SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-13-489104
MOTION HEARD: JULY 18, 2014

RE: James J. Lawson v. Westerkirk Capital Inc.

BEFORE: MASTER R.A. MUIR

COUNSEL: Howard A. Levitt and Sean J. O’Donnell for the defendant/moving party
Moya J. Graham for the plaintiff/responding party

ENDORSEMENT - COSTS

[1] This costs endorsement arises out of a motion brought by the defendant for an order striking out certain paragraphs of the plaintiff’s statement of claim.

[2] On October 6, 2014, I released my reasons for decision. I made an order granting most of the relief the defendant was seeking. My reasons for decision also requested written costs submissions. I have now received and considered those submissions.

[3] The defendant’s costs submissions are somewhat contradictory. On the first page of its submissions, the defendant states that it is seeking “substantial indemnity costs of $26,689.45” for the motion. However, at paragraph 9 on page 8 of its submissions, the defendant states that it is seeking “costs on a substantial indemnity basis in the amount of $17,868.47”. When one looks at the defendant’s costs outline, the amount of $26,689.45 is set out as its substantial indemnity costs and $17,868.47 is referenced as its partial indemnity costs. I am assuming, for the purposes of this endorsement, that the $17,868.47 figure in paragraph 9 was inserted in error and the defendant is actually seeking substantial indemnity costs of $26,689.45.

[4] The plaintiff argues that the costs the defendant is seeking are excessive for a motion of this nature. The plaintiff also argues that the defendant’s costs should be reduced because it failed to disclose to the court the existence of a related action it had commenced against the defendant for breach of fiduciary duty and other causes of action. This related proceeding may bring into play many of the allegations in the statement of claim that I have ordered to be stuck out. The plaintiff submits that partial indemnity costs to the defendant in the range of $4,500.00 to $5,500.00 would be fair and reasonable in the circumstances.

[5] The court’s general authority to award costs as between parties to litigation is found in section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, which provides that costs are in the discretion of the court. Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) sets out a non-exhaustive list of factors the court is to consider when awarding costs. Rule 1.04(1.1) is also applicable. It requires the court in applying the Rules to make orders that are proportionate to the importance and complexity of the issues and to the amount involved in the proceeding.

[6] When dealing with costs, the overall objective for the court is to fix an amount that is fair and reasonable for the unsuccessful party who generally must pay the costs of the successful party. See Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. No. 4495 (C.A.) at paragraph 4 and Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634 (C.A.) at paragraph 26. In Clarington (Municipality) v. Blue Circle Canada Inc., 2009 ONCA 722 the Court of Appeal stated as follows at paragraph 52:

Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.

[7] These are the factors and principles I have considered and applied in determining the costs issues on this motion.

[8] The defendant was almost entirely successful. In the usual course the defendant would be entitled to its partial indemnity costs. It is my view that the usual practice should be followed in connection with this motion.

[9] This was a moderately complex pleadings motion. Both sides acknowledge that the issues were important in terms of how the litigation will proceed going forward. This is a very substantial claim. The plaintiff is seeking nearly $7,000,000.00 in damages.

[10] However, I agree with the plaintiff that the amounts being sought by the defendant are excessive. The plaintiff’s costs outline (served before I released my decision) sets out partial indemnity costs of approximately $6,000.00. The defendant’s motion record (quite properly of course) consisted of a notice of motion and a copy of the statement of claim. No responding record was served. Obviously no cross-examinations took place. The remaining materials served by the parties were their factums and authorities.

[11] I also agree with the plaintiff that it is appropriate to take into account the fact that the defendant actually served two factums and only the second, revised factum was relied upon in argument. The defendant also handed up a large amount of case law at the beginning of argument. Both of these steps resulted in increased costs for both sides. Finally, I see no basis for a junior counsel fee. I note that Ms. Graham appeared without the assistance of junior counsel.

[12] I do agree with the defendant, however, that the issues regarding the related action should have no bearing on the costs order in this action. The appropriateness of the pleading in this action must be considered on its own.

[13] I am not prepared to make an elevated costs order as is apparently being requested by the defendant. Elevated costs should only be awarded on the basis of a clear finding of reprehensible conduct. See Clarington at paragraph 40. There is certainly no suggestion of any such conduct on the part of the plaintiff.

[14] For these reasons, I have concluded that a reduction in the costs requested by the defendant of approximately 50% is appropriate in the circumstances.

[15] In my view, it is fair and reasonable for the plaintiff to pay the defendant’s partial indemnity costs of this motion fixed in the amount of $8,500.00, inclusive of HST and disbursements. These costs shall be paid within 30 days.

Master R.A. Muir

DATE: November 20, 2014