CITATION: Galan v. Finch, 2015 ONSC 4067
COURT FILE NO.: CV-10-030
DATE: 20150623
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Garry Galan
Plaintiff
– and –
Paul Finch, carrying on business as Finch’s Heating
Defendant
Martin P. Forget, for the Plaintiff
Jackie McGaughey-Ward, for the Defendant
Decision on Costs
E.J. koke J.
Introduction
[1] On April 20, 2015, after a six day trial, I awarded judgment to the plaintiff for $810,016.75 plus pre-judgment interest and costs. I have now received cost submissions. The plaintiff seeks costs of $222, 804 calculated as follows:
Fees: $168,251
HST on Fees: $21,872
Total: $190,123
Disbursements: $32,681
Total: $222,804
[2] The fee portion of the plaintiff’s costs are divided between substantial and partial indemnity costs to reflect the fact that the plaintiff served the defendant with a settlement offer, and the judgment was more favourable than the terms set out in the offer.
[3] The defendant agrees that the plaintiff should be awarded costs. However, he contends that costs should be assessed in the range of $113,703.45 to $129,122.46, exclusive of taxes and disbursements.
[4] The defendant argues that the hourly rates on which the plaintiff bases the fee portion of his costs are not in compliance with the accepted principles which govern the assessment of partial and substantial indemnity costs. He submits that the rates for determining partial indemnity costs should be 60% of the actual amount charged to the plaintiff by his lawyer; the amount charged for substantial indemnity costs should be 90% of the actual fees charged. According to the defendant, applying partial and substantial indemnity rates of 60% and 90% to the hours submitted by the plaintiff results in a reduction of $21,823.
[5] The defendant also takes issue with the time devoted to this matter by the plaintiff’s lawyers, and he submits that the amount of hours should be reduced by between 25% and 33%.
Applicable Principles
[6] In exercising its discretion to award costs, Rule 57.01 of the Rules of Civil Procedure provides that the Court can consider, in addition to success, the amount claimed and recovered, the complexity and importance of the matter, unreasonable conduct of any party which unduly lengthened the proceedings, any offer to settle, the principle of indemnity, hourly rates claimed, the time spent and principle of proportionality, and the amount that the losing party would reasonably expect to pay.
[7] The court has broad discretion to determine by whom and to what extent costs of a proceeding should be paid. Overall, the Court is required to consider what is “fair and reasonable” in fixing costs and it is to do so with a view to balancing the compensation of the successful party with the goal of fostering access to justice. See Boucher v. Public Accountants Counsel for the Province of Ontario, 2004 14759 (ONCA).
[8] Rather than engaging in a purely mathematical exercise, an award of costs should reflect what the Court views as a reasonable amount that should be paid by the unsuccessful party rather than any actual measure of the actual costs of the successful litigant. See Davies v. Clarington (Municipality), 2009 ONCA 722.
Decision
[9] In reviewing the applicable principles and considering them in the context of this case, I have concluded that the plaintiff should be awarded the amount claimed in his written submissions and costs brief. My reasons for coming to this conclusion include the following.
Settlement Offer
[10] The judgement of $810,016.75 is $185,016.75 more than the plaintiff’s pre-trial offer to settle for $625, 000. Clearly, the offer is more favourable than the judgment and therefore the plaintiff is entitled to costs on a partial indemnity scale up to the date of the offer and on a substantial indemnity scale thereafter. The defendant does not raise this as a serious issue.
Hourly Rates
[11] The defendant cites Newbould J’s decision in Stetson Oil & Gas Ltd v. Stifel Nicolaus Canada Inc., 2013 ONSC 5213 as authority for the proposition that partial indemnity fees should be calculated on the basis of 60% of the actual fees charged and substantial indemnity fees calculated on the basis of 90% of the fees charged.
[12] I agree that there is case law which suggests that percentage rates of 60% and 90% should be used to determine partial and substantial costs. However, in my view the principles adopted in those cases should be confined to the unique facts in those cases and are not applicable to all cases in which a court must assess costs. I note that the Stetson Oil case was a complex commercial case where counsel used hourly rates of between $700 and $800 as a basis for determining their costs.
