ONTARIO
SUPERIOR COURT OF JUSTICE
CONSOLIDATED COURT FILE NO.: CV-14-236
DATE: 20150728
BETWEEN:
Northridge Homes Ltd.
Eric Gionet, for the Plaintiff
Plaintiff
- and -
The Travellers Motel (Owen Sound) Limited, Chandra Grewal, Pirithi Grewal and First Source Mortgage Corporation
Defendants
Allen Wilford, for the Defendants The Travellers Motel (Owen Sound) Limited, Chandra Grewal and Pirithi Grewal.
Jeff Larry for the Defendant First Source Mortgage Corporation (not participating on the issue of costs).
- and –
Harold Sutherland Construction Ltd.
Douglas Grace, for the Plaintiff
Plaintiff
- and -
The Travellers Motel (Owen Sound) Limited, Chandra Grewal, Pirithi Grewal and First Source Mortgage Corporation
Defendants
Allen Wilford, for the Defendants The Travellers Motel (Owen Sound) Limited, Chandra Grewal and Pirithi Grewal.
Jeff Larry for the Defendant First Source Mortgage Corporation (not participating on the issue of costs).
- and –
CAAJ Construction Inc., 2156559 Ontario Inc., Preet Plumbing & Heating Ltd., A & M Heating & Air Conditioning Ltd., New Starline Painting Ltd. and
Marble and Granite Stonecraft Ltd.
Harjaap Mann, for the Plaintiffs
Plaintiffs
- and -
The Travellers Motel (Owen Sound) Limited, Chandra Grewal, Pirithi Grewal and Northridge Homes Ltd.
Defendants
Allen Wilford, for the Defendants The Travellers Motel (Owen Sound) Limited, Chandra Grewal and Pirithi Grewal.
Eric Gionet, for the Defendant Northridge Homes Ltd.
REASONS FOR DECISION ON COSTS
Conlan J.
I. Introduction
[1] In Reasons for Decision reported at 2015 ONSC 3743, I dismissed the Motion brought by The Travellers Motel (Owen Sound) Limited (“Motel”) and Pirithi Grewal and Chandra Grewal (the “Grewals”).
[2] To understand the background, I reproduce here paragraphs 1 through 6 of my Reasons for Decision on the Motion.
On August 7, 2013, an Owner/Contractor Agreement (“Contract”) was executed by Mr. Dave Rai for Northridge Homes Ltd. (“Northridge”), as the contractor, and Traveller’s Motel Owen Sound (“Motel”), Mr. Pirithi Grewal and Ms. Chandra Grewal (collectively the “Grewals”), as owners.
The Contract was for the construction of a new building on the Motel property located on 9th Avenue East in Owen Sound. The Contract amount was $900,000.00 plus taxes, with some stipulations and a limited scope of work. The commencement date was August 26, 2013, and the completion date was six months thereafter.
From time to time, Change Orders (amendments to the Contract) were signed by the parties. And, from time to time, subcontractors were engaged for some of the work.
It is now June 2015. The construction has not been completed. The Grewals are still operating the Motel. First Source Mortgage Corporation (“First Source”) has taken steps to enforce an alleged default on its mortgage. Very recently, a Notice of Sale was issued. Northridge, the subcontractors and Harold Sutherland Construction Ltd. (“Sutherland”) have advanced lien claims against the property and have issued Statements of Claim under the Construction Lien Act, R.S.O. 1990, chapter C.30, as amended (“CLA”). The Court actions were commenced in September and October 2014 as the result of alleged non-payment by the Motel and the Grewals.
On June 9, 2015, in Owen Sound, I heard a Motion brought by the Motel and the Grewals. That Motion was opposed by Northridge, the subcontractors (CAAJ Construction Inc., 2156559 Ontario Inc., Preet Plumbing & Heating Ltd., A&M Heating & Air Conditioning Ltd., New Starline Painting Ltd. and Marble and Granite Stonecraft Ltd.) and Sutherland. That Motion is not the primary concern of First Source – it simply wants to be paid what it is owed or at least have the mortgage brought in to good standing, failing which it intends to realize on its security.
The Motion brought by the Motel and the Grewals was for some 25 heads of relief, most principally to (i) consolidate three Court files (which relief was granted, unopposed, on an earlier date), (ii) for security for costs (which request was dismissed as abandoned at the commencement of the Court hearing on June 9, 2015), and (iii) to strike/discharge/vacate all of the liens registered by the other parties (which relief is the subject of these Reasons).
