Court File and Parties
Court File No.: CV-14-0285-00 Date: 29/11/2018 Ontario Superior Court of Justice
Between: MARY MAGDALENE AYLWARD, Plaintiff – and – REBUILD RESPONSE GROUP INC., HARMONY HOMES QUINTE LTD. and TOM STREEK, Defendants
Counsel: David P. Lees, for the Plaintiff John Mastorakos, for the Defendants
Heard at Belleville: January 15, 16, 17, 18, 19, 22, 2018
Tausendfreund, J.
Reasons on Costs
[1] After a seven day trial, I dismissed the Plaintiff’s claim. The issues at trial revolved around a construction contract. I found that the Plaintiff wrongfully repudiated that contract and that the Defendants accordingly were entitled to retain the Plaintiff’s deposit of $175,432.50.
[2] The Plaintiff had sought the return of the deposit plus damages of $600,000 based on an alleged breach of contract by the Defendants. She also alleged negligent misrepresentation and sought punitive damages.
[3] The parties were unable to resolve the issue of costs. Accordingly, these reasons now follow.
[4] Both sides provided written submissions on costs. Unfortunately, the submissions of the Plaintiff, which appear to have been prepared by her without legal assistance, were not helpful on the issues concerning the matter of costs. Additionally, and despite the fact that her case was dismissed, she requested that costs be awarded to her on a substantial indemnity basis in the amount of $75,000 or as the court might deem appropriate.
[5] The Defendants served three written Offers to Settle on the Plaintiff. The first of these offers was served with the Defendants’ Statement of Defence on December 18, 2014. The Defendants offered to pay the Plaintiff $10,000 inclusive of damages and costs to resolve the Plaintiff’s claims. The second offer was made on January 9, 2018, about one week prior to trial. The Defendants proposed a payment of $30,000 to the Plaintiff to resolve all issues. The third offer was made on January 15, 2018, prior to trial. The Defendants offered to pay the Plaintiff $87,500 to resolve all issues between them. The Plaintiff did not accept any of these offers.
[6] The Defendants have provided a Bill of Costs for their substantial indemnity costs in the amount of $63,390.04.
[7] In exercising my discretion on costs and relying on Rule 57.01(1)(e) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”), the Defendants urge that I should find that the conduct of the Plaintiff while testifying unnecessarily lengthened the trial. The Plaintiff testified over a period of three days. The Defendants submit that she was combative and uncooperative while giving her evidence. Although her testimony in direct and cross-examination could likely have been shorter without compromising any of the evidence she had to present, I do not find that her conduct in testifying should warrant a costs sanction.
[8] That takes me to the Offers to Settle served by the Defendants. It is clear that these written offers, at least two of which were made more than seven days before the start of the trial, were more favourable to the Plaintiff than was the judgment which dismissed her action. At least two of the Defendants’ Offers to Settle met the requirements of Rule 49.10(2). As such, the Defendants urge that I should award substantial indemnity costs to the Defendants.
[9] In deciding this issue, I start with S & A Strasser Ltd. v. Richmond Hill (Town), [1990] 1 O.R. (3d) 243 (ON CA). In that decision, the Plaintiff’s action was dismissed following a refusal of a significant Offer to Settle by the Defendant. In recognizing the silence of Rule 49 on the question of whether substantial indemnity costs may be awarded to a Defendant following the dismissal of the Plaintiff’s action, Carthy J. in speaking for the court stated that:
“…[I]t 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.”
[10] Justice Carthy also referenced Rule 49.13 which states that:
“Notwithstanding rules 49.03, 49.10 and 49.11, the court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.”
[11] Justice Carthy further referenced Rule 57.01(1) which states that in exercising its discretion on costs, the court may consider an Offer to Settle.
[12] The court then concluded as follows:
“…I do see reason for a bonus in making an offer of $30,000 in the face of a claim which subsequently reduced itself to $70,000 and resulted in a dismissal of the action. That bonus should be related to the offer and its date and, based upon the general principles enunciated in rule 57.01, I would award solicitor-and-client costs to the defendant following the date of the offer and party-and-party costs up to that date.”
[13] However, 25 years later, the Ontario Court of Appeal in Iannarella v. Corbett, 2015 ONCA 110, stated at para. 139:
“The development of this court’s approach to awards of substantial indemnity costs has evolved since Strasser, as this court noted in Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66. Outside of rule 49.10, to make such an award as a matter of judicial discretion, the court must find that the party has been guilty of egregious misconduct in the proceeding. See St. Elizabeth Home Society v. Hamilton (City), 2010 ONCA 280, at para. 92 and McBride Metal Fabricating Corp. v. H. & W. Sales Co. (2002), 59 O.R. (3d) 97 (C.A), at para. 39.”
[14] The court in Davies v. Clarington, supra stated at para. 40:
Apart from the operation of rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made. … Strasser should be interpreted to fit within this framework -- as a case where the trial judge implicitly found such egregious behaviour, deserving of sanction.
[15] As already stated, I do not find such egregious conduct by the Plaintiff in this trial that would warrant elevated costs.
[16] I now turn to the quantum of costs to be awarded to the Defendants.
[17] Based on my review of the Defendants’ Bill of Costs of $63,390.04 and compared to the amount of $75,000 of costs sought by the Plaintiff, I find the amount of substantial indemnity costs of the Defendants to be reasonable. As partial indemnity costs are typically awarded in the range of 60% of the substantial indemnity rates, I find that the Defendants are entitled to be paid by the Plaintiff partial indemnity costs fixed at $38,000 all in.