Court File and Parties

Court File No.: CV-12-462314 and CV-13-487549

Date: 20151030

Superior Court of Justice - Ontario

RE: Norton McMullen Consulting Inc. and Paul Simpson, Plaintiffs

– AND –

Paul Boreham, 401 Energy Ltd., MFOP Wind Power Ltd. and Last Chance Wind Power Corp., Defendants

– AND –

Attorney General of Ontario, Intervener

AND RE: Paul Boreham, 401 Energy Ltd., MFOP Wind Power Ltd. and Gateway Wind Farms Development Inc., Plaintiffs

– AND –

Norton McMullen & Co. LLP, Paul Simpson and Rob Gilroy, Defendants

BEFORE: Justice E.M. Morgan

COUNSEL:
Michael Shell and Karen Phung, for the Plaintiffs in CV-12-462314

Rocco Galati, for the Defendants in CV-12-462314 and the Plaintiffs in CV-13-487549

Padraic Ryan, for the Intervener

Lisa Munro, for the Defendants in CV-13-487549

HEARD: July 6-9, 2015, with written submissions on costs

COSTS ENDORSEMENT

[1] The Plaintiffs in Court File No. CV-12-462314 (the “NM Consulting Action”) were entirely successful in obtaining summary judgment against the Defendants in that action. As a consequence, that action is at an end; as a further consequence, the Defendants in Court File No. CV-13-487549 (the “NM Accounting Action”), who are the same or related to the Plaintiffs in the NM Consulting Action, were likewise successful in resisting the motion by the Plaintiffs in the NM Accounting Action to join it with the NM Consulting Action.

[2] The Defendants in the NM Accounting Action, although the same or closely related to the Plaintiffs in the NM Consulting Action, were sued separately and have different counsel. The two cases have some factual overlap, but raise distinct causes of action; in particular, the NM Consulting Action alleges professional malpractice and therefore doubtless triggered an insurance company selecting its own choice of counsel.

[3] In responding to the successful parties’ costs requests, counsel for the Defendants in the NM Consulting Action has complained that there is no need for his opponents to have retained two separate law firms in two separate actions. However, that dynamic was prompted by the Plaintiffs in the NM Accounting Action bringing a separate action in the first place. One cannot fault either the Defendants in the NM Accounting Action or the Plaintiffs in the NM Consulting Action for selecting the lawyer of their own and/or their insurer’s choice. Each has been successful here and each deserves its costs.

[4] The summary judgment motion in the NM Consulting Action Court was a hard fought battle. It was argued over the course of four days, which is a substantial length of time for condensed legal argument in motions court, without witness testimony (which is often more time consuming). In addition to the hearing days, the motion entailed voluminous affidavit evidence, cross-examinations, legal research, and factums. Counsel for the Plaintiffs in the NM Consulting Action has requested a large amount of costs – equivalent to an amount that might be requested following a rather lengthy civil trial.

[5] The Defendant’s consolidation motion in the NM Accounting Action was far less complicated. It was not designed to bring the litigation to a final conclusion, but rather was a procedural motion that was argued in a half day on the final hearing day, on the heels of the much larger motion in the NM Consulting Action. Counsel for the Defendants in the NM Accounting Action has requested a far more modest amount of costs, appropriate to the time and effort spent on a procedural issue such as consolidation of two actions.

[6] Plaintiffs’ counsel in the NM Consulting Action seeks a total of $674,609.03 in costs, including fees, disbursements, and HST. This is based on a partial indemnity scale from the commencement of the action in August 2012 until the service of an offer to settle on June 6, 2013. This offer proposed settling the NM Consulting Action for $1,650,000. That amount turns out to be substantially less than the judgment ultimately issued against the Defendants, which is in the total amount of $2,588,450.89. Counsel for the Plaintiffs submits that in accordance with Rule 49 of the Rules of Civil Procedure, the Plaintiffs are entitled to costs on a substantial indemnity scale for fees incurred after service of this offer on June 6, 2013.

[7] Defendants’ counsel in the NM Accounting Action seeks a total of $39,287.21 in costs, including fees, disbursements, and HST. This is based on a substantial indemnity scale. Counsel for the Defendants submits that while a consolidation motion is not ordinarily an overly complicated matter, the approach to the motion taken by the Plaintiffs was such as to force the Defendants to become involved in the far more complex NM Consulting motion. Counsel for the Defendants in the NM Accounting Action submits that this tactic engendered unnecessary costs, and is the type of approach to litigation that should attract substantial indemnity costs.

