CITATION: YEOMAN et al v. MEYER et al , 2015 ONSC 716

COURT FILE NO.: C-485/08

DATE: 2015/02/02

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: RUSSEL YEOMAN and HOWICK MUTUAL INSURANCE COMPANY, Plaintiffs

AND:

DAVID MEYER, LAURIE MEYER, OIL SPILL CONTROL SERVICES INC., FORTRESS ENVIRONMENTAL CORP. c.o.b. as OIL SPILL CONTROL SERVICES and WEST WAWANOSH MUTUAL INSURANCE COMPANY, Defendants

BEFORE: The Honourable Justice D.A. Broad

COUNSEL: Michael Fleischmann , for the Plaintiff Russel Yeoman

Harold S. Ginn, for the Plaintiff Howick General Insurance Company

James S. Schacter, for the Defendants David Meyer and Laurie Meyer

Corrected Decision: In paragraph 4, “The Meyers seek costs of the motion as against the Meyers...” was changed to “The Meyers seek costs of the motion as against Yeoman...”

COSTS ENDORSEMENT

[1] The parties have not been able to agree on the issue of the costs of the motion and have each now delivered their submissions on costs. The following is my disposition on the question of costs.

Positions of the parties

[2] The plaintiff Russel Yeoman (“Yeoman”) seeks costs against the defendants David Meyer and Laurie Meyer (the “Meyers”) on a partial indemnity basis in the sum of $12,650.38 comprised of fees in the sum of $9,710, HST thereon in the sum of $1,262.30 and disbursements, including HST thereon, in the sum of $1,678.08. Counsel for Yeoman submits that the motion was critical to his personal claim and that, although a motion to amend pleadings is generally straightforward, the present motion was complicated by the arguments of abuse of process and a detrimental reliance upon alleged admissions made by Yeoman’s prior counsel advanced by the Meyers. Counsel for Yeoman submitted that the responding affidavit from counsel for the Meyers was biased, self-serving, hearsay and largely irrelevant to the issues and thereby served to lengthen the motion and represented a step which was improper or unnecessary.

[3] The plaintiff, Howick, seeks partial indemnity costs in the sum of $10,780.68, representing 75% of its fees in the sum of $12,730 plus HST thereon in the sum of $1,654.90 and disbursements in the sum of $271.29. Counsel for Howick submits that although it was not Howick’s motion, it involved issues between Howick and its insured, Yeoman, and it was necessary for counsel for Howick to attend on the motion.

[4] The Meyers seek costs of the motion as against Yeoman in the sum of $10,046.50 in respect of fees plus HST thereon in the sum of $1,306.04 for a total of $11,352.54. Counsel for the Meyers submit that it was reasonable for them to oppose the motion of Yeoman to add a personal claim. He submits that the wording of rule 26.01 is such that on a motion to amend a pleading for compensatory award of costs to the responding party will frequently be appropriate, even if the responding party was not successful in opposing the motion to amend.

[5] Counsel for the Meyers submit that the cross-examination of Mr. Seales on his affidavit filed in response to the motion served no purpose with respect to the motion to amend. Moreover, he argues that under rule 39.02 the party who cross-examines on an affidavit filed on a motion (other than a motion for summary judgment) is presumptively liable for the partial indemnity costs in respect of the cross-examination.

[6] Counsel for the Meyers further submit that the time sought by Mr. Fleischmann for the motion at 64.1 hours is excessive when compared to the 43.5 hours sought by him on behalf of the Meyers. He further submits that Howick was neither a moving nor a responding party and that Mr. Ginn’s response and attendance on the motion were unnecessary and that Howick should therefore have no entitlement to an award of costs.

[7] In the alternative, counsel for the Meyers submits that there be no order as to costs in the circumstances.

Guiding Principles

[8] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, provides that "subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the cost shall be paid."

[9] The factors to be considered by the court, in the exercise of its discretion on costs, are set forth in subrule 57.01(1), as follows:

57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing, various factors, including:

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

(i) any other matter relevant to the question of costs.

[10] The Court of Appeal has observed that modern costs rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behavior by litigants (see Fong v. Chan (1999) O.J. No. 3707 (CA) at para. 24).

