Court File and Parties

COURT FILE NO.: CV-13-5678 DATE: 2019 02 25 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CORRECT BUILDING CORPORATION and CORRECT GROUP INC., Plaintiffs - and - LEHMAN, INDICOM APPRAISAL ASSOCIATES LTD., and ROBERT STEWART, Defendants

BEFORE: EMERY J.

COUNSEL: William Gilmour, for the Plaintiffs, CORRECT BUILDING CORPORATION and CORRECT GROUP INC. Roger Horst, for the moving Defendants INDICOM APPRAISAL ASSOCIATES LTD., and ROBERT STEWART

HEARD: January 24, 2019 in Kitchener

Endorsement on costs

[1] The plaintiffs brought an action against the defendants Robert Stewart (“Stewart”), an appraiser, and his company Indicom Appraisals Associates Ltd. (“Indicom”) among others with respect to a failed transaction to purchase lands in Barrie, Ontario. In the action, the plaintiffs claimed damages for the loss of opportunity to redevelop lands known as the Allandale Railway lands along Kempenfelt Bay.

[2] Stewart and Indicom defended the action. They ultimately brought a motion for summary judgment to dismiss all claims as against them. Those claims were based on the following causes of action:

a) Conspiracy; b) Negligent or fraudulent misrepresentation; c) Breach of confidence; d) Interference with economic relations; e) Breach of a confidentiality agreement; f) Inducement and breach of contract; g) Negligence.

[3] I heard the motion for summary judgment over two days, on November 7, 2016 and January 4, 2017. In Reasons for Decision released under Correct Building Corp. v. Lehman, 2017 ONSC 150, I dismissed the plaintiffs claim as against Stewart and Indicom for conspiracy and for negligent or fraudulent misrepresentation. However, I ordered a mini trial on defined terms to determine whether there was a genuine issue requiring a trial for the plaintiffs’ remaining claims, noteably those alleging interference with economic relations and negligence. A mini trial was also ordered to hear evidence I considered necessary to determine whether the time for bringing an action on those causes of action had expired.

[4] Correct Building Corporation appealed the order dismissing the action as against Stewart and Indicom for conspiracy and negligent or fraudulent misrepresentation, as well as the order for a mini trial. Stewart and Indicom cross-appealed with respect to the order requiring a mini trial to dismiss the balance of the claims made against them.

[5] For reasons released by the Court of Appeal at Correct Building Corp. v. Lehman, 2018 ONCA 462, the plaintiffs’ appeal with respect to the dismissal order of the claims for conspiracy and fraudulent/negligence misrepresentation was dismissed. In a simple twist of fate, the Court of Appeal agreed that the order for a mini trial should be set aside, “but not for the reasons advanced by the appellant.” The court found a mini-trial was not necessary to dismiss the remaining claims based on the various causes of action for which the mini trial had been ordered, and dismissed those claims as well.

[6] In granting the appeal to set aside the mini-trial in this respect, the appeal court in effect allowed the cross-appeal.

[7] The plaintiffs’ action as against Stewart and Indicom has therefore been dismissed in its entirety. The Court of Appeal has now referred the costs below back to me for determination.

Overarching principles

[8] The principles set out in Boucher v. Public Accountants Council of Ontario, [2004] O.J. No. 2634 requires the court to assess costs in an amount that would be fair and reasonable to the parties, and in particular, those costs must be fair and reasonable to the party who is to pay those costs.

[9] It is the custom of the courts that costs should follow the event. This means that the successful party is in most cases entitled to costs for the step or the proceeding in which success has been achieved. This custom was recognized in Bell Canada v. Olympia & York Developments Ltd., [1994] O.J. No.343 (Ont. C.A.), where it was held that it is reasonable for the successfully party in an action to have an expectation to be awarded costs, absent special circumstances. I did not get the impression from the written materials or from submissions made by counsel for Correct Building Corporation that Stewart and Indicom’s entitlement to costs is seriously contested.

