SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: 07-CV-336979PD1
DATE: 20151006
RE: Arpy-Ara Company Limited, Plaintiff
AND:
A. R. Manufacturers & Distributors Limited, Danuta Radomski, Defendants
BEFORE: Carole J. Brown, J.
COUNSEL:
Morris Manning, Q. C. and Frederick J. Shuh, for the Plaintiff
Leo Klug, newly appointed counsel for the Plaintiff
Theodore B. Rotenberg and David M. Golden, for the Defendants
COSTS ENDORSEMENT
Counterclaim
[1] The defendant, ARM, seeks a declaration pursuant to its counterclaim as regards its right- of-way over the East-West laneway indicating that my reasons for decision did not address these issues.
[2] I have reviewed my reasons for decision as well as the written submissions of the parties as regards the counterclaim. Based on my review, the defendant did not abandon its counterclaim.
[3] As regards the declarations sought by ARM, I am of the view, given my reasons for decision, that no additional declaration is necessary. However, for greater certainty, the defendant's rights as regards the East-West laneway are as set forth in the Quitclaim Deed deposited by the condominium in the Land Registry Office in favour of ARM.
[4] I make no order regarding an award of punitive or exemplary damages.
Costs
[5] Both defendants were successful in defending the claims brought by the plaintiff against them. In general, costs are intended to compensate the successful party or parties to the litigation for some of the legal expenses incurred.
Costs of David Golden
[6] Mr. Golden, acting for Ms. Radomski in her capacity as lawyer, sought his costs on a substantial indemnity basis. His actual costs were $231,753. The parties agreed that I should order payment of his costs in the reduced amount of $190,000 all inclusive, which I so order.
[7] I note that Mr. Golden's actual costs are fixed by Law Pro at $350 per hour. Given Law Pro's rate of payment of lawyers, such fees are generally awarded in court at the rate fixed by Law Pro. In this case, the amount agreed upon by Mr. Golden and the plaintiff amount to 82% of Mr. Golden's actual costs.
Costs of Theodore Rotenberg
[8] Mr. Rotenberg, acting for ARM and for Ms. Radomski in her capacity as principal of ARM, seeks his costs on a substantial indemnity basis for the entire action in the amount of $437,426.55 (comprising fees of $329,868.75 plus disbursements and HST/GST), on a substantial indemnity basis after the date of an offer to settle of April 16, 2014 in the amount of $365,883.67 (comprising fees of $263,312.50 plus disbursements and HST/GST) or alternatively, costs on a partial indemnity basis in the amount of $315,035.49 (comprising $219,912.50 in fees plus disbursements and HST/GST).
[9] Mr. Rotenberg submits that his fees are reasonable. He submits that the issues related to ARM and Ms. Radomski as its principal are numerous and complex with a number of witnesses and experts, which justifies the costs he seeks. He contrasts his fees with those of Mr. Golden. He indicated that the defence mounted by Mr. Golden was limited in scope as regards the issues related to professional negligence and breach of fiduciary duty, while ARM was required to mount a defence regarding many more issues as related to the corporate defendant and to Ms. Radomski in her capacity as an officer of ARM, which necessitated numerous witnesses and experts.
[10] It is the position of the plaintiff that the fees sought by Mr. Rotenberg are not reasonable as regards the amount of time spent, the amount claimed and the total amount to be paid by the plaintiff. It argues that the parties have agreed upon payment of Mr. Golden's fees in the amount of $190,000 and that reasonable fees for Mr. Rotenberg should be $220,000. It argues that, in exercising this Court's discretion to award costs, the Court must consider the reasonableness of the totality of the costs, including the combined costs of both Mr. Golden and Mr. Rotenberg.
[11] As regards expert fees, the corporate defendant seeks payment of professional fees for Messrs. Karr, Vernon and Weigenbroker, who were all paid their usual hourly rates for preparation and appearance at trial to testify. These professional fees amount to $9,270.52, $6,056.80 and $5,781.16, respectively. It also seeks the costs of Mr. Woolley ($14,895.76) for a report that he prepared and for his time for preparation to testify. While he was prepared to testify, the plaintiff objected to his testifying on the issues. I permitted Mr. Weigenbroker to testify instead and to refer to parts of Mr. Woolley's report, which was entered in evidence as Exhibit 11. Mr. Rotenberg indicates that there was no objection taken by the plaintiff to the full amount paid to Mr. Johnston, the ARM planning expert.
