Court File and Parties
Court File No.: CV-12-497009 Date: 2018-09-26 Superior Court of Justice - Ontario
Re: MICHAEL COVELEY and SOLBYUNG COVELEY aka STELLA YOON, Plaintiffs/Responding Parties And: THORSTEINSSONS LLP, COLIN SMITH, MATTHEW WILLIAMS MARK BARBOUR and JASON A. PUTERMAN, Defendants/Moving Parties
Before: Cavanagh J.
Counsel: Daniel Chitiz and Alastair McNish, for the Plaintiffs/Responding Parties William E. Pepall and Brian N. Radnoff, for the Defendants/Moving Parties
Heard: By Written Submissions
Costs Endorsement
[1] On August 9, 2018, I granted the defendants’ motion for summary judgment dismissing the action on the ground that there was no genuine issue requiring a trial in relation to whether the plaintiffs’ action was statute barred as having been commenced after the expiry of the applicable limitation period.
[2] This is my endorsement with respect to costs of the action.
[3] The defendants request costs of the action on a partial indemnity scale in the amount of $156,599.20 inclusive of taxes and disbursements. This amount is comprised of fees (inclusive of HST) in the amount of $91,822.67 and taxable and non-taxable disbursements (inclusive of HST) in the amount of $64,776.53. The disbursements include payments to experts. The amount claimed by the defendants includes costs of the summary judgment motion in the amount of $57,519.83, inclusive of HST.
[4] The defendants submit: a. They were the successful parties and that the usual rule should be applied that costs follow the event. b. The costs claimed are within the plaintiffs’ reasonable expectations. c. The amount claimed and the importance of the issues justifies the amount of costs requested. In the action the plaintiff’s claimed $4 million in damages plus $1 million in punitive damages. There were serious allegations made against the defendants including alleged breaches of fiduciary duties and acting in a conflict of interest. d. The action was legally and factually complex and the summary judgment motion itself was complex, requiring a substantial volume of materials, expert evidence and cross examinations, together with detailed factums and briefs of authorities. e. The amount claimed for fees and disbursements is fair and reasonable within the context of this action.
[5] The plaintiffs oppose the defendants’ request for costs. Although they were unsuccessful, the plaintiffs request costs of the action on a partial indemnity scale in the amount of $216,079.28, inclusive of taxes and disbursements. The plaintiffs request fees in the amount of $143,742.15 (inclusive of HST) and disbursements of $72,337.13 (inclusive of HST).
[6] The plaintiffs rely upon rule 57.01(2) of the Rules of Civil Procedure which provides that the fact that a party is successful in a proceeding does not prevent the court from awarding costs against the party in a proper case.
[7] The plaintiffs cite the following factors in support of their claim for costs: a. The defendants moved for summary judgment on four separate and independent grounds and they were only successful on one of these grounds. The plaintiffs submit that, as a result, the defendants claim for costs should be reduced to one-quarter of the full amount claimed. b. The defendants’ conduct unnecessarily lengthened the duration of the proceeding which was originally scheduled to be heard in one day but which was heard over two days. The plaintiffs also rely upon assertions that (i) the defendants refused to participate in mediation prior to discovery, which forced the defendants in a related action to bring a motion to have the two actions heard together; (ii) the defendants did not provide answers to undertakings given on examinations for discovery; (iii) the defendants did not conduct examinations for discovery of the plaintiffs on a timely basis; and (iv) the motion for summary judgment itself was brought four and one-half years after the action was commenced and this delay meant that further examinations were necessary at significant cost to the plaintiffs.
[8] In my view, there is no reason to depart from the usual rule that costs should follow the event. The defendants, as the successful parties, are entitled to costs of the action on a partial indemnity scale.
[9] I do not agree that the defendants’ claim for costs should be reduced because they were successful on one of the four grounds upon which their motion for summary judgment was founded. A distributive order for costs based upon success or failure on issues raised in the litigation, although not foreclosed in a proper case, is not generally appropriate: Oakville Storage & Forwarders Ltd. v. Canadian National Railway (1991), 5 O.R. (3d) 1 (Ont. C.A.), leave to appeal to S.C.C. refused [1992] 1 S.C.R. vi (S.C.C.); Skye v. Matthews, [1996] O.J. No. 44 (Ont. C.A.) at paras. 15 and 19. The evidence that was used for the summary judgment motion was, to a greater or lesser extent in relation to each issue, relevant to all of the issues that were raised. The defendants were successful in having the action dismissed. I do not regard this action as a proper one in which to make a distributive costs order based upon success or failure on a given issue.
[10] I do not agree with the plaintiffs’ submission that the defendants’ conduct unnecessarily lengthened the duration of the motion for summary judgment because it was heard over two days instead of the one day that was originally scheduled. In my view, given the number and complexity of the issues and the volume of motion materials, the motion could not have been fairly heard in one day. The time estimate that was originally agreed upon for this motion was inaccurate.
[11] I also do not agree that the conduct of the defendants in the action in relation to participation in a mediation should affect the costs to be awarded. A consent order was made exempting the action from mandatory mediation. The plaintiffs’ request for mediation was conditional upon the defendants withdrawing their summary judgment motion, with prejudice. The defendants cannot be faulted for not accepting this condition.
[12] I also do not agree that any failure by the defendants to (i) provide complete answers to discovery undertakings, (ii) complete examinations for discovery expeditiously, or (iii) bring the summary judgment motion earlier should affect the disposition as to costs.
[13] I have reviewed the defendants’ bill of costs for the action, which includes costs of the motion for summary judgement. I have taken into consideration the factors in r. 57.01(1) of the Rules of Civil Procedure.
[14] The hourly rates claim for senior counsel and second counsel were $210 and $195, respectively. These rates reflect reasonable discounts from the actual rates charged by counsel for this action. I am satisfied that the partial indemnity hourly rates claimed for the lawyers and legal professionals who worked on this case are reasonable.
[15] I am also satisfied that the time spent by the lawyers and other professionals was reasonable for this action, given the amount claimed, the importance of the issues to the parties, and the nature and complexity of the issues. The action was commenced in 2012 and proceeded through the pleadings and discovery stages before the motion for summary judgment was brought. The discovery transcripts were used on the summary judgment motion, which was efficient. The time expended at the pleadings, discovery, and summary judgment stages of the action was reasonable.
[16] I also take into consideration that the plaintiffs requested costs of the action on a partial indemnity scale in the amount of $216,079.28 inclusive of disbursements and HST. They submitted that this amount of costs would have been reasonable. I note that the hourly rate claimed for senior counsel for the plaintiffs on a partial indemnity scale ($400) significantly exceeds the partial indemnity rates claimed by the defendants, and reflects the higher actual rate charged by plaintiffs’ counsel for this case.
[17] In my view, the amount claimed by the defendants is within the range of costs that the plaintiffs would have reasonably expected to pay if they were unsuccessful in the action.
[18] I therefore fix costs of the action in the amount of $156,599.20 inclusive of fees, disbursements and HST, to be paid by the plaintiffs to the defendants.
Cavanagh J. Date: September 26, 2018