[10] There is no doubt in my mind that Stewart and Indicom are entitled to the costs of the action as they were wholly successful in the ultimate result. The more troublesome question is how I am to approach the determination of costs for Stewart and Indicom’s motion for summary judgment, having regard to the mixed result at the motion level, and the ultimate disposition on appeal.

[11] This question has been answered recently by the Court of Appeal on its costs decision in Fehr v. Sunlife Assurance Company of Canada, 2018 ONCA 874. The underlying motions in that case concerned the certification of a class action brought by the plaintiffs, and a motion for summary judgment brought by the defendants, on which the defendants had achieved success. The plaintiffs appealed, and were partially successful on obtaining certification as a class action with respect to some, but not all of their claims.

[12] Although not on all fours with the facts and circumstances before this court, the Court of Appeal dealt with the costs of the motion below as follows:

[8] In our view, there is no basis on which to deprive the plaintiffs of costs in either respect. Their success in having the action certified on some common issues and in reversing summary judgment should be reflected in an appropriate award of costs. In our view, $600,000 inclusive of disbursements and all applicable taxes would be a fair and reasonable award, in respect of the costs in the court below.

[13] Taking this direction from the court in Fehr and under the circumstances of this case, I am of the view that costs are to be awarded on the motion and with respect to the action as though the moving defendants had been successful by obtaining summary judgment dismissing the action as against them in the first instance.

[14] With these principles in mind, I now address the determination of costs on the motion, and the costs of the action itself.

Costs of the Motion

[15] The motion record was served in May 2015, with the hearing of the motion for summary judgment initially scheduled in November 2015. The motion was adjourned from November 2015 to April 2016 for the plaintiff to file more evidence.

[16] On April 2016, the plaintiff obtained a further adjournment of the motion to September 2016. The motion was later adjourned from September 2016 until November 2016 as a result of court scheduling.

[17] Mr. Gilmour made the observation that this action, which I take to include the motion for summary judgment, has had a tortured history. He makes the submission that the plaintiff achieved some success on the motion for summary judgment to argue that success was divided between the parties. Mr. Gilmour submits that costs should be a reasonable reflection of the result found by this court.

[18] Mr. Gilmour properly acknowledges that Stewart and Indicom were the more successful parties on the motion, and that they are entitled to costs. However, to argue that success was divided on the motion is to ignore the ultimate disposition of the plaintiffs’ claims at the appeal level.

[19] This court has the discretion to award costs in any step of an action, including this motion for summary judgment, under section 131(1) of the Courts of Justice Act. The court must exercise that discretion subject to the Rules of Civil Procedure, and overarching principles that have been developed by the courts over time. Rule 57.01(1) sets out a number of factors that I must consider when determining costs. I have therefore considered the following factors, along with the principles set out in Boucher:

1. The principle of indemnity:

   [20] Stewart and Indicom have filed a costs outline in which they claim costs on a partial indemnity basis in the amount of $65,426.92. Those costs are composed of $56,385 for fees, plus HST of $7,330.05 and disbursements totalling $1,711.87. The fee portion of those costs is made up primarily of the fees Mr. Horst claims at $350 an hour against his stated hourly rate of $410 an hour up to the preparation for and conduct of the cross-examination of the respondents, and $415 an hour thereafter.

   [21] Mr. Gilmour takes issue with the amount claimed for fees, arguing that Mr. Horst could have and should have engaged counsel at a lesser and more cost effective rate for much of this work. However, Mr. Gilmour did not voice this objection strenuously. I do not consider this to be a basis to oppose a claim for costs in any event as senior counsel can often accomplish the same job in less time than it would take a lawyer of lesser experience. The time shown for which costs are claimed to indemnify the successful defendants is reasonable for each of the steps indicated in their costs outline for the motion.

