Court File and Parties

NEWMARKET COURT FILE NO.: CV-13-114819-00 DATE: 2018-03-12

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Dean’s Standard Inc. Plaintiff

– and –

Westmont Hospitality Canada Limited, InnVest Real Estate Investment Trust and Choice Hotels Canada Inc. Defendants

Counsel: D. Christie, for the Plaintiff C. Spry, for the Defendants

HEARD: By Written Submissions

Healey J.:

COSTS ENDORSEMENT

[1] The defendants Westmont Hospitality Canada Limited (“Westmont”), InnVest Real Estate Investment Trust (“InnVest”) and Choice Hotels Canada Inc. (“Choice”) [collectively the “Hotel Defendants”] sought an order requiring the Plaintiff to post security for costs in the amount of $280,000. It was the second time that the Hotel Defendants had brought a motion for security for costs in this action. The Plaintiff took the position that the motion was barred by res judicata. The Plaintiff also argued that the amount of security sought was excessive, and should not be awarded for past costs incurred as well as costs anticipated to the conclusion of the action.

[2] The Hotel Defendants were awarded an order for security in the amount of $130,000.

[3] The Hotel Defendants now seek costs of the motion on a partial indemnity basis in the amount of $26,530.69.

[4] Having regard to the factors set out in rule 57.01(1), I first consider the amount claimed and the amount recovered. The Plaintiff takes the position that the Hotel Defendants were only partially successful on the motion because they were denied their request for past costs, and awarded future costs that were approximately $50,000 less than the sum requested. Further, the Plaintiff conceded at the outset of the argument of the motion that the Hotel Defendants would be entitled to security for costs due to a change in the Plaintiff’s financial position, but for the question of res judicata. Not only was the motion opposed on the basis of res judicata, but also on the basis of prejudice caused by delay.

[5] The Plaintiff’s argument ignores the fact that it fully challenged the Hotel Defendants’ motion, arguing that these defendants were estopped from seeking the relief in question. In the result, it was necessary for the Hotel Defendants to incur the costs that it did in order to obtain any order, even if that order ultimately secured only a portion of their costs. Whether they had been awarded $280,000 or $130,000, the same steps had to be followed and the same time spent. Despite the amount of security awarded, I would not characterize the outcome of the motion as anything less than successful for the Hotel Defendants.

[6] Additionally, there is no indication that the Plaintiff made any formal concessions about the Hotel Defendants’ entitlement to security for costs prior to the motion. That concession, given its timing, did nothing to reduce the amount of work required to prepare the motion. Ultimately the concession made little difference.

[7] In considering a just award of support, I also take into consideration that the Plaintiff’s main argument, that of res judicata, was contrary to the holdings in recent Ontario cases. The Plaintiff relied on case law from other jurisdictions with distinguishable facts. With respect to the delay argument, the facts involved only a short delay of three months at most between the time that the Hotel Defendants found evidence of that the Plaintiff may no longer be in business and the date of booking the motion. In other words, there was a low degree of merit in the position adopted by the Plaintiff.

[8] Accordingly, although the Plaintiff was effective in resisting the substantially higher award of costs being sought, this fact pales in comparison to the considerations that I have just outlined.

[9] This motion was reasonably complex. It required a significant amount of background work for the Hotel Defendants in order to establish a change in the Plaintiff’s circumstances since the time of the earlier unsuccessful motion for security for costs. None of this evidence was provided by the Plaintiff. The Hotel Defendants also prepared a substantial amount of material and analysis on the merits of the action. This was done presumably in anticipation of an argument of impecuniosity. While impecuniosity was not raised by the Plaintiff, there is no indication in the material that the Hotel Defendants were ever warned in advance that this would be the case.

