leveque Closing Argument, such MTO influence and suppression has definitely tainted any “fair, objective and non-partisan” opinion ultimately presented by Golder Associates.”

[18] I have determined, as a result of what I had witnessed during this trial, that MTO was quite improperly instructing and manipulating their supposedly “fair, objective and non-partisan” expert opinion as presented to this Court.

[19] As I commented on at paragraph 32, there was a demonstrated “lack of cooperation from MTO” with Leveque and Bruell. With regard to the various unfair and unreasonable challenges imposed upon these contractors here, I have determined that “MTO was pompously oblivious or completely unconcerned”.

[20] Although I ultimately decided not to grant the exceptional remedy of punitive damages as was legitimately submitted by Leveque in these circumstances, I nonetheless determined that the “conduct exhibited here by MTO is extremely troublesome”. Such misconduct includes facts proven at trial by Leveque that were not necessarily noted in the Reasons for Judgment; such as cancelling a Change Order, the various MTO threats of infractions, the chicanery of Paul Lecoarer, and the impropriety of the MTO Press Release, to name only a few more.

[21] At paragraph 49, I noted as follows:

“Although I am left with serious concerns from the conduct exhibited by MTO during this litigation including the trial itself, I must cautiously exercise my discretion to award punitive damages in addition here in a case which, at its core, is about a breach of contract claim. It is difficult to disregard however the significance of these patently inaccurate and false Minutes of meetings, as confirmed by Donald Teddy and Roland Legault, as well as the incidents of material non-disclosure here by MTO.”

[22] The evidence at trial demonstrated that MTO’s misconduct was clearly a calculated and continuing scheme to misrepresent and withhold evidence from these contractors. For clarity of the record, this Court did find there most certainly was evidence of bad faith by MTO, even without awarding punitive damages to Leveque.

[23] However for this my determination of the appropriate costs award from this trial, I stress my finding that such misconduct by MTO was unconscionable, egregious and reprehensible. Therefore, as proven during this trial, this is such a rare and exceptional case where Leveque is entitled to elevated costs on the full indemnity scale from MTO. Justice can only be done here by complete indemnification of costs for Leveque.

[24] With respect to the costs of AECOM, no liability was found for all the claims brought against them. On September 24, 2012, which was 16 days prior to the commencement of this trial, AECOM made a Rule 49 Offer to Contribute $50,000 to Leveque in exchange for the dismissal of Leveque’s claim as against AECOM only. Although not accepted, it is clear that AECOM’s Offer to Contribute does not constitute an Offer to Settle as contemplated by Rule 49.10 engaging those costs consequences. Instead, AECOM submits that this Offer to Contribute should be considered in exercising my discretion under Rule 57.01 to award AECOM its costs; either on the partial indemnity scale to September 24, 2012 and substantial indemnity thereafter, or for its partial indemnity costs throughout. It is noted that no party, even MTO, disputes the reasonableness of the quantum of costs claimed by AECOM against Leveque for their defence in this trial.

[25] On the issue of whether a Sanderson Order should be imposed as requested by Leveque, much useful guidance is provided as follows from the decision in Gardner v. Hann [2012] O.J. No. 1440 (S.C.J.):

12 The general rule in multi-defendant litigation is that the Plaintiff is entitled to costs from the unsuccessful Defendant and the successful Defendant is entitled to costs from the Plaintiff.¹ However, this rule can sometimes lead to unjust results. Bullock, [1907] 1 K.B. 264, and Sanderson orders offer relief from these unjust results. Ontario courts have the jurisdiction to grant such awards by virtue of s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C. 43, which grants the courts discretion over cost awards: Susin v. Goodreau (2005), 204 O.A.C. 180 (C.A.) at para. 51.

13 A Bullock order still requires the Plaintiff to pay the costs of the successful Defendant(s). However, it then requires, in turn, the unsuccessful Defendant(s) to reimburse the Plaintiff for costs that the Plaintiff has paid to the successful Defendant(s): Rooney (Litigation Guardian Of) v. Graham (2001), 53 O.R. (3d) 685 (C.A.) at para. 6 [Rooney v. Graham].

14 A Sanderson order is a more direct solution; it requires the unsuccessful Defendant(s) to pay the costs of the successful Defendant(s), leaving the Plaintiff out of the process entirely: Rooney v. Graham at para. 6.

15 In Rooney v. Graham, Carthy J.A. explained at para. 6 that Bullock and Sanderson cost orders are appropriate in situations where it is unclear who is responsible for the Plaintiff's loss:

The rational [sic] behind both orders is the same. Where the allocation of responsibility is uncertain, usually because of interwoven facts, it is often reasonable to proceed through trial against more than one defendant. In these cases, a Bullock or Sanderson order provides a plaintiff with an appropriate form of relief.

