CITATION: John Deere Financial Inc. v. 1232291 Ontario Inc., 2016 ONSC 888

COURT FILE NO.: 13-56908

DATE: 2016/02/04

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: John Deere Financial Inc., Plaintiff

AND:

1232291 Ontario Inc. o/a Northern Haul Contracting, Ryan Bignucolo, Richard Bignucolo, Lucia Bignucolo, Bignucolo Incorporated, Chapleau Village Shops Inc., 1039442 Ontario Inc. and 1558738 Ontario Inc., Defendants

AND BETWEEN:

1232291 Ontario Inc. o/a Northern Haul Contracting, Ryan Bignucolo, Richard Bignucolo, Lucia Bignucolo, Bignucolo Incorporated, Chapleau Village Shops Inc., 1039442 Ontario Inc. and 1558738 Ontario Inc., Plaintiffs by Counterclaim

AND:

John Deere Financial Inc., Eacom Timber Corporation and Nortrax Canada Inc., Defendants by Counterclaim

BEFORE: Mr. Justice Patrick Smith

COUNSEL: John P. O’Toole and Kathleen McDormand, Counsel for the Plaintiff/Defendant by Counterclaim, John Deere Financial Inc. and Nortrax Canada Inc.

Christopher J. Cosgriffe, Counsel for the Defendants

Karen Groulx, Counsel for the Defendant by Counterclaim, Eacom

HEARD: via written submissions

ENDORSEMENT on costs

[1] On December 10, 2015 I released my decision with respect to this matter and granted: summary judgment in favour of the Plaintiff, John Deere Financial Inc. (“JDFI”). In my reasons I requested that the parties provide written submissions with respect to the issue of costs. I have now received and reviewed those written submissions.

General Principles of Costs

[2] The general rule is that costs should follow the event. As stated in Orkin, The Law of Costs:

In general, it can be said that when a motion is properly brought costs should be awarded to the moving party, if successful, otherwise to the responding party subject always to the discretion of the judge of judicial officer. (Mark Orkin, The Law of Costs, 2nd ed., vol. II, Canada Law Book, Section 402 at page 4-1).

[3] In Fong et al v. Chan et al, (1999), 1999 CanLII 2052 (ON CA), 46 O.R. (3d) 330, the Ontario Court of Appeal set out three fundamental purposes of modern cost rules:

• to indemnify successful litigants for the cost of litigation;

• to encourage settlements; and

• to discourage and sanction inappropriate behaviour by litigants.

[4] Rule 57 of the Rules of Civil Procedure sets out the factors to be considered by a court when exercising its discretion under s. 131 of the Courts of Justice Act. The rule places emphasis on the result in the proceeding and any written offer to settle when considering the other factors enumerated in the rule.

[5] The text of rule 57.01(1) provides in part as follows:

57.01 (1) Factors in discretion - In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle, various factors including the following which are relevant in this case:

• the complexity of the proceeding;

• the importance of the issues;

• offers to settle; and

• any other matter relevant to the question of costs.

[6] An award of costs is a matter in the discretion of the court by virtue of s. 131(1) of the Courts of Justice Act, which provides:

Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in the proceeding are in the discretion of the court, and the court may determine by whom and to what extent costs shall be paid.

The Positions of the Parties

[7] The Plaintiff requests that costs should be payable within 30 days on a substantial indemnity basis in the amount of $106,854.66 along with lawyer’s fee for appearance in the amount of $6,671.52 and disbursements of $66,789.56 (inclusive of HST).

[8] The Defendants argue that costs should be payable “in the cause” and awarded after the counterclaim has been decided. In paragraph 92 of my reasons I stayed execution of the judgment pending completion of the trial and release of the decision on the counterclaim.

[9] Alternatively, the Defendants submit that, if costs are awarded, they should be paid on a party and party basis fixed in the amount of $51,098.60 and payable after a decision has been made on the counter claim.

Discussion

[10] The Plaintiff was completely successful. There is no reason why costs should not follow the event.

[11] The proceedings were somewhat complex.

