Court File and Parties

BRACEBRIDGE COURT FILE NO.: CV-15-43-00 DATE: 20190404 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

ADEN BOWMAN personally and as executor for the estate of SHIRLEY BOWMAN Plaintiffs – and – ALMA EMOND, SHELLEY EMOND, PAUL STUDHOLME, SUZANNE MARTINEAU and RE/MAX HALLMARK REALTY LIMITED Defendants

Counsel: David A. Morin and Peter Reintzer, for the Plaintiffs Hans Engell, for the Defendants, Suzanne Martineau and Re/Max Hallmark Realty Limited

HEARD: In Writing

REASONS FOR DECISION ON COSTS

DiTOMASO J.

THE PROCEEDINGS

[1] This action arises following the plaintiffs’ discovery that their newly purchased home suffered from severe water and mould damage due to water penetration through the building envelope. The plaintiffs were awarded the sum of $450,215.35 in damages with an apportionment of liability of 70% to the realtor defendants, Suzanne Martineau and Re/Max Hallmark Realty Limited, following an eight-day trial.

[2] The successful plaintiffs now seek costs against the unsuccessful, non-settling realtor defendants. Pierringer Agreements were reached with the home inspector, Studholme, and vendors, Emond, on September 25, 2018 and October 22, 2018, respectively. Both Perringer Agreements particularized damages and costs that each of the settling defendants have agreed to pay. The plaintiffs seek costs against the non-settling defendants, Martineau and Re/Max, having regard to the court’s allocation of liability.

[3] The parties have delivered written submissions regarding costs.

GENERAL PRINCIPLES

[4] The court’s determination of costs is governed by s. 131 of the Courts of Justice Act and by r. 57.01 of the Rules of Civil Procedure. Section 131 provides for the general discretion to fix costs. Rule 57.01 provides guidance as to the exercise of that discretion by enumerating certain factors that the court may consider when assessing costs.

[5] In 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, at para. 10, Perrel J. summarized the purposes of costs orders as follows,

Modern costs rules are designed to advance five purposes in the administration of justice: (1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements (internal citations omitted).

[6] The court’s role in assessing costs is not necessarily to reimburse a litigant for every dollar spent on legal fees. The Court of Appeal in Boucher et al v. Public Accountants Council for the Province of Ontario, 2004 ONCA 14579, 71 O.R. (3d) 291, [2004] O.J. No. 2634 (Ont. CA), stated that the award of costs must be fixed in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceedings rather than an exact measure of actual costs to the successful litigant.

[7] In reviewing a claim for costs, the court does not undertake a line by line analysis of the hours claimed, and should not second guess the amount claimed, unless it is clearly excessive or overreaching. It considers what is reasonable in the circumstances and taking into account all the relevant factors, awards costs in a global fashion J.M.B. Cattle Corp. v. 2144032 Ontario Inc. et al, 2016 ONSC 2150.

[8] In J.M.B. v. 2144032 Ontario Inc., supra, at para. 11, Price J. states:

Ultimately, in determining the amount of costs to be awarded, the court applies fairness and reasonableness as overriding principles. It does not engage in a mechanical exercise but, rather, takes a contextual approach, applying the principles and factors discussed above, and setting a figure that is fair and reasonable in all the circumstances. Rule 1.04(1.1) requires the court to consider proportionality; that is, the amount of costs ordered should be proportional to the amount of money and other interests at stake in the proceeding.

[9] Further, at para. 12, Price J. states the following:

The general rule is that costs follow the event and will be awarded on a partial indemnity scale [Bell Canada v. Olympia & York Developments Limited et al (1994), 1994 ONCA 239, 17 O.R. (3d) 135 (C.A.)]. In special circumstances, costs may be withheld from the successful party or be ordered to be paid to the unsuccessful party, and the scale of costs may be higher, but those cases are exceptional and generally involve circumstances where one party to the litigation has behaved in an abusive manner, brought proceedings wholly devoid of merit, and/or has unnecessarily run up the costs of litigation [Standard Life Assurance Company v. Elliott (2007), 2007 ONSC 18579, 86 O.R. (3d) 221 (S.C.J.)].

