DONALDSON TRAVEL INC. v. MURPHY et al, 2016 ONSC 1396

COURT FILE NO.: C-285-12

DATE: 2016-02-26

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DONALDSON TRAVEL INC., Plaintiff

AND:

MARY MURPHY, PETER VAN DER HEYDEN and 1631318 ONTARIO INC. Defendants

BEFORE: The Honourable Mr. Justice D.A. Broad

COUNSEL: John W. McDonald, for the Plaintiff Gary E. Flaxbard, for the Defendant Mary Murphy, Patricia J. Forte, for the Defendants Peter Van Der Heyden and 1631318 Ontario Inc.

Costs ENDORSEMENT

[1] The parties have been unable to settle the issue of costs and have now delivered their submissions on costs as directed in my Endorsement released February 5, 2016.

[2] The defendant Mary Murphy (“Murphy”) seeks costs on a full indemnity basis in respect of the action, including her motion for summary judgment, in the total sum of $53,366.81, comprised of fees in the sum of $46,631, HST thereon in the sum of $6062.03, disbursements in the sum of $627.35 and HST thereon in the sum of $46.33. In her Bill of Costs, Murphy sets forth a calculation of her partial indemnity costs totaling $37,760.38 representing fees in the sum of $32,820 and HST thereon in the sum of $4266.60 plus the disbursements and HST thereon as set forth above.

[3] The defendants Peter Van Der Heyden and 1631318 Ontario Inc. (“Goliger’s) seeks costs on a full indemnity basis in the total sum of $63,212.46, comprised of fees in the sum of $57,684.50, HST thereon in the sum of $7498.99 and disbursements in the sum of $3596.64 and HST thereon in the sum of $432.33. Goliger’s Bill of Costs similarly sets forth a calculation of its partial indemnity costs totaling $46,911.91 comprised of fees in the sum of $37,949.50, HST thereon in the sum of $4933.44 plus the disbursements and HST thereon as set forth above.

[4] The defendants served two joint Offers to Settle. The first Offer to Settle was dated July 16, 2012 and provided for payment to the plaintiff of the sum of $20,000 inclusive of interest plus partial indemnity costs incurred to July 18, 2012, as agreed or assessed and provided for the plaintiff to pay partial indemnity costs to the defendants arising after July 18, 2012 to the date of acceptance of the Offer to Settle. This Offer to Settle was withdrawn on January 7, 2013.

[5] The defendants’ second Offer to Settle was dated June 16, 2015 and provided for payment to the plaintiff of the total amount of $10,000 all-inclusive. This Offer to Settle remained open for acceptance until five minutes after the commencement of the hearing of the summary judgment motions brought by the defendants.

[6] The plaintiff served no Offers to Settle.

[7] The plaintiff’s submissions on costs consisted largely of an attempt to reargue the motions for summary judgment.

[8] On the question of the costs themselves, the plaintiff submitted that each party should be responsible for its own costs. It argues that the motions for summary judgment could have been brought by the defendants in the very early stages of the action which would have “drastically reduced” the costs of all of the parties. The plaintiff also submitted that the action was a “novel action” which attempted to explore the protection of the proprietary interest of a travel agency in its client base without resort to any geographic or time restrictions, in view of the development of the Internet which makes such geographic and time restrictions obsolete. Finally, the plaintiff argued that the total costs requested by the defendants are excessive. It does not explain in what respect the claimed costs are excessive. No specific issue was taken by the plaintiff with the amount of time spent by counsel for the defendants, nor their hourly rates. Moreover, the plaintiff did not submit its own Bill of Costs or Costs Outline which would have assisted the court in gauging the plaintiff’s reasonable expectations with respect to the costs of the action and the motions for summary judgment.

[9] I do not accept the argument that the defendants should be disentitled to costs because they could have brought their motions for summary judgment earlier. Rule 20.01(3) of the Rules of Civil Procedure provides that a defendant may, after delivering a statement of defence, move with supporting affidavit material or other evidence for summary judgment dismissing all or part of the claim in the statement of claim. It is evident that, subject to Rule 48.04 which prohibits a party from initiating or continuing any motion without leave after setting an action down for trial or consenting to an action being placed on a trial list, a party may bring a motion for summary judgment at any stage of the proceeding. The costs incurred by the parties was not incurred by the defendants in delaying bringing their motions for summary judgement but by the plaintiff bringing an action which lacked merit.

[10] I do not agree that the plaintiff’s characterization of the action as “novel” has any relevance to the defendants’ entitlement to costs in all of the circumstances. Although the plaintiff may have been advancing a novel argument that a restrictive covenant without a temporal limitation is enforceable, I would not consider the action as “novel” in the sense of taking it out of the category of cases to which the usual principles respecting entitlement to costs would apply.

[11] 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."

[12] The factors to be considered by the court, in the exercise of its discretion on costs, are set forth in sub-rule 57.01(1), to which I have had regard.

[13] 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 CanLII 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 CanLII 1042 (ON CA), [2005] O.J. No. 160 (Ont. C.A.)).

[14] 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] CarswellOnt 1007 (Ont. C.A.), 2002 CanLII 41469 and Macfie v. Cater, 1920 CanLII 401 (ON SC), [1920] O.J. No. 71 (Ont. H.C.) at para 28).

[15] In my view the successful defendants are entitled to costs of the action and the motions for summary judgment on a partial indemnity basis. I find the amounts for partial indemnity costs, as set forth by the defendants in their respective Bills of Costs, to be fair and reasonable having regard to what the plaintiff could have expected the costs to be in light of the amount of the plaintiff’s claim, the serious allegations of wrongdoing advanced against the defendants in the Statement of Claim, and the positions taken and arguments advanced by the plaintiff which the defendants were required to respond to.

[16] It is therefore ordered that the plaintiff pay to the defendant Mary Murphy costs in the sum of $37,760.38 and to the defendants Peter Van Der Heyden and 1631318 Ontario Inc. in the sum of $46,911.91, both amounts being fixed on a partial indemnity basis and inclusive of fees, disbursements and HST. These amounts are payable within 30 days hereof.

D.A. Broad J.

Date: February 26, 2016