Court File and Parties

Citation: Deluca v. Canada, 2016 ONSC 6982 Court File No.: CV-15-531808 Date: 2016-11-10 Superior Court of Justice - Ontario

Re: Frank Deluca, Plaintiff And: Her Majesty the Queen in Right of Canada as represented by the Attorney General of Canada, David Duff and Kathleen Sturkenboom, Defendants

Before: S. F. Dunphy, J.

Counsel: Paul H. Starkman, for the Plaintiff Nancy Arnold and Angela Shen, for the Defendants

Heard: In Writing

Costs Endorsement

[1] On June 20, 2016 I granted the defendants’ motion for dismissal of the plaintiff’s action with costs: Deluca v Canada, 2016 ONSC 3865. The parties were requested to make written submissions regarding the scale and amount of costs and have done so. My ruling on the matter of costs and reasons therefor follow.

[2] The successful moving party defendants seek costs of $51,799.19 on a substantial indemnity basis or, alternatively, $35,523.82 on a partial indemnity basis. The plaintiff has submitted its own costs outline evidencing substantial indemnity costs of $7,645 and partial indemnity costs of $6,618. He submits that the defendants’ costs should not exceed his own substantial indemnity costs for this relatively narrow Rule 21 motion.

[3] The Crown was ably represented by in-house counsel from the Department of Justice. Their “in-house” status does not thereby disentitled from recovering costs: s. 131(2) Courts of Justice Act, R.S.O. 1990, c. C.43. However, care must be taken that an award of costs does not depart from the principle of indemnity.

[4] The defendants’ counsel have conceded that the relatively low rate at which the DOJ charges back the relevant government departments for the services of its lawyers covers only part of the actual costs of the DOJ, the balance being absorbed in DOJ’s own budget allocation. Accordingly, the defendants have applied the tariff rates found in the 2005 “Notice to the Profession” published by the Costs Subcommittee of the Civil Rules Committee. In so doing, the defendants rely on the decision of Hambly J. in City of Hamilton v. Attorney General et al, 2012 ONSC 1363.

[5] The plaintiff submits that the City of Hamilton case is being misapplied by the plaintiff and that the rates and hours claimed are both excessive for a Rule 21 motion that required no evidence and was premised upon a narrow questions of law.

[6] In my view, the rates claimed by the defendants – determined in accordance with the same Notice to the Profession as was applied by Hambly J. in City of Hamilton – are reasonable for the reasons expressed by Hambly J. in that case. I do not propose to quibble with them. Indeed, they could reasonably be adjusted upwards somewhat to reflect inflation since 2005.

[7] That being said, I do concur with the plaintiff that the process of assessing costs is not confined to a simple mechanical exercise of counting hours and determining the relevant rate to multiply them by. The criteria listed in Rule 57.01 of the Rules of Civil Procedure make this quite clear. If there is a golden rule in costs it is that the result must be one that appears fair and reasonable in all of the circumstances. When s. 131 of the CJA places costs in the discretion of the court, that is what is intended. The criteria in Rule 57.01(1) of the Rules of Civil Procedure are something of a checklist to be reviewed in making that overall assessment. The reasonable expectations of the losing party are but one of the criteria to be consulted in searching for that elusive answer, albeit an important one.

[8] There is another reason to be wary of a mechanical application of hours and rates to the process. In the “traditional” law firm model, lawyers charge their clients by the hour. The bulk of the jurisprudence and practices applied in the matter of costs derives from and is premised on this traditional model. However, there is a “market” check and balance implicit in that process that ensures the result cleaves closely to the standard of reasonableness. Clients will no more willingly pay for excess hours or inflated rates than will losing parties. In private firm practice, a 10 hour day often delivers little more than half of that number of billable hours. Lawyer’s rates or hours that become detached from value delivered are soon discounted or the lawyer will be left with a lot of time on his or her hands. However, that “traditional” model is imperfectly applicable to two categories of legal practitioners: in-house law departments (whether private or public) and firms that primarily bill on a contingent basis. Both of these are able to allocate time and resources to matters with less of a weathered eye on the ruthless math of hours x rates than their private practice counterparts. In these cases, the market discipline applicable to the “traditional” model can be blunted to a greater or lesser degree. I do not intend thereby to slight in any way the integrity, diligence or efficiency of the often admirable counsel that emerge from those environments. In a practice as challenging and complex as the law, there is no luxury more precious than time.

[9] In the present case, I find the above observation to be apt. While I don’t doubt that the time claimed was docketed and spent by the relevant DOJ lawyers, the total of time charged for a relatively straightforward motion without evidence on a narrow question of law was considerably out of proportion to the tasks in question and to the time that a defendant could reasonably expect to pay for were an arm’s length external law firm involved. On the other hand, the results obtained clearly vindicated the DOJ’s efforts on behalf of its clients in this matter.

[10] I am persuaded that there are excessive hours recorded in the aggregate, although I am loath to micromanage the file in hindsight and stipulate exactly where and to what degree there was duplication or excessive time recorded.

[11] The defendants suggest two aggravating factors warranting a higher scale of costs or a more generous award.

[12] Firstly it is claimed that the plaintiff failed to avail himself of an offer to settle on the basis of abandoning his claim without costs. Secondly, it is claimed that his continued resistance was unreasonable after having been provided with two cases that ought to have made it clear that his claim was without hope.

[13] I cannot find that the failure of the plaintiff to have capitulated on demand was necessarily unreasonable. Courts are there to resolve disputes. The plaintiff was not successful in his arguments, but I have no basis to find that they were advanced in bad faith or insincerely. I have found no aggravating factors arising from the conduct of the parties in this case.

[14] If the defendants’ claimed hours are excessive as I have found, what amount of costs should be awarded? The plaintiff offers as a comparative guide its own actual costs that were a fraction of the amount claimed by the defendants. While the plaintiff’s Outline of Costs is restricted to the motion itself (no amount for the drafting of pleadings was included), the comparative exercise remains reasonably valid. This case did not proceed very far and was fully resolved with the defendants’ motion.

[15] In the circumstances, I have determined that an all-inclusive amount of $15,000 represents a fair and reasonable amount for the partial indemnity costs of the defendants. The reasonable expectations of the unsuccessful plaintiff cannot extend to expecting an exact mirror of his own costs. The moving party often bears the greater load and it was so in this case. The defendants were entitled to take the time needed to ensure that the “knock-out” blow they intended to deliver was properly formulated and presented. On the other hand, the actual costs of the losing party must certainly be consulted in forming a view as to the reasonable expectations of the losing party.

[16] Order accordingly.

S. F. Dunphy, J.

Date: November 10, 2016