CITATION: Payne v. Mak, 2017 ONSC 3660
COURT FILE NO.: CV-09-13295 CM
DATE: 2017-06-13
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
GLORIA PAYNE, HILARY PAYNE and LAURA MUNRO personally and as Litigation Guardian for TARA MUNRO and SHANE MUNRO, minors
Plaintiffs
– and –
CHRISTINE MAK, MIKE OWENS, EERICK RANDSALU, THE OFFICE OF THE FIRE MARSHAL, RICHARD COTE, WINDSOR POLICE SERVICES BOARD, RICHARD MARR, WINDSOR FIRE AND RESCUE SERVICES DEPARTMENT, MARIO SONEGO, THE CORPORATION OF THE CITY OF WINDSOR
Defendants
Raymond Colautti and Steven Pickard, for the plaintiffs
Jeremy Glick, Christopher Thompson and Heather Burnett, for the defendants Christine Mak and Mike Owens
Sheila Handler, for the defendants Windsor Police Services Board, Richard Marr, Windsor Fire and Rescue Services Department, Mario Sonego, and the Corporation of the City of Windsor
HEARD: September 28, 29, 30, October 4, 5, 6, 7, 11, 12, 13, 14 and 17, 2016; written submissions on costs completed April 21, 2017
heeney j.:
[1] I have now reviewed the submissions of counsel as to costs.
[2] In my Reasons for Judgment I stated that the plaintiffs had sued the defendants for one million dollars in general damages, $500,000 in punitive, aggravated and exemplary damages, and $500,000 in special damages. It was pointed out in the written submissions on costs of the OFM defendants that the amount claimed was actually $4.75 million, since the Statement of Claim specified that Gloria and Hilary Payne each claimed $2 million in damages, and the three Family Law Act claimants claimed $250,000 each.
[3] The claims were based on the following alleged torts: negligence, negligent investigation, malfeasance in office, s. 24 damages under the Charter of Rights and Freedoms, malicious prosecution and abuse of process.
[4] The claims were dismissed in their entirety, with reasons reported at 2017 ONSC 243.
[5] Since costs generally follow the event, the defendants are presumptively entitled to their costs, and the plaintiffs do not take issue with that. The real issue is quantum.
[6] The defendants were divided into two groups, for purposes of their legal representation. Christine Mak, Mike Owens, Eerik Randsalu and the Office of the Fire Marshall, collectively referred to as the OFM defendants, were one group, and lead counsel for them was Jeremy Glick of the Ministry of the Attorney General, with the assistance of Heather Burnett. The other defendants were collectively referred to as the Windsor defendants, and lead counsel for them was Sheila Handler, of McCall Dawson Osterberg Handler LLP. Given the differing routes to potential liability faced by these two groups of defendants, I find that this division of representation was entirely reasonable, and allowed for their respective defences to be presented in an efficient fashion. The plaintiffs chose to sue a great many parties, and theoretically each one of them was entitled to be separately represented. The plaintiffs are fortunate to be facing only two sets of costs in this case.
[7] While the plaintiffs challenged the fact that the OFM defendants had two lawyers continuously on the trial (Christopher Thompson’s involvement was limited to the expertise and evidence of the plaintiffs’ expert Dr. Becker), they can hardly be heard to complain, since they had two lawyers themselves for the duration of the trial. As will be noted below, this was a case of considerable complexity, and justified having a junior counsel at the table.
[8] The OFM defendants seek costs of $403,458.51 on a full indemnity basis or, in the alternative, $364,004.44 on a substantial indemnity basis or, in the further alternative, $245,672.24 on a partial indemnity basis. Those figures include disbursements, but do not include HST, since Crown counsel does not charge HST.
[9] The Windsor defendants seek costs of $289,835.54 on a full indemnity basis or, in the alternative, $264,504.60 on a substantial indemnity basis or, in the further alternative, $249,881.96 on a partial indemnity basis. All figures are inclusive of disbursements and HST.
[10] The plaintiffs take the position that the costs of the Windsor defendants should not exceed $100,000, and the costs of the OFM defendants should not exceed $50,000. While various objections are made with respect to the claims for costs that were advanced, the final numbers proposed are unsupported by any discernable calculation.
