J.J.A.S. Catering and Banquet Inc. v. Vesia Jr., 2015 ONSC 1417
COURT FILE NO.: CV-12-632-SR
DATE: 2015-03-03
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
J.J.A.S. CATERING AND BANQUET INC.
Amelia Lau and Cameron Fiske, for the Plaintiff
Plaintiff
- and -
MICHAEL VESIA JR., MICHAEL VESIA, AND VICTORIA’S CHERRY HILL RESTAURANT INC.
Joseph Irving, for the Defendants
Defendant
Price J.
Costs Endorsement
NATURE OF PROCEEDING
[1] On October 3, 2014 I released my reasons for judgment following a trial that took place on October 1, 2014. The action concerned a dispute over money owed from the purchase of a restaurant. I ordered the defendant Michael Vesia (“Mr. Vesia”) to pay to the plaintiff J.J.A.S. Catering and Banquet Inc. (“JJAS”) the amount of $25,500.
[2] In my judgment, I set off against the award to JJAS the amount of $4,500, based on Mr. Vesia’s counterclaim for the value of a dishwasher that JJAS had purported to sell him, but which JJAS had had not, in fact, owned, but had leased. Accordingly, the net recovery by JJAS was $21,000.
[3] I dismissed the claims against Mr. Vesia’s son, Michael Vesia Jr., for whom he bought the restaurant, and against Victoria’s Cherry Hill Restaurant, the company which took title to the restaurant. I also dismissed Mr. Vesia’s counterclaim for losses he said he suffered as a result of business disruption when he stopped making payments for the leased dishwasher, and it was repossessed.
[4] As the parties were unable to agree on costs, I must now rule on the costs to be awarded. Costs submissions were received from JJAS but not from the defendants.
[5] JJAS claims costs of $25,551.85 for fees and disbursements, on a substantial indemnity scale, based on the delay in the proceeding, begun under the simplified procedure rule, and based on the defendants’ cross-examination of Mr. Spizzirri, a representative of JJAS, where it says the defendants’ lawyers made “allegations of fraud” against the witness.
ANALYSIS AND LAW
[6] Boswell J. set out the general principles governing the determination of costs in George v Landels. 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.[^1] (internal citations omitted).
[7] The general rule is that costs follow the event, and are awarded on a partial indemnity basis.[^2] In special circumstances, costs are 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, or unnecessarily run up the costs of the litigation.[^3]
[8] Ultimately, in determining the costs to be awarded, the court applies fairness and reasonableness as overriding principles.[^4] In assessing what is fair and reasonable, it does not engage in a mechanical exercise but, rather, takes a contextual approach, applying the principles and factors discussed above, and sets a figure that is fair and reasonable in all the circumstances.[^5]
[9] The Court is guided by the factors set out in Rule 57.01(1) of the Rules of Civil Procedure. Among those factors are the following:
(i) The complexity of the proceeding;
(ii) The importance of the issues;
(iii) The conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(iv) Any offers to settle;
(v) The principle of indemnity;
(vi) The concept of proportionality, which includes at least two factors:
(a) The amount claimed and the amount recovered in the proceeding; and,
(b) 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;
(vii) Any other matter relevant to the question of costs.
[10] In reviewing a claim for costs, the court does not undertake a line by line analysis of the hours claimed, and should not second-guess the amount claimed, unless it is clearly excessive or overreaching. It considers what is reasonable in the circumstances and, taking into account all the relevant factors, awards costs in a global fashion.[^6]
Complexity and Importance
[11] The plaintiff fairly acknowledges in its costs outline that the matter was not complex. It involved an action over the unpaid balance of the purchase price for a restaurant.
[12] It was made more complex by the fact that the purchaser, Mr. Vesia, bought the restaurant for his son, who became the manager and owner of the company, Victoria’s Cherry Hill Restaurant Inc., who took title to the restaurant, and by the fact that payments were made in installments, which stopped, and by the fact that Mr. Vesia alleged that some of the installments were paid in cash, including at least one to the plaintiff’s solicitor, who died. As a result of these factors, the action became, by the time of trial, moderately complex.
[13] The action was not of exceptional importance to the litigants and it did not involve issues of importance to the general public.
Reasonableness of the litigants’ conduct and offers to settle
[14] There was no conduct on the part of any of the litigants that was so unreasonable as to justify departing from the general rule that costs should be awarded on a partial indemnity scale. Additionally, the parties did not tender any offers to settle that would have an impact on the determination of costs.
[15] Although the cross-examination of Mr. Spizzirri was intense, there were no pleadings of fraud, and the allegations made in the cross-examination were not for the purposes of scandalizing Mr. Spizzirri. The litigation was not exceptionally long, when considering the reality of an under-resourced court system in Central West Region. On the whole, the time spent was reasonable, and a reasonable amount for costs is arrived at by applying JJAS’s lawyers’ hourly rates, on a partial indemnity scale, as derived from the Bulletin, and adjusted for inflation, to the time they spent.
Indemnity – Success achieved
[16] JJAS was successful in its action against Mr. Vesia. It was not successful in its action against Michael Vesia Jr. or the Cherry Hill Restaurant. Mr. Vesia had partial success in his counterclaim for the value of the dishwasher. Success was somewhat divided, but JJAS was more successful in the overall outcome and is entitled to its costs against Mr. Vesia.
Indemnity - The hourly rates charged
[17] 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.[^7] 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.
[18] 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.[^8] 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.
[19] 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,[^9] 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.
[20] 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.
[21] 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.
