CITATION: Sidhu v. Knight, 2016 ONSC 8166
COURT FILE NO.: CV-16-3554-SR
DATE: 2016 12 30
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MANIPAL SINGH SIDHU - and - TONA KNIGHT
BEFORE: LEMAY J
COUNSEL: B. Nagra, Counsel for the Plaintiff
M. Panacci, Counsel for the Defendant
COSTS ENDORSEMENT
[1] Mr. Manipal Singh Sidhu (“the Plaintiff”) and Mr. Tona Knight (“the Defendant”) entered into an agreement that allowed the Defendant to finance and use a Case 450 S/N N7M458356 machine, and related attachments. I will refer to this machine and the attachments as the “Case Machine”.
[2] The Defendant defaulted on the terms of the agreement. The Plaintiff commenced an action seeking damages and the return of the equipment. As an interim step in that proceeding, the Plaintiff brought a motion before me on November 25th, 2016 seeking the return of the equipment.
[3] At the hearing of the motion, the parties agreed on terms that included the return of the equipment, the payment of some monies and the discontinuance of the action on a without costs basis.
[4] However, the parties could not agree on the costs of the motion before me. As a result, I am required to fix those costs.
Background
[5] Given that there is no decision on the merits of this case, some more detailed background is required in order to understand my decision on costs. It is also important to remember that neither I nor anyone else has made factual findings in this case. Instead, I am left to consider the costs of the motion (which was not argued) based on the positions of the parties and the settlement that they reached.
a) The Parties Agreement and the Default
[6] The Plaintiff, Manipal Singh Sidhu, is a mortgage broker. The Defendant, Tona Knight, is involved in the home renovations business. They met in 2012, and developed a business relationship in which they would each refer work and clients to the other.
[7] In early 2015, the Plaintiff suggested that the Defendant acquire the Case Machine for a home renovation project that he was working on together with the Plaintiff. The Case Machine was duly acquired.
[8] There is an issue as to who holds title in the Case Machine. Both Mr. Knight and Mr. Sidhu have corporations. Mr. Knight’s position is that it was Mr. Sidhu’s Corporation that obtained ownership of the Case Machine and Mr. Knight’s corporation that has possession of the unit.
[9] However, it is also clear that the two parties (Mr. Sidhu and Mr. Knight) entered into a performance agreement respecting the Case Machine on June 23rd, 2015. This agreement contained various obligations that the Defendant owed to the Plaintiff. In turn, the Plaintiff was responsible for making the payments on the machine to the company that had financed the machine.
[10] In May of 2016, the Defendant stopped making payments on the performance agreement. In the meantime, the Defendant had not been providing the maintenance information about the machine to the Plaintiff. It was not clear to me that providing this information was a requirement under the Performance Agreement. However, the Defendant was obligated to perform all of the regularly required maintenance on the Case Machine as a term of the Performance Agreement.
b) Events Since the Default
[11] As a result, the Plaintiff brought an action claiming damages. As part of that action, the Plaintiff brought a motion for the return of personal property (the Case Machine) under Rule 44 of the Rules of Civil Procedure. This motion was originally to be heard by Bloom J. in September of 2016. It was then adjourned to November of 2016. At that time, Defendant’s counsel advised that he wished to conduct cross-examinations and the matter was adjourned again and heard before me on November 25th, 2016.
[12] At the November 25th, 2016 appearance before me, the parties settled the underlying issues on terms that resulted in the return of the equipment to the Plaintiff. The costs of this motion remained outstanding.
[13] I also note that, in the materials on this motion, the Defendant advanced a number of other claims relating to loans that were allegedly made by him to the Plaintiff and other issues in their business relationship. I did not hear enough evidence to determine whether any of these loans were made. However, I note that the action was resolved without reference to these issues.
The Positions of the Parties
a) The Plaintiff’s Position
[14] The Plaintiff claims substantial indemnity costs in the amount of $19,167.64, inclusive of HST and disbursements for the following reasons:
a. The Defendant’s conduct of the action was improper because he should have disclosed the location of the machine much earlier.
b. The Defendant’s conduct was also improper because he was well aware that he was not the owner of the machine, there were no amounts owing to him that he could claim set-off against, and the Performance Agreement was binding.
c. The Defendant failed to put his best foot forward on the motion by failing to provide an Affidavit. Instead, his wife and one of the legal assistants at his law firm provided the evidence for this motion.
d. The Defendant provided an offer to settle and, based on case-law (see Clark Door of Canada Ltd. v. Inline Fiberglass Ltd. (1996) 45 C.P.C. (3d) 244 (Ont. Gen Div)) the Plaintiff asserts that he would have been successful on the hearing of the motion.
b) The Defendant’s Position
[15] The Defendant argues that he should be entitled to its costs on either a substantial indemnity basis, in the sum of $9,689.75, inclusive of HST and disbursements or on a partial indemnity basis in the sum of $7,876.10, inclusive of HST and disbursements. The Defendant takes this position for the following reasons:
a. The case was made to be more complex than it actually was.
b. There was no privity of contract between the Plaintiff and the Defendant over the machine, and the motion was not properly brought against the Defendant.
[16] In the alternative, the Defendant argues that each side should bear its own costs.
