Court File and Parties

Newmarket Court File No.: CV-12-111175-00 Date: 20180726 Ontario Superior Court of Justice

Between: Giovanni Antonio Venostini, c. o. b. Reliable Restoration, Plaintiff – and – Alameen Khan and Bibi Sheliza Rasheed, Defendants

Counsel: Michael Suria, for the Plaintiff Ravinder Sawhney, for the Defendants

Heard: In writing

Ruling on Costs

McCarthy J.:

Introduction

[1] The trial of this matter took place before me on May 16 and 17, 2018. It proceeded as a summary trial under the simplified rules. In a judgment dated June 14 2018, I allowed the plaintiff to maintain its claim for lien under the Construction Lien Act, R.S.O. 1990, c. C. 30 (the “CLA”).

[2] The plaintiff was granted judgment totalling $58,315.62 comprised of a balance owing on an original contract, extras on that contract and HST. The plaintiff was also granted the right to realize upon its lien for the payment of that judgment.

[3] Having been unable to agree on the issues of pre-judgment interest and costs, the parties have made written submissions to the court on those remaining issues.

[4] In exercising its discretion to award costs, the court is guided by the general principles and factors set out in rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990 Reg. 194 (the “Rules”).

The Plaintiff’s Position

[5] The plaintiff seeks costs on a “substantial indemnity” basis totalling $65,326.32. This sum is comprised of: $58,604.70 in fees; an additional fee of $1,457.70 for the preparation of written submissions; and disbursements of $5,263.93. In the alternative, the plaintiff seeks costs on a partial indemnity basis totalling $51,628.16 comprised of: $45,245.54 for fees; an additional fee of $1,118.70 for the preparation of written submissions; and disbursements of $5,263.93.

The Defendant’s Position

[6] The defendants suggest that costs should bear some proportion to the nature of the claim and the amount recovered. The defendants also assert that the following considerations should bear on the court’s decision on costs: the plaintiff should not have pursued the claim for HST; the defendants did succeed on some part of its counterclaim for deficiencies; the plaintiff could have proceeded with its claim in small claims court. The defendants suggest that the maximum amount to be awarded for costs should be 10 % of the judgment obtained, being $5,800.

Presumptive Entitlement to Costs

[7] Having succeeded in obtaining a judgment against the defendant for an amount in excess of anything that was offered by the defendant, the plaintiff is presumptively entitled to costs of the action.

Factors for Consideration

[8] I do not accept that the failure of the plaintiff to convince the court on the HST issue should have any special significance. HST was simply one of the amounts sought by the plaintiff. After consideration of the evidence, I found that the original contract price was an all-inclusive and fixed one. My reasons are set out at pages 4 and 5 of the judgment. While the plaintiff failed in his effort to have HST added to the contract price, he succeeded in his claim for most contract extras; as well, other than his concession on some minor deficiencies, the plaintiff was overwhelmingly successful in defeating the defendant’s counterclaim.

[9] I fail to see how this matter would have been one for small claims court or why costs should be assessed based upon what would have been awarded in that court; first, the quantum of the claim and the amount of the judgment recovered both exceed the small claims court monetary limits of $25,000; second, there was a claim for lien under the Construction Lien Act – lien remedies are outside the jurisdiction of the small claims court; third, the question of whether lien remedies can be sought in summary trials under the simplified rules aside, the fact remains that the parties did agree to conduct the matter by way of summary trial, presumably with a view to efficiencies and cost savings. The plaintiff prosecuted the matter at trial in an expeditious and organized fashion.

[10] I heard no suggestion that the examination for discovery procedure was unduly lengthy, burdensome or a waste of time. The fact that the parties attended on three separate pre-trials is unremarkable; indeed, it appears that at the last of the pre-trials, the parties obtained an order for summary trial. That seems to me to have been a good use of time and judicial resources, not a hopeless and repetitive exercise.

[11] The issues here were not at all complex; having said that, the recovery of money for a small business person like the plaintiff is always subjectively important. For the average working person, $58,000 is hardly pocket change. The defendant here was misguided enough to flirt with a claim for punitive damages. In the end, he hardly advanced it.

[12] In my reasons, I was critical of Mr. Khan’s evidence; he was sorely lacking in credibility and refused to admit things that should have been admitted.

The Offer to Settle of January 15, 2015

[13] The plaintiff contends that it has bettered its offer to settle dated January 15, 2015. That offer contains the following terms:

“The defendants will pay to the plaintiff $55,000.00 plus HST for a total payment of $62,150.00 in full settlement for all damages, interest and costs”; and

“This offer is irrevocably open for acceptance for 30 days from the date of this offer.”

[14] The offer also required the dismissal of the counterclaim on a without costs basis and stipulated that the plaintiff would discharge the lien and certificate of action. The offer contemplated the exchange of mutual releases.

