ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-11-424029
DATE: 20140709

BETWEEN:

ANN BUIK, SANDRA BUIK AND CATHERINE BUIK, TRUSTEES OF THE ESTATE OF WILLIAM BUIK, DECEASED

Plaintiffs

– and –

CANASIA POWER CORP.

Defendant

H. Michael Rosenberg, for the Plaintiffs

Ashok Dhillon, for the Defendant

HEARD: January 27, 28, 29 and 30, 2014

HIMEL J.

reasons ON COSTS

[1] The estate of William Buik (“the estate” or “the plaintiffs”) brought an action against Canasia Power Corp. ("Canasia” or "the defendant") for repayment of outstanding loans and interest. Following a four day trial, I released Reasons for Judgment on May 16, 2014 in which I held that the plaintiffs had proven on a balance of probabilities that: (1) William Buik had loaned Canasia large sums of money as evidenced by promissory notes, and (2) demands for payment had been made but no monies had been repaid by the defendant. I held that when the action was commenced, the limitation period had not expired and thus the plaintiffs were entitled to judgment. I also ordered that, if the parties were unable to agree on the issue of costs, they could file written submissions according to a timetable. I have now received and considered the submissions filed and provide my decision on costs below.

Positions of the Parties

[2] The plaintiffs seek an order of costs on a full indemnity basis because of a provision in the promissory note and because of the conduct of the defendant, which they argue justifies costs awarded on the highest scale. In the alternative, they seek costs on the partial indemnity scale. They submit that the basis for costs on the higher scale is that Canasia was uncooperative throughout the action, that its conduct resulted in delay and unnecessary court appearances, that Canasia resisted in producing relevant documents despite the requests made and undertakings given, that Canasia refused to complete the certification form, did not provide a list of witnesses and “will say” statements for trial and increased costs generally because of a lack of communication.

[3] Counsel also points to an offer to settle made by the plaintiffs pursuant to Rule 49.10 in the amount of $462,000 that was not accepted. The offer was served on January 16, 2014 and remained in effect until the trial commenced. The plaintiffs say that this unaccepted offer alone entitles them to costs on the substantial indemnity scale, as the trial judgment was more favourable than the terms of the offer to settle.

[4] Taking all factors into account the plaintiffs, as noted above, claim costs on the full indemnity scale in the amount of $167,765.52 inclusive of disbursements and HST.

[5] In the alternative, the plaintiffs seek an order of costs on the partial indemnity scale for the action in the amount of $57,008.57 inclusive disbursements and HST.

[6] Counsel for the defendant was retained after trial but has prepared written submissions on costs. Canasia opposes the costs order requested and submits that the Bill of Costs was not supported by evidence of dockets, receipts and invoices for disbursements and other documents. Further, it is argued, the amount claimed is excessive, unreasonable, and disproportionate to the complexity of the case. Counsel submits that the action was straightforward and was merely the enforcement of a promissory note with the only real issue being the limitation period defence. Costs are in the discretion of the court and the general rule is that they should be awarded on a partial indemnity basis in an amount that is fair and reasonable. Counsel has broken the conduct of the matter down into twelve stages and has taken a position that most of the costs claimed are excessive for the work performed at each of these stages of the litigation. The defendant’s position is that a more reasonable award would be in the amount of $29,377.24 inclusive of disbursements and HST.

The Law

[7] The jurisdiction of this court to award costs is found in s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 which provides:

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.

[8] Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 sets out the factors the court may consider in making an award of costs:

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.

[9] Generally, costs follow the event and the successful party is entitled to its costs incurred in bringing or defending the action: see Bell Canada v. Olympia and York Developments Ltd. (1994), 1994 239 (ON CA), 17 O.R. (3d) 135 (C.A.). The fixing of costs is not a mechanical exercise based solely upon a calculation of hours and rates. It involves a consideration of a number of factors set out in Rule 57.01 to determine what is appropriate in the circumstances. The objective is to fix costs in an amount that the court considers fair and reasonable for the unsuccessful party to pay in a particular proceeding, rather than to fully indemnify a successful litigant for their actual costs incurred: see Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.); Zesta Engineering Ltd. v. Cloutier (2002), 2002 45084 (ON CA), 164 O.A.C. 234 (C.A.); Moon v. Sher, (2004), 2004 39005 (ON CA), 246 D.L.R. (4th) 440 (C.A.).