[12] It is the position of the plaintiff that none of these witnesses were "experts" within the meaning of rule 53 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), and therefore, their professional fees should not be included in the disbursements.
[13] Mr. Rotenberg on behalf of the corporate defendant submits that while these witnesses were not independent experts within the meaning of rule 53, they were "participating experts" whose expert evidence is admissible because they were involved in the very events: Westerhof v. Gee Estate, 2015 ONCA 206, 124 O.R. (3d) 721, leave to appeal to S.C.C. filed, [2015] S.C.C.A. No. 198. He submits that while rule 53.03 witnesses are "a specific class" of experts, the tariff only refers to "experts," and it is therefore proper to pay "a reasonable amount" for the testimony of "the participating experts" as well as for Woolley, who prepared a written report.
[14] In Westerhof v. Gee Estate, the Court of Appeal drew a distinction between "litigation experts," i.e. those who fall within the provisions of rule 4.1.01 and Form 53 of the Rules, and "participating experts." As defined by the Court of Appeal, litigation experts are those who are "engaged by a party to provide [opinion] evidence in relation to a proceeding" and "for the purpose of the proceeding." "Participating experts" include all witnesses with special expertise. However, they are not engaged by a party to form their opinions for purposes of litigation, but rather are those who were themselves involved in a matter. Accordingly, they do not form their opinions for purposes of the litigation, but testify to opinions that they have formed during their involvement. A treating physician, for example, would be considered a participating expert.
[15] As regards the issues raised concerning the costs incurred in paying the professional fees of "participating experts," the case of Hanis v. University of Western Ontario, 2006 23155 (ON SC), [2006] O.J. No. 2763, 53 C.C.E.L. (3d) 86 (Ont. S.C.) is instructive. In that case, the University of Western Ontario submitted that it was required to call, as a witness, legal counsel who appeared for the University in the trial of the main action in the proceedings. As a result, the University incurred additional counsel fees. It submitted that the nature of the case involved a counsel witness giving opinion evidence and argued that he did not testify simply as a lay witness, but as a lawyer with "unique and specific insight into a complex case." In his decision, Power J. accepted the submissions of the University that the amount of fees attributable to the counsel's time should be
wholly recoverable because his evidence was essential to UWO's claim for damages and to the proper determination of the allocation issue by the court, and therefore, UWO should not be penalized by having offered his assistance to the court or, in the alternative, as expert fees (at para. 37).
[16] I am satisfied that the witnesses in question here were all professionals and were all necessary to the case. Further, they were of assistance to the court. Given the foregoing, I am prepared to permit a reasonable amount for the testimony of these professional witnesses as follows: Mr. Weigenbroker, $5,781.16; Mr. Vernon, $6,056.80; Mr. Karr, $9,270.52 and for Mr. Woolley, $12,500.
[17] Mr. Rotenberg submits that the claims included allegations of fraud and the creation of false documentation against Ms. Radomski as lawyer for and as directing mind of ARM and that allegations of dishonest conduct such as these, which are defamatory and unproven, will attract substantial indemnity costs. In this regard, he relies on DiBattista v. Wawanesa Mutual Insurance Co., 2005 41985 (ON SC), 78 O.R. (3d) 445, [2005] O.J. No. 4865 (Ont. S.C.) at paras. 3-5 and Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303 at paras. 24-26. The plaintiff further argues that substantial indemnity costs are not appropriate as there was no reprehensible, scandalous or outrageous conduct on the part of the plaintiff that would merit such an award.
[18] While Mr. Rotenberg seeks costs on a substantial indemnity basis, costs on this basis are generally awarded when there has been high-handed and contumelious behaviour on the part of the unsuccessful party. In this case, I have not found behaviour on the part of the plaintiff that may justify costs on a substantial indemnity basis.
