ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-13-0248
DATE: 2014-09-18
B E T W E E N:
G.C. Rentals & Enterprises Limited,
Brian A. Babcock, for the Plaintiffs
Plaintiff
- and -
Advanced Precast Inc., Plenary Justice Thunder Bay LP, and Bird Design-Build Construction Inc.,
Dan Matson, for the Defendants
Defendants
HEARD: August 29, 2014,
at Thunder Bay, Ontario
Mr. Justice D. C. Shaw
Decision On Costs
[1] This is a decision on the costs of a motion by the defendant, Advanced Precast Inc. (“Advanced”) for an order, pursuant to s. 47 of the Construction Lien Act, discharging and vacating the claim for lien of the plaintiff, G.C. Rentals & Enterprises Limited (“G.C.”) on the grounds that the lien was filed out of time.
[2] The motion was dismissed.
[3] G.C. seeks its costs of the motion. It claims fees on a partial indemnity basis of $12,326.42 and on a substantial indemnity basis of $18,503.85.
[4] Advanced submits that costs of the motion should be left to the trial judge or, in the alternative, that I should determine the quantum of costs on a partial indemnity basis but order that they be paid in the cause.
[5] In my view, G.C. is entitled to costs on a partial indemnity basis, payable within 30 days.
[6] Section 86 of the Construction Lien Act deals with costs under that Act. It provides that costs in proceedings under the Construction Lien Act are in the discretion of the court.
[7] Section 131(1) of the Courts of Justice Act 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 costs shall be paid.
[8] Rule 57.01 allows the court to take into account “any other matter relevant to the question of costs.” Read in conjunction with s. 131 of the Courts of Justice Act and s. 86 of the Construction Lien Act, the court therefore has wide discretion.
[9] In Serra v. Serra (2009), 2009 ONCA 395, 66 R.F.L. (6th) 40 (Ont. C.A.), at p. 42, the Court of Appeal reiterated the fundamental purposes which modern costs rules are designed to foster, as set out in Fong v. Chan (1999), 1999 2052 (ON CA), 46 O.R. (3d) 330 (Ont. C.A.), at para. 22:
(1) to partially indemnify successful litigants for the costs of litigation;
(2) to encourage settlement; and
(3) to discourage and sanction inappropriate behaviour.
[10] In Anderson v. St. Jude Medical Inc., 2006 85158 (ON SCDC), [2006] O. J. No. 508 (Ont. Div. Ct.), at para. 22, the Divisional Court set out the principles to be applied by the court in exercising its discretion (citations omitted):
- 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).
- A consideration of experience, rates charged and hours spent is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case. 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.
- 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)(O.b).
- 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.”
- The court should seek to balance the indemnity principle with the fundamental objective of access to justice.
[11] The Court of Appeal has made it clear that in assessing costs, the overriding principle is one of reasonableness, and that the failure to follow that principle can produce a result that is contrary to the fundamental objective of access to justice (Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (Ont. C.A.), at p. 302.
[12] In Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. No. 4495 (Ont. C.A.), at para. 4 the Court of Appeal did not make a specific finding with respect to the amount of time spent or the rates charged by counsel, and stated:
“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 party rather than any exact measure of the actual costs of the successful litigant.”
[13] Rule 57.01(1) of the Rules of Civil Procedure provides:
“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 on any party that tended to shorten or 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 solicitor; and
(i) any other matter relevant to the question of costs.”
[14] As set out in more detail in my decision dismissing the motion, a motion to discharge a lien under s. 47 is analogous to a motion for summary judgment under Rule 20.
[15] Rule 20.06 provides costs sanctions for improper use of the Rule 20 summary judgment procedure:
20.06 The court may fix and order payment of the costs of a motion for summary judgment by a party on a substantial indemnity basis if,
(a) the party acted unreasonably by making or responding to the motion;
or
(b) the party acted in bad faith for the purpose of delay.
[16] G.C. submits that Advanced should have realized that it was not going to be successful on its motion after its representative was cross-examined on his affidavit and that it should have therefore abandoned the motion. G.C. submits that Advanced brought the motion only for tactical reasons. Because of this G.C. submits that costs on a substantial indemnity basis are warranted.
[17] Advanced submits that it brought the motion in an attempt to deal efficiently with the issue of the validity of the lien prior to trial. Advanced submits that the motion was not ill conceived, it was just unsuccessful.
[18] I made no finding that the motion was unreasonable or made for tactical reasons. There was nothing in the conduct of Advanced in bringing or presenting its motion that warrants an award of costs on a substantial indemnity basis. In particular, there is nothing in the conduct of Advanced that would, by analogy, bring the costs sanctions of rule 20.06 into consideration.
[19] However, I also see no basis to agree with the submission of Advanced that costs of this motion should be left to the trial judge or that they should be awarded in the cause. Advanced refers to Marini v. Miller, [2001] O.J. No. 259 (S.C.J.) where costs of a summary judgment motion were left in the cause after the motions judge found that the decision to deny the motion was “a close call”. However, this decision pre-dates the amendments to the Rules that brought in the present rule 57.03(1). The predecessor to present rule 57.03(1), which was in place when Marini was decided, read:
57.03(1) Where, on the hearing of a contested motion, the court is satisfied that the motion ought not to have been made or opposed, as the case may be, the court shall,
(a) fix the costs of the motion and order them to be paid forthwith; or
(b) order the costs of the motion to be paid forthwith after assessment.