[12] The Plaintiff submits that, in addition to being successive, substantial indemnity costs should be awarded because it made two offers to settle: the first on March 7, 2014 in the amount of $700,000.00; the second dated November 10, 2015 for $800,000.00.

[13] I see no reason to depart from the general rule that a successful party is entitled to costs on a partial indemnity basis.

[14] The two offers made by the Plaintiff are important factors to be considered. However, I agree with the position of the Defendant that the offers do not entitle the Plaintiff to substantial indemnity costs because: 1. the first offer expired on March 28, 2014 and therefore was null and void when the summary judgment motion was heard and; 2. the Plaintiff did not meet or exceed its November 10, 2015 offer because it included a stipulation that it was to be provided security either by way of an irrevocable letter of credit or a form of security acceptable to the Plaintiff – a term that was not awarded by the court.

[15] The overall objective in assessing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case rather than an amount fixed by the actual costs incurred by the successful party.

[16] Counsel for the Plaintiff has extensive experience in commercial litigation and I find that the billing rates set out in his cost outline are reasonable.

[17] Although the hourly rates of counsel and the number of hours expended are factors that are taken into consideration in awarding costs, the key question when fixing costs is this: “At the end of the day, is the total for fees and disbursements a fair and reasonable amount to be paid by the unsuccessful parties in the particular circumstances of this case?” (see: Murano v. Bank of Montreal, (1998) 1998 CanLII 5633 (ON CA), 41 O.R. (3rd) 222 at p. 247 and Boucher v. Public Accountants Council for The Province of Ontario 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.).)

[18] The principle of fairness and reasonableness is the major guiding principle in the fixing of costs. It was succinctly stated by Borins J.A. when he observed that an award of costs must:

…reflect “more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant”. This is a fundamental concept in fixing or assessing costs. (Moon v. Sher, (2004) 2004 CanLII 39005 (ON CA), 246 D.L.R. (4th) 440 at para. 30 (Ont. C.A.))

[19] The Court of Appeal also endorsed this principle in Zesta Engineering Ltd. v. Cloutier 2002 CanLII 25577 (ON CA), [2002] O.J. No. 4495 (Ont. C.A.)):

In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.

[20] A Costs Outline was filed by the Plaintiff. It sets out the following scale of costs inclusive of disbursements:

• partial indemnity: $82,473.68;

• substantial indemnity: $120,315.74;

• full indemnity: $132,929.77.

[21] The Plaintiff is entitled to partial indemnity costs, however I find that the amounts claimed are somewhat excessive and disproportional.

Ruling

[22] Costs are awarded to the Plaintiff on a partial indemnity basis fixed in the amount of $65,000.00 inclusive of disbursements.

[23] Notwithstanding my ruling that execution of the judgment is stayed pending release of the decision on the counterclaim, I agree with the submissions of the Plaintiff that the provisions of Rule 57.03(1)(a) apply. Accordingly, costs are payable forthwith.

Patrick Smith J.

Date: February 4, 2016

CITATION: John Deere Financial Inc. v. 1232291 Ontario Inc., 2016 ONSC 888

COURT FILE NO.: 13-56908

DATE: 2016/02/04

ONTARIO

SUPERIOR COURT OF JUSTICE

RE: John Deere Financial Inc., Plaintiff

AND:

1232291 Ontario Inc. o/a Northern Haul Contracting, Ryan Bignucolo, Richard Bignucolo, Lucia Bignucolo, Bignucolo Incorporated, Chapleau Village Shops Inc., 1039442 Ontario Inc. and 1558738 Ontario Inc., Defendants

AND BETWEEN:

1232291 Ontario Inc. o/a Northern Haul Contracting, Ryan Bignucolo, Richard Bignucolo, Lucia Bignucolo, Bignucolo Incorporated, Chapleau Village Shops Inc., 1039442 Ontario Inc. and 1558738 Ontario Inc., Plaintiffs by Counterclaim

AND:

John Deere Financial Inc., Eacom Timber Corporation and Nortrax Canada Inc., Defendants by Counterclaim

ENDORSEMENT

P. Smith J.

Released: February 4, 2016