Court File and Parties

Newmarket Court File No.: CV-14-119264-00 Date: 2017-03-23 Superior Court of Justice – Ontario

In the Matter of the Construction Lien Act, 1990, R.S.O. 1990, c.C.30

Re: Otomic Contractors Ltd., Plaintiff And: Royal 7 Developments Ltd., Defendant

Before: The Hon. Mr. Justice G.M. Mulligan

Counsel: S. Mannella, Counsel for the Plaintiff D. Weisman, Counsel, for the Defendant

Heard: By written submissions

Costs Endorsement

[1] This matter proceeded by way of a four-and-a-half-day trial under the Construction Lien Act. Reasons for Decision were released on the 13 day of February 2017. The parties were unable to resolve the costs issues. Both the plaintiff and the defendant have now made written submissions as to costs.

[2] The plaintiff was successful in its claim for damages in the amount of $217,945.74, together with an order upholding the validity of the construction lien it had previously registered. The defendant was unsuccessful in its counter-claim against the plaintiff.

Position of the Plaintiff

[3] As the successful party, the plaintiff claims costs on a partial indemnity basis of $120,902.32. This includes a claim for fees of $109,756.49 plus HST, as more particularly set out in the Bill of Costs. The plaintiff also claims for disbursements, including an expert report and an expert’s attendance at trial.

Position of the Defendant

[4] The defendant does not take issue with the disbursements incurred by the plaintiff. The principal objection of the defendant is the large number of hours expended by plaintiff’s counsel as opposed to the hours spent by counsel for the defendant. As counsel sets out in para. 9 of his submissions:

The plaintiff’s Bill of Costs, not including the time noted for attendance at the trial, amounts to 261.7 hours which, it is submitted, is disproportionately high when taking into account the amount in dispute and the issues involved, which were not complex.

[5] The defendant also takes issue with the hourly rate of $425 per hour claimed by the plaintiff’s senior counsel. He submits that based on the guidance from the “Information for the Profession”, adjusted for inflation, the appropriate hourly rate should be $413.15.

[6] In this case, the counsel for the defendant provided its own Bill of Costs for comparison purposes, indicating that counsel spent 86.25 hours in preparation up to the trial itself. The defendant submits that its costs on a partial indemnity basis for preparation and trial was $57,073.67.

[7] In addition, defendant relies on the Stellarbridge principles (Stellarbridge Management Inc. v. Manga, 2004 ONCA 9852, [2004] O.J. No. 2102). That case stands for the principle that an award of costs must not be higher than what a lawyer actually charged to its client. I am not satisfied that that principle has application here. Plaintiff’s counsel submitted that its substantial indemnity billing rate is $625 and claimed a partial indemnity billing rate of $425 per hour. There is nothing in the material before that suggests that the plaintiff’s counsel charged its client an amount less than that claimed on a partial indemnity basis.

Analysis

[8] It is well settled that s. 131 of the Courts of Justice Act, R.S.O. 1990, c.43 provides considerable judicial discretion on the issue of affixing costs. Rule 57.01 of the Rules of Civil Procedure sets out various factors that the court can consider in exercising this discretion, including the principle of indemnity, the amount of costs an unsuccessful party would expect to pay, and the complexity of the proceeding, and the importance of the issues. See Boucher v. Public Accountants Council for the Province of Ontario, 2004 ONCA 14579, 71 O.R. (3d) 291.

[9] The submission of the defendant suggests that the plaintiff’s counsel may have over-prepared. In Moon and Shire, 2004 ONCA 39005, [2004] O.J. No. 4651 (ONCA), Borins J.A. made reference to over-preparation with respect to costs awards at para. 33:

If a lawyer wants to spend four weeks in preparation for a motion when one week would be reasonable, this may be an issue between a client and his or her lawyer. However, the client in whose favour a costs award is made, should not expect the court in fixing costs, to require the losing party to pay for over-preparation, nor should the losing party reasonably expect to have to do so.

[10] A consideration of reasonableness is also a factor that provides assistance to the court in determining the appropriate level of fees in a matter such as this. In Clarington (Municipality) v. Blue Circle Canada Inc., 2009 ONCA 722, [2009] O.J. No. 4236, Epstein J.A. stated at para. 52:

As can be seen, the overriding principle is reasonableness. If the judge fails to consider the reasonableness of costs award, then the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the Court views as a reasonable amount that should be paid by the unsuccessful party, rather than the exact measure of the actual costs of the successful litigant.

[11] Proportionality is also a factor to be considered by the court. Rule 1.04(1.1) of the Rules of Civil Procedure provides, “In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.”

[12] After reviewing the submissions from both parties and a consideration of the guiding factors with respect to partial indemnity costs, I am satisfied that an award of $75,000 plus HST for fees is appropriate and reasonable under the circumstances. I also award the plaintiff its disbursements as sought. Further, I would give the defendant credit for the $3,000 costs award previously paid by the defendant. In the result, the total costs award is $94,724.74 broken down as follows:

Fees: $75,000 HST on fees: $9,750 Disbursements, expert report and attendance, including HST: $8,612.30 Disbursements, including HST: $4,362.44 Less $3,000: Prior costs award Total: 94,724.74

[13] Costs are payable in the amount of $94,724.74 to the plaintiff, Otomic Contractors Ltd. by Royal 7 Developments Ltd. forthwith.

MULLIGAN J. Date: March 23, 2017