Court File and Parties

COURT FILE NO.: 13-2417 DATE: 2016/08/16 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: JANE DARLENE ROLSTON (Plaintiff) And: JEFFREY RANDAL ROLSTON and JOANNE ROLSTON, DANIEL ROLSTON and KELLY SUZANNE ROLSTON (Defendants)

BEFORE: Justice I. F. Leach

COUNSEL: Frederick E. Leitch, Q.C., for the plaintiff John Sipos, for the defendants

HEARD: In writing

COST ENDORSEMENT

Introduction

[1] My decision in relation to a summary judgment motion, brought herein by the defendants, was released on May 16, 2016. It has since been reported as Rolston v. Rolston, [2016] O.J. No. 2518 (S.C.J.).

[2] In the final paragraph of my endorsement, I made provision for the tendering of written cost submissions if the parties were unable to reach an agreement on costs.

[3] Since then, I have received and considered the following material:

• a brief from the defendants, containing a cost outline, a bill of costs, a number of disbursement invoices, and various authorities, delivered on or about May 30, 2016;
• responding written cost submissions from the plaintiff, including an attached bill of costs, delivered on or about June 8, 2016; and
• reply written cost submissions from the defendants, delivered on or about June 14, 2016.

Overview of positions

[4] In broad terms, the defendants say in their primary written cost submissions that they should receive costs of the motion awarded on a partial indemnity basis, fixed in the amount of $34,995.66, (inclusive of fees and disbursements), plus applicable HST. In support of their claim, they rely on considerations that include the following:

• They say they enjoyed substantial success on the motion, insofar as they obtained an order summarily dismissing the majority of the plaintiff’s claims, and all of the claims which were the focus of the parties’ evidence arguments. They emphasize that the surviving claim of the plaintiff for an accounting of farm profits was not pressed by the plaintiff during the course of cross-examination or requested undertakings, and was not the focus of counsel submissions during the course of argument.
• They submit that the motion involved a good deal of complexity, insofar as it raised numerous legal issues, all of which needed to be addressed in the context of an extended historical context.
• They say the motion raised issues of considerable financial significance to the defendants, but also effectively operated to the benefit of both parties insofar as it succeeded in greatly reducing the issues in dispute and avoiding the time and expense required to resolve all issues through a full trial.
• The defendants suggest that the plaintiff acted unreasonably by advancing her claims, insofar as her personal interests conflicted with her role as an estate trustee. They also suggest that the plaintiff acted unreasonably, and unnecessarily prolonged the litigation, by pressing on with her claims and opposition to the defendants’ motion for summary judgment when the pleadings, affidavit evidence and cross-examinations progressively should have made it clear to the plaintiff that most of her claims should have been abandoned.

[5] The defendants also ask that their requested order for costs include terms requiring the plaintiff to pay the costs within 30 days, and preventing the plaintiff from taking any further steps in the litigation until the cost order has been satisfied.

[6] In response, the plaintiff apparently does not dispute that the defendants should be entitled to a measure of partial indemnity costs, but suggests that a more appropriate cost disposition would be an award of $10,000.00 for fees, $1,835.66 for disbursements, and $1,300.00 of HST, for a total cost award to the defendants in the amount of $13,135.66. In support of that position, she relies on considerations which include the following:

• She has tendered a bill of costs from her own lawyers, indicating that the costs she incurred in relation to the motion, assessed on a partial indemnity basis, came to $19,755.22. She says this reflects the amount of costs she reasonably could have expected to pay if she was unsuccessful in relation to the motion.
• She says that she actually enjoyed a good deal of success in relation to the motion, insofar as she was able to establish that the facts and equities demonstrated the presence of a meritorious claim that would have succeeded had it been brought against her brother’s estate, and that her claims were not barred by any applicable limitation period.
• She also notes that her claim for a partition order was dismissed on a without prejudice; i.e., without prejudice to the plaintiff’s ability to make a further request for such a partition order if and when necessary consent to such a partition is obtained through the mandated administrative law procedure. In that regard, the plaintiff’s responding written cost submission says it “appears likely that the severance policy will be amended in a way favourable to a potential severance of the Rolston property subject, of course, to appeal rights to the Ontario Municipal Board”.

