COURT FILE NO.: 16-67326
DATE: 2018/04/09
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 7321201 Canada Ltd. o/a Jamrock Solutions, Plaintiff
-and-
Intact Insurance Company, Defendant
BEFORE: Madam Justice Sylvia Corthorn
COUNSEL: Christine A. Powell, for the Plaintiff
Ryan Kennedy, for the Defendant
HEARD: By written submissions
COSTS ENDORSEMENT
Introduction
[1] The defendant was successful on a motion to set aside a default judgment obtained in January 2017. The action is with respect to an insurance claim arising from a fire that occurred in January 2014 at premises owned by the plaintiff corporation (“Jamrock”).
[2] At paragraph 81, item 8 of my endorsement on the motion, I ordered that “Intact shall pay to Jamrock its costs of the action, from August 24, 2016 to and including the motion to set aside the default judgment, on a substantial indemnity basis, thrown away”. (See: 2017 ONSC 6480.)
[3] The parties agree that the substantial indemnity costs of the motion are $13,000 including fees, disbursements, and HST. As a result, the costs to be fixed at this time are those for the work done by Jamrock’s counsel from August 24, 2016 until the date on which counsel began work in response to the motion to set aside the default judgment. I refer to that period as “the default proceeding”.
Positions of the Parties
[4] Jamrock requests costs of the default proceeding, on a substantial indemnity basis, in the amount of $14,084.20 inclusive of fees, disbursements, and HST.
[5] The defendant’s position is that to award costs to Jamrock would lead to double recovery of costs for the default proceeding. Approximately one month after obtaining the default judgment, Jamrock enforced the judgment by garnishing funds from the defendant’s bank account. The defendant points to the fact that the funds garnished included $16,333.26 for costs payable pursuant to the default judgment. The defendant submits that Jamrock is not entitled to any additional costs, given the funds already garnished.
Disposition
[6] For the reasons that follow, I find that Jamrock is entitled to its costs of the default proceeding on a substantial indemnity basis in the amount of $9,865.
Analysis
[7] The costs awarded as part of the default judgment were set aside as a consequence of the default judgment being set aside. The costs fixed in this endorsement are in follow-up to my endorsement on the motion to set aside the default judgment.
[8] In February 2017, Jamrock garnished $243,540.59 from the defendant’s bank account. I agree with the defendant that the $243,540.59 garnished includes the costs portion of the default judgment.
[9] The funds garnished were placed in the trust account of Jamrock’s counsel. In June 2017, and on notice to the defendant, $170,702.50 was released to Jamrock. Approximately $73,000 of the funds garnished remains in the trust account of Jamrock’s counsel.
[10] The pleading delivered by the defendant includes a counterclaim. The defendant alleges that Jamrock has been overpaid on the fire loss claim and seeks repayment of the funds garnished.
[11] When the main action and counterclaim are resolved, whether by negotiated settlement or a trial, there will be an accounting of the funds garnished. That accounting will take into consideration that Jamrock (a) was not entitled to costs of $16,333.26, and (b) is entitled to costs, on a substantial indemnity basis, of the default proceeding and of the motion to set aside the default judgment. There will not be double recovery by the plaintiff of costs awarded with respect to the default proceeding.
Fixing Costs
[12] The plaintiff seeks costs on a substantial indemnity basis as follows:
Fees $ 11,470.95
HST on fees $ 1,491.22
Disbursements (incl. HST) $ 1,122.03
Total $ 14,084.20
[13] The fees claimed include work with respect to the notice of garnishment. The costs to be fixed at this time are only to and including the motion for default judgment. I therefore reduce the fees for the work with respect to the notice of garnishment ($589.95 on a full indemnity basis and $530.96 on a substantial indemnity basis).
[14] I agree with counsel for the defendant that the time docketed by junior counsel for the preparation of the materials on the motion for default judgment is excessive (46.1 hours). I reduce the fees associated with that work by 40 per cent to $4,480.92 ($7,468.20 x 0.6) on a full indemnity basis. That results in a reduction of the substantial indemnity fees by $2,688.55 (($7,468.20 - $4,480.92) x 0.9).
[15] In summary, the fees to which the plaintiff is entitled are $8,251.44 ($11,470.95 - $530.96 - $2,688.55). The applicable HST is $1,072.69.
[16] The disbursements claimed total $1,122.03. That figure includes the non-taxable disbursement of $140 for the garnishment in February 2017 and a courier charge ($29.37) incurred one week later. Those items do not fall within the default proceeding and are deleted from the disbursements.
[17] There is no explanation as to why the online Carswell searches total $400 for the default proceeding. I find that amount to be high for a proceeding described as “not overly complex” in Jamrock’s costs submissions. I reduce that item to $200.
[18] Both the courier charge and online Carswell searches are subject to HST. The reduction of the disbursements for those items includes the reduction for the applicable HST.
[19] The disbursements allowed are calculated as follows:
Total claimed $ 1,122.03
Reduce for
Courier $ 29.37
Online searches $ 200.00
Applicable HST $ 29.81
Garnishment $ 140.00
Revised total $ 722.85
Summary
[20] The defendant shall pay to the plaintiff its costs of the default proceeding on a substantial indemnity basis, calculated as follows:
Fees $ 8,251.44
HST on fees $ 1,072.69
Disbursements $ 722.85
Total $ 10,046.98
Rounded to $ 10,045.00
[21] The total costs to be paid by Intact to Jamrock on a substantial indemnity basis are $23,045 ($13,000 + $10,045).
[22] In accordance with paragraph 81, items 5 to 10, of my endorsement on the motion the costs payable are considered part of the funds garnished from Intact’s bank account and remaining, as of the date of the motion, in the trust account of Jamrock’s counsel.
Madam Justice Sylvia Corthorn
Date: April 9, 2018
DATE: 2018/04/09
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: 7321201 Canada Ltd. o/a Jamrock Solutions, Plaintiff
-and-
Intact Insurance Company, Defendants
BEFORE: Madam Justice Sylvia Corthorn
COUNSEL: Christine A. Powell, for the Plaintiff
Ryan Kennedy, for the Defendant
COSTS ENDORSEMENT
Madam Justice Sylvia Corthorn
Released: April 9, 2018