CITATION: Iroquois Falls Power Corp. v. Jacobs Canada Inc., 2017 ONSC 6187

COURT FILE NO.: 05-CV-290557PD1 DATE: 2017-10-17

ONTARIO SUPERIOR COURT OF JUSTICE

RE: IROQUOIS FALLS POWER CORP., Plaintiff AND: JACOBS CANADA INC and MCDERMOTT INCORPORATED and CHUBB INSURANCE COMPANY OF CANADA and AMERICAN HOME ASSURANCE COMPANY, Defendants

BEFORE: Mr. Justice Mario D. Faieta

COUNSEL: Paul Ivanoff and Evan Thomas, for the Plaintiff Robert Rueter, for the Defendants Jacobs Canada Inc. and McDermott Incorporated Duncan W. Glaholt, for the Defendants Chubb Insurance Company of Canada and American Home Assurance Company

HEARD: Submissions in Writing

COSTS ENDORSEMENT

BACKGROUND

[1] For reasons dated September 20, 2017, I dismissed the plaintiff’s action for delay.

[2] Three issues remain: (1) should the defendants be awarded their costs of this action? (2) on what scale should costs be awarded? (3) should the costs of this action be fixed or assessed?

[3] The defendants Jacobs Canada Inc, and McDermott Incorporated (the “Engineering Defendants”) seek costs of $1,534,100.18.

[4] The defendants Chubb Insurance Company of Canada and American Home Assurance Company (the “Bonding Defendants”) seek costs of $332,580.07.

ANALYSIS

[5] The award of costs is governed by s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 and the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Rule 57.01 is the primary rule governing costs.

ISSUE #1: SHOULD THE DEFENDANTS BE AWARDED THEIR COSTS OF THIS ACTION?

[6] The defendants are the successful parties in this action because the action against them has been dismissed for delay. They are entitled to costs. The plaintiff submits that the defendants should not be awarded costs in light of their unexplained failure to bring a motion to dismiss this action for delay much earlier and therefore seeks costs before this court. In my view, the plaintiff’s responsibility to move its action along in a timely manner should not be deflected or visited on the defendants in determining whether to award costs. Given its dismissal, I find that the defendants are entitled to their costs of this action.

ISSUE #2: SHOULD COSTS BE AWARDED ON A SUBSTANTIAL INDEMNITY BASIS?

[7] Substantial indemnity costs are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties: Hamilton v. Open Window Bakery Ltd. 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 26.

[8] The Bonding Defendants submit they should receive substantial indemnity costs because the claim against them was without merit. In my view, the fact that the plaintiff failed to pursue its action against the Bonding Defendants does not necessarily mean that its claim was clearly without merit or that its conduct in the prosecution of this action was reprehensible, scandalous or outrageous. I decline to make that finding in these circumstances.

[9] The Engineering Defendants submit that the plaintiff continued to pursue this action despite having expert evidence, in or about 2011, that the HRSGs were expected to last to the end of their 30 year life expectancy. In my view, such conduct does not constitute “reprehensible, scandalous or outrageous conduct” as the bulk of the legal costs in this action had been incurred by 2011.

[10] There have been several settlement offers exchanged by the parties:

• April 26, 2007 – the Engineering Defendants offered to settle this action on the basis of its dismissal plus a payment by the plaintiffs of $1.2 million for their costs. The offer was open until May 18, 2007.

• December 20, 2012 – the plaintiff offered to settle this action on the basis that the defendants pay the plaintiff the sum of $1.75 million plus interest and partial indemnity costs of the action;

• February 7, 2013 – the plaintiff offered to settle this action on the basis that the defendants pay the plaintiff the sum of $1.75 million plus interest and the payment of $450,000.00 in costs to the date of the offer plus partial indemnity costs after the date of the offer;

• December 9, 2013 – the plaintiff offered to settle this action on the basis that the defendants pay the sum of $100,000 to the plaintiff.

[11] None of these offers triggers the substantial indemnity cost consequences provided by Rule 49.

ISSUE #3: SHOULD COSTS BE FIXED OR ASSESSED?

[12] Unless there are exceptional circumstances, a court that awards costs shall fix them rather than refer costs for assessment under Rule 58: See Rules 57.01(3), (3.1) of the Rules of Civil Procedure. The fundamental premise of this rule is that the judge who hears a matter is in the best position to fix them.

[13] The assessment of costs is appropriate when:

(a) When there has been inordinate delay in advancing a claim for costs before the judge who disposed of the matter on its merits: 407 ETR Concession Company Limited v. Ontario (Minister of Transportation), 2005 13785 (ON SC) (Ont. S. C.);

(b) There have been numerous pretrial motions over many years that the trial judge is not familiar with: Boucher v. Public Accountants Council for the Province of Ontario, 2002 22268 (ON SCDC), [2003] 166 O.A.C. 281 (Divisional Court), at para 53; rev’d on other grounds (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.)

[14] In my view, the assessment of costs is warranted. The defendants waited many years, seemingly content to have this action remain in abeyance, before bringing a motion to dismiss this action for delay and to seek an order for their costs of this action. Both judges that dealt with the merits of this action retired many years ago. It does not rest with the defendants to now take the position that the interests of justice dictate that they deserve an expedited determination of their large claim for costs before a judge who had no part in the determination of the merits of this litigation.

Conclusions

[15] I find that the defendants are entitled to have their costs of this action, as assessed, paid by the plaintiff on a partial indemnity basis.

Mr. Justice Mario D. Faieta

Released: October 17, 2017