Starkman Barristers v. Cardillo, 2017 ONSC 6349

COURT FILE NO.: CV-15-123859 DATE: 2017-10-24

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Starkman Barristers Applicant

– and –

John Cardillo, Neil Proctor, Medcap Real Estate Holdings Inc. and National Racquet Club Inc. Respondents

Counsel: Paul H. Starkman for the Applicant F. Scott Turton for the Respondents

HEARD: Submissions in Writing

RULING ON COSTS

Boswell J.

[1] Mr. Starkman acted as counsel to the respondents in relation to a number of litigation matters. The respondents fell behind on their accounts with his office. He taxed his accounts before an Assessment Officer. A ruling on the assessment was released on March 14, 2017. The accounts, rendered at $108,265.92, were assessed at $93,923.67. The sum of $57,125.71 had been paid, leaving an assessed balance owing of $36,797.96. The parties were not invited to make submissions on costs. Instead, no costs were ordered.

[2] Mr. Starkman moved to oppose confirmation of the Assessment Officer’s ruling, asserting that it was an error not to permit cost submissions to be made.

[3] The respondents similarly moved to oppose confirmation, asserting that numerous errors had been made by the Assessment Officer, principally that he had reversed the onus of proof.

[4] On September 21, 2017, I released my ruling on the parties’ motions. I dismissed the respondents’ motion and confirmed the ruling of the Assessment Officer, save for the issue of costs, which I remitted back to him for reconsideration.

[5] I invited the parties to make written submissions on the issue of costs of the motions, which they have done. The following is my ruling on that issue.

The Parties’ Positions

[6] Mr. Starkman seeks costs of $21,109.76 for the two motions. He has broken down his claim for costs into three distinct segments. First, in relation to his own motion to oppose confirmation on the basis that the Assessment Officer erred on the issue of costs, he seeks $7,427.11 on a partial indemnity basis. Second, he seeks $6,117.57 in substantial indemnity costs he submits were incurred from the time the respondents’ motion was launched until it was adjourned by me on July 21, 2017. Finally, he seeks partial indemnity costs in relation to the respondents’ motion from and after July 22, 2017.

[7] Substantial indemnity costs are sought in relation to the respondents’ motion, for the period prior to July 21, 2017, on the basis that there were steps taken, or not taken, by the respondents that unfairly increased the cost of the hearing. In particular, Mr. Starkman submits that the respondents failed to obtain the transcripts of the assessment hearing in a timely manner. The respondents’ counsel (not Mr. Turton), he contends, prepared a lengthy factum without having the benefit of the transcripts. Mr. Starkman was compelled to prepare a responding factum, again without transcripts, in order to set the record straight on what he perceived to be a number of inaccuracies.

[8] The respondents subsequently confirmed their motion as proceeding on July 21, 2017, then sought an adjournment on that date on the basis that transcripts were not ready yet. When the transcripts arrived, the respondents’ new counsel submitted a revised factum that required a revised response. The time spent preparing the initial factum was, in Mr. Starkman’s submission, thrown away.

[9] The respondents submit that the amount sought by Mr. Starkman is disproportionate to the complexity of the issues, the amounts at stake and the results achieved. They contend that Mr. Starkman’s alleged preparation time is excessive, as is his claimed hourly rate. They submit that nothing occurred during the narrative of this case that would justify an award of costs on a scale above partial indemnity. In their submission, a more fair and reasonable costs award, all things considered, would be $4,000 to $5,000.

The Legal Framework

[10] The court’s jurisdiction to award costs is found in section 131 of the Courts of Justice Act, R.S.O. 1990 c. C.43. It is a discretionary jurisdiction. The overarching principle engaged in the exercise of the court’s discretion is that any cost award must be fair and reasonable: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.); and Moon v. Sher (2004), 2004 CanLII 39005 (ON CA), 246 D.L.R. (4th) 440 (C.A.).

[11] Rule 57.01 of the Rules of Civil Procedure enumerates certain factors that serve to guide the court in the exercise of its discretion. Those factors include, but are not limited to the following:

(a) the complexity of the proceeding;

(b) the importance of the issues;

(c) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(d) whether any step in the proceeding was improper, vexatious or unnecessary or taken through negligence, mistake or excessive caution;

(e) the principle of indemnity; and,

(f) the concept of proportionality, which includes at least two factors:

i. the amount claimed and the amount recovered in the proceeding; and,

ii. 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.

