ONTARIO
SUPERIOR COURT OF JUSTICE
CITATION: Wyman v Kadlec, 2015 ONSC 1249
COURT FILE NO.: CV-09-0069
DATE: 2015-02-25
B E T W E E N:
JAMES WYMAN
Morris J. Holervich, for the Plaintiff
Plaintiff
- and -
DAVID KADLEC and KADLEC RESORT PROPERTY INC.
Daniel J. Matson, for the Defendants
Defendants
HEARD: February 20, 2015,
at Thunder Bay, Ontario
Madam Justice H.M. Pierce
Reasons on Costs
Introduction
[1] This case illustrates the ruinous cost consequences of losing perspective in litigation. It is important to note that Mr. Matson was the defendants’ counsel at trial, but was not retained until a year before trial. He did not draft the defendants’ pleadings.
[2] In September, 2008, the plaintiff was unrepresented. He sued the defendants in Small Claims Court where he claimed damages for commission and cleaning fees in the amount of $7,537.50. The same cleaning fees of $2,450 were subsequently claimed in Small Claims Court and settled in 2009.
[3] The defendants defended the Small Claims Court action, pleading that any commission owing had not yet been calculated and further, that the plaintiff, as manager of the defendant resort, had bartered goods and services without the defendants’ knowledge or consent. The defendant counterclaimed for $44,454 for damages, and for recovery of chattels, pleading that the proceeding should be transferred to the Superior Court of Justice.
[4] In March, 2009, the plaintiff amended his claim in Small Claims Court, claiming $6,237.50 in unpaid commission from the defendants. Neither of the plaintiff`s claims proceeded in Small Claims Court.
[5] Notwithstanding his amended claim in Small Claims Court, the plaintiff sued the defendants in the Superior Court of Justice in February, 2009. This action claimed a return of chattels and other damages totalling $579,000.
[6] The case did not reach trial until April, 2014. By that time, the pleadings had gone through various iterations. The defendants resisted the plaintiff’s claim and launched their own counterclaim for recovery of chattels, general damages for $250,000 and punitive damages in the amount of $120,000. Well into the trial, the defendants conceded that they could not prove most of the counterclaim and abandoned virtually all of their claims. The only chattels for which they sought possession were two boat motors. These were ordered returned to them, after police had stored them for several years, awaiting the court’s ruling about who was entitled to possession.
[7] The trial took eight days. The plaintiff obtained judgment for unpaid commissions in the amount of $11,356.70; for conversion in the amount of $4,165; and for unjust enrichment in the amount of $10,000 for a total judgment of $25,521.70. Apart from obtaining possession of the two motors, the defendants counterclaim was dismissed. When the plaintiffs recovery is offset by the value of the motors, his judgment fell within the Small Claims Court jurisdiction of $25,000.
[8] The plaintiff seeks substantial indemnity costs of $219,911.93, including disbursements and applicable taxes. Partial indemnity costs are calculated at $145,340.40. The defendants submit that success is divided and there should be no costs.
The Parties’ Arguments
[9] The plaintiff argues that, as compared to the defendants, he was largely successful. He submits that the defendants’ counterclaim was without merit, but was not abandoned until several days into the trial, leaving the plaintiff to answer the allegations.
[10] The plaintiff contends that the only reason the case was brought in the Superior Court was that the defendants objected to the Small Claims Court jurisdiction. Therefore the defendants should not complain that the case was elevated to the Superior Court.
[11] The plaintiff concedes there were no offers to trigger Rule 49 consequences. However, he relies on Bonaiuto v. Pilot Insurance Co. 2010 ONSC 1248, para 7 for the proposition that costs exceeding the recovery should not render a costs award on a substantial indemnity basis unreasonable. He says that the defendants hid the calculation of commission owed to the plaintiff beginning in 2008 until trial and should be punished for their intransigent conduct.
[12] The defendants argue that the plaintiff unreasonably forced the case to trial because he failed to accept or make reasonable offers. The unreasonableness stems from three factors:
that the plaintiff delivered offers for more than the amounts claimed;
that the amount of the offers went up and not down as trial approached; and
the plaintiff`s offers sought substantially more than his recovery.
[13] The defendants also submit that it was unreasonable to commence and continue an action by regular procedure when the recovery was less than $100,000, and further, when the core issue in the case, commission owing, was within the Small Claims Court jurisdiction. They argue that the plaintiff didn`t abandon any of its claims at trial, which were really window-dressing on the basic claim.
[14] Finally, the defendants submit that the costs being sought are disproportionate to the commission claimed.
Discussion
[15] Notwithstanding that judgment was granted for damages for commission, conversion, and unjust enrichment, the core issue was the failure of the defendants to pay commission. Mr. Wyman knew that, because that was how he framed his claim in Small Claims Court. That is where this case should have stayed. Unfortunately, this case became a face-saving contest, and the grievances escalated on both sides until it became impossible to settle. The issues became substantially aggravated by the defendants` insistence that the police charge Mr. Wyman with theft of their boat motors. This was heavy-handed and unnecessary.
[16] The plaintiff behaved unreasonably in escalating his demands to settle the case. Likewise, the defendants escalated their demands and reduced their offers. They ought to have known that their offer in January, 2014 to dismiss the action without costs was not reasonable. The longer the case went on, the less likely it was that either side could recover their costs, let alone realize on their claims. Mr. Matson`s bill of costs for the last year of the action was almost $26,000 on a partial indemnity scale, after one year of practice.
[17] In Bonaiuto, the plaintiff sued his insurer for $22,000 for theft and damage to his car and stereo equipment. The insurer alleged this was a fraudulent claim with little evidence to support its position. At trial before a jury, a verdict of $5,000 was obtained. The claim for punitive damages was dismissed. Nevertheless, the court ordered substantial indemnity costs, holding that there was no basis to allege fraud; that the plaintiff had shown his willingness to settle the case; and that it was reasonable for the plaintiff to adopt the ordinary procedure before a jury.
[18] In my view, the allegation of fraud distinguishes Bonaiuto from the case at bar. Here, both sides had unrealistic perspectives of their cases in relation to what they could prove. An eight-day trial was excessive in the circumstances. The defendants are culpable in bringing the case before the Superior Court, having objected to the Small Claims Court jurisdiction. They ought not to complain now that the plaintiff did so. They are also culpable for launching a counterclaim for relief, much of which they conceded could not be proven at trial. It was only during the trial that they abandoned most of these claims.
[19] Ultimately, when determining costs, the court must determine what is reasonable. If costs are not proportional to what is at stake, access to justice will be limited to the rich. No rational person would pay legal fees exceeding what is in issue.
[20] In my view, the plaintiff enjoyed proportionately more success than the defendants, to the extent that he can claim to be the successful party. Even a modest claim will require basic civil procedure with the attendant costs. For that reason, the plaintiff shall have some costs from the defendants.
[21] The defendants are therefore ordered to pay to the plaintiff costs fixed at $25,000 inclusive of fees, disbursements, and tax.
“Original Signed By”
Madam Justice H.M. Pierce
Released: February 25, 2015
CITATION: Wyman v Kadlec, 2015 ONSC 1249
COURT FILE NO.: CV-09-0069
DATE: 2015-02-25
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
JAMES WYMAN
Plaintiff
- and -
DAVID KADLEC and KADLEC RESORT PROPERTY INC.
Defendants
REASONS ON COSTS
Pierce J.
Released: February 25, 2015
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