Court File and Parties

Court File No.: CV-13-486705 Date: 2016-07-18 Ontario Superior Court of Justice

Between: Monique Savin (Plaintiff) And: Granite Club (Defendant)

Before: M. D. Faieta, J.

Counsel: Monique Savin on her own behalf Allyson M. Fischer for the Defendant

Costs Endorsement

Background

[1] The Plaintiff obtained Default Judgment in the amount of $125,385.00 plus costs of $750.00 on April 6, 2016.

[2] On April 20, 2016, Justice Dunphy stayed the execution of the Default Judgment. He ordered that the Plaintiff pay costs of the motion in the amount of $750.00.

[3] On June 22, 2016, I heard the Defendant’s motion to set aside the Default Judgment. On June 24, 2016, I granted the motion and invited costs submissions from the parties: see Savin v. Granite Club, 2016 ONSC 4215.

[4] The Defendant’s submissions, dated June 28, 2016, claim substantial indemnity costs in the amount of $18,275.94 from the Plaintiff.

[5] On June 28, 2016, the Plaintiff, who is self-represented, sent several email messages to my assistant including the following three messages:

I served Hicks and filed my notice of dismissal with the court last Friday. Thus the matter is concluded. No costs accordingly. Please advise Faieta of the status.

I understand with a discontinuance filed in court, this matter is over. I can’t pay costs as I receive ODSP. I’m in disagreement with his costs. Faieta should recall I did not ask for costs from Granite for my attendance at my April 6 default hearing. I ask that he deny their costs submitted to him.

I won’t provide my costs. I can’t. I’m recovering from a medical procedure and am unavailable to provide them. Would he like my doctor to fax/email him?

[6] An email was sent to the Plaintiff by my assistant on July 6, 2016. The email message from my assistant appears to have been blocked by the Plaintiff as my assistant’s email was returned with the message “Delivery to the following recipient failed permanently … Technical details of permanent failure: The requested recipient could not be reached. You do not have permission to send to this recipient. …”

Analysis

[7] I agree with the following statement made by Justice Myers in Fimax Investments v. Grossman, 2015 ONSC 2048, at para.7:

The fixing of costs is a discretionary decision under s.131 of the Courts of Justice Act. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the complexity of the issues (57.01(1)(c)). Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v Public Accountants Council (Ontario), (2004), 71 O.R. (3d) 291 (Ont. C.A.), at paras 26, 37.

[8] To the above principles I add an observation regarding proportionality.

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

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.

[10] The introduction of this overarching principle of proportionality was one of many amendments made in 2008 to the Rules of Civil Procedure whose purpose was to respond to concerns about the excessive cost and delay of the civil justice system. [^1]

[11] I agree with the views expressed in 2008 by the late Martin Teplitsky, O.Ont., Q.C., LSM, LL.D., regarding the main problem with access to the civil justice system in Ontario:

The problem is hourly rated billings, what Justice Farley called the “mindless multiplicand of an hourly rate times docketed hours.”

There are a number of problems with time-based billings. First, they provide a disincentive to settle because settlement eliminates billing opportunities. This disincentive does not exist for the “value biller” or “contingent fee biller”. Second, they encourage the use of more staff per file because each additional person can also bill per hour. It is obvious to any observer that, particularly with large firms, two or three lawyers and/or students show up at every opportunity. Third, the longer any step takes, the more the client pays. There is no incentive for efficiency. Inefficiency attracts a prize, not a penalty. Fourth, this practice deflects consideration of what the client can afford to pay and any cost-benefit analysis. In fact, with the practice of time-based billings, legal fees are often greater than the cost of settlement or the value of the dispute. The goal of proportionality is not achievable under this billing practice.

The practice of time-based billings was criticized as long ago as 1911, when Mr. Justice Middleton wrote a scathing denunciation of them. More recently, Justice Robert Blair, in his Civil Justice Review, called for a task force to address the issue. That was 12 years ago; nothing has happened since. [^2]

[12] In my view, the principle of proportionality informs the balancing of interests in deciding whether an award of costs is “fair and reasonable”: see Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520, at paras. 126-7. The meaningful application of the principle of proportionality in this context dictates that less weight should be placed on the principle of indemnity (as reflected by the hourly rate charged and the time spent by a lawyer) and greater weight should be placed on considerations of the complexity and jurisprudential importance of the issues and the amount involved in the dispute.