16 In Moore v. Wienecke 2008 ONCA 162 at para. 41, the Ontario Court of Appeal set out a two-part test for determining whether a Sanderson order is appropriate. This test also applies to Bullock orders.

a. Whether it was reasonable to join the several Defendants together in one action.

b. If so, whether courts should exercise their discretion to award such an order, i.e. would it be just and fair in the circumstances.

17 As part of the second consideration, the Court in Moore v. Wienecke set out four factors that are "relevant" to determine whether it is appropriate for the Court to exercise its discretion. However, the Court noted at para. 45 that they "need not be applied mechanically in every case" since a determination of costs is discretionary.

The Four Factors:

(a) Did the unsuccessful Defendant try to shift responsibility on the successful Defendant?

(b) Did the unsuccessful Defendant cause the successful Defendant to be added as a party?

(c) Are the causes of action independent of each other?

(d) Who has the ability to pay costs?

18 The question of whether to award a Bullock or Sanderson order is one of allocation of risk. A Bullock order places the risk on the Plaintiff of not recovering its costs from an impecunious unsuccessful Defendant and a Sanderson order places the risk on the successful Defendant of not recovering its costs from the impecunious unsuccessful Defendant.²

19 In considering in the case before me whether it is appropriate to make a Sanderson or Bullock order, the overarching concern is that of fairness and whether the Court ought to depart from the usual costs order that a Plaintiff will pay the costs of a Defendant against whom they were unsuccessful at trial and receive payment of their own costs from the at-fault Defendant. Should the costs burden be shifted from the Plaintiffs to the unsuccessful Defendant?

[26] In paragraphs 11 to 16 of their Costs Submissions, Leveque outlines the basis for their argument that a Sanderson Order is appropriate here. From paragraphs 34 to 42 of their Responding Costs Submission, MTO essentially submits that, upon a proper application of the two step test, there should be no exceptional Order for the unsuccessful defendant to pay the costs of the successful defendant AECOM. For the following reasons, I disagree with the MTO argument and I completely agree with both the factual analysis and argument as outlined in the Leveque written submissions; as further particularized in paragraphs 17 to 28 of the Leveque Costs Submissions in Reply to those of MTO.

[27] In considering the two-part test cited with approval by the Ontario Court of Appeal;

a) Was it reasonable here for Leveque to join MTO and AECOM together in one action? Of course it was. It became obvious after trial that MTO and Mr. Weilenmann had conveniently ‘after the fact’ orchestrated their defence of a standard practice in the industry in which the contractor supplying the aggregate would conduct a stripping test to evaluate compatibility issues. This “industry standard” defence was ultimately adopted by both the MTO and the AECOM experts. If that defence had been applied against Leveque and Bruell, it certainly was not clear that AECOM would escape a finding of liability as the Contract Administrator.

b) Therefore, should this Court exercise its discretion to make such an order in all of the circumstances? Would it be fair and just in this case? As part of this consideration, there are four factors relevant to determine whether it is appropriate for the Court to exercise its discretion.

i) That there were no crossclaims between MTO and AECOM or cross-examination of each other’s witnesses does not alter the fact that the MTO “industry standard” defence did expose their Contract Administrator to potential responsibility. If such an “industry standard” had existed, clearly AECOM should also have known as the Contract Administrator.

ii) The MTO defence strategy, including the “industry standard” defence, made it necessary that AECOM be added as a party and also to remain as a defendant in this trial. I completely agree with the Leveque submissions in this regard, and I accept that the AECOM expert did materially change its position on the “industry standard” issue during his testimony.

iii) As it became abundantly clear after the trial of these actions together, the cause of action in negligence was completely intertwined with the facts for the breach of contract action. From the structure of my Reasons for Judgment, it is obvious that these causes of actions were not independent of each other and it was extremely appropriate that they be heard together.

iv) From these costs submissions, who has the ability to pay costs here is not actually an extremely relevant factor in whether I should exercise my discretion in this case.

[28] Considering all these circumstances, in the interest of achieving a fair and just result in this case, it is appropriate that MTO shall pay the costs of AECOM pursuant to a Sanderson Order. And as a result of the AECOM Offer to Contribute, I also note that Rule 49.12(2)(a) appears to provide additional support for my decision in this regard.

[29] I am also mindful of my obligation to assess whether these costs awards from this trial are “fair and reasonable”. As outlined by the Divisional Court of this province in Andersen v. St. Jude Medical, Inc., [2006] O.J. No. 508:

“15 The principles that should guide the exercise of discretion in fixing costs are reviewed in Boucher at paras. 24, 37 and 38:

[24] ... While it is appropriate to do the costs grid calculation, it is also necessary to step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable. This approach was sanctioned by the court in Zesta Engineering Ltd. v. Cloutier, [2002] O.J. No. 4495, 21 C.C.E.L. (3d) 161 (C.A.) at para. 4 where it said:

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.

