2019 ONSC 1475
COURT FILE NO.: 236/14 DATE: 2019 03 06
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: NORTHRIDGE HOMES LTD., Plaintiff (Defendant by Counterclaim)
AND:
THE TRAVELLERS MOTEL (OWEN SOUND) LIMITED, CHANDRA GREWAL, PIRITHI GREWAL, THE TORONTO-DOMINION BANK and FIRST SOURCE MORTGAGE CORPORATION, Defendants (Motel and Grewals, Plaintiffs by Counterclaim)
BEFORE: Conlan J. (Heard in Writing)
COUNSEL: Eric O. Gionet, Counsel for the Plaintiff Mary Anne Cummings, Counsel for the Defendants (Plaintiffs by Counterclaim), Motel and Grewals Heather Michel, Counsel for Non-Parties, A. Wilford Professional Corporation, Allen Wilford, and Ram Shankar
ENDORSEMENT ON COSTS
I. Introduction
[1] More than three years ago, on November 18, 2015, in Owen Sound, I made this handwritten Endorsement: “[o]n consent, the Order of Van Melle J. dated August 28, 2015 is vacated. It is of no force or effect. On consent, costs for today…are adjourned sine die ”.
[2] The parties have now filed written materials on costs. There is also a Motion before this Court, in writing, to be decided.
[3] What led to the Endorsement that I made on November 18, 2015?
[4] A new building was being constructed to be a part of the premises of the Defendant, The Travellers Motel (Owen Sound) Limited (“Motel”). The Defendants, Chandra Grewal and Pirithi Grewal (“Grewals”), owned and operated the Motel. The Plaintiff, Northridge Homes Ltd. (“Northridge”) was the contractor.
[5] A dispute arose, and Northridge sued the Defendants under what was then the Construction Lien Act, R.S.O. 1990, c. C.30, as amended (“CLA”). Other subcontractors also sued the Defendants. Numerous Liens were filed.
[6] On August 28, 2015, on a “basket motion” made in writing, without notice, brought by the Defendants, Justice Van Melle made an Order vacating the Liens of all claimants, including Northridge, on account of the Defendants posting a Financial Guarantee Bond in the sum of $489,000.00.
[7] There was, of course, authority to make that Order under subsection 44(1) of the CLA.
[8] Unbeknownst to Van Melle J., however, the Financial Guarantee Bond was a sham. It was provided by an unlicensed insurer and was therefore invalid.
[9] Luckily, no thanks to the Defendants or their then counsel, the lawyer for Northridge discovered the issue before the Plaintiff could be severely prejudiced and demanded that corrective action be taken.
[10] It turns out that potential economic disaster was avoided, just by chance, because the Land Registry Office refused to act on the August 28, 2015 Order due to its drafting errors.
[11] Northridge brought a Motion returnable October 15, 2015 to address the matter. That Motion was adjourned twice and eventually dealt with on consent by the November 18th Endorsement referred to above.
II. The Positions of the Parties on Costs
[12] Northridge seeks its costs on a full indemnity basis in the amount of $11,346.75. Alternatively, it asks for its costs on a substantial indemnity ($10,259.80) or partial indemnity ($8,629.38) scale.
[13] Very responsibly, the Defendants do not challenge Northridge’s entitlement to costs but argue that the quantum sought is excessive.
[14] The Defendants also seek an Order, hence the separate Motion referred to above, that their counsel at the time be held responsible for any costs awarded against the Defendants and in favour of Northridge.
[15] The Defendants’ then counsel are now represented by their own lawyers retained by the Lawyers’ Professional Indemnity Company.
[16] I shall refer to the Defendants’ then counsel, collectively, as Wilford Professional Corporation.
[17] To my surprise, counsel for Wilford Professional Corporation argues that no costs ought to be awarded to Northridge and, if some costs are granted against the Defendants, no Order be made that Wilford Professional Corporation be held responsible to pay them.
[18] More specifically, Wilford Professional Corporation submits that Northridge is not entitled to any costs because (i) the matter of correcting the August 28, 2015 Order was not complex, and (ii) the correction was ultimately achieved on consent, and (iii) the November 18, 2015 Court attendance was unnecessary, and (iv) there has been too much delay in seeking costs on the part of Northridge, and (v) Northridge has not tried to settle the issue of costs.