[7] In reply, the defendants’ further written cost submissions include:

• emphasis on their degree of success based on substantive outcome, rather than incidental issue resolution;
• a suggestion that advancement of the plaintiffs’ claim against the defendants rather than the estate of the plaintiff’s brother “amounted to a misuse of this Court’s time and resources”;
• objection to the plaintiff’s suggestion that applicable partition policies are being re-examined, in support of which no admissible evidence was offered; and
• a suggestion that, if the hourly rated fees incurred by the defendants are found to be excessive on a partial indemnity basis, the defendants should instead be awarded costs on a substantial indemnity basis having regard to their substantial success.

Analysis

GENERAL PRINCIPLES

[8] Pursuant to section 131 of the Courts of Justice Act, R.S.O. 1990, c.C.43, as amended, and 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 costs shall be paid”.

[9] This is supplemented by the provisions of Rule 57.01, subsection (1) of which lists a broad range of factors the court may consider when exercising its discretion to award costs pursuant to section 131.

[10] Our courts repeatedly have emphasized that cost awards must not be a simple mechanical or mathematical calculation; e.g., focused merely on details of time spent multiplied by hourly rates, or a tabulation of disbursements actually incurred.

[11] Rather, all cost claims are subject to the “overriding principle of reasonableness”, as applied to the factual matrix of the case, pursuant to the ultimate “cross check” required by such authorities as Boucher, Moon and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC (2005), 75 O.R. (3d) 638 (C.A.), and Anderson v. St Jude Medical Inc. (2006), 264 D.L.R. (4th) 557 (Ont.Div.Ct.).

[12] The overall goal is to award costs in an amount that is “fair and reasonable for the unsuccessful party to pay in a particular proceeding”, rather than a sum tailored to an exact measure of the actual costs of a successful litigant. See Boucher v. Public Accountants Council for the Province of Ontario, [2004] O.J. No. 2634 (C.A.), at paragraph 26, and Zesta Engineering Ltd. v. Cloutier, [2002] O.J. no. 4495 (C.A.), at paragraph 4.

[13] In arriving at a global determination of a cost award that is “fair and reasonable” in this particular case, having regard to all the circumstances, my considerations therefore include but are not limited to those outlined below.

SCALE

[14] I reject the defendants’ suggestion that it might be appropriate to award costs on a substantial indemnity basis, in the particular circumstances of this case.

[15] Although the court has a broad discretion in relation to costs, confirmed by the statutory and Rule provisions outlined above, our appellate courts repeatedly have emphasized that awards of costs on a partial indemnity basis generally strike the proper balance as to the burden of costs that should be borne by the “winner”, and that elevated cost awards should be reserved for “rare and most exceptional” cases. See, for example, Foulis v. Robinson (1987), 21 O.R. (2d) 179 (C.A.), and Isaacs v. MHG International Ltd., (1984), 45 O.R. (2d) 693 (C.A.)

[16] The sort of conduct meriting elevated cost awards has been described in various ways.

[17] In Young v. Young, [1993] 4 S.C.R. 3, at p.134, McLachlin J. indicated that elevated cost awards are warranted “only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties”.

[18] In Mortimer v. Cameron (1994), 17 O.R. (3d) 1 (C.A.), and McBride Metal Fabricating Corp. v. H&W Sales Co. (2002), 59 O.R. (3d) 97, whose principles were echoed and emphasized again by the Court of Appeal in Davies v. Clarington, 2009 ONCA 722, [2009] O.J. No. 4236 (C.A.), conduct warranting elevated cost awards was described as “reprehensible”, “egregious”, or “acts that clearly indicated an abuse of process”, justifying enhanced costs as a form of chastisement.

[19] In this case, I see nothing in the conduct of the plaintiff warranting an award of costs on a substantial indemnity basis.

[20] The only consideration put forward by the defendants in that regard was their “substantial success”, but that is not a justification for awarding substantial indemnity costs, according to the authorities outlined above.

[21] The defendants should receive their costs of the motion only on a partial indemnity basis.

AMOUNT CLAIMED AND RECOVERED – RULE 57.01(1)(a)

[22] Rule 57.01(1)(a) permits the court to consider “the amount claimed and the amount recovered in the proceeding”.

[23] As noted in my substantive decision, the plaintiff’s claims against the defendants included a proprietary constructive trust, equitable mortgage and/or order of partition and sale in relation to the homestead, as well as an alternative claim for an accounting of farm profits from the homestead since 2007.

[24] The value of the claims relating directly to the homestead was the subject of evidence offered in relation to the motion.