[10] The Hotel defendants rely on Future Health Inc. v. Economical Mutual Insurance Co., 2012 ONSC 5680, at para. 10, where the court reasoned that complexity caused from having to consider the merits of the main action, which expanded the scope of the motion, was to be factored into the amount of costs awarded. In that case, the moving party was awarded costs fixed at $25,000 inclusive in respect of its motion for security for costs. The Hotel Defendants also referred to 1465778 Ontario Inc. v. 1122077 Ontario Ltd., 2006 CanLII 35819 (ON CA), 2006 CarswellOnt 6582 (Ont. C.A.), where at para. 39 the Court cited the Supreme Court of Canada’s comments from Walker v. Ritchie, 2006 SCC 45 (S.C.C.):

[11] Unsuccessful defendants should expect to pay similar amounts by way of costs across similar pieces of litigation involving similar conduct and counsel, regardless of what arrangements the particular plaintiff may have concluded with counsel. (para. 28)

[12] In terms of the time spent by counsel, I have already referred to the need for the Hotel Defendants’ lawyers to have spent substantial time on this matter. The Plaintiff’s counsel refers to the fact that the time spent by the Plaintiff for both the motion and cross-motion was a total of 34.6 hours, in comparison to 87.9 hours spent by the moving parties. This comparison is not effective given the extensive amount of material filed by the moving parties and the length of their factum in relation to the materials filed by the Plaintiff.

[13] In terms of the partial indemnity rates being charged by the Hotel Defendants’ lawyers, those rates are less than the maximum rate recommended in the Practice Direction established by the Costs Subcommittee of the Civil Rules Committee. Beyond that, the Rules require only that partial indemnity costs be awarded in accordance with Part I of Tariff A. Tariff A mandates that counsel fees be determined in accordance with s. 131 of the Courts of Justice Act and the factors set out in Rule 57.01(1). Wide discretion in fixing costs therefore remains with the court, bearing in mind the principles enunciated in the leading Ontario cases such as Anderson v. St. Jude Medical Inc. (2006), 2006 CanLII 85158 (ON SCDC), 264 D.L.R. (4th) 557 (Ont. Div. Ct.), Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), and Clarington (Municipality) v. Blue Circle Canada Inc., 2009 ONCA 722, 100 O.R. (3d) 66.

[14] Finally, in terms of the importance to the parties, this was a motion that held significant importance to the Hotel defendants given the evidence that the Plaintiff has no assets. Absent an order for security, the Hotel Defendants would be left with no ability to collect their substantial costs, should they be successful at trial.

[15] The Plaintiff’s counsel provided a cost outline setting out costs calculated in the amount of $15,141 on a partial indemnity basis. The Plaintiff’s lawyer has 33 years’ experience and charges at an actual rate of $525/hour. There can be no doubt that the cost award being sought by the Hotel Defendants falls within the range that the Plaintiff could reasonably have anticipated paying in the event that it was unsuccessful in opposing the motion.

[16] In Boucher v. Public Accountants Council (Ontario), Justice Armstrong held that the fixing of costs involves more than merely a calculation using the hours docketed and the costs grid. Courts fixing costs are required to give further consideration to quantum. At para. 24 of Boucher, Justice Armstrong directed that “it is also necessary to step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable.” He reiterated what the Court of Appeal said in Zesta Engineering Ltd. v. Cloutier, 2002 CanLII 45084 (2002), 164 O.A.C. 234 (Ont. C.A.), at para. 4:

In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.

[17] These authorities require that I step back to assess whether the cost claimed are fair and reasonable in the circumstances. Given all of the factors and considerations outlined above, I am satisfied that an award of costs in the amount $23,000 is fair and reasonable for this particular motion. This amount takes into account that the Hotel Defendants have not particularized the disbursements being sought of $2,776.91, and therefore the court cannot evaluate their reasonableness. Accordingly, this Court orders that the Plaintiff shall pay costs of the motion for security for costs to the Hotel Defendants fixed in the amount of $23,000 inclusive, and payable within 30 days.

HEALEY J.

Released: March 12, 2018