Court File and Parties
COURT FILE NO.: 51145/09 DATE: 2018-11-22 ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
Kristen Cass Rosemary Book, Counsel for the Plaintiff Plaintiff
- and -
1410088 Ontario Inc., c.o.b. as My Cottage BBQ & Brew and Port Dalhousie Vitalization Corporation Eli Lipetz, Counsel for the Defendants Defendants
COSTS JUDGMENT The Honourable Mr. Justice A.C.R. Whitten
I. INTRODUCTION
[1] Both parties moved before the court July 18, 2018 for summary judgment as against the opposing party. The plaintiff moved for a series of declarations that would reduce any trial to a matter of damages being proven. The surviving defendant PDVC moved for summary judgment on the basis there was no genuine issue for trial. The plaintiff concedes that in the judgment issued September 21, 2018, the defendant was entirely successful.
[2] Furthermore, the plaintiff acknowledges that on or about October 8, 2013, PDVC offered to settle the action for $4,000.00 all inclusive, which was not accepted by the plaintiff. A Rule 49 offer to settle the action for $1.00 plus costs and disbursements was made April 11, 2018. That offer too was not accepted by the plaintiff.
[3] PDVC seeks partial indemnity costs of $17,112.09 for the services rendered prior to the Rule 49 offer. Substantial indemnity costs, post that offer of $23,989.51, are sought. Disbursements in total are $24,300.67.
II. ISSUES
[4] Given the fact of a Rule 49 offer, it is necessary to determine the appropriate rate of reimbursement both before and after the offer dates, applying the principles enumerated pursuant to Rule 57.
[5] Although the plaintiff concedes its liability for costs, counsel argues that the fees billed by the counsel for the defendant are both excessive and unnecessary and requests a reduction of 50 hours.
[6] Furthermore, with respect to the disbursements claimed by the defendant, plaintiff’s counsel asserts:
that the defendant should not be allowed to be reimbursed for a costs award against the defendant with respect to its opposition to a motion by the plaintiff to amend the pleadings; and
that a disbursement for an orthopaedic report in the amount of $10,000.00 (the expert never had to testify) is way beyond what one would expect; and
why is there a legal research fee for case precedents which are available for free through publically accessible websites?
[7] The plaintiff concludes her submissions with a request to consider the personal circumstances of the plaintiff and the fact that although what was advanced in the motion for summary judgment, namely the request for certain declaratory relief was novel, it was nevertheless meritorious and deserving of some recognition as a courageous effort to expand tort law.
III. APPLICABLE LAW
i. General Principles
[8] Referring as did Justice S. Gomery in Greenough v. Maple Ridge Media Inc., 2018 ONSC 4429 to the normative or default approach which was summarized by Justice Cumming in DUCA Financial Services Credit Union Ltd. v. Bozzo, 2010 ONSC 4601, at paragraph 5 it is stated:
In Ontario, the normative approach is first, that costs follow the event, premised upon a two-way, or loser pay, costs approach; second, that costs are awarded on a partial indemnity basis; and third, that costs are payable forthwith, i.e. within 30 days. Discretion can, of course, be exercised in exceptional circumstances to depart from any one or more of these norms.
[9] Section 131(1) of the Courts of Justice Act provides that the costs of and incidental to a proceeding are in the discretion of the court, and the court can decide by whom and to what extent the costs should be paid. As with any discretion, it should be exercised fairly and reasonably.
[10] Rule 57.01 sets out the general principles to be applied. The preamble to the rule invites a court to consider the results of any written offer.
(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.
[11] The factors listed in this rule are to be “fleshed out” as it were in the particular case.
ii. Rule 49 Offers
[12] Rule 49.10 sets out the consequences in the event a written offer is made in a timely fashion. Obviously, offers are encouraged within a system of litigation that cause parties to reflect upon their chance of success and the costs associated with the pursuit of litigation. In other words, to take a clinical, objective approach to what they are embroiled in. The incentive is to make a fair offer and there are cost consequences to the other side if they do not achieve the offer or better than.
iii. Partial and Substantial Indemnity Rates
[13] Rule 1.03 defines "substantial indemnity costs as "costs awarded in an amount that is 1.5 times what would otherwise be awarded in accordance with Part I of Tariff A." Justice Spies in Newlands Estate v. Newlands Estate, 2018 ONSC 2598 at paragraph 54 construes the above phraseology to describe substantial indemnification costs as 1.5 times the amount of partial indemnity costs, in other words typically partial indemnity costs are 60 percent of substantial indemnity rates.
