COURT FILE NO.: 12-53886 DATE: 2017/06/02 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Carmen Scaffidi-Argentina, Michaelangelo Scaffidi-Argentina, Sheila Scaffidi-Argentina And Marissa Scaffidi-Argentina Plaintiffs – and – Tega Homes Developments Inc., Goodeve Manhire Inc., Goodeve Manhire Partners Inc., Paterson Group Inc. and The City of Ottawa Defendants

COUNSEL: Ronald Price and Nadia Authier, for the Plaintiffs David Bertschi and Stéphanie Drisdelle, for the Defendant, Tega Homes Mark Frederick and Elizabeth Ackman, for the Defendants Goodeve Manhire Inc. and Goodeve Manhire Partners Inc. Sara Mahoney, for the Defendant, Paterson Group Inc.

HEARD: In writing

DECISION RE INTEREST AND TRIAL COSTS

Overview

[1] The parties agreed to a bifurcated trial whereby the methodology and quantum of the plaintiffs’ damages would be determined first, followed by a trial of the liability issues thereafter. The damages trial took place in January and February 2016. The liability issues were to have been determined at a separate hearing which was to have begun on May 8, 2017. The trial did not proceed on that date and is now scheduled to begin on January 15, 2018.

[2] Reasons for Judgment on the damages issue were released on August 30, 2016. On consent, only the costs of the plaintiffs and of the defendant, Tega Homes Development Inc. (“Tega”) were to be decided at this time. The costs of the other parties are reserved to be determined following the liability trial. The plaintiffs and Tega provided written costs submissions in September and October 2016. These Reasons decide the costs of those parties with respect to the damages trial.

[3] In their costs submissions, the plaintiffs and Tega identified that the Reasons for Judgment were silent on the issue of prejudgment and postjudgment interest. Accordingly, these Reasons address those issues.

Positions of the Parties

The Plaintiffs’ Position

[4] The plaintiffs seek their costs on a partial indemnity basis.

[5] In the plaintiffs’ Bill of Costs, the time spent is broken out under 5 headings: pleadings, discovery, trial preparation, settlement process, and trial. The plaintiffs seek the following amounts:

Fees $221,094.32 HST $28,742.26 Disbursements $49,488.36 HST $2,176.59 Total $301,501.53

[6] The plaintiffs’ disbursements of $51,664.95 ($49,488.36, plus HST of $2,176.59) are broken down as follows:

1. Taxable disbursements with HST $18,919.61
2. Non-taxable disbursements $803.00
3. Experts’ Fees $31,942.34 i. Allen Kim, Brown and Beatie Engineering $16,077.34 ii. Enzo DiChiara, Prestige Construction $9,605.00 iii. Oliver Tighe, Colliers International Realty $2,260.00 iv. ARC Associates Inc. (drawings for reconstruction) $4,000.00 Total $51,664.95

Tega’s Position

[7] Tega argues that the plaintiffs are entitled to partial indemnity costs up to the date of the service of Tega’s rule 49 Offer to Settle of December 29, 2015 (“Tega’s Offer”) but discounted by 50%. Tega argues that the discount of 50% is required because the plaintiffs unnecessarily prolonged the trial by calling irrelevant witnesses and by exaggerating their claim.

[8] Tega then seeks partial indemnity costs as of December 29, 2015. As will be seen below, I have determined that the plaintiffs achieved a result at trial that was less favourable than Tega’s Offer. As a result, Tega is presumptively entitled to its partial indemnity costs as of December 29, 2015.

[9] Tega calculates its partial indemnity costs at the rate of 60% of its full indemnity costs and are as follows:

1. Fees $97,806.00
2. HST on fees $12,714.78
3. Disbursements with HST $31,790.12 Total $142,310.90

[10] The costs incurred by Tega after service of Tega’s Offer relate primarily to preparation for and attendance at trial, as well as preparation of submissions following the trial.

Should Insurance Monies Reduce the Damage Award?

[11] The central issue during the damages trial was the methodology to be used to calculate the plaintiffs’ damages. The plaintiffs asked that damages be based on the cost to rebuild the building, with an adjustment for betterment. The defendants asked that damages be based on the diminution in value of the plaintiffs’ property by reason of the damages suffered to the building and lands.

