Court File and Parties

COURT FILE NO.: 25471/11 DATE: 2016/05/26 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

DAN McCABE, Carrying on Business as CANADIAN COMMERCIAL FLOORING Plaintiff /Defendant by Counterclaim – and – FINN WAY GENERAL CONTRACTOR Defendant/Plaintiff on Counterclaim

COUNSEL: H. N. MacDonald, for the Plaintiff/Defendant by Counterclaim R. W. Johansen, for the Defendant/Plaintiff on Counterclaim

COSTS AWARD

A.D. KURKE J.

[1] At the conclusion of my judgment in this matter (2015 ONSC 7557), I invited the parties to provide written submissions of no more than three pages if they were unable to agree on costs. I have received submissions from both parties.

[2] The purposes of costs awards are to partially indemnify successful litigants for their costs of litigation, to encourage settlement, and to discourage inappropriate behavior on the part of litigants: Fong v. Chan (1999), 46 O.R. (3d) 330 (C.A.), at para. 22.

[3] The main issue in this trial was which of the two parties breached the contract between them involving the installation of sheet vinyl flooring in a long term care facility in Terrace Bay, Ontario. The plaintiff is a subcontractor whose main scope of work was to lay down the flooring on this project for which the defendant was the general contractor. The plaintiff claimed he could not complete his flooring work as a result of the defendant’s failure to ensure a suitable sub-floor structure on which to lay down the flooring. Also at issue were extras performed during the course of the project by the plaintiff, for which the plaintiff sought payment.

[4] For its part, the defendant denied being responsible for breaching the contract, and sought its own damages from the plaintiff resulting from his “abandoning” the contract. The defendant’s damages were essentially its expenditures to have the flooring completed on the project, once the plaintiff was no longer involved.

[5] These issues are not inherently complex, and the amounts at issue in the pleadings demonstrate that the case was not of world-shaping importance, although they were obviously of substantial significance to the defendant’s small business. On the evidence before me, while the plaintiff’s claims for “extras” remained debatable, it was readily apparent at least that the defendant had breached the contract between the parties. That evidence was available to the defendant before trial.

[6] In the result, I awarded the plaintiff $49,451.44, roughly half the amount he sought in his Claim. Of the nearly $80,000 finally sought by the defendant in its Counterclaim, I awarded the defendant a little more than $500. I therefore consider the plaintiff to have been reasonably successful in this trial, and, contrary to the submission of the defendant, substantially more successful than the defendant. The plaintiff is entitled to his costs.

[7] The objective of this exercise is to fix an amount of costs that is fair and reasonable for the unsuccessful party to pay the successful party, as opposed to the actual costs incurred: Boucher v. Public Accountants Council (Ontario), [2004] O.J. No. 2634 (C.A.), at para. 26. In the circumstances of this case: what is fair and reasonable for the defendant to pay the successful plaintiff?

[8] The plaintiff seeks $151,834.51 on a substantial indemnity basis, and $131,230.66 on a partial indemnity basis. The defendant professes total fees and disbursements of $71,036.94 on a substantial, and $47,853.29 on a partial indemnity basis. As at trial about the defendant, the plaintiff suggests that the defendant’s counsel is not completely candid in his Bill of Costs; I see nothing in particular that would cause me to believe that an officer of the Court would falsify a Bill for the purpose of this exercise. In my view, nothing elevates the appropriate costs award to the substantial indemnity plane. I further note that the difference between these Bills at the least demonstrates that the defendant’s expectations about costs were lower than the plaintiff’s.

[9] Counsel on this trial are both very senior. Mr. MacDonald bills at $350/$300, and Mr. Johansen at $315/210 per hour on a substantial/partial indemnity rate. In terms of additional expenses, Mr. MacDonald billed the services of a law clerk, and bore the costs associated with an expert witness, Mr. Caughill. Mr. Johansen, whose practice is in Thunder Bay, attended the two-week trial of this matter in Sault Ste. Marie. Accordingly, his attendance expenses were higher.

[10] Both parties made formal or informal offers to settle that did little to advance the prospects of resolution. In January 2015, the plaintiff proposed resolution at $80,000 plus fees and disbursements. After some further discussions, in March 2015 the defendant proposed “to walk away from the litigation without costs” as its best offer. Instead, there was a trial. The plaintiff’s position, though proven high in the result, at least provided a starting point for discussion.

[11] The defendant complains that the proceedings were unnecessarily lengthened as a consequence of the plaintiff’s introduction of and reliance upon expert evidence that was proven to be unreliable in cross-examination. While the force of the expert’s evidence was significantly diminished by the skilful cross-examination of Mr. Johansen, I nevertheless found that it still assisted the plaintiff’s case. For his part, the plaintiff attacks as unnecessary the defendant’s strong opposition to the introduction of expert evidence of this sort, evidence which is not unusual in cases of this kind.

[12] In addition, plaintiff counsel’s focused in cross-examination on how the defendant may improperly have secured sign-off from building inspectors, or in suggestions that the defendant was improperly withholding essential disclosure, and on other issues remote from flooring or sub-floor. These areas protracted the proceedings at several points. As a result, a trial that should have taken a week morphed into two and probed areas that advanced the Court’s understanding of real issues very little, while leaving aspects of some claims for extras unproven.

[13] The proportionality principle is so central to civil proceedings, that it finds its expression early on in the Rules of Civil Procedure, at Rule 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.”

[14] I cannot but observe that the plaintiff’s Bill of Costs dramatically exceeds even the amount he sought in his Statement of Claim, let alone my final damage award. Plaintiff attributes this to the adversarial machinations of the defendant, and some authorities do point out that highly adversarial conduct that forces matters on to trial and elevates legal expenses, should not be rewarded by smaller costs awards to the victorious party: Bonaiuto v. Pilot Insurance Co., [2010] O.J. No. 745 (S.C.), at para. 7; Luxterior Design Corp. v. Gelfand, 2014 ONSC 990, at paras. 23-24.

[15] In my view, the defendant was not interested in resolving this litigation. That was an unreasonable position for the defendant to hold.

[16] In balancing all of the circumstances of this case, it is my view that there must be a costs award made, from the defendant to the plaintiff. As I balance the factors set out in Rule 57.01 of the Rules of Civil Procedure, it is my view that a fair and reasonable award is $75,000, all in.

A.D. Kurke J. Released: May 26, 2016