Lewis v. Dynamite Network Solutions Inc., 2017 ONSC 6296
CITATION: Lewis v. Dynamite Network Solutions Inc., 2017 ONSC 6296
COURT FILE NO.: CV-11-440829
DATE: 20171020
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: DEBORAH LEWIS operating as CITYEVENTS, Plaintiff (Defendant by Counterclaim)
AND:
DYNAMITE NETWORK SOLUTIONS INC. and JEFF MUSSON, Defendants (Plaintiffs by Counterclaim)
BEFORE: SANFILIPPO J.
COUNSEL: Kevin W. Fisher, for the Plaintiff (Defendant by Counterclaim)
Marvin J. Huberman appearing for Jordan Kofman, lawyer for the Defendants (Plaintiffs by Counterclaim)
HEARD: October 16, 2017
REASONS
A. Overview
[1] This motion was brought by the plaintiff, Deborah Lewis operating as CityEvents, for an order to enforce the terms of settlement of this action further to an offer and acceptance of settlement that took place on February 3, 2017. As these reasons will show, no motion was required to obtain an order that the parties had a binding settlement. Rather, the point of contention between the parties was the assessment of costs.
[2] Counsel readily conceded at the opening of argument that a settlement had been concluded on February 3, 2017. The plaintiff accepted an offer to settle this action through receipt of the sum of $10,000 plus costs to be “assessed, argued or negotiated”, with the added term that the sum of $10,000 would be payable within ten days, as is evidenced by the following exchange of communications, all of which occurred on February 3, 2017:
- At 4:21 p.m., the defendants forwarded by email an offer to settle as follows: “Pursuant to our earlier conversation, here is our offer to settle: $10,000 plus costs to be assessed, argued or negotiated. Please let us know your position ASAP.”
- At 4:23 p.m., the plaintiff’s counsel sought by email the following two points of clarification: “Can you confirm when the $10,000 will be paid if accepted. I would suggest payable within 10 days. That is costs to date, correct. Please confirm and I will seek instructions and get back to you.”
- At 4:38 p.m., counsel for the defendants responded by email that the settlement amount can be paid within ten days: “We can get you the money in 10 days. However, all of the money needs to be payable by Dynamite, not Jeff personally. He wants to treat this as a business expense.”
- The plaintiff’s counsel responded by email at 4:39 p.m. as follows: “That is up to him how he treats it. As long as it is paid. Trying to reach my client. Will revert to you as soon as I am able.”
- At 4:45 p.m., counsel for the defendants stated by email: “OK let me know when you hear back.”
- At 5:15 p.m., counsel for the plaintiff forwarded an email to accept the defendants’ offer, stating as follows: “Our client has agreed to accept the offer. We will provide you with our detailed bill of costs next week with disbursements and HST. We will advise the court that the matter has settled, subject to completion of the settlement terms.”
[3] A dispute arose in the transfer of the $10,000 payment as counsel for the defendants took the position that this payment could not be released to the plaintiff until the defendants were first provided with a full and final release. The defendants delivered the $10,000 to the plaintiff’s counsel on February 27, 2017: 14 days late, as the settlement funds were due on February 13, 2017, being ten days from the date of settlement. This breach has been waived by the plaintiff.
[4] By reason of the plaintiff’s waiver of any issue pertaining to delay in the payment of the sum of $10,000, the parties have a settlement on the following terms: the plaintiff will receive the $10,000 that her counsel holds in escrow plus “costs to be assessed, argued or negotiated.”
[5] No motion was required to determine whether a settlement had been reached. Rather, the only remaining dispute was the quantum of costs to be paid by the defendants to the plaintiff.
[6] The parties did not proceed to assess costs before an assessment officer as provided for by r. 57.04, which states as follows:
Where a proceeding is settled on the basis that a party shall pay or recover costs and the amount of costs is not included in or determined by the settlement, the costs may be assessed under Rule 58 on the filing of a copy of the minutes of settlement in the office of the assessment officer.
[7] The plaintiff submitted that the settlement herein did not advance to the point of implementation of minutes of settlement such that the plaintiff was not able to meet the requirements necessary to invoke r. 57.04. This submission is not sustainable in circumstances in which the defendants’ responding position to this motion was that the matter in issue ought to be referred to an assessment officer in accordance with rr. 57.04 and 58.
[8] I also do not accept the plaintiff’s submission that this motion was necessary in order to obtain determinations that were necessary for an assessment officer to address the cost issue.
[9] This motion to enforce settlement could have been dismissed with direction to assess costs under r. 58 before the assessment officer. However, in the interest of efficiency and in furtherance of the objective of seeking the most expeditious and least expensive determination of the last remaining issue in this six-year-old action, and thereby to provide the parties with some much-needed finality, I heard and have determined the issue of quantification of costs.
[10] For the reasons set out herein, the plaintiff’s cost entitlement resulting from the settlement will be fixed in the amount of $25,000 for legal fees, plus HST of $3,250 and disbursements of $5,164.31, for a total of $33,414.31.
[11] For the reasons set out herein, the plaintiff will also receive costs of this motion fixed and payable forthwith in the all-inclusive amount of $1,500.