[12] The competing methodologies led to very different damage outcomes. Had the plaintiffs’ methodology been accepted, the plaintiffs’ damages would have ranged from something over $1.1 million to over $2.3 million. The damages methodology advocated by Tega contemplated a much lower range in damages.

[13] For the reasons set out in my Reasons for Judgment, I concluded that the proper method for calculating the plaintiffs’ damages was the diminution in value, which was determined to be $847,390.00. The plaintiffs were also entitled to damages for lost rental income, determined to be $236,323.26, for a total calculation of $1,083,713.26, save any deductions for insurance monies received by the plaintiffs.

[14] The damages calculation in the Reasons for Judgment did not include a reference to prejudgment interest. The parties agree that prejudgment interest ought to have been included on the lost rental income.

[15] The plaintiffs and Tega do not agree on whether the $367,442.37 in insurance monies received by the plaintiffs from their own insurer, State Farm, for the loss of the building, reduce the damage calculation. That question must first be resolved so that it is clear on what amounts prejudgment interest is to be calculated. In addition, clarification of that issue also has a direct bearing on costs: if the plaintiffs’ damages are not reduced by the $367,442.37 they received from State Farm, then their result at trial will be better than the amount of Tega’s Offer.

[16] In their Reply Costs Submissions, the plaintiffs assert that the damages award should not be reduced by State Farm’s $367,442.37 payment.

[17] The plaintiffs acknowledge that they received $69,449.76 from State Farm to compensate them for one year’s lost rent and that the Reasons for Judgment specifically provide (at para. 125) that the damages awarded for lost rental income ($236,323.26) shall be reduced by that amount.

[18] The plaintiffs also acknowledge that they received the $367,442.37 from State Farm for the loss of the building. However, in their Reply Costs submissions, the plaintiffs take the position that Tega ought not to receive credit for the State Farm payment, which deduction is contrary to the common-law exception that insurance proceeds are not deductible from an award of damages. If the plaintiffs’ argument is accepted, then the total damages award (before interest on the lost rental income) would be $1,014,263.50 (i.e. $1,083,713.26 − $69,449.76).

[19] In the alternative, the plaintiffs argue that if there should be any accounting for the State Farm payment, it should not be the full sum of $367,442.37. The plaintiffs argue that the full value of State Farm’s subrogated claim was $521,357.90. A settlement was reached between Tega and State Farm by which State Farm accepted $400,000.00 in full settlement of its subrogated claim. The plaintiffs argue, therefore, that as State Farm reduced its claim by 25%, Tega should only be entitled to a deduction of $275,581.78 ($367,442.37 less 25%). If the plaintiffs’ argument were to be accepted, then the damages award (before prejudgment interest) would total $738,681.72 ($1,014,263.50 − $275,581.78).

[20] Tega’s Offer was for $650,000, plus prejudgment interest and partial indemnity costs. Therefore, applying either of the plaintiffs’ alternatives above, the damage award would exceed Tega’s Offer.

[21] Tega disputes the position taken by the plaintiffs. Tega argues that at all times prior to the settlement Tega reached with State Farm, the plaintiffs’ claim included State Farm’s subrogated claim as well as the plaintiffs’ un-subrogated claim. As a result of Tega’s settlement with State Farm, the plaintiffs were entitled to keep the full amounts they received from State Farm for the loss of the building ($367,442.37) and lost rental income ($69,449.76). Tega argues that if the plaintiffs’ damage award is not reduced by the foregoing amounts paid by State Farm, the plaintiffs would enjoy a windfall or double recovery.

[22] Tega further argues that in Tega’s Offer it is clear that Tega was offering only to settle the plaintiffs’ un-subrogated claim. Indeed, paragraph 1 of Tega’s Offer reads as follows:

1. The defendants agree to the valuation of the plaintiffs’ un-subrogated claims in the following amount of $650,000.

[23] Tega also points to paragraphs 63 and 64 of the plaintiffs’ Reply Submissions, submitted to the Court following the trial, in which the plaintiffs specifically state that from the damages awarded “would have to be deducted the funds received from State Farm ($367,442.37)”.

