SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CNL STAMPING & TOOLING INC.

v.

LORWOOD HOLDINGS INCORPORATED, VMS HOLDINGS INC., CARMINE GUGLIETTI AND DONA FIORE

2014 ONSC 7327

COURT FILE NO.: CV-13-491486

BEFORE: MASTER R.A. MUIR

COUNSEL: Paul H. Starkman for the plaintiff Neil G. Wilson and Ed Hiutin for the defendants

HEARD: November 10, 2014

SUPPLEMENTARY ENDORSEMENT

[1] This endorsement is supplementary to my endorsement of November 18, 2014. The court heard two motions on November 10, 2014. The plaintiff brought a motion for an order granting it leave to discontinue this action and for the costs of the action. The defendants’ motion requested that the plaintiff pay their costs of the action. The background facts can be found in my November 18, 2014 endorsement.

[2] On November 18, 2014 I made an order granting the plaintiff leave to discontinue this action. I also made an order that the plaintiff pay the defendants’ costs of this action on a partial indemnity scale from April 9, 2014 (not including any costs associated with the motions before me or the appeal heard by Justice Stewart). I requested that the defendants provide a revised costs outline and allowed the plaintiff an opportunity to provide written submissions in response to the defendants’ revised costs outline. I have now received and considered those materials.

[3] The plaintiff has made two preliminary objections to the defendants’ submissions. First, the plaintiff takes the position that my order of November 18, 2014 only asked for a costs outline from the defendants and not written submissions with a bill of costs as filed by the defendants. In addition, the plaintiff argues that the defendants’ materials simply repeat the arguments they made on November 10, 2014. I do not agree. In my view, the written submissions are nothing more than a summary of the points the defendants could have properly included in a costs outline prepared in accordance with Form 57B. Moreover, the submissions made by the defendants were of assistance to the court as they focused on the time period after April 9, 2014.

[4] The plaintiff’s second objection is with respect to the defendants’ reply submissions. The plaintiff submits that my endorsement did not include any provision for reply submissions. I agree with the plaintiff on this point. My endorsement did not allow for any reply submissions. If the defendants wanted to file a reply they should have contacted the court and sought the court’s permission in advance. I am therefore not prepared to consider the defendants’ reply submissions.

[5] The defendants seek partial indemnity costs of $25,090.75 inclusive of HST and disbursements for the time period in issue. The plaintiff argues that the defendants should not be entitled to costs after the service of the plaintiff’s notice of discontinuance on June 18, 2014. The plaintiff also takes the position that the fees claimed by the defendants are excessive, duplicative and repetitive. The plaintiff suggests that costs to the defendants in the range of $5,000.00 to $6,000.00 would be fair and reasonable in the circumstances.

[6] 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.

[7] 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.

[8] These are the factors and principles I have considered and applied in determining the costs issues before me.

[9] At the outset, I note that there would appear to be an error on the defendants’ bill of costs dated November 28, 2014. The summary on page 4 of the defendants’ bill of costs sets out fees of $18,802.50 before HST. The defendants then add HST to those fees resulting in a total of $21,246.84. However, further down the summary the defendants add HST again, this time to the $21,246.84 amount. This is a double charging of HST. The amount of $2,762.09 must be deducted.

[10] I also agree with the plaintiff that the time spent after June 18, 2014 should be disallowed. I have reviewed all of the defendants’ dockets for that time period. They deal almost entirely with the defendants’ security for costs motion or with the defendants’ request for the costs of this action. The defendants were unsuccessful in persuading Master Graham to continue with the security for costs motion. I see no reason why they should be permitted to recover those costs now. The costs related to the motions before me must also be deducted. They will be considered once I have fixed the costs of the action. These deductions total approximately $4,000.00.

[11] It is also my view that the overall costs of the defendants are generally excessive given the nature of the work involved. The defendants are seeking more than $12,000.00 for “communications, correspondence, emails, phone calls, discussions and meetings”. This amount is far greater than the amounts requested by the defendants for discovery or pleadings. The defendants’ costs must also be contrasted with the plaintiff’s overall costs for the same period, which total approximately $5,000.00.

[12] Finally, the defendants’ costs outline also includes some disbursements for the period prior to April 9, 2014. Those amounts should also be deducted.

[13] I have reviewed and considered the defendants’ bill of costs with these factors in mind. In my view, it is fair and reasonable for the plaintiff to pay the defendants’ costs of this action in the amount of $10,000.00 plus HST, for a total of $11,300.00.

[14] I note that the plaintiff has been awarded its costs of the appeal before Justice Stewart in the all-inclusive amount of $4,500.00. In view of Justice Stewart’s order that those costs may be set off against any costs of the action awarded to the defendants, the net amount now owing by the plaintiff is $6,800.00.

[15] The parties will provide the court with written submissions with respect to the costs of these motions on the following basis:

(a) the defendants’ submissions shall be filed by January 9, 2015;

(b) the plaintiff’s submissions shall be filed by January 19, 2015;

(c) any reply submissions from the defendants shall be filed by January 26, 2015; and,

(d) no other submissions will be accepted.

Master R.A. Muir

DATE: December 17, 2014