Court File and Parties

COURT FILE NO.: CV-15-0462 DATE: 2016-04-29

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Robert Buys, Applicant Daniel Matson, for the Applicant

- and -

Carrel + Partners LLP, Respondent Robert V. Botsford, for the Respondent

HEARD: Via written submissions

Regional Senior Justice D. C. Shaw

Decision On Costs

[1] This is a decision on the costs of an application for the assessment of the accounts of the respondent law firm, Carrel + Partners LLP.

[2] I granted the application and required the Assessment Officer to assess the 17 accounts rendered to the applicant, Robert Buys, by Carrel + Partners between June 30, 2011, and February 28, 2013. The accounts totalled $63,378.84, inclusive of fees and disbursements. Mr. Buys paid the accounts as they were rendered. Carrel + Partners opposed the application for an assessment.

[3] Mr. Buys requests costs of the application on a substantial indemnity basis. His counsel, Mr. Matson, files a Bill of Costs showing substantial indemnity costs of $14,579.81, inclusive of fees of $12,413.25. The Bill of Costs also shows partial indemnity costs of $9,810.63, inclusive of fees of $8,192.74.

[4] Mr. Matson has two years’ experience. He practices in the area of civil litigation. His actual hourly rate is $225 per hour. His substantial indemnity rate is $202.50 per hour (90% of his actual rate), and his partial indemnity rate is $133.65 per hour (66% of his substantial indemnity rate).

[5] Mr. Matson’s Bill of Costs shows docketed time of 61.3 hours. Of that time 1.6 hours was docketed for a meeting and a telephone call with Mr. Buys after the hearing of the application but before the decision was released.

[6] Mr. Buys seeks substantial indemnity costs on the grounds that Carrel + Partners should have consented to the application at the outset, that the law firm delayed the process and that the result was better for Mr. Buys than an offer to settle which he served six days before the hearing of the application.

[7] Carrel + Partners submits that costs of $3,000 plus reasonable disbursements and HST would be fair and reasonable in the circumstances of the case, awarded on a partial indemnity basis.

[8] Carrel + Partners submits that Mr. Matson’s hourly rates are too high for counsel of his experience. Carrel + Partners submits that Mr. Matson’s actual or full rate should be $150 per hour, that his substantial indemnity rate should be $135 per hour and that his partial indemnity rate should be $90 per hour.

[9] In its submissions as to an appropriate hourly rate, Carrel + Partners refers to the statement titled Information for the Profession issued in 2005 by the Costs Subcommittee of the Civil Rules Committee which sets out suggested maximum rates for partial indemnity costs. These rates were the maximums under the former costs grid. The maximum for a lawyer of less than 10 years’ experience is shown at $225 per hour.

[10] Carrel + Partners submits that 20 hours of preparation and 5.5 hours for court attendance would be reasonable.

Discussion

[11] Mr. Buys was successful in his application. He is entitled to an award of costs. However, this is not a case where substantial indemnity costs should be ordered.

[12] As a general rule, an order for costs on a substantial indemnity basis is reserved for very limited circumstances to mark the court’s disapproval of the conduct of a party in the litigation. See Orkin, The Law of Costs (Toronto: Canada Law Book, loose leaf) at p. 2-216 – 2-217. As noted in Orkin, the Supreme Court of Canada in Young v. Young, [1993] 4 S.C.R. 3, has approved the following statement of principle:

Solicitor-and-client costs are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties.

[13] The fact that Carrel + Partners did not facilitate the assessment and that the court imposed a schedule for delivery of responding materials does not, in my view, rise to the level of conduct warranting the sanction of substantial indemnity costs.

[14] The offer to settle served by Mr. Buys, offering to settle on a without prejudice basis if Carrel + Partners consented to the assessment, was better than the final result for the law firm. The offer to settle was not served seven days before the hearing of the application commenced, as required by rule 49.03 of the Rules of Civil Procedure. The costs consequences of rule 49.10 therefore do not apply. However, I may take the offer to settle into account in exercising my discretion, pursuant to rule 49.13 and rule 57.01(1).

[15] In Finn Way General Contractor Inc. v. S. Ward Construction Inc., 2014 ONSC 4071, I have set out the purposes, principles and factors to be considered by the court in exercising its discretion to award costs:

[19] In Serra v. Serra (2009), 2009 ONCA 395, 66 R.F.L. (6th) 40 (Ont. C.A.), at p. 42, the Court of Appeal reiterated the fundamental purposes which modern costs rules are designed to foster, as set out in Fong v. Chan (1999), 46 O.R. (3d) 330 (Ont. C.A.), at para. 22:

(1) to partially indemnify successful litigants for the costs of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour.

[20] In Anderson v. St. Jude Medical Inc., [2006] O. J. No. 508 (Ont. Div. Ct.), at para. 22, the Divisional Court set out the principles to be applied by the court in exercising its discretion (citations omitted):

1. The discretion of the court must be exercised in light of the specific facts and circumstances of the case in relation to the factors set out in Rule 57.01(1).
2. A consideration of experience, rates charged and hours spent is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case. The quantum should reflect an amount the court considers to be fair and reasonable rather than any exact measure of the actual costs to the successful litigant.
3. The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining an amount that is fair and reasonable: Rule 57.01(1)(0.b).
4. The court should seek to avoid inconsistency with comparable awards in other cases. “Like cases [if they can be found], should conclude with like substantive results.”
5. The court should seek to balance the indemnity principle with the fundamental objective of access to justice.