Disposition: Insurance Monies are to be Credited to Tega

[24] The arguments now put forth by the plaintiffs conflict with the position they took throughout the trial and in their written submissions submitted following the trial: throughout, the plaintiffs acknowledged that from the damages would have to be deducted the amounts paid by State Farm for lost rent and for the building loss.

[25] Had the plaintiffs intended that there be no such credit given with respect to the $367,442.37 State Farm payment, the time for doing so was at trial and in their written submissions following the trial. The defendants and the Court relied upon the submissions made by the plaintiffs with respect to the quantification and determination of damages. It is now too late to change that position. Should any clarification be required, against the award of $847,390.00 awarded for diminution in value of the property shall be credited the sum of $367,442.37, leaving a net award under that heading of $479,947.63 and a total award of $646,821.13.

[26] Separately, I conclude that the amount for which State Farm agreed to settle its subrogated claim with Tega is irrelevant to the determination of the plaintiffs’ damages.

Prejudgment Interest

[27] The parties agree that that prejudgment interest should be awarded on the lost rental income.

[28] Tega calculates prejudgment interest on the net rental income on the basis of 61 months “from the date of the loss” (Tega’s Costs Submissions, Tab A, page 1, Footnote 1). In Footnote 1, Tega appears to have calculated prejudgment interest from July 1, 2011 to August 30, 2016, the date on which the Reasons for Judgment were released. In fact, the plaintiffs were awarded lost rent for the period June 1, 2011 to December 31, 2016 in the amount of $236,323.26 – being 66 months (against which the State Farm lost rent monies of $69,449.76 were to be credited).

[29] The plaintiffs and Tega agree that the prejudgment rate is 1.3% per annum. In its calculations, Tega deducts the State Farm lost rent monies and calculates prejudgment interest of $11,025.80, based on the net rental loss of $166,874.26 ($236,323.26 − $69,449.00) x 1.3% for 61 months (or roughly 5.083 years).

[30] In their costs submissions, the plaintiffs state that, “due to the length of time which has passed since the damages were incurred, with no payment having been made by Tega, and given that there is a high likelihood that no payment will be received by the plaintiffs until after a decision is obtained following the conclusion of the liability trial”, the plaintiffs should be awarded prejudgment and postjudgment interest on the full amount of the damages calculated at the rate of 1.3% per annum from the date the statement of claim was issued, March 20, 2012, to the date of the Reasons for Judgment, August 16, 2016. The plaintiffs claim post-judgment interest at the rate of 2% per annum as of August 31, 2016 until the date the damages are paid (Cost Submissions of the Plaintiffs, at paras. 18–20).

[31] If prejudgment interest were calculated on the lost rent using the dates put forth by the plaintiffs — March 20, 2012 to August 30, 2016, or 1625 days — prejudgment interest on the lost rental income would be $9,652.50, calculated as follows: $166,874.26 x 1.3% 365 — rounded to a daily rate of $5.94 — for 1,625 days.

[32] If prejudgment interest were calculated on the lost rental income using the dates put forth by Tega, June 29, 2011 to August 30, 2016 — but not using Tega’s 61-month calculation — prejudgment interest on the lost rental income would be $11,226.60 ($5.94 x 1,890 days).

[33] Accepting the methodologies adopted by the plaintiffs and Tega, I determine that prejudgment interest on the lost rental income should accrue from the date of the loss (June 29, 2011) to August 30, 2016, which I calculate at $11,226.60.

[34] As stated above, the plaintiffs seek prejudgment interest on the total award from the date the claim was issued to the date of the release of the Reasons for Judgment. For the reasons set out below, I do not allow prejudgment interest as requested by the plaintiffs.

[35] The plaintiffs were awarded (or received) rental income lost from the date of the loss to December 31, 2016. The plaintiffs’ evidence was that the damaged property had a value to them only as a source of rental income. By the award of lost rent, the plaintiffs will have been compensated for the loss of that income-generating asset up to December 31, 2016. As a result, despite that the building was uninhabitable on and after June 29, 2011, the plaintiffs will not have suffered the financial loss from that event between June 29, 2011 and December 31, 2016.