[14] Keeping in mind that in the past, discussion by courts as to the costs referred to party - party costs and solicitor client costs, those terms are equivalent to the terms partial v. substantial indemnity. That being said, precedent as to what factors led to the granting of the higher rate is of assistance.
[15] In S & A Strasser Ltd. v. Richmond Hill (Town), O.J. No. 2321 (OCA), Carthy J. having reviewed ruled 49.10(1) and (2) commented that:
...it seems an anomaly that the plaintiff should be awarded solicitor-and-client costs following the date of an offer, while the defendant only receives party-and-party costs. The answer is found in appreciating that this rule assumes that the plaintiff has recovered a judgment of some value. Without the rule, that plaintiff would normally recover party-and-party costs. The rule gives that plaintiff a bonus for an offer lower than the recovery by elevating costs to the solicitor-and-client level following the offer. The bonus to a defendant who makes an offer higher than the recovery is that the defendant pays no costs following the offer and, in addition, recovers party-and-party costs for that period of time. That rationale does not fit a case where the plaintiff is totally unsuccessful because, without the rule, the defendant is normally entitled to party-and-party costs. The words in the rule "and the plaintiff obtains a judgment as favourable" make it clear that the rule has no application where the plaintiff fails to recover any judgment.
[16] Justice Smith in Michael Dunston v. Flying J. Travel Plaza, (2007) OJ No. 4089, refers to Justice Carthy's observations above and extends his findings to state that Rule 49(10)2 only comes into play if the plaintiff recovers a judgment of some value.
[17] Beyond considering the result, the preamble to Rule 57.01 refers to, that the discussion invariably shifts to behaviour of a party that prolongs or exacerbates the costs of all or some of the parties. Carthy J.A. and S.A. Strasser spoke of, "An expression of the courts disapproval of (the parties) behaviour".
[18] Justice Malloy in Standard Life Assurance Co. v. Elliott, (2007) O.J. No. 200131 describe "A situation(s) in which such an award is appropriate is where one party to the litigation has behaved in an abusive manner/brought proceedings wholly to void the merit and unnecessarily run up the costs of litigation."
[19] Justice Shaw in Metz v. Tremblay Hall, [2007] Carswell Ont, 1056 A.C.W.S. (3d) 536 quoted Henry J. in Apotex Inc. v. Egis Pharmaceuticals, 4 O.R. (3d) 321 (Ont. S.C.J.) who spoke of a party pursuing "The litigation willy nilly", and like Justice Malloy, that higher level of costs being reserved for instances where the court wishes to show its disapproval of conduct that is "aggressive or contumelious “.
[20] Justice Shaw did distinguish between improper conduct and unwise conduct (ref. para. 11). The latter is less blame worthy but if repeated throughout a substantial part of the litigation it does take on the characterization of being improper because of its repetitive nature.
[21] In Davies v. Clarington (Municipality), 2009 ONCA 722, the judgment of the court contains such references as, "Reprehensible conduct...egregious behaviour, deserving of sanction...malicious, counterproductive behaviour conduct".
IV. ANALYSIS
[22] The defence of this matter initially involved the efforts of two counsel, Michael S. Schmidt and Eli Lipetz. The latter appears to be the sole responsible counsel for the file as of early 2017. His hourly rate is not questioned. The former was roughly four years more experienced. That being said, the two counsel were close in their level of experience.
[23] The immediate question that arises is why was it necessary that there be two counsel involved in this file? The initial preparation, file opening, investigation, pleadings and disclosure, examination for discovery and fulfilment of undertakings are not so complex that there would be any need for a division of labour.
[24] In this day and age of boiler plate pleadings and the instant availability of drafting precedent, the hours expended appear to be excessive. The same could be said of the conduct of the examinations for discovery. It was highly unlikely that both counsel would be present for the actual discoveries which were quite brief in that they totalled two hours and seventeen minutes.
[25] The inclusion of 26.5 hours by counsel for the defendant to defend the motion by the plaintiff to amend the statement of claim is bizarre. It is not farfetched to characterize most of such motions to amend, as pro forma. It is the norm that opposing counsel, either consent or take no position. As Justice Walters stated in her judgment of August 31, 2017, “(On) its face, the rule (Rule 26.01) clearly indicates that amendments are to be presumptively approved.”
