COURT FILE NO.: CV-14-512903 DATE: 20181031 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: HURST REAL ESTATE SERVICE INC. and DTZ CANADA INC., A UGL COMPANY Plaintiffs AND: great lands corporation, great lands (halton Hills) industrial park corp. and sam sadr , Defendants

BEFORE: Dietrich J.

COUNSEL: Peter Manderville and Lindsay Moffat, for the Plaintiffs David A. Weisman, for the Defendants

HEARD: By written submissions

ENDORSEMENT on costs

[1] The plaintiffs brought an action for damages for breach of contract. I delivered written reasons for judgment on September 5, 2018. I invited counsel to make written submissions if they were unable to agree on costs. Counsel for each of the parties has done so, including reply submissions by the plaintiffs. I have considered all of the written submissions.

Overview

[2] The plaintiffs, through David Hurst, performed real estate agent services for the defendants. In so doing, Mr. Hurst brought a buyer to the defendants, which was interested in purchasing a large commercial property owned by one of the defendants. That buyer purchased the commercial property. At issue was whether Mr. Hurst was entitled to a 5% real estate commission on the sale. The defendants refused to pay the commission on the basis that the plaintiffs did not bring the buyer to the defendants and there was no signed commission agreement in place at the closing of the transaction.

[3] I found that the plaintiffs were entitled to judgment in the amount of $540,000, being 5% of the sale proceeds of the commercial property plus HST.

Position of the Plaintiffs

[4] The plaintiffs submit that they met with complete success in the trial and are thus entitled to their costs throughout the action. Further, they submit that the award of damages is more favourable than their offer to settle at $432,000 plus prejudgment interest and costs to be fixed. They made this offer pursuant to rule 49 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the Rules). The plaintiffs served this offer on the defendants on May 19, 2015.

[5] Accordingly, they submit that they are entitled to an award of substantial indemnity costs from May 19, 2015 through to the end of the trial and the rendering of the judgment. They also submit that they are entitled to an award of full indemnity costs, or a measure close to that, based on my finding of bad faith on behalf of the defendants. The plaintiffs include in their submission a chart summarizing their costs on: i) a partial indemnity basis; ii) a substantial indemnity basis; and iii) a full indemnity basis. Including fees, disbursements and HST on each, the partial indemnity claim is for $286,459.07 (60% of full indemnity); the substantial indemnity claim is for $425,543.85 (90% of full indemnity); and the full indemnity claim is for $471,903.90.

[6] With reference to the factors listed in rule 57.01 of the Rules, the plaintiffs submit that in addition to the result in the proceeding and the offer to settle, the court should consider other factors. These other factors include the principle of indemnity, the experience of the lawyers for the successful party, the amount claimed and the amount recovered in the proceeding, the conduct of any party that tended to lengthen the duration of the proceeding, a party’s denial or refusal to admit anything that should have been admitted, and any other matter relevant to the question of costs.

Position of the Defendants

[7] The defendants accept that the plaintiffs obtained a judgment that was more favourable than the terms of their offer to settle, which was not accepted by the defendants. Accordingly, the plaintiffs are entitled to partial indemnity costs to the date of the offer and substantial indemnity costs thereafter pursuant to the Rules. However, the defendants submit that the plaintiffs have not allocated their costs between the period prior to the offer to settle and the period after the offer to settle. With respect to the plaintiffs’ claim for full indemnity costs based on my finding of bad faith, the defendants cite Bruell Contracting Ltd. v. J & P Levesque Bros. Haulage Ltd., 2013 ONSC 6676 and submit that this case stands for the proposition that full indemnity costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against whom the order is being made. The conduct referred to is the conduct of the party during the litigation and not the conduct of the party when the cause of action arose. They submit that there was no misconduct attributable to Mr. Sadr during the course of the litigation, and, in any event his conduct did not rise to the threshold reserved for the rare and exceptional circumstances where the party’s behavior has been reprehensible, scandalous or outrageous, as set out in Sgromo v. Scott, [2007] O.J. No. 4893 at paras. 19 to 23.

[8] The defendants also submit that a court must balance the factors set out in rule 57.01 of the Rules and arrive at an amount that is reasonable and fair in the circumstances and bears some relationship to the amount that an unsuccessful party could reasonably expect to pay: Akagi v. Synenergy, 2015 ONCA 771 at para. 55. The defendants assert that the total hours spent by the plaintiffs’ lawyers and law clerks, being 662, is “exorbitantly excessive” for a “non-complex commercial litigation matter” that took four days of trial. Further, they assert that a close review of the dockets reveals some duplication of effort by the lawyers.

[9] In reply, the plaintiffs explained their methodology for the allocation of their costs for the period prior to the offer to settle and the period following the offer to settle.

Analysis

[10] The plaintiffs were wholly successful at trial. The defendants accept that the plaintiffs are entitled to partial indemnity costs to the date of the offer and substantial indemnity costs thereafter. They object to full indemnity costs and also object to the amount of time spent by the plaintiffs’ lawyers and law clerks.

[11] The court is granted a wide discretion when determining the appropriate quantum of costs. Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides as follows:

Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

[12] Rule 57.01(1) of the Rules identifies the factors a court may consider when exercising its discretion to award costs:

(1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

(i) any other matter relevant to the question of costs.