[15] I have two problems with the offer to settle: first, it proposed that the $62,150.00 monetary amount would be inclusive of HST, damages, costs and interest; second, the offer only remained open “for 30 days from the date of this offer”.

[16] The problem with the plaintiff including costs in the offer to settle is that it was left uncertain what portion of the monetary amount was comprised of claim and interest and what portion was comprised of costs. There was no bill of costs or list of disbursements attached to the offer. The plaintiff has not submitted any time records before or after the date of the offer; only two of the third party invoices which formed part of the disbursements claimed actually pre-date the offer to settle. The plaintiff submits that at the time the offer was made, the plaintiff had incurred actual legal fees of $17,729.70; yet, the plaintiff has failed to provide the court with anything that could properly support that assertion. There are no invoices, time sheets or dockets to prove that these costs had been incurred. There is no way by which the court can determine, as suggested by the plaintiff, that partial indemnity costs and disbursements would have totalled $13,367.76, as of the date of the offer. By serving an all-inclusive offer, the plaintiff has left the court in a position, more than 3 ½ years later, where it is being asked to either: accept a bald and unsubstantiated assertion that the plaintiff had run up costs of the kind suggested by the offer date; or to engage in a retroactive assessment of what the costs would have been during the window of time that the offer was left open without the benefit of any time dockets, invoices or contemporaneous records.

[17] The second problem is more obvious: by including a thirty day expiry term in its offer, the plaintiff lost its presumptive entitlement to substantial indemnity costs pursuant to r. 49.10 (1) because its offer to settle expired before the commencement of the hearing. I do not read the offer as being open for acceptance beyond thirty days despite what is urged upon me by the plaintiff in his reply submissions. I interpret the words “irrevocably open for acceptance for 30 days from the date of this offer” to mean that this offer would not be revoked within that thirty days but that the opening for acceptance would end on the thirtieth day. Had the plaintiff intended to keep the offer open beyond the thirty day window, he would have added something akin to: “after that date, the plaintiff may revoke this offer upon notice to the defendant”; or “this offer shall remain open until one minute after the commencement of trial”; or words to that effect. At best, the time period during which the offer was open for acceptance is ambiguous and I would resolve that ambiguity in favour of the party who did not prepare the offer (the defendant).

[18] I find that the plaintiff’s offer to settle fails to satisfy the criteria under r. 49.10(1). I have therefore determined that the plaintiff is only entitled to costs on a partial indemnity scale for the entirety of the litigation.

Proportionality

[19] Costs should be proportionate to the result and should fall within the reasonable expectation of what an unsuccessful party would anticipate having to pay. Unfortunately, I was furnished with no information about what Mr. Khan was charged by his own counsel for proceeding through to trial. I will not speculate on whether Mr Khan’s expectations of what the matter would ultimately cost him were reasonable.

[20] A two day summary trial under the simplified rules featuring affidavit evidence, limited cross-examination, a modest number of documents and only two experts, cries out for a dose of proportionality. Litigation of this kind must be affordable and accessible; otherwise, advancing and resisting claims would be not just unattractive and risky for persons of limited or even modest means, but frankly unthinkable. On the other hand, a party with a legitimate claim should be able to count upon a healthy measure of indemnity for her actual costs incurred; otherwise, meritorious claimants will be inevitably frustrated by net recoveries which fall well short of putting the person back in the financial position that she would have been in had the wrong not been inflicted upon her.

Disbursements

[21] The defendant did not address the plaintiff’s claimed disbursements. Some, but not all, of the disbursements were supported by back up documentation. The failure of the plaintiff to provide an invoice for such a large disbursement ($1,364.76) as “Court Reporter and Transcript” is perplexing. Nonetheless, I am aware that discoveries did take place in this matter and the court was furnished with transcripts of those discoveries for use on cross-examination. The balance of the disbursements appear to be reasonable and conventional. I am prepared to allow the disbursements in the amount of $5,263.92.

Quantum of Fees

[22] I have considered the amount claimed by the plaintiff, the result obtained at trial, the rule 57.01 factors, the principle of proportionality and the offer to settle of the plaintiff. One day of discoveries, three pre-trials and a two day trial do not, in my view, warrant the quantum of costs sought by the plaintiff. I have determined that $35,000 for the fees portion of the costs is a reasonable and proportionate amount for costs of the entire action. Notionally, I would break that down as: $20,000 for trial preparation and attendance (including costs submissions); $10,000 for pleadings, file handling and discovery attendance and preparation; and $5,000 for preparation and attendance for pre-trials. HST on $35,000 is $4,550.

Disposition

[23] The defendants shall therefore pay the plaintiff his costs of the action, inclusive of HST and disbursements, in the amount of $44,813.92, fixed and payable forthwith. These costs flow from a legitimate claim for lien; that amount shall therefore form part of the judgment against the defendants. The plaintiff is entitled to all rights and means of recovery of judgments under the CLA.

McCarthy J. Released: July 26, 2018