SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: CV-05-011883-00
DATE: 2015 08 13
RE: Febau (Canada) Limited -and- The Corporation of the City
Mississauga and McCormick Rankin Corporation – Third Party
BEFORE: BLOOM J.
COUNSEL:
David E. Mende and Nedko Petkov, for the Plaintiff
David G. Boghosian, for the Defendant
Peter J. Mitchell, for the Third Party
COSTS ENDORSEMENT
[1] These are my reasons on the matter of costs arising from the judgment I delivered on June 8, 2015 in which I dismissed the main action and third party claim in this matter. I have carefully reviewed the written costs submissions of the parties including the Reply of the Defendant and the Supplementary and Reply Costs Submissions of the Plaintiff.
[2] My function was to fix costs. In that regard I reviewed on a principled basis the costs claimed. I did not examine in a detailed way the dockets of counsel or the disbursements claimed. I have, however, had regard to the reasonableness of the claims.
[3] In performing my analysis I have addressed the following issues which were specifically raised by the parties:
the adequacy of documentary production by the Defendant;
the calling by the Defendant of Frank Spagnolo and James Doran as witnesses at trial;
the responsibility for the costs of the Third Party Proceeding;
the appropriate calculation of partial indemnity costs; I have also considered the factors set out by Rule 57.01(1).
The Adequacy of Documentary Production by the Defendant
[4] The Plaintiff calls for a reduction of 25% of any partial indemnity award of costs to the Defendant flowing from the non-production of three documents related to the construction of the lower portion of the composite retaining wall subject of the proceeding, and from related refusal to admit documentation. Additionally, the Plaintiff calls for disallowance of $ 3,785.50 inclusive of HST for 10 hours of counsel’s time in respect of dealing with evidentiary issues related to these documents.
[5] The documents in question were of peripheral importance because they did not relate to the failure of the composite wall, the key factual question at trial. The failure of the wall resulted from the presence of the upper wall on the lower wall; the documents in question related to the construction of the lower wall.
[6] Moreover, the Defendant’s conduct relative to the non-production of the documents was neither intentional nor reckless. In my view fairness dictates only that a portion of the $ 3,785.50 sum be deducted from the Defendant’s claim; I fix that reduction at one third, being $1261.80.
The Calling of Frank Spagnolo and James Doran
[7] The Plaintiff alleges that a reduction in the Defendant’s costs is in order as a result of the Defendant’s calling what the Plaintiff characterizes as the essentially irrelevant evidence of Frank Spagnolo and James Doran.
[8] Spagnolo’s evidence was directed at rebutting inferences of the Defendant’s regulation of the building of the upper wall. These inferences were at the heart of the Plaintiff’s attempt to establish a duty of care on the part of the Defendant, a central element of the Plaintiff’s case. Spagnolo’s evidence was, therefore, quite appropriate.
[9] Doran’s evidence was very short and was a logical consequence of the documentary discovery problems referred to above. I allow a reduction of $400.00 inclusive of HST in the interests of fairness consistent with the similar reduction I outlined above.
The Costs of the Third Party Proceeding
[10] The issue regarding the costs of the third party is whether the Plaintiff or Defendant should be liable for them. The applicable legal test is a proposition cited with approval by all parties in their costs submissions. “Where the third party proceedings follow naturally and inevitably upon the institution of plaintiff’s action, in the sense that the defendant had no real alternative but to join the third party”, fairness requires that an unsuccessful plaintiff bear a successful third party’s costs (Guarantee Co. of North America v. Resource Funding Ltd. 2009 Carswell Ont 4583; S.C.J.-Commercial List cited by the Plaintiff).
[11] In my view the application of that test in the case at bar requires that the Plaintiff bear the costs of the Third Party. In his opening statement counsel for the Plaintiff explicitly alleged that a reasonable standard of care was not met by both the Defendant and Third Party in 2000 when the structural instability of the composite wall was not identified. The inspection of the composite wall to which reference was being made was the subject of evidence at trial; it was an inspection by the Third Party carried out in fulfilling a contract with the Defendant.
[12] In paragraph 19A of the Amended Statement of Claim the Plaintiff alleged “At all times the defendant was responsible and accepted responsibility for inspections, maintenance and repairs to the retaining wall.” In paragraph 4 of its Reply and Defence to Counterclaim the Plaintiff asserted, “The plaintiff states that any negligence of McCormick Rankin Corporation (“MRC”) is the responsibility of the defendant, for whom MRC acted at all times in this matter.” The Plaintiff’s opening put in issue what was the appropriate standard of care of the Third Party on the inspection, and alleged that, had the inspection been carried out in a proper manner, the structural instability of the composite wall would have been discovered.
[13] The Defendant “had no real alternative but to join the third party.” Fairness, therefore, requires that the Plaintiff bear the Third Party’s Costs.
The Calculation of Partial Indemnity Costs
[14] The fees claimed by both the Defendant and Third Party are on a partial indemnity basis. Assuming an appropriate billing rate, partial indemnity costs would as a “rule of thumb” be 60% of those fees. However, I have a discretion as regards that percentage. I “must consider all of the circumstances, including the guiding principles set out in Rule 57.01(1), in order to arrive at an amount that is fair and reasonable for the successful party to recover and for the unsuccessful party to pay.” (Orkin, The Law of Costs, 2d ed. 2015, at pp 2-42 to 2-46 cited by the Plaintiff).
[15] The Plaintiff calls for the use of a 60% factor on any costs awarded to other parties on a partial indemnity basis. I do find that the Plaintiff must pay the costs of the Defendant on a partial indemnity basis, having regard especially to the result but also to all of the circumstances. Bearing in mind Rule 57.01(1) and all of the circumstances, particularly the large amount and complexity of expert engineering evidence called, I will apply a factor of 65% to the actual fees to calculate the quantum of the partial indemnity costs awarded to both the Defendant and Third Party as against the Plaintiff.
Costs Calculation and Conclusion
[16] The Defendant’s costs to be borne by the Plaintiff are calculated as follows:
Total Fees $274,041.00
Fees at Partial Indemnity Scale (65%) $178,126.65
Plus HST on Fees $23,156.46
Reduced by Partial indemnity Fees of 65% on
$1261.80 which includes HST $820.17
Reduced by Partial Indemnity Fees of 65% on $400.00
which includes HST $260.00
Disbursements inclusive of HST $41,482.02
Total Costs Awarded to Defendant $241,684.96
[17] The Third Party’s Costs to be borne by the Plaintiff are calculated as follows:
Total Fees $150,593.00
Fees at Partial Indemnity Scale (65%) $97,885.45
HST on Fees $12,725.11
Disbursements Claimed inclusive of HST $20,206.20
Total Costs Awarded to Third Party $130,816.76
[18] I would be remiss if I did not thank all counsel for their vigorous efforts on behalf of their clients and their courtesy to the Court throughout this long matter.
BLOOM J.
DATE: August 13, 2015
COURT FILE NO.: CV-05-011883-00
DATE: 2015 08 13
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Febau (Canada) Limited -and- The Corporation of the City
Mississauga and McCormick Rankin Corporation –Third Party
COUNSEL: David E. Mende and Nedko Petkov, for the Plaintiff
David G. Boghosian, for the Defendant
Peter J. Mitchell, for the Third Party
COSTS ENDORSEMENT
BLOOM J.
DATE: August 13, 2015