[37] The failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice... However, in my view, the chilling effect of a costs award of the magnitude of the award in this case generally exceeds any fair and reasonable expectation of the parties.

[38] In deciding what is fair and reasonable, as suggested above, the expectation of the parties concerning the quantum of a costs award is a relevant factor [citations omitted]. I refrain from attempting to articulate a more detailed or formulaic approach. The notions of fairness and reasonableness are embedded in the common law. Judges have been applying these notions for centuries to the factual matrix of particular cases.

16 As Boucher observes, the notions of fairness and reasonableness are notions with which judges have been long familiar, although it is not evident that they are necessarily familiar with how to determine the reasonable expectations of the parties. In fixing costs, judges have traditionally had regard to the factors set out in Rule 57.01(1). This Rule includes the factors with which we are all familiar as well as the following two additional factors which came into effect on July 1, 2005:

57.01(1) (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;

17 Although the costs grid has been revoked, judges who are tasked with fixing costs must continue to consider as a factor the experience of the lawyer, the rates charged and the hours spent in light of subrule (0.a) and in light of the information to the profession from the Costs Subcommittee of the Civil Rules Committee, which has published a guideline with rates and years of experience on a partial indemnity scale that is identical to the former costs grid. Costs on a substantial indemnity scale are to be 1.5 times higher. Thus, an hours and rates calculation will continue to be performed and serve as a guideline for allowable costs.

18 Subrule 57.01(0.b) reflects the dictum from the brief endorsement of the Court of Appeal in Zesta Engineering, quoted with approval in Boucher and Moon. As stated in Boucher at para. 25, Zesta and Stellarbridge Management Inc. v. Magna International Canada Inc. (2004), 71 O.R. (3d) 263 "confirmed a well-settled approach to the fixing of costs prior to the establishment of the costs grid as articulated by Morden A.C.J.O. in Murano v. Bank of Montreal (1998), 41 O.R. (3d) 222 (C.A.) at p. 249...". This approach emphasizes the overriding principle of reasonableness.

19 The amount of costs that an unsuccessful party could reasonably expect to pay in relation to a step in the proceeding for which costs are being fixed is, in view of subrule 57.01(1)(0.b), one of the factors to be considered in fixing costs. Although Boucher does not explain how this is to be determined, the introduction of the Costs Outline in Rule 57.01(6) will provide some measure of what the unsuccessful party expected as the court will now have available to it the hours, rates and amount claimed by the unsuccessful party who, if successful, would be seeking this amount for costs.”

[30] And then at paragraph 22, that Court outlines the following:

“However, an award of this magnitude warrants careful scrutiny because in exercising the discretion to award a significant amount for costs, we must be satisfied that the judge has exercised the discretion on proper principles and that the award is not "plainly wrong". We understand these principles to be:

1. 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): Boucher, Moon and Coldmatic.

2. 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: Zesta Engineering.

3. 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).

4. 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": Murano at p. 249.

5. The court should seek to balance the indemnity principle with the fundamental objective of access to justice: Boucher...”

[31] As well from Davies, infra, the Ontario Court of Appeal adds:

“[52] As can be seen, the overriding principle is reasonableness. If the judge fails to consider the reasonableness of the costs award, then the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. In Boucher, this court emphasized the importance of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, at para. 37, where Armstrong J.A. said "[t]he failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice".”

[32] Without commenting too extensively, in applying these principles to this case, I have in fact reviewed the Bill of Costs as submitted by Leveque, Bruell and AECOM. Recognizing that it is not solely my task to analyze these on a line by line basis (and the MTO costs submission demonstrates no such analysis), I have however in fact reviewed these in sufficient detail to recognize and appreciate the matters billed in relation to the issues raised by the parties in this trial.

