Court File and Parties

COURT FILE NO.: CV-09-0097 DATE: 2019/05/17 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

SHEILA DONLEAVY and KENNETH EDWARDS Plaintiffs – and – ULTRAMAR LTD., KILPATRICK FUELS LIMITED and JOE BURNS Defendants

COUNSEL: R. Steven Baldwin, for the Plaintiffs Todd J. Burke, for the Defendant, Ultramar Ltd. James B. Tausenfreund, for the Defendants, Kilpatrick Fuels Limited and Joe Burns

HEARD: In writing

Ruling with Respect to Costs

Corthorn J.

Introduction

[1] The plaintiffs’ action arose from an oil spill that occurred at their home in June 2008. The plaintiffs were successful at trial in their claims based in negligence; they were unsuccessful in their claims based in breach of contract.

[2] The plaintiffs’ success is tempered by a finding of 40 per cent contributory negligence. The damages awarded, totalling $780,000, are reduced because of that finding. Of the damages awarded, $750,000 was agreed upon by the parties as representing the subrogated claim on behalf of the plaintiffs’ homeowner insurer (the “Insurer”). The remaining $30,000 was awarded to the plaintiffs personally.

[3] In the end, the damages payable total $468,000, with $450,000 to be paid to the Insurer and $18,000 to be paid, collectively, to the individual plaintiffs.

[4] The plaintiffs seek costs totalling $306,832.45, broken down as follows:

Partial indemnity fees July 23, 2008 to June 9, 2016 $ 57,125.85 Substantial indemnity fees June 10, 2016 forward $ 181,969.50 HST on fees $ 31,082.40 Disbursements (incl. HST) $ 36,654.70 Total $ 306,832.45

[5] The plaintiffs rely on an offer to settle, made on June 10, 2016, as triggering their entitlement to substantial indemnity costs subsequent to that date.

[6] This endorsement follows two interim endorsements with respect to costs—the first is Donleavy v. Ultramar Ltd., 2018 ONSC 7142, and the second is Donleavy v. Ultramar Ltd. (19 December 2018), Ottawa, CV-09-0097 (Ont. S.C.J.). The two interim endorsements were required because of the approach taken by the plaintiffs with respect to both the documents filed (or, more accurately, not filed) and their submissions with respect to costs.

[7] I do not intend to repeat in this endorsement all of the findings made or concerns raised in the previous endorsements with respect to the plaintiffs’ approach to the exercise of fixing costs of the action.

The Plaintiffs’ Submissions

[8] Certain portions of the plaintiffs’ costs submissions make their submissions unique.

[9] First, the plaintiffs’ costs outline (the “Outline”) identifies what is said to be “the rate actually charged” by their counsel. Hourly rates are identified for six timekeepers. The hourly rates range from $550 for R. Steven Baldwin (“R.S. Baldwin”) to $235 for a paralegal, and $165 for “clerks/assistants”. The “rate actually charged” for each timekeeper is the same as the substantial indemnity rate identified, in the Outline, for each timekeeper.

[10] The Outline includes a copy of the dockets from the office of plaintiffs’ counsel. The dockets identify the timekeeper and the time docketed per entry. There is no hourly rate associated with any of the dockets. Plaintiffs’ counsel says that, in addition, the dockets have been redacted to eliminate reference to matters that are privileged.

[11] Second, the reference in the Outline to “the rate actually charged” is misleading. At para. 15 of the plaintiffs’ written reply submissions, the following statement is made:

For clarity, no amounts have been billed to the subrogating insurer pursuant to a fee arrangement between the subrogating insurer and counsel that no accounts are rendered pending a successful outcome of the proceeding. Nevertheless, the actual fee arrangement should not be a governing factor in the court’s determination of costs.

[12] Third, the oral submissions made on behalf of the plaintiffs include the following:

• Plaintiffs’ counsel does not have an actual hourly rate because there is no agreement with the client(s) as to such;
• The costs paid can exceed the contingency fee to be paid pursuant to the fee arrangement between the Insurer and plaintiffs’ counsel;
• The fee ultimately rendered to the client will be greater than the costs potentially recoverable;
• It is not possible to know the actual hourly rate that will be charged to the plaintiffs;
• Absent a positive monetary judgment, there are no fees chargeable to the client;
• As a result, there can only be a notional hourly rate and not an actual hourly rate; and
• Disbursements may only be charged to the client if disbursements are recovered as part of costs.

[13] The reference to “the contingency fee to be paid” is specifically from plaintiffs’ counsel. The plaintiffs’ written submissions make no reference to a retainer agreement in the nature of a contingency fee agreement. It is, however, clear from the oral submissions made on July 3, 2018, that plaintiffs’ counsel would only be paid if the plaintiffs were successful in the action.

[14] Fourth, in response to the order made in the first interim costs endorsement, the plaintiffs delivered a document titled, “Response”. That document is effectively three additional pages of costs submissions. The Response is now part of the record on the costs hearing. The Response is signed by both R.S. Baldwin and Michael Salmon. The latter is the President of the Insurer (L & A Mutual Insurance Company). The Response is not in the form of an affidavit.

