Court File and Parties

COURT FILE NO.: 467/13 DATE: 2018/09/06 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Tricar Developments Inc. and Carvest Properties Inc., Plaintiffs AND: Terex Corporation, Terex USA, LLC and Terex Deutchland GMBH, Defendants

BEFORE: Justice A. K. Mitchell

COUNSEL: R. Love and S. Bonanno, for the Plaintiffs L. Lorimer and L. Ray, for the Defendants

HEARD: In writing.

COSTS ENDORSEMENT

Background

[ 1 ] This costs endorsement relates to a status hearing brought by way of motion by the plaintiffs pursuant to rule 48.14 of the Rules of Civil Procedure. The plaintiffs sought the court’s indulgence to continue the action despite the passage of more than 5 years’ time since the action was commenced. The defendants opposed the motion and asked that the action be dismissed.

[ 2 ] In response to materials filed by the plaintiffs in support of its position on the status hearing, the defendants brought a cross-motion seeking to strike an affidavit filed by the plaintiffs on the basis it improperly contained expert opinion evidence.

[ 3 ] The motions were heard on June 20, 2018 and my decision was released on July 11, 2018. With regards to the cross-motion, I granted the relief sought by the defendants in part. Some paragraphs of the affidavit, but not all, were struck. With regards to the outcome of the status hearing, I permitted the action to proceed and imposed a timetable for the remaining steps in the action.

[ 4 ] With regards to the costs of the cross-motion, I offered my preliminary view that all parties should bear their own costs in light of the divided success. With regards to both motions, I invited the parties to file written submissions on the issue of costs if no agreement could be reached. Submissions have now been received.

Positions of the Parties

[ 5 ] In keeping with my suggestion, the plaintiffs do not seek their costs of the cross-motion. However, the plaintiffs seek their costs of the status hearing on a substantial indemnity basis in the amount of $87,997.96 which amount is comprised of fees totalling $72,497.60 (inclusive of HST) and disbursements of $6,075.67 (inclusive of HST). The plaintiffs seek costs on an enhanced basis and point to the defendants’ alleged misconduct as commented upon by the court in its endorsement of July 11, 2018 [1] 2018 ONSC 4308 as justifying and enhanced scale. If the court does not agree, the plaintiffs seek their partial indemnity costs totalling $67,516.37.

[ 6 ] The defendants do not object to the plaintiffs’ entitlement to costs of the status hearing; however, submit that there is no basis to deviate from recovery on a partial indemnity basis as any alleged misconduct occurred in the context of the litigation and not the motion. Further, the defendants submit that the time spent (and therefore the amount claimed) is excessive and unreasonable and point to the 230 hours of lawyers’ time spent on the status hearing by the plaintiffs to support their position. The defendants further submit that they were more successful on the cross-motion and are, therefore, entitled to their costs. A costs outline for the cross-motion was not submitted by the defendants and no specific amount was claimed. Instead, the defendants suggest that an all-inclusive award of $25,000 in favour of the plaintiffs is fair and reasonable in all of the circumstances including their success on the cross-motion.

[ 7 ] In reply, the plaintiffs submit an adverse inference should be drawn from the failure of the defendants to file a costs outline for comparison purposes and to support any award of costs in connection with the cross-motion.

Analysis

[ 8 ] Section 131(1) of the Courts of Justice Act grants the court very broad discretion to award the costs of and incidental to a proceeding. To guide its discretion, the court must look primarily to the factors set out in r. 57.01(1) of the Rules of Civil Procedure.

[ 9 ] However, the primary guiding principle is that any costs award should be fair and reasonable in all of the circumstances: see Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A).

[ 10 ] The plaintiffs were entirely successful on the status hearing and are, therefore, presumptively entitled to their fair and reasonable costs. There were no rule 49 offers made in the context of the status hearing.

[ 11 ] The first issue to be determined is: are the plaintiffs entitled to costs on an enhanced basis?

[ 12 ] The court was critical in its comments regarding the defendants’ conduct with regards to the need for the status hearing and the defendants’ unwillingness to produce Mr. Bergemann for examination for discovery in a timely manner. The court was not critical of the manner in which the defendants conducted themselves with respect to the status hearing.

[ 13 ] It was the mere passage of time and nothing more which required the plaintiffs (not the defendants) to seek the court’s indulgence. The court stopped short of finding that defendants’ counsel engaged in sharp practice. From the record it is apparent that defendants’ counsel had no real intention of working cooperatively with plaintiffs, instead insisting on strict compliance with the Rules. The plaintiffs had tools available to them to force the attendance of Mr. Bergemann at discovery. They elected not to avail themselves of these remedies despite the persistent lack of responsiveness of the defendants. As they waited for cooperation, the clock continued to wind down. They did so at their own peril.

[ 14 ] I agree with the defendants that the conduct of which the court was critical does not relate to the conduct of the proceeding in question, namely, the status hearing. It relates to the conduct of the litigation. The defendants’ conduct was a factor which was considered by the court in allowing the action to proceed and ultimately led, in large part, to the plaintiffs’ success on the status hearing. However, I am not persuaded this conduct entitles the plaintiffs to their costs of the status hearing calculated on a substantial indemnity basis.

[ 15 ] The final issue to be determined is: what are the plaintiffs’ fair and reasonable partial indemnity costs of the status hearing?

[ 16 ] Having regard to the factors in rule 57.01, I note the following:

(a) The status hearing was a critical step in the proceeding. Success on the motion was critically important to the plaintiffs. If unsuccessful, the litigation would have been at an end and the plaintiffs would have been denied their day in court and denied the opportunity to remedy their perceived wrongs. (b) The plaintiffs were required to compile a comprehensive record and respond with rigour to the position of the defendants on the status hearing. The record was voluminous. (c) Cross-examinations took place at the request of the defendants thus increasing the time spent. (d) Both the plaintiffs and defendants were represented at the status hearing by senior and junior counsel. Both sets of lawyers practice in Toronto. Without the bill of costs of the defendants for comparison purposes, I find that the hours spent and hourly rates of lawyers working on the matter are fair and reasonable having regard to: (i) the various lawyers’ respective years of experience; (ii) the importance of the issues; and (iii) the history of the proceedings which made a detailed analysis of the proceedings necessary in order to respond to the defendants’ claims of prejudice and unreasonable delay.

[ 17 ] I find the plaintiffs’ partial indemnity costs of the status hearing, as claimed, to be fair and reasonable in all of the circumstances.

[ 18 ] The cross-motion was incidental to the status hearing in respect of which the plaintiffs were ultimately successful. The alleged offending affidavit was filed in response to the defendants’ position on the status hearing and did not form part of the original motion record. As earlier noted, there was divided success on the cross-motion. In the circumstances, the parties shall each bear their own costs of the cross-motion.

Disposition

[ 19 ] The defendants shall pay to the plaintiffs their costs of the status hearing on a partial indemnity basis in the amount of $67,516.37 inclusive of disbursements and HST, as claimed.

“Justice A. K. Mitchell” Justice A. K. Mitchell Date: September 6, 2018