[13] I now turn to assess the various relevant considerations in assessing costs in this matter.

Result in the Proceeding

[14] The motion to set aside the Default Judgment was granted.

Offers to Settle

[15] On June 17, 2016, the Defendant offered to settle its motion to set aside the Default Judgment that was returnable on June 22, 2016 on the basis that the Plaintiff would consent to an Order setting aside the Default Judgment and that the Defendant would not seek payment of costs of $750.00 ordered by Justice Dunphy on April 20, 2016. The Plaintiff’s response later that day was as follows:

Gather Hogg Sullivan Hale Jung DiRenzo and D’Andrea to beg me – in person – on their knees – to accept this offer.

Otherwise, you know where I’ll be June 22.

Principle of Indemnity

[16] The Defendant claims substantial indemnity costs in the amount of $18,275.94 comprised of:

• Fees for Motion: $12,859.50;
• Counsel Fee: $1,750.00;
• HST on legal fees – 13%: $1,241.28;
• Disbursements, including HST: $778.45.

[17] The Defendant has not explained why it claims a “counsel fee” of $1,750.00, or how that amount was calculated, in addition to its “fees for the motion.” Given that its Bill of Costs for “fees for the motion” includes attendance at the motion, the claim for a counsel fee appears redundant and, accordingly, is denied.

[18] The Outline of Costs shows that 38.1 hours were spent by counsel for the Defendant in bringing this motion to set aside the Default Judgment. The Outline provides the gross number of hours spent by the three lawyers who worked on this motion but it does not specify the number of hours worked by each lawyer on each identified fee item (namely, motion preparation, legal research, preparation for motion including preparation of motion materials, review of responding materials, preparation of reply motion materials; communications with client; preparation of argument; attendance at the motion). In my view the number of hours spent on a relatively straightforward motion to set aside a default judgment was excessive.

[19] On the other hand, I find that the hourly rates claimed for each of the three lawyers as reasonable given their year of call.

The Amount that an Unsuccessful Party could Reasonably Expect to Pay

[20] Typically a comparison of the costs sought by the parties assists in determining what amount was reasonably within the reasonable contemplation of the losing party. However, the Plaintiff is unrepresented and no such information has been provided.

The Amount Claimed and the Amount Recovered

[21] This consideration has no application on the facts given that this was a motion to set aside a default judgment.

The Apportionment of Liability

[22] Again, this consideration has no application on the facts of this case.

The Complexity of the Proceeding

[23] This motion was relatively simple. The hearing of the motion took 45 minutes.

The Importance of the Issues

[24] The Defendant submits that the issues raised by the motion were significant because it would have required the Defendant to pay a significant amount of money to the Plaintiff for which it is not contractually responsible. In my view, this submission addresses the importance of the motion to the Defendant rather than the jurisprudential importance of the issues raised by the motion to set aside the Default Judgment. In my view, the determination of the issues raised by the motion are unlikely to have any importance to anyone other than the parties.

The Conduct of any Party that Tended to Shorten or Lengthen Unnecessarily the Duration of the Proceeding

[25] The Plaintiff refused to accept an offer to settle made by the Defendant on June 10, 2016 whereby in exchange for the Plaintiff’s consent to set aside the Default Judgment, the Defendant would have waived payment of the costs of $750.00 ordered by Justice Dunphy.

Whether any Step in the Proceeding was Improper, Vexatious or Unnecessary or Taken Through Negligence, Mistake or Excessive Caution

[26] The Defendant submits that the Plaintiff noted the Defendant in default while the Defendant was waiting for a response to draft settlement documents.

[27] Further, the Defendant submits that the Plaintiff admitted that the Defendant would be successful on the motion but refused to consent to set aside the Default Judgment. On June 10, 2016, the Plaintiff stated in an email to the Defendant’s counsel:

You and I know you’ll get the default set aside. Tally up $750 owing with the cost for June 22 now. I’ll come and given [sic] you cash. I’m in the lobby of your building.

[28] The Plaintiff continued with the enforcement of the Default Judgment in the face of the motion to set aside the Default Judgment. On the morning that the stay of these enforcement proceedings was argued before Justice Dunphy, the Plaintiff obtained a writ of execution against the Defendant and served a Notice of Garnishment immediately after the motion.