[15] The submissions made in the Response include the following:

2. The court is advised there is no Fee Agreement in writing.
3. It was agreed that Baldwin Law would not render an account pending final completion of the matter.
4. It was agreed the account of Baldwin Law for fees would not be calculated until final resolution either by settlement or final judgment after all appeals.
5. It was agreed that Baldwin Law would not render an account for fees or disbursements if there was no monetary recovery.
6. Mr. Baldwin and Mr. Salmon would regularly discuss the status of the litigation including the ongoing assessment of the merits in respect of liability and damages.
7. The hourly rates of counsel for the litigation were never discussed nor were expected hourly rates stipulated. Rather, the expectation was to obtain success in course of the litigation, whether at settlement or trial, with contribution to legal fees through party and party costs. The absence of settlement required attention to the making of Rule 49 Offers.

[16] The Response concludes by identifying that the individual plaintiffs will not be required to contribute towards payment of the solicitor-client account. The Insurer will pay the portion of the account related to the personal claims advanced on behalf of the individual plaintiffs.

a) The ‘Contingent’ Nature of the Retainer Arrangement

[17] I turn briefly to what appears to be the contingent nature of the arrangement between the Insurer and plaintiffs’ counsel. The arrangement does not amount to a contingency fee retainer agreement within the meaning of the Solicitors Act, R.S.O. 1990, c. S.15 (the “Act”). First and foremost, the arrangement is not reduced to writing, is not signed by the clients, and is not signed by plaintiffs’ counsel. In addition, the signatures of the clients and counsel have not been witnessed (s. 1 of Contingency Fee Agreements, O. Reg. 195/04).

[18] There are many other ways in which the fee arrangement falls short of the requirements of the Act. As a result, it is not necessary to consider the validity of the fee arrangement in the context of either the Act or the relevant regulation (i.e., Contingency Fee Agreements, O. Reg. 195/04).

The Defendants’ Respective Submissions

[19] A bill of costs was delivered by each of Ultramar Ltd. and Kilpatrick Fuels Limited/Joe Burns. The former’s bill of costs includes partial indemnity fees of $90,429.40 and disbursements of $10,499.33. The latter’s bill of costs includes partial indemnity fees of $96,005.66 and disbursements of $50,708.72.

[20] That the partial indemnity fees for and disbursements incurred by Kilpatrick/Burns exceed those of Ultramar is not surprising. Kilpatrick/Burns took the lead at trial in defending the action, including with respect to both cross-examination of the expert witnesses called by the plaintiffs and examination-in-chief of expert witnesses called in defending the claims advanced.

[21] The defendants do not dispute that the plaintiffs are entitled to costs of the action. One or both of the defendants, however, emphasize the following factors relevant to fixing costs:

a) The reasonable expectations of the unsuccessful party as to what they may be required to pay for costs; b) Proportionality, in particular given the finding that the plaintiffs were 40 per cent contributorily negligent; and c) Assuming the suggested actual hourly rates are used, the work for which the dockets have been redacted represents fees of $36,190.

[22] Ultramar submits that a reasonable award of costs would be $120,000 for fees, disbursements and HST. Kilpatrick/Burns suggest a total of $150,000 for fees, disbursements, and applicable HST. The defendants did not specify whether their respective figures proposed for fees include any portion based on substantial indemnity rates.

[23] Before determining the quantum of costs payable by the defendants, it is necessary to determine the scale or scales upon which costs are to be fixed.

The Issues

[24] The issues to be determined are:

1. Were any offers to settle made that trigger entitlement to costs on a substantial indemnity basis for any portion of the action?
2. What is the quantum of costs payable by the defendants?

Issue No. 1 – Offers to Settle and the Scale of Costs

[25] The plaintiffs rely on their offer to settle, dated June 9, 2016 (“the Offer”), in support of their claim of entitlement to costs on the substantial indemnity scale from that date forward. The monetary terms of the Offer call for the defendants to pay (a) $375,000 to the Insurer for its subrogated claim, (b) $35,000 to Sheila Donleavy, and (c) $20,000 to Kenneth Edwards. Prejudgment interest and costs are over and above those amounts. The Offer remained open for acceptance until five minutes after the commencement of trial.

[26] The plaintiffs submit that the judgment at trial is more favourable to them than are the terms of the Offer. They are correct as relates to the Insurer’s claim. The damages payable on the subrogated claim were agreed at $750,000. After reduction for the finding of contributory negligence, the damages payable to the Insurer are $450,000, to Mrs. Donleavy are $12,000, and to Mr. Edwards are $6,000. The damages payable to the Insurer alone exceed the total damages payable pursuant to the Offer ($430,000 = $375,000 + $35,000 + $20,000).

[27] I agree with the plaintiffs and find that the judgment is more favourable to the plaintiffs than were the terms of the Offer.

[28] Ultramar did not address the subject of offers to settle in either their written or oral submissions on costs.