   [22] I recognize that the actual rates at which Mr. Horst has indicated he is billing his time are more than reasonable in the prevailing market for the services of senior counsel in Toronto. However, the partial indemnity rate of $350 an hour claimed is excessive when one considers that partial indemnity rates are generally calculated at between 60 to 65% of the actual rate charged. Using that calculus, the range for Mr. Horst to seek partial indemnity for his fees on behalf of the moving defendants would be $245 to $270 an hour. Given his experience and years at the bar, I set the hourly rate for Mr. Horst on this basis at $265 an hour.

2. The amount of costs the unsuccessful parties could reasonably expect to pay:

   [23] Mr. Gilmour refers to the written submissions on costs prepared by Mr. Krupnyk, in-house counsel for the plaintiffs, in which he states that counsel for the plaintiffs have billed some $19,112.98 for the motion. This is a bald assertion with no bill of costs or costs outline provided to show the details of how or in what manner that amount was billed to the plaintiffs. In the absence of a bill of costs or costs outline from the plaintiffs as a comparator, I am not inclined to consider that amount as a representation of what amount the plaintiffs could reasonably expect to pay in costs as the unsuccessful parties on the motion.

3. The amount claimed:

   [24] The plaintiffs claimed a staggering $40 million dollars for damages against Stewart and Indicom, among the other defendants named in the action. The costs claimed for successfully defending themselves are not out of proportion to the plaintiffs’ claims against Stewart and Indicom.

4. The complexity of the proceeding:

   [25] There were several causes of action pleaded against Steward and Indicom. There were eleven volumes of evidence that counsel for those defendants were required to cross-reference not only to each cause of action, but to analyze how the evidence related to various witnesses and how evidence could relate to more than one cause of action. This required careful attention to detail in gathering evidence and preparing for the motion.

   [26] Stewart and Indicom are entitled to costs for a generous amount of time to draft, gather evidence, prepare for and argue the motion made complex and time consuming by the plaintiffs own pleadings. The fact that the statement of claim was 79 pages long is indicative of the density of the allegations made against various defendants, and the complexity of the issues raised by the plaintiffs. That complexity required Stewart and Indicom to incur significant amounts of legal time to meet the case against them, including the time for preparing their defence, examination of all evidence they could access, and 41 hours to prepare for and to attend at the cross-examinations of Mr. Stewart and of Mr. Furbacher for the plaintiffs.

5. The importance of the issues:

   [27] The issues were no doubt important to each side on the motion for summary judgment. However, the plaintiffs claim challenged the professional integrity of the moving defendants because of the nature of the allegations made in the statement of claim and on the motion. The claims made by the plaintiffs also threatened Stewart’s livelihood and economic well-being because of the amount claimed for damages.

6. The conduct of any party that lengthened unnecessarily the motion:

   [28] I am satisfied from the submissions made on behalf of Stewart and Indicom that the plaintiffs conducted themselves in a manner that tended to lengthen unnecessarily the duration of this motion.

   [29] Stewart and Indicom urge me to award costs to them on a partial indemnity basis at the maximum level permitted within the scope for partial indemnity costs because of the unproven allegations of fraud and conspiracy made in the statement of claim. In my view, the partial indemnity costs on this motion are to be awarded in the same manner as any costs on a partial indemnity basis would be. That is the level of costs requested by Stewart and Indicom, without reference to any grades within that level.

   [30] I do not consider it appropriate to trim the amount of costs at in the manner requested, or to acknowledge that the time claimed is on the generous side. There were steps taken by the plaintiffs that added to the complexity of the motion and extended its duration. One such step that serves to illustrate the point was the motion the plaintiffs brought at the same time as the motion for summary judgment to introduce the report by Lansink Appraisal and Consulting as the opinion of an expert on what Mr. Stewart should have considered when preparing the appraisal. This motion required Mr. Horst to incur the further time and expense to produce a second factum.