[25] For example, the equitable interest sought by the plaintiff was linked to the value of her ongoing renovation expenditures on the homestead farmhouse and surrounding area. In the prelude to hearing of the summary judgment motion, the plaintiff quantified those expenditures at $212,769.35, but the plaintiff was asserting a right to reimbursement for future expenditures as well. The entitlement she was seeking to confirm, and the corresponding alleged obligation of the defendants, accordingly would have grown in magnitude over time.

[26] The plaintiff also tendered an appraisal which valued the homestead farmhouse and a surrounding acre of land at $270,000.00, albeit on the hypothetical premise that the property could be severed legally from the remaining portions of the homestead.

[27] The plaintiff obtained no recovery whatsoever in relation to those particular claims.

[28] The plaintiff’s claim for an accounting of farm profits since 2007 did survive the motion for summary judgment, but the net value of that claim has yet to be determined.

PRINCIPLE OF INDEMNITY – RULE 57.01(1)(0.a)

[29] Rule 57.01(0.a) permits the court to consider, in exercising its cost discretion, “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”.

[30] In their respective cost submissions, neither side questioned the indicated lawyer experience and corresponding hourly rates put forth in the other side’s bill of costs, and I independently find that the suggested partial indemnity hourly rates are reasonable in the particular circumstances of this case, having regard to the nature of the dispute, and the seniority and experience of counsel.

[31] In that regard, I note that the partial indemnity hourly rate of $300.00 suggested by defence counsel in this case is equal to (but does not exceed) the actual hourly rate charged to the defendants, but I see nothing objectionable in that. As indicated by authorities such as Mantella v. Mantella, [2006] O. J. No. 2085 (S.C.J.), at paragraph 7, in fixing partial indemnity rates the court does not look at the actual fee arrangement between solicitor and client and discount that arrangement to ensure that recovery is “partial”. To the contrary, if counsel is prepared to work at rates approximating partial recovery costs, that is counsel’s choice, and there is no reason why a client’s fee recovery ought to be reduced because he or she has negotiated a favourable rate with counsel, so long as the total of the indemnity does not exceed the fees actually charged.

[32] As for the amount of effort expended towards this matter, I am mindful of the general admonition, voiced by Justice Nordheimer in Basedo v. University Health Network, [2002] O.J. No. 597 (S.C.J.), but embraced by our Court of Appeal in Boucher v. Public Accountants Council (Ontario), supra, at paragraph 27, that “it is not the role of the court to second-guess the time spent by counsel unless it is manifestly unreasonable in the sense that the total time spent is clearly excessive or the matter has been overly lawyered”.

[33] I see nothing in the matter before me to suggest any concerns in that regard.

[34] The disbursements incurred by each side also were not questioned, and I independently find those incurred by the defendant to be reasonable and recoverable in the circumstances.

REASONABLE EXPECTATIONS OF UNSUCCESSFUL PARTY – RULE 57.01(1)(0.b)

[35] In conceding that she should pay some measure of costs to the defendants, the plaintiff seems to accept that, on balance, (and despite a measure of success revisited below), she generally should be regarded as “the unsuccessful party” in relation to the summary judgment motion.

[36] Pursuant to Rule 57.01(1)(0.b), the amount of costs she reasonably could expect to pay in relation to the motion are a relevant consideration.

[37] As noted above, the plaintiff filed her own bill of costs in that regard, indicating that she has incurred partial indemnity costs totalling $19,755.22, which is considerably less than those incurred and claimed by the defendants.

[38] In my view, however, that marked disparity is not without explanation.

[39] For example, the moving defendants effectively assumed a disproportionate share of responsibility for organizing and placing the extended history and substantial documentation underlying the parties’ dispute before the court. The thorough and accurate manner in which that was done was reflected, I think, in the nature of the plaintiff’s responding material. It generally supplemented, but did not contradict, the record put forth by the defendants.

[40] Moreover, I think it fair to say that the defendants expended considerably more effort in addressing each of the numerous legal issues raised by the motion.

APPORTIONMENT OF LIABILITY – RULE 57.01(1)(b)

[41] Rule 57.01(1)(b) permits the court to consider, in exercising its cost discretion, “the apportionment of liability”.

[42] As noted above, I found that the defendants in this case bore no liability in relation to most of the plaintiff’s claims.

