COURT FILE NO.: 17-63285
DATE: 2019-05-03
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
2436179 Ontario. Inc.
Plaintiff
- and -
Nirmal Heeralal
Defendant
COUNSEL:
Paul Ledroit and Ondrej Sabo, for the Plaintiff
Ajay Duggal for the Defendant
HEARD: April 11, 2019
COSTS RULING
OVERVIEW
[1] The parties entered into a valid Agreement of Purchase and Sale (APS) regarding a $712,000 commercial property on Barton Street East. The defendant never closed the APS. The plaintiff sued for specific performance alleging the subject property was unique and could not be replaced. However, in cross-examination (prior to the hearing of the motion), the plaintiff admitted to buying another commercial property, which I found to be proximate to the subject property. Further, this purchased property was in the same proximate area, had similar zoning, and otherwise was an adequate replacement. The plaintiff did not disclose the new property in the filed affidavit material. Accordingly, the plaintiff’s motion for specific performance was denied with costs awarded to the defendant.
ISSUE
[2] What is a fair and reasonable costs award?
FACTS
[3] The defendant’s counsel, Ajay Duggal, asks for $53,363.85 for substantial indemnity costs.
[4] The defendant submits that the court should consider a number of factors including:
(a) the issues were not overly complex but required full attention to the intricacies of the facts;
(b) the plaintiff coloured the motion as urgent when it was not;
(c) the plaintiff did not disclose that he had purchased another property fulfilling his needs, omitting this fact in his filed documentary material;
(d) even after the plaintiff’s new property purchase was admitted to in cross-examination just weeks before the motion was to be heard, the plaintiff insisted on proceeding with the motion;
(e) the defendant alleges the plaintiff’s conduct as outlined above, including non- disclosure of material facts, even in the plaintiff’s factum, was unreasonable.
[5] The plaintiff submits that the $700 per hour rate Mr. Duggal claims is excessive.
[6] The plaintiff includes in its materials the case of Dasham Carriers Inc. v. Gerlach, 2013 ONSC 7657 (Dasham). Mr. Duggal was the applicant’s counsel in Dasham. Price J. awarded the applicant costs in Dasham. Price J. has published numerous costs decisions and is widely regarded as a respected judicial expert in costs’ matters. At paras. 12, 15, 16, Price J. outlines the following factors to be considered in fixing costs:
- Factors to be Considered in Fixing Costs
[12] Rule 57.01(1) contains a non-exhaustive list of factors that guide the Court in its reasoning when awarding costs. It provides, in part:
57.01(1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the Court may consider…
(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;
(c) the complexity of the proceeding;
(d) the importance of the issue;
(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;
any other matter relevant to the question of costs…
[15] A costs order balances two conflicting principles, namely, that:
a) A blameless litigant who is successful in a proceeding should not be required to bear the costs of prosecuting or defending the proceeding.
b) Citizens should not be made to feel unduly hesitant to assert or defend their rights in court by the prospect that, if unsuccessful, they will be required to bear all the costs of their opponent.
[16] The Supreme Court of Canada has held that the ultimate objective in balancing these two principles is to ensure that the justice system works fairly and efficiently. [emphasis in original].
[7] Ultimately, a costs award must be both fair and reasonable: see Boucher v. Public Accountants Council (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291(C.A.) at paras. 24, 37, and 38.
[8] At para. 18 of Dasham, Price J. notes that Mr. Duggal’s Bill of Costs claimed an hourly rate of $400 based on nine years’ experience. Price J., at para. 20, found that a reasonable rate for Mr. Duggal was $325 per hour on a partial indemnity scale.
[9] At para. 28 of Dasham, Price J. held that the range of costs in motions arising from breaches of a commercial lease is from $10,000 to $25,000, with the high end of the range reserved for cases in which costs are awarded on a substantial indemnity scale.
[10] Regarding the plaintiff’s complaints about the defendant’s conduct, I agree that the defendant’s failure to produce an affidavit by the defendant’s wife, Ms. Seepersad, needlessly made the factual matrix more complex due to numerous hearsay statements made in her affidavit. The defendant, Mr. Nirmal Heeralal, initially did not file a responding affidavit despite being a party and the person most familiar with the defendant’s circumstances. The plaintiff indicates that Mr. Heeralal is incarcerated in British Columbia. Mr. Heeralal did make an affidavit dated October 18, 2018, but this was not provided to plaintiff’s counsel until cross-examinations. The plaintiff claims this was done to shield the defendant from cross-examination.
[11] From the material before me, it appears that the plaintiff has a legitimate claim for damages as a result of the defendant’s failure to close the agreed upon prima facie valid APS.
CONCLUSION
[12] In Amelin Resources, Inc. v. Victory Energy Operations, L.L.C. 2019 ONSC 239, Perell J. held at para. 10:
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) facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage and sanction inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements.
[13] In have noted that the defendant’s conduct in filing affidavits, when and by whom can be legitimately criticized, but I do not think in the end result, it made any material difference in the proceedings. The plaintiff, however, by not disclosing, in their affidavit material, the acquisition of a building that could act as an adequate replacement for the APS building they argued was unique and could not be replaced, was inappropriate and not reasonable in these circumstances. Accordingly, the costs award in this matter should be on a substantial indemnity basis. That, however, does not end the matter.
[14] I find that the Bill of Costs claiming an hourly rate of $700 to be excessive. I note, as well, that most entries are at a rate of $700 by counsel for the defendant. Normally, some work is delegated to junior lawyers, law clerks, students, or administrative staff. For reasons unknown, that was done minimally here.
[15] I find that a reasonable rate, even on a substantial indemnity scale, would be $350 per hour for Mr. Duggal. Given the non-disclosure of a key component of the plaintiff’s claim regarding the availability/unavailability of alternative commercial premises, an award on a substantial indemnity scale of $350 per hour is appropriate and both fair and reasonable.
[16] Accordingly, I would amend the Bill of Costs as follows:
LAWYER/STAFF TIME SPENT- HOURLY RATE AMOUNT
HOURS
Ajay Duggal 61 $350.00 $21,350.00
Clerk 15 $70.00 $ 1,050.00
Process Server 4 $65.00 $ 260.00
TOTAL $22,660.00
HST (13%) $ 2,945.80
TOTAL FEES + HST $25,605.80
DISBURSEMENTS
CLAIMED DISBURSEMENTS $ 5,869.51
HST (13%) $ 763.04
TOTAL DISBURSEMENTS + HST $ 6,632.55
TOTAL FEES, DISBURSEMENTS + HST ON A
SUBSTANTIAL INDEMNITY BASIS $32,238.35
[17] The total substantial indemnity fees of $22,660 plus HST is in line with Price J’s comments regarding the range of fees awarded in these type of motions: see Dasham, at para. 28.
ORDER
[18] The plaintiff shall forthwith pay to the defendant, on a substantial indemnity scale, the defendant’s costs fixed at a total of $32,238.35 inclusive of fees, disbursements, and HST.
Skarica J.
Released: May 3, 2019
COURT FILE NO.: 17-63285
DATE: 2019-05-03
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
2436179 Ontario. Inc.
Plaintiff
- and –
Nirmal Heeralal
Defendant
COSTS RULING
TS:mw
Released: May 3, 2019