[21] The Court of Appeal has made it clear that in assessing costs the overriding principle is one of reasonableness and that the failure to follow that principle can produce a result that is contrary to the fundamental objective of access to justice (Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (Ont. C.A.), at p. 302.

[22] In Zesta Engineering Ltd. v. Cloutier, [2002] O.J. No. 4495 (Ont. C.A.), at para. 4 the Court of Appeal did not make a specific finding with respect to the amount of time spent or the rates charged by counsel, and stated:

“In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.”

[23] Rule 57.01(1) of the Rules of Civil Procedure provides:

“57.01 (1) Factors in discretion - 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,

(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 on any party that tended to shorten or 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 solicitor; and (i) any other matter relevant to the question of costs.”

[24] Rule 1.04 (1.1) of the Rules of Civil Procedure provides:

1.04 (1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.

[16] In my view, the partial indemnity hourly rate of $133.65 claimed by Mr. Matson is reasonable in this case.

[17] The reference by Carrel + Partners to the maximum rates set out in the Information for the Profession issued by the Costs Subcommittee of the Civil Rules Committee approximately 11 years ago is of little assistance in considering an appropriate rate for Mr. Matson for a case in this Region today.

[18] Carrel + Partners criticizes as excessive the number of hours docketed by Mr. Matson. I make the observation that if an unsuccessful party is contesting the reasonableness of the successful party’s claim for costs, it is helpful for the court, in assessing whether the amount claimed is something that the unsuccessful party could reasonably have expected to pay, to have the unsuccessful party’s own costs outline or bill of costs. Otherwise, the complaint of excessive hours, or excessive hourly rates, loses some of its force.

[19] Having said that, I find that 61.3 hours for which Mr. Buys seeks indemnification is beyond what an unsuccessful party could reasonably expect to be responsible for on an application of this nature.

[20] I take into account that the issues on the application, involving sections 3(b), 4(1) and 11 of the Solicitors Act, were of moderate complexity. The total of the bills which Mr. Buys sought to assess, namely $63,378.84, was significant, given that the family matters for which he was billed resolved early in the litigation process. An assessment of the accounts was of some importance, both in light of the amount of the accounts and the principle that the courts should ensure that a client’s request for an assessment is dealt with fairly and equitably despite procedural gaps or irregularities. See Price v. Sonsini, 2002 Carswell Ont. 225 (C.A.), at para. 19.

[21] Mr. Buys’ offer to settle, if accepted, would have resulted in the assessment which I have ordered, without costs against the law firm. Although the offer was made less than 7 days before the hearing of the application, Carrel + Partners had a reasonable opportunity to consider the offer. Instead, the law firm chose to continue to resist an assessment.

[22] Accompanying the offer to settle, Mr. Matson sent to Carrel + Partners a Costs Outline. The Costs Outline showed partial indemnity fees of $4,731.41 and substantial indemnity fees of $6,468.50, inclusive of an estimated two hours for attendance on the hearing of the application. That Costs Outline set out much less time than the Bill of Costs filed on this costs hearing. Carrel + Partners submit that the Costs Outline should be regarded as accurate because it was created right after the work was done, unlike the Bill of Costs which was drafted three months after the hearing of the application.

[23] I am prepared to accept the Bill of Costs as Mr. Matson’s representation to the court of the time he actually docketed on the file. As I observed, however, the 61.3 hours shown in the Bill of Costs is more time than I find would be reasonable on this file.

[24] I acknowledge the point raised by Carrel + Partners in its submission on costs that because Mr. Buys was out of time to assess the accounts by way of a registrar’s order on requisition, he would have had to bring an application in any event to obtain leave from the court. I accept, as well, the law firm’s submission that the time expended following the hearing of the application, in a telephone call and meeting with Mr. Buys, should not be included in my costs award. I also agree with the submission of Carrel + Partners that the failure to provide details for the photocopying charges of $145.63 and the courier costs of $118.86 is problematic. It is apparent, of course, that there were photocopying expenses. I also accept that courier charges were incurred. However, without details of those expenses, I will only award a nominal amount for photocopying and courier expenses of $125. The claim for a disbursement of $107.35 for “an ACL license fee for the firm’s automatic litigation program”, without further explanation, will be regarded as properly a matter of overhead, to be subsumed in Mr. Matson’s hourly rate.

[25] As noted above, the amount of a costs award should reflect what the court considers to be fair and reasonable rather than a mathematical calculation of hours spent by counsel for the successful party or an exact measure of the actual costs to the successful party.

[26] In my opinion, it is fair and reasonable to award Mr. Buys partial indemnity costs of the application in the sum of $5,000 for fees, plus HST thereon. He is also awarded disbursements of $125 for photocopying and courier costs, plus HST thereon. Because Mr. Buys had to bring an application to obtain leave from the court to have the accounts assessed, in any event, I decline to award a disbursement for issuing the application.

Original signed by The Hon. Mr. Justice D. C. Shaw

[27] Released: April 29, 2016

COURT FILE NO.: CV-15-0462 DATE: 2016-04-29 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: Robert Buys, Applicant - and - Carrel + Partners LLP, Respondent DECISION ON COSTS Shaw R.S.J.

Released: April 29, 2016 /mls