Court File and Parties

2019 ONSC 1351 COURT FILE NO.: 18-75956 DATE: 2019/02/27 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Custom Home Interiors By Obvious Advantage Inc., Plaintiff AND Steve Corriveau, personally and c.o.b. as TEKPro AV, Defendant

BEFORE: Justice R. Ryan Bell

COUNSEL: K.W. McKenzie, for the Plaintiff Jean-Francois Lalonde, for the Defendant

HEARD: In writing

Costs Endorsement

Introduction

[1] Mr. Corriveau moved for summary judgment dismissing the claim against him and for summary judgment on his counterclaim. He was successful. Mr. Corriveau also obtained an order correcting the names of the plaintiffs to Custom Home Interiors Inc. and Obvious Advantage Inc.

[2] The parties have been unable to agree on costs of the motion and the action. Costs submissions were provided by both parties in accordance with the timetable set out in my January 24, 2019 endorsement. In the opening paragraph of the plaintiffs’ submissions, counsel wrote that “[t]he Defendant has served a five page Bill of Costs…with no attachments.” In light of this statement, I requested confirmation from both counsel that plaintiffs’ counsel had received the entirety of the defendant’s submissions, including the bill of costs, time dockets and disbursements. Defendant’s counsel provided confirmation and filed brief reply submissions on this issue and other issues raised in the plaintiffs’ costs submissions.

[3] Plaintiffs’ counsel is correct that my endorsement did not contemplate reply submissions. However, it was appropriate for defendant’s counsel to file reply submissions to address the narrow issue upon which I requested clarification. I have considered the reply submissions only to that extent. Plaintiffs’ counsel provided me with sur-reply submissions. Those submissions are silent on the issue I raised with counsel.

[4] Mr. Corriveau seeks his costs of the motion and of the action. Both the scale of costs and the quantum of costs are in issue. Mr. Corriveau’s position is that he is entitled to costs on a partial indemnity basis up to May 5, 2017 and costs on a substantial indemnity basis thereafter; he seeks total costs of $111,140.18, inclusive of HST and disbursements.

[5] The plaintiffs acknowledge that Mr. Corriveau was successful on his motion and that he is entitled to partial indemnity costs related to the motion. However, they submit that “the Court should not reward what was an uneconomical and unreasonable set of decisions that enriched Tekpro’s lawyers when the claim was not very large and should have been resolved inexpensively.”

[6] I reject the plaintiffs’ submission that they are entitled to their costs thrown away prior to Mr. Corriveau’s amendment to his pleading to add a counterclaim. As the successful party on the motion and in the action, it is Mr. Corriveau who is entitled to his costs, not the plaintiffs. In any event, the plaintiffs have provided no bill of costs to support the amount claimed.

[7] For the following reasons, I have determined that Mr. Corriveau is entitled to his costs against Custom Home Interiors Inc. and Obvious Advantage Inc., on a partial indemnity basis, in the amount of $70,000, inclusive of HST and disbursements.

Scale of Costs

[8] In his May 5, 2017 offer, Mr. Corriveau offered to settle the proceedings on the basis that the plaintiffs consent to the dismissal of their action without costs if the offer was accepted on or before May 10, 2017. If accepted after May 10, 2017, the plaintiffs would pay to Mr. Corriveau his substantial indemnity costs.

[9] Rule 49.10(2) of the Rules of Civil Procedure sets out the applicable rules where a defendant makes an offer to settle and the result obtained by the plaintiff following the hearing is as favourable as or less favourable than the terms set out in the offer. It provides:

(2) Where an offer to settle,

(a) is made by a defendant at least seven days before the commencement of the hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing; and

(c) is not accepted by the plaintiff,

and the plaintiff obtains a judgment as favourable as or less favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer was served and the defendant is entitled to partial indemnity costs from that date, unless the court orders otherwise.

