Court File and Parties
COURT FILE NO.: CV-14-517992 DATE: 20170525 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Marshall & Swift/Boeckh Llc And Marshall & Swift/Boeckh (Canada) Ltd., Plaintiffs AND: SCM Insurance Services Inc., SCM Risk Management Services Inc., Opta Information Intelligence Inc. and Syntech Associates Ltd., Defendants
BEFORE: R.F. Goldstein J.
COUNSEL: Brendan van Niejenhuis, for the Plaintiff Mel Hogg, for the Defendants
HEARD: In Writing
COSTS ENDORSEMENT
[1] The Plaintiffs are in the business of providing software products for the insurance industry. The Defendants provide claims management and risk management services to the insurance industry. The Plaintiffs licenced software products to the Defendants. The Plaintiffs and the Defendants are involved in a dispute. The Plaintiffs say that the Defendants violated the licence agreement. They have sued the Defendants.
[2] Under the licence agreement the Plaintiffs were entitled to inspect the Defendant’s computer systems. They did so. They did not get the answers they wanted. They inspected again. Again they did not get the answers that they sought. They sought a third inspection. This time the Defendants refused to permit inspection, saying that the Plaintiffs had exhausted their inspection rights. The Plaintiffs brought a motion for further inspection. On February 1, 2017 I dismissed the motion: Marshall & Swift/Boeckh LLC et al. v. SCM Insurance Servics et al., 2017 ONSC 788.
[3] The Defendants seek partial indemnity costs of $48,880.70 based on 60% of actual costs of $80,556.86. The Defendants argue that since they achieved complete success on the motion there is no need to depart from the usual rule that costs go to the winning party.
ANALYSIS
[4] The general rule is that costs are payable to the winning party: Schreiber v. Mulroney, 2007 ONSC 31754, at para. 2. The Plaintiffs take the position, however, that I should make an order that costs are “in the cause”. They argue that I did not determine the entitlement to inspection. I only determined whether an inspection was necessary at the time. The Plaintiffs argue that costs are often awarded “in the cause” on a motion for inspection. This is especially so where there was a reasonable basis for the motion and there remains a prospect that the Plaintiffs will still succeed in obtaining an inspection order at a future time.
[5] The Plaintiff relies on this statement from Orkin, The Law of Costs (2nd Ed.)(Toronto: 2016):
408.13 Inspection of Property: An order for the inspection of property was made with costs in the cause, and a second inspection has been order has been ordered with costs to the responding party in the cause. An order for inspection was refused with costs in the cause or costs to the responding party in the cause. (Citations omitted).
[6] The Plaintiffs also point to other situations where costs in the cause have been granted. In 1615540 Ontario Inc. (c.o.b. Healing Hands Massage Therapy Clinic) v. Simon, 2013 ONSC 4798 Perell J. granted an interlocutory injunction. The injunction required the defendants to return files, records, and property in their possession to the plaintiff. Perell J. referred to Justice Sharpe’s text on Injunctions and Specific Performance. Justice Sharp noted that it would be unusual to award costs to a successful plaintiff on an interlocutory injunction. An interlocutory injunction is not a final determination of the merits but simply preserves the plaintiff’s position. Perell J. ordered costs in the cause.
[7] In Mittal v. Jindal, 2012 ONSC 4297 Perell J. also ordered costs in the cause where the win was “technical”. Likewise, in Brown v. Hudson’s Bay Co., 2014 ONSC 5079 Price J. ordered costs in the cause on a motion for leave to appeal to the Divisional Court, that being the usual practice. Price J. also ordered costs in the cause on an application by a landlord for a declaration that a tenant was required to do certain work on the property. Price J. ordered costs in the cause on the basis that the landlord’s victory was only partial: Caledonia Service Station Inc. v. Cango Inc., 2010 ONSC 2256.
[8] With great respect to counsel to the Plaintiff, whose submissions are always very persuasive, I am unable to agree. I see no reason to exercise my discretion and depart from the usual rule. I do not doubt that in many cases it would be appropriate to order costs in the cause on a motion for inspection. This case, however, is different. The Plaintiffs sought a third inspection after two inspections were conducted pursuant to the agreement. I appreciate that the Plaintiffs say that the Defendant’s obstructed the original inspections, but I did not make a finding on that point. My finding was that the motion was premature because discovery had not yet taken place. I was not persuaded that traditional discovery could not have yielded results – not the least of which could have been a more focussed request.
QUANTUM
[9] With regard to quantum, costs are within the discretion of the Court: Courts of Justice Act, s. 131(1). Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 sets out the factors that the Court may consider in awarding costs. The Court should fix an amount that is fair and reasonable in the circumstances: Boucher v. Public Accountants Council for Ontario, 2004 ONCA 14579, 71 O.R. (3d) 291, [2004] O.J. No. 2643 (C.A.).
[10] The parties here are large and sophisticated and evenly matched. Although the motion did not engage sophisticated legal concepts, there were reasonably complex technical issues explored through affidavits and cross-examinations. Under those circumstances, I believe that their reasonable expectations should play a significant role. I also agree that the 55-60% rule should apply: Inter-Leasing Inc. v. Ontario (Minister of Revenue), 2014 ONCA 683, at para. 5; Pennyfeather v. Timminco Ltd., 2016 ONSC 4706, at para. 16. The Defendant’s partial indemnity amount of $48,880.70 based on 60% of actual costs of $80,556.86 is reasonable in the circumstances. That is especially given that the Plaintiff’s costs outline sets out partial indemnity costs in the amount of $51,425.99 is almost identical.
DISPOSITION
[11] The Plaintiffs will pay the defendants $48,880.70 within 30 days.