Court File and Parties
COURT FILE NO.: CV-17-576804 DATE: 20180820 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: CORONA STEEL INDUSTRY PRIVATE LIMITED, Applicant AND: INTEGRITY WORLDWIDE INC., Respondent
BEFORE: Cavanagh J.
COUNSEL: Brian D. Belmont, for the Applicant Catherine Allen, for the Respondent
HEARD: BY WRITTEN SUBMISSIONS
Costs Endorsement
[1] The applicant, Corona Steel Industry Private Limited (“Corona”), seeks costs from the respondent, Integrity Worldwide Inc. (“IWW”), of its successful application for judgment recognizing and enforcing a judgment of the High Court of Calcutta, India (the “Indian Judgment”).
[2] Corona submits that costs should be awarded on a substantial indemnity scale in the amount of $81,289.32. Alternatively, Corona seeks costs on a partial indemnity scale for the period of time until December 7, 2017, when it made an offer to settle, and on a substantial indemnity scale after that date, in the amount of $63,116.10.
[3] There are three questions to be answered:
a. Is Corona entitled to costs on a substantial indemnity scale because of conduct by IWW? b. If not, is Corona entitled to costs on a substantial indemnity scale after December 7, 2017 when it served an offer to settle? c. What amount of costs should be awarded to Corona?
Is Corona entitled to costs on a substantial indemnity scale because of conduct by IWW?
[4] Corona submits that it should be awarded costs on a substantial indemnity scale because IWW engaged in litigation tactics that were intended to “cause as much delay as possible” to Corona, and to cause Corona to “incur as much costs as possible”. In order to address this submission, I set out some of the procedural history of this application.
[5] This application was originally returnable on October 23, 2017. Before this date, Corona had delivered its application record that included the affidavit of a law clerk employed by the law firm representing Corona. Corona also delivered a supplementary application records containing additional evidence, including transcripts of the cross examinations of deponents of affidavits delivered on behalf of IWW. Corona also filed a brief and a supplementary brief relating to the law of India. Neither of Corona or IWW provided evidence from a qualified Indian lawyer to prove the law of India. Both Corona and IWW delivered factums for the hearing of the application in which submissions were made in relation to the law of India.
[6] At the scheduled hearing of the application on October 23, 2017, Gluestein J. advised that he could not properly hear the application on the evidence before him because neither party had filed evidence on Indian law. The application was adjourned in order for the parties to file evidence on the law of India. On November 21, 2017, Gluestein J. gave an endorsement setting out a timetable for delivery of expert affidavit evidence and for cross examinations. The application was adjourned to be heard by February 23, 2018.
[7] In accordance with this timetable, Corona delivered the affidavit of Pubali Sinha Chowdhury, a lawyer in the law firm in India that had acted as counsel for Corona in the Indian litigation. IWW chose not to deliver affidavit evidence with respect to the law of India. Corona submits that IWW’s failure to serve expert evidence leads to the conclusion that IWW was engaging in litigation tactics intended to cause delay and increased costs.
[8] There were difficulties with respect to the timetable for steps to be taken for this application. These difficulties resulted in additional telephone conferences with Gluestein J. on January 10, February 27, and March 5, 2018 to address the issues that had arisen. Corona and IWW made submissions to me with respect to who was at fault for these difficulties, but I do not need to resolve these disagreements in order to decide the issue of costs.
[9] The application was heard before me on March 26, 2018. In addition to the factums that were filed for the application when it was first scheduled to be heard, Corona filed a supplementary factum, IWW delivered a responding factum, Corona delivered a reply factum, and IWW delivered a sur-reply factum.
[10] I disagree that Corona is entitled to costs on a substantial indemnity scale because of conduct by IWW in this litigation. The burden of proof on the application rested with Corona, and IWW was entitled to decide not to file expert evidence with respect to the law of India, and to challenge the admissibility, and sufficiency, of the expert evidence upon which Corona relied, and it did so. I do not attribute any delay in the hearing of this application to improper conduct by IWW. I also do not find that the steps taken by IWW to oppose this application were intended to cause Corona to incur unnecessary costs.
[11] There is no basis for an award of substantial indemnity costs because of the conduct of IWW in responding to this application.
Is Corona entitled to costs on a substantial indemnity scale after December 7, 2017 when it served an offer to settle?
[12] Counsel for Corona sent a “without prejudice” letter to counsel for IWW dated December 7, 2017 containing an offer to settle the application. The letter states:
Please be advised that on a without prejudice basis, my client is prepared to resolve this matter upon the following terms, namely:
Within 30 days from the date hereof, your client shall pay to my client the following amounts, by certified cheques or bank drafts: (A) The principal amount of US $86,638.00. (B) The sum of US $27,372.86 for interest to December 7, 2017. (C) The sum of Cdn. $25,000 plus HST for costs.
Upon receipt by my client of the payments set out in paragraph 1 above, this application shall be dismissed without costs, and my client shall provide a release to your client in mutually acceptable form.
The above is to be considered a formal offer pursuant to the Rules of Civil Procedure, and shall be relied upon in support of my client’s request for complete indemnity costs.
[13] Corona’s offer to settle was for the full principal amount of the Indian Judgment, with prejudgment interest at the rate provided by the Indian Judgment from April 20, 2015, the date of the Indian Judgment, to December 7, 2017, the date of the offer to settle. The Indian Judgment, by its terms, orders IWW to pay to Corona interest on USD $86,638 from April 8, 2013.