[43] While I dismissed the plaintiff’s claim for a partition order on a without prejudice basis, (so as not to preclude a request for similar relief in the future if and when a consent to the proposed partition was obtained through the mandated administrative law procedures), the fact remains that the plaintiff’s claim in that regard was dismissed. I agree with the defendants’ submission that the informal indication of a pending re-examination change in

[44] While the plaintiff’s claim for an accounting of farm profits survived the motion for summary judgment, I agree with the defendants’ submission that the issue received comparatively little attention during the course of the motion. Party efforts and associated costs obviously were focused on the claims in respect of which the defendants successfully moved for summary judgment.

[45] In exercising their discretion in relation to cost determinations, courts also sometimes consider the broader question of whether success in relation to particular issues was divided; i.e., either through a broad interpretation of Rule 57.01(1)(b) that does not restrict focus to “liability” per se, or resort to the court’s broad discretion under s.131 of the Courts of Justice Act, supra.

[46] In my view, certain aspects of the plaintiff’s cost submissions invite such an analysis. For example, they focus on my incidental determinations that the plaintiff would have had a meritorious claim against her brother’s estate, and that her claims were not barred by any applicable limitation period. The plaintiff emphasizes that she was “successful” in relation to those issues, which should be reflected in any cost award.

[47] In making my cost determinations, I nevertheless am not inclined to place reliance on such considerations in the particular circumstances of this case.

[48] As emphasized by our Court of Appeal in Oakville Storage & Forwarders Ltd. v. Canadian National Railway Co. (1991), 5 O.R. (3d), leave to appeal to the Supreme Court of Canada refused (1992), 6 O.R. (3d) xiii (note), and Skye v. Matthews (1996), 47 C.P.C. (3d) 222 (C.A.), while distributive cost awards are still a possibility, they are rarely if ever appropriate.

[49] In this case, the defendants offered multiple reasons why the targeted plaintiff claims needed to be dismissed. Not all of those reasons were accepted, but that should not detract from the reality that the defendants were successful in defeating most of the plaintiff’s claims, and all of the claims in respect of the costs under consideration primarily were incurred.

COMPLEXITY OF PROCEEDING AND IMPORTANCE OF ISSUES – RULES 57.01(1)(c) AND RULES 57.01(1)(d)

[50] Rules 57.01(1)(c) and 57.01(1)(d) permit the court to consider, in exercising its cost discretion, “the complexity of the proceeding” and “the importance of the issues”.

[51] In that regard, I agree with the defence submission, (not challenged or questioned by the plaintiff), that various aspects of this litigation involved inherently complex matters. Years of underlying developments needed to be canvassed in a thorough fashion, not only to establish what had been said and done, but to make clear what had not been said and done; e.g., in terms of putting the defendants on notice of the plaintiff’s intended claims. As outlined in my endorsement, that extensive factual matrix in turn gave rise to many somewhat unusual legal issues.

[52] Similarly, I accept that the issues in this case were of fundamental importance to the parties. From their perspective, the disputed sums and property interests represented considerable claims and exposures. Those stakes were compounded by the understandable emotional aspects of this unfortunate family dispute.

CONDUCT AND/OR STEPS THAT LENGTHENED PROCEEDING – RULES 57.01(1)(e) AND 57.01(1)(f)

[53] Rule 57.01(1)(e) permits the court to consider, in exercising its cost discretion, “the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding”.

[54] Rule 57.01(1)(f) permits the court to consider whether any step in the proceeding was “improper, vexatious or unnecessary”, or “taken through negligence, mistake or excessive caution”.

[55] In my view, however, these are not factors that resonate in this case, at least in terms of finding fault with the conduct of the plaintiff.

[56] In that regard, the defendants essentially submit that the plaintiff should have realized well before argument of the summary judgment motion, (e.g., through progressive exposure to the defendants’ pleading, the defendants’ motion material, and the results of cross-examination on the parties’ affidavit material), that her position on the issues raised by the motion was untenable and conceded the inevitable. The plaintiff instead forced the matter on to a formal determination, necessitating the expenditure of considerable time and expense that might otherwise have been avoided.

[57] While such arguments are tempting with the benefit of hindsight, I think they ignore the complexities mentioned above, and the uncertainties reflected by the defendants’ own multi-pronged attack relying on various alternative arguments.

[58] In the circumstances, and having regard to the obvious personal importance the plaintiff placed on her claims, (which gave rise to certain equities, albeit not superior to equities favoring the defendants), I do not think she acted unreasonably in requiring a court determination of the underlying issues.

