Court File and Parties

CITATION: Bone Safety Signs, LLC v. Work Zone Safety Products Inc. 2017 ONSC 4784

COURT FILE NO.: CV-16-564195

DATE: 20170809

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: BONE SAFETY SIGNS, LLC, Plaintiff

AND:

WORK ZONE SAFETY PRODUCTS INC., Defendant

COUNSEL: Matthew Maurer, for the Plaintiff

Barry Yellin, for the Defendant

BEFORE: Monahan, J.

HEARD: July 14, 2017

SUPPLEMENTARY COSTS ENDORSEMENT

[1] On July 17, 2017, I granted summary judgment in favour of Bone Safety Signs LLC (“Bone”) in an amount of Canadian funds equivalent to $47,301.92 USD, in respect of goods provided by Bone to Work Zone Safety Products Inc. (“Work Zone”). I further fixed the costs payable by Work Zone to Bone as being $19,192.00.

[2] Following the issuance of my Endorsement, the parties were granted permission to make supplementary submissions in respect of costs. Counsel for Bone advised that on May 23, 2017, Bone had served an offer to settle the action on the basis that it would receive payment in the sum of $42,000 USD, plus costs on a partial indemnity basis. Bone achieved a result that was more favourable than the offer to settle. Accordingly, counsel for Bone argued that, pursuant to rule 49.10, Bone ought to be awarded its partial indemnity costs up to May 23, 2017 and substantial indemnity costs from May 23, 2017 onwards. The application of Rule 49.10 in the manner suggested would have the effect of increasing the plaintiff’s costs by $2,096.71.

[3] In reply, counsel for Work Zone argued that the offer to settle served by Bone did not meet the requirements of rule 49.10, as the plaintiff had offered to settle the action for “$42,000 USD”, rather than “an amount of Canadian funds sufficient to purchase $42,000 USD.” As such, the offer was not in accordance with s. 121 of the Courts of Justice Act, as this Court cannot render a judgment in American dollars, which means that the offer does not fall within the ambit of rule 49.10.

[4] Counsel for Work Zone further noted that the additional costs sought by Bone are on the high end of the spectrum, particularly taking into account the principle of proportionality, and that the application of rule 49.10 is not automatic.

[5] Rule 1.04 provides that the rules are to be liberally construed to, among other things, secure the most just determination of the proceedings. Bone’s offer to settle was for compensation equal to $42,000 USD. This represented a real compromise of its claim since, as discussed in my earlier Endorsement, Bone was entitled to full compensation for the value of the goods delivered to Work Zone. I do not believe that Work Zone should be entitled to avoid the cost consequences of rule 49.10 on the basis of a technical interpretation of the rule, one that would be clearly inconsistent with its purpose.

[6] While the application of rule 49.10 is not automatic, it states the general rule to be applied in the cases of written offers to settle. The Court of Appeal in Niagara Structural Steel (St. Catherines) Ltd. v. W.D. Laflamme Ltd., 1987 CanLII 4149 (ON CA), 58 O.R. (2d) 773, [1987] O.J. 2239 described the limited circumstances in which it might be appropriate to depart from the general rule in rule 49.10:

“While rule 49.10(1) does not set forth the basis for resorting to the exception to it, it is reasonable to assume that the occasions for the application of the exception should not be so widespread or common that the result would be that the general rule is no longer, in fact, the general rule. If this were to happen, the presumption in favour of the general rule and the resulting reasonable degree of predictability respecting the incidence of costs would disappear and the incentive policy of the rule would be substantially frustrated. Another consequence would be a more uneven application of the rule in litigation generally.”

[7] In the circumstances of the present case, I see no reason to depart from the application of the presumptive rule in 49.10. The purpose of the rule is to provide an incentive to encourage voluntary resolution. As discussed in my earlier Endorsement, Work Zone precipitated the litigation through its unilateral action in ignoring the basis upon which the credit note had been issued by Bone. Work Zone sought to force Bone to undertake litigation, at considerable cost and expense, in the hopes of somehow avoiding payment for goods it had ordered and received. The settlement offer by Bone was a genuine compromise of its claim and falls within the ambit of rule 49.10. Nor do I believe it appropriate, given the circumstances of this case, to depart from rule 49.10 on the basis of the principle of proportionality: Jarbeau v. McLean, 2017 ONCA 115 at para.84.

[8] Accordingly, I would modify my original costs award, to the extent that Bone is entitled to its costs on a substantial indemnity basis from May 23, 2017. Therefore, costs payable by Work Zone to Bone are fixed at a total of $21,288.71, inclusive of disbursements and HST, payable within 30 days of this supplementary endorsement.

Monahan, J.

Date: August 9, 2017