[10] The words in the rule “and the plaintiff obtains a judgment as favourable as” make it clear that the provisions of Rule 49.10(2) have no application where the plaintiff fails to recover any judgment (S & A Strasser Ltd. v. Richmond Hill (Town) (1990) , 1 O.R. (3d) 243 (Ont. C.A.)). In this case, the plaintiffs did not recover a judgment of any value; Mr. Corriveau succeeded on his counterclaim.

[11] Where the defendant has made an offer to settle and the plaintiff fails to recover any judgment, the court may find it appropriate in exercising its discretion pursuant to Rule 57.01(1) of the Rules of Civil Procedure to award costs on a substantial indemnity basis from the date of the defendant’s offer to settle (S & A Strasser Ltd.; Dunstan v. Flying J. Travel Plaza , [2007] O.J. No. 4089 (S.C.J.), at para. 13 ).

[12] In my view, it would not be appropriate to award costs to Mr. Corriveau on a substantial indemnity basis from May 5, 2017. The time to consider the “walk away” offer was very limited – only five days. Acceptance after May 10, 2017 would have resulted in substantial indemnity costs. I also note that Mr. Corriveau’s offer to settle was made prior to the amendment of the pleadings to include the counterclaim.

Quantum of Costs

[13] The fees claimed by Mr. Corriveau on a partial indemnity basis are $67,872.68, prior to HST. The plaintiffs submit that there were less expensive and more reasonable ways to resolve the dispute.

[14] Contrary to the plaintiffs’ assertion, the responsibility for the failure to keep these proceedings “simple and inexpensive” does not rest entirely, or even principally, with Mr. Corriveau. The history of the proceedings discloses the following:

• The plaintiffs’ action was commenced in Barrie after Mr. Corriveau had commenced his action in the Small Claims Court in Ottawa for non-payment of the balance of his invoice.
• Mr. Corriveau sought the plaintiffs’ consent to transfer the action to Ottawa and advised that failing agreement, he would proceed with a motion in Ottawa.
• The plaintiffs’ July 11, 2017 motion (for relief subsequently resolved) and the defendants’ cross-motion for an order transferring the action from Barrie to Ottawa were adjourned to permit the plaintiffs to cross-examine the defendant’s affiants. McCarthy J. ordered that costs of the motion and cross-motion “shall be determined by the judge disposing of the matter on its merits.” I interpret “the matter” to be a reference to the action; that is, McCarthy J. ordered that costs would be in the cause.
• The plaintiffs then moved to strike out the defendants’ affidavits and to remove defendant’s counsel as solicitors of record. On August 29, 2017, the plaintiffs’ motion was adjourned on consent to October 31, 2017, with costs reserved to the judge hearing the motion. The plaintiffs did not proceed with the motion to strike out the affidavits.
• Mr. Corriveau’s motion to transfer the action from Barrie to Ottawa was heard by Kane J. on September 7, 2017. The plaintiffs’ request to adjourn the motion was denied. Kane J. granted the motion to transfer the action to Ottawa and ordered that the plaintiffs pay Mr. Corriveau his costs of the motion, fixed in the amount of $7,500, within 30 days of the motion.
• Mr. Corriveau was required to make a special appointment to settle the order of Kane J.
• Mr. Corriveau was required to serve a notice of examination in aid of execution in connection with the costs ordered by Kane J.
• The plaintiffs moved for leave to appeal the order of Kane J. The motion for leave to appeal was subsequently abandoned.
• At the case conference on May 30, 2018, Gomery J. ordered that Mr. Corriveau’s summary judgment motion would be heard on January 14, 2019. Gomery J.’s order was without prejudice to the plaintiffs’ right to schedule a hearing date for any pending motion to remove defendant’s counsel.
• At the outset of the summary judgment motion, I declined to hear the plaintiffs’ motion to remove defendant’s counsel on the basis that the motion was not properly before me. No notice of return of motion was served and the motion to remove counsel was not confirmed.