[59] On the other hand, I agree that the defendants do merit recognition for pursuing a strategy that effectively narrowed and shortened the proceeding considerably, for the benefit of all concerned. Both the defendants and the plaintiff would have incurred considerably more prolonged uncertainty and expense had all of the issues been determined only after a lengthy and much more expensive trial.

REFUSAL TO MAKE APPROPRIATE ADMISSIONS – RULE 57.01(1)(g)

[60] Neither side suggested this was a relevant factor or consideration in the determination of an appropriate cost award in this case. Nor do I independently think the factor has any relevance here.

ANY OTHER MATTER RELEVANT TO COSTS – RULE 57.01(1)(i)

[61] Under the rubric of “any other matter” relevant to costs, (and the provisions of Rule 49.13), my attention was drawn to the settlement offers exchanged by the parties in advance of the motion.

[62] However, it seems common ground that the formal outcome of the motion did not generate a result “as favourable as or more favourable than” the terms of either side’s offer to settle, so as to engage the provisions of Rule 49.10. (The defendants proposed a binding discontinuance of the entire action, coupled with a $10,000.00 cost payment by the plaintiff to the defendants. The plaintiff proposed a complete withdrawal of the defendants’ summary judgment motion, coupled with a $10,000.00 cost payment by the defendants to the plaintiff.)

[63] In any event, I independently find that the offers have no relevance to my cost determination.

[64] One residual “other matter” I nevertheless do have in mind is that mentioned earlier, in paragraph 58, supra.

[65] As noted in my substantive decision, (e.g., at paragraphs 85-87), the situation here involved one of those unfortunate cases in which the equities, (by which I mean entitlements and rights generated by established equitable principles), were not one-sided.

[66] The sad reality is that both the plaintiff and the defendants were placed in an unfortunate position by the events leading to the current dispute. Both sides arguably were exposed to a perceived injustice. It was a situation of competing equities, which nevertheless had to be resolved in favour of the defendants for the reasons outlined in my decision.

CONCLUSION

[67] It has been said many times, and in many ways, that discretionary cost determinations are far from an exact science.

[68] Again, the overall goal is to award costs in an amount that is fair and reasonable in a particular proceeding – having examined various factors such as those outlined in Rule 57.01.

[69] Having regard to all the circumstances of this particular case, including the various countervailing considerations explored in detail above, I think justice will be served in this particular case if my discretion is exercised so as to award the defendants their costs of the summary judgment motion, fixed in the all-inclusive amount of $27,000.00.

[70] An order shall go accordingly.

[71] As noted above, the defendants sought additional terms of any cost order; e.g., requiring the plaintiff to satisfy the aforesaid cost order within 30 days, and precluding the plaintiff from taking any further steps in the litigation pending the payment of the ordered costs.

[72] I am mindful of the reality that the plaintiff is a retired person, who has devoted considerable savings and expense towards an asset, in respect of which she now has been confirmed to hold only a life interest. I expect those circumstances, and responsibility for payment of her own legal fees, (documented in her bill of costs), may make it more challenging for her to finance complete payment of this additional cost order within 30 days. In the circumstances, I will make the $27,000.00 cost award payable within 90 days.

[73] Moreover, in the circumstances before me, I am not inclined to preclude the plaintiff from taking further steps in the litigation unless and until the cost award has been paid.

[74] In that regard, I am mindful of the reality that the plaintiff has an ostensible ongoing entitlement vis-à-vis the defendants, (an accounting of the net farm profits from the homestead back to 2007), in respect of which she apparently has been paid nothing to date. That entitlement, when quantified, may generate a demonstrable offsetting consideration to be weighed against the plaintiff’s obligations to the defendants. The plaintiff should not be precluded from taking steps in that regard as soon as possible.

[75] Moreover, if the plaintiff fails to address her cost obligations within the more extended timeframe permitted, the defendants will have other remedies provided by the Rules.

[76] In the result, the plaintiff is ordered to pay the defendants their costs of the summary judgment motion, fixed in the all-inclusive amount of $27,000.00, payable within 90 days.

“Justice I. F. Leach” Justice I F. Leach Date: August 16, 2016

[1] I agree with the defendants’ submission that the plaintiff’s informal indication of a pending re-examination of the applicable severance policy is not supported by admissible evidence, and should not be considered for the purpose of this cost determination. However, I think such a development irrelevant in any event, as it has no bearing on the proper outcome or corresponding entitlement to costs at the time the motion was argued and determined.