Duff v. Genesys Laboratories Canada Inc.

Ontario Reports

Ontario Superior Court of Justice,

Matheson J.

February 17, 2016

129 O.R. (3d) 715 | 2016 ONSC 1168

Case Summary

Civil procedure — Interest — Prejudgment interest — Interest rate fluctuating significantly over 12-year period since plaintiff's cause of action arose — Plaintiff responsible for significant delay — Pre-judgment interest ordered at rate of 2.25 per cent rather than default rate of 3.3 per cent for period of seven rather than 12 years.

The plaintiff's action was allowed. The outstanding issues included the rate of prejudgment interest, the exchange rate applicable to the judgment, which was in U.S. dollars, and costs. [page716]

Held, the outstanding issues were resolved.

The interest rate had fluctuated significantly over the 12-year period since the plaintiff's cause of action arose. The plaintiff was responsible for some significant delay. As a result, it was appropriate to order prejudgment interest at a rate of 2.25 per cent, rather than the default rate of 3.3 per cent, for a period of seven rather than 12 years.

There was no reason to depart from the default conversion rate provided for in s. 121(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43.

The plaintiff claimed $35,400 in costs, while the defendant submitted that an all-inclusive amount of $16,115 should be payable. In light of all of the relevant factors, costs were fixed at $23,000, all inclusive.

Cases referred to

Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291, [2004] O.J. No. 2634, 188 O.A.C. 201, 48 C.P.C. (5th) 56, 132 A.C.W.S. (3d) 15 (C.A.); Duff v. Genesys Laboratories Canada Inc., [2015] O.J. No. 6284, 2015 ONSC 7297 (S.C.J.); Girsberger v. Kresz (2000), 2000 22406 (ON SC), 50 O.R. (3d) 157, [2000] O.J. No. 4216, 143 O.A.C. 228, 45 C.P.C. (4th) 77, 1 C.P.C. (5th) 250, 101 A.C.W.S. (3d) 910 (C.A.), affg (2000), 2000 22329 (ON SC), 47 O.R. (3d) 145, [2000] O.J. No. 266, 97 A.C.W.S. (3d) 1108 (S.C.J.); Zucchetti Rubinetteria S.p.A. v. Natphil Inc., [2011] O.J. No. 2813, 2011 ONSC 3845, 204 A.C.W.S. (3d) 160 (S.C.J.)

Statutes referred to

Courts of Justice Act, R.S.O. 1990, c. C.43, ss. 121, (1), (3), 127, (1), 128, 129, 130, (1)(b), (2)

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 57, 57.01, (1)(0.a), (0.b)

RULING on interest, conversion rate and costs.

Sheldon Duff, self-represented.

J.B. Simpson, for defendant.

[1] Endorsement of MATHESON J.: — This endorsement arises from my judgment in the trial of this action, released November 27, 2015 [[2015] O.J. No. 6284, 2015 ONSC 7297 (S.C.J.)]. The remaining issues to be addressed include interest, costs, the appropriate order regarding conversion of the judgment to Canadian dollars, taxes and a request by the plaintiff regarding the payment of the funds.

Prejudgment Interest

[2] There is a dispute between the parties about the rate for prejudgment interest prescribed by s. 128 of the Courts of Justice Act, R.S.O. 1990, c. C.43. As set out in the applicable definition in s. 127(1), the prejudgment interest rate is the bank rate at the end of the first day of the last month of the quarter [page717] preceding the quarter in which the action was commenced. Accordingly, since this action was commenced in April 2006, the rate is 3.3 per cent.

[3] In this case, the cause of action arose in July 2003. As a result, there is a period of about 12 years during which pre-judgment interest would ordinarily apply.

[4] The defendant submits that I should exercise my discretion to vary both the rate and the time period under s. 130 of the Act.

[5] The defendant asks that I vary the rate due to interest rate fluctuations in the relevant time period. Subsection 130(1)(b) provides that the court may, where it considers it just to do so, allow interest at a rate higher or lower than that provided above. As set out in s. 130(2), among the factors I must take into account is changes in market interest rates over the relevant period.

[6] Over the approximately 12-year period, the market interest rates have changed significantly. They have ranged from 4.8 per cent at the high end to 0.5 per cent at the low end. Bearing in mind all relevant factors, I conclude that the use of the default interest rate would result in overcompensation from the standpoint of prejudgment interest. An average rate of 2.25 per cent is more appropriate.

[7] The defendant submits that the period of time during which prejudgment interest should run should be reduced to five years because of undue delay by the plaintiff.

[8] The plaintiff was responsible for some significant delay, especially in regard to setting this action down for trial and proceeding with the trial. However, the entirety of the delay was not due to the plaintiff. It was shown on the trial evidence that the discovery process was protracted by the defendant either failing or refusing to produce relevant documents and answer proper discovery questions.

[9] The defendant also submits that even though this action was commenced well within the applicable limitation period, because the limitation legislation changed shortly thereafter, the action should be treated as if it should have been commenced within two years for the purpose of considering the length of time during which prejudgment interest should be paid. I do not find this argument persuasive.

[10] Bearing in mind all relevant factors, I conclude that the period of time during which prejudgment interest shall run is seven years. [page718]

[11] I therefore exercise my discretion to order that the judgment shall bear prejudgment interest at the rate of 2.25 per cent for the period of seven years.

Post-Judgment Interest

[12] Post-judgment interest shall be 2 per cent, in accordance with ss. 127 and 129 of the Act.