[15] The bill of costs submitted on behalf of Mr. Corriveau reflects partial indemnity fees of $1,462.29 incurred in connection with the complaint made by plaintiffs’ counsel to the Law Society of Ontario. These fees are not, in my view, properly claimed as costs of this action and I have reduced the partial indemnity fees accordingly.

[16] The substance of the plaintiffs’ disagreement with the fees claimed on behalf of Mr. Corriveau is that they are disproportionate to the amount claimed and the amount recovered in the proceeding. I make three observations. First, the amount of damages recovered is only one factor in awarding costs.

[17] Second, the plaintiffs’ claim against Mr. Corriveau was for $125,000. Mr. Corriveau was required to respond to the claim and entitled to counterclaim for the outstanding balance on his invoice. In May 2018, plaintiffs’ counsel proposed that because his clients’ anticipated damages were now within the jurisdiction of the Small Claims Court, the parties should arrange for the stay of those proceedings to be lifted and abandon the action in the Superior Court of Justice. It would not be surprising if this proposal was met with a certain degree of skepticism given that the Small Claims Court is where Mr. Corriveau first initiated his claim. The fact is that the plaintiffs’ claim was never amended to reflect a reduction in the amount of damages.

[18] Third, plaintiffs’ counsel submits that Mr. Corriveau did not provide copies of the software he used and refused “repeated attempts to mediate or to attend with the Plaintiff at the location to try to resolve ongoing issues.” This is a repetition of the plaintiffs’ submission on the motion for summary judgment, an argument I described as disingenuous given that Mr. Corriveau had been told he would never be paid, labelled “the epitome of a bad customer service provider,” characterized as one who might elect to sabotage the system, and threatened with trespass. Mr. Corriveau was under no obligation to provide copies of software to the plaintiffs.

[19] In fixing costs, the overall objective 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 (Boucher v. Public Accountants Council (Ontario) (2004) , 71 O.R. (3d) 291 (C.A.)).

[20] There is no requirement for the unsuccessful party to provide a bill of costs; however, it is difficult to address the reasonable expectations of the unsuccessful party without some information as to the costs she incurred in addressing these same issues. The assertion by plaintiffs’ counsel, without further particulars, that their fees have been fixed at $25,000, plus HST and disbursements, is of little assistance.

[21] By no later than September 2018, plaintiffs’ counsel was advised that Mr. Corriveau had incurred legal costs of approximately $70,000. The plaintiffs are simply incorrect to suggest that moving the matter to Small Claims Court would have saved Mr. Corriveau “about $75,000 in actual fees.” Those fees had already been incurred by Mr. Corriveau.

[22] Contrary to the assertion of plaintiffs’ counsel, counsel for Mr. Corriveau has provided a detailed, itemized breakdown of his client’s claim for costs. I am satisfied that costs are not currently being claimed for a previous step or event where costs have already been dealt with. There is no claim for costs associated with the motion before Kane J.

[23] After reviewing the time dockets, I have concluded that the total time claimed in connection with the motion for summary judgment (counsel at 104.6 hours and law clerk at 187 hours) is excessive for a motion of this nature and involves some overlap in the work done. I am also not prepared to allow any of the law clerk’s time for attending in court. I conclude that the time spent in relation to other events and steps in the proceeding was reasonable.

[24] Disbursements are claimed at $9,075.54, including HST. A detailed list of disbursements has been provided, including the invoice associated with the cross-examinations in September 2018, the invoice of the court reporter on the attendance before Kane J., and the invoice of the agent retained to attend in Barrie on August 29, 2019. I disagree with the plaintiffs’ bald assertion that Mr. Corriveau’s disbursements should be no more than one-half the amount claimed. The disbursements will be allowed in the amount claimed.

[25] Taking into account all of the above, the principles in Boucher and the factors listed in Rule 57.01 of the Rules of Civil Procedure , I fix Mr. Corriveau’s costs of the motion and the action in the total amount of $70,000, inclusive of HST and disbursements.

Justice Robyn M. Ryan Bell Date: February 27, 2019