SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: 10-48168
DATE: 20150807
RE: Campbell Pools Inc., Plaintiff
AND
The Seville Group Inc., Defendant
BEFORE: Mr. Justice Robert N. Beaudoin
COUNSEL:
Eric Williams, for the Plaintiff
Kevin Johnson, for the Defendant
HEARD: By Written Submissions
costs ENDORSEMENT
[1] The Plaintiff, Campbell Pools Inc., (“Campbell”) was entirely successful in the trial of this action and now seeks its costs. Campbell claims costs on a substantial indemnity basis for the entire action and, in the alternative, costs on a partial indemnity basis up to the date of its Rule 49 Offer to Settle (August 29, 2014), and on a substantial indemnity basis thereafter.
[2] Campbell cites the factors set out in rule 57.01(1). As for the importance of the issues, the Plaintiff, acting on the belief that it had purchased the property, had expended over $600,000 in improvements in addition to the $440,000 in insurance proceeds that it had signed over to the Defendant for the purchase. The action contained questions of law that are not routinely litigated: statute of frauds, part performance, specific performance, and proprietary estoppel.
[3] The Plaintiff relies on the Defendant’s (“Seville”) pre-litigation conduct and cites Davies v. Clarington (Municipality) 2009 ONCA 722, (2009), 100 O.R. (3d) 66, where the Court of Appeal held that elevated costs can be awarded on a clear finding of reprehensible conduct.
[4] Campbell relies on my finding that Seville’s conduct was a “flagrant and deliberate infliction of risk of loss” on the Plaintiff. This conduct included Seville’s decision to confirm they had no obligation to rebuild before depositing the cheque and then repudiating the agreement only after cashing the cheque. This was at a time when Campbell was not represented by counsel and was cooperating with Seville’s requirements to complete the deal. The Plaintiff further relies on my finding that its claim of proprietary estoppel would have been successful because Seville had tried to take “unconscionable advantage” of Campbell.
[5] The Plaintiff adds that the Defendant’s conduct during litigation is also worthy of sanction. At a pre-trial which took place on August 28, 2013, this matter was set down for trial during the week of September 8, 2014. In March 2014, Seville brought a motion in relation to alleged deficiencies in answers to undertakings. Seville also sought to remove the certificate of pending litigation that had been placed on the property since 2010 and to have Campbell pay $300,000 into court in advance of the trial. These latter two issues were the only issues identified in its Factum.
[6] Campbell argues that Seville was trying to hamper its ability to proceed to trial while also making the lands in question vulnerable to disposition to an innocent third party. A second motion date (July 3, 2014) was necessary since not enough time had been allocated for the motion which had dealt primarily with the answers to undertakings.
[7] Seville agreed to withdraw the remaining portions of the motion and have the issue of costs of the motion determined in the cause. Campbell now seeks its cost for that motion.
[8] Campbell points out that the Defendant failed to admit that its agent, Duciaume, had actual or apparent authority to enter into the contract. The Plaintiff stresses that the only evidence of Duciaume’s lack of authority came from Mr. Valle at trial who was found to be an unreliable and evasive witness. The Defendant also failed to call a witness who would have been in a position to give evidence on the issue of Duciaume’s authority.
[9] Seville also failed to consent to the admission of appraisals of property that had been completed by Mr. Maloney. Both of these had been commissioned well in advance of the litigation and were provided to Seville before Campbell had counsel. The appraisals were included in both parties’ affidavits of documents. The appraisals were the subject of questions on Examination for Discovery of Tom Campbell. Upon hearing that the Defendant may be objecting to the admission of the appraisals, Campbell served a Notice of Expert Witness on August 22, 2014. Campbell advised that it would be seeking additional costs in the event that Seville would not consent to the admission of the documents into evidence.
[10] Seville ultimately required Mr. Maloney to testify, but called no other contrary evidence with respect to the value of the property. Campbell says at that Seville’s refusal to admit the appraisals into evidence was unreasonable and had a prolonging effect on the matter and on the trial.
[11] As noted, the trial of this matter was scheduled to proceed the week of September 8, 2014. On July 17, 2014, Campbell served a Notice of Motion to amend its pleadings to include a claim of proprietary estoppel. Campbell took the position that no new material facts were pleaded in order for this claim to be established and sought Seville’s consent. The motion was returnable for the commencement of trial on September 8, 2014.
