SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

CITATION: Western Larch Limited v. Di Poce Management Limited, 2015 ONSC 1168
COURT FILE NO.: CV-10-8587-00CL
DATE: 20150223

RE: Western Larch Limited and Donald A. MacIver, Plaintiffs

AND:

Di Poce Management Limited, John Di Poce, Eastern Hemlock Limited, George Frankfort, Large Tooth Aspen Limited, Carmine Guglietti, Red Alder Limited, The Estate of Giovanni Guglietti, deceased, Fincourt Inc., Fincourt Partnership, Alpa Lumber Inc. and Alpa Partnership, Defendants

BEFORE: D. M. Brown J.

COUNSEL: T. O’Sullivan and S. Laubman, for the Plaintiffs/Responding Parties

P. Griffin and M. Lerner, for the Moving Party Defendants, Di Poce Management Limited, John Di Poce, Eastern Hemlock Limited, George Frankfort, Large Tooth Aspen Limited, Carmine Guglietti, Fincourt Inc., Fincourt Partnership, Alpa Lumber Inc. and Alpa Partnership

S. Kugler and D. Templer, for the Moving Party Defendants, Red Alder Limited and the Estate of Giovanni Guglietti, deceased

HEARD: May 3 and 4, 2012; written cost submissions filed January 9, 27 and 30, 2015.

REASONS FOR DECISION - costs

[1] In a shot-gun buy/sell dispute, the defendants moved for summary judgment. Two of the defendants, Red Alder Limited and the Estate of Giovanni Guglietti (collectively “Red Alder”), were successful in obtaining summary judgment dismissing the action against them. The other defendants were substantially successful on the motion, but I directed a trial of three specific claims against them: 2012 ONSC 7014, appeal dismissed 2013 ONCA 722. A settlement was reached, and the trial did not proceed. One issue remains outstanding: fixing the costs of Red Alder.

[2] Red Alder seeks substantial indemnity costs of the summary judgment motion and action in the amount of $208,924.39. The plaintiffs object, submitting that costs should be fixed on a partial indemnity basis in an amount of $75,000.00.

[3] Rule 57 applies. Accordingly, I have taken into account the factors enumerated under that rule, including the time spent, the result achieved, and the complexity of the matter, as well as the application of the principle of proportionality in the sense of “cutting the cloth to fit”.[1] As well, I have considered the principles set forth by the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3rd) 291 (C.A.) and Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.), specifically that the overall objective of fixing costs is to fix an amount that is fair and reasonable for an unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant.

[4] As to the scale of costs, I see no basis to award substantial indemnity costs. No offers to settle were made. The core dispute between the parties involved the interpretation and application of a contract – the 1997 Amended and Restated Partnership Agreement, as amended. While the plaintiffs did allege that the defendants had conspired to remove them from the partnership and that Mr. Guglietti had misappropriated some money from the partnership, those allegations stood at the periphery of the dispute and their assertion, in and of themselves, would not justify the award of elevated costs. Red Alder is entitled to partial indemnity costs from the plaintiffs.

[5] As to the quantum, this was a significant summary judgment motion involving a significant monetary dispute. The record fell towards the centre of the spectrum of complexity and volume. Eight affiants were cross-examined. The hearing of the motion took two days in May, 2012.

[6] The Bill of Costs filed by Red Alder calculated its partial indemnity fees at $111,027.00, together with disbursements of $6,372.94, plus HST. The unsuccessful plaintiffs filed a Bill of Costs disclosing their partial indemnity costs – a practice which other members of the Bar should follow, especially when significant costs are in dispute. The plaintiffs’ partial indemnity fees amounted to approximately $116,500, together with disbursements of $7,564.12 and HST.

[7] While the parties’ partial indemnity fees are quite similar, in my view two reductions should be made to those claimed by Red Alder.

[8] First, on the motion for summary judgment, the role played by Red Alder was subordinate to that played by the other defendants. While Red Alder’s role did not amount to a simple “watching brief”, the other defendants took the lead in preparing the evidentiary record and making submissions.

[9] Second, Red Alder seeks indemnification for fees charged by two solicitors: one a senior corporate M&A lawyer and the other a senior estates lawyer. Neither solicitor appeared as a counsel of record during the proceeding. Red Alder seeks to recover fees for about 68 hours of time spent by both solicitors on this proceeding, amounting to about $43,000 in actual costs.

[10] While a party to a proceeding is free to populate its “litigation team” with the legal advisors of its choice, a party can only reasonably expect indemnification for the legal fees incurred by litigation counsel, absent some extraordinary circumstance. No such circumstance was present in this straight-forward shot-gun buy/sell dispute. Consequently, Red Alder is not entitled to indemnification for the fees of its corporate and estate solicitors.

[11] Applying those two reductions to the partial indemnity costs claimed, I would allow Red Alder partial indemnity fees in the amount of $85,000, inclusive of HST, together with disbursements of $6,400.00, inclusive of HST, for a total “all-in” cost award of $91,400.00, payable by the plaintiffs within 30 days of the date of this order.

D. M. Brown J.

Date: February 23, 2015

[^1]: Marcus v. Cochrane, 2014 ONCA 207, para. 15.