ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 11-50689
DATE: 20140310
B E T W E E N:
Rocksolid
Gary G. Boyd and Jean-François Laberge, for the Plaintiff
Plaintiff
– and –
Dino Bertolissi, Stephanie Bertolissi and The Toronto-Dominion Bank
Christopher A. Moore, for the Defendants
Defendants
A N D B E T W E E N:
Dino Bertolissi and Stephanie Bertolissi
Plaintiffs by Counterclaim
-and –
Rocksolid, Jason Currie and Darryl Currie
Defendants to the Counterclaim
Christopher A. Moore, for the Defendants/Plaintiffs by Counterclaim
Gary G. Boyd and Jean-François Laberge, for the Plaintiff/Defendants to the Counterclaim
HEARD: By written submissions
DECISION ON COSTS
R. Smith J.
Overview
[1] The plaintiff recovered $18,530 in damages, after a four and a half day trial, which was the balance owing for installing stone on the defendants newly constructed home. The defendants counterclaimed for approximately $60,000 for the cost to complete the installation of the stone on their home and to repair deficiencies in the plaintiff’s work. The plaintiff successfully defended the counterclaim.
Positions of Parties
[2] The plaintiff claims costs on a complete indemnity basis in the amount of $80,777 or, alternatively, on a substantial indemnity basis at 90 percent of these costs of $73,017 or, alternatively, on a partial indemnity basis of $49,737.
[3] The plaintiff seeks costs on a full indemnity basis because Dino Bertolissi filed artificially inflated invoices in an attempt to bolster his counterclaim and testified that he had paid these amounts. The invoices he introduced were contradicted by his own witness who testified that the cost to repair the deficiencies was in the approximate range of $10,000 rather than $45,000 as alleged. In addition, his own witness testified that he had not delivered any interim invoices or provided any details of the hours he spent working to correct the deficiencies, which Dino Bertolissi claimed to have reviewed before paying the interim invoices.
[4] The plaintiff further submits that it has exceeded the terms of its offer to settle of April 8, 2013 and, as a result, it should receive costs on a partial indemnity basis to April 8, 2013, when the offer was delivered and on a substantial indemnity basis thereafter, which would result in costs of $67,597.77.
[5] The defendants submit that the plaintiff is only entitled to partial indemnity costs because the action should have been tried in the Small Claims Court. The defendants submit that the plaintiff should be limited to $15,000 in fees on a partial indemnity basis and disbursements limited to $2,000 inclusive of HST.
[6] The defendants deny that Dino Bertolissi’s filing of the misleading invoices amounted to fraud on the Court and submits that fraud was not pleaded by either of the parties and as such is not the type of circumstance like a finding of fraud, breach of fiduciary duty or misrepresentation that would attract the higher scale of costs. I agree with the defendants’ submissions that civil fraud was not pleaded or argued but the plaintiff was unaware of Dino’s actions until his evidence was contradicted by his own witness. I find that the defendants’ conduct of filing inflated invoices with the court, that were contradicted by his own witness, and by failing to call any evidence from the party who issued the invoices, amounted to unreasonable conduct which is a factor which increases the costs to be awarded.
Factors
[7] The factors to be considered when fixing costs are set out in Rule 57 of the Rules of Civil Procedure and include in addition to success, the amount claimed and recovered, the complexity and importance of the matter, unreasonable conduct of any party which unduly lengthened the proceeding, scale of costs and any offer to settle, the principle of indemnity, hourly rate claimed the time spent and the principle of proportionality, and the amount that a losing party would reasonably expect to pay.
Success
[8] In this case the plaintiff was almost completely successful on its claim to recover the balance owing for the stone installed on the defendants’ house. The plaintiff also successfully defended the counterclaim of approximately $60,000.
Amount Claimed and Recovered
[9] The plaintiff initially claimed $19,030 in damages and recovered $18,530. The defendants recovered zero on their counterclaim of approximately $60,000. The plaintiff recovered almost 100 percent of their claim.
Complexity and Importance
[10] The issues in this construction litigation were of above average complexity and the issues were important to the parties.