[19] In awarding costs, which are in the discretion of the trial judge, the factors set forth at rule 57.01 may be considered.
[20] In Boucher v. Public Accountants Counsel (Ontario), 2004 14579 (ON CA), 71 O.R. (3d) 291, [2004] O.J. No. 2634, the Court of Appeal held that costs in an action are to be fair and reasonable and within the expectations of the parties. Proportionality is the governing principle in fixing costs: Trafalgar Industries of Canada Ltd. v. Pharmax Ltd., 2003 40313 (ON SC), 64 O.R. (3d) 288, [2003] O.J. No. 1602 (Ont. S.C.). However, the principle of proportionality should not normally result in reduced costs where the unsuccessful party has forced a long and expensive trial: Cimmaster v. Piccione, 2010 ONSC 846, [2010] O.J. No. 456.
[21] The amounts claimed were considerable. As against the defendant, the plaintiff claimed $2 million for breach of contract and $2 million for the tort of spoliation. As against ARM, it claimed $300,000 for unjust enrichment, $2 million for diminution in value of the plaintiff's lands and $200,000 for trespass, slander of title, and damages to the plaintiff’s real and personal property. The plaintiff did not succeed in its claims. The counsel were experienced, and it should have been well known to them that one of the risks involved in pursuing an action is an award of costs. In this case, the trial was three weeks in length with significant issues involved. I do not find the legal fees of the corporate defendant to be unreasonable in all of the circumstances.
[22] The issues were complex and the documentation was voluminous. Further, the issues were of significant importance given that the allegations as against the defendants included fraud and deception which may have resulted in loss of reputation, loss of essential easements to the ARM property and significant punitive damages had the defendants not been successful. There were also numerous motions during the course of trial which substantially lengthened the trial.
[23] Mr. Rotenberg, on behalf of his clients, served an Offer to Settle on April 16, 2014. He seeks costs on a substantial indemnity basis after the date of the Offer to Settle. The Offer provided that ARM offered to settle the action and counterclaim on the following terms:
The plaintiff consents to judgment on the counterclaim declaring that ARM has good and valid rights-of-way over Parts 2, 3, 4, 5, 6, and 7, Plan 64R-16774 (corresponding to Parts 1, 2, 3, 4, 5, and 6 on Plan 64R-16499), as set out in Instrument Number CA712147, registered on February 14, 2001;
The plaintiff consents to an order dismissing the action without costs and allowing the counterclaim as stated in paragraph 1 without costs, if this Offer to Settle is accepted in writing by 5:00 PM on April 16, 2014 and with cost payable to ARM by the plaintiff on a partial indemnity basis from April 1, 2014 to and including the date of acceptance if this Offer to Settle is accepted after 5:00 PM on April 16, 2014.
[24] I am satisfied that the provisions of rule 49 of the Rules have been met and that the decision at trial in favour of the defendant was as favourable as or more favourable than the Offer to Settle. Accordingly, the corporate defendant is entitled to its substantial indemnity costs after April 16, 2014.
[25] Taking into account the amount agreed upon for the costs of Mr. Golden, the issues involved in the defence of Ms. Radomski in her personal capacity versus those involved in the defence of the corporate defendant, the witnesses involved in each of those respective defences and reducing the costs sought by Mr. Rotenberg by those costs of Mr. Woolley, I award costs of $263,312.50 (partial indemnity to the date of the offer to settle and substantial indemnity thereafter) plus disbursements, including the amounts payable regarding the professional witnesses as indicated above, plus HST/GST.
[26] I have considered the parties’ submissions regarding the costs sought. I am satisfied that Mr. Rotenberg's costs in relation to Mr. Golden's are reasonable given the complexity of the issues involved regarding the corporate defendant relative to those involved regarding the defendant in her personal capacity. I have further taken into consideration the overall number of issues raised by the plaintiff in its claims against the defendants, the complexity of those issues, the importance of those issues to the defendants, the number of witnesses called by the corporate defendant and the amount of time required to complete the trial. I am of the view that the totality of the costs awarded is reasonable in all of the circumstances.
Carole J. Brown, J.
Date: October 6, 2015