Court File and Parties

CITATION: CAMS Atlas, LLC v. Stang, 2017 ONSC 7122

COURT FILE NO.: CV-16-561580

DATE: 20171130

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CAMS ATLAS, LLC, Plaintiff

AND:

DARREL STANG, in his capacity as trustee of ALIGNED VENTURES INNOVATIVE FUND, GORDON D. PUTNAM, Q.C., in his capacity as trustee of ALIGNED VENTURES INNOVATIVE FUND, PETER PURDON, in his capacity as Trustee of ALIGNED VENTURES INNOVATIVE FUND, WATER EXCHANGE, INC., TECH SONIC INTERNATIONAL (f/k/a, TECH SONIC INTERNATIONAL LTD. and/or TECH SONIC, TECH SONIC SERVICES L.P.) TECH SONIC LIMITED PARTNERSHIP, SHAWN SMITH and ROBERT ORR, Defendants

AND:

WATER EXCHANGE, INC. and TECH SONIC INTERNATIONAL INC., Plaintiffs by Counterclaim

AND:

CAMS ATLAS, LLC, Defendant by Counterclaim

BEFORE: J. E. Ferguson J.

COUNSEL: Eliot N. Kolers and Vlad A. Calina, for the Plaintiff/Defendant by Counterclaim

Sean Foran and Lia Boritz, for the Defendants/Plaintiffs by Counterclaim

HEARD: In-Writing

COSTS ENDORSEMENT

[1] On September 19, 2017 I heard a motion brought by the defendants seeking an order for security for costs. I made an order for security for costs in the amount of $75,000 covering the estimated defendant’s costs to the end of examinations for discovery. The defendants were seeking approximately $100,000. The plaintiff submitted that, if I made the order, the amount should be in the range of $25,000.

[2] The plaintiff submits that there was divided success on this motion. I do not agree. The defendants were successful and are entitled to their partial indemnity costs.

[3] There was also a motion for partial summary judgement brought by the plaintiff (heard by Morgan, J.) which was intertwined with this motion. The defendants recognize that notwithstanding the evidence on the motions being intertwined, the two motions were separate and distinct and result in separate costs awards.

[4] The defendants seek costs for this motion on a partial indemnity basis in the amount of $17,354.50 inclusive of HST plus disbursements in the amount of $828.25. The plaintiff submits that a fair and reasonable amount of costs is no more than $10,000 [inclusive of HST and disbursements] which it submits reflects the proportionate share of the amount ordered to be posted as security for costs.

[5] The defendants submit the following in support of their request for the above quantum of costs:

i. The reasonableness of a cost award is determined with reference to the factors set out in Rule 57.01.

ii. Given the plaintiff’s request for the evidence on both motions to be intertwined, the costs being claimed by the defendants for this motion are fair and within the reasonable expectation of the plaintiff.

iii. A considerable amount of work was required by both parties to prepare the materials for both motions. In addition, the plaintiff and defendants both used junior and senior counsel to prepare for and attend the motion. As a result, the time spent by counsel for the defendants on the motion for security for costs is not excessive and is reasonable in the circumstances.

iv. It was necessary and important for the defendants to obtain an order for security for costs given that the plaintiff was a non-resident corporation and had insufficient assets in Ontario to satisfy a costs award. It was equally important for the defendants to defend against the proposition that the foreign judgment against Water Exchange should impact the ability of the other defendants to obtain an order for security for costs.

v. Had the defendants not been successful in obtaining security for costs based on existence of the foreign judgment against Water Exchange, this result would likely have adversely impacted the defendants' ability to defend the plaintiff's motion for partial summary judgment as well as the main action.

vi. While the law regarding the issue of security for costs is generally well-settled, this security for costs motions was more complex as a result of the existence of the foreign judgment against Water Exchange and the impact the foreign judgment might have on the defendants who were not a party to the proceeding in which the judgment was obtained. The complexity was increased due to the intertwining of the evidence between the two separate motions.

vii. The complexity of the motion and the importance of the issues on the motion justifies the amount of time spent by counsel for the defendants.