[13] In this case, the time dockets submitted into evidence by the plaintiff’s lead counsel, Martin Forget, reveal that he charged his client $270 an hour at the time the litigation commenced in December, 2009, and his rate gradually increased to $320 by the time he completed his final submissions earlier this year. The substantial indemnity rate he requests in his costs brief for his initial work is $215 per hour, and this rate increases to $255 per hour by the time his settlement offer is tendered to the defendant. Thereafter, his substantial indemnity rate ranges from $275 per hour to $325 per hour through to the conclusion of the lawsuit.
[14] Mr. Forget was called to the bar in 1998 and he has extensive trial experience. Throughout the proceedings he demonstrated that he was a very capable and effective trial counsel. The plaintiff submits that the rates charged by his counsel were discounted significantly from market rates and I accept this submission. I note that if the plaintiff had not negotiated these less than market rates, the defendant would be faced with a significantly higher costs exposure, using the 60/90% method proposed by him.
[15] In my view, there is no authority to support the defendant’s contention that the “actual fees billed to the client” must be used to fix costs, regardless of whether such fees are discounted from standard market rates”. In fact, there are cases where costs are fixed in circumstances where no fees are actually billed to the client, as in cases where a party is self-represented. See MacKay Homes v. North Bay (City), [2005] O.J. No. 3263. Courts have held that a party represented by counsel who is acting on a pro bono basis is also entitled to cost. See 1465778 Ontario Inc. v. 1122077 Ontario Ltd., (2006) 2006 35819 (ON CA), 82 O.R. (3d) 757 (ONCA). Similarly, parties who engage a lawyer on a contingency basis are entitled to costs.
[16] In conclusion, the rate charged by the plaintiff’s counsel was refreshingly modest. The defendant has benefited from this discounted rate and it would not be fair or reasonable if I reduced it further.
The Complexity and Importance of the Matter
[17] This was a fire loss case, involving a determination of what caused the fire. Both parties called experts to testify. The theory of causation, which the court accepted, was unusual and was strongly contested by defendant’s counsel, who put forth various alternative theories to which the plaintiff was required to respond. In my view, this was a case of moderate to high complexity, and the issues were important to the plaintiff.
The Time Spent
[18] In addition to having to prove causation of the fire, the plaintiff was also required to prove all damages to both personal and real property. Although I do not find that either of the parties took steps which could be viewed as improper or vexatious, I note that the defendant did not concede anything throughout the trial proceedings. The plaintiff was not only required to prove causation of the fire, he was also required to prove all damages to personal and real property.
[19] In the end, the plaintiff was entirely successful in this subrogated action. Virtually all of his assertions were accepted in relation to the issues of causation and damages. In my view, there is no basis for the defendant’s suggestion that the plaintiff unnecessarily lengthened the duration of the proceedings. I accept that the number of hours devoted to this matter by counsel for the plaintiff were reasonable.
In Accordance with Reasonable Expectations
[20] This was a subrogated claim involving two major insurance companies. The parties are sophisticated and experienced in dispute resolution. In his reply submissions on the issue of costs, the plaintiff acknowledged that the time his counsel devoted to preparing final submissions may have exceeded the reasonable expectations of the defendant, and accordingly the plaintiff reduced his claim for costs by $25,000.
[21] I am satisfied that the amount claimed by the plaintiff is consistent with the reasonable expectations of the defendant’s insurer.
Judgment
[22] The plaintiff is to have judgment against the defendant for costs in the sum of $222,804.
E.J. KOKE, SCJ
Released: June 23, 2015
CITATION: Galan v. Finch, 2015 ONSC 4067
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Garry Galan
Plaintiff
– and –
Paul Finch, carrying on business as Finch’s Heating
Defendant
Decision on Costs
E.J. KOKE, SCJ
Released: June 23 , 2015