Court File and Parties

CITATION: Hammer v. Cleeves, 2015 ONSC 3882

COURT FILE NO.: C-829-13

DATE: 2015-06-16

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Carol Hammer, Plaintiff

AND:

Roy Cleeves and David Anderson, Defendants

BEFORE: G. E. Taylor

COUNSEL: Jeffrey Larry and Lindsay Scott, Counsel, for the Plaintiff

Gary Petker Counsel, for the Defendants

HEARD: November 24, 27, December 1, 2, 3, 4, 2014 and January 16, 2015

cost ENDORSEMENT

[1] On April 17, 2015 I released my Reasons for Judgment granting judgment in favour of the plaintiff for $225,000. I requested written submissions with respect to costs which have now been received.

[2] This action arose out of an Asset Purchase Agreement for the sale of the plaintiff’s real estate business to the defendants. The plaintiff was successful in the action although the amount awarded in the judgment was less than claimed in the Statement of Claim.

[3] The defendants assert the rather unusual position that, notwithstanding the judgment which was granted against them, they should nevertheless be awarded costs of the action. Alternatively, the defendants submit that there should be no costs awarded to either side. The reasons given in support of these submissions were essentially those that were argued unsuccessfully at trial.

[4] The plaintiff is entitled to her costs of the action.

[5] The plaintiff made an Offer to Settle pursuant to Rule 49 of the Rules of Civil Procedure which is dated November 21, 2014. In this Offer to Settle, plaintiff offered to accept the sum of $165,000 plus all amounts owing pursuant to the persistency bonus to be calculated in accordance with the terms of the Asset Purchase Agreement. According to the terms of the Agreement, payments under the persistency bonus did not begin until January 2017 and were to be calculated on the basis of the revenue generated by the plaintiff’s business for the five year period from January 2011 to December 2016. In my Reasons I explained that rather than grant a declaration that the plaintiff was entitled to payments calculated pursuant to the persistency bonus as the amounts became due, I decided to grant judgment in favour of the plaintiff for $30,000 with respect to the persistency bonus.

[6] The plaintiff’s Offer is clearly superior to the result achieved at trial for the purchase price set out in the Agreement exclusive of the persistency bonus. At this time it is not possible to determine if the judgment of $30,000 as damages associated with the persistency bonus is a result more favourable to the defendants than the terms of the Offer. More important, however, is the fact that the plaintiff’s Offer was not made until three days before the start of the trial and therefore is not in compliance with the provisions of Rule 49.

[7] Accordingly, the plaintiff is entitled to her costs of the action on a partial indemnity basis.

[8] The plaintiff seeks costs of $172,362 on the basis of partial indemnity costs to date of the Offer to Settle and substantial indemnity costs subsequently.

[9] This was a contract action with some degree of complexity. I am mindful that the principle of indemnity is an important consideration in an award of costs. Similarly, the amount that an unsuccessful party could reasonably expect to pay is also an important factor. Both parties presented their respective cases thoroughly, efficiently and fairly.

[10] However, I find that the costs sought by the plaintiff to be awarded in her favour far exceeds a reasonable amount for costs of this action. I have analyzed the hours spent and hourly rates charged by counsel for the plaintiff and counsel for the defendants for the period from the November 21, 2014 (the date of the plaintiff’s Offer to Settle) and January 16, 2015 (the last day of trial). During this period, the two lawyers representing the plaintiff recorded a total of 230 hours of time at hourly rates of $450 and $350. Senior counsel for the plaintiff recorded approximately 74 hours of the total time. During the same period, counsel for the defendants who is considerably senior to both lawyers for the plaintiff recorded a total of approximately 79 hours at an hourly rate of $360. I conclude, based on this brief analysis, that there was considerable time spent by counsel for the plaintiffs for which the defendants should not be required to indemnify the plaintiff.

[11] With respect to disbursements, I agree with the submission of the defendants that there are some which are not appropriate to be included in a partial indemnity award of costs.

[12] I am not conducting an assessment. In my view, the fair and reasonable amount that the defendants should pay to the plaintiff as costs of this action is the all-inclusive sum of $80,000.

G.E. Taylor

Date: June 16, 2015