Court File and Parties
Court File No.: 12-53595 Date: 2017/05/26 Superior Court of Justice - Ontario
Re: Sorbam Investments Ltd. - Plaintiff And: Alan David Litwack, Gary Michael Litwack and Deborah Ruth Litwack, in their capacity as Estate Trustees of the Estate of Moses Litwack, deceased, Samuel Litwack and 1129892 Ontario Limited - Defendants
Before: Madam Justice Liza Sheard
Counsel: Michael S. Hebert for the Plaintiff Tamara Farber for the Defendants and Moving Parties, Alan David Litwack, Gary Michael Litwack and Deborah Ruth Litwack, in their capacity as Estate Trustees of the Estate of Moses Litwack, deceased and Samuel Litwack
Heard: By Way of Written Submissions
Costs Endorsement
[1] The defendants, Alan David Litwack, Gary Michael Litwack and Deborah Ruth Litwack, in their capacity as Estate Trustees of the Estate of Moses Litwack, deceased, and Samuel Litwack (collectively the “Litwacks”) successfully moved for summary judgment, dismissing this action as against them. The motion was granted and on February 24, 2017, the action was dismissed as against the Litwacks.
[2] The Litwacks seek their costs both of the motion for summary judgment and of the action.
Costs of the Motion for Summary Judgment
[3] The Litwacks seek costs of the motion for summary judgment on a substantial indemnity basis in the amount of $42,022.19 inclusive of fees, and disbursements plus HST on that amount. They put forward three grounds for that position:
(i) a near offer of settlement: although they did not serve an offer to settle upon the plaintiff, by email of August 2, 2016, counsel for the Litwacks advised that she would recommend that her client would pay the plaintiff $10,000 by way of settlement/contribution/Pierringer;
(ii) a without prejudice settlement letter dated October 27, 2016 in which the Litwacks offered to settle on the basis of a dismissal of the action as against them with costs, but on a scale lower than partial indemnity. That letter did set out the various heads of potential liability and the Litwacks’ reasons why liability would not be found as against them. The arguments set out in that letter are closely consistent with the reasons given for the dismissal of the plaintiff’s action as against the Litwacks; and
(iii) that the Litwacks had no “viable alternative” to a motion for summary judgment or they would have been required to take part in the three to four week trial scheduled to proceed in June 2017.
[4] A “near offer” does not attract the costs consequences of an actual offer.
[5] The plaintiff objects to costs being awarded on a substantial indemnity basis. The plaintiff asserts that the neither the August 2, 2016 email nor the letter of October 27, 2016 were offers to settle. The plaintiff says that the letter of October 27, 2016 does not include a formal offer but only says that the Litwacks were interested in costs recovery and amenable to discussions.
[6] That plaintiff’s assertion that the October 27, 2016 letter did not contain an offer to settle, ignores the first paragraph of the letter which reads:
Second, we extend a further offer to dismiss the action as against our clients with costs.
[7] In the October 27, 2016 letter, the Litwacks offer to consent to a dismissal of the action as against them with costs. Moreover, in an attempt to persuade the plaintiff that the action ought to be dismissed, the letter also outlines the reasons for the position taken by the Litwacks. I conclude that the letter of October 27, 2016 does constitute a settlement proposal which should be taken into account by this Court when determining the appropriate scale of costs.
[8] There is no evidence of any offers to settle made by the plaintiff. The absence of any such offers tends to support the third ground upon which the Litwacks seek costs on a substantial indemnity basis: had they not brought a motion for summary judgment the Litwacks would have been required to participate in a three to four week trial in June 2017.
[9] Both the email of August 2, 2016 and the October 27, 2016 letter were sent in the hope of settlement and with clear notice that, unless there was a settlement, the Litwacks intended to bring a motion for summary judgment.
[10] In support of their claim for costs, the Litwacks ask the Court to consider the following factors under r. 57 of the Rules of Civil Procedure:
(a) the amount claimed: the amount claimed was $4 million;
(b) the complexity of the proceeding: there were four headings of potential liability, which issues were to have taken three to four weeks of trial time;
(c) the importance of the issues: these issues are clearly important to the Litwacks given the size of the claim and given the death, ill-health, age and mental incapacity of the Litwacks’ principal witnesses. The Litwacks further argue that the issues in this case are of broader importance to the commercial landlord community;
(d) the conduct of any party that intended to shorten or lengthen unnecessarily the duration of the proceeding: the Litwacks assert that the plaintiff refused to provide evidentiary support for its claim and refused to admit various facts. They also assert that the plaintiff served responding materials only four days before the hearing of summary judgment motion despite having been served with a Notice of Motion in August 2016 and the supporting affidavit in December 2016. Further, it was not until January 10, 2017, days before the hearing, that the plaintiff abandoned its strict liability claim (Rylands v. Fletcher), which it did in its Responding Factum;
(e) whether any steps in the proceeding were improper, vexatious or unnecessary or taken through negligence, mistake or excessive caution: the Litwacks argue that the plaintiff made no settlement offers and failed to respond to the offers made by the Litwacks;
(f) a party’s denial or refusal to admit anything that should have been admitted: the Litwacks point to their Request to Admit they served and to the paragraphs that the plaintiff refused to admit, but did not address in the motion materials.