[29] At para. 10 of their written submissions, Kilpatrick/Burns address the subject of offers to settle. They do not respond in any way to the plaintiffs’ reliance on the Offer. Kilpatrick/Burns submit, “We offered a total amount owing of $135,000 fees + $35,000 disbursements + $468,000 net damages + $115,425 PJI = $753,425 (of which Northbridge is liable for 50% (pending decision on appeal) = $376,712.50 payable by my client.” A copy of that offer to settle is not before the court. In neither their written nor their oral submissions did Kilpatrick/Burns identify (a) the date of their offer to settle, or (b) whether the offer to settle remained open for acceptance until immediately following the commencement of trial.

[30] Kilpatrick/Burns identify that an offer to settle was made; they do not relate it to any specific submission with respect to costs. Kilpatrick/Burns do not submit that their offer is relevant to the scale upon which costs are to be fixed; they do not submit that their offer triggers the costs consequences prescribed by r. 49.10(2) of the Rules of Civil Procedure (i.e., entitling them to partial indemnity costs from the date of the offer forward).

[31] Kilpatrick/Burns appear to acknowledge that the Offer may entitle the plaintiffs to costs on a substantial indemnity scale from the date of the offer forward. At para. 7 of their written submissions, Kilpatrick/Burns submit, “Regardless, it is respectfully submitted that the appropriate substantial indemnity rate for Steven Baldwin is $330 per hour and $165 per hour for Daniel Baldwin. However, the Plaintiffs should not be entitled to any substantial indemnity rate at least until their offer of June 10, 2016.”

[32] I find that the Offer (a) falls within the scope of r. 49.10(1), and (b) entitles the plaintiffs to costs on the substantial indemnity scale from the date of the Offer forward.

Issue No. 2 – The Quantum of Costs Payable

[33] In Spiteri Estate v. Canada (Attorney General), 2014 ONSC 6167, Master MacLeod (as he then was) discussed the general principles to be applied when fixing costs. He concluded that a starting point when fixing costs is to determine the reasonable amount of “party and party costs” (now partial indemnity costs). Once that step is completed, and against the back drop of fees to be charged pursuant to a special fee arrangement, the court is in a position to determine whether “the reasonable fees” should be adjusted: see Spiteri at para. 64c.

a) Hourly Rates

i) Positions of the Parties

[34] In fixing costs of this action, the most contentious issue is the solicitor-client or “actual” hourly rates upon which the plaintiffs rely. There are three categories of timekeepers. For senior counsel, R.S. Baldwin, the actual hourly rate proposed is $550. For R.S. Baldwin, the plaintiffs propose a substantial indemnity rate of $550 and a partial indemnity rate of $330. Kilpatrick/Burns submit that the reasonable substantial indemnity rate for R.S. Baldwin is $330.

[35] Ultramar takes a different approach. They submit that the court must consider that the action was, for all intents and purposes, a subrogated action on behalf of an insurance client. In that context, Ultramar emphasizes “the amount the unsuccessful party could reasonably have expected to pay in the event of a lack of success in the litigation” (r. 57.01(1)(0.b)). Ultramar asks the court to consider that all counsel involved in this subrogated action were, to the knowledge of all involved, retained by an insurer client.

[36] Ultramar also relies on a recent decision of R.S.J. McNamara in fixing costs following a trial in which the successful party was represented by R.S. Baldwin (Middleton v. Municipality of Highlands East, 2013 ONSC 2027, 10 C.C.E.L. (4th) 275). In 2013, the actual hourly rate proposed for R.S. Baldwin was $425. R.S.J. McNamara concluded that rate was excessive. He fixed costs relying on an actual hourly rate of $350 for R.S. Baldwin.

[37] Ultramar submits that a reasonable actual hourly rate for R.S. Baldwin in this matter is $350.

[38] The plaintiffs respond by pointing to the actual hourly rates of the lawyers whose work is reflected in the bills of costs submitted on behalf of the defendants, respectively. R.S. Baldwin was called to the bar in 1993. As of the date of trial he had 23 years of experience. The actual hourly rates reflected in Ultramar’s bill of costs include $475 for a lawyer with 22 years’ experience and $335 for a lawyer with 21 years’ experience. The former did less than ten per cent of the work; the latter did approximately 75 per cent of the work on the file.

[39] I am not persuaded that the relatively minor involvement of the lawyer whose actual hourly rate is $475 is sufficient to support the actual hourly rate proposed by the plaintiffs for R.S. Baldwin.

[40] Ultramar does not provide any explanation for the significant difference between the actual hourly rates of the lawyers with 22 and 21 years of respective experience. I draw an inference and find that the $335 actual hourly rate represents an insurance litigation rate—meaning the rate Ultramar’s insurer was prepared to pay for the work done by counsel based on their level of experience.

[41] The actual hourly rates charged by counsel for Kilpatrick/Burns include $265 to $280 for a lawyer with 17 years’ experience and $185 to $235 for a lawyer with 11 years’ experience. The latter