[20] Rule 57.03(1) now reads:
57.03(1) On the hearing of a contested motion, unless the court is satisfied that a different order would be more just, the court shall,
(a) fix the costs of the motion and order them to be paid within 30 days; or
(b) in an exceptional case, refer the costs of the motion for assessment under Rule 58 and order them to be paid within 30 days after assessment.
[21] Advanced also refers to Smith v. Barna Estate, [2001] O.J. No. 1029 (S.C.J.), which left costs in the cause on a summary judgment motion. This case, however, relies on Marini, without reference to the changes to rule 57.03(1).
[22] As the successful party on this motion, and in the absence of special circumstances, G.C. is presumed to be entitled to its costs. Rule 57.03(1) is mandatory - the court shall fix costs and order them to be paid within 30 days unless it is satisfied that a different order would be more just. Although the validity of the lien will be determined at trial, and although Advanced may succeed on that issue at trial, Advanced did not meet the higher threshold required on a s. 47 motion. There are costs consequences for that failure which oblige Advanced, as the unsuccessful party, to indemnity G.C. for successfully defending the motion. There are no facts that satisfy me that it would be “more just” to leave the costs of this motion to the trial judge or to order them paid only if G.C. is successful at trial.
[23] G.C.’s partial indemnity fees of $12,326.42 are based on 28.1 hours for Mr. Babcock, 1.6 hours for Mr. Cyr, 53.6 hours for Mr. Mikulasik and 21.9 hours for a law clerk. Mr. Babcock and Mr. Cyr are senior members of the bar, each with over 30 years’ experience. Mr. Mikulasik was called to the bar in 2013. The partial indemnity hourly rates claimed are reasonable: Mr. Babcock - $176; Mr. Cyr - $205; Mr. Mikulasik - $97. These partial indemnity rates represent 2/3 of the lawyers’ substantial indemnity rates. The substantial indemnity rates, in turn, are calculated at 90% of the lawyers’ respective actual rates.
[24] Advanced presents its own bill of Costs for comparison. Partial indemnity fees are shown at $3,510, based on 4.4 hours for senior counsel, Mr. Johansen, at a partial indemnity rate of $225 per hour, and 25.2 hours for Mr. Matson, who was called in 2013, at a partial indemnity rate of $100 per hour.
[25] Mr. Babcock reviewed the motion material, prepared for the hearing and argued the motion. Mr. Mikulasik prepared the motion material and attended at cross-examination. Mr. Cyr reviewed the notice of motion.
[26] On behalf of Advance, Mr. Johansen prepared the affidavit supporting the motion and prepared for cross-examination of its deponent. Mr. Matson met with the client, conducted research, prepared the factum, prepared for the hearing and argued the motion.
[27] The difference in the amounts of the two Bills of Costs are largely because of (a) the greater number of hours spent by the lawyers for G.C., namely 83.3 hours in total, plus law clerk time, as contrasted with 29.6 hours of lawyer time for Advanced, and (b) the fact that Mr. Babcock, as senior counsel at an hourly rate of $176, prepared for and argued the motion for G.C., while Mr. Matson, at his rate of $100 per hour, prepared for and argued the motion on behalf of Advanced.
[28] I take no issue with Mr. Babcock’s time. It appears reasonable. Mr. Mikulasik’s time of 53.6 hours, plus law clerk time of 21.9 hours, however, in my view, exceeds what Advanced should be expected to bear. Some of that time, together with Mr. Cyr’s time, would likely duplicate the time recorded by Mr. Babcock.
[29] The amount at issue in the matter is over $250,000. The motion was relatively complex. The issue was important to G.C. If it had lost the s. 47 motion, it would have lost its security for the debt it claims it is owed. Apart from these factors, there was nothing unusual about the motion or the conduct of the parties that should affect a costs award.
[30] I take into account that some of the time spent on the motion will be of use at trial, where the validity of the lien will again be argued.
[31] G.C. seeks disbursements of $553.75, plus HST, for copying, courier charges and the court reporter’s fee on the cross-examination of a representative of Advanced on his affidavit. Advanced agrees with the claim for copying and courier expenses but objects to paying the court reporter’s fees because the transcript may be referred to at trial.
[32] The transcript of the cross-examination was useful on the motion and was referred to in my reasons. If G.C. receives its disbursements for the court reporter’s fee on this motion, it will not be able to recover that amount again at trial. I see no basis to deny recovery for this item.
[33] In my view, taking into account the factors outlined above, it would be fair and reasonable to award G.C. partial indemnity fees, for the motion and for submissions on costs, in the sum of $8,000.00, plus HST, and disbursements of $553.75, plus HST.
The Hon. Mr. Justice D. C. Shaw
Released: September 18, 2014
COURT FILE NO.: CV-13-0248
DATE: 2014-09-18
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
G.C. Rentals & Enterprises Limited,
Plaintiff
- and -
Advanced Precast Inc., Plenary Justice Thunder Bay LP, and Bird Design-Build Construction Inc.,
Defendants
DECISION ON COSTS
Shaw J.
Released: September 18, 2014
/mls