ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-13-493059
DATE: 20140422
BETWEEN:
ANC BUSINESS SOLUTIONS INC. and SCOTT HUA
Applicants
– and –
VIRTUALINK CANADA LTD. and VIRTUALINK PROPERTIES INC.
Respondents
Steven Goldman and Jonathan Mesiano-Crookston, for the Applicants
Ronald Birken, for the Respondents
HEARD: In writing
Perell, J.
REASONS FOR DECISION - COSTS
[1] The Applicant Scott Hua is the principal of the Applicant ANC Business Solutions Inc. (“ANC”), which was a franchisee of the Respondents Virtualink Canada Ltd. and Virtualink Properties Inc. (collectively “the Franchisor”).
[2] The Applicants successfully brought an Application. See ANC Business Solutions Inc. v. Virtualink Canada Ltd., 2014 ONSC 1619.
[3] In that Application, I concluded that the Franchisor had wrongfully terminated the franchise, and I ordered that ANC should be immediately reinstated as franchisee. I ordered that ANC should be allowed to re-enter its subleased premises and to resume its franchise’s business operations.
[4] Further, I directed a trial with respect to: (a) whether ANC has a claim that there has been a breach of the Arthur Wishart Act (Franchise Disclosure), 2000; (b) whether the Franchisor may require ANC to operate with a new Cloud-based phone message system; and (c) an assessment of damages for the wrongful termination of the Franchise Agreement.
[5] Relying on s. 22.7 of the Franchise Agreement, the Applicants claim costs on a full indemnity basis in the amount of $92,890.03, all inclusive.
[6] In the alternative, the Applicants claim costs on a partial indemnity basis of $64,055.22, all inclusive.
[7] Neither party served an Offer to Settle.
[8] The Respondents submit that the Applicants should receive costs on a partial indemnity basis fixed at $28,000 plus taxes plus disbursements of $1,786.61.
[9] The quantum of disbursements is not disputed.
[10] The Respondents do not object to the hourly rates of the Applicants’ lawyers, Mr. Goldman and Mr. Mesiano-Crookston, but they submit that the overall hours expended is excessive and that the amounts claimed by the Applicants should be reduced by 50%.
[11] The Respondents submit that a reduction is appropriate because, among other things, the Application did not dispose of all issues between the parties and there are outstanding issues for which a trial has been directed. The Respondents submit that a reduction of 25% is warranted by reason of excess of time. They submit that an additional reduction of 15% is warranted by time expended on unnecessary issues for the hearing of the Application and that there should be a further reduction of 10% on account of the Applicants’ failure on several contested issues.
[12] Of these submissions, in my opinion, there is some merit to the Respondents’ submission that the costs award should take into account the fact that the Applicants were not totally successful and that several important issues remain outstanding between the parties and these issues remain to be tried.
[13] I, however, do not agree that the way to take these circumstances into account is to discount the costs to be awarded to the Applicants. A different approach is called for.
[14] In a submission with which I agree, the Respondents also submit that there was no misconduct that would justify an award of full indemnity costs and that paragraph 22.7 of the Franchise Agreement does not limit the authority of the court to exercise its usual discretion with respect to costs.
[15] In my opinion, the appropriate way to exercise the court’s discretion in the circumstances of the case at bar is to award the Applicants costs of $64,055.22 on a partial indemnity basis with 60% of the award plus the disbursements of $1,786.61 payable forthwith and the balance of 40% payable to the Applicants in the cause of the trial.
[16] Order accordingly.
Perell, J.
Released: April 22, 2014
COURT FILE NO.: CV-13-493059
DATE: 20140422
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ANC BUSINESS SOLUTIONS INC. and SCOTT HUA
Applicants
‑ and ‑
VIRTUALINK CANADA LTD. and VIRTUALINK PROPERTIES INC.
Respondents
REASONS FOR DECISION - COSTS
Perell, J.
Released: April 22, 2014