Court File and Parties
COURT FILE NO.: CV-17-577665 DATE: 20181217 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: BIRCHCLIFFE CORE-HARBOUR INC., Plaintiff AND: STELLA PINNOCK, STAINTON PINNOCK and HOMELIFE ROMANO REALTY, Defendants
BEFORE: Dietrich J.
COUNSEL: David Taub and Jonathan Preece, for the Plaintiff Osborne G. Barnwell, for the Defendants Stella Pinnock and Stainton Pinnock
HEARD: By written submissions
Endorsement on Costs
[1] The plaintiff brought an action for damages for breach of contract including loss of bargain. I heard the plaintiff’s motion for summary judgment and subsequently delivered written reasons for judgment on October 26, 2018. I invited counsel to make written submissions if they were unable to agree on costs. Counsel for each of the parties who appeared on the motion have done so, including reply submissions by the defendants Stella and Stainton Pinnock. I have considered all of the written submissions.
Overview
[2] In its claim the plaintiff alleged that the defendants breached an agreement for the purchase and sale of a residential property in the City of Toronto. As such, it sought the return of its deposit of $25,000 and damages of $187,500 for loss of bargain. The defendants counterclaimed alleging that the plaintiff caused the breach of contract by taking action that impeded the defendants from being able to discharge their mortgage and deliver clear title on closing. The defendants also alleged that the plaintiff bargained in bad faith.
[3] I found that the plaintiff was entitled to the return of its deposit but was not entitled to damages for loss of bargain. Apart from awarding the return of the deposit, I dismissed the plaintiff’s claim.
[4] I did not find that the plaintiff engaged in actionable conduct such that the defendants were impeded in their ability to discharge their mortgage and I did not find bad faith on the part of the plaintiff. I dismissed the defendants’ counterclaim.
Position of the Defendants
[5] The defendants submit that they had already agreed to return the deposit prior to the litigation. Thus, only the matter of a loss of bargain was at issue on the motion. They also submit that because there was no case law directly on point, and because of the unique facts of the case, counsel for the defendants was required to conduct additional research and present novel arguments based on interference with contractual relations, unconscionability, frustration and bad faith.
[6] They assert that the matter was very important to them because they believed that they were deceived by the mortgagee that held their mortgage and the lawyer for the plaintiff, and that, but for the actions of those persons, they would have been able to discharge the mortgage and close the deal. The defendants submit that much of the time spent by their counsel was spent on research and reviewing 500 pages of undertakings to build arguments in support of this claim.
[7] The defendants submit that because of the conduct of the mortgagee and the plaintiff’s lawyer in the real estate transaction, costs should be awarded to them on a substantial indemnity basis in the amount of $95,294.15 including disbursements of $3,250 and HST. They also ask that the costs be awarded against Robbins Appleby, the solicitors for the plaintiff. The defendants cite rule 20.06(a) of the Rules of Civil Procedure in support of their claim for substantial indemnity costs in the context of a summary judgment motion. They further submit that their costs on a partial indemnity scale would be $82,761.98, including disbursements of $3,250 and HST. The defendants confirm that their costs do not include any time spent by their counsel on the counterclaim.
Position of the Plaintiff
[8] The plaintiff submits that no costs should be awarded to the defendants, or, in the alternative, the defendants should be awarded less than the amount sought. The plaintiff submits that it was successful on the substantive issues in dispute, other than the issue of damages for loss of bargain, and note that the defendants’ counterclaim was dismissed.
[9] The plaintiff further submits that the defendants made vexatious and unsubstantiated allegations, including allegations against the plaintiff’s lawyer, and they did not deliver any bona fide offers of settlement in the action. Finally, it submits that the costs claimed by the defendants are excessive, unjustified and uncorroborated. The plaintiff submits that the defendants’ costs should not exceed $2,475 (on a partial indemnity basis) and be limited to the time spent preparing closing submissions on the subject of damages.
Analysis
[10] The defendants were successful on the motion for summary judgment to the extent that they defeated the principal claim for damages for loss of bargain. However, they did not succeed in their counterclaim, which included a claim for forfeiture of the deposit and damages for bad faith on the part of the plaintiff.
[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 defendants 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:
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.).
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.
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).
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.
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.
[17] The first factor under rule 57.01(1) is the principle of indemnity, including the rates charged. Osborne Barnwell, representing the defendants, has 25 years of experience and seeks costs of $500 per hour on a full indemnity basis and $425 per hour on a partial indemnity basis. The plaintiff does not suggest that Mr. Barnwell’s hourly rate is unreasonable but does object to the overall costs, which it finds excessive. It submits, in particular, that the bulk of Mr. Barnwell’s time was spent crafting and advancing arguments that did not succeed on the motion and that relatively little time was spent on the matter of loss of bargain, on which they did succeed.
[18] The goal, as set out 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 plaintiff would expect to pay substantial indemnity costs of $95,294.15 or even partial indemnity costs of $82,761.98 for the defendants’ partial success on a summary judgment motion. I find that the time spent by the defendants’ counsel to be disproportionate to the result, notwithstanding his efforts to advance novel arguments.
[19] While the facts at issue were most unusual and there was no jurisprudence directly on point, the case, at the centre of which was a breach of an agreement of purchase and sale, was not particularly complex. I appreciate that Mr. Barnwell perceived the issues differently and, as a consequence, spent a considerable amount of time and effort building a case to demonstrate bad faith on behalf of the plaintiff and others. However, ultimately, those arguments did not succeed.
[20] Accordingly, I find that defendants are not entitled to costs based on the 164.5 hours spent by Mr. Barnwell. I find that number of hours to be well in excess of what was required in this case.
[21] On April 6, 2017, on the eve of the closing of the transaction, the defendants did offer to return the deposit to the plaintiff in exchange for mutual releases, but this offer was made prior to the litigation and therefore not in accordance with rule 49.10 of the Rules of Civil Procedure. Another attempt at settlement occurred on August 7, 2017 when the defendants sought a withdrawal of the plaintiff’s claim at no cost. This offer does not assist the defendants because the plaintiff was successful in part of its claim, being the return of its deposit.
[22] 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 $20,000 plus HST, and disbursements in the sum of $3,250 plus HST, are both fair and reasonable. I fix the costs of the defendants in those amounts to be paid by the plaintiff forthwith.
Dietrich J. Date: December 17, 2018