[36] Were the plaintiffs now to be awarded interest on the damages award, they would be recovering damages for the loss of their income-earning asset while also recovering the income that the asset would have generated had it not been destroyed. That would lead to double recovery (see Tridan Developments Ltd. v. Shell Canada Products Ltd. (2002), 57 O.R. (3d) 503 (C.A.)). I conclude, therefore, that the plaintiffs are not entitled to prejudgment interest on the awarded diminution in value.

Postjudgment Interest

[37] Notwithstanding that the issue of liability is not yet been tried, given the methodology for calculating damages, the plaintiffs are entitled to postjudgment interest calculated from August 30, 2016 to the date of payment, on the net amount of the damage awarded, after deducting the State Farm payments, and after adding in prejudgment interest on the lost rental payments.

[38] Given the comments above regarding double recovery, and to clarify the apparent inconsistency in these Reasons that might result from an award of postjudgment interest on the building loss from August 30, 2016 rather than from December 31, 2016, the Court notes that the plaintiffs have not yet received any money from Tega. As a result, the plaintiffs are without their income-generating asset; since December 31, 2016 they have been without the rental income that would have been generated by that asset and have yet to receive the damages awarded to them with which they might purchase a replacement income property or investment. The award of lost rent for a period of four months following the release of the Reasons for Judgment takes into account the time it was expected to have taken the plaintiffs to take steps to purchase a replace the income-generating asset.

Analysis: Costs

[39] The award of costs is governed by s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “CJA”), and by rules 49 and 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Rule 57.01 expands the judicial discretion regarding costs award found in s. 131 of the CJA.

[40] In Fong v. Chan (1999), 46 O.R. (3d) 330 (C.A.), the Ontario Court of Appeal set out three fundamental purposes of modern cost rules:

(i) to indemnify successful litigants for the cost of litigation; (ii) to encourage settlements; and (iii) to discourage and sanction inappropriate behaviour by litigants.

[41] Rule 57.01 contains a non-exhaustive list of factors to be applied by the Court in fixing costs:

(1) 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, (0.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; (0.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 of any party that tended to shorten or to 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 lawyer; and (i) any other matter relevant to the question of costs.

[42] Rule 57.01(4) confirms the authority of the Court under s.131 of the CJA to award all or part of the costs on a substantial indemnity basis and in an amount that represents full indemnity.

[43] Rule 57 assumes that the Court will consider the result in its exercise of the discretion under s. 131 of the CJA. In this case, the issue of liability has yet to be determined. However, while there has been no admission of liability by Tega, for the purposes of determining costs, in all of the circumstances, I conclude that it is reasonable to consider that the plaintiffs were successful in their claim. I reach that conclusion because the damages suffered by the plaintiff occurred following the development and construction of a condominium project by Tega on lands adjacent to the plaintiffs’ lands, on which the plaintiffs’ residential rental property was situated. Again, without acknowledging liability, at least by the first day of trial, if not earlier, Tega acknowledged that, during and after construction of its condominium project, the plaintiffs’ residential rental building became uninhabitable and irreparable.

Offers to Settle

[44] In this case, Tega’s Offer to settle is a significant factor in determining the costs between the parties. Tega asserts that its offer of December 29, 2015 was more favourable than the plaintiffs’ recovery at trial.

[45] On December 29, 2015 Tega served a rule 49 offer by which the defendants agreed to settle the plaintiffs’ action as follows:

1. The defendants agree to the evaluation of the plaintiffs’ un-subrogated claims in the amount of $650.00;
2. In addition, the defendants would pay prejudgment interest in accordance with the Courts of Justice Act;
3. The defendants would pay the plaintiffs’ their partial indemnity costs, including disbursements and HST, up to the date of acceptance of the offer, in the amount as agreed upon or assessed by the Court following a finding of liability by the Court or following the resolution of the matter.