[11] The overall objective in awarding costs is to fix an amount that is fair and reasonable in all the circumstances, taking into account the reasonable expectations of the parties, most particularly the successful party. Rule 57.01 describes the factors to be considered by the court in exercising its discretion to award costs:
57.01 (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. R.R.O. 1990, Reg. 194, r. 57.01 (1); O. Reg. 627/98, s. 6; O. Reg. 42/05, s. 4 (1); O. Reg. 575/07, s. 1.
[12] The first thing to be considered is the result. The defendants were wholly successful.
[13] The second consideration is any offer to settle. On September 29, 2015, the defendants jointly served a Rule 49 offer on the plaintiffs proposing a dismissal of the claim in exchange for $20,000 plus interest, plus reasonable costs. That offer was amended by a two further offers dated September 8, 2016, whereby each group of defendants offered to pay $10,000 each plus reasonable costs as agreed upon or assessed. The covering letter made it clear that the plaintiffs were free to accept either the earlier offer, or either or both of the later offers. None of these offers were accepted.
[14] The plaintiffs served a Rule 49 offer dated October 30, 2015, proposing that the defendants pay $375,000 inclusive of damages and interest, plus costs on a partial indemnity basis as agreed upon or assessed. This offer was not accepted.
[15] The plaintiffs’ offer was, in view of the result, wholly unreasonable. Indeed, the amount proposed is more than double the figure of $153,574.18 at which the plaintiffs’ damages were provisionally assessed.
[16] The defendants’ offers to settle were, in my view, reasonable, and represented a sincere effort to resolve the matter and avoid the expense and uncertainty of a trial. The plaintiffs argue that these offers did not contain any element of compromise. I disagree. The sum of $20,000 plus interest was a meaningful sum, given that the claims were ultimately held to have no merit. The defendants were also prepared to pay the plaintiffs’ reasonable costs which, given that this lawsuit took almost eight years to complete, would have been significant. The defendants were also prepared to forgo their own claim for costs. Given the numbers that have now been presented, this also represents a significant compromise on their part.
[17] Since the plaintiffs were awarded nothing at trial, the result was clearly more favourable to the defendants than their offers to settle. However, it has been held that the automatic costs consequences set out in Rule 49.10 do not apply where the plaintiff recovers nothing: see Schwark Estate v. Cutting, 2010 ONCA 299, [2010] O.J. No. 1728 (C.A.) at para. 6. Where the claim of a plaintiff is dismissed in its entirety, the successful defendant is presumptively entitled to partial indemnity costs. However, the court is still entitled to take any offers into account in exercising its discretion, pursuant to rule 49.13.
[18] The next relevant consideration is the complexity of the proceeding. This case was highly complex, primarily due to the long list of torts alleged in the Statement of Claim, which were added to during the course of the trial. Each of those raised discrete legal and factual issues that had to be addressed by the defendants. The case required expert evidence regarding the interplay between the Fire Code and the Building Code, as well as the origin and cause of the fire.
[19] The issues were important to all parties. The plaintiffs considered the case to be important because they felt that they had wrongly been branded as criminals, and sought vindication through this lawsuit. It is noteworthy that they had already been vindicated when the charges against Gloria Payne were withdrawn by the Crown, and the charges against Hilary Payne were dismissed at the preliminary inquiry. It is unfortunate for the plaintiffs that this was apparently insufficient, and that they chose to commence and proceed with this ill-conceived lawsuit.
[20] The issues were equally important to the defendants. Allegations were made that the defendants acted with malice, and engaged in a conspiracy against the plaintiffs to further ulterior motives. Their behaviour was variously described in the Statement of Claim as “malicious”, “high-handed”, “deliberate” and “disgraceful”, all of which put the professional reputations of the personal defendants at stake.
[21] The next consideration is the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding. In this regard, it is fair to say that counsel for the plaintiffs wasted a considerable amount of time reading in lengthy excerpts from the cross-examinations of various parties and from their testimony at the preliminary inquiry that ultimately had little or no relevance to the issues to be decided.
[22] By contrast, the defendants expedited their case by filing the report of Dr. Prendergast, instead of calling him as a witness. The plaintiffs object to the disbursements paid to him for trial preparation, since he was not called as a witness. However, I accept the submissions of Ms. Handler that Dr. Prendergast had to be prepared to testify if all counsel did not agree that the report could be filed. Similar efficiencies were achieved by the defence by choosing not to call certain witnesses who had been served with a summons to witness and paid conduct money, as the trial evolved and it became apparent that their evidence would not be needed. Again, I see no merit to the plaintiffs’ argument that the defendants should be denied their disbursements incurred to ensure that these witnesses were available to testify, when the ultimate decision not to call them saved all parties and the court considerable time and expense.