[12] Seville then sought to further examine Tom Campbell on his answers to undertakings. Campbell invited Seville to examine Tom Campbell on the proposed amendments in addition to any questions arising out of the further answers to undertakings. Those examinations proceeded on August 13, 2014 and Seville did not ask any questions in respect to the proposed amendments despite Campbell’s encouragement to do so.
[13] In advance of the trial, Campbell served Seville with its notices under the Evidence Act, and its liability, insurance and compensation briefs. Campbell was prepared to proceed.
[14] There were communications between the parties and the trial coordinator between August 19 and September 5, 2014. It became apparent that Seville was going to seek an adjournment of the trial. Campbell resisted any such attempts. By this time, Seville had not served or filed any material in response to Campbell’s motion to amend the pleadings. On September 8, 2014, the parties appeared before Justice Minnema.
[15] Seville did not provide any affidavit evidence in support of its motion to seek an adjournment. Mr. Valle was not in attendance. Seville’s position before Justice Minnema was that the amendments could be allowed, but it would need time to amend its Statement of Defence and Counterclaim and to examine Tom Campbell on the evidence in support of this new pleading. Justice Minnema granted the adjournment and ordered costs of the motion and the adjournment in the cause.
Rule 49 Offer
[16] On August 29, 2014, Campbell served a Rule 49 Offer to Settle. This was seven clear days before the commencement of the trial and it was left open until the commencement of trial. As the trial did not commence on September 8, 2014, the offer to settle remained open for acceptance by Seville until the commencement of the trial on January 12, 2015.
[17] The offer included the following terms:
The Seville Group would convey the lands in an attached sketch;
Campbell Pools will pay for the costs associated with the severance;
Campbell Pools will pay any municipal property taxes that the Seville Group paid on the property from November 2008 onward; and
The Seville Group’s counterclaim is dismissed.
[18] Campbell maintains this is precisely the relief granted by me after trial. Campbell seeks the following breakdown of costs:
[19] Substantial indemnity costs for the entire action in the amount of $124,163.40; disbursements in the amount of $11,222.76 and appropriate taxes on fees and disbursements. In the alternative, Campbell seeks fees in the amount of $26,391.80 on a partial indemnity basis to the offer of settlement and substantial indemnity thereafter in the amount of $84,611.60 for a total of $109,003.40[^1], plus its disbursements and appropriate taxes.
[20] The Defendant maintains that its conduct does not reach the level of reprehensible conduct that was found to be of concern in the case of Davies. Seville argues that my findings of “a flagrant and deliberate infliction of risk and loss” and “unconscionable advantage” have to be placed in context. These findings were made in order to support an award of specific performance or of proprietary estoppel.
[21] As for the March 13, 2014 motion, the Defendant says it was necessary to gain the Plaintiff’s compliance with undertakings. Seville submits it was successful in obtaining an order on almost all of the undertakings and refusals pursued. Seville did not proceed with the balance of the motion since Justice Ray, who heard the original motion, was not available on the new date of July 3, 2014. Seville says the motion was withdrawn by mutual agreement of counsel due the upcoming trial.
[22] Seville adds that there is nothing unusual about not addressing arguments relating to undertakings and refusals in a factum as these are generally not required on such motion. Seville claims that the costs of the first motion before Justice Ray should be assessed to its credit on a partial indemnity basis in the amount of $5000 as a set off against any costs the Plaintiff may have incurred in regard to the initial preparations for the withdrawn portion of the motion.
[23] Seville maintains that its refusal to admit that Maurice Duciaume had actual or apparent authority to enter the contract for the sale of property was reasonable and that the finding at trial was largely based on the application of the indoor management role. Seville says the evidence in determining this issue went hand-in-hand with the overall issue as to whether there was an agreement and that no additional time or effort was spent to distinctly deal with the question of Duciaume’s authority. As for the appraisal reports, the Defendant asserts that it was reasonable to require the court to determine the admissibility of the reports and to have the evidence of Mr. Maloney properly considered.
[24] As for the adjournment of the trial date, Seville maintains that the amendments to the pleading brought a significant change to the Statement of Claim and that its position was vindicated since Justice Minnema granted the request. Seville blames the Plaintiff for waiting until the eve of trial to seek an amendment. The Defendant argues that no costs should be awarded with regard to the motion, the amendment of pleadings and the resulting discovery. Furthermore, the Defendant claims that there is no evidence that any further costs were actually incurred by the Plaintiff.