[46] Tega’s Offer was not withdrawn prior to the trial, which began on January 11, 2016.

[47] On January 4, 2016, the plaintiffs’ offered to settle their claims on the basis of payment to the plaintiffs’ of $1,144,700.00, which represented the un-subrogated portion of their claims as follows:

1. Prejudgment interest calculated on the loss of rental income claimed of the plaintiffs’ in accordance with the Courts of Justice Act; and
2. Costs as agreed upon or assessed.

[48] The plaintiffs’ offer was open for acceptance until 5 minutes after the commencement of trial.

[49] Neither offer was accepted. Tega argues that its rule 49 offer was more favourable to the plaintiffs than the outcome at trial by $46,906.46. That calculation was based upon the interest on the rental income of $11,025.80 and a belief that Tega served an offer of $661,484.00. In fact, the Tega Offer was for $650,000.00 and the interest on the lost rental income has now been set at $11,226.60. Tega’s Offer agreed to the valuation of the plaintiffs’ un-subrogated claims in the amount of $650,000.00, plus prejudgment interest on that amount in accordance with the CJA, and agreed to pay the plaintiffs their partial indemnity costs, including disbursements and HST up to the date of acceptance of the offer in an amount to be agreed upon or assessed by the Court following a finding of liability by a court or following a resolution.

[50] As per these Reasons and the Reasons for Judgment, damages are calculated as follows:

Lost rental income and diminution in value $1,083,713.26 Prejudgment interest on lost rental income 11,226.60 Less: State Farm monies ($436,892.13) Net Damage Award: $658,054.28

[51] To compare the Tega Offer to the net damage award, prejudgment interest in accordance with the CJA must be added to the $650,000.00 offered. Prejudgment calculated on $650,000.00 at 1.3% from the date the cause of action arose, June 29, 2011, to August 30, 2016 — being 1890 days — totals $43,754.79. With prejudgment interest, Tega’s Offer becomes $693,754.79 and exceeds the plaintiffs’ trial net damage award by $35,707.06.

[52] Having concluded that Tega’s offer exceeded the trial judgment, the provisions of rule 49.10(2) apply.

[53] Rule 49.10(2) provides:

Where an offer to settle, (a) is made by a defendant at least seven days before the commencement of the hearing; (b) is not withdrawn and does not expire before the commencement of the hearing; and (c) is not accepted by the plaintiff, and the plaintiff obtains a judgment as favourable as or less favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer was served and the defendant is entitled to partial indemnity costs from that date, unless the court orders otherwise. [Emphasis added.]

[54] As per rule 49.10(2), unless the Court orders otherwise, as a starting point, the plaintiffs are presumptively entitled to their costs up to December 29, 2015 on a partial indemnity basis and Tega is entitled to its costs from that date forward on a partial indemnity basis.

[55] In Tega’s cost submissions, Tega asks the Court to consider that the plaintiffs’ last offer to settle, dated January 4, 2016, was for $1,144,700, which represented the un-subrogated portion of the claims, plus prejudgment interest calculated on the loss of rental income claimed and its costs of the action. Tega asserts that the plaintiffs’ offer exceeded the amount of damages awarded by approximately $497,000.00.

[56] The purpose of rule 49 is to encourage parties to make reasonable settlement offers and to impose cots consequences on those who fail to reasonably assess of the value of their case (see Lawson v. Vierson, 2012 ONCA 25, 108 OR (3d) 771, at para. 20).

[57] The implications of rule 49 have been clearly stated by the Ontario Court of Appeal in Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66, at para. 16:

Rule 49 deals with a specific aspect of costs: it is a self-contained scheme that addresses the manner in which offers to settle are brought into play. Its objective is to promote an offer of compromise and visit a cost consequence upon an offeree who rejects an offer that turns out to be as favourable as or more favourable than the judgment awarded to a plaintiff at trial.

Application of the Applicable Rule 57 Factors

[58] The proper exercise of judicial discretion to determine costs requires a consideration of the applicable factors under rule 57.