   [31] As I do not have a costs outline or a bill of costs from the plaintiffs, I do not have any breakdown of costs from the plaintiffs to compare each step on the motion for summary judgment taken by counsel for Stewart and Indicom to weigh in terms of reasonableness.

   [32] I am therefore awarding the costs of the motion for summary judgment to Robert Stewart and Indicom Appraisal Associates Limited to indemnify them for fees in the amount of $42,400, plus HST and disbursements, for a total of $49,623, plus post judgment interest.

Costs of the action

[33] Stewart and Indicom also claim costs on a partial indemnity basis for the action totalling $33,456.28. Mr. Horst assures the court there is no duplication in the time claimed between the action and the motion for summary judgment, or time claimed in respect of the appeal.

[34] Mr. Gilmour has challenged the amount for costs claimed by Stewart and Indicom for defending the action on the same grounds he argued with respect to costs on the motion for summary judgment. In addition to those grounds, he also argues that Mr. Horst claims excessive time for settlement discussions in the course of the action. He also argues that the costs claimed are excessive having regard to the fact that the parties had only completed pleadings and that Stewart and Indicom had only served a defence and an affidavit of documents before bringing the motion for summary judgment.

[35] Mr. Krupnyk makes reference in his written submissions that the plaintiffs had only incurred costs of $12,398 in the conduct of the action before the motion for summary judgment. However, the plaintiffs have again not provided the court with a bill of costs or a costs outline as a comparator, or as a means to determine the composition of those costs. I am therefore left to determine what is reasonable, or not, by other means.

[36] For the same reasons relating to the costs for the motion, I am reducing the rate for Mr. Horst’s time on a partial indemnity basis to $265 an hour. This would be the rate to apply to the time I ultimately find fair and reasonable of the 80 hours claimed to defend the action.

[37] In Stewart and Indicom’s costs outline, Stewart and Indicom seek costs for settlement meetings and discussions for 15 hours. Mr. Gilmour made the submission that this time for settlement communications is excessive in the greater scheme of the action. While undoubtedly settlement discussions are an important part in the conduct of any action and are to be encouraged by the court, the time incurred for those discussions must be considered on a reasonable basis in the context of a claim for costs.

[38] I am reducing the claim for partial indemnity costs that Stewart and Indicom are claiming for settlement meetings and discussions to 5 hours in total for the first settlement meeting on February 4, 2015. I am also reducing the time for which costs are claimed on the lengthy discussion about settlement with the lawyer then representing the plaintiffs on August 19, 2016. There comes a point in time where counsel can reasonably conclude having regard to the nature of the case and the tenor of the negotiations that further time discussing settlement would be better spent preparing the proceeding for court.

[39] I also deduct 6 hours for Mr. Horst to prepare for and attend at case conferences. I do not consider the submissions to support the claim for indemnity for this amount of time in the greater context of the costs claimed on the action.

[40] Finally, I am reducing the time claimed by Stewart and Indicom for Mr. Horst to attend on the motions of other parties by 10 hours, including motions for summary judgment by Metrolinx and the City of Barrie not because Mr. Horst has failed to satisfy me that he incurred that time, but that the time was spent more for observing than for counsel work. I agree that Mr. Horst as responsible counsel should attend at each motion involving other parties in the action. However, in his capacity as observing counsel, I would allow him a lesser hourly rate for participating in that capacity.

[41] After subtracting those hours, the fees claimed on a partial indemnity basis by Stewart and Indicom for the action are reduced to $14,000. I also award HST of $1,826 on that amount, plus disbursements in the amount of $1,319.08.

[42] Therefore, the costs of the action, exclusive of the costs for the summary judgment motion, are awarded to Robert Stewart and Indicom Appraisal Associates Limited in the amount of $17,150, plus post-judgment interest.

[43] All costs awarded in these reasons are payable by the plaintiffs jointly and severally within 30 days.

Emery J. Released: February 25, 2019