Law of Costs

[6] In Chandra v. CBC, 2015 ONSC 6519 (“Chandra”), the court set out the following applicable principles for dealing with costs at paras. 15-17:

15. The general principles to be applied in fixing costs are conveniently articulated in Agius v. Home Depot Holdings Inc., 2011 ONSC 5272, at paras. 10-12, as follows:

Cumming J. in DUCA Financial Services Credit Union Ltd. v. Bozzo, 2010 ONSC 4601 at para. 5, described the “normative approach” to an application for costs:

Costs are in the discretion of the Court: s. 131, Courts of Justice Act, R.S.O. 1990, c. C.43 and Rule 57.01 of the Rules of Civil Procedure. In Ontario, the normative approach is first, that costs follow the event, premised upon a two-way, or loser pay, costs approach; second, that costs are awarded on a partial indemnity basis; and third, that costs are payable forthwith, i.e. within 30 days. Discretion can, of course, be exercised in exceptional circumstances to depart from any one or more of these norms.

Fixing of costs is not merely a mechanical exercise in reviewing the receiving party’s Cost Outline. In Andersen v. St. Jude Medical Inc. (2006), 2006 CanLII 85158 (ON SCDC), 264 D.L.R. (4th) 557, the Divisional Court set out several principles to be considered in making an award of costs:

1. The discretion of the court must be exercised in light of the specific facts and circumstances of the case in relation to the factors set out in rule 57.01(1): Boucher [Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291], Moon [Moon v. Sher (2004), 2004 CanLII 39005 (ON CA), 246 D.L.R. (4th) 440], and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC (2005), 2005 CanLII 1042 (ON CA), 75 O.R. (3d) 638 (C.A.).

2. A consideration of experience, rates charged and hours spent is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case: Boucher. The quantum should reflect an amount the court considers to be fair and reasonable rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier (2002), 119 A.C.W.S. (3d) 341 (Ont. C.A.), at para. 4.

3. The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining an amount that is fair and reasonable: rule 57.01(1)(0.b).

4. The court should seek to avoid inconsistency with comparable awards in other cases. “Like cases, [if they can be found], should conclude with like substantive results”: Murano v. Bank of Montreal (1998), 1998 CanLII 5633 (ON CA), 41 O.R. (3d) 222 (C.A.), at p. 249.

5. The court should seek to balance the indemnity principle with the fundamental objective of access to justice: Boucher.

The Court of Appeal has identified the overriding principle to be that the amount of costs awarded be reasonable in the circumstances. In Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 Epstein J.A. stated at paras. 51-52:

As can be seen, the overriding principle is reasonableness. If the judge fails to consider the reasonableness of the costs award, then the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. In Boucher, this court emphasized the importance of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding at para. 37, where Armstrong J.A. said “[t]he failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice.”

16. As Mark Orkin in The Law of Costs, 2nd ed., loose-leaf (Aurora, Ont.: Canada Law Book, 2010) reminds us (at para. 201) awarding costs is an exercise in balancing two principles:

…One, that a successful party to litigation who is free of blame should not be required to bear the costs of either prosecuting or defending the action, and two, that citizens will be unduly hesitant to assert or defend their rights in court if an unsuccessful party is required to bear all of the costs of a successful one.

17. The principle of indemnification is no longer the only purpose of costs awards. There is recognition that modern costs awards may encourage settlement, prevent (or at least discourage) frivolous or vexatious litigation, or sanction behaviour that increases the expense of litigation.

[7] With respect to the defendants’ counsel delegation of work between junior and senior counsel, I agree that this is an appropriate decision to be made by them as they considered appropriate and necessary to deliver results for their client. I also agree that it is not for the plaintiff’s counsel to opine on the appropriateness of the delegation of work as between them. This was a complex motion.

[8] The Rule 57.01 factors applicable in this case are the principle of indemnity; the amount of costs that an unsuccessful party could reasonably expect to pay; the amount claimed; the complexity of the proceedings; and the importance of the issues. Costs should also be proportionate and reasonable.

[9] Under all the circumstances the plaintiff is ordered to pay the all-inclusive amount of $15,000 to the defendants for costs of this motion.

J. E. Ferguson J.

Date: November 30, 2017