CITATION: Miletic v. Jaksic et al, 2015 ONSC 1400
COURT FILE NO.: CV-11-2125-00
DATE: 2015-03-03
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
BOZIDAR MILETIC
Anser Farooq, for the Plaintiff
Plaintiff
- and -
GEORGE JAKSIC, (THE ESTATE OF) NADA JAKSIC, MICRO PRECISION MACHINING LIMITED AND JAMES WHEELER also known as JAMES S. B. WHEELER also known as JAMES STUART BOTHWELL WHEELER
Perry Cheung, for the Defendants George Jaksic, (The Estate of) Nada Jaksic, and Micro Precision Machining Limited
Ian Latimer, for the defendant James Wheeler
Defendants
Price J.
Costs Endorsement
Nature of the proceeding
[1] On August 28, 2014 I released my reasons for judgment on the summary judgment motions that were heard on April 24, 2014. The parties were unable to agree on the costs of the motion, making this further order necessary.
[2] Mr. Miletic entered into an agreement with the Jaksics whereby he believed that the Jaksics’ machine shop business, Micro Precision Machining Limited, was sold to him. In fact, the shares of the business were never transferred to him, and the Jaksics continued to manage it.
[3] The issues before the Court on the motions for summary judgment were whether there was a genuine issue for trial as to whether Mr. Miletic’s action to recover the funds paid to the Jaksics, and for damages against the Jaksic’s lawyer, James Wheeler, was statute barred, and whether it disclosed a cause of action, and as to whether Mr. Miletic’s defence to Mr. Jaksic’s counterclaim for the balance of the purchase price for the company raises a genuine issue for trial.
[4] I found that Mr. Miletic’s action is not statute barred as against either the Jaksics or Mr. Wheeler, and that his statement of claim discloses a cause of action. I found that Mr. Miletic’s defence to Mr. Jaksic’s counterclaim raises a genuine issue for trial and dismissed Mr. Jaksic’s motion for summary judgment on the counterclaim.
Positions of the parties
[5] Mr. Miletic claims costs of $22,007.17 on a partial indemnity scale, consisting of $14,000 in fees for preparing materials, attending at cross-examinations, and preparing for the hearing, and $3,220 for a counsel fee at the hearing, plus $2,548.57 for disbursements and 2,238.60 for H.S.T., or, in the alternative, $28,990.57 on a substantial indemnity scale.
[6] Mr. Jaksic and Mr. Wheeler argue that the 82 hours of time that Mr. Miletic’s lawyers spent on the motions was unreasonably high, having regard to the fact that Mr. Jaksic’s lawyer spent only 46.9 hours and Mr. Wheeler’s spent 33.5 hours. Additionally, they argue that the $400 that Mr. Farooq has claimed as his actual hourly rate is excessive, having regard to the fact that he was called to the Bar in 2002, and that the $200 that Mr. Chaudhry and Ms. Suntharalingham claim is also excessive, having regard to the fact that they were called to the Bar in 2013. Finally, they argue that Mr. Miletic should only have had one counsel, not two, at the cross-examinations and at the hearing of the motion, and that the transcripts from the cross-examinations should not have been expedited, at greater cost.
ANALYSIS AND LAW
General principles
[7] Boswell J. set out the general principles governing costs assessments in George v Landels, where he stated:
The award of costs is governed by section 131 of the Courts of Justice Act, R.S.O. 1990 c. C.43 and by Rule 57.01 of the Rules of Civil Procedure. Section 131 provides for the general discretion to fix costs. Rule 57.01 provides a measure of guidance in the exercise of that discretion by enumerating certain factors that the court may consider when assessing costs. In addition, the Court must always be mindful of the purposes that costs orders serve. As Perell J. summarized in 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, [2010] O.J. No. 5692 (S.C.J.), at para. 10:
Modern costs rules are designed to advance five purposes in the administration of justice: (1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements (internal citations omitted).
