Shah v. Southdown Towns Ltd., 2017 ONSC 6220

ONTARIO

SUPERIOR COURT OF JUSTICE

CITATION: Shah v. Southdown Towns Ltd., 2017 ONSC 6220

COURT FILE NO.: CV-17-1646-00

DATE: 2017 10 17

CORRECTED: 2017 10 18

BETWEEN:

AMEE GOKULESH SHAH, GOKULESH KUMAR SHAH, JAIGOPAL KALRA, BHARAT KALRA and INDU SHARMA

Amandeep Sidhu, for the Applicants

Applicants

• and -

SOUTHDOWN TOWNS LTD.

Q. Ryan Hanna, for the Respondent

Respondent

HEARD: July 18, 2017

ENDORSEMENT ON COSTS

EMERY J

Correction notice

OCTOBER 18, 2017:

Paragraph [13] the word “costs” in the last sentence is replaced with the word “basis”

Paragraph [19] the total amount of costs of $12,743 has been replaced with the amount of $10,743.89

1The respondent, Southdown Towns Ltd. (“Southdown”), seeks costs for successfully opposing the application that was dismissed by the court on September 12, 2017. Southdown seeks those costs on a substantial indemnity basis in the amount of $15,963.86, made up of $12,483 for fees and $1,614.37 for disbursements, plus all applicable HST. Alternatively, Southdown seeks its costs on a partial indemnity basis made up of $8,322 for fees, $1,614.37 for disbursements and applicable HST.

2The applicants oppose the claim for substantial indemnity costs. The applicants argue that Southdown has no basis to seek its costs on a substantial indemnity basis, and that any costs should be awarded on a partial indemnity basis only, subject to certain deductions. Those deductions relate to the partial indemnity costs they claim they should receive for the cross-examination conducted under Rule 39.02(4)(b), and certain duplication between the two lawyers that made up the counsel team for Southdown.

3The applicants submit that a costs award of $4,000 inclusive of HST and disbursements would be an appropriate award to make in the circumstances.

4Although the written submissions of the applicants provide little in the way of argument or authority to contest Southdown’s claim for a costs award on a substantial indemnity basis, the law is clear that substantial indemnity costs may be awarded in a civil proceeding only in rare cases. There is no indication in either brief that Southdown made an offer to settle to give effect to Rule 49. Therefore, the court must look to the authorities for any basis to award costs in a proceeding at an elevated level.

5Substantial indemnity costs are generally not awarded unless the parties seeking costs at that level can satisfy the court that the parties against whom costs are sought have behaved in a reprehensible or egregious manner, or in such other manner deserving chastisement. The court must consider these factors as the threshold for awarding costs at a higher level: Mortimer v. Cameron, 1993 568 (Ont. C.A.) and reviewed with approval by the Court of Appeal in Davies v. Clarington (Municipality of), 2009 ONCA 722.

6I do not consider the circumstances in this case to amount to reprehensible or egregious conduct on the part of the applicants. Parties are entitled to bring civil proceedings against other parties to have their claims adjudicated by the court. Provided those civil proceedings are not frivolous or vexatious, or otherwise an abuse of process, the court should not make a costs award that could deter the exercise of rights to seek redress for perceived civil wrongs, or to curtail access to justice.

7There is no dispute that Southdown is entitled to its costs as the successful party by having the application dismissed. It is entitled to its costs, but on a partial indemnity basis. The question therefore becomes how much those costs should be.

8I have the discretion to award costs in a proceeding or in a step in a proceeding under section 131(1) of the Courts of Justice Act. Although that discretion is exercised to determine entitlement, on what basis and for what amount, the discretion of the court is subject to the provisions of any act or rules of court, including the Rules of Civil Procedure.

9The Court of Appeal has also set out general principles that the court is guided by when exercising this discretion.

10First and foremost among those general principles is the requirement that a costs award should reflect what the court views as a fair and reasonable amount for the party paying those costs: Boucher v. Public Accountants Council of Ontario, 2004 CanLII 14579 (Ont. C.A.).

11The amount of a costs award should reflect more what the court considers to be a fair and reasonable amount the paying party should pay rather than any exact measure of the actual costs incurred by the successful litigant: Zesta Engineering Ltd. v. Cloutier, 2002 CanLII 25577 (Ont. C.A.). If a judge is able to affect procedural and substantive justice by fixing costs, the judge should do so: Murano v. Bank of Montreal, 1998 CanLII 5633 (Ont. C.A.).

12Mr. Hanna seeks indemnity for his fees based on a partial indemnity rate of $210 an hour against his full hourly rate of $350. Mr. Meirovici claims his fees on a partial rate of $165 an hour against a full rate of $275 an hour. I find these rates to be fair and reasonable.

13When reviewing the Bill of Costs filed by Southdown showing the time spent, it is evident that the lion’s share of the time was incurred by Mr. Hanna. Mr. Meirovici incurred only 2.2 hours of time for the preparation of correspondence and other legal work at the beginning, at a time when the evidence was unfolding. There is no submission that he necessarily provided legal work that related directly to Southdown’s response to the application. I am therefore disallowing Southdown’s claim for Mr. Meirovici’s time on a partial indemnity basis to the extent of $410.19.

14The applicants submit that Southdown’s costs should be adjusted to permit them partial indemnity costs for the cross-examinations Mr. Hanna conducted of Mr. Shah and his wife, Amee Gokulesh Shah, pursuant to Rule 39.02(4). With respect, I disagree. Although Rule 39.02 governs the right of any party to a motion or application to cross-examine the deponent of any affidavit served by a party adverse in interest generally, subrule 39.02(4) applies specifically to the cross-examination on an affidavit filed in respect of a motion. This is highlighted by the subtitle “Additional Provisions Applicable to Motions” that precedes subrule (4).

15The adverse costs associated with cross-examinations under Rule 39.02(4) do not apply to the cross-examinations of affiants who have sworn affidavits in support of, or in response to, an application. A proceeding commenced by a notice of application under Rule 14.05 enables the parties to seek a final order through a summary procedure, and based on a paper record. Cross-examinations are necessary, and often essential to reveal the proper characterization, if not the truth behind a general statement given in an affidavit. The party who cross-examines an affiant in those circumstances is not expected to pay for the costs of the adverse party for a good reason: the cross-examination is likely his or her only opportunity to test the evidence on which the court will make its decision.

16This reasoning is borne out by the evidence adduced from Mr. Shah at his cross-examination on which I based findings of fact in paragraphs 41 and 42 of my Reasons for Decision.

17Counsel for the applicants further submit that the submissions for Southdown did not specify the number of hours sought for the cross-examination, and provided transcript pages showing the date the cross-examinations were commenced, and the time they concluded. The applicants suggest that an appropriate time of six hours would be appropriate in the circumstances, including time for travel.

18The court should not second guess counsel for the successful party on the amount of time spent on a case, or the allocation of counsel to various tasks, unless the time spent is grossly excessive. See Risorto v. State Farm Mutual Insurance Company (2003), 64 O.R. (3d) (SCJ) and Lawyers Professional Indemnity Co. v. Geto Investments Ltd., [2002] O.J. No. 921 (SCJ). I find the time, and therefore the fees claimed for Mr. Hanna’s services are not excessive, and that time is therefore allowed.

19In conclusion, Southdown Towns Ltd. is awarded its costs of the application on a partial indemnity basis fixed in the amount of $7,911.81 for fees, HST of $1,028 and disbursements in the amount of $1,804.08 inclusive of HST, for a total of $10,743.89. I consider this to be a fair and reasonable amount to award for costs. These costs are payable by the applicants, jointly and severally, within thirty days.