The appropriate scale of costs

[10] In determining the appropriate scale of costs to be awarded, I note that the partial indemnity scale is intended to provide indemnification for costs reasonably incurred in the course of an action. In the usual circumstances, an award of costs on a partial indemnity basis is the appropriate award to impose on the unsuccessful party: see Foulis et al. v. Robinson; Gore Mutual Ins. Co., Third Party (1978), 1978 1307 (ON CA), 21 O.R. (2d) 769 (C.A.); Mortimer et al. v. Cameron et al. (1994), 1994 10998 (ON CA), 17 O.R. (3d) 1 (C.A.). In Wasserman, Arsenault Ltd. v. Sone (2002), 2002 45099 (ON CA), 164 O.A.C. 195 (C.A.) at para. 4, the court wrote that “[p]artial indemnity means just that – indemnification for only a part, or a proportion, of the expense of the litigation.”

[11] Costs on the substantial indemnity scale are usually reserved for those “rare and exceptional” cases, where the conduct of the party against whom costs is ordered may be considered reprehensible or where there are other special circumstances such as an offer to settle within the meaning of Rule 49.10 that justifies costs on the higher scale: see McBride Metal Fabricating Corp. v. H & W Sales Co. (2002), 2002 41899 (ON CA), 59 O.R. (3d) 97 (C.A.), at paras. 38-39. An award of costs on a substantial indemnity basis, or on a full indemnity basis for that matter, may also be appropriate where indemnification for the costs of enforcement proceedings is a term of the promissory note in question: Wertheim-Brault v. Figueira, 2013 ONSC 6168, at para. 6.

Decision

[12] In this case, the plaintiffs’ unaccepted written offer to settle and the provision in the promissory note for full reimbursement of enforcement costs are particularly relevant factors. These factors justify an award of costs on the higher scale. In the light of these circumstances, I award costs on the substantial indemnity scale. Even though the promissory note provided for full reimbursement, costs are always in the discretion of the court: Animal House Investments Inc. v. Lisgar Development Ltd., [2009] O.J. 4406 (Ont. S.C.), at para. 8.

[13] As for the quantum of costs claimed, I consider the factors outlined in Rule 57.01. In this case, the plaintiffs were successful in proving their case on a balance of probabilities and demonstrating why the limitation period defence should not succeed. The circumstances of this case including the nature of the claim made, the amount claimed, the large result obtained ($2.3 million when interest is factored in), the relative lack of complexity, and the importance of the matter to the parties are all relevant factors. I have also considered the conduct of the parties throughout the litigation. I agree that the defendant did not cooperate in producing documents in a timely manner, did not comply with the pre-trial judge’s orders concerning witness lists and witness statements and acted in a manner that generally led to unnecessary proceedings and delay.

[14] I also consider that the amount of time spent by plaintiffs’ counsel was somewhat excessive given that the action was not complex in light of the nature of the issues raised and the type of work performed. I consider the results achieved and the principle of proportionality and the overriding principle that costs awards should be fair and reasonable.

[15] For these reasons, I exercise my discretion and deem it fair and reasonable in the circumstances of this case to fix costs as follows: Canasia shall pay costs to the plaintiffs in the amount of $105,051.08 inclusive of disbursements and HST within 30 days.

Himel J.

Released: July 9, 2014

COURT FILE NO.: CV-11-424029
DATE: 20140709

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

ANN BUIK, SANDRA BUIK AND CATHERINE BUIK, TRUSTEES OF THE ESTATE OF WILLIAM BUIK, DECEASED

Plaintiffs

– and –

CANASIA POWER CORP.

Defendant

REASONS ON COSTS

Himel J.

Released: July 9, 2014