Unreasonable Conduct of Any Party
[11] I found that Mr. Bertolissi engaged in unreasonable conduct when he falsely testified that he had received and paid grossly inflated invoices to repair the deficiencies, which were contradicted by his own witness. I find that this conduct was unreasonable and was an attempt to mislead the Court.
[12] I do find that the defendants acted reasonably in agreeing to pay the amount of the construction lien into the plaintiff’s counsel’s trust account, plus 25 percent for costs. The defendants also initially proposed to transfer the matter to the Small Claims Court but this was before they delivered their statement of defence and counterclaim which exceeded the limits of the Small Claims Court. In their email dated March 15, 2011, the defendants agreed to pay the amount of the claim for lien, plus 25 percent into the plaintiff’s firm’s trust account, on the condition the lien and the certificate of action be remove from title, the action be discontinued against the Toronto-Dominion Bank and to have the defendants serve and file their statement of defence and counterclaim by March 21, 2010. They also at paras. 5 and 6 of the aforementioned email stated: “We will agree to leave the matter in the Superior Court which will allow our clients to claim an amount in excess of $25,000 in their counterclaim. If you are prepared to reconsider our proposal to move the matter to Small Claims Court we would still be amiable to proceed in that fashion”.
[13] The plaintiff responded that it wanted the defendants’ statement of defence immediately, wanted the plaintiff to bring an ex-parte motion to vacate the lien by paying the funds into court and insisted that the action continue in the Superior Court. By letter of March 17, 2011 the Bertolissis advised that the action must proceed at the Superior Court given the fact that the costs to rectify the deficiencies exceeded $25,000 and therefore the Small Claims Court was not applicable.
[14] It appears that by June 7, 2011 the parties had agreed that the sum of $23,872.86 would be forwarded and held by the plaintiff’s counsel in trust until judgment or other resolution was achieved. The plaintiff agreed to discontinue the action against the Toronto-Dominion Bank and also discharge the lien and certificate of action.
[15] On June 15, 2011, the defendants agreed that the matter would proceed as a construction lien matter although they were still prepared to agree to have the matter moved to Small Claims Court. The defendants submit that the plaintiff’s conduct of refusing to agree to proceed in the Small Claims Court action amounted to unreasonable conduct. I find that the matter could have proceeded as a Small Claims Court action on consent however, the defendants also agreed to proceed in the Superior Court and to advance a counterclaim of $55,000 which made it impossible to transfer to a Small Claims Court.
[16] The plaintiff submits that the defendants acted unreasonable in failing to respond to the request to admit which would have shortened the trial substantially. The defendants provided a request to admit dated February 15, 2013. The defendants proposed a book of documents in response to the request to admit. I am unable to find that either party’s conduct was unreasonable with regards to the filing of the request to admit.
Scale of Costs and Offers to Settle
[17] The plaintiff acknowledges that the first two offers to settle were revoked by the subsequent offers and as a result were not available for acceptance at the time the trial commenced. The final offer to settle was dated and served on April 8, 2013. I agree with the defendants submissions that the offer to settle on April 8, 2013 did not comply with the requirements of Rule 49.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg 194 because it was served less than seven days before the trial commenced.
[18] However, offers to settle may still be considered as a factor when awarding costs pursuant to Rule 49.13 of the Rules of Civil Procedure. In the plaintiff’s offer to settle dated June 1, 2011 it offered to accept $15,000 inclusive of all costs and disbursements. This offer was exceeded at trial as the plaintiff recovered $18,530 and will recover some costs and disbursements. Although the June 1, 2011 offer was withdrawn by subsequent offers it remained a reasonable offer to settle. In its final offer to settle dated April 8, 2013, the plaintiff offered to abandon its claim completely, release all of the funds held as security for the lien to the defendants and to pay a further $5,000 towards the defendants’ counterclaim. While this offer was not made within seven days of trial it was a very reasonable offer to settle and was exceeded by the plaintiff at trial.