[3] The parties have been unable to agree on costs. Written submissions were filed by (i) Northridge Homes Ltd. (“Northridge”), (ii) the subcontractors (CAAJ Construction Inc., 2156559 Ontario Inc., Preet Plumbing & Heating Ltd., A&M Heating & Air Conditioning Ltd., New Starline Painting Ltd., and Marble and Granite Stonecraft Ltd.), (iii) Harold Sutherland Construction Ltd. (“Sutherland”), and (iv) the Motel and the Grewals.
II. THE POSITIONS OF THE PARTIES
Northridge
[4] Northridge requests an Order that the Motel and the Grewals pay, within thirty days, costs on a substantial indemnity basis in the total amount of $33,761.70 ($27,778.05 for fees).
[5] There are two main reasons for Northridge’s claim for costs: (i) the Motel and the Grewals were unsuccessful in what was essentially a summary judgment motion, and (ii) “the Defendants made serious, prejudicial and damaging allegations against Northridge Homes, and against Mr. Rai personally, which were not proven on the motion and which warrant an award of costs at the higher scale”.
[6] In addition to its written submissions on costs, Northridge filed a copy of an Account from its counsel dated June 18, 2015, showing total fees of just under $31,000.00, and some jurisprudence.
The Subcontractors
[7] The subcontractors request an Order that the Motel and the Grewals pay costs on a substantial indemnity basis in the total amount of $22,036.53 ($21,348.60 for fees).
[8] The subcontractors rely upon the submissions made by Northridge (except as they pertain to Mr. Rai personally). A Bill of Costs was filed.
Sutherland
[9] In the most succinct and the most reasonable of the costs submissions filed by any party, Sutherland requests an Order that the Motel and the Grewals pay costs on a full recovery basis in the total amount of $7,119.00 (all for fees). A Bill of Costs was filed.
[10] Sutherland makes three points. First, it was a “massive Motion”. I agree. Second, on the items that were opposed at the time of argument, the moving parties were entirely unsuccessful. I agree. Third, costs ought to follow accordingly. I agree.
The Motel and the Grewals
[11] The moving parties filed some helpful case law and lengthy written submissions.
[12] The moving parties submit that no costs ought to be awarded in favour of Northridge or the subcontractors. Alternatively, the costs awards in favour of those parties ought to be substantially less than what is being sought and ordered payable in the cause “to further the courts’ stated position of ensuring the motel stays in business to benefit all”.
[13] As for Sutherland, the moving parties do not dispute that Sutherland is entitled to costs, and the quantum sought is not complained about. The suggestion, however, is that Northridge pay the costs to Sutherland.
[14] There are numerous reasons put forward by the Motel and the Grewals to justify its submissions. First, the moving parties were not entirely unsuccessful on the Motion; and further, the subcontractors were also unsuccessful. Second, the allegations of fraud and dishonesty against Northridge and Mr. Rai are not unproven but simply undecided at this time. Third, the conduct of Northridge and the subcontractors, leading up to the Motion, ought to disentitle them to any costs. They caused delays. They were uncooperative. They were obstructive. They were unprofessional. Fourth and finally, the quantum of costs sought by Northridge and the subcontractors are excessive and unsupported.
III. ANALYSIS and CONCLUSION
The Law
[15] Costs shall be decided promptly and be made payable after each step in the case. That is the general rule that is applicable to all types of civil and family litigation.
[16] In most cases, successful litigants are awarded some costs. There is a general presumption accordingly.
[17] Although this is a construction lien action, the Court may (and should, in my view) have reference to the costs factors outlined in subrule 57.01(1) of the Rules of Civil Procedure.
[18] In terms of quantum, the overall objective of any costs award is to fix an amount that is fair and just and reasonable for the unsuccessful party to pay, rather than the successful litigant’s actual costs. Boucher et al v. Public Accountants Council for the Province of Ontario et al, 2004 14579 (ON CA).
[19] In exercising its discretion regarding costs, the Court is entitled to consider the conduct of all of the parties, even the successful one(s). Orlando Corp. v. Bothwell-Accurate Co., [2004] O.J. No. 2802 (ON CA).
[20] Bald allegations of fraud, dishonesty and/or criminality, which are serious and damaging yet unproven, will often lead to a higher quantum of costs against the party that made those allegations. Cecilio v. Turnberry Green Homes Inc., 2010 ONSC 7077.
[21] There is authority for the proposition that motions such as the one brought by the Motel and the Grewals ought to be resorted to only in the clearest of cases, and costs awards against unsuccessful moving parties should be fashioned to act as a deterrent from bringing such motions where it was unreasonable to do so. Metron Construction Inc. v. Belleville Racetrack Development Corp., 2011 ONSC 2817, at paragraph 47.
[22] In Ledcor Construction Ltd. v. Canalfa Liberty Village Homes Inc., 2009 CarswellOnt 1475 (Master Albert), the Court set out numerous factors to consider in assessing costs for a motion to strike a construction lien claim. Primarily, however, is the question as to whether it was reasonable for the moving party to have brought the motion.