[8] Ultimately, in determining an amount for costs, the overriding principles are fairness and reasonableness.[^1] In assessing what is fair and reasonable in the circumstances, the Court does not engage in a mechanical exercise, but takes a contextual approach, applying the principles and factors discussed above, to settle on a figure that is fair and reasonable in all the circumstances.[^2]
[9] The Court is guided by the factors set out in Rule 57.01(1) of the Rules of Civil Procedure. The Court may consider, among other factors, the following:
(a) The complexity of the proceeding;
(b) The importance of the issues;
(c) The conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(d) Any offers to settle;
(e) The principle of indemnity;
(f) The concept of proportionality, which includes at least two factors:
(i) The amount claimed and the amount recovered in the proceeding; and,
(ii) 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;
(g) Any other matter relevant to the question of costs.
Importance and complexity of the motion
[10] The motion had importance to the parties because, had Mr. Miletic been unsuccessful, the outcome would have precluded him from pursuing his action any further and would have exposed him to judgment for the amount claimed by Mr. Jaksic. The importance of the action was limited to the litigants as it did not involve issues of importance to the public.
[11] The motion involved issues of moderate complexity. It involved a shareholder dispute with several issues of fact and credibility that affected liability. Additionally, the limitations argument required an analysis of fiduciaries in relation to statutory limitations.
Reasonableness and offers to settle
[12] The general rule is that costs follow the event and will be awarded on a partial indemnity scale.[^3] In special circumstances, costs may be awarded on a higher scale, but those cases are exceptional and generally involve circumstances where one party to the litigation has behaved in an abusive manner, brought proceedings wholly devoid of merit, and/or unnecessarily run up the costs of the litigation.[^4]
[13] Mr. Farooq was unreasonable in not producing his dockets upon request in the assessment of the costs he was claiming. However, his conduct in his defence of the motion was not unreasonable, nor was the conduct of Mr. Jaksic and Mr. Wheeler.
[14] None of the parties has produced offers to settle that would affect the determination of costs. Accordingly, I find that none of those special circumstances exist in the present case that would justify depriving Mr. Miletic of his costs or awarding them on a substantial indemnity scale. He is entitled to recover his costs on a partial indemnity scale.
Indemnity - The hourly rates charged
[15] In determining the appropriate hourly rates to be assigned to the lawyers involved in the motion, the court follows the approach taken by Aitkin J. in Geographic Resources.[^5] That is, the starting point is the successor of the Costs Grid, namely, the “Information for the Profession” bulletin from the Costs Sub-Committee of the Rules Committee (the “Costs Bulletin”), which can be found immediately before Rule 57 in the Carthy or Watson & McGowan editions of the Rules, sets out maximum partial indemnity hourly rates for counsel of various levels of experience.
[16] The Costs Bulletin suggests maximum hourly rates (on a partial indemnity scale) of $80.00 for law clerks, $225.00 for lawyers of less than 10 years’ experience, $300.00 for lawyers of between 10 and 20 years’ experience, and $350.00 for lawyers with 20 years’ experience or more.[^6] The upper limits in the Costs Bulletin are generally intended for the most complex and important of cases. Having regard to the complexity of the motion, Mr. Farooq, who was senior counsel at the hearing, is entitled to the maximum hourly rate for a lawyer of between 10 and 20 years’ experience.
[17] The Costs Bulletin, published in 2005, is now dated. Aitkin J. considered adjusting the Costs Subcommittee’s hourly rates for inflation, as Smith J. did in First Capital (Canholdings) Corp. v. North American Property Group,[^7] but the unadjusted rates of the lawyers in her case were only slightly less than the actual fees they charged, so she elected to use their unadjusted rates. Normally, however, it is appropriate to adjust the hourly rates in the Costs Bulletin to account for inflation since 2005.
[18] Based on the Bank of Canada Inflation Calculator, available online at http://www.bankofcanada.ca/rates/related/inflation-calculator/, the current (2014) equivalent of the hourly rates in the Costs Bulletin are $93.52 for law clerks, $263.03 for lawyers of under 10 years’ experience, $350.71 for lawyers of between 10 and 20 years’ experience, and $409.16 for lawyers of over 20 years’ experience.