[14] Following the release of my reasons for judgment, but before the formal judgment was issued and entered, at the request of Corona, I granted leave to Corona to make written submissions concerning whether an error had been made in my reasons for judgment by providing for prejudgment interest on the principal amount of the Indian Judgment from its date, April 20, 2015, instead of from April 8, 2013, the date for the commencement of the calculation of interest according to the terms of the Indian Judgment. Corona provided written submissions and IWW made responding written submissions. I held that the date of April 20, 2015 was in error, and I amended my reasons for judgment to substitute April 8, 2013 for April 20, 2015 in the sub-paragraph dealing with prejudgment interest that was owed under the Indian Judgment. My endorsement providing for amendment of my reasons for judgment to correct this error is being released at the same time as this costs endorsement.
[15] The amount for principal and interest in Corona’s offer to settle (a combined amount of USD $114,010.86) is less than the amount that was awarded by my judgment, as amended.
[16] Corona submits that it obtained a judgment as favourable as or more favourable than the terms of its offer to settle and, as a result, pursuant to rule 49.10(1), is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date.
[17] Rule 49.10(1) provides:
49.10 (1) Where an offer to settle,
(a) is made by a plaintiff at least seven days before the commencement of the hearing; (b) is not withdrawn and does not expire before the commencement of the hearing; and (c) is not accepted by the defendant,
and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.
[18] IWW submits that Corona’s offer to settle was not a compromise, but a request for capitulation. An offer to settle need not contain an element of compromise and a plaintiff’s offer to settle for 100 per cent of a liquidated claim may result in an award of substantial indemnity costs. However, the absence of an element of compromise is a fact that the court may consider in exercising its discretion to “order otherwise”: Data General (Canada) Ltd. v. Molnar Systems Group Inc. (1991), 6 O.R. (3d) 409 (C.A.). The court should depart from the prima facie costs consequences in rule 49.10 only where, after giving proper weight to the policy of the rule and the importance of reasonable predictability and the even application of the rule, the interests of justice require a departure: Niagara Structural Steel (St. Catharines) Ltd. v. W.D. Laflamme Ltd. (1987), 58 O.R. (2d) 773; Jarbeau v. McLean, 2017 ONCA 115; additional reasons 2017 ONCA 294.
[19] Corona’s offer to settle required payment of the amounts in the offer within 30 days of December 7, 2017, the date of the letter from Corona’s counsel. IWW did not accept this offer. Upon the expiry of this 30 day period of time, it was no longer open to IWW to settle the application by acceptance of Corona’s offer to settle because it was too late to comply with the terms of the offer. Therefore, Corona’s offer to settle effectively expired before the commencement of the hearing of this application on March 26, 2018.
[20] Corona’s offer to settle does not qualify for the prima facie costs consequences that are provided for by rule 49.10(1) because the offer to settle had expired before the commencement of the hearing of the application.
[21] In the absence of an offer to settle that satisfies the requirements of rule 49.10(1), I do not regard this application to be one in which an award of costs on a substantial indemnity scale should be made. In the circumstances of this case, I exercise my discretion to award costs to Corona for this application on the usual partial indemnity scale.
What amount of partial indemnity costs should be awarded to Corona?
[22] Corona seeks costs based upon time spent by its counsel, an experienced litigation counsel called in 1991, at a partial indemnity hourly rate of $300. Counsel’s actual hourly rate is $475. Corona claims costs based upon 147.3 hours of time spent on this application.
[23] IWW submits that (i) Corona’s conduct in the application substantially increased the costs of the application, (ii) Corona is claiming fees for significant work that was done to rectify prior errors made in the application, and (iii) the amount claimed is on an elevated basis because the partial indemnity rate claimed is too high.
[24] IWW submits that the application was adjourned by Gluestein J. because neither Corona nor IWW had filed evidence to prove Indian law. IWW submits that the references to Indian law in its factum were in response to submissions regarding Indian law in Corona’s factum. IWW submits that Corona, as the applicant, needed to file evidence of Indian law and, before the adjournment ordered by Gluestein J., it had failed to do so.
[25] IWW submits that the scheduling issues that required telephone conferences with Gluestein J. were caused by failures by Corona to follow the timetable that had been set. IWW submits that Corona is claiming costs for at least 55 hours of time that was unnecessarily spent and should be disallowed. IWW also submits that disbursements for photocopying and filing of three application records totalling $641.60 should be disallowed as having been unnecessarily spent.
[26] Corona submits that it was not necessary for it to prove the law of India, and that it did so only in response to the submissions concerning Indian law made by IWW. I do not agree. There were issues raised with respect to the merits of the application that required Corona to prove the law of India, and I relied on the evidence of Indian law that Corona put forward in my decision on this application. I agree with IWW that some of the time spent by Corona before October 23, 2017 was unnecessarily spent, or resulted in unnecessary duplication of work, and that it would not be fair to require IWW to pay for all of the costs claimed before this date. I would reduce the number of hours for which costs should be awarded for the period before October 23, 2017 by 25 hours. I do not reduce the time claimed in respect of resolving the scheduling issues, or the other time claimed after October 23, 2017.
[27] In my view, a fair hourly rate on a partial indemnity scale for this application, having regard to the actual rate charged by counsel for Corona, is $285. I allow a fee of $35,000 based upon this rate applied to 122.3 hours (the hours claimed before October 23, 2017, reduced by 25, together with the hours claimed after this date), rounded up. I regard this fee to be fair and reasonable for this application on a partial indemnity scale, and a fee that IWW would reasonably expect to pay if it was unsuccessful in opposing Corona’s application: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291. HST on the fees is $4,550.
[28] I do not agree that the disbursements incurred for copying and filing evidence used on this application should be reduced. I allow the disbursements claimed of $2,226.05, including HST.
[29] I therefore order that IWW pay to Corona costs of this application on a partial indemnity scale in the amount of 41,776.05 within 30 days.
[30] The parties had mixed success in respect of the issues in relation to costs, and I exercise my discretion not to award costs in respect of the submissions that were made as to costs.
Cavanagh J. Date: August 20, 2018