The Law as Applied to this Case
[23] Apart from the consolidation of the various actions (which was ordered on consent), the Motel and the Grewals were entirely unsuccessful on the Motion. It is true that the Court confirmed that the moving parties are at liberty to pay security in order to discharge the liens, that is not a success for the Motel and the Grewals. The moving parties wanted a much lower amount of security to be ordered.
[24] Northridge, the subcontractors and Sutherland were all successful on the Motion. Their liens were not discharged. A compromised amount of security was not ordered. I disagree with the moving parties that the subcontractors were unsuccessful. Their security is subsumed within the amount devoted to Northridge.
[25] Consequently, it is presumed that the Motel and the Grewals will pay costs in favour of Northridge, the subcontractors and Sutherland.
[26] In my view, there is nothing to displace that presumption in this case. And there is no reason to order costs in the cause.
[27] I disagree with the Motel and the Grewals that the conduct of Northridge and the subcontractors ought to disentitle them to costs. If the case does not settle and it turns out after trial that those parties and/or their counsel did act in the manner alleged by the moving parties in their costs submissions, then that can be taken in to consideration in terms of costs up to and including the trial.
[28] On quantum of costs, there being no dispute about the very modest fees being sought by Sutherland, an Order will go for the full amount claimed by Sutherland. Frankly, the Motion ought to never have been brought against Sutherland. In fact, Sutherland ought to never have been forced to start a claim. The work was done. The quality of the work and the price are not issues. Sutherland deserves to be paid. And the documentation clearly shows that the deal was between Sutherland and the Motel and the Grewals, directly.
[29] I agree with Mr. Wilford that a trial is required before we know whether the allegations of fraud and impropriety against Northridge and Mr. Rai are actually the type of bald, spurious and unproven nonsense that usually attract costs on a substantial indemnity or even higher basis. Partial indemnity costs are more appropriate at this time, on this Motion, in favour of Northridge and the subcontractors. Besides, although I do believe that the Motion ought not to have been brought at all, I cannot say with the same degree of vigour as with Sutherland that it was unreasonably brought against Northridge and the subcontractors. The amounts that I am ordering below will serve as a sufficient deterrent for these moving parties and others in their positions.
[30] I disagree with Mr. Wilford that the amount sought by Northridge is excessive. I have reviewed the account. Considering the factors outlined in subrule 57.01(1), it appears reasonable to me. This was a “massive” endeavour.
[31] I agree with Mr. Wilford that the quantum sought by the subcontractors is excessive. Mr. Mann, very reasonably, has elected to allow Northridge to take the lead. He ought to be commended for not wasting the Court’s time or inundating the Court with redundant materials. But that must also be adequately reflected in the amount of costs that the subcontractors are entitled to.
Conclusion
[32] I am convinced that the below awards are fair, just and reasonable, in all of the circumstances. Further, by tempering the quantum of costs ordered in favour of Northridge and the subcontractors, I am not eviscerating any chance that the Motel will be a success.
[33] Within thirty days of August 1, 2015, the Motel and the Grewals shall pay to Sutherland costs (limited to fees) on a full recovery scale in the amount of $7,119.00, including tax.
[34] Within thirty days of August 1, 2015, the Motel and the Grewals shall pay to Northridge costs on a partial indemnity basis in the total, all-inclusive amount of $25,000.00. I recognize that amount is approximately $3500.00 less than what is indicated in Northridge’s written costs submissions. That is not a reflection on Northridge or Mr. Gionet but rather an exercise of some discretion on my part to bring the total award in favour of all parties more in line with what I think is reasonable overall.
[35] Within thirty days of August 1, 2015, the Motel and the Grewals shall pay to the subcontractors costs on a partial indemnity basis in the total, all-inclusive amount of $6,000.00. I have chosen that amount for two reasons. First, it is about one-quarter of what is being awarded to Northridge, to reflect the fact that Northridge essentially speaks for itself and the sub-trades. Second, it is less than what is being ordered in favour of Sutherland, which only makes sense because Sutherland’s award is on a full recovery scale.
[36] I thank all counsel for their helpful submissions. I will now move to decide the outstanding Motions brought by Northridge. I remain available if counsel wish to speak with me about those Motions or about the case in general.
Conlan J.
Released: July 28, 2015
COURT FILE NO.: CV-14-236
DATE: 20150728
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Northridge Homes Ltd. et al.
Plaintiffs
- and -
The Travellers Motel (Owen Sound) Limited et al.
Defendants
REASONS FOR DECISION ON COSTS
Conlan J.
Released: July 28, 2015