[11] In addition to the Litwacks’ arguments above, I would also note that in its responding materials and in argument at the outset of the hearing of the summary judgment motion, the plaintiff unsuccessfully raised technical objections to the Litwacks’ use on the motion of certain discovery transcripts. To some degree, those objections lengthened the hearing of the motion.
[12] In response to the third ground raised by the Litwacks - that they had no choice but to move for summary judgment - the plaintiff asserts that the summary judgment motion was brought too close to the trial, which is a factor that ought to be taken into account in awarding costs.
[13] On that issue, the evidence is that the plaintiff was given advance notice of the Litwacks’ intention to bring a summary judgment motion. The Litwacks’ Notice of Motion was served in August 2016 but not returnable until early 2017. After serving the Notice of Motion, the Litwacks pursued settlement with the plaintiff and held off delivering their supporting affidavit until December. Given those timelines, and the alternative of participating in a long trial, I conclude that the Litwacks were reasonable in pursing their motion for summary judgment when they did.
[14] This case was well-suited to a summary judgment: the evidence of the Litwacks witnesses was known to the plaintiff and unlikely to change at trial given the death, incapacity and old age of the individual defendants and principal witnesses. The claim was historical in nature and a determination of liability did not rest on findings of credibility.
[15] The plaintiff argues that this was not a complex proceeding and did not involve any cross-examinations or lengthy affidavits and that the issues were legal ones. Those arguments support the bringing of a motion for summary judgment and are properly considered in determining costs.
[16] The central argument made by the plaintiff/respondent on the motion is the amount of the costs sought by the Litwacks. The plaintiff argues that the time spent by the Litwacks’ senior counsel is excessive. For example, the plaintiff asserts that senior counsel spent too much time (36.8 hours) communicating with her clients and counsel; spent too much time on discoveries (21.7 hours for a one-day examination); and too much time was charged for the pre-trial (34.3 hours), when the pre-trial was only 3 hours. The plaintiff asserts that work should have been delegated to more junior counsel.
[17] The plaintiff particularly objects to paying costs for a mediation, which was not attended by the Litwacks’ counsel. Instead, the Litwacks proposed that one of the Litwacks’ sons participate in the mediation via telephone. As a result, the mediation did not proceed. The plaintiff faults the Litwacks for not properly taking part in the mediation, which was prejudicial to the plaintiff.
[18] The plaintiff also asserts that, although the claim was for approximately $3 million, the Litwacks knew that the plaintiff had incurred remediation costs of only approximately $200,000.00.
Time Spent
[19] Based on the costs outlined submitted by the Litwacks, it appears a total of 60.4 hours was spent by Ms. Farber on the summary judgment motion (including preparation of a Request to Admit). In addition, 19.5 hours was spent on the motion by others in Ms. Farber’s firm. The plaintiff asserts that the time incurred by counsel for the Litwacks on the summary judgment motion also appeared to include 3 hours of travel time and notes that the Litwacks, who did and still reside in Ottawa, choose to retain out-of-town counsel.
[20] The plaintiff acknowledges that the Litwacks’ were free to choose out-of-town counsel, but objects to paying additional costs as a result of that choice.
[21] Given the nature of the plaintiff’s claim, it may have been reasonable for the Litwacks’ to have retained counsel, such as Ms. Farber, who has special expertise in the subject area. The plaintiff’s claim was asserted under four different headings of damages. The claim arose from historical contamination, which required technical expert evidence. The amounts claimed were high, and could have been potentially devastating for the Litwacks, who were individually named.
[22] While the plaintiff asserts that the claim was inflated and that the plaintiff had only incurred only $200,000.00 for remediation, the amount of the claim was the discretion of the plaintiff, which could have amended the claim or conceded that the damages would be capped at a lower amount than claimed. Also, in addition to recovery of its remediation costs, the plaintiff was seeking damages for the “stigma” that attached to the land by reason of the historical contamination.
