Superior Court of Justice – Ontario
COURT FILE NO.: CV-17-575026
DATE: 20180607
RE: hilda r. bedard et al, Respondents
AND:
RICHARD D. BEDARD ET AL, Appellants
BEFORE: Stinson J.
COUNSEL: Shara N. Roy and Laura E. Robinson, for the Respondents
Clifford I. Cole and Brent J. Arnold, for the Appellants
HEARD at Toronto: By written submissions
REASONS FOR DECISION AS TO COSTS
Background
[1] In my Reasons for Decision released April 6, 2018 (2018 ONSC 2220), I granted the appeal of the Appellants (“Ric”), set aside paragraph 14 of the arbitrator’s formal judgment dated April 12, 2017, as it relates to Cetaris US, and directed the parties to return to the arbitrator to obtain a judgment from him consistent with those Reasons.
[2] In relation to costs, I urged the parties to reach agreement, or to make written submissions. No agreement was reached, and thus these Reasons address the written submissions the parties subsequently filed.
Liability for costs
[3] This case involved not only an appeal from the decision of the arbitrator, but also two interlocutory motions: one by the respondents (“Del”) to quash the appeal and a second by Ric for leave to extend the time for appealing (if necessary). Following discussions at the first substantive appearance before me, the motion to quash was, in essence, withdrawn on the basis that the arguments raised in it would form part of the submissions in response to the appeal. As a result, the motion to extend was rendered moot.
[4] Ric seeks costs not only for the main appeal but also for the two preliminary motions, neither of which came to be argued or decided. Del submits that his motion to quash was warranted because the Notice of Appeal served by Ric was procedurally flawed.
[5] I do not accept that there was a procedural flaw in the Notice of Appeal, as argued by Del. Del asserted in his costs submissions that it was unclear under which provision the appeal was brought, giving rise to the argument that the time for appealing had expired. This proceeding was an appeal of an arbitration award and thus it should have been apparent that the applicable timing and procedure were those prescribed under s. 47(1) of the Arbitration Act, 1991, S.O. 1991, c. 17. Rather than seek clarification from Ric, Del launched a motion to quash, based on the premise that the appeal was out of time. The result was a responding cross-motion to extend time for service of the Notice of Appeal.
[6] As I ultimately directed, the more efficient (and, in my view, more appropriate) way for Del to advance his argument that the appeal was brought out of time would have been as part of his response to the appeal. The determination of the merits of Del’s argument required an analysis of the underlying merits of the appeal. The result of the selected course of action was a multiplicity of motions, since by choosing the tack he did, Del forced Ric to respond with his cross-motion, instead of merely replying to an argument raised by Del on the appeal itself.
[7] In the final analysis, I found that the timing argument raised by Del had no merit. I therefore conclude that the costs recoverable by Ric should include costs relating to the preliminary motions that were initiated by reason of Del’s course of action.
[8] Turning to the question of whether Ric should recover costs of the appeal, in the ordinary course, costs awards are made in favour of the successful party and are payable by the unsuccessful party. Although Del submits that “success was divided” I see no proper basis for reaching that conclusion: the judgment was set aside on the main point argued. Since Ric succeeded on the main question, I conclude that he should recover costs of the main appeal and the two preliminary motions.
Scale of Costs
[9] Ric seeks costs of the preliminary motions on a substantial indemnity scale and of the appeal on a partial indemnity scale. As a general rule, substantial indemnity costs are awarded on very rare occasions such as when a party has displayed outrageous conduct during the proceedings: Prinzo v. Baycrest Centre for Geriatric Care, 2002 45005 (ON CA). Or, as the Court of Appeal affirmed in Oz Optics Ltd. v. Timbercon, Inc., 2012 ONCA 735 (at para. 16) “substantial indemnity costs are warranted when one of the parties is guilty of reprehensible conduct either prior to the litigation or during the litigation itself … .”
[10] While Del’s decision to move to quash the appeal was ill-advised, I cannot say that it reached the level of misconduct during the course of the litigation sufficient to warrant the rare and exceptional sanction of a punitive order as to costs. I therefore conclude that partial indemnity costs only should be awarded.
Quantum
[11] The ultimate object of a costs award is to fix a sum that is "fair and reasonable". In Andersen v. St. Jude Medical, Inc. (2006), 2006 85158 (ON SCDC), 264 D.L.R. (4th) 557 (Ont. Div. Ct.) the Divisional Court set out several principles that must be considered when awarding costs:
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).
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. 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.
The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining an amount that is fair and reasonable.
The court should seek to avoid inconsistency with comparable awards in other cases.
The court should seek to balance the indemnity principle with the fundamental objective of access to justice.
[12] On a partial indemnity scale, Ric seeks fees of $18,590.70 for the appeal and $27,122.40 for the two motions, exclusive of tax and disbursements, plus a further $2,326.50 for costs of the costs assessment process.
[13] Despite my express invitation to Del to submit the Bill of Costs he would have presented had he been successful on the appeal, Del chose not to do so. I therefore have no basis to compare the time and expense incurred by Ric’s counsel, to the time and expense incurred by Del’s. Despite the fact he exceeded the page limit for submissions that I imposed, Del also made no substantive criticism concerning the quantum of fees sought by Ric. Given Del’s lack of any express criticism of the quantum fees sought, I infer that Del does not take issue with the time spent and amounts charged.
[14] Except in relation to the disbursements incurred, Del does not argue that excessive time was spent or unreasonable amounts were charged. I infer that the amounts sought were within Del’s reasonable expectations and are not unfair. Nor would an award of the costs sought impede Del’s access to justice: both sides have ample resources to retain top tier counsel.
[15] This was an important motion, as it represented the final step in the implementation of the parties’ lengthy arbitration process. It was a matter of medium complexity and would have required a fair level of sophistication and effort on the part of counsel, both in preparation and in the presentation of argument. The outcome favoured Ric, in that the judgment granted by the arbitrator was set aside on the key point argued. A significant amount of money was involved.
[16] The sole dispute as to quantum concerns disbursements. Del disputes the reasonableness of the expenses incurred by Ric for photocopying and process serving, on the ground that they were higher than Del’s expenditures for the same items. I do not find this variance surprising, given that Ric was the appellant and therefore had to prepare and serve more materials. For this reason I reject this objection.
[17] In the result, I fix the costs (inclusive of fees, disbursements and taxes) payable by Del to Ric as follows:
a. Appeal - $21,007.49
b. Motions - $30,648.31
c. Costs submissions - $2,628.94
Total - $54,284.74
Payee of Costs Awarded
[18] Del also requests an order that the costs award be in favour of Cetaris US on the ground that he has reason to believe that Cetaris US paid the appellants’ legal bills in the first instance. According to counsel for Ric, this was not the case. I therefore see no reason to depart from the standard award that the costs awarded be paid to the successful appellants. Payment shall be made within 30 days of the release of these reasons.
Stinson J.
Date: June 7, 2018