[10] In this case, the general rule applies. The plaintiffs are the successful parties and costs follow the event.

[11] One of the issues here is whether the plaintiffs are entitled to costs on a partial indemnity scale or a higher scale of costs.

ENTITLEMENT

[12] The plaintiffs submit that they are entitled to costs as follows:

(a) 70% of fees from the date of the Statement of claim until communication of the first offer to settle, being March 17, 2015 to December 16, 2015, at partial indemnity rates.*

(b) 70% of fees from communication of the first offer to settle to execution of the Perringer Agreement between the plaintiff and Alma and Shelley Emond, being December 17, 2015 to October 22, 2018, at substantial indemnity rates.*

• As the plaintiff has received contributions to costs from the settling defendants for his legal fees incurred up until the dates that they settled their disputes with the Plaintiff, receiving the full 70% of the fees as claimed above from March 12, 2015 to October 22, 2018 would over-indemnify the plaintiff for legal fees incurred during that period. The plaintiff therefore limits his claim for costs for this period in accordance with the calculations on Schedule A attached to these submissions.

(c) 100% of fees from execution of the Pierringer Agreement between the plaintiff and Alma and Shelley Emond to the submission of written materials following the end of trial, being October 23, 2018 to January 15, 2019, at substantial indemnity rates.

[13] The plaintiffs submit a Bill of Costs wherein they seek a total contribution to fees of $182,059.65 plus HST and disbursements, for a total of $232,120.70. It is noted that these fees apply exclusively to the non-settling defendants; fees applicable to the settling defendants have already been deducted to arrive at this amount.

[14] The plaintiffs served three r. 49 Offers to Settle on all defendants during the course of the litigation, all of which were beaten at trial. The Offers are dated December 16, 2015, June 27, 2018 and August 24, 2018. The defendant realtors, Martineau and Re/Max, served one offer on November 5, 2018 for $50,000 plus costs. I have reviewed all of the cost offers contained at Tab 3 of the Plaintiffs’ Costs Brief.

[15] The non-settling defendants, Martineau and Re/Max, submit that plaintiffs’ counsel failed to mention in his submissions that he withdrew all settlement offers prior to trial. His assertion that the plaintiffs had beaten an offer made in compliance with r. 49 was incorrect.

[16] In the Plaintiffs’ Reply Costs Submissions received, it is acknowledged that the defendants are correct; that the plaintiffs revoked their August 24, 2018 offer by letter of October 2, 2018 and did not replace it with a subsequent r. 49 offer. Such fact was inadvertently excluded from the plaintiffs’ costs submissions.

[17] The plaintiffs submit that there was further correspondence, namely a letter dated October 4, 2018, regarding settlement. While this letter did not constitute a formal r. 49 offer, it is submitted that it represented yet another effort by the plaintiffs to resolve matters on a compromised basis to avoid trial.

[18] Nevertheless, realtor defendants produced a letter from plaintiffs’ counsel, dated October 26, 2018, confirming that the plaintiffs revoked their offer, dated August 24, 2018.

[19] I find that the plaintiffs did not deliver a formal r. 49 offer on which they could rely. I find there is no basis on which to award costs on a substantial indemnity basis. Having revoked their only extant offer, the plaintiffs proceeded to trial without making any offer capable of acceptance. I find r. 49.10(1)(b) stipulates that for costs consequences set out in r. 49.10(1)(c) to apply, the offer cannot be withdrawn or expire before the commencement of the hearing.

[20] I find that the plaintiffs are entitled to costs on a partial indemnity scale. The plaintiffs are entitled to 70% of these costs in accordance with the liability allocation set out in my Reasons for Judgment.

QUANTUM

[21] Disbursements in the amount of $26,493.30 are not in dispute. The plaintiffs are entitled to disbursements in this amount.

