Huron Bay Co-operative Inc. v. Andrew Philip Needham et al.
COURT FILE NO.: CV-104-14 DATE: 20170110
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Huron Bay Co-operative Inc. Ms. Julia M. Fischer, for the Plaintiff Plaintiff
- and -
Andrew Philip Needham, also known as Andy Needham; Michael Robert Needham, also known as Mike Needham; and Mar-Bo Farms Inc. Mr. G. Edward Oldfield, for the Defendants Defendants
HEARD: November 14, 15 & 16, 2016
REASONS FOR DECISION ON COSTS
Conlan J.
I. Introduction
[1] The Plaintiff, Huron Bay Co-Operative Inc. (“HBC”), an agricultural business, sued the Defendants, Andrew Philip Needham (“Andrew”) and Michael Robert Needham (“Mike”) and Mar-Bo Farms Inc. (“Mar-Bo”).
[2] The Plaintiff alleged that the Defendants had defaulted on a credit facility advanced by Farm Credit Canada (“FCC”). That alleged default caused the Plaintiff to have to pay to FCC what was owing by the Defendants.
[3] At trial, counsel for the Plaintiff filed an updated statement which alleged the following amounts owing by the Defendants: $75,392.77 in outstanding invoices, plus $98,297.75 in interest, for a total of $173,690.52.
[4] The Defendants took the position that any debt owing to HBC was owed exclusively by Mar-Bo and not by either or both of the individual brothers.
[5] Further, the Defendants took issue with the interest being claimed by HBC.
[6] Finally, the Defendants alleged that the amount of any debt owing to HBC ought to be reduced by something less than $10,000.00 on account of barley seed received from HBC in a quantity more than what was needed, corn seed received from HBC in a quantity more than what was needed, and corn seed billed for by HBC but never received by the Defendants.
[7] The trial of this Rule 76 Simplified Procedure action was heard in Walkerton in mid-November 2016. The trial lasted 2.5 days, including final submissions by counsel.
[8] In Reasons for Judgment released shortly after the completion of the trial, reported at 2016 ONSC 7296, this Court granted judgment in favour of the Plaintiff, without any reduction as sought by the Defendants and without any disruption of the interest rates claimed, but only against Mar-Bo.
[9] The Claim was dismissed as against Andrew and Mike.
[10] On costs, the Reasons for Judgment included the following:
In light of the divided success at trial, I am inclined to award no costs. Even if I was convinced that the Defendants were a little more successful than the Plaintiff because of the resolution of the first issue discussed above, I would remain inclined to make no order as to costs, subject to considering the submissions of the parties.
[11] The “first issue” referred to was whether the individual Defendants, or either of them, were/was liable.
[12] The parties have been unable to settle the issue of costs and have filed written submissions, which I have reviewed.
II. The Positions of the Parties
[13] The Defendants ask for costs in the total amount of $11,297.18, on a partial indemnity scale, for the limited time period between the date of service of their Offer to Settle dated November 9, 2016 through to the receipt and review of the Reasons for Judgment after trial.
[14] The said Offer to Settle, acknowledged by the Defendants as having been served less than seven days prior to the start of the trial and therefore not being a Rule 49 offer, essentially mirrors the ultimate result after trial – liability against Mar-Bo, alone, for the entire sum, principal and interest, claimed by HBC.
[15] HBC submits that there ought to be no costs awarded to either side. Alternatively, the Plaintiff argues that Mar-Bo ought to pay any costs awarded to the individual Defendants – commonly referred to as a Sanderson order.
III. Analysis and Conclusion
[16] This is not a case for a Sanderson order. Looking at the factors outlined in the Plaintiff’s own written submissions on costs, they do not operate in favour of such an order in this case.
[17] Was it reasonable to join the individual Defendants together with Mar-Bo in one action? Yes.
[18] But would it be fair and just in the circumstances to order Mar-Bo to pay to Andrew and Mike their costs? No, for these reasons.
[19] First, Mar-Bo did not try to shift responsibility for the debt onto Andrew and/or Mike.
[20] Second, Mar-Bo did not cause the individual Defendants to be added as parties to the action.
[21] Third, as among all of the parties on both sides of the litigation, Mar-Bo likely has no greater ability to pay costs.
[22] Examining the factors discussed by the Court of Appeal for Ontario in Moore (Litigation Guardian of) v. Wienecke, [2008] O.J. No. 841, a decision relied upon by HBC, the only one that may lean in favour of a Sanderson order in our case is the consideration as to whether the causes of action (that against the corporate Defendant and that against the individual ones) were independent of each other.
[23] This is not a mechanical exercise of simply counting how many factors line up in each column for or against a Sanderson order. Costs, after all, are discretionary.
[24] The jurisprudence, however, works against HBC’s argument.
[25] Having concluded that the alternative order sought by HBC would not be fair and just in the circumstances, the only question remaining is whether there ought to be (i) no costs awarded to any party, or (ii) some costs ordered in favour of Andrew and Mike.
[26] When this Court released its Reasons for Judgment and opined that this may be a case for no costs, obviously the Court was unaware of the fact that the Defendants had offered, several (but not quite seven) days before the start of the trial, to resolve the case in the precise way in which the ultimate Judgment provides.
[27] I have concluded that I ought not to ignore that important fact.
[28] Settlements must be encouraged by the Courts, which is why reasonable offers can be considered even where they do not meet the strict requirements of Rule 49.
[29] The Defendants’ Offer to Settle dated November 9, 2016 was a reasonable one. Even if it is true that enforcement of a judgment against Mar-Bo would be challenging, the said Offer amounted to a significant compromise on the part of the Defendants as they gave up all of their set-off claims and abandoned their arguments regarding the interest rates.
[30] Some costs will be awarded to Andrew and Mike, payable by HBC.
[31] I have decided, however, to temper the quantum of costs. I am awarding to Andrew and Mike less than the $11,297.18 sought. I do that for two reasons, neither of which has anything to do with the reasonableness of the time spent or the fees charged by Mr. Oldfield’s office.
[32] First, Andrew and Mike do not come to this Court asking for costs with entirely clean hands. At some point, if for no other reason than basic morality, they should have stopped purchasing things from HBC on account.
[33] Second, although not significantly, the individual Defendants prolonged the length of the trial by continuing to advance set-off claims, albeit reduced, that were very weak.
[34] On account of those two considerations, I elect to reduce the quantum of partial indemnity costs, post-Offer to Settle, being claimed by Andrew and Mike by approximately 50%.
[35] In the result, HBC shall pay costs to Andrew and Mike of $5600.00, all-inclusive.
Conlan J. Released: January 10, 2017