[33] It is to be noted that the MTO written submissions do not include the time dockets of the complete MTO legal team that was obviously present throughout this trial. When MTO takes serious issue with the reasonableness of the legal work required on behalf of Leveque and Bruell for this trial, I would have expected that evidence for comparison purposes. As Justice Winkler stated in Risorto v. State Farm Mutual Automobile Insurance Co., [2003] O.J. No. 990 (S.C.J.):

“9 Further, courts have repeatedly stated that the role of the court on a costs disposition is not to second-guess successful counsel on the amount of time spent on the case or the allocation of counsel to the tasks at hand. (See Tri-S Investments v. Vong, [1991] O.J. No. 2292 (Gen. Div.); Lawyers' Professional Indemnity Co. v. Geto Investments Ltd., [2002] O.J. No. 921 (Sup. Ct.))…

10 The attack on the quantum of costs, insofar as the allegations of excess are concerned, in the present circumstances is no more than an attack in the air. I note that State Farm has not put the dockets of its counsel before the court in support of its submission. Although such information is not required under r. 57 in its present form, and the rule enumerates certain factors which would have to be considered in exercising the discretion with respect to the fixing of costs in any event, it might still provide some useful context for the process if the court had before it the bills of all counsel when allegations of excess and "unwarranted over-lawyering" are made. In that regard, the court is also entitled to consider "any other matter relevant to the question of costs". (See r. 57.01(1)(i)). In my view, the relative expenditures, at least in terms of time, by adversaries on opposite sides of a motion, while not conclusive as to the appropriate award of costs, is still, nonetheless, a relevant consideration where there is an allegation of excess in respect of a particular matter.”

[34] As noted previously, MTO does not dispute the reasonableness of the quantum of costs claimed by AECOM against Leveque for their defence in this trial; and the total costs billed to AECOM for their legal defence in this trial was $533,055.06. As well, MTO does not dispute with any serious analysis that the various disbursements claimed were incurred.

[35] MTO essentially submits that the Leveque and Bruell costs amounts are excessive and unreasonable, and that a costs award should be in the reasonable expectation of the unsuccessful party. Although the expectation of the parties concerning the quantum of a costs award is a relevant factor, having regard to the complexity of this proceeding, the importance of the issues raised here, the voluminous and complex MTO contract documents, and the misconduct of the MTO as previously discussed, I find that MTO must have realistically expected these costs amounts from these contractors should their defence strategy as mounted fail as it did.

[36] MTO has further submitted that the range of costs that would be reasonably expected to be awarded here should be consistent with cases of similar length. The cases submitted however are not at all similar to this matter, which was factually and technically complex with numerous expansive and interwoven relevant documents and reports. As well, in this case there are applicable Rule 49 offers of settlement and clear findings of misconduct by the unsuccessful defendant. Furthermore, after 17 extended days of trial spanning over 3 months, followed by comprehensive written submissions after trial and also for the costs awards, Leveque claims legal fees representing approximately 29% of its award of damages with interest from this Court, while Bruell claims fees representing essentially 46% of its much smaller award plus interest. In my view, this is a proper reflection of the expansive role necessarily taken by Leveque’s lawyers in defending the claim of Bruell and then advancing their claims against MTO and AECOM.

[37] MTO has submitted that I should factor into my exercise of discretion that none of the representatives from the parties involved had ever experienced a failure of this type or magnitude prior to this particular construction project. When I applied the experience that Don Teddy had with surface treatment and considered his testimony regarding the issue of causation for the deterioration, it was obvious to this Court that MTO had purposely failed to conduct an objective investigation of the causation issue before reacting as it did against these contractors. Instead, the “industry standard” defence was manufactured by MTO and their misconduct is now unfortunate history, which I have an obligation to rebuke rather than appear to condone.

[38] Considering all of the written submissions regarding costs of this trial, in exercising my discretion from the Courts of Justice Act and applying all of the applicable factors and principles to my findings of fact in this trial, the appropriate “fair and reasonable” costs awards are as follows:

(a) THIS COURT ORDERS that MTO pay to Leveque its costs of these actions as claimed on a full indemnity scale, hereby fixed in the amount of $863,013.07.

(b) THIS COURT ORDERS that MTO pay to Bruell its costs of these actions as claimed on a mixed partial and substantial indemnity scale, hereby fixed in the amount of $435,983.70.

(c) THIS COURT ORDERS that MTO pay to AECOM its costs of these actions on a partial indemnity scale, hereby fixed in the amount of $370,638.16.

RELEASED: November 22^nd, 2013

The Honourable Mr. Justice David Nadeau

COURT FILE NO.: 4265-08, 60766

DATE: 20131122

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

BRUELL CONTRACTING LIMITED Plaintiff

-and-

J. & P. LEVEQUE BROS. HAULAGE LIMITED and HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO, AS REPRESENTED BY THE MINISTRY OF TRANSPORTATION OF ONTARIO Defendants

AND BETWEEN:

J. & P. LEVEQUE BROS. HAULAGE LIMITED Plaintiff

-and-

HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO, EARTH TECH CANADA INC. NOW DOING BUSINESS UNDER THE NAME OF AECOM CANADA LTD., BRUELL CONTRACTING LIMITED and MCASPHALT INDUSTRIES LIMITED Defendants

REASONS ON COSTS

The Honourable Mr. Justice David Nadeau

Released: 20131122