Court File and Parties
Court File No.: CV-07-0276 Date: 2017-05-08
Superior Court of Justice – Ontario
B E T W E E N:
JONATHAN ESSA in his personal capacity and as Executer of the Estate of REGINALD ESSA, Plaintiffs
Counsel: Christopher D.J. Hacio, for the Plaintiffs
- and -
LARRY PANONTIN, ROBERT PANONTIN and MILLS MANUFACTURING ACRYLIC PRODUCTS LIMITED, Defendants
Counsel: Alex W. Demeo, for the Defendants
Heard: Via Written Submissions at Thunder Bay, Ontario
Before: Platana J.
Decision on Costs
Overview
[1] On January 20, 2017, I dismissed the Plaintiffs’ motion for partial summary judgment which sought dismissal of the Defendants’ counterclaim, and that portion of the Defendants’ Statement of Defence which sought to set-off certain debts claimed by the Defendants in the counterclaim and another separate claim from any and all amounts owed by the Plaintiffs in their action. The motion was based on the position that no debts were owing and that a two-year limitation period to bring the counterclaim had expired. A further issue was argued on the basis of abuse of process.
[2] In the reasons, I provided the Plaintiffs an opportunity to provide written submissions on costs within a time period to be followed by the Defendants’ response. The Plaintiffs originally filed no material, having interpreted my reasons as meaning if the plaintiffs made no submissions, there were no costs to be awarded. The Defendants then filed costs submissions, and objected when the Plaintiffs, alleging a misunderstanding of the costs direction, attempted to file materials. Although I did not see how any misunderstanding could have arisen, I permitted the Plaintiffs to file materials after having received the Defendants’ submissions.
Background
[3] This action is long outstanding and was in the process of being trial managed when this summary judgment motion was brought. It revolves around a broken business relationship between the parties, and loan guarantees which were given in exchange for an interest in a life insurance policy. The action is based on entitlement to proceeds of that policy in the amount of one million dollars, or what remains in dispute of the proceeds.
[4] In support of their motion, the Plaintiffs raised a number of issues including limitation period, assignment of guarantees, contribution and indemnity, res judicata, abuse of process, set-off, and multiplicity of proceedings. The Plaintiffs filed a 22 page affidavit and 27 tabs of documents.
[5] The Defendants’ argued that there was a genuine issue for trial, and raised arguments countering those raised by the Plaintiffs on each of the issues noted. The essential aspect raised was that the counterclaim and defence of set-off were so inextricably entwined with the core issue in dispute that the counterclaim could not be taken out of the larger context of the litigation as a whole.
[6] In my ruling, I determined that this matter was at the stage of trial management when this motion was brought and counsel advised was going to have to proceed to trial.
[7] The Defendants now submit costs. They claim $67,648.58, inclusive of disbursements and HST of which $59,266.00 are fees on a partial indemnity basis, (actual rate claimed is $84,391.23).
[8] The Defendants base the amount on a 20% discounted partial indemnity basis. They claim counsel fees for Mr. Demeo (called in 1982) of $240.00 per hour; for Douglas Treilhard (called in 2014) of $140.00 per hour; and for Tina Gillespie (legal assistant) of $80.00 per hour.
[9] The Defendants submit that this motion was complex, based on the parties’ various guarantees, signed with two different banks, and the number of issues raised. They note that materials filed totalled 11 volumes, and 1,485 pages. Over 1,000 pages of cross-examination and discovery transcripts were reviewed. They argue that the evidentiary and legal issues were complex and not amenable to a fair and just adjudication by way of summary judgment.
[10] They submit that the important issues were the alleged breach of contract claim, and that the secondary relief claimed sought did not justify the time and effort spent, and the volume of materials filed.
[11] They argue that this motion could have been brought years earlier, and that to have brought this motion now did not serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.
[12] The Plaintiffs submit that no reasonable party would have expected to receive, or pay, costs in the amount in excess of $70,000.00 and that the Defendants should be awarded costs in the amount of $15,000.00.
[13] They note that after the materials for the motion were filed, the parties attended several case conferences. Cross-examinations of the parties were held, with each party being cross-examined for no more than half a day each.
[14] The argument on the motion lasted approximately 4.5 hours.
[15] Plaintiffs’ counsel submits that the appropriate hourly rate on a partial indemnity basis should be $235.00 for Mr. Demeo, $100.00 for Mr. Treilhard, and there should be no hourly rate for administrative work done by Ms. Gillespie, legal assistant.
[16] Mr. Hacio notes that the total time claimed by the Defendants is 272 hours, or more than 45 days of work.
[17] He further submits that while it is appropriate to discount fees, partial indemnity fees should be based on a range of 55-65% of complete indemnity, and the Defendants have used only a 20% reduction in calculating their fees on a partial indemnity basis.
[18] Further, Mr. Hacio argues that while there were a number of factual and legal issues, they were not particularly complex. Further, they submit that despite the number of documents claimed necessary for review by the Defendants, the motion materials themselves consisted of approximately 25 documents with a total of 200 pages.