[23] There is merit to the position taken by the plaintiff that much of the work was done by senior counsel and a significant amount of time was spent in communication with her client and with counsel. It must also be noted that the time spent was as a result of the nature of the claim being historic, which would have required investigations of historic records including management records; that one of the defendants died during the litigation, as a result of which, the estate of Moses Litwack had to be represented by his three estate trustees; and that the surviving Litwack, Samuel Litwack, was elderly and his examination was conducted by way of interrogatories, which would have added to the time spent in communicating with clients.
[24] The plaintiff submits that an appropriate award of costs on the motion for summary judgment would be $15,000.00 and points to the plaintiff’s costs on the motion which totalled $26,033.00 on a full indemnity basis, inclusive of disbursements and HST. By comparison the actual time spent by the Litwacks counsel is $45,199.04 ($39,999.15 plus HST of $5,199.89) plus disbursements of $2,286.03 ($2,023.04 plus HST of $262.99) for a total of $47,485.07. The fees and disbursements incurred by the plaintiff are is approximately 55% of that incurred by the Litwacks. However, it should be recognized that the Litwacks were the moving parties on the summary judgment motion shouldered the onus of proof.
Analysis
[25] The Court’s discretion in determining costs is subject to the overriding principle of reasonableness. (Boucher v. Public Accountants Council for the Province of Ontario, 71 O.R. (3d) 291 (C.A.)).
[26] Rules 57.01 (0.a) and (0.b) also require the Court to consider the principle of indemnity, the experience of the Litwacks’ lawyer - touched on above - and the amount of costs that the plaintiff could reasonably expect to pay for the motion. The disparity between the fees and disbursements incurred by the parties poses the greatest challenge to the application of the latter factor. Given what the plaintiff had spent on the summary judgment motion, could it reasonably have expected to pay partial or even substantial indemnity costs to the Litwacks in an amount that exceeded the full amount it paid to its own lawyer?
Disposition: Costs on Summary Judgment Motion
[27] After considering the relevant factors I conclude that it is fair and reasonable to fix the Litwacks’ costs of the summary judgment motion at $24,860.00 ($22,000.00 + HST $2,860.00) for fees.
[28] The Litwacks asked that disbursements of $4,067.78 be divided equally between the motion and the action, but I have chosen to deal with them here.
[29] The appendix attached to the Litwacks’ cost outline does not include travel dates. Therefore, I will treat the disbursements for the action as a whole. The Litwacks ask for disbursements totalling $4,067.78. That amount does not accord with the “Costs Recap Summary” included in the materials but it is what they have asked for in their “Cost Outline-Full Case History”.
[30] I have determined that the Litwack disbursements of $4,067.78 will be reduced by $1,726.76 which they have identified as out-of-town travel expenses. There will be a further deduction of $214.33, which is identified as accommodation, taxi of $176.80, and meals of $22.34 for a total deduction of $2,140.23. As a result the total disbursements allowed the Litwacks is $1,927.55 ($4,067.78 - $2,140.23) plus HST of $208.37 (HST is payable on all but $324.70 of the disbursements) for total disbursements of $2,135.92.
[31] In determining the fair and reasonable amount, I have chosen an amount that it is greater than partial indemnity costs and lower than substantial indemnity costs. I have done so to recognize the offers of settlement made by the Litwacks.
Disposition: Costs of the Action
[32] The Litwacks seek their partial indemnity costs of the action which includes fees of $43,414.80 plus HST. I need not deal here with disbursements as they were determined above.
[33] The Litwacks point out that the costs of the action covered litigation that spanned the course of five years and included the exchange of dozens of technical reports and that the fees average out to $8,500.00 per year of litigation.
[34] I do not propose to again review the r.57 factors but do take them into account when determining the fair and reasonable fees that should be awarded to the Litwacks.
[35] I accept the submissions of the plaintiff that no fees should be allowed for the mediation and that the time spent by lead counsel for the pre-trial of 15.3 hours was excessive and also included travel to and from Toronto to Ottawa.
[36] For the same reasons set out respecting the costs for the summary judgment motion, I do not accept the arguments put forth by the plaintiff that excessive time was spent by lead counsel in communicating and corresponding with her clients and counsel.
[37] I fix the Litwacks costs of the action at $31,200.00 + HST of $4,056.00 for a total award of $ 35,256.00.
Summary: Total Costs
[38] The costs payable by the plaintiff to the Litwacks are:
a) Summary judgment motion: $26,995.92 b) Action: $35,256.00
Total: $62,251.92
L. Sheard J.