B. Analysis
[12] By reason of the settlement, the plaintiff is entitled to receive from the defendants costs to be “assessed, argued or negotiated”.
[13] It was throughout understood by the parties that the receipt of costs would not take place at the same time as the delivery of the $10,000 in settlement funds, barring agreement on the quantum of costs. This is clear from the email by plaintiff’s counsel of 4:23 p.m. on February 3, 2017, wherein a term was imposed requiring the payment of $10,000 within ten days of settlement with no matching timing requirement for conclusion of the cost entitlement.
[14] The parties agreed that the plaintiff would receive costs from the defendants, but did not agree on the quantum or scale of costs.
[15] The defendants submit that this action ought to have been brought in the Small Claims Court and, as such, the court ought to exercise its discretion under rr. 57.01(4)(a) and 57.05(1) to refuse an award of any costs. Rule 57.05(1) provides as follows:
If a plaintiff recovers an amount within the monetary jurisdiction of the Small Claims Court, the court may order that the plaintiff shall not recover any costs.
[16] Alternatively, the defendants submit, on the basis of s. 29 of the Courts of Justice Act, R.S.O. 1990, c. C.43, that the plaintiff’s recovery of costs should be limited to the Small Claims Court cost limit of 15% of the value of the claim.
[17] Although these submissions may have had merit had this action proceeded to trial and had the plaintiff’s recovery in damages at trial been determined to have been within the monetary jurisdiction of the Small Claims Court, these submissions are not sustainable in circumstances, like the present, where the defendant has agreed to pay “costs to be assessed, argued or negotiated”. Had the defendants intended to restrict this negotiated cost entitlement to Small Claims Court levels, the defendants would have had to impose this limitation or qualification at the time of settlement.
[18] The plaintiff has submitted a Bill of Costs that totals $45,451.53, all inclusive, on a partial indemnity basis, conceding that there is no basis for costs on a substantial indemnity basis. This Bill of Costs is inclusive of disbursements in the amount of $4,652.10 plus HST of $512.21, for a total of $5,164.31. This quantum of disbursements has been conceded by the defendants to be appropriate.
[19] The Courts of Justice Act makes clear in s. 131 that a court’s assessment of costs is a matter of discretion. An assessment officer would have considered the factors contained in r. 58.06, which mirror certain of the factors set out in r. 57.01, the following of which are pertinent to the present analysis:
(a) Rule 57.01(1)(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. It is clear from the record that the defendant did not consider that the quantum of costs could equate to a multiple in excess of four times the value of the settlement.
(b) Rule 57.01(1)(a): the amount claimed and the amount recovered in the proceeding. While the plaintiff claimed the full amount of the monetary limit available under the Simplified Procedure, the plaintiff delivered an Offer to Settle on October 29, 2012, shortly after the close of pleadings, proposing settlement of the sum of $20,000 plus costs. This was an early recognition that this action had modest potential for monetary recovery.
(c) Rule 57.01(1)(c): the complexity of the proceeding. This action had limited factual and legal issues and was acknowledged to have limited monetary value.
[20] But the overriding consideration in the assessment of costs in this case is a necessity to achieve proportionality. To ensure continued access to justice, particularly in Simplified Procedure cases, the quantum of cost awards must be proportionate to the amounts realistically an issue.
[21] In Marcus v. Cochrane, 2014 ONCA 207, 317 O.A.C. 251, the court stated that costs must be fair and reasonable. In reducing a trial cost award of $160,706.99 on an $80,000 claim to $60,000, the court stated as follows, at para. 16:
In the end, the order for trial costs against the appellant must be fair and reasonable: see Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (Ont. C.A.), at p. 299. Making that assessment is more art than science. Of particular importance here is that, primarily, this was a trial about a modest amount of money.
[22] In Mayer v. 1474479 Ontario Inc., 2014 ONSC 2622, the court held that the assessment of proportionality could be related to an assessment of what the action was really worth, stating as follows at paras. 40—41:
Assessment of proportionality therefore generally must be guided, I think, by the trier of fact’s objective assessment of what a case was truly worth.
The need for all involved in our justice system to focus on cost control and proportionality is emphasized by our Rules of Civil Procedure [citing r. 1.04].
[23] Proportionality and fairness requires that this cost assessment take into consideration the amounts realistically in issue, the issues advanced, and the reasonableness of the costs appropriately incurred, particularly in a Simplified Procedure action that is specifically tailored to be conducted in a cost-efficient manner to enhance access to justice.
C. Conclusion
[24] Having considered all pertinent factors under rr. 57 and 58.06, and being mindful of the objective of proportionality and efficiency, particularly in the instance of a Simplified Procedure case, I assess costs of the action to the plaintiff in the amount of $25,000 for legal fees, plus HST of $3,250 and disbursements of $5,164.31, for a total of $33,414.31.
[25] In terms of the cost of this motion, it is recognized that this motion was simply not necessary in that the preferable proceeding would have been an assessment under rr. 57.04 and 58 before an assessment officer. Nonetheless, the plaintiff is entitled to costs for the assessment of a cost entitlement that had been conceded. The plaintiff is awarded costs of this motion in the all-inclusive sum of $1,500, fixed and payable forthwith.
Sanfilippo J.
Date: October 20, 2017