A Party’s Denial of or Refusal to Admit Anything that Should Have Been Admitted

[29] As noted earlier, the Plaintiff acknowledged that the Defendant would be successful on the motion but did not consent to an order setting aside the Default Judgment.

Whether it is Appropriate to Award any Costs or More Than One Set of Costs Where a Party Commenced Separate Proceedings

[30] This consideration has no relevance on this motion.

Any Other Matter Relevant to the Question of Costs

1) Inability to Pay

[31] The Plaintiff claims that she is unable to pay costs. Impecuniosity alone is not a sufficient basis to refuse to grant an award of costs. This would invite an impecunious litigant to ignore the rules of the court with impunity or to conduct her case in an unreasonable manner. Accordingly, there must also be exceptionally sympathetic circumstances surrounding the outcome of the proceeding to justify the refusal of an award of costs. [^3]

[32] The Plaintiff has not provided any evidence to support her claim of impecuniosity. [^4] Further, the Plaintiff’s circumstances are not sympathetic nor has she conducted this motion in a reasonable manner for the reasons described earlier. Accordingly, the Plaintiff’s alleged impecuniosity is insufficient reason to deny the Defendant its costs of this motion.

2) Discontinuance of Action

[33] The Plaintiff submits that her discontinuance of this action against the Defendant disentitles the Defendant from seeking costs. Rule 23.05 of the Rules of Civil Procedure provides otherwise. It provides that any party to an action may make a motion respecting the costs of the action within thirty days after the action is discontinued. Accordingly, I dismiss the Plaintiff’s submission that the Defendant is not entitled to seek costs of this motion because she has discontinued this action.

Conclusions

[34] In weighing the above considerations two points emerge.

[35] First, the legal fees claimed on this motion (comprised of 38.1 hours on a straightforward motion to set aside a default judgment) far exceed what I believe is reasonable.

[36] Second, the Defendant is entitled to its costs on a substantial indemnity basis. The Plaintiff admitted that she expected that the Default Judgment would be set aside yet refused to consent to an order that set aside the Default Judgment. It appears that her fruitless opposition to this motion was motivated by her dislike of the Defendant and certain of its representatives as well as an interest in seeing the Defendant incur legal costs. It is my view that the Plaintiff’s conduct satisfies the standard of “reprehensible, scandalous or outrageous conduct” that would support an award of elevated costs: see Young v. Young, [1993] 4 S.C.R. 3, page 134; Davies v. Clarington (Municipality), 2009 ONCA 722, para. 28.

[37] Applying the considerations described above, including the principle of proportionality, I find that it is fair and reasonable to award the sum of $8,000.00 in costs to the Defendant.

M. D. FAIETA, J. Released: July 18, 2016

Footnotes

[^1]: The principle of proportionality was a central theme of the recommendations made by The Honourable Coulter Osborne in his report for the Attorney General of Ontario entitled “Summary of Findings and Recommendations of the Civil Justice Reform Project, November 2007. [^2]: Martin Teplitsky, Q.C., L.S.M., “Making civil justice work: A new vision,” 27 Advocates’ J. No. 3., 7-15, at paras. 9-11; Also see BNY Financial Corp.-Canada v. National Automotive Warehousing Inc., 87 A.C.W.S. (3d) 446, at para. 5 (Ont. Gen. Div.); Re Solicitors, 18 O.W.R. 366, at para. 2; Justice Blair’s Ontario Civil Justice Review, November 1996, recommended “[t]hat the Ministry of the Attorney General, in conjunction with the Judiciary, the Bar, and the Public, establish a Working Group to study the question of the "cost" of justice, both from an institutional or systemic perspective and from the perspective of individual litigants, with a view to completing a report within one year of the creation of the Working Group. Further that the Working Group include in its study, in particular, the question of alternatives to the billable hour as a mechanism for establishing lawyers' fees, including the concept of "results based" or overall value for services based billing.” [^3]: Belvedere v. Brittain Estate, 2009 ONCA 691, [2009] O.J. No. 4062, paras. 6-8. [^4]: Sutherland v. Manulife, 2011 ONSC 1170, para. 10.