[26] Irrespective of such observations, counsel for the defendant took an aggressive stance, arguing before Justice Walters that the proposed amendments were “not legally tenable.” To succeed in resisting the amendment sought was a “long shot”. That position could be characterized as playing “hardball”, in other words making something straightforward harder and more expensive for the other side. A more measured approach would have been to “keep your powder dry” (ref. Edward Hayes, Ballads of Ireland (1856) Oliver’s Advice. An Orange Ballad). In other words, to wait and save your efforts for the summary judgment motion which specifically deals with “untenable legal positions.”
[27] Justice Walters must have thought similarly as she awarded a fairly hefty costs award against the defence. To allow the time claimed in advancing a position of dubious merit for which there were costs consequences against the defendant, would undermine the findings of Justice Walters, and in a way be rewarding a questionable tactic.
[28] A less onerous observation is that of why is there a claim for the solicitor’s time for the two assignment courts, when they were apparently handled by the law student? At the most, it would have been the student’s time and given the brevity of these experiences what is claimed would apply over travel time by the student.
[29] The time proposed for preparation for the summary judgment motion straddles the date of the Rule 49 offer. Mr. Lipetz is claiming some 80 hours. This does present as excessive, some 20 to 30 hours would have been more acceptable.
[30] All in all one can see how counsel for the plaintiff would seek to cut that portion of the bill of costs allocated to fees in half.
[31] With respect to disbursements, it is understandable that a plaintiff would question a $10,000.00 orthopaedic opinion, especially so when they themselves paid $3,000.00 for a similar opinion. As mentioned before, there was no court attendance necessitated for the expert. Plaintiff’s counsel suggests that this sum be deleted in its entirety. That is not appropriate. Without any details as to what exactly this doctor did, for example, how many reports and x-rays did he or she review, how much time it took to examine the plaintiff, it is difficult to see what would be appropriate aside from reacting to the immensity of the bill put forth. $5000.00 presents as an appropriate amount.
[32] $900.00 for legal research is problematic. One assumes that counsel graduated with the basic legal knowledge we all possess. This matter was unlikely his first blush with the world of “occupier’s liability”, and specifically the liability of landlords. Counsel no doubt was familiar with the focus on the degree or control and access exercised by the landlord on the subject area. So given all the base experience and knowledge, the need for “research” by some anonymous identity is questionable.
[33] That cannot be said of the rather creative assertion by the plaintiff, that she was a third party beneficiary of the lease between the defendants. Still, the principal case law was from the Supreme Court of Canada, and defence counsel, as competent counsel as he was, would no doubt have read the decisions authorized by Justice Iacobucci, to argue so compellingly that the plaintiff was not such a beneficiary.
[34] All in all, whatever this “research” was would be well within the preparation for the motion. There was no need for outsider or third party research. If artificial intelligence sources were employed, no doubt counsel’s preparation time would have been significantly reduced.
[35] The third aspect of the disbursements which is complained about, is the recouping of the costs award by Justice Walters of $5,504.08. The criticism of including the legal time dissipated in that resistance, is equally applicable to this as a disbursement.
[36] As noted with respect to the Rule 57.01 factors, having consequences for questionable litigation behaviour, it would be unseemly if a cost awarded for resisting what is usually a pro forma step is recognized through disbursements. To do so would be schizophrogenic. It should not be allowed as a disbursement.
[37] Therefore, as a starting point the disbursements claim should be reduced by $11,404.08.
[38] The concluding costs factor in Rule 57.01(0.b), namely “any other matter relevant to the question of costs”, is obviously quite broad. It could easily include the personal circumstances of the plaintiff. Some of those circumstances would be within contemplation at the time of the alleged tortious incident. The long term sequelae of the open reduction of the ankle would be. The bankruptcy of the occupying tenant, My Cottage and its offshore insurance carrier, removed from the protection of FISCO, was probably not contemplated at the time of the event. These latter phenomena presented significant obstacles to the pursuit of the plaintiff’s claim.
[39] The suggestion that the plaintiff was a third party beneficiary of the lease between the defendants was creative, even though it was not successful. This action against the surviving defendant was definitely merited despite the obstacles.
[40] These circumstances pertinent to the plaintiff herself and her action in conjunction with the observations as to the amount of fees and disbursements claimed, merit a cost award against the plaintiff in the amount of $20,000.00, all in (i.e. inclusive of HST).
WHITTEN J. Released: November 22, 2018