[12] The general rule is that costs follow the event and will be awarded on a partial indemnity basis: Bell Canada v. Olympia & York Developments Limited et. al. (1994), 1994 CanLII 239 (ON CA), 17 O.R. (3d) 135 (C.A.). In special circumstances, costs may be awarded on a higher scale, but those cases are exceptional and generally involve circumstances where one party to the litigation has behaved in an abusive manner, brought proceedings wholly devoid of merit, and/or unnecessarily run up the costs of the litigation: Standard Life Assurance Company v. Elliott (2007), 2007 CanLII 18579 (ON SC), 86 O.R. (3d) 221 (S.C.J.).

Analysis

Scale

[13] I will begin my analysis of the costs issue with the question of scale. In my view, there has been no conduct evident in the record to support a costs award – in whole or in part – at any elevated scale beyond partial indemnity costs.

[14] I accept that the respondents’ eleventh hour adjournment request on July 21, 2017, and the subsequent amendment of their factum, resulted in additional costs to the lawyer. But those costs are not extraordinary, nor were they occasioned because of the vexatiousness or abusiveness of the respondents or their counsel. Litigation is a tough business. Delays, hiccups and frustrations are an almost inevitable and certainly predictable part of it.

Quantum

[15] I turn now to the issue of quantum. I make two preliminary observations. First, I have no difficulty with Mr. Starkman’s claimed hourly rate of $350 on a partial indemnity scale. By point of reference, the now-defunct 2002 costs grid allowed for an hourly rate of $350 on a partial indemnity scale for lawyers with twenty years or more experience. Fifteen years have passed since that grid came into force. I take judicial notice of the fact that lawyers’ rates have continued to climb since that time.

[16] I also do not take any particular objection to the amount of time that Mr. Starkman and his staff spent preparing for and attending on the motions. I agree with Justice Nordheimer’s observation in Basedo v. University Health Network, [2002] O.J. No 597 (S.C.J.) that “it is not the role of the court to second guess the time spent by counsel unless it is manifestly unreasonable in the sense that the total time spent is clearly excessive or the matter has been overly lawyered.”

[17] Having said that, I think Mr. Turton has fairly identified proportionality as the central issue in relation to this assessment of costs.

[18] There were two motions that the court considered. The first – Mr. Starkman’s motion to oppose confirmation on the basis that he was not permitted to make submissions on the issue of costs – was a non-complex, straightforward issue that required little argument. It was dealt with at the tail end of the argument of the respondents’ motion. It dealt with the relatively simple concept of natural justice.

[19] The respondents’ motion was more complex, at least in terms of the number of issues raised. There were some 27 alleged errors made by the Assessment Officer. They raised some straightforward procedural issues, but also issues relating to the misapprehension of evidence and the reversal of the applicable onus. This was not the most complex of motions, but it was far from the most straightforward as well.

[20] The amount in issue was roughly $36,000. I accept that it is difficult to litigate modest amounts in an economically efficient way these days. Moreover, there isn’t a strong correlation, in my experience, between the amounts at stake and the complexity of the issues involved in any given case. All this is to say that, particularly with modest amounts at stake, it is not surprising to see a claim for costs that approaches the amount of the claim itself.

[21] Achieving a sense of proportionality does not require the application of a specific mathematical formula. A proportionate costs award does not necessarily represent some fixed percentage of the amount claimed. Indeed a costs award may, in some circumstances, actually exceed the amount of a claim and yet remain generally proportionate given the complexity of the issues and the interests at stake.

[22] In this case, the complexity of the respondents’ motion was something a little more than modest. Factums were required – twice given the way in which the respondents’ prepared for the hearing. Two attendances were necessitated because of the respondents’ late-breaking adjournment request on July 21, 2017. The first was a brief attendance. The argument itself took the better part of a day.

[23] In my view an unsuccessful party, acting reasonably, would not expect to pay in excess of $21,000 in costs for a motion (or two motions heard together) that took less than a day to argue, where there were no prior examinations involved and where the stakes were fixed at about $36,000.

[24] My view is that a fair and reasonable – and proportionate – award of costs, on a partial indemnity basis, for the two motions together is $12,000 in fees, plus disbursements and HST.

[25] Disbursements are fixed at $1,689.61. HST on disbursements is $198.85. HST on fees is $1,560. The total payable by the respondents to Mr. Starkman is $15,448.46.

Boswell J.

Released: October 24, 2017