[25] As for the Offer to Settle, the Defendant notes that the offer required the conveyance of a 5 acre parcel of land and that this Offer to Settle was not capable of being performed based on the evidence of Mr. Barrette that the 6 acre parcel was the smallest possible severance. Since the offer was not capable of being performed, the Defendant claims it was reasonable and not accepting it and that this is not simply a matter of the Plaintiff offering to accept less property than it was found to be entitled to.
[26] Finally, the Defendant maintains that the Bill of Costs lacks sufficient particulars to address the reasonableness of the Costs Submissions. Seville adds that the disbursements are not properly receipted.
[27] Seville appears to concede that issues were important but disputes the complexity of the legal issues involved. The Defendant asks that I credit it for the costs incurred on the March 13, 2014 motion and that there be no order as to costs for the adjournment of the trial. The Defendant submits that a fair and reasonable costs award would be in amount of $70,000 inclusive of disbursements and HST, on a partial indemnity basis. In the event that I determine that increased costs are warranted, Seville submits that the fair reasonable amount should be $85,000 inclusive of disbursements and HST.
Analysis and Conclusion
[28] The Plaintiff was entirely successful at trial. There was a valid Rule 49 Offer that was not accepted by the Defendant. Campbell obtained a better result at trial. The consequences of rule 49.10(1)(c) should follow. Whether or not a 5 acre parcel was ultimately severable is irrelevant as that was not the reason for Seville’s refusal. I am satisfied on the evidence that the Defendant was not prepared to accept that its agent had concluded a valid agreement of purchase and sale. The Defendant simply wanted more money and attempted to resile from a contract entered into by its agent.
[29] As for the motion before Justice Ray, I agree that the Defendant appeared to be successful on the issue of refusals and undertakings, but Seville put the Plaintiff to the cost of responding to a significant motion to vacate the Certificate of Pending Litigation and the payment of money into court.
[30] As for adjournment of the trial, the amendment of the claim for proprietary estoppel was based on the same facts as pleaded. I relied on the evidence in support of the claim for specific performance to support an award of proprietary estoppel. Further discoveries in my view were unnecessary; moreover Seville could have examined Mr. Campbell earlier in advance of the first trial date. The Plaintiff is entitled to costs of the appearance before Justice Minnema and for any time spent on further discoveries.
[31] Mr. Duciaume’s apparent authority was never in doubt and Seville had no basis for refusing to admit it. As for Mr. Maloney’s appraisals, the Defendant relied on his failure to produce an acknowledgement of expert pursuant to Rule 43 in a vain attempt to have these reports excluded. While there was an issue with respect to the comparables used by Mr. Maloney in his report, I noticed that the Defendant offered no contradictory evidence with respect to the value of the property. Mr. Duciaume’s own estimates supported the opinion offered by Mr. Maloney. This evidence could have been admitted at trial and Mr. Johnson could have made the same arguments without the need to cross-examine of Mr. Maloney. Seville maintained its defence of this action on a complete misreading of the insurance adjuster’s reports. It confused the method the insurer used to record the payments made with an evaluation of the property and barn. Seville ignored Duciaume’s efforts to explain the deal he had made.
[32] As for the Bill of Costs, the Defendant complains that the Plaintiff’s Bill of Costs is too without offering any insight as to its own costs. I have examined the Bill of Costs, and I find that the time spent and the hourly rates claimed are reasonable. I allow some credit to the Defendant for its appearance on the motion on March 13, 2014, but nothing else. I will allow some minor adjustments with regard to some duplication of effort.
[33] The issues in this litigation were of great importance to the Plaintiff and the success of its business. This was not a simple contract case. As noted above, the Defendant’s pre and post litigation conduct was far from commendable, but the Rule 49 offer is a significant factor in this case. For these reasons reason, I assess the Plaintiff’s costs in the amount of $125,000.00 inclusive of disbursements and applicable taxes.
Mr. Justice Robert N. Beaudoin
Date: August 7, 2015
COURT FILE NO.: 10-48168
DATE: 20150807
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Campbell Pools Inc., Plaintiff
AND
The Seville Group Inc., Defendant
BEFORE: Mr. Justice Robert N. Beaudoin
COUNSEL:
Eric Williams, for the Plaintiff
Kevin Johnson, for the Defendant
costs ENDORSEMENT
Beaudoin J.
Released: August 7, 2015
[^1]: There appears to be a mathematical error at para 54a. of the Plaintiff’s Costs submissions in that it appears that partial indemnity numbers have been used in the totals calculated.