[22] 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
[23] All three lawyers who worked on this file for JJAS had been litigating for less than 10 years. The Bulletin assigns a maximum hourly rate of $225, on a partial indemnity scale, to lawyers of less than 10 years’ experience.[^10]
[24] JJAS claims costs of $25,551.85, which includes $2,198.30 for disbursements.
[25] JJAS claims $4,000 for drafting its pleadings, preparing its affidavit of documents, examining Michael Vesia Jr. for discovery, and preparing a motion to compel the defendants to produce their affidavit of documents. The Costs Outline does not provide the year of call of the lawyers who performed these services at the early stages of the action, or their hourly rates, because JJAS’s senior counsel, Mr. Plastino, died, and the file was transferred to other lawyers. The Costs Outline states that JJAS incurred legal costs of $4,000 for those services. This represents 18.6 hours of work at $215 per hour, being the average hourly rate of JJAS’s solicitors, who range in experience from 3 to 9 years, and are entitled to charge between $175 and $250 per hour. On this basis, I allow $4,000 for the preliminary steps set out above.
[26] In order of seniority, David Milosevic was the most senior of the lawyers who worked on the file. He was called to the Bar in 2005, and recorded 12.6 hours in his dockets. The Bulletin assigns an hourly rate of $225 to him, based on his year of call, for the work done up to the time of trial, in 2014. Adjusted for inflation since 2005, his maximum hourly rate is now $260.34. He claims $245 on a partial indemnity scale, which is less than his maximum rate of $260, adjusted for inflation. I allow a rate of $250 for him for the 12.6 hours he docketed, for a total of $3,150.
[27] Cameron Fiske was the next most senior lawyer who worked on the file. He was called to the Bar in 2009, and had approximately 5 years of experience at the time of the trial. He claims an hourly rate of $215 on a partial indemnity scale, and $280 on a substantial indemnity scale. He spent 7.2 hours on this matter. I assign a rate of $225 per hour for his time for the 7.2 hours he docketed, for a total of $1,620.
[28] Amelia Lau was the most junior lawyer who worked on the file. She was called to the Bar in 2011, so she had three years’ experience at the time of the trial. She charges an hourly rate of $165 on a partial indemnity scale, and $215 on a substantial indemnity scale. She spent 53.5 hours working on this action. Based on the Bulletin’s maximum rate of $269.34, adjusted for inflation, for lawyers with under ten years’ experience, I assign a rate of $175 per hour to Ms. Lau for the 53.5 hours she spent, for a total of $9,362.
Proportionality and Reasonable Expectations
[29] Mr. Vesia has not made costs submissions or submitted evidence concerning the fees and disbursements he paid in the action. Accordingly, there is no basis upon which the court can determine what his reasonable expectations were as to the costs he might face if he was unsuccessful at trial.
[30] The costs incurred were proportionate to the amounts at stake in the action and do not have to be adjusted on that account. The plaintiff sought to recover $30,000 owing from the sale of its business and the defendants maintained that $20,000 was outstanding, but counterclaimed for $18,000 for a used commercial dishwasher.
[31] In the context of the proportionality of a costs award in relation to the amount of damages, Daley J. stated in A & A Steelseal Waterproofing Inc. v. Kalovski:
Further, while costs awarded must be reasonable, it is not the case that the mere fact that costs exceed the damages awarded renders such an award inappropriate: Bonaiuto v. Pilot Insurance Co., 2010 CarswellOnt 1039. As has been stated, the fact that costs significantly exceed the amount at stake, at least in the main action, is regrettable but it is well known to counsel that this is one of the risks involved in pursuing or defending a case.[11] [Emphasis added]
Conclusion and Order
[32] For the reasons stated above, it is ordered that:
Mr. Vesia shall pay costs to the plaintiffs, on a partial indemnity scale, in the amount of $18,132, plus $2,357.16 H.S.T., plus $2,198 for disbursements, for a total of $22,687.16.
Mr. Vesia shall pay pre-judgment interest on the above amount at the rate of 3% per year from October 3, 2014.
Price J.
Released: March 3, 2015
CITATION: J.J.A.S. Catering and Banquet Inc. v. Vesia Jr., 2015 ONSC 1417
COURT FILE NO.: CV-12-632-SR
DATE: 2015-03-03
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
J.J.A.S. CATERING AND BANQUET INC.
Plaintiff
- and -
MICHAEL VESIA JR., MICHAEL VESIA, AND VICTORIA’S CHERRY HILL RESTAURANT INC.
Defendant
COSTS ENDORSEMENT
Price J.
Released: March 3, 2015
[^1]: George v Landels, 2012 ONSC 6608
[^2]: Bell Canada v. Olympia & York Developments Limited et. al. (1994), 1994 239 (ON CA), 17 O.R. (3d) 135 (C.A.)
[^3]: Standard Life Assurance Company v. Elliott (2007), 2007 18579 (ON SC), 86 O.R. (3d) 221 (S.C.J.)
[^4]: 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.)
[^5]: 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
[^6]: see the cases referenced in Fazio v. Cusumano 2005 33782 (ON SC), 2005 CarswellOnt 4518 (S.C.J.), at para. 8
[^7]: Geographic Resources Integrated Data Solutions Ltd. v. Peterson, 2013 ONSC 1041, paras. 7 and 11 to 16
[^8]: “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.
[^9]: First Capital (Canholdings) Corp. v. North American Property Group, 2012 ONSC 1359, 2012 ONSC 1359 (S.C.J.)
[^10]: “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.
[^11]: A & A Steelseal Waterproofing Inc. v. Kalovski, 2010 ONSC 2652, at para. 21