[22] The realtor defendants rely on the principle of proportionality that must be considered by any judge in fixing costs. It is submitted that even on a partial indemnity scale, the claim for costs by the plaintiffs is not proportional to the damages awarded.

[23] For comparison purposes, the realtor defendants submit their legal fees and disbursements inclusive of HST for the entire action totaled $147,655 as of March 17, 2019. This figure also includes non-recoverable costs.

[24] I have considered the principle of proportionality. I do not accept the submissions made by the realtor defendants in this regard. There is no evidence submitted by these defendants “for comparison purposes” to support that the costs claimed by the plaintiffs are not proportional. Without evidence, this submission is anecdotal only and has no merit.

[25] In contrast, I have reviewed the plaintiffs’ submissions in respect of quantum. Those submissions are fulsome and complete. Said submissions set out the hourly rates applied, and the services provided in considerable detail.

[26] I am not prepared to second-guess either the rates billed or the services provided. I accept both as reasonable and fair. There has been no attempt on the part of the realtor defendants to challenge any specific hourly rates or services provided as being excessive, other than to say that the fees claimed are disproportionate to the amount recovered or disproportionate in comparison to the realtor defendants’ fees. I have rejected this submission.

[27] I have also considered the r. 57 factors. I do not agree with the realtor defendants’ submissions that the case was not legally complex and consisted of conflicting witness accounts typical of most trials involving multiple parties. A reading of my Judgment would indicate the contrary.

[28] I have considered the question surrounding the plaintiffs’ Request to Admit. I find that the realtor defendants’ denial of the plaintiffs’ Request to Admit had not lengthened the trial. Most of the facts were not contested as they were contained in documents, whose authenticity was admitted to be authentic. Some of the facts could not be admitted because they related to the central issue in contention at trial.

[29] In any event, the trial was not lengthened by any failure on the part of these defendants in the delivery of their Response to Request to Admit.

[30] Having considered all of these factors and the circumstances surrounding the issues in this case, I accept the plaintiffs’ submissions in respect of hourly rates and services provided to the plaintiffs.

[31] In respect of the quantum of fees claimed by the plaintiffs, I find that the plaintiffs are entitled to fees on a partial indemnity scale at the rate of 66.66% from the beginning to present. I am assisted by the plaintiffs’ claim for full indemnity fees to October 22, 2018, as set out in Schedule A to their Costs Brief. Those full indemnity fees claimed are in the amount of $111,425.

[32] Further, the plaintiffs claim full indemnity fees from October 23, 2018 to present in the amount of $112,718. The aggregate of the fees claimed from March 17, 2015 to present is the sum of $224,143.

[33] Fees on a partial indemnity scale are calculated as follows:

66.66% x $224,143: $149,413.72 Martineau and Re/Max liability at trial at 70%: $104,589.60 (70% x $149,413.72 = $104,589.60) 13% HST on $104,589.60: 13,596.65 Total for Fees, including HST: $118,186.25 Disbursements: 26,493.30 Total: $144,679.55

[34] I consider the amount of $144,679.55 to be fair, reasonable and proportionate, having considered the written submissions by counsel and the circumstances of this case Davies v. Clarington (Municipality), 2009 ONCA 722 at para. 51.

CREDIT

[35] As a result of the Pierringer Agreements, the plaintiffs received the following amounts:

Received from Studholme: $33,750.00 Received from Emond: $46,141.19

[36] The realtor defendants are entitled to a credit which takes in to account these payments and an amount calculated to avoid over-indemnification regarding costs.

[37] Further written submissions are required from counsel specifying the amount of the credit to be applied together with supporting calculations, based on these Reasons. These further submissions shall be delivered by counsel within the next 10 days to my judicial assistant at Barrie. Hopefully, counsel can agree on the credit amount.

[38] Once the credit amount is received, I shall issue Supplemental Reasons on Costs which will apply the credit amount and order the net amount to be paid by the realtor defendants to the plaintiffs.

Mr. Justice G.P. DiTomaso Released: April 4, 2019