[19] With respect to the criteria set out in Rule 57, the Plaintiffs take the position that the time spent by the Defendants on the motion is excessive.
[20] He further submits that the vast majority of the time spent by the parties in dealing with the motion can be used at trial.
[21] The Plaintiffs submit that a reasonable amount a party should expect to pay or receive for this motion would be $30,000.00.
[22] They note the counterclaim asked for damages of $168,500.00 and the amount now being claimed for costs is half that amount.
[23] They argue that the motion was important to the parties as it tried to minimize trial time by eliminating the counterclaim.
[24] They further argue that the single biggest factor which delayed the motion was the Defendants’ efforts to try and stay, delay or have the motion dismissed without being argued. Two case conferences were held with that objective at the Defendants’ request, and the Plaintiffs argue that the Defendants should not be entitled to costs for those attendances.
Discussion
[25] In Serra v. Serra (2009), 66 R.F.L. (6th) 40 (Ont. C.A.), at p. 42, the Court of Appeal reiterated the fundamental purposes which modern costs rules are designed to foster, as set out in Fong v. Chan (1999), 46 O.R. (3d) 330 (Ont. C.A.), at para. 22:
(l) to partially indemnify successful litigants for the costs of litigation;
(2) to encourage settlement; and
(3) to discourage and sanction inappropriate behaviour.
[26] In Anderson v. St. Jude Medical Inc., [2006] O. J. No: 508 (Ont. Div. Ct.), at para. 22, the Divisional Court set out the principles to be applied by the court in exercising its discretion (citations omitted):
The discretion of the court must be exercised in light of the specific facts and circumstances of the case in relation to the factors set out in Rule 57.01(1).
A consideration of experience, rates charged and hours spent is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case. The quantum should reflect an amount the court considers to be fair and reasonable rather than any exact measure of the actual costs to the successful litigant.
The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining an amount that is fair and reasonable: Rule 57.01(l)(O.b).
The court should seek to avoid inconsistency with comparable awards in other cases. "Like cases [if they can be found], should conclude with like substantive results."
The court should seek to balance the indemnity principle with the fundamental objective of access to justice.
[27] The Court of Appeal has made it clear that in assessing costs, the overriding principle is one of reasonableness, and that the failure to follow that principle can produce a result that is contrary to the fundamental objective of access to justice (Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (Ont. C.A.), at p. 302).
[28] In Zesta Engineering Ltd. v. Cloutier, [2001] O.J. No. 4495 (Ont. C.A.), at para. 4, the Court of Appeal did not make a specific finding with respect to the amount of time spent or the rates charged by counsel, and stated:
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.
[29] Rule 57.01(1) of the Rules of Civil Procedure provides:
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 or to contribute made in writing,
(O.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(O.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct on any party that tended to shorten or lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party's denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding; or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different solicitor; and
(i) any other matter relevant to the question of costs.
[30] In considering the factors mandated by Rule 57.01, I am satisfied that costs to the Defendants on a partial indemnity basis are appropriate. I do not accept that a reduction of 20% from full indemnity is appropriate, and I would assess partial indemnity fees on the basis of a 35% reduction from what I would assess on a full indemnity basis.
[31] With respect to the amount claimed for fees, I find the amount claimed for Mr. Demeo and Mr. Treilhard to be reasonable. I would not allow the amount for a legal assistant.
[32] In reviewing the reasonableness of the time spent, I am not satisfied that the issues were so complex as to justify a total of 262 hours in total claimed by the Defendants (as Mr. Hacio notes some 45 days of legal work). I note also that the argument on the motion took approximately 4.5 hours.
[33] I further have considered what would be a reasonable amount of costs for a party to pay or receive. Mr. Hacio has suggested that would be $30,000.00. The Plaintiffs raised a number of issues, which had to be responded to. Mr. Hacio has suggested that in this case the Defendants should be awarded costs of $15,000.00. I find that amount to be as unreasonable as the Defendants’ claim of $67,648.58, inclusive of disbursements and HST.
[34] I am mindful of the fact that this is a long standing action. It has reached the stage where trial management is in process and a trial is to be scheduled. The facts giving rise to the issue of dismissal of the counter-claim and other relief have been outstanding for some time and I consider it untimely to have now brought this motion. I found that the issues raised were intertwined with issues in the main action and that much of the evidence in the claims sought to be dismissed will in all probability still be required in the main action. I do not see how dismissal of the counter-claim and other claims would have resulted in any significant time-saving at trial.
[35] Any award of costs is a matter for the court’s discretion. My task is not to review in detail the time offered by counsel but rather to determine overall what is a fair and reasonable amount to be paid by the Plaintiffs on what I have determined is a partial indemnity basis.
[36] I cannot find it reasonable that a total of some 262 hours was necessary for the Defendants to spend on this motion. Having said that, I do note that there was a number of issues which had to be dealt with. I consider that it is fair and reasonable in this motion to award the Defendants partial indemnity fees of $35,000.00, plus HST, and disbursements of $600.00, plus HST.
”original signed by” The Hon. Mr. Justice T.A. Platana
Released: May 8, 2017