[19] The court is guided by the rates in the Costs Bulletin, not the actual hourly rates charged. The actual rates charged are relevant only as a limiting factor, in preventing the costs awarded from exceeding the actual fees charged. The Costs Subcommittee’s rates apply to all lawyers and all cases, so everyone of the same level of experience starts at the same rate.
[20] The court adjusts the hourly rate, or the resulting fees, to reflect unique features of the case, including the complexity of the proceeding, the importance of the issues, and the other factors set out in Rule 57.01(1). If an excessive amount of time was spent, or too many lawyers worked on the file, the court reduces the resulting amount of fees accordingly. As long as the resulting amount does not exceed the amount actually charged to the client, the actual fee that the client agreed to pay is irrelevant.
Indemnity - The time spent on the motion
[21] In this case, Mr. Miletic’s counsel recorded 82 hours for their work on the motion. 14 of those hours were spent by Mr. Farooq, 52.5 were spent by Mr. Chaudhry, and 15.5 were spent by Ms. Suntharalsdingam. That is, the greatest proportion of the time (68 hours, or 83% of the time) was spent by junior counsel called to the Bar in 2013, whose hourly rate is claimed at $140 on a partial indemnity scale. The balance of 17% was spent by Mr. Farooq, who claims an hourly rate of $320 on a partial indemnity scale.
[22] Mr. Farooq, having been called to the Bar in 2002, is entitled to claim a maximum hourly rate, on a partial indemnity scale, of $300 in 2005, or $345.58 (which I round down to $345) in 2013. The 14 hours that he spent on the motions up to the time of the oral argument, therefore has a value of $4,830. Mr. Chaudhry and Ms. Suntharalingam, who were called in 2013, also have a maximum hourly rate of $225. The hourly rate of $140 ascribed to them on a partial indemnity scale is fair, having regard to their year of call, within the ten year span of experience of those lawyers entitled to claim that maximum rate. The value of the time they spent, up to the time of oral argument, is therefore $7,350 for Mr. Chaudhry’s time ($140 x 52.5 hours) and $2,170 for Ms. Suntharalingam ($140 x 15.5 hours). The total value of the time spent by all three lawyers in preparation, calculated in this way, was $14,350. Mr. Farooq estimates his counsel fee for the appearance at $3,220.00. The motion was argued by two counsel for Mr. Miletic and one counsel each for Mr. Jaksic and Mr. Wheeler, for approximately 6 hours on April 24, 2013. This translates to $2,070 for Mr. Farooq and $840 for his co-counsel, for a total of $2,910. The difference of $310 between this amount and the time claimed is accountable for preparation on the day of the hearing and is reasonable. I find that the combined total of $17,570, representing the time spent in the preparatory steps ($14,350) and at the hearing ($3,220) is reasonable.
Proportionality and the reasonable expectation of the unsuccessful parties
[23] The parties’ agreement for the purchase and sale of Micro-precision Tooling provided that of a purchase price of $250,000. At the end of the term set out in the Payment Plan, $16,850.75 in interest would have been paid, and $236,850.75 would have been paid in principal and interest. Mr. Jaksic states that of this amount, Mr. Miletic paid $112,000 (28 payments of $4,000.00). Mr. Miletic made no payments after March 16, 2009, and there is no dispute that the installments due from February 6 to August 6, 2009, and the final payment, were never paid. Mr. Jaksic calculates that he is owed $124,850.75, being $236,850.75 less the $112,000 that was paid.
[24] I find that the $22,000 that Mr. Miletic claims as the costs of his defence of the motion, being less than 20% of the amount at stake in the action, is proportionate to the amount in issue.
[25] Mr. Latimer, who represented Mr. Wheeler, was called in 1987 and spent 33.5 hours on the motion. His actual hourly rate was $440 and his partial indemnity scale, according to the Costs Bulletin, was $350 in 2005. Adjusted for inflation, it was $403 in 2013. The cost of his time, on an adjusted hourly rate, was therefore $13,500.50.