[13] In determining the appropriate amount of costs to which the plaintiffs are entitled, I am guided by the following principles set forth by the court in Andersen v. St. Jude Medical, Inc. (2006), 264 D.L.R. (4th) 557 (Ont. Div. Ct.), leave to appeal refused, 2006 CarswellOnt 7749 (C.A.), at para. 22:

1. The discretion of the court must be exercised in light of the specific facts and circumstances of the case in relation to the factors set out in rule 57.01(1): Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.); Moon v. Sher (2004), 246 D.L.R. (4th) 440 (Ont. C.A.); and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC (2005), 75 O.R. (3d) 638 (C.A.).

2. A consideration of experience, rates charged and hours spent (formerly a costs grid calculation) is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case: Boucher. The quantum should reflect an amount the court considers to be fair and reasonable rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier (2002), 21 C.C.E.L. (3d) 161 (Ont. C.A.), at para. 4.

3. The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining an amount that is fair and reasonable: rule 57.01(1)(0.b).

4. The court should seek to avoid inconsistency with comparable awards in other cases. “Like cases, [if they can be found], should conclude with like substantive results”: Murano v. Bank of Montreal (1998), 41 O.R. (3d) 222 (C.A.) at p. 249.

5. The court should seek to balance the indemnity principle with the fundamental objective of access to justice: Boucher.

[14] The Court of Appeal has made it clear that the overriding principle when fixing costs is that the amount of costs awarded be reasonable in the circumstances: Davies v. Corporation of the Municipality of Clarington, 2009 ONCA 722, 100 O.R. (3d) 66, at para. 52.

[15] In Boucher, at para. 26, the Court of Appeal noted specifically that the overall objective of fixing costs “is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.”

[16] I will address the rule 57.01(1) factors that are relevant to this costs determination as well as the application of the principle of proportionality: rule 1.04(1.1).

[17] The first factor under rule 57.01(1) is the principle of indemnity, including the rates charged. Peter Manderville, who had carriage of the file on behalf of the plaintiffs, has 29 years of experience and seeks approximately $450 per hour on a partial indemnity basis, approximately $675 on a substantial indemnity basis and approximately $750 on a full indemnity basis. His associate, Lindsay Moffat, who attended the trial, seeks $195 per hour on a partial indemnity basis, $292.50 per hour on a substantial indemnity basis and $325 per hour on a full indemnity basis. The defendants do not suggest that the hourly rates of the plaintiffs’ counsel are unreasonable. As noted, defendants object to the amount of time spent by the plaintiffs’ counsel.

[18] The goal, as noted in Boucher, is to fix costs in a reasonable amount: a sum that the losing party could reasonably expect to pay, as opposed to doing a precise mathematical calculation of the costs incurred. It is doubtful that the defendants would expect to pay full indemnity costs of $471,903.90, or substantial indemnity costs of $425,543.85 or even partial indemnity costs of $286,459.07 on a judgment of $540,000 plus interest for success on a four day trial. The defendant Sam Sadr did unnecessarily lengthen the proceeding by agreeing to a mediation and then failing to attend. This resulted in additional time spent and wasted by the plaintiffs’ counsel. Notwithstanding, I find that the time spent by the plaintiffs’ counsel to be disproportionate to the result.

[19] The issues relating to entitlement to the commission were not particularly complex, especially for a seasoned lawyer such as Mr. Manderville. Novel arguments were not required.

[20] Based on a review of the dockets submitted by the plaintiffs’ counsel, I find that the number of hours spent by the plaintiffs’ counsel in preparing the pleadings, in documentary discovery, in examinations for discovery, in trial preparation and during the course of the trial to be in excess of what was required in this case. There also appears to be some duplication of effort between Mr. Manderville and Ms. Moffatt. Accordingly, I would reduce certain of the hours set out in the Bill of Costs of the Plaintiffs’ as follows:

FEE ITEMS LAWYER HOURS RECORDED REDUCED HOURS Pleadings Peter Manderville 47.4 30 Documentary Discovery Peter Manderville 57.9 25 Max Munoz 31.6 15 Examination for Discovery Peter Manderville 47.5 30 Trial Preparation Peter Manderville 196.7 100 Lindsay Moffatt 46.4 30 Trial Peter Manderville 81.4 40 Lindsay Moffatt 61.2 40

[21] The plaintiffs did make an offer to settle, early in the proceedings. They were awarded a judgment more favourable than the terms of their offer to settle. This is a good result for the plaintiffs and must be factored in to their entitlement to costs.

[22] The plaintiffs are entitled to partial indemnity costs prior to their offer of settlement (on May 19, 2015) and substantial indemnity costs thereafter. Taking into account the above-noted reductions in the hours recorded, the revised fees for the plaintiffs’ counsel prior to May 19, 2015 amount to approximately $49,000 in partial indemnity costs. Post May 19, 2015, the revised fees amount to approximately $142,500 in substantial indemnity costs. The disbursements include the costs of discovery transcripts and mediation and appear to be reasonable.

[23] Taking into account the relevant factors enumerated in rule 57 and the principle of proportionality applied to the facts of this case, I am of the view that fees in the sum of $191,500 plus HST, and disbursements in the sum of $6,850.43 plus HST, are both fair and reasonable in the circumstances of this case. I fix the costs of the plaintiffs in these amounts and confirm their entitlement to prejudgment interest.

Dietrich J. Date: October 31, 2018