[8] The fixing of costs is a discretionary decision under section 131 of the Courts of Justice Act, RSO 1990, c C.43. That discretion is generally to be exercised in accordance with the factors listed in Rule 57. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the complexity of the proceeding (57.01(1)(c ), and the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceedings (57.01(1)(e)). The court is required to consider more generally what is “fair and reasonable” in fixing costs, and in doing so is to endeavor to balance compensation of the successful party with the prevailing policy of access to justice: Boucher v Public Accountants Council (Ontario) (2004), 71 OR (3d) 291, at paras 26, 37 (Ont CA).

[9] I agree that the cost consequences set out in Rule 49(10) should generally apply to the offer to settle that the Defendants in the NM Consulting Action failed to accept. It was made well in advance of the hearing leading to judgment, was firm and unambiguous, and was open for acceptance until after the commencement of the hearing. As indicated above, it would have put the Defendants in the NM Consulting Action in a substantially better position than the final judgment put them.

[10] That said, the amount sought by the Plaintiffs in NM Consulting Action can only be described as exorbitant. It is the type of costs request that one might expect to see after a trial of many months’ duration. I do not doubt that this costs request accurately reflects the time that Plaintiffs’ counsel spent on the matter, and I do appreciate that Plaintiffs’ counsel were successful and that their investment of time and effort therefore paid off for their client. However, Rule 57 requires me to have regard to the expectations of the losing side, and not just the costs incurred by the successful side.

[11] Counsel for the Defendants in the NM Consulting Action concedes that the Plaintiffs in that action deserve costs, but submits that this should be on a partial indemnity scale throughout and should be one-half of the partial indemnity costs incurred by the Plaintiffs. I partly agree and partly disagree with this submission.

[12] Like counsel for the Defendants, I view the Plaintiffs’ request to be about double what would be expected of a summary judgment motion of this complexity. Although the Defendants in the NM Consulting Action fought every point raised by the Plaintiff, and took positions that I considered to be strategic and destined to fail as a matter of law, the Plaintiffs’ request is out of all proportion to what this matter required. The Defendants could have expected this summary judgment motion to attract costs equivalent to a trial of several weeks’ duration, but not a trial of several months’ duration.

[13] Unlike counsel for the Defendants in the NM Consulting Action, I agree with counsel of the Plaintiffs in that action that substantial indemnity costs apply from the date of the offer to settle onward. It was a perfectly reasonable offer, and although the Defendants were entitled to roll the dice on their defense of the claim, that defense turned out to lack legal merit. They should have accepted the offer. The policy behind Rule 49 is to encourage this type of offer.

[14] I would reduce the Plaintiffs’ request in the NM Consulting Action by one-half. Instead of the $674,609.03 requested on a hybrid partial/substantial scale, I would award them $337,304.51. This takes into account their request for substantial indemnity scale after the date of the offer, but also takes into account Defendants’ counsel’s assessment that the overall request is double what one would expect.

[15] As for the NM Accounting Action, I agree with counsel for the Defendants in that action that the tactic pursued by the Plaintiffs in that action – i.e. linking the consolidation motion to the summary judgment motion in the NM Consulting Action – greatly increased the complexity and cost of the consolidation motion. There was no need to involve Defendants’ counsel in the other action in that way; it appears to me to have been part of the aggressive tactics pursued by Plaintiffs’ counsel throughout. Under the criteria outlined in Rule 57, this approach to litigation should attract costs on a substantial indemnity scale

[16] I would award costs to the Defendants in the NM Accounting Action in the requested amount of $39,287.21. This reflects costs that are commensurate with the time and complexity of a consolidation motion, with the added costs of having to involve counsel unnecessarily in the other action.

[17] The Attorney General of Ontario intervened in the NM Consulting Action in order to address the portion of the Defendants’ case that raise a constitutional argument. The Attorney General was successful in that portion of the case, but seeks no costs. Accordingly, no costs will be awarded in respect of this intervention.

Disposition

[18] The Defendants in the NM Consulting Action shall pay the Plaintiffs in the NM Consulting Action a total of $337,304.51 in costs, inclusive of all fees, disbursements, and tax.

[19] The Plaintiffs in the NM Accounting Action shall pay the Defendants in the NM Accounting Action a total of $39,287.21 in costs, inclusive of all fees, disbursements, and tax.

Morgan J.

Date: October 30, 2015