ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 12-54751

DATE: 2014/05/26

BETWEEN:

MONTEL INC.

Plaintiff
(Defendant by Counterclaim)

– and –

KIPAWA SALES & SERVICES INC. AND GERALD JOHNSON

Defendants
(Plaintiffs by Counterclaim)

(“Action No. 1”)

Marisa Victor and Julia Kennedy, for the Plaintiff (Defendant by Counterclaim)

Cheryl McLuckie as agent for Daniel Mayo, for the Defendants (Plaintiffs by Counterclaim)

AND BETWEEN:

COURT FILE NO.: 12-55409

JOHNSONS FILING & SHELVING SYSTEMS INC.

Plaintiff

– and –

MONTEL INC. AND CHARLES OLIVIER & MONTEL SMARTSPACE OTTAWA INC.

Defendants

(“Action No. 2”)

Cheryl McLuckie as agent for Daniel Mayo, for the Plaintiff

Marisa Victor and Julia Kennedy, for the Defendants

HEARD: By Written Submissions

AMENDED DECISION ON COSTS

The text of the original decision was corrected on May 26, 2014
and the description of the corrections is appended

Kane J.

Overview

[1] Four motions were argued in the first of the above actions, (Action 1”). One of those brought by the plaintiff, Montel, was successful in obtaining judgment without a trial for some $135,000 plus an administrative fee of 1.5%.

[2] Six motions were argued in the second action commenced by Johnson Filing & Shelving Systems Inc. (“Action 2”). One of those motions by the Montel plaintiff group, was withdrawn and not argued.

[3] Argument of the above motions extended over four days, or parts thereof.

[4] The motions and outcomes thereof may be summarized as follows:

Action 1

[5] Montel brought a motion to strike the defence and counter-claims of Kipawa and Johnson. Montel was successful in obtaining judgment against Kipawa: paras. 55-56 and 95-96.

[6] As part of motion 1 above, Montel requested and obtained judgment against Kipawa for some $135,000 plus the administrative fee: para. 95. The full amount claimed was awarded.

[7] Kipawa was unsuccessful on its cross-motion to stay execution of the above judgment: para. 90.

[8] Montel was successful on its motion to strike the counter-claim of Johnson and Kipawa, on the basis that those claims are being pursued in Action 2: paras. 67, 78 and 83.

Action 2

[9] Johnson Shelving was successful in adding Kipawa as a plaintiff: para. 139.

[10] Montel’s motion to dismiss Action 2 on the basis of a contractual selection of a court in Quebec for disputes, was unsuccessful: paras. 118 and 128.

[11] Johnson Shelving’s motion to strike the Brunelle affidavit was successful: para. 117.

[12] Montel’s motion to strike portions of the claim of Johnson Shelving was successful, with leave to amend: paras. 145 to 149.

[13] Johnson Shelving’s motion to consolidate Action 1 and Action 2 was unsuccessful. However consecutive trials were ordered: paras. 153 to 155.

[14] During the days intervening between argument of these motions, Montel conducted its cross-examination and therefore withdrew its motion to strike Johnson’s affidavit.

Positions of Parties

[15] Montel seeks costs in Action 1 on a substantial indemnity scale against Kipawa and Johnson on motion No. 1 in the amount of $28,073 and a further $18,650 on Motion No. 2, for a total of $46,723. Montel submits there should be no cost award in the motions in Action 2, as success was divided therein.

[16] Kipawa and Johnson or Johnson Shelving:

(a) Do not seek costs in the motions in Action 1.

(b) Submit that Montel’s claim for costs on the motions in Action 1 is excessive as to the scale requested, the hourly rates charged given year of call, the time docketed, disproportionate to the amount in dispute, lacking in merit given alleged improper steps taken and should not be awarded against Johnson in any event.

(c) Seek costs on a partial indemnity scale in the amount of $7,439 on motions 5 and 9; $14,340 on motion 6; $2,220 on motion 7; and $1,309 on motion 10 as a motion withdrawn, for a total of $25,308.

