CITATION: 992548 Ontario Inc. v. 8657181 Canada Inc., 2017 ONSC 6478
COURT FILE NO.: 11552/17
DATE: 2017/10/27
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
992548 Ontario Inc.
Michael Stratton and Johanna McNulty, for the Plaintiff/Responding Party
Plaintiff (Responding Party)
- and -
8657181 Canada Inc.
Paul H. Starkman, for the Defendant/Moving Party
Defendant (Moving Party)
The Honourable Justice T. Maddalena
ENDORSEMENT ON COSTS
[1] I heard this long motion at Welland on August 18, 2017 and rendered my decision on September 19, 2017. I have now received and reviewed costs submissions of both the plaintiff and the defendant.
The Position of the Plaintiff
[2] The plaintiff submits that costs should be awarded to it on a substantial indemnity basis.
[3] The plaintiff submits that a Rule 49 offer was served upon the defendant prior to the cross-examinations.
[4] The plaintiff states that its offer to settle met all of the criteria outlined in Rule 49.10.
[5] Further, the plaintiff states that the defendant commenced its motion without a viable defence and with no evidence of the defendant’s ability to redeem on the mortgage. At the date of the actual hearing, the defendant presented, as evidence of ability to redeem the mortgage, a commitment letter addressed to nonparties.
[6] Finally, the plaintiff submits that the defendant made serious allegations of misconduct on the part of the plaintiff, all of which were unfounded and unproven.
[7] The plaintiff therefore claims costs on a substantial indemnity basis inclusive of fees, disbursements and HST fixed in the amount of $47,292.61.[^1]
The Position of the Defendant
[8] The defendant submits the offer to settle made by the plaintiff does not comply with Rule 49.
[9] Further, the offer to settle has fixed costs amounts which the court cannot assess as correct effective the date of the offer.
[10] Further, the defendant submits that only paragraph 5 of the offer to settle is open for acceptance until the hearing, but it has costs associated with it, which are again undeterminable.
[11] Further, the defendant states that it did nothing that would attract substantial indemnity costs.
[12] Further, the formulaic approach used by the plaintiff to calculate costs by the hourly rate times hours leads to costs that are unreasonable. The defendant states that reasonable costs should be on a partial indemnity basis and should be fixed at $13,560.00 all inclusive.[^2]
Analysis
[13] The plaintiff is the successful party and is entitled to its costs. The plaintiff served a Rule 49 offer to settle dated July 4, 2017. Only paragraph 5 of the offer to settle was open until the commencement of the motion.
[14] However, the defendant complains that this offer was incapable of acceptance and the court could not determine if the costs therein were reasonable costs. Thus, it does not fall within Rule 49.10(1) of the Rules of Civil Procedure.
[15] However, the defendant made no offer to settle and this is surprising given the high costs of litigation.
[16] The cases on offers to settle and costs have generally held that if a plaintiff recovers judgment, partial indemnity costs are usually awarded. Costs are generally raised to a substantial indemnity level if judgment is greater than the plaintiff’s offer.
[17] In the instant case, the decision of the court was as outlined in paragraph 5 of the offer, except that paragraph 5 included $17,000.00 in costs, plus HST, plus disbursements.
[18] Therefore, I do not strictly apply the Rule 49.10(1) costs consequences of failure to accept the offer.
[19] Further, in the case of Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, the court quoted the case of Young v. Young in paragraph 26 as follows:
In Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3, at p. 134, McLachlin J. (as she then was) for a majority of this Court held that solicitor-and-client costs “are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties”. An unsuccessful attempt to prove fraud or dishonesty on a balance of probabilities does not lead inexorably to the conclusion that the unsuccessful party should be held liable for solicitor-and-client costs, since not all such attempts will be correctly considered to amount to “reprehensible, scandalous or outrageous conduct”…
[20] While in the instant case there was some reference by the defendant to improper conduct by the plaintiff, I would not categorize that conduct as “reprehensible, scandalous or outrageous” so as to attract costs on a substantial indemnity basis.
[21] The court in assessing costs must consider all of those factors set out in Rule 57.01(1).
[22] In addition, the court must also consider what is fair and reasonable for the unsuccessful party to pay to the successful party, rather than an amount fixed by actual costs.[^3]
[23] I find that upon a review of the plaintiff’s bill of costs, the hourly rates charged by the plaintiff’s counsel are reasonable. The services of a more junior counsel were utilized in order to reduce overall costs. The disbursements charged are reasonable.
[24] I have noted, however, from the plaintiff’s bill of costs that approximately 37 hours ($8,880) were utilized for preparation of a factum and preparation for oral argument on the motion.
[25] While this court is not disputing that those hours were actually spent by counsel in her factum preparation and oral preparation, I note that they are a bit excessive.
[26] In accordance with the principles outlined in Boucher, I conclude that it is fair and reasonable to reduce the actual fees of the plaintiff by $5,000.00. After that, costs should be awarded to the plaintiff on a partial indemnity basis.[^4]
Conclusion
[27] Taking into consideration all of the factors outlined in Rule 57.01(1) of the Rules of Civil Procedure, as well as the principles of what is a fair and reasonable amount, I fix the costs payable by the defendant to the plaintiff on a partial indemnity basis, at $27,000.00 all inclusive of fees, disbursements, plus HST, all payable within 30 days.
Order Made
[28] The defendant shall pay to the plaintiff costs fixed at $27,000.00 inclusive of fees, disbursements and HST, payable within 30 days.
Maddalena J.
Released: October 27, 2017
CITATION: 992548 Ontario Inc. v. 8657181 Canada Inc., 2017 ONSC 6478
COURT FILE NO.: 11552/17
DATE: 2017/10/27
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
992548 Ontario Inc.
Plaintiff (Responding Party)
- and –
8657181 Canada Inc.
Defendant (Moving Party)
ENDORSEMENT ON COSTS
Maddalena J.
Released: October 27, 2017
[^1]: See tab 2 of the plaintiff’s costs submissions. [^2]: See the defendant’s costs submissions, page 2. [^3]: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 [^4]: Actual fees $38,790 less $5,000 = $33,790 total actual fees; Partial is $33,790 @ 60% = $20,274; plus HST $2,635; plus disbursements & HST $3,458, for a total of $26,367 ($27,000 rounded).