SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-12-454429
DATE: July 6, 2015

RE: Unimac-United Management Corp. (plaintiff) v. Canadian National Railway Company and Metrolinx;

BEFORE: MASTER C. WIEBE

COUNSEL: Hersen, G. D., and Goode, J. for Metrolinx (the moving party); Baichoo, J. P., for Unimac-United Management Corp.(the responding parties).

HEARD: February 2, 2015 at Toronto, Ontario.

DECISION: April 11, 2015.

COSTS DECISION

[1] On April 14, 2015 I released my decision on the Metrolinx motion for security for costs. I ordered that Unimac-United Management Corp. (“Unimac”) post $264,712.73 as security for the costs of Metrolinx in this action, to be paid in 60 days. Metrolinx had claimed $407,250.34.

[2] As ordered, the parties served and filed written submissions as to the costs of this motion. On April 24, 2015, Mr. Hersen, counsel for Metrolinx, filed written submissions containing a Costs Outline showing partial indemnity costs in favour of Metrolinx in the amount of $51,613.47 (tax inclusive) and substantial indemnity costs of $76,216.96 (tax inclusive). Copies of dockets and other documents were attached. Metrolinx seeks a partial indemnity costs award in favour of Metrolinx in the amount of $51,613.47.

[3] On May 4, 2015, Mr. Baichoo, counsel for Unimac, filed written costs submissions containing a Costs Outline showing a partial indemnity costs in favour of Unimac in the amount of $6,554 (tax inclusive) and substantial indemnity costs of $9,268.26 (tax inclusive). He submitted that either Metrolinx receive no costs or that the question of costs be reserved to the panel hearing the Application for Judicial Review. I understand that Unimac has commenced a judicial review of my ruling and that this proceeding is pending at this point.

[4] I note that neither party submitted costs outlines at the time of the argument of the motion on February 2, 2015. I bear this fact in mind in reviewing these costs submissions.

[5] I have now found the time to make a determination as to the costs of the motion. I will now review the relevant factors to be considered.

Result of the motion:

[6] I find that Metrolinx was the successful party on the motion. It succeeded in obtaining an order for security for costs. However, in my view, it was not entirely successful, as I awarded Metrolinx only 65% of the security it claimed. This will be born in mind.

Complexity:

[7] The motion contained moderate complexity. There were two grounds for the motion, namely the multiplicity of proceedings by Unimac and the insufficiency of Unimac assets to pay for Metrolinx’s costs. Metrolinx succeeded on both grounds.

[8] Mr. Hersen also submitted that Unimac filed an excessively lengthy factum. I agree with that point. In my view, that factum could have and should have been reduced substantially in length.

[9] Mr. Hersen also argued that the Unimac factum introduced many issues, which increased the complexity of the motion. I agree with that argument. As indicated in my ruling, I had to resolve at least eight issues in order to make my decision. Having said this, I note though that Unimac’s position was not unreasonable in relation to most of these issues. This will be born in mind as well.

[10] Mr. Hersen also argued that Unimac complicated matters by failing to change the venue of its Damages Action to Toronto. He referred to my ruling in this regard. I do not agree with this point. I only made that statement in the context of discussing Unimac’s criticism of Metrolinx for failing take steps to implement my change of venue order in order to enhance its position on its motion for security for costs. I stated simply that Unimac could not in fairness make that criticism when it has done nothing itself to move its own action to Toronto.

Importance of the issues:

[11] Mr. Hersen also submitted that this was a very important motion for Metrolinx. Unimac’s lien claim against Metrolinx is in excess of $7 million and its non-lien action in Newmarket against Metrolinx is in excess of $12 million. With the evidence of a multiplicity of proceedings by Unimac and an insufficiency of Unimac assets in Ontario to pay Metrolinx’s costs, the importance of this motion to Metrolinx was self-evident. The importance of the motion to Unimac was also significant as my order will represent a real hurdle to the continuation of its lien action.

Conduct of the parties:

[12] Most of the submissions concerned this issue, namely conduct of the parties that tended to lengthen unnecessarily the duration of this motion.

[13] Mr. Hersen raised several points in this regard. He argued that, when he requested from Mr. Baichoo proof of the sufficiency of Unimac’s assets to pay costs, Unimac provided the heavily redacted bank statements. I found these heavily redacted bank statements to be inadequate evidence of asset sufficiency. I agree with Mr. Hersen’s point here. The bank statements themselves created a concern as to whether the shown cash met Unimac’s onus on the motion. But the heavy redactions and Unimac’s refusals to disclose further evidence concerning the redactions only deepened that concern. This conduct was unreasonable.

[14] Mr. Hersen also pointed out that Mr. Hui in cross-examination refused many questions about the quality and sufficiency of the shown Unimac’s assets. I found in my reasons that a negative inference could be drawn from such refusals. I agree that this conduct was unreasonable, and that it unnecessarily lengthened the motion. With proper answers, there may have been a difference resolution of the motion.

[15] Mr. Hersen raised again the issue of the inordinate length of the Unimac factum. This length was in clear violation of the Consolidated Provincial Practice Direction dated July 1, 2014, which specifies that in Toronto the court should not accept facta in excess of 30 pages. I note that Mr. Baichoo reduced the size of the document from the required double spacing and still produced a factum of 47 pages in length. Despite the number of issues that Mr. Baichoo raised, he made, in my view, little effort to be brief and economical in this document. This increased my work and I am sure the work of Unimac in preparing for the motion. I allowed the factum to be considered by the court over the objection of Mr. Hersen, but I will take this point into consideration in awarding costs.

