Court File and Parties

COURT FILE NO.: CV-16-562425

DATE: 20180621

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Pet Valu Canada Inc., Plaintiff

AND:

Robert Rodger, Defendant

BEFORE: Nishikawa J.

COUNSEL: Derek Ronde and Kate Byers, for the Plaintiff

Andy Seretis, for the Defendant

HEARD: June 21, 2018

Costs ENDORSEMENT

[1] On May 29, 2018, in Reasons reported at Pet Valu Canada Inc. v. Rodger, 2018 ONSC 3353, I granted the Plaintiff’s motion for summary judgment. The Plaintiff seeks costs of its successful motion, on a substantial indemnity basis, in the amount of $64,044.56, including HST, and disbursements of $6,881.00, for a total of $70,926.49.

[2] The Franchise Agreement between the parties entitles the Plaintiff franchisor to an indemnity for its costs “on a solicitor and his client basis” from the Defendant franchisee. As noted in my Reasons, indemnity for costs is an industry standard in the franchising context. The Defendant is taken to know that he has agreed to be liable for the franchisor’s substantial indemnity costs: Home Instead, Inc. v. 244674 Ontario Inc., 2016 ONSC 255, para. 5. In this case, I see no basis upon which to exercise my discretion to relieve the Defendant from his commercial bargain. I reject the Defendant’s interpretation of the indemnification provision as applicable only to third party claims as inconsistent with the express language of the provision. This conclusion is consistent with, and flows from, my decision on the merits of the summary judgment motion on the enforceability and applicability of the terms of the parties’ agreements.

[3] Pursuant to the Courts of Justice Act, s. 131(1), the Court has broad discretion when determining the issue of costs. The overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.)

[4] Rule 57.01(1) of the Rules of Civil Procedure sets out the factors to be considered by the Court when determining the issue of costs. To begin, this proceeding should not have been required. It was necessitated because of the failure of the corporate franchisee, of which the Defendant is the principal, to pay a costs award. The total amount at issue in this proceeding was over $1.7 million. The Plaintiff brought a summary judgment motion, which shortened the proceedings, and was entirely successful. The Plaintiff withdrew the claim for fraudulent conveyance, although not until shortly before cross-examinations. It appears that costs associated with the fraudulent conveyance claim have been excluded. The Defendant argued every potential issue, including some that had little chance of success. While the class action proceedings preceding this litigation were complex, given that the issues on the summary judgment motion were not legally complicated, I find the Plaintiff’s costs somewhat high.

[5] I have considered the above factors, as well as the principle of proportionality in R. 1.01(1.1) of the Rules of Civil Procedure, while keeping in mind that the court should seek to balance the indemnity principle with the fundamental objective of access to justice.

[6] Pursuant to the indemnification provision in the Franchise Agreement, the Plaintiff is entitled to its costs of the summary judgment motion on a substantial indemnity basis, which I fix in the amount of $60,000.00, including disbursements and HST, payable within 60 days.

Nishikawa J.

Date: June 21, 2018