[11] It is well known that the overall objective in dealing with costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful party. The expectation of the parties concerning the quantum of costs is a relevant factor to consider. The court is required to consider what is "fair and reasonable" having regard to what the losing party could have expected the costs to be (see Boucher v. Public Accountants Council (Ontario), 2004 14579 (ON CA), [2004] O.J. No. 2634 (Ont. C.A.) at para. 26 and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, 2005 1042 (ON CA), [2005] O.J. No. 160 (Ont. C.A.)).

[12] The usual rule in civil litigation is that costs follow the event and that rule should not be departed from except for very good reasons (see Gonawati v. Teitsson 2002 41469 (ON CA), [2002] CarswellOnt 1007 (Ont. C.A.)], 2002 41469 and Macfie v. Cater, 1920 401 (ON SC), [1920] O.J. No. 71 (Ont. H.C.) at para 28).

[13] Notwithstanding the general rule that costs follow the event, it has been held that the wording of rule 26.01 is such that on a motion to amend a pleading, a compensatory award of costs to the responding party will frequently be appropriate, even if the responding party was not successful in opposing the motion to amend (see Tikhanova v. Covelli 2004 CarswellOnt 1967 (Master) at para. 3. See also Haikola v. Arasenau (1996) 27 O.R. (3d) 292 (C.A.) and King’s Gate Developments Inc. v. Drake (1994) 1994 416 (ON CA), 17 O.R. (3d) 841 (C.A.)).

Analysis

[14] In my view, there was little in the way of explanation as to why the plaintiff Yeoman, did not originally advance a claim for damages alleged to have been suffered by him personally, thereby necessitating a motion to amend considerably after the Statement of Claim was issued. Although the plaintiff Yeoman was found to be entitled to amend his statement of claim due to the mandatory nature of rule 26.01, he would have no reasonable expectation that he would be entitled to the costs of the motion to amend, even if it were opposed by the responding defendants.

[15] Similarly, although the Meyers were entitled to oppose the motion to amend, they would have no reasonable expectation that they would be entitled to an award of costs against Yeoman. Rule 26.01 provides that if leave for an amendment to a pleading is granted it shall be on “such terms as are just”, including an order for compensatory costs to the responding party, depending upon the circumstances.

[16] In my view, this is not a case for a compensatory award of costs in favour of the Meyers. The amendment was not sought late in the day insofar as the progress of the action to trial is concerned, nor has it caused substantial delay or costs to be thrown away. The approach taken by the Meyers in response to the motion did contribute to the costs of the motion becoming elevated. They delivered a responding affidavit which was largely unnecessary or irrelevant to the issues to be determined. It advanced an argument respecting whether Yeoman should be permitted to set aside the Minutes of Settlement in the previous action in their entirely, which was not germane to the motion and which was not pursued in argument

[17] The motion was necessitated by Yeoman’s failure to properly plead his personal claim in the first instance. There is no reason, in principle, why he should be rewarded by an award of costs in these circumstances.

[18] The cross-examination of Mr. Seales by counsel for Yeoman was, in my view, an unnecessary step. If Mr. Seales’ affidavit was largely unnecessary, it should similarly not have been necessary for counsel for Yeoman to cross-examine on it. The transcript of the cross-examination was not meaningfully referred to in submissions and it did not assist in the determination of the matter.

[19] Although Howick was entitled to respond to and attend on the motion, it would not have a reasonable expectation of recovering costs against the Meyers for doing so. Howick sought no relief against the Meyers and no relief was sought against it on the motion. In my view, there is no basis for an award of costs in favour of Howick.

[20] I see no reason to depart from the presumption in rule 39.02 that Yeoman be liable for the partial indemnity costs of the Meyers in respect of the cross-examination of Mr. Searles on his affidavit, in light of the observations set forth above. I find the claim of the Meyers for the costs of the cross-examination in the sum of $2,270.17 inclusive of H.S.T. to be reasonable. This amount is based on a time involvement of Mr. Schacter of 9.8 hours. However, each of the parties should otherwise bear their own costs of the motion.

Disposition

[21] It is therefore ordered that the plaintiff Russel Yeoman pay to the defendants, David Meyer and Laurie Meyer, costs fixed in the sum of $2,270.17 inclusive of H.S.T.

D.A. Broad

Date: February 2, 2015