[17] In his submissions of December 14th, 2016, Mr. Panacci also states that the Defendant tendered an offer to settle, which was attached to the submissions. I have reviewed the submissions and no such offer is attached. In addition, it is clear from the copy of the submissions that were faxed to me that they were complete, and I received all 11 pages.
[18] Both an offer from the Plaintiff and a counter-offer from the Defendant were attached to other submissions, however, and I have considered those offers below.
Analysis and Reasons
a) Should I Consider the Defendant’s Submissions?
[19] The Defendant’s costs submissions were filed late. I determined that I would receive them in spite of the late filing. My reason for doing so is that a short delay in providing submissions should not preclude a party from having their position considered, especially when there is no prejudice to the other side.
[20] However, I should also note two further points about these late submissions. First, it was only after the deadline passed and I had my assistant contact Mr. Panacci that we were advised that there was a delay in receiving these submissions. It is quite possible that I could have made a decision without being aware that Mr. Panacci was intending to make submissions.
[21] Second, counsel provided an explanation for why the submissions were late, and outlined that his clients had experienced a number of family related issues that needed to be addressed. While that might explain the delay in receiving the submissions, it does not explain why Mr. Panacci did not contact either the Court or Ms. Nagra to seek an extension before the deadline passed.
b) The Offers to Settle
[22] There were two competing offers to settle in this case, both of which were served the day before the motion was heard. Given this fact, neither offer triggers the provisions of Rule 49.10 of the Rules of Civil Procedure.
[23] However, Ms. Nagra’s offer is closer to the result in this case. It is not exactly the outcome that the parties agreed on, however, as her Offer to Settle would have seen the Defendant pay the Plaintiff costs in the sum of $10,000.00.
[24] Although the mandatory costs provisions of Rule 49.10 are not triggered in this case, I can consider offers to settle as a factor in assessing the costs under Rule 57.01. In this case, that factor favours an award of costs in the Plaintiff’s favour.
c) Who Should Pay Costs?
[25] The factors that should be considered in assessing costs are set out in Rule 57.01. One of those factors, the offers to settle, has already been discussed. The other factors under Rule 57.01 that are the most relevant to this motion are the importance of the issues and the conduct of the parties.
[26] First, there is the importance of the issues. The entire action in this case was over the Case Machine. As a result, this motion, had it been heard and decided, would have gone a long way to resolving the entire case. As a result, the issues were relatively important, and this factor favours a higher award of costs.
[27] This brings me to the conduct of the parties. The Defendant’s failure to provide an Affidavit to the Court on this motion is a factor that favours an award of costs against the Defendant. That failure necessitated an additional examination under Rule 39.03 of the Rules of Civil Procedure. This was an unnecessary step that tended to lengthen the hearing of this matter and to add to its complexity. The Defendant should have provided direct evidence on this motion without the need to trigger the provisions of Rule 39.03.
[28] This brings me to the next part of the Defendant’s conduct that is of some concern to me. Mr. Panacci argued that there was no privity of contract over the machine in this case, and that the action needed to be amended to include the corporations. He argued that the whole motion was improper.
[29] I view this as a further indication that the Defendant and his corporation were trying to find ways to avoid addressing the actual issues in this litigation. I appreciate that a party is entitled to rely on the form of a transaction as well as its substance. However, in this case the Defendant’s attempted to use the form of the transaction to avoid his obligations (and his company’s obligations) under the substantive terms of the transaction. In my view, such conduct argues in favour of an award of costs against the Defendant.
[30] In that respect, I agree with the Defendant that the litigation (and the underlying transaction) were more complicated than they needed to be. A significant part of that complication was brought about by the Defendant’s desire to rely on the form of the transaction and advance the privity of contract argument. Given that the Defendant and the Plaintiff each signed the Performance Agreement in their personal capacity, the strength of this argument is questionable.
[31] I do not need to resolve that issue in this decision, however. I would simply note that the result of this motion was, in essence, what the Plaintiff was seeking. This is a further factor that supports a significant costs award in the Plaintiff’s favour.
[32] However, I am also of the view that the costs award needs to be moderated because of the Plaintiff’s conduct. The Plaintiff was well aware as to which parties were legally involved in the agreement. The action was prolonged in part by the Plaintiff’s decision not to name all of the relevant parties in this case. This favours a reduction in the costs payable by the Defendant.
[33] Finally, there is the complexity of the matter. While this was a simple action (brought under the Simplified Rules), it was made more complex by the adjournments and the other procedural issues discussed above.
[34] When all of these factors are considered together, I am of the view that the Defendant should pay the Plaintiff’s costs in the sum of $7,500.00, inclusive of HST and disbursements.
Disposition
[35] The Defendant is directed to pay the Plaintiff costs of this motion in the sum of $7,500.00 inclusive of HST and disbursements within thirty (30) days of today’s date.
LEMAY J
DATE: December 30, 2016
CITATION: Sidhu v. Knight, 2016 ONSC 8166
COURT FILE NO.: CV-16-3554-SR
DATE: 2016 12 30
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MANIPAL SINGH SIDHU
- and - TONA KNIGHT
COUNSEL: B. Nagra, Counsel for the Plaintiff
M. Panacci, Counsel for the Defendant
COSTS ENDORSEMENT
LEMAY J
DATE: December 30, 2016