Experience of the Lawyers, Hourly Rates and Time Spent

[59] The hourly rates charged by the plaintiffs’ lawyers were higher than those charged by Tega’s lawyers. Although lead counsel on both sides were senior, there was a differential in their hourly rates. Senior counsel for the plaintiffs was Ronald W. Price (called in 1982) who charged $450 per hour. Senior counsel for Tega was David A. Bertschi (called in 1985) who charged out his time at $375 an hour.

[60] Mr. Price was assisted by Nadia J. Authier (called in 2002). Her hourly rate was $325 as at the date of trial. Mr. Britt she was assisted at trial by Stephanie Drisdelle (called in 2010) whose hourly rate was $175.

[61] Having reviewed the docket submitted by counsel for the plaintiffs, it is clear that Ms. Authier handled much of the day-to-day work on the file. Mr. Price’s involvement was primarily on the big events in the litigation: examinations for discovery, mediation, and trial.

[62] I conclude that, notwithstanding the higher overall hourly rates of senior counsel, and since much of the legal services on the file were rendered by the more junior counsel, there was nothing unreasonable in having two lawyers on the file. Tega has not raised any specific objection to the hours charged on the file and I see nothing in the time docketed that suggests unwarranted time spent or unnecessary or unreasonable duplication of time. I therefore conclude that the time spent by the plaintiffs’ legal team and the fees charged are reasonable and fair.

[63] A review of the dockets of the plaintiffs’ counsel and Tega’s Bill of Costs for the same period of time (i.e. as of December 29, 2015) also supports the conclusion that the fees charged by counsel for both parties are reasonable and in keeping one with the other. I further conclude that the fees are within the range of what either party would have expected to pay if unsuccessful.

[64] Perhaps coincidentally, the expert fees paid by the parties is also comparable: the plaintiff’s expert fees total $31,942.34, inclusive of HST. Tega’s expert fees totalled $28,792.63, inclusive of HST.

[65] Tega urges the court to discount the plaintiffs’ partial indemnity fees by 50% on the basis that that the trial was unnecessarily prolonged because the plaintiffs called unnecessary witnesses and exaggerated their claim.

[66] There is some basis for Tega’s arguments: as per the Reasons for Judgment, the evidence of Enzo DiChiara as to the reasonable cost of rebuilding could not be relied upon by the Court (nor even by the plaintiffs) because he was not given complete or detailed drawings and specifications.

[67] Mr. DiChiara’s estimate for rebuilding was $2,337,255.00, although he would not commit to rebuild for that price.

[68] In their written submissions following the trial, the plaintiffs reduced their damage claim from a potential high, based on Mr. DiChiara’s estimate, to an amount that was almost $1 million lower than Mr. DiChiara’s estimate and was based upon Tega’s experts.

[69] Tega had argued that Mr. DiChiara’s evidence was intended to be high so as to lead the court to conclude that a lower figure, still too high, was a realistic figure.

[70] As set out in the Reasons for Judgment, and without in any way criticizing Mr. DiChiara’s expertise, his evidence was unhelpful and could not be relied upon even by the plaintiffs. For all of those reasons, Mr. DiChiara’s expert fees of $9,605 shall be deducted from the plaintiffs claim for partial indemnity costs.

[71] I do not agree with Tega’s submissions that it would be a proper exercise of my discretion to reduce the plaintiffs’ partial indemnity costs by 50%. While it may be fair to conclude that the plaintiffs were overreaching in their claim, given that I have concluded that the provisions of rule 49.10(2) apply, the cost consequences to the plaintiffs and in favour of Tega will be sufficient to address Tega’s submissions on that issues.

Amount Claimed and Recovered

[72] The plaintiffs claim in damages was for well over $1.5 million and the amount awarded was just over $658,000.00. Both amounts are significant.

Costs the Unsuccessful Party would Reasonably Expect to Pay

[73] As set out above, I conclude that the amount of costs claimed by each party on a partial indemnity scale was within the reasonable expectation of the other.

Complexity and Importance

[74] The issues were of moderate complexity. Much of the evidence was given by experts and was detailed and technical.

[75] The issues were important to the parties. There was a significant range in the quantum of damages depending on the methodology used. That the parties agreed to bifurcate the trial to deal firstly with damages speaks to the importance to the parties of the determination of damages.