Factors

[17] The factors to be considered when fixing costs are set out in Rules 1.04 (1.1) and 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as follows:

(a) Level of complexity and importance of the issues;

(b) Proportionality as to complexity and importance of issues;

(c) Level of success, including amount claimed;

(d) Unreasonable conduct which unduly lengthens the proceeding (unnecessary, vexatious, improper, negligence, mistake or excessive caution);

(e) The scale of costs;

(f) Offers of settlement;

(g) The principle of indemnity;

(h) Lawyer’s level of experience;

(i) Time spent;

(j) Hourly rate claimed; and

(k) The amount the losing party would reasonably expect to pay.

Level of Complexity and Importance of Issues

[18] The issues on these motions varied between simple, as in motions 5 and 7, and average complexity. They were all important to the parties.

Proportionality as to Complexity and Importance of Issues

[19] Subject to the other factors herein, the amounts in dispute of $135,000 and $250,000, the motion for judgment and the motion to strike the counterclaims in Action 1 and the motion for dismissal in Action 2, justified considerable effort and preparation. The other motions were procedural in nature. Combined, the costs claimed are proportional.

Success Including Amount Claimed

[20] Montel was successful on the motions in Action 1 and obtained the full amount claimed. Its success in striking the counterclaims in Action 1 is qualified as the merit of those claims remains to be determined in Action 2.

[21] On the procedural motions in Action 2, Johnson Shelving was successful in three versus Montel’s success in two.

[22] Johnson Shelving was successful in the substantive motion in Action 2 thereby defeating the request of dismissal based on a contractual election of forum.

[23] Combined, Montel obtained the relief sought in six of the nine motions argued in the two actions.

Conduct Unnecessarily Lengthening Proceeding

[24] There are cross complaints by the parties under this heading and to some extent nullify the impact thereof.

[25] Complaints against Montel include filing amended motions and factums at the eleventh hour which required new responding materials from the Johnson group, selecting unilaterally appointments for cross-examination and objecting to reasonable adjournments.

[26] Complaints against the Johnson group include increased time and cost due to two adjournments by the Johnson group which successfully argued the motions on the two actions should be heard at the same time. The other complaints, such as the duplicity in including the same claims in two actions and the lack of clarity of pleadings, go to the merits and resulted in Montel’s success on several motions and are not applicable under this heading.

[27] The pleadings and structuring of claims by Johnson necessitated motions 1, 2, 3, 4, 5, 8 and 9.

Offers to Settle, Scale of Costs, Hourly Rates and Time Spent

[28] No offers have been disclosed.

[29] The complaint of excessive hours against Montel and the attendance of two counsel in argument of these motions are not strong arguments. Montel was fully successful in Action 1. A trial thereof may be avoided.

[30] Counsel for Montel involved more junior counsel with a lower hourly rate on some of the procedural motions in Action 2, which is appropriate.

[31] The hourly rates of counsel for Montel, given the 2006 and 2010 years of call, of $375 and $275 per hour are high. That however must be compared to the hourly rates charged by four lawyers for the Johnson group with hourly rates of $425 (1979), $310 (2001), $240 (1984) and $195 (2009).

[32] Counsel for Montel used students for research and law clerks. Counsel for Johnson does not declare or claim time at that level.

[33] The billing summaries for the motions per action, indicate the following:

Action 1

Docketed Hours Fees - Partial indemnity Lawyers

Montel 103 $28,314 1

Johnson 37 $7,488 3

Action 2

Montel 119 $34,385 2

Johnson 120 $24,053 4

Total Actions 1 and 2

Montel 222 $62,699

Johnson 158 $31,541

[34] Counsel for Johnson would have been accurate if they recognized the difficulty of defending Montel’s motion to strike the defence and judgment in Action 1 thereby explaining comparatively, why they spent substantially less time on the motions in Action 1 and spent comparable time in the motions in Action 2. This is not a reason to reduce time docketed by Montel’s counsel on the motions in Action 1. As indicated, docketed hours by lawyers between the two firms are virtually the same in Action 2.