[19] On the Motion brought by the Motel and the Grewals, that is the Defendants’ request for an Order under Rule 57.07(1)(b) of the Rules of Civil Procedure (that Wilford Professional Corporation be ordered to pay any costs awarded against the Defendants and in favour of Northridge), Wilford Professional Corporation submits that the said issue should be left to be decided in the context of the separate Court action in negligence brought by the Defendants against their former counsel.
III. Decision
[20] This is not complicated.
[21] In November 2015, Northridge was successful in obtaining a Court Order that effectively wiped out that made by Justice Van Melle earlier in August.
[22] The successful party, Northridge, is presumed to be entitled to some costs. There is nothing to displace that presumption on these facts.
[23] The alleged lack of complexity of the matter, the fact that the November 2015 Order was consented to, the alleged undue delay in Northridge seeking costs, and the alleged lack of settlement efforts made by Northridge all go to quantum and not to entitlement.
[24] The one remaining submission made by Wilford Professional Corporation, that is that the November 2015 Court attendance was unnecessary, I reject. Regardless of any position taken by the Land Registry Office, and regardless of any other developments that occurred after the August 2015 Order was made, there still existed a Court Order that had to be vacated. Failing the Defendants or their then counsel taking it upon themselves to correct the matter by way of a consent order made in writing, Northridge cannot be faulted for proceeding the way in which it did. Hundreds of thousands of dollars were at stake.
[25] In terms of the basic legal principles related to costs, they are well known. The objective is to make an award that is just, fair and reasonable. All of the circumstances of the case ought to be considered, as well as the factors outlined in Rule 57, particularly 57.01(1), of the Rules of Civil Procedure. The reasonable expectations of the losing side should be taken into account. Proportionality is key, both in relation to the result achieved and the time and effort expended.
[26] But for Ms. Cummings’ submission on behalf of the Defendants that some discount should be made to the Plaintiff’s Costs Outline on account of fees claimed for travel time, and Ms. Cummings’ submission that the time spent by Northridge’s counsel on research seems a little high, both submissions of which I accept, I see no reason why Northridge should not be fully compensated for its costs.
[27] To be blunt, whether through inadvertence, carelessness, lack of due diligence, negligence, gross negligence, or outright fraud (that is the spectrum of fault here), Justice Van Melle was misled into granting an improper and highly prejudicial Order, through absolutely no involvement of Northridge. So why should Northridge be out of pocket any money as a result of its successful efforts to remedy the situation? It should not be.
[28] I do agree with counsel for Wilford Professional Corporation that Northridge could (should) have pursued these costs with greater vigour. I also agree that it should have made a more genuine effort to settle the quantum of costs, although it appears that nothing but paltry sums were being offered by Wilford Professional Corporation.
[29] On account of those points, and having regard to the submissions made by Ms. Cummings referred to above, I have decided to reduce the costs to be awarded to Northridge to an even $9,000.00, all-inclusive. The Defendants shall pay that amount to Northridge within thirty (30) days.
[30] On who should be ordered to pay those costs, I again agree with Ms. Cummings. Clearly, Rule 57.07(1)(b) is applicable here.
[31] On the evidence filed, which includes an affidavit sworn by Chandra Grewal but nothing directly from Wilford Professional Corporation, it is clear that the Defendants’ former counsel caused the costs related to both the August and the November 2015 Orders to be incurred without reasonable cause.
[32] The opening words of Rule 57.07(1) are important. There is no requirement for there to be finding of bad faith or fraud. In fact, there is not even a requirement for negligence to be found. Did Wilford Professional Corporation, through some default, cause, unreasonably, these costs to be incurred? The answer to that question is a resounding “yes”.
[33] “Default” means the failure to fulfill an obligation. In August 2015, on a basket motion brought ex parte, seeking very significant relief, Wilford Professional Corporation had an obligation to ensure that, at a bare minimum, the issuer of the Bond was authorized to issue it. That obligation was not met. How a contrarian view could be taken escapes this Court.
[34] The case law establishes that nothing more onerous than that is required, provided that this Court is satisfied that the solicitors’ personal liability to pay/reimburse costs, something not commonly held but reserved for exceptional circumstances as a tool to be used sparingly and with caution, is warranted.
[35] I so find. There is no need to await any further evidence or any decision in the separate negligence action.
[36] Thus, it is ordered that Wilford Professional Corporation reimburse to the Defendants, the Motel and the Grewals, forthwith, the costs ($9,000.00) that the Defendants have been ordered to pay to Northridge.
[37] If counsel wish to speak to me about costs of the Defendants’ Motion decided herein, they may do so.