[23] The next factor is whether any step in the proceeding was improper, vexatious or unnecessary, or taken through negligence, mistake or excessive caution. In this regard, there were two motions for summary judgment brought by the defendants, one of which was partially successful and the other of which was wholly unsuccessful. However, the costs consequences of those motions were dealt with by the judges who decided them, and those costs have not been included in the claims now before this court.
[24] The next factor is a party’s denial of or refusal to admit anything that should have been admitted. Here, the OFM defendants point out that the plaintiffs refused to admit several facts set out in the Request to Admit dated October 16, 2015. However, that did not unduly lengthen the trial, because those facts were quickly proven through witnesses who would have been called anyway. Many key facts were admitted by the plaintiffs, which helped to expedite the trial and dispense with the need for proof.
[25] The next consideration is whether it is appropriate to award more than one set of costs. This issue has already been dealt with.
[26] Finally, the court should consider any other relevant matter on the question of costs. In this regard, the nature of the unfounded allegations made against the defendants are again relevant. It has been held that allegations of fraud, misconduct or dishonesty are a sufficient basis to award costs on a substantial indemnity scale when those allegations are not substantiated: Hamalengwa v. Duncan, 2005 ONCA 33575, [2005] O.J. No. 3993 (C.A.) at para. 17. The allegations levelled against the defendants fall into that category. They were wholly unsubstantiated. Indeed, the plaintiff Hilary Payne admitted during his cross-examination that he had no direct evidence of any conspiracy against him, and his counsel made a similar admission during argument. The circumstantial evidence did not come remotely close to supporting an inference of malicious conduct on the part of the defendants. I agree with Ms. Handler’s submissions that the plaintiffs effectively abandoned these allegations by not even cross-examining the personal defendants on the issues of malice and malfeasance.
[27] The plaintiffs are well aware that making unfounded allegations of bad faith against public servants can attract an award of full indemnity costs. In Payne v. Corporation of the City of Windsor, 2012 ONSC 4728, the court awarded full indemnity costs of $1,237,183.02 against Hilary Payne following a seven-day application in which he alleged that the City of Windsor, through various public servants, had conspired to act illegally and in bad faith against them in passing certain demolition control bylaws. The court held, at para. 24, that making unfounded allegations of dishonesty, illegality and conspiracy was a sufficient basis for an award of full indemnity costs.
[28] This prior case is also relevant to the reasonable expectations of the parties. The plaintiffs were clearly well aware of the potential for a substantial award of costs against them in proceeding with this lawsuit, yet they took the risk and prosecuted their case to the end. On the first day of trial, I asked counsel what they expected their trial costs would amount to for a three-week trial, and was given a figure totalling around $200,000. That figure did not include costs incurred prior to trial. Clearly, the plaintiffs had every reason to expect a substantial costs award being made against them if they were unsuccessful.
[29] Proportionality is also a relevant factor. The plaintiffs were claiming $4.7 million in damages, and it is that claim that the defendants had to defend. The costs claimed by the defendants are not disproportionate to the amount claimed. The fact that, in closing argument, the plaintiffs only sought damages in the total amount of $518,308.89 does not change this conclusion. The plaintiffs never sought to amend their Statement of Claim to reduce the amounts being claimed, and made this concession only at the very end of the trial.
[30] In a similar vein, the fact that I provisionally assessed the plaintiffs’ damages at $153,574.18 does not make the defendants’ costs disproportionate. They had no way of knowing what the court’s assessment of damages would be until the trial was over. Until then, they had to defend the case that had been pleaded by the plaintiffs.
[31] The principle of indemnity is to be considered, 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. The Windsor defendants spent $331,943.92 in legal fees and disbursements in successfully defending this lawsuit, and are entitled to some indemnification. The OFM defendants had the benefit of salaried Crown counsel, but their costs are not to be reduced on that account: see Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131(2). Thus, the Crown is entitled to some indemnification as well.
[32] No issue was taken by the plaintiffs regarding the hourly rates charged in the Bills of Costs of the two groups of defendants. Instead, the attack was focussed on the hours spent.