Unreasonable Conduct of Any Party

[76] Tega asserts that the plaintiffs were unreasonable in presenting evidence of the cost of rebuilding that exaggerated the plaintiffs’ claim. As per my comments above, there is some merit to that allegation. As set out in my Reasons for Judgment, the evidence of Mr. DiChiara, called by the plaintiffs, as to the cost of rebuilding could not be relied upon. Mr. DiChiara acknowledged that he could provide only a class “C” estimate.

[77] Moreover, after trial, and in their written submissions, the plaintiffs’ appeared to resile from the evidence properly given by Mr. DiChiara as to the cost of rebuilding, in favour of using his oral evidence, not found in his report, that $300.00 per square foot would be the starting point for reconstructing costs. In their written submissions the plaintiffs also put forth an alternative position based on the estimate prepared by Tega’s expert, SPECS, which was a reduction of the damages claimed.

[78] The plaintiffs failed to provide evidence from which to determine the cost of rebuilding. As stated in paragraph 39 in the Reasons for Judgment, had the plaintiffs obtained more than preliminary architects’ drawings, the cost of rebuilding could have been estimated with some certainty. By failing to obtain the requisite drawings and schematics, which could have provided a factual underpinning for their experts, the plaintiffs could not discharge the burden on them to prove the facts by which their preferred calculation of damages (cost of rebuilding) could be calculated. Notwithstanding the foregoing, it might be overstating the plaintiffs’ conduct to label these actions as “unreasonable”.

Disposition

Plaintiffs’ Partial Indemnity Costs

[79] Having considered the rule 57 factors, I conclude that there is no reason not to apply the provisions of rule 49.10(2). Accordingly, the plaintiffs are entitled to their partial indemnity costs up to December 29, 2015. I fix those costs at $135,876.00 for fees, inclusive of HST, plus disbursements fixed at $32,891.11, inclusive of HST, for total costs of $168,767.11, and payable by Tega.

[80] For clarity, the plaintiffs’ disbursements have been allowed as claimed except for the expert fees. The Bill of Costs did not specify the date on which services and invoices of the experts were rendered. On the basis that at least half of the fees were incurred prior to December 29, 2015, the disbursements for the experts are allowed as follows: Allen Kim at 50% ($8,038.50); the disbursement for Enzo DiChiara is disallowed in whole; Oliver Tighe at 50% ($1,130.00); and ARC at 100% ($4,000.00).

Tega’s Partial Indemnity Costs

[81] For the reasons outlined above, I conclude that the partial indemnity costs claimed by Tega are fair and reasonable and within the reasonable expectation of the plaintiffs. Accordingly, Tega’s partial indemnity costs, including disbursements and HST, as of December 29, 2015 are fixed at $142,310.90, and payable by the plaintiffs.

[82] Postjudgment interest will accrue on the costs awarded from the date of these Reasons.

L. Sheard J.

Released: June 2, 2017

COURT FILE NO.: 12-53886 DATE: 2017/06/02 ONTARIO SUPERIOR COURT OF JUSTICE RE: CARMEN SCAFFIDI-ARGENTINA, MICHAELANGELO SCAFFIDI-ARGENTINA, SHEILA SCAFFIDI-ARGENTINA and MARISSA SCAFFIDI-ARGENTINA Plaintiffs AND TEGA HOMES DEVELOPMENTS INC., GOODEVE MANHIRE INC., GOODEVE MANHIRE PARTNERS INC., PATERSON GROUP INC. and THE CITY OF OTTAWA Defendants BEFORE: In Writing COUNSEL: Ronald W. Price and Nadia J. Authier, for the Plaintiffs David Bertschi and Stéphanie Drisdelle for the Defendant, Tega Homes Mark Frederick and Elizabeth Ackman, for the Defendants Goodeve Manhire Inc. and Goodeve Manhire Partners Inc. Sara Mahoney, for the Defendant, Paterson Group Inc. DECISION RE INTEREST AND TRIAL COSTS Sheard J.

Released: June 2, 2017