COURT FILE NO.: 57942/18 & 58143/18
DATE: 2018/10/29
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Rolling Meadows Land Development Corporation
Applicant
– and –
2560262 Ontario Inc.
Respondent
H. Korosis and L. Thompson, for the Applicant
F. Soccol, for the Respondent
AND BETWEEN:
2560262 Ontario Inc.
Applicant
– and –
Rolling Meadows Land Development Corporation and Glen Douglas Gordon
Respondent
F. Soccol, for the Applicant
H. Korosis and L. Thompson, for the Respondent
HEARD: July 6, 2018
COSTS ENDORSEMENT
THE HONOURABLE JUSTICE R. B. REID
[1] The parties to these two applications sought a court order as to the enforceability of an Agreement of Purchase and Sale concerning 48 residential building lots.
[2] Rolling Meadows Land Development Corporation and Glen Douglas Gordon, (“the Vendor”) submitted there was no binding agreement and 2560262 Ontario Inc. (“the Purchaser”) took the opposite position.
[3] For reasons released July 27, 2018, I concluded that there was a binding and enforceable agreement.
[4] Costs submissions have now been received and it is acknowledged that a costs award should be made in favour of the purchaser. The parties disagree as to the scale of costs and the proper quantum.
[5] The purchaser claims $68,757.50 plus disbursements of $6,951.70 and HST of $9,785.18 for a total of $85,494.38 on a substantial indemnity basis. According to the purchaser’s cost submissions, the actual rate and substantial indemnity rate for senior counsel are the same at $400 per hour, and the partial indemnity rate is $350 per hour. For a research lawyer, the actual and substantial indemnity rate is $250 and the partial indemnity rate is $200 per hour.
[6] The purchaser justifies the request for substantial indemnity costs based on an offer to settle pursuant to rule 49 of the Rules of Civil Procedure[^1] dated June 5, 2018. In that offer, the purchaser proposed that the agreement of purchase and sale be found valid with the vendor being responsible for partial indemnity costs.
[7] As to the discretionary factors set out in subrule 57.01(1), the purchaser submits that the amount at stake was significant in that the purchase price for the subject property was $4,351,000 with a $1,305,000 deposit. It submitted that the legal issues were relatively complex with a total of five affidavits plus exhibits and cross-examinations of five deponents over the course of three days. The issues were of importance to the purchaser which had also made other investments of time and money directed toward the anticipated development of the property.
[8] In response, the vendor submits that the substantial indemnity rate should be 90 percent of the full indemnity rate and that a partial indemnity rate should be 62.5 percent of the full indemnity rate, that is, $350 and $250 per hour respectively for senior counsel, and $225 and $156 per hour respectively for the research lawyer.
[9] The vendor also submits that a significant portion of the disagreement was centered on the interpretation of a closing date clause in the agreement and that I agreed with the vendor’s interpretation of that clause. Thus, the vendor claims a measure of success, or at least that the proceedings were lengthened because of the purchaser’s failure to agree to the vendor’s interpretation.
[10] As to the rule 49 offer, the vendor submits that costs should be awarded on a partial indemnity basis to the date of the offer and thereafter on a substantial indemnity basis, and only as to services that related directly to the applications. As well, the vendor challenges some charges made by the purchaser on the basis that they should have been completed by a clerk or junior lawyer rather than the senior counsel who docketed the time. Finally, the vendor submits that disbursements should also be reduced by the same percentage as the fees from full indemnity to substantial or partial indemnity.
[11] The vendor proposes a costs award in favour of the purchaser in the all-inclusive amount of $50,000.
[12] The court’s discretion to awards costs flows from s. 131 of the Courts of Justice Act[^2].
[13] Factors to be considered in the exercising of discretion are enumerated in rule 57.01. Success is a presumptive factor and in this case the purchaser was entirely successful. I therefore agree that an award of costs is appropriate in favour of the purchaser, payable by the vendor in the two applications which were heard together.
[14] The provisions of rule 49.10 presumptively entitle the purchaser in this case to an award of partial indemnity costs up to the date of the service of the offer to settle and thereafter costs on a substantial indemnity basis. After review of the discretionary factors set out in rule 57.01, I see no reason to depart from that presumption. Therefore, there will be an order of partial indemnity costs in favour of the purchaser up to June 5, 2018 and thereafter costs on a substantial indemnity basis.
[15] As to the rates payable, I agree with the vendor that there should be a reduction from a full indemnity rate to a substantial indemnity rate. The costs shifting provisions of the rules do not provide full indemnity except in limited and unusual situations that are not applicable here. I also accept the percentage reductions proposed by the vendor to 90% and 62.5% of full indemnity rate for substantial and partial indemnity scales respectively.
[16] I am satisfied on a review of the bill of costs prepared by the purchaser that the services charged properly relate to the applications with the exception of 10.7 hours incurred between January 11 and February 14, 2018 in preparation of a draft statement of claim that was not issued. The hours claimed are reduced by that amount.
[17] The provision of legal services encompasses a variety of tasks which require varying degrees of expertise. Based on the bill of costs provided, I am not satisfied that there should be a reduction in hourly rate for services provided by senior counsel, even if some tasks could have been performed by a less skilled or experienced person. I note that 9.7 hours were docketed by a research lawyer at a lower rate, as were four hours by a law clerk.
[18] It is not appropriate to reduce disbursements from their actual amount. In that respect, they are considered separate and apart from varying hourly rates to which the scales of costs apply.
[19] My calculations are as follows:
• Partial indemnity: 76.65 hours @ $250 = $19,162.50
• Substantial indemnity: 75 hours @ $360 = $27,000.00
9.27 hours @ $225 = $2,085.75
4 hours @ $100 = $400.00
• Subtotal: = $48,648.25
• HST on fees @ 13%: = $ 6,324.27
• Disbursements: = $ 6,951.70
• HST on disbursements: = $ 846.70
• Total: = $62,770.92
[20] Therefore, there will be an order that the vendor pay the purchaser costs in the amount of $62,770.92.
Reid J.
Date: October 29, 2018
COURT FILE NO.: 57942/18 & 58143/18
DATE: 2018/10/29
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Rolling Meadows Land Development Corporation
Applicant
– and –
2560262 Ontario Inc.
Respondent
AND BETWEEN:
2560262 Ontario Inc.
Applicant
– and –
Rolling Meadows Land Development Corporation and Glen Douglas Gordon
Respondent
COSTS ENDORSEMENT
Reid J.
Released: October 29, 2018
[^1]: R.R.O. 1990, Reg. 194
[^2]: R.S.O. 1990, c. C.43