Court File and Parties
Court File No.: CV-15-6154 Date: 2017/06/09 Ontario Superior Court of Justice
Between: TROY WHITE and DARREN TURCOTTE CARRYING ON BUSINESS AS WHITE & TURCOTTE CONSTRUCTION, Plaintiffs
And: MARK HAMELIN, TRACY HAMELIN and COMPUTERSHARE TRUST COMPANY OF CANADA C/O FIRST NATIONAL FINANCIAL LP, Defendants
Counsel: Dawood Ahmad, for the Plaintiffs Thomas J. Davis, for the Defendants Mark Hamelin and Tracy Hamelin James M. Butson, for the Defendant Computershare Trust Company of Canada c/o First National Financial LP
Heard: May 19, 2017
Before: Nadeau J.
Ruling on a Costs Motion
[1] In this action, the Plaintiffs obtained an ex parte Order discontinuing the action against the Defendant Computershare Trust Company of Canada c/o First National Financial LP (hereinafter “First National”). Within thirty days after the action was discontinued, this motion respecting the costs of the action was brought pursuant to Rule 23.05 of the Rules of Civil Procedure. The Moving Party Defendant seeks for the Plaintiffs to pay First National its costs in the amount of $11,094.45.
[2] The remaining Defendants, Mark Hamelin and Tracy Hamelin (hereinafter “Hamelins”), participated in this motion; obviously due to their obligations under the Charge registered on their property on February 6, 2015 by First National.
[3] The Hamelins have submitted that the Plaintiffs ought to pay the costs requested by First National, and that the Plaintiffs also pay their costs for responding to this motion.
[4] The Plaintiffs request that First National’s motion for costs be dismissed, and further request their costs of the within motion.
[5] The factual context is that the Plaintiffs entered into a contract with the Hamelins for construction of a new home at 1018 South Shore Road, Astorville, Ontario (“the property”). On or about February 6, 2015, First National registered a Charge on the property in the amount of $575,000.00. On March 13, 2015, the Plaintiffs registered a lien on the property in the amount of $127,493.42 for outstanding amounts claimed to be owed to the Plaintiffs. On April 21, 2015, the Plaintiffs issued a Statement of Claim against the Hamelins for the outstanding amounts.
[6] The Plaintiffs also sought priority over the First National Charge, and on May 13, 2015 advised that First National was a relevant party to the action. On October 3, 2015, First National served a Statement of Defence. First National also served a Crossclaim against the Hamelins. On July 20, 2016, the monies at issue were deposited in Court by the Hamelins. On March 8, 2017, the action against the Defendant First National was discontinued.
[7] For almost two years there were pleadings required, demand for particulars made, affidavits of documents, a pre-trial in this Court, and much correspondence between these parties regarding whether the action would be discontinued against First National. The Plaintiffs proceeded with an ex parte motion resulting in the Order I granted on March 8, 2017.
[8] First National, with this motion, claims it is entitled to recover from the Plaintiffs the costs it has incurred to defend itself in this action in the amount of $11,094.45.
[9] Counsel for these three litigants agree that the appropriate test to be applied by this Court in the exercise of its discretion under Rule 23.05 may be called the “justified action test”. The authors of Morden & Perell, The Law of Civil Procedure in Ontario, (Second Edition), at page 479, outline the test for cost awards when a party seeks to discontinue an action as follows:
“Under rule 23.05(1), which came into force on January 1, 2010, if all or part of an action is discontinued, any party to the action may, within 30 days after the action is discontinued, make a motion respecting the costs of the action.
Under the former version of rule 23.05, a discontinuance normally exposed the plaintiff to the payment of costs, although the court retained its discretion with respect to making an award of costs and might allow a discontinuance without costs. A presumption in favour of costs is no longer part of Rule 23 and, therefore, it follows that costs follow the general principles set out in rule 57.01. However, the former case law remains relevant. Under the case law on the former rule, to be relieved of costs, the plaintiff must satisfy the court that the material filed discloses a bona fide cause of action that is not frivolous or vexatious and that he or she was justified in commencing a lawsuit. Whether or not a defendant should be awarded costs on the discontinuance of an action will require a very fact-specific analysis of the circumstances giving rise to the initiation of the action and its discontinuance.”
[10] My own very fact-specific analysis of these circumstances giving rise to the initiation of this action against First National, its continuance by Counsel for the Plaintiffs, and its discontinuance leads me to the conclusion that the Plaintiffs had to investigate the issue of whether the First National mortgage was a construction mortgage with respect to their claim or priority, however such an investigation does not provide justification for continuing that claim against First National in the manner that it did.
[11] First National, from the outset, was interested in saving costs. The Plaintiffs insisted on their filing of a Statement of Defence and to participate in this ongoing litigation which appears to be related only to the extent and quality of work on the property; unrelated to the Charge advanced by First National. Furthermore, the holdback amount was maintained in compliance with the legislation, and it appears that the Plaintiffs registered their construction lien after it had expired.
[12] In my opinion, based on this factual context, although it was reasonable for the Plaintiffs to satisfy itself that the Charge was not a construction mortgage, it was not reasonable to continue to assert their claim seeking priority over First National’s Charge. Quite simply, First National is not a proper party to the action since, as the necessary investigation revealed, they did not advance a construction mortgage. The Hamelins held a construction mortgage at Caisse Populaire North Bay Limitée. The Charge from First National was obtained in order to repay that construction mortgage, and was fully advanced at the time of registration. I have not been satisfied by the Plaintiffs that there was a bona fide cause of action against First National.
[13] Therefore, it is not reasonable in the circumstances here to order a discontinuance without costs consequences.
[14] In accordance with the normal principles set out in Rule 57.01 and the evolving case law regarding the exercise of this Court’s discretion with respect to costs, I have taken into account the factors enumerated under Rule 57, including the time spent, the result achieved, and the complexity of the matters, as well as the application of the principle of proportionality. In addition, I have considered the principles set forth by the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.) and Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.), specifically that the overall objective of fixing costs is to fix an amount that is fair and reasonable for an unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant.
[15] In my opinion, First National is entitled to their costs on a partial indemnity basis. Having reviewed First National’s Docket at Tab O of their Motion Record, I conclude that an award of costs fixed in the amount of $6,500.00 all-inclusive would be a reasonable one in these circumstances, and I order the Plaintiffs to pay to First National that amount within 30 days.
[16] Furthermore, I make no order regarding the request by the Hamelins for their costs to respond to this motion. They chose to respond and should absorb their own costs in these circumstances.
[17] If these litigants are unable to agree on an appropriate costs award for this motion, any party seeking costs shall within 15 days provide written submissions (up to three pages) supported by a Bill of Costs. Any responding submissions (up to three pages) may be made within a further 15 days.