[33] The plaintiffs argue that too much time was expended on this case by counsel for the defendants. In a chart, found at para. 11 of their Costs Submissions, the plaintiffs state that they expended a total of 955.75 hours in counsel and student/clerk time on the file, while counsel for the OFM defendants expended 1,435.14 hours and counsel for the Windsor defendants expended 1,198.30. The plaintiffs’ figure is somewhat suspect, because it differs from two different figures found at para. 8 of the submissions, and in their Bill of Costs respectively. The Bill of Costs also states that Mr. Pickard spent only 2 hours preparing for trial, which is remarkable since he participated in the entire trial, during which he examined and cross-examined several key witnesses.
[34] Furthermore, the action was commenced by a Statement of Claim issued on June 18, 2009, but the plaintiffs’ current counsel was not retained until October 2010. Thus, 1 ½ years’ worth of fees and disbursements are missing from the plaintiffs’ numbers, thereby distorting the comparison.
[35] Taking them at face value, though, they do not tell the complete picture. The plaintiffs’ submissions do not reflect the dollar amount that would be associated with that expenditure of time. Counsel for the OFM defendants has calculated the plaintiffs’ costs, using the hourly rates utilized by the plaintiffs in their Bill of Costs for the second summary judgment motion. They amount to $301,691 in fees plus $14,414.70 in disbursements, which falls between the full indemnity costs sought by the two groups of defendants.
[36] Having said that, I am of the view that too much time was spent on the file by counsel for the OFM defendants. While their case was meticulously prepared and presented, they had the advantage of being, in effect, “in-house” counsel, where the usual constraints of time management and budgeting found in private practice do not always apply. I am satisfied that the time spent on the file by counsel for the Windsor defendants is closer to the mark, and meets the test of proportionality.
[37] Proportionality is also informed by the costs claimed by the plaintiffs on the first summary judgment motion, where they were largely successful. They claimed almost $62,000 in costs for a three-day motion. Costs for a trial spanning almost three weeks can be expected to be several multiples of that figure.
[38] The plaintiffs objected to the fact that travel, accommodation and meal expenses were charged for out-of-town counsel. In that regard, I agree with the comments of Brockenshire J. in Dinsmore v. Southwood Lakes Holdings Ltd., [2007] O.J. No. 263 (S.C.J.) at para. 18, that where a plaintiff sues a governmental or quasi-governmental agency, it would be reasonably expected that out-of-town counsel would be engaged, such that travel and accommodation charges were properly recoverable. See also Beland v. Hill, 2012 ONSC 4855, [2012] O.J. No. 3997 (S.C.J.) at para. 56.
[39] While the Bills of Costs that have been submitted are an important consideration, the court should not engage in a purely mathematical exercise, but should instead arrive at an amount that is fair and reasonable for the unsuccessful party to pay. Most of the factors outlined above militate in favour of an award at or approaching full indemnity costs. Nevertheless, I am not persuaded that an award of costs of that magnitude is fair and reasonable to the plaintiffs, particularly since they will be paying two sets of costs instead of one.
[40] In my view, a fair and reasonable figure for the plaintiffs to pay to the Windsor defendants is $260,000, inclusive of disbursements and HST. This figure falls between the amounts claimed for partial indemnity and substantial indemnity costs. Costs payable to the OFM defendants should be the same, but discounted for the fact that HST is not chargeable on the fees portion. Given that their disbursements were approximately $8,900, their fees should be fixed at $222,200. Had HST been chargeable, it would have added $28,886 to their costs, bringing the total to approximately $260,000.
[41] In the result, the plaintiffs shall pay the costs of the Windsor defendants in the amount of $260,000, inclusive of fees, disbursements and HST. The plaintiffs shall pay the costs of the OFM defendants in the amount of $231,100 inclusive of fees and disbursements.
“Justice T. A. Heeney”
T. Heeney J.
Released: June 13, 2017
CITATION: Payne v. Mak, 2017 ONSC 3660
COURT FILE NO.: CV-09-13295 CM
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
GLORIA PAYNE, HILARY PAYNE and LAURA MUNRO personally and as Litigation Guardian for TARA MUNRO and SHANE MUNRO, minors
Plaintiffs
– and –
CHRISTINE MAK, MIKE OWENS, EERIK RANDSALU, THE OFFICE OF THE FIRE MARSHAL, RICHARD COTE, WINDSOR POLICE SERVICES BOARD, RICHARD MARR, WINDSOR FIRE AND RESCUE SERVICES DEPARTMENT, MARIO SONEGO, THE CORPORATION OF THE CITY OF WINDSOR
Defendants
REASONS FOR JUDGMENT ON COSTS
T.A. Heeney J.
Released: June 13, 2017