[26] Mr. Cheung, on behalf of Mr. Jaksic, who was called to the Bar in 2010, recorded 46.9 hours at an actual rate of $250 an hour. His hourly rate on a partial indemnity scale, according to the Costs Bulletin, was $225 in 2005, or $259.19 (which I round up to $260) in 2013. The cost of his time, on an adjusted hourly rate, was therefore $12,194.
[27] Mr. Latimer and Mr. Cheung, collectively, spent 80 hours on the motions, with a collective cost of $25,694.50. This represents 46% more than the costs claimed by Mr. Miletic’s counsel. I find that the amount claimed by Mr. Miletic is within what Mr. Jaksic and Mr. Wheeler, collectively, should reasonably have expected to pay if unsuccessful in their motions.
[28] Counsel for the Jaksics and Mr. Wheeler raise the issue that during the cross-examination and on the motion, both Mr. Farooq and Mr. Chaudhry attended. I take into account that there were separate counsel for Mr. Jaksic and Mr. Wheeler and that there were substantially different issues raised on the motion for summary judgment on the claim and counterclaim. If the total time spent by Mr. Miletic’s counsel was disproportionate to the time spent by counsel for Mr. Jaksic and Mr. Wheeler, I might be inclined to reduce the costs awarded to them. In the circumstances, however, where the total time spent by Mr. Jaksic’s and Mr. Wheeler’s lawyers, at their respective hourly rates, exceeded the costs claimed by Mr. Miletic for his lawyers by 46%, I do not find it unreasonable that Mr. Miletic was represented by two counsel at the cross-examinations and at the hearing.
[29] I have considered the following costs endorsements in other motions for summary judgment arising from agreements of purchase and sale:
a) In Elliott v. Grand Shores Realty Development Corp., Glass J. awarded $60,000 plus GST and disbursements.[^8]
b) In 1483677 Ontario Limited v. Crain, Himel J. awarded $45,000.[^9]
c) In 1357202 Ontario Ltd. v. 1326046 Ontario Limited, Belobaba awarded $18,000.[^10]
d) In MCAP Financial Corp. v. George Fernicola in Trust and Carrington Homes Ltd., Thorburn J. awarded $26,502.18.[^11]
e) In 1828445 Ontario Ltd. v Guerra, James J. awarded $10,143.26 plus HST plus disbursements of $727.31 for a total of $12,189.[12]1.[^9]
f) In 2391286 Ontario Inc. v. Di Paola Midland Holdings Ltd. et al., Emery J. awarded $5,600 inclusive of disbursement.[^13]
g) In Battistella v. Rossi, 2010 ONSC 6729, Justice Mulligan awarded $5,000.[^14]
[30] Based on the foregoing results, which should have informed the expectations of Mr. Jaksic and Mr. Wheeler regarding the costs they would face if unsuccessful in a motion of this kind, I find that the costs of $22,007.17 claimed by Mr. Miletic is within the range of costs awards in similar motions.
Any other matters relevant to the determination of costs
a) Disbursements
[31] In fixing costs, the court need not undertake a line by line analysis of the hours or expenses claimed, nor should it second guess the amounts claimed unless they are clearly excessive or overreaching.[^15] Accordingly, I do not propose to reduce the disbursement for expedited transcripts. The circumstances vary that require and justify the expediting of transcripts and ordering the transcript on this basis in the present case resulted in greater expense for Mr. Miletic as well as Mr. Jaksic and Mr. Wheeler. This is the kind of decision best left to experienced counsel faced with the exigencies of a motion and the preparation for it.
b) Apportionment
[32] It is rarely possible, in my experience, to apportion the costs of a motion among moving parties, but circumstances vary and there is precedent for the practice.[^16] In the present case, the responsibility for both the bringing of the motion and the majority of time spent was principally that of Mr. Jaksic. Mr. Wheeler played a lesser role, which was limited, for the most part, to the limitations issue. In these circumstances, I will apportion the costs of the motion in the ration of 2/3 to Mr. Jaksic and 1/3 to Mr. Wheeler, subject to the proviso that if the costs are not fully paid in 30 days, any of the parties may apply for directions regarding their payment.
