Court File and Parties
Court File No.: CV-16-11465-00CL Date: 2017-02-27 Superior Court of Justice – Ontario Commercial List
Re: Kari Holdings Inc., Plaintiff And: HSBC Bank Canada, Defendant
Before: Conway J.
Counsel: Edward J. Babin and Morgan Westgate, for the Plaintiff Mark Evans and Chloe Snider, for the Defendant
Heard: In Writing
Costs Endorsement
[1] Kari Holdings Inc. (“Kari”) is a secured creditor of C.I.F. Furniture Limited (“CIF”). Kari brought an action against HSBC Bank Canada (the “Bank”) alleging that the Bank granted overdraft protection to CIF and repaid itself out of collateral that was subject to Kari’s prior security interest. Kari moved for summary judgment on its claim against the Bank. The Bank brought a cross-motion for summary judgment to dismiss Kari’s claim. By reasons released on January 18, 2017, [1] I granted the Bank’s cross-motion and dismissed Kari’s action against it.
[2] The Bank now seeks its costs of the motions and the entire action, in the total amount of $166,786. The Bank calculates its costs on a partial indemnity basis up to the date of its offer to settle on December 15, 2014, and on a substantial indemnity basis thereafter. Alternatively, the Bank seeks costs on a partial indemnity basis in the total amount of $119,562.
[3] Kari submits that there should be no award of costs as the case involved novel issues of law and would cause undue hardship to Kari’s two elderly shareholders. Alternatively, Kari submits that costs should be awarded on a partial indemnity basis in the amount of $87,571.
[4] The general rule is that a successful party is entitled to its costs (Rule 57.01(1) of the Rules of Civil Procedure). The Bank was successful in having Kari’s action dismissed against it and is presumptively entitled to its costs. I reject Kari’s submission that the case involved novel issues of law. The case turned on established legal principles with respect to the nature of an overdraft, and the application of those principles to the facts. With respect to the undue hardship issue, I cannot see how the financial circumstances of Kari’s shareholders, who were not parties to this proceeding, are relevant to the determination of costs. In any event, there is insufficient evidence as to the personal financial circumstances of Kari’s shareholders on which to conclude that a costs award against Kari would cause them undue hardship.
[5] The Bank is entitled to its costs. There is, however, no basis for an elevated scale of costs. Rule 49.10 of the Rules of Civil Procedure does not apply where the plaintiff’s claim is dismissed and there has been no finding of reprehensible conduct on the part of Kari to warrant an award of substantial indemnity costs: see Davies v. Clarington (Municipality), 2009 ONCA 722. Partial indemnity is the appropriate scale.
[6] The overriding principle in awarding costs 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: Boucher et al. v. Public Accountants Council for the Province of Ontario et al. (2004), 71 O.R. (3d) 291 (C.A.).
[7] In exercising my discretion under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C-43, I may consider, in addition to the result in the proceeding, the factors in Rule 57.01(1) of the Rules of Civil Procedure.
[8] In this case, Kari made serious allegations about the Bank’s conduct. Kari could reasonably have expected that the Bank would expend significant resources in defending the claim. The claim was for close to $1 million (including interest). Both oral and extensive documentary discovery occurred. There were numerous affidavits filed on the motions and cross-examinations of four witnesses. There were several legal issues raised on the motions, with some degree of complexity, and detailed facta were prepared. The hearing itself took two days. It is clear that both sides engaged in a significant amount of preparation for the hearing.
[9] Considering all of those factors, I exercise my discretion to award costs to the Bank on a partial indemnity basis in the amount of $100,000, all inclusive. That amount is payable by Kari to the Bank within 30 days.
Conway J. Date: February 27, 2017