Court File and Parties

Court File No.: CV-15-524984 Date: 2016-09-14 Superior Court of Justice - Ontario

Re: Best Source Inc., Plaintiff And: International Industries Corporation and David Cloer, Defendants

Before: R.F. Goldstein J.

Counsel: Carmine Scalzi and Miguel Mangalindan, for the Plaintiff, Responding Party Michael F. Smith, for the Defendants, Moving Parties

Heard: In Writing

Costs Endorsement

[1] Best Source, the Plaintiff, is an Ontario company. International Industries is a South Carolina company. David Cloer resides in South Carolina. Best Source sued International Industries and Cloer in this Court. On July 5, 2016 I granted a motion to stay the action: Best Source Inc. v. International Industries Corporation and David Cloer, 2016 ONSC 4423. I found that an arbitration clause in the sales agency agreement applied.

[2] International Industries and Cloer, the Defendants, now seek their costs. They seek partial indemnity costs in the amount of $26,337.50 up until August 15, 2015. They made an offer to settle on August 15, 2015. They offered to settle the matter by dismissing the action without costs, to have the matter determined by arbitration, and to have costs of the motion of $500.00 paid by Best Source. They seek substantial indemnity costs of $40,469.00 (including a U.S. counsel fee of C$7,970) after August 15, 2015. They also seek disbursements of $1,643.05. The total sought is $68,449.55.

[3] Best Source concedes that The Defendants are entitled to their costs in accordance with the usual rule. Best Source also does not appear to take issue with the principle that the Defendants are entitled to substantial indemnity costs after the offer to settle was made. Rather, Best Source argues that the costs sought are excessive, unreasonable, and outside the reasonable expectation of the parties. Best Source argues that a reasonable amount for counsel fees is $16,975.00 plus HST and disbursements. Their own costs outline sets out partial indemnity costs plus HST and disbursements in the amount of $20,327.57.

[4] The key principle was set out by Armstrong J.A. in Boucher v. Public Accountants Council for the Province of Ontario, [2004] O.J. No. 2634, 71 O.R. (3d) 291 (C.A.) at para. 26:

Overall, as this court has said, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.

[5] I agree with The Defendants that the matter was of great importance to them (it ended the litigation). I also agree that the conduct of Mr. Calabrese (the principal of Best Source) tended to cause costs to rise. In particular, he insisted that he was never aware of the sales agency agreement. I found otherwise. I also agree that The Defendants are entitled to reasonable substantial indemnity costs after the offer to settle.

[6] That said, I agree that much of the amount claimed by The Defendants is unreasonable. A brief examination shows that the costs sought are excessive and do not take account of the reasonable expectations of a losing party. For example, counsel (a lawyer with 42 years of experience) spent over 105 hours on this matter, which, as Best Source points out, is the equivalent of about 13 full working days of time. The motion was two hours and not particularly complex.

[7] I disagree with counsel for Best Source that the consultations between U.S. counsel and Canadian counsel were unnecessary. Clearly some consultation was necessary in order to determine whether it was more cost-effective to litigate in Canada or the United States. I do agree, however, that the amount of time (42 hours) was excessive.

[8] In my view, a fair and reasonable amount that a losing party could expect to pay for a high-stakes motion of this nature is in the range of about $20,000.00 to $40,000.00, including disbursements and HST. This lower amount is reflected in the costs outline submitted by Best Source. Given the offer to settle and the substantial indemnity costs incurred as a result, I find that the amount should be at the higher end of the range. Accordingly, costs are awarded to Best Source and International Industries in the amount of $40,000.00.

R.F. Goldstein J. Date: September 14, 2016