[16] Mr. Baichoo argued that I should discount Metrolinx’s entitlement to costs on account of its “ambushing” Mr. Hui with evidence that was not raised by Metrolinx in its motion material. Based on what was argued before me, I have concluded that the key questions put to Mr. Hui arose from the assets Unimac proffered to meet its onus on the motion. I do not accept this criticism.

[17] Mr. Baichoo argued that Mr. Hersen did not give advance notice of his complaint about the length of the Unimac factum. In my view, there was no need to give such notice as lawyers are expected to know the rules concerning the documents they submit to the court.

[18] Mr. Baichoo also complained that Mr. Hersen did not give advance notice of his complaint about the Unimac failure to submit answers to undertakings to the court by way of affidavit. I made a preliminary ruling at the beginning of the argument of the motion that denied Unimac’s attempt to file answers to undertakings by way of a letter. I did so as I found that a court can only consider evidence on a motion in the form of affidavits, viva voce or transcripts of cross-examinations. Again, I reiterate that lawyers are expected to know the rules that pertain to the submission of evidence on motions. I do not criticize Metrolinx for failing to give notice of its position on these points.

Offer to settle:

[19] It appears that on December 9, 2014 Unimac made a Rule 49 offer to settle the Metrolinx motion on the basis of a withdrawal of the motion on a without costs basis, which offer was made open for acceptance until service of the Unimac responding material.

[20] This offer was made after the delivery by Unimac of some of its redacted bank statements in response to Metrolinx’s requests for evidence of Unimac’s wherewithal to pay costs. Mr. Hersen argued that this was not a reasonable offer to settle a meritorious motion for security for costs. The argument appears to be that the offer was instead an attempt to bully Metrolinx away from pursuing its motion, conduct which should attract an adverse ruling on costs.

[21] I do not draw such a conclusion. While I have found that the evidence provided by Unimac was not sufficient to meet its onus on the motion, I do not go the extra step to conclude that it did not believe that it had disclosed sufficient financial information to meet its onus at the time of the offer and that it made the offer in bad faith. In any event, Metrolinx is sophisticated enough not be bullied into any course of conduct it does not wish to pursue.

Quantum:

[22] There was some debate over the quantum of costs being claimed by Metrolinx. I am satisfied that the rates shown for the claimed legal fees are reasonable. They are consistent with the rates recommended for awards of partial indemnity costs by the “Information for the Profession” that is included as a part of Rule 57.01.

[23] Mr. Baichoo’s complaint is with the quantum of the time shown for the work that was done. He argued that it was unreasonably excessive. For instance, he argued that the 12.6 hours shown for the work on the Costs Outline and the two-page letter attached to it was much too high. He argued that the 23.3 hours shown for preparing for and attending at the cross-examination of Mr. Hui was also unreasonably high, examinations which Mr. Baichoo stated lasted only three hours. He argued that the 29.4 hours shown for preparing affidavits for the motion was excessive. The total of 181.3 hours shown for the legal time spent on the motion was, he stated, unreasonable. He pointed out that Unimac’s Costs Outline showed a total of only 27.5 hours of work on the motion.

[24] As stated earlier, I take the Unimac Costs Outline with “a grain of salt” as an indicator of what Metrolinx’s reasonable costs should have been. The Unimac Costs Outline was prepared after the result of the motion was known, and no dockets were submitted in support of it. It has to be viewed as a self-serving document as a result. In that light, I do not consider the Unimac Costs Outline to be a fair reflection of the work that was properly done by Unimac (much less Metrolinx) on the motion. For instance, I simply do not believe that Mr. Baichoo spent only 12.5 hours of his time in preparing the responding material, attending at the cross-examination, reviewing the transcript, answering undertakings, and preparing the factum and book of authorities, as appears in the Unimac Costs Outline.

[25] Furthermore, Metrolinx was the moving party and had the difficult job of garnering the evidence to overcome its initial onus. Unimac did not make that job easier through its limited disclosures. If Metrolinx spent more time on this motion than Unimac, that fact per se is not unreasonable.

[26] I do think that Mr. Baichoo’s criticism has some merit nevertheless. The time shown in the Metrolinx Costs Outline for certain tasks seems excessive. For instance, the 12.6 hours shown for preparing the Costs Outlines and costs submissions seems excessive, as does not 68.4 hours for the preparation of the motion material, factum and book of authorities and the 23.3 shown for the work done on the cross-examination of Mr. Hui. 66% of the quantum of time shown for those three items seems reasonable.

[27] There was no issue with the quantum of the $2,398.14 in disbursements that is shown on the Metrolinx Costs Outline. I will make no adjustment here as result.

[28] I do not view my responsibility in awarding costs to include a detailed line-by-line “audit” of the Metrolinx Costs Outline. But I do have the responsibility of determining what the reasonable quantum of partial indemnity costs should be generally in light of the work that was done. I have come to the conclusion that the maximum quantum of a partial indemnity award in favour of Metrolinx on this motion should be in the $40,000 range.

Judicial review:

[29] I do not accept Unimac’s submission to have the costs issue reserved to the court hearing the Unimac judicial review of my decision. Rule 57.03(1) is clear that I must fix the costs of the motion, unless I am “satisfied that a different order would be more just.” Mr. Baichoo made no argument as to why, as a matter of justice, the court hearing the judicial review should determine the costs of this motion. I, therefore, do not deviate from Rule 57.03(1) and will fix the costs of this motion.

Conclusion:

[30] In light of all of these factors, particularly the result of the motion, I have decided to award Metrolinx $25,000 (inclusive of tax) in partial indemnity costs for this motion, to be paid by Unimac in 30 days. This amount roughly corresponds with 65% of what I have found to the reasonable maximum quantum of partial indemnity costs for this motion, as noted above.

Date: July 6, 2015 __________________________

MASTER C. WIEBE