COURT FILE NO.: 13-57421 DATE: 2017/05/15 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
OZERDINC FAMILY TRUST, MUHARREN ERSIN OZERDINC, MARION KATHLEEN GRIMES, SITE PREPARATION LIMITED, SITE PREPARATION LIMITED PARTNERSHIP, 1634158 ONTARIO INC., 1634159 ONTARIO INC and OZERDINC FAMILY TRUST No. 2 Plaintiffs/Moving Party – and – GOWLING LAFLEUR HENDERS LLP, MARK SIEGEL and ROSANNE DAWSON Defendants RAYMOND CHABOT GRANT THORNTON LLP Third Party
Ronald F. Caza, for the Plaintiff/Moving Party Allan R. O’Brien and Frances Shapiro Munn, for the Defendants Sally Gomery and Alexa Biscaro, for the Third Party
HEARD: By written submissions
COSTS ENDORSEMENT
labrosse j.
Background
[1] This proceeding was heard as a Motion for Summary Judgment on the issue of liability in a dispute between related parties and their long-time solicitor who provided legal services for the creation of a family trust. My Endorsement dated January 3, 2017 granted partial summary judgment in favour of the Plaintiffs on the issue of liability and as such, the Plaintiffs are entitled to the payment of their costs related to the Motion for Partial Summary Judgment. The matter also involves a Third Party who was brought into the Motion for Partial Summary Judgment as a result of the Defendants’ proposed manner to resolve the issue of causality.
[2] Each of the parties have provided their written costs submissions and I have considered them in deciding the matter.
[3] The Plaintiffs claim partial indemnity costs to the date of their Offer to Settle being January 16, 2016 ($42,951.30) and then substantial indemnity costs thereafter ($178,467.57 together with disbursements of $176,464.54). The total amounts claimed by the Plaintiffs are $221,418.87 in fees and $176,464.54 in disbursements.
[4] The Defendants submits that a global award of $150,000.00 is appropriate in the circumstances. In coming to this amount, the Defendants rely on their Partial Indemnity Bill of Costs which amounts to $154,372.78 of which $62,719.78 relates to disbursements.
[5] The Third Party claims partial indemnity costs in the amount of $19,566.96 from the Defendants. The Defendants have confirmed that they have resolved the claim for costs by the Third Party.
Analysis
[6] I have considered the following principles in my decision to award costs to Plaintiffs:
− The Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”) provides:
131(1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
− The Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario articulated the principles that govern costs assessments. Armstrong J.A. stated: “When the court awards costs, it shall fix them in accordance with sub-rule 57.01(1) and the Tariffs…Subrule (1) lists a broad range of factors that the court may consider in exercising its discretion to award costs under s. 131 of the CJA.” Further, the Court of Appeal in Boucher stated that the assessment of costs is not a mechanical issue. The overall objective 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 litigant: see Boucher at para 26.
[7] In exercising my discretion to award costs in these proceedings, I have considered the factors set out in Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and make the following findings:
Offer to Settle: The Plaintiffs made an offer to settle in January 2016. That offer re-stated the relief requested in the Motion for Partial Summary Judgment. The Defendants suggest that the Court did not grant the relief sought in paragraph 1(c) of the Notice of Motion. I agree with the Plaintiffs that paragraph 1(c) sought an admission on the issue of causation. While my decision did not expressly address para 1(c), the effect of the decision is to arrive at a conclusion on the issue of causality and as such the Plaintiffs obtained a result which is equal to that which was offered in the Offer to Settle. It must be noted that the Plaintiff’s offer is a “no-cost” offer as it re-states the relief sought in the Notice of Motion. Such an offer does not in my view automatically trigger the cost consequences of Rule 49 : see Crete v Carleton Condominium Corporation #47 (Chateau Vanier Towers). However, the presence or absence of an offer to settle is a relevant factor to consider under Rule 57.
Costs of the Unsuccessful Party: The Defendants have submitted a Bill of Costs which can be considered when determining the amount that the unsuccessful party could reasonably expect to pay. Here, the Defendant’s show partial indemnity fees of $91,653 and disbursements of $62,719.78. While this amount is significantly lower than the amounts claimed by the Plaintiffs, the Defendant’s substantial indemnity Bill of Costs is $124,981 in fees and $62,719.78 in disbursements.
Time Spent: The time spent by the Plaintiffs was challenged by the Defendants. The Defendants also challenge the Plaintiffs inclusion of fees related to issues beyond the Motion for Partial Summary Judgment. While the Plaintiffs claim that the time related to the disclosure motion are recoverable at this stage, I disagree. These are costs which form part of the litigation as a whole and do not relate specifically to the Motion for Partial Summary Judgment. I agree with the Defendants that several items for which costs are claimed relate to matters which are outside the scope of the Motion for Partial Summary Judgment and that a reduction in the amount claimed is warranted.