Amount Unsuccessful Party Would Reasonably Expect to Pay

[35] The parties primarily involve corporations. Corporations can often afford and frequently, vigorously litigate matters most individuals could not afford to. This argument is not strong given the outcome of these motions and the amounts being claimed.

[36] Time docketed overall does not exceed permissible limits, particularly when comparing the similarity of hours docketed by counsel for each party in Action 2.

Disposition

[37] There is no basis to award costs to Montel at the scale of substantial indemnity.

[38] Mr. Johnson should not be equally responsible for costs awarded in favour of Montel in Action 1. He had no liability exposure on motions 1 and 2. Judgment was not sought against him. His counterclaim was struck in Action 1 and entitlement of the Johnson group remains to be determined in Action 2.

[39] There was divided success of the procedural motions in Action 2, particularly as two of those where Johnson Shelving succeeded, numbered 5 and 9, were simple. One motion was withdrawn by Montel. Those are offset by motion 8 where Montel was successful. Johnson Shelving is entitled to costs on Montel’s motion to strike Action 2.

[40] Four lawyers for one party on these related motions led to too much internal communication and time.

[41] Based on all of the above factors, costs are awarded as follows:

(a) To Montel for motions 1, 3 and 4, $14,000 for fees, $1,200 for disbursements plus HST, payable by Kipawa.

(b) To Montel on motion 2, $7,000 for fees, $500 for disbursements plus HST, payable by Kipawa.

(c) To Johnson Shelving on motion 6, $8,000 for fees, $600 for disbursements plus HST, payable by Montel.

(d) The above costs are payable within 30 days.

Kane J.

Released: May 26, 2014

APPENDIX

May 26, 2014:

The following paragraph replaces paragraph [5] in the original decision issued on March 21, 2014:

[5] Montel brought a motion to strike the defence and counter-claims of Kipawa and Johnson. Montel was successful in obtaining judgment against Kipawa: paras. 55-56 and 95-96.

The reference to Johnson Filing in paragraph [6] in the original decision is replaced with Kipawa.

The following paragraph replaces paragraph [8] in the original decision:

[8] Montel was successful on its motion to strike the counter-claim of Johnson and Kipawa, on the basis that those claims are being pursued in Action 2: paras. 67, 78 and 83.

The reference to Johnson Shelving in paragraph [15] in the original decision is replaced with Kipawa.

The words “or Johnson Shelving” are added to the first line in paragraph [16].

The following paragraph replaces paragraph [38] in the original decision:

[38] Mr. Johnson should not be equally responsible for costs awarded in favour of Montel in Action 1. He had no liability exposure on motions 1 and 2. Judgment was not sought against him. His counterclaim was struck in Action 1 and entitlement of the Johnson group remains to be determined in Action 2.

The word “Shelving” is added to the second line in paragraph [39] in the original decision.

The following paragraph replaces paragraph [41] in the original decision:

[41] Based on all of the above factors, costs are awarded as follows:

(a) To Montel for motions 1, 3 and 4, $14,000 for fees, $1,200 for disbursements plus HST, payable by Kipawa.

(b) To Montel on motion 2, $7,000 for fees, $500 for disbursements plus HST, payable by Kipawa.

(c) To Johnson Shelving on motion 6, $8,000 for fees, $600 for disbursements plus HST, payable by Montel.

(d) The above costs are payable within 30 days.

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

MONTEL INC.

Plaintiff
(Defendant by Counterclaim)

– and –

KIPAWA SALES & SERVICES INC. AND GERALD JOHNSON

Defendants
(Plaintiffs by Counterclaim)

(“Action No. 1”)

JOHNSONS FILING & SHELVING SYSTEMS INC.

Plaintiff

– and –

MONTEL INC. AND CHARLES OLIVIER & MONTEL SMARTSPACE OTTAWA INC.

Defendants

(“Action No. 2”)

AMENDED decision ON COSTS

Kane J.

Released: May 26, 2014