[19] Notwithstanding that the plaintiff failed to comply strictly with Rule 49.10, they made three reasonable offers which were all exceeded at trial and this is a factor that will be considered when awarding the costs.
[20] I find that the defendants conduct of filing inflated invoices, introducing evidence contradicting his own invoices, and failing to call someone who could verify the invoices, did not rise to conduct that is so reprehensible, scandalous or outrageous be worthy of sanction by way of full indemnity or substantial indemnity costs. However, costs will be increased as a result of this conduct.
[21] As a result I will award costs above the partial indemnity level due to the reasonable offers to settle by the plaintiff pursuant to Rule 49.13 and also given the unreasonable conduct of Mr. Bertolissi described previously.
Hourly Rates, Time Spent and Proportionality
[22] The defendants submit that the reasonable expectations of the losing party would be to pay costs of substantially less than the amount claimed by the plaintiff. The defendants further submit that the construction lien litigation is designed in a way to minimize costs if it is used in an efficient manner. The defendants argue that by paying 25 percent of the amount claimed in the lien for costs, establishes an objective measure of what the losing party is reasonably expected to pay in costs. I do not agree with this submission especially when there is a full trial and a substantial counterclaim is advanced.
[23] Section 86 of the Construction Lien Act, R.S.O. 1990, c. C.30 provides that when the least expensive course is not taken by a party, costs allowed to the party shall not exceed what would have been incurred had the least expensive course been taken. However, the Constructive Lien Act requires that lien actions proceed in the Supreme Court. The Construction Lien Act envisions an efficient and quick proceeding but the reality of this construction claim which included $60,000 counterclaim alleging multiple deficiencies, as well as the initial claim which was relatively simple resulted in a substantial amount of time being spent at trial. The defendants also agreed to maintain the action in the Superior Court because it proceeded to file a counterclaim for approximately $60,000 which they advanced vigorously throughout the trial.
[24] The defendants object to time being claimed by two counsel however, Mr. Boyd completed the trial because of a death in Mr. Laberge’s family. I find that two counsel were not required to attend at trial. I also find that there is not necessarily duplication in efforts except when both counsel were present at trial.
[25] The defendants contested the plaintiff’s claim and counterclaimed vigorously in a complex construction matter involving claims for many deficiencies and counterclaimed for damages of $60,000 which necessitated the matter remaining in the Superior Court. The parties spent approximately four and a half days at trial including submissions. There is no real dispute about the hourly rates claimed by the parties based on their seniority and I find that they are reasonable.
[26] With respect to the time spent I find there was some duplication on the days where both counsel for the plaintiff were present at trial. Counsel for the plaintiff and defendants appeared to have difficulty in resolving matters between them but I am unable to determine which party acted unreasonably or whether additional time was spent because the inability of counsel to co-operate in this matter.
Amount the Unsuccessful Party Would Reasonably Expect to Pay
[27] The defendants did not provide a bill of costs at the end of the trial as did the plaintiff but did provide a bill of costs claiming a total of $27,590, which was delivered with their submissions on costs after the results were known. I find that the reasonable expectations of the losing party with experienced counsel, involved in a four and a half day complicated construction trial, with claims for deficiencies in the losing party would reasonably expect the costs in the range of $50,000 on a partial indemnity basis.
Disposition
[28] Having considered all of the above factors the defendants are ordered to pay costs to the plaintiff fixed in the amount of $50,000 plus HST plus disbursements of $3,000 inclusive of HST which is slightly above the partial indemnification costs sought for the reasons given previously.
The Honourable Mr. Robert J. Smith
Released: March 10, 2014
COURT FILE NO.: 11-50689
DATE: 20140310
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Rocksolid
Plaintiff
– and –
Dino Bertolissi, Stephanie Bertolissi and The Toronto-Dominion Bank
Defendants
A N D B E T W E E N:
Dino Bertolissi and Stephanie Bertolissi
Plaintiffs by Counterclaim
-and –
Rocksolid, Jason Currie and Darryl Currie
Defendants to the Counterclaim
DECISION ON COSTS
R. Smith J.
Released: March 10, 2014