Importance of the Issues: The issues were obviously important to the parties. The issues surrounding a potential deemed disposition involving over two million dollars of taxes was clearly very important.
Complexity: This was obviously a very complex matter. It required that experts in taxation law be retained and they provided detailed reports to address the issues. Furthermore, the Defendant’s Bill of Costs demonstrates the extent to which this was a complicated litigation which required significant work by senior counsel despite the fact that the Defendants were not the party driving the issues surrounding the Motion for Partial Summary Judgment. It would be expected that the Plaintiffs’ fees would be higher than those of the Defendants.
Conduct: The conduct of the parties has been considered herein. The Plaintiffs advance that the Defendants acted unreasonably in delaying the admission on the issue of liability. I disagree. This was a complex litigation and the Defendants have defended it in a reasonable manner which is reflective of its importance and complexity. The Defendants conducted themselves properly in the litigation and while the duration of the litigation clearly has increased the Plaintiffs’ claim for costs, it does not give rise to a finding that the Defendants acted unreasonably.
[8] In the end, I agree with the Defendants that the costs claimed by the Plaintiffs are higher than that which was required for a motion of this nature. While I recognize that the Plaintiffs were driving the litigation and in these circumstances would be expected to have incurred more fees than the Defendants, I am of the view that the total time spent is excessive. The Plaintiffs also chose to retain several experts to assist them in dealing with the issues before the Court. There are issues of proportionality which apply to both the time spent and the disbursements claimed.
[9] When considering the Plaintiffs’ Bill of Costs, there are several items for which time is claimed that pre-date the Motion for Partial Summary Judgment and are not directly associated to it. These costs can be claimed in the context of the litigation as a whole but not specifically for the Motion for Partial Summary Judgment. Specifically, I disallow at this point the time spent titled “legal fees incurred prior to the service of the summary judgment motion” together with the fees related to the Request to admit and the Disclosure Motion. The entries amount to $17,061.54.
[10] I am also concerned with the time spent of preparing the costs submissions. The Plaintiffs claim $21,525.31 while the Defendants have time spent of just under $6,000.00. I find the Plaintiff’s claim for costs related to the costs submissions excessive.
[11] Finally, when considering the time spent on the Motion for Partial Summary Judgment, I note that in 2016, Plaintiffs’ senior counsel spent 137.2 hours in time, the main junior counsel spent 190.1 hours and students spent 141.3 hours. Conversely, in 2016, the Defendants’ senior counsel spent 190.5 hours, junior counsel 58.13 and a law clerk spent 20.70 hours. While I acknowledge that the bulk of the time spent by the Plaintiffs related to junior counsel, the total amount of time spent exceeds a fair amount and that which would reasonably be expected to be required in the circumstances.
[12] As set out in Boucher, the exercise here is not a mechanical calculation of the amounts claimed but more appropriately an analysis of what is fair. I therefore conclude that prior to the January 15, 2016 Offer to settle, the Plaintiffs are entitled to partial indemnity costs fixed at $25,889.76. Following the Offer to settle, I note that the Defendant’s substantial indemnity Bill of Costs is roughly $100,000. I am of the view that a fair amount for the Plaintiffs’ would be somewhere between the partial indemnity and substantial indemnity rates. I therefore fix the amount of costs after the Offer to Settle at $125,000, inclusive of taxes. Finally, for the costs submissions, I fix the Plaintiffs’ costs at $10,000.
[13] With respect to disbursements, my issue is with proportionality. While I appreciate that the experts retained provided detailed reports in support of their opinions and that they were cross-examined, the amounts claimed are out of proportion with the amounts spent by the Defendants to address similar issues. I fix the Plaintiffs’ disbursements at $100,000.
Conclusion
[14] For the reasons provided, I conclude that the Plaintiff’s are entitled to an award of costs against the Defendants arising from the Motion for Partial Summary Judgment of $160,889.76 in fees (inclusive of taxes) and $100,000 in disbursements (inclusive of taxes).
Mr. Justice Marc R. Labrosse
Released: 2017/05/15
COURT FILE NO.: 13-57421 DATE: 2017/05/15 ONTARIO SUPERIOR COURT OF JUS TICE OZERDINC FAMILY TRUST, MUHARREN ERSIN OZERDINC, MARION KATHLEEN GRIMES, SITE PREPARATION LIMITED, SITE PREPARATION LIMITED PARTNERSHIP, 1634158 ONTARIO INC., 1634159 ONTARIO INC and OZERDINC FAMILY TRUST No. 2 Plaintiffs/Moving Party – and – GOWLING LAFLEUR HENDERS LLP, MARK SIEGEL and ROSANNE DAWSON Defendants RAYMOND CHABOT GRANT THORNTON LLP Third Party costs endorsement Labrosse J. Released: 2017/05/15