Exchange Rate

[13] The judgment is for $400,000 in U.S. dollars. The plaintiff submits that he should receive the Canadian dollar equivalent as of July 29, 2003, the day on which his invoice was issued to the defendant. His submission is that the exchange rate as of that date was 1.3856.

[14] The defendant submits that the currency conversion date should be the default conversion date as provided for in s. 121(1) of the Act, which provides as follows:

121(1) Subject to subsections (3) and (4), where a person obtains an order to enforce an obligation in a foreign currency, the order shall require payment of an amount in Canadian currency sufficient to purchase the amount of the obligation in the foreign currency at a bank in Ontario listed in Schedule I to the Bank Act (Canada) at the close of business on the first day on which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day payment of the obligation is received by the creditor.

(Emphasis added)

[15] Under this provision, the judgment itself expresses this wording and the actual rate is determined when payment is received: Zucchetti Rubinetteria S.p.A. v. Natphil Inc., [2011] O.J. No. 2813, 2011 ONSC 3845 (S.C.J.), at para. 12; Girsberger v. Kresz (2000), 2000 22329 (ON SC), 47 O.R. (3d) 145, [2000] O.J. No. 266 (S.C.J.), at para. 20, affd (2000), 2000 22406 (ON SC), 50 O.R. (3d) 157, [2000] O.J. No. 4216 (C.A.).

[16] Section 121 allows for departure from this default approach in certain circumstances. Only subsection (3) is relevant here. It provides as follows:

121(3) . . . where, in a proceeding to enforce an obligation in a foreign currency, the court is satisfied that conversion of the amount of the obligation to Canadian currency as provided in subsection (1) would be inequitable to any party, the order may require payment of an amount in Canadian currency sufficient to purchase the amount of the obligation in the foreign currency at a bank in Ontario on such other day as the court considers equitable in the circumstances.

(Emphasis added)

[17] The plaintiff has not demonstrated that it would be inequitable to him to convert the amount of the obligation to Canadian [page719] currency as provided in s. 121(1). I am therefore not prepared to depart from s. 121(1).

Taxes

[18] The agreement provided that the defendant pay applicable taxes. The defendant acknowledges that if HST is payable the plaintiff should receive that amount. The defendant submits, however, that there is no evidence before the court that the plaintiff will actually be required to pay HST or that he is properly registered to collect HST.

[19] In the plaintiff's submissions, he indicates that he has made an inquiry of the Canadian Revenue Agency and been told that HST applies.

[20] It seems obvious that tax will be payable and, under the agreement, it is payable by the defendant. It is reasonable, however, that the defendant receive some assurance that the amount paid for HST will actually go to the appropriate taxing authorities and that the defendant receive any appropriate tax consequences for its payment. This can be addressed by terms, which I order as follows:

(i) the judgment shall provide that the defendant pay applicable tax, which, based upon the plaintiff's inquiry, is HST;

(ii) the plaintiff shall promptly remit the tax and provide the defendant with documentary proof that he did so;

(iii) the plaintiff shall provide any other information that the defendant reasonably requires in order that the defendant may request any available tax credit or other tax benefit that it may be entitled to as a result of this payment; and

(iv) if the HST is not remitted or is refunded to the plaintiff, in whole or in part, the plaintiff shall return that amount to the defendant.

Direction Regarding Payment

[21] The plaintiff asks that the defendant pay Duff Capital Inc., which is not a party to this action. To the extent that this is a request to make a court order in favour of that company, I am not prepared to do so. The judgment is in favour of the plaintiff, not in favour of that third party company. If, however, this is simply an indication that the plaintiff intends to provide the defendant with a direction regarding to whom he wishes the money be sent, that is a matter between the parties and need not be addressed here. [page720]

Costs

[22] The plaintiff has submitted a claim for costs that includes fees paid to prior counsel, disbursements and applicable taxes. The defendant accepts that the plaintiff is entitled to recover some amount for costs, but disputes the amount claimed. More specifically, the defendant submits that an all-inclusive amount of approximately $16,115 should be payable, rather than the approximately $35,400 claimed by the plaintiff.

[23] The general principles applicable to the order of party and party costs are well settled. Costs are discretionary. Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 sets out factors I may consider in exercising my discretion, in addition to the result of the proceeding and any written offers to settle. Overall, the objective is to fix an amount that is fair and reasonable, having regard for, among other things, the expectations of the parties concerning the quantum of costs: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291, [2004] O.J. No. 2634 (C.A.), at paras. 26, 38.

[24] Certain general principles have now been expressly articulated in subparagraphs (0.a) and (0.b) of rule 57.01(1), specifically the principle of indemnity and the affirmative obligation to consider the amount of costs than an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed.

[25] I have considered all of the submissions of the parties in exercising my discretion regarding costs. Without limiting that consideration, I note that the plaintiff has not submitted detailed information regarding the time spent by prior counsel on the various tasks, which has made it more difficult to assess the reasonableness of those fees. The defendant also observes that prior counsel was not on the record during some of the periods of time in question; however, party and party costs need not be limited to counsel of record. If a self-represented party has counsel assisting in the background, but not on the record, that expenditure may still be submitted for consideration on a party and party costs claim, subject to other relevant factors under Rule 57. The defendant has also raised other issues, including regarding the disbursements, although those issues are less significant from a monetary standpoint.

[26] Considering all relevant factors, I exercise my discretion to order costs payable by the defendant to the plaintiff, fixed at $23,000, all inclusive.

Order accordingly.

End of Document