Conclusion and Order
[33] For the foregoing reasons, it is ordered that:
- Mr. Jaksic and Mr. Wheeler shall pay the costs of Mr. Miletic in the amount of $22,007.17, consisting of the following:
a) Fees: $17,220.00
b) HST: $ 2,238.60
c) Disbursements: $ 2,548.57
TOTAL: $22,007.17
Mr. Jaksic and Mr. Wheeler shall additionally pay pre-judgment interest on the said costs at the rate of 3% from September 15, 2014.
Mr. Jaksic and Mr. Wheeler shall pay the foregoing costs and interest in the proportion of 2/3 by Mr. Jaksic and 1/3 by Mr. Wheeler. If the costs are not fully paid within 60 days, any party may apply to the court for directions as to their payment.
Price J
DATE: March 3, 2014
CITATION: Miletic v. Jaksic et al, 2015 ONSC 1400
COURT FILE NO.: CV-11-2125-00
DATE: 2015-03-03
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
BOZIDAR MILETIC
Plaintiff
- and -
GEORGE JAKSIC, (THE ESTATE OF) NADA JAKSIC, MICRO PRECISION MACHINING LIMITED AND JAMES WHEELER also known as JAMES S. B. WHEELER also known as JAMES STUART BOTHWELL WHEELER
Defendants
COSTS ENDORSEMENT
Price J.
Released: March 3, 2015
[^1]: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.); and Moon v. Sher (2004), 2004 39005 (ON CA), 246 D.L.R. (4th) 440 (C.A.)
[^2]: Gratton-Masuy Environmental Technologies Inc. (c.o.b. Ecoflow Ontario) v. Building Materials Evaluation Commission, 2003 8279 (ON SCDC), [2003] O.J. No. 1658, at para. 17
[^3]: Bell Canada v. Olympia & York Developments Limited et. al. (1994), 1994 239 (ON CA), 17 O.R. (3d) 135 (C.A.)
[^4]: Standard Life Assurance Company v. Elliott (2007), 2007 18579 (ON SC), 86 O.R. (3d) 221 (S.C.J.)
[^5]: Geographic Resources Integrated Data Solutions Ltd. v. Peterson, 2013 ONSC 1041, paras. 7 and 11 to 16
[^6]: “Information for the Profession” bulletin (“the Costs Bulletin”) from the Costs Sub-Committee of the Rules Committee (that the Costs Sub-Committee of the Rules Committee issued to replace the Costs Grid, which it repealed in 2005). The Costs Bulletin has advisory status only and not statutory authority, as it was not included in the Regulation that repealed the Costs Grid.
[^7]: First Capital (Canholdings) Corp. v. North American Property Group, 2012 ONSC 1359, 2012 ONSC 1359 (S.C.J.)
[^8]: Elliott v. Grand Shores Realty Development Corp., 2005 18317 (ON SC)
[^9]: 1483677 Ontario Limited v. Crain, 2010 ONSC 1353,
[^10]: 1357202 Ontario Ltd. v. 1326046 Ontario Limited, 2007 39361 (ON SC)
[^11]: MCAP Financial Corp. v. George Fernicola in Trust and Carrington Homes Ltd., 2010 ONSC 148, paras. 6 and 23
[^12]: 1828445 Ontario Ltd. v Guerra, 2014 ONSC 3325, para. 31
[^13]: 2391286 Ontario Inc. v. Di Paola Midland Holdings Ltd. et al., 2014 ONSC 6924
[^14]: Battistella v. Rossi, 2010 ONSC 6729
[^15]: Fazio v. Cusumano 2005 33782 (ON SC), 2005 CarswellOnt 4518 (S.C.J.), at para. 8.
[^16]: Currie v. Symcor, 2007 35150 (ON SC)