Dalron Commonholds (Montrose) Inc. v. Campbell, 2016 ONSC 7237

Dalron Commonholds (Montrose) Inc. v. Campbell

CITATION: Dalron Commonholds (Montrose) Inc. v. Campbell, 2016 ONSC 7237

COURT FILE NO.: C-5052-16

DATE: 2016-11-28

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Dalron Commonholds (Montrose) Inc.

Plaintiff

– and –

Kevin Campbell

Defendant

COUNSEL:

D. Peter Best, for the Plaintiff

Spencer Ball, for the Defendant

HEARD: November 18, 2016

RULING ON COSTS

Gauthier, J.

The Motions

1There are two motions before me:

1. The plaintiff’s (“Dalron”) motion for the following relief:

(a) an order striking out the counterclaim on the ground that it discloses no reasonable causes of action (the Rule 21 motion);

(b) an order striking out the jury notice (the “Jury Notice motion”);

(c) an order striking out the statement of defence and counterclaim (the “Rule 25 motion”); and

(d) substantial indemnity costs, because of the allegations of deceit.

2. The defendant’s (“Campbell”) motion for:

(a) an order amending the statement of defence and counterclaim in terms of a draft fresh as amended statement of defence and counterclaim;

(b) an order striking out paragraphs 4, 17, 18, 21, 22, 23, 25, 26, 27, 29, 30, 36(i) and 40 of the statement of claim; and

(c) costs on a substantial indemnity basis.

2At the outset of the hearing of the motions, plaintiff’s counsel advised me that he was withdrawing the claim pertaining to the jury notice.

3Defendant’s counsel advised me that he was not proceeding with (c) of his motion, that is, to strike out specified paragraphs of the statement of claim.

4Both counsel advised me that the issues raised in (a) and (b) of the plaintiff’s motion record, as well as the claim for relief contained in (a) of the defendant’s motion record, had been resolved. On consent, the defendant is granted leave to deliver the fresh as amended statement of defence and counterclaim at tab 3 of the defendant’s motion record.

5Essentially, then, what is left before me is the issue of costs, which both sides claim.

6A land dispute between the parties began in 2014. It apparently continues to be ongoing.

7The statement of claim was issued on July 18, 2016, and served on July 19, 2016. Dalron claims damages in the amount of $200,000 for trespass and nuisance, as well as an interlocutory and permanent injunction requiring Campbell to abate the trespass and the nuisance. Dalron further claims the sum of $200,000 for breach of contract and/or for restitution.

8A statement of defence and counterclaim was delivered on August 31, 2016.

9On September 8, 2016, Dalron’s counsel communicated with Campbell’s counsel by facsimile. The relevant portions of the letter are as follows:

In my view your pleadings violate [sic] numerous rules of pleading, including, but not limited to:

• Atmospheric, prejudicial, irrelevant assertions – paragraphs 5, 7, 25, 63, 65;

• Repeated personal references to “Mr. Arnold” having the prejudicial effect of making it appear that Mr. Arnold acted as an independent agent rather than as an agent of the plaintiff, or that the rights being asserted were those of Mr. Arnold’s personally, and not those of the plaintiff – paragraphs 9, 11, 15, 16, 17, 18, 25, 34, 48, 53, 56, 57, 58, 59, 62, 63, 64, 66 and virtually the entire Counterclaim;

• Pleading evidence –paragraph 19;

• Engaging in legal argument – “misleading” pleadings – paragraphs 38, 48, 49, 53, 56, 61, 63, 64, 66;

• Inappropriate emboldening and underlining, constituting a form of argument – paragraphs 11, 13, 18, 28, 31, 50, 52, 66.

My client also asks that you discontinue the Counterclaim, because, on these facts as pleaded by both parties, it pleads no reasonable cause of action.

It is hoped that a pleading motion can be avoided.

I would also ask that you withdraw your Jury Notice. An injunction and other equitable relief are claimed in the Statement of Claim. Therefore Section 108(2) of the Courts of Justice Act is engaged, which states in effect that this action cannot be tried by a judge and jury.

I would appreciate your response to all of the above within seven days of the date of this letter.

10On September 9, 2016, Campbell’s counsel responded as follows:

Thank you for your letter of September 8^th, 2016. Unfortunately I cannot comply with your unilateral ultimatum to respond within seven days. Your suggested time line for a response is unreasonable.

If you bring a pleadings Motion, you will have to set out with particularity exactly your objection is as it relates to each and every paragraph.

I would ask that you consider doing that in a form of a letter. I can then take this information, review it, meet with my client and obtain instructions and in this fashion save both your client and mine the expense of having to prepare for a pleadings Motion.

In this fashion, your hope as expressed in your letter that the pleadings Motion can be avoided, may be avoided in this fashion.

May I please hear from you.

11Dalron’s counsel then wrote to Campbell’s counsel on September 13, 2016:

This is in reply to your letter of September 9^th.

I did set out in my letter of September 8^th, with reasonable particularity, the numbered paragraphs to which I took objection, and the basic reason(s) for the objection in each case.

I cannot burden my client with the extra costs involved in your demand for a more detailed letter.

I believe that my letter of September 8^th constitutes reasonable and fair notice of my client’s positions and concerns.

I take your letter of September 9^th as a basic disagreement to the contents of my letter of September 8^th, and an unwillingness to engage with the serious issues raised in the letter and/or reconsider your pleading.

I will prepare my motion materials.

12The exchange of correspondence continued, with Campbell’s counsel responding to the September 13, 2016, in this fashion:

Thank you for your letter of September 13^th, 2016.

You are a master of many things however, you cannot read my mind.

Your comment that you take my letter of September 9^th as a basic disagreement to the content of your letter of September 8^th, 2016 and an unwillingness to engage with the serious issues raised in the letter and/or reconsider my pleadings is disingenuous.

The letter was intended to engage in that dialogue however you have chosen to burden the Court with a pleadings Motion.

I will be in attendance to ask the Court to adjourn the Motion for the following reasons:

1. I will shortly deliver a Third Party Claim against Mr. Arnold personally. The Court should be in a position to address all of the pleadings on the Motion. In this way, the Court will not be further burdened.

2. In my view, the Motion will require more than one hour. In order for both you and I to go over each and every paragraph that you object to, have a discussion with the presiding Judge and reference the law, will take at least two hours. Therefore I will be asking the Judge to have the Motion adjourned for us to speak to the Trial Co-Ordinator to obtain a special date to hear the Motion.

3. As well, given the pressures of my practice, the short absence of Mr. Derro, I will not be in a position to respond adequately on the return date of the Motion.

If you agree with my time assessment please advise and we can avoid the necessity of having to appear on the return of the Motion and contact the Trial Co-Ordinator.

13Dalron brought its motion (Rules 21 and 25, jury notice, and costs) on September 15, 2016, with a first return date of September 30, 2016. The matter was adjourned, on consent, to October 14, 2016, then to October 28, 2016.

14In the interim, on October 5, 2016, Campbell’s counsel once again wrote to Dalron’s counsel. The relevant portions of that communication are as follows:

I write to you on behalf of Mr. J. Robert Leblanc, solicitor for Kelvin Campbell. I acknowledge that I am in possession of the motion record you have filed. In response, I am to advise you that we will shortly be providing to you an amended Statement of Defence and Counterclaim which we hope will address many of the issues raised in your motion. In terms of the grounds for your motion I can advise of the following:

Paragraph A: We have removed claims for the torts of intimidation, coercion and bad faith bargaining from our pleadings. The revised pleadings disclose the essential elements of the tort of deception.

Paragraph B: We cannot agree to withdraw our jury notice. There is a body of case law indicating that the right to a jury trial is a substantial right that can only be set aside for compelling reasons. The fact that an injunction or declaratory relief is sought does not automatically disallow a jury trial. This position is supported by the cases of Pires et al. v. Hermenegildo, 2006 CanLII 34280 (ON SC), 83 O.R. (3d) 341, Reid v. The Manufacturers Life Insurance Company et al, 2010 ONSC 4645. I have enclosed those cases with this letter.

Paragraph C(i): We believe our revised pleadings will address your concerns regarding alleged prejudice and alleged tactical pleadings. Should any paragraphs of concern remain they will have to be argued on the motion as our position is they are relevant to matters at issue.

Paragraph C(ii): Part of Mr. Campbell’s defence is that Mr. Arnold is the alter-ego of Dalron. It is impossible to properly plead the facts of the defence without reference to Mr. Arnold’s actions.

Paragraph C(iii): We believe our amended pleadings will remedy the issue of immaterial facts. Should the changes not be to your satisfaction the remaining facts will have to be argued as our position is they are material to Mr. Campbell’s defence.

Paragraph C(iv): The amended pleadings will address this issue.

Paragraph C(v): We agree to remove all emboldening and underlining from the pleadings. This will be reflected in the amended statement of claim [sic] and counterclaim.

Paragraph C(vi): We are unable to see how paragraphs 3 and 8 constitute legal argument. Paragraph 57 reflects facts that the Trier of fact may accept or reject. The amended pleadings will also address the issues of alleged legal argument.

Paragraph C(vii): The amended pleadings will address this issue.

15On October 12, 2016, Campbell’s counsel provided Dalron’s counsel with his client’s proposed amended statement of defence and counterclaim. The letter went on to say this:

I hope that the Amended Statement of Defence and Counterclaim will address the concerns you have raised in your motion materials. We hope that your consideration of our amendments may serve to limit the issues that have to be addressed on the motion and prevent the motion from requiring any special date.

16Campbell brought his motion (to amend his pleadings, to strike out portions of the statement of claim, and for costs), returnable on October 28, 2016.

17On October 28, 2016, both motions were adjourned to November 18, 2016, “to argue (i) the wording of the order disposing of the motion, and (ii) the issue of costs of the motion.”

The Issue

18Who should be liable for the costs incurred with regard to the motions, and on what scale.

Dalron’s Position

19Dalron seeks substantial indemnity costs for both Dalron’s motion, and for having had to respond to Campbell’s motion. The amount sought is $14,389.56. Dalron’s counsel suggested that that amount be reduced by one-fifth to reflect the withdrawal of the jury notice motion by Dalron.

20Dalron says that Campbell’s pleadings were reckless, and contained baseless allegations of moral wrongdoing. Dalron’s motion was required to vacate those claims. Campbell’s motion was unnecessary and was purely tactical. Campbell’s refusal to engage in any discussions about costs necessitated the motion.

21Campbell’s original statement of defence and counterclaim were deeply flawed. Campbell’s own motion for leave to deliver fresh as amended pleadings reflects this.

22The original statement of defence and counterclaim contained allegations of “Deception, Intimidation, Coercion, and Bad Faith Bargaining” as against Dalron and its President R. Arnold.

23The allegation of intimidation was neither properly pleaded, nor was there a reasonable cause of action for this alleged tort.

24There is no independent common law tort of “coercion” as pleaded in the counterclaim. Likewise for the alleged tort of “bad faith bargaining”.

25The allegation of deceit presupposes moral fraud. Bell v. Macklin (1888), 1887 CanLII 13 (SCC), 15 S.C.R. 576 at 581.

26Deceit and/or fraud attract legal sanction, and actual fraud must be proven. Bank of Toronto v. Harrell (1917), 1917 CanLII 33 (SCC), 55 S.C.R. 512. The allegations made by Campbell were unjustified and should attract serious costs sanctions.

27Not only were there unjustified allegations of moral wrongdoing, the essential elements of the tort of deceit were not pleaded.

28All of Dalron’s challenges to Campbell’s pleadings, as outlined in his letter of September 8, were particularized and justified.

29The September 9, 2016, response to the September 8, 2016, correspondence suggested that Campbell was adopting a very casual attitude toward the improper allegations of misconduct against both Dalron and its President, R. Arnold.

30Dalron was put to the expense of having its counsel justifiably take issue with the fitness of the statement of defence and counterclaim, and specify the basis of the challenges. It was reasonable, in that context, to initiate discussions about costs. When Campbell was unresponsive to the request for costs, Dalron’s motion became necessary.

31Campbell’s motion was purely tactical. Dalron had already indicated its agreement to have Campbell deliver fresh as amended pleadings. The motion was wasteful and superfluous.

32With regard to Campbell’s motion attacking the statement of claim, no leave was sought, and same was required given that Campbell had already taken steps to deliver new pleadings. Further, the motion was simply an attempt to ameliorate the likely negative costs consequences to Campbell.

33Every step taken and every expense incurred has flowed from the unprovable and reprehensible allegations of misconduct made by Campbell against Dalron and R. Arnold.

Campbell’s’ Position

34Campbell’s counsel concedes that the statement of defence and counterclaim should never have gone out as drafted. They were not drafted by Mr. Leblanc, but rather by a student at law.

35Campbell’s counsel was always prepared to “work things out” with Dalron’s counsel and avoid the necessity of motions. It is Dalron’s counsel who refused to engage in a dialogue to resolve the pleadings issue and who brought the motion to strike Campbell’s pleadings. The motion was avoidable.

36It was unreasonable for Dalron’s counsel to insist on substantial costs in return for a consent to the delivery of fresh as amended pleadings. The amendment of pleadings is presumptively approved, unless non-compensable prejudice will result. Anderson Consulting Ltd. v. Canada (Attorney General), 2001 CanLII 8587 (ON CA), [2001] O.J. 3576 (C. A.).

37The outcome of the proceedings is described, by Campbell as being “slightly” more in favour of Dalron. In other words, there was mixed success on Dalron’s part.

Analysis

38It appears to me that, unfortunately, the pleadings issue became a contest between the lawyers and not the clients; I am referring to the tone and specific language used in the communications. That happened relatively quickly in the process and was entirely avoidable.

39In his submissions on the motion for costs, defendant’s counsel accurately and properly conceded that the statement of defence and counterclaim should not have gone out in the form it did. Essentially, the pleading was prepared by a student in the office of defendant’s counsel. It was not properly reviewed by counsel who is responsible for that pleading.

40Plaintiff’s counsel, in his letter of September 8, 2016, quite properly took issue with a significant portion of the statement of defence and counterclaim. It was not a blanket or general criticism; rather, it was detailed.

41Defendant’s counsel, in his communication of September 9, 2016, suggested a letter setting out, with particularity, exactly what the objections were as they related to each paragraph. Plaintiff’s counsel had already done just that. Therefore, the September 9, 2016, correspondence was neither responsive nor constructive.

42And while defendant’s counsel is correct that the amendment of pleadings is presumptively approved, it was not unreasonable for plaintiff’s counsel to expect some costs to flow as a result of the flawed statement of defence and counterclaim. The only evidence before me on the question of costs is (a) the affidavit of Amy Best setting out the inability or unwillingness of defendant’s counsel to provide their client’s position on the issue of costs, and (b) the mention of an email from Mr. Best to Mr. Derro, October 13, 2016, offering to resolve the issues for the sum of “$6,500 all in”, in Mr. Best’s costs outline.

43The submissions on behalf of the defendant suggest that costs should not be awarded against him as the “necessity to amend the pleading could and should have resulted in only a one week delay of this matter”. I do not find this submission compelling in view of the tone and contents of Mr. Leblanc’s letter of September 9, 2016, indicating an inability to respond within 7 days. Additionally, Mr. Derro’s letter containing admissions and concessions in connection with the statement of defence and counterclaim came almost 3 weeks after service of the plaintiff’s motion record.

44After considering the evidence on this motion and the submissions, I conclude that the plaintiff should be awarded some costs. The issue is the quantum of same.

45The plaintiff’s costs outline sets out reduced full indemnity costs of $18,040 and unreduced partial indemnity costs of $12,402.

46The defendant’s costs outline sets out substantial indemnity costs of $8,446.06 and partial indemnity costs of $5,466.

47In fixing costs, I am to have regard to what is reasonable, given the nature of the matter, including the complexity of the matter, and the conduct of the parties.

48I conclude that the plaintiff should have its costs fixed at $6,000 plus H.S.T. for both its own motion and time spent in response to the defendant’s motion to strike. The time spent, and for which reimbursement is claimed, was not proportional to the issues. I say this, appreciating fully the seriousness of making allegations of moral turpitude and the need to fully particularize one’s pleadings in that regard.

49The Supreme Court of Canada recognized in Hyrniak v. Mauldin 2014 SCC 7 that timeliness, affordability and proportionality are essential components of any legal system that seeks to provide true access to justice. Affordability and proportionality require that lawyers budget their time.

50I further conclude that there should be no further costs awarded to either party. Had there been some discussion about what might have been appropriate as costs for the plaintiff in connection with the defective pleadings early on, the defendant likely could have avoided having to bring a motion to amend the statement of defence and counterclaim. The timing of the motion to strike (being nearly 3 months after the delivery of the statement of claim), the fact that fresh steps had been taken (i.e. delivery of pleadings and the issuance of the third party claim against R. Arnold), and non-compliance with Rule 2.02 (requesting leave), all lead me to suspect that the motion was brought for tactical reasons only. Accordingly, it is my conclusion that the defendant is not entitled to costs.

51In conclusion, it is unfortunate that counsel had to engage the court process where it was possible to avoid it.

Order

52The plaintiff shall have its costs of the motion originally returnable on September 30, 2016, fixed in the amount of $6,000 plus H.S.T. and payable within 30 days.

The Honourable Madam Justice Louise L. Gauthier

Released: November 28, 2016

CITATION: Dalron Commonholds (Montrose) Inc. v. Campbell, 2016 ONSC 7237

COURT FILE NO.: C-5052-16

DATE: 2016-11-28

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Dalron Commonholds (Montrose) Inc.

Plaintiff

– and –

Kevin Campbell

Defendant