Court File and Parties

Court File No.: CV-17-580584 Date: 2018-07-16 Superior Court of Justice - Ontario

Between:

ECHELON ENVIRONMENTAL INC., Plaintiff

- and -

SITEWORX CONSTRUCTION LTD., JEDA ROSE MANAGEMENT INC., and RICHARD PARK, Defendants

Before: G. Dow, J.

Counsel: Max Gennis, for the Plaintiff Marc Koplowitz, for the Defendant, Jeda Rose Management Inc.

Heard: Written Submissions

Costs Endorsement

[1] The Plaintiff, Echelon Environmental Inc. (“Echelon”) seeks to vary my disposition of costs in its favour in the amount of $22,500.00 inclusive of fees, HST and disbursements. Echelon does so on the basis of a Rule 49 Offer to Settle made October 31, 2017 or about six months before I heard this matter on May 9, 2018.

[2] The target defendant, Jeda Rose Management Inc. (“Jeda Rose”) opposes this request. The parties provided written submissions in accordance with my decision released June 4, 2018 which I received on June 18 and June 26, 2018.

[3] Echelon seeks its costs on a partial indemnity basis to the date of its Offer to Settle and on a substantial indemnity basis after its Offer to Settle. The total amount sought is $32,131.26. It submits my decision to grant a judgment against Jeda Rose for $49,397.67 plus interest was greater than its Offer to Settle. Further, it submits that Rule 49.10(1) should be followed in accordance with the direction and comments of the Court of Appeal in Jarbeau v. McLean, 2017 ONCA 115 at paragraph 82 which indicates the rule should be applied in the “vast majority of cases” and why.

[4] It is clear Echelon’s Offer to Settle of the substantive amount was for $2,000.00 less than the amount awarded. However, the substantive amount was not the only term of the Offer to Settle or my decision. Both required payment of pre-judgment interest.

[5] The phrase within the Offer to Settle “plus pre-judgment interest at a rate of 1.0% simple interest per month calculated monthly not in advance (12% annual interest)” can be argued to lack sufficient clarity to fairly calculate same.

[6] Paragraph Section 128(1) of the Courts of Justice Act, R.S.O. 1990 c.C43 entitles the parties to pre-judgment interest from “the date the cause of action arose to the date of the order”. The central issue in this case was Echelon’s delay in depositing the Siteworx cheques which undermined the ability of Jeda Rose to take steps to ensure the payments it had “assured” and agreed to replace were made. The starting point for a claim for pre-judgment interest or the cause of action arising could be argued to be:

a) the Minutes of Settlement dated May 2, 2016; b) the dates the cheques were not honoured; c) the date Echelon notified Jeda Rose’s representative of the fact the cheques had not been honoured; d) the expiry of the 10 days that Clause 6.4 of the Minutes of Settlement provided for Jeda Rose to replace a dishonored payment with a certified cheque or bank draft “plus $100.00 for interest and bank charges”; or e) the date the Statement of Claim was issued in which a claim for pre-judgment interest was made.

[7] As stated in my reasons, I specifically addressed the issue of pre-judgment interest (in paragraph 15) allowing the 1% per month sought by the plaintiff but only from the date each cheque was not honoured by the bank to August 10, 2017, being the date the Statement of Claim was issued. Thereafter, I reduced the rate of pre-judgment interest to 0.8% per annum rate allowed under Section 128 of the Courts of Justice Act, supra.

[8] While less persuasive, Jeda Rose also raised the Offer to Settle required funds be paid by certified cheque and proposed a consent order dismissing the action without referencing the cross-claim of Jeda Rose against the co-defendants, Siteworx Construction Ltd. and Richard Park.

[9] With regard to Echelon’s reliance on the direction by the Court of Appeal in Jarbeau v. McLean, supra at paragraph 82, I note earlier in the sentence indicating Rule 49.10 should be applied “in the vast majority of cases” that the rule is “intended to be an incentive to settlement”. As submitted by Jeda Rose, a discount of $2,000.00 from the least favourable result for it being judgment in the amount of $49,397.67 does not fulfill that incentive.

[10] As a result, I am not prepared to give effect to Rule 49.10 in the circumstances. I prefer to rely on the overall purpose of awarding costs set out by the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario, [2004] O.J. No. 2634 at paragraph 26 where “the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant”. In this regard, I rely on the discretion provided to me under Section 131 of the Courts of Justice Act, supra.

[11] I would repeat, as contained in paragraph 17 of my reasons, the amount sought by Echelon is excessive and its request is refused. Echelon remains entitled to the amount of $22,500.00 inclusive of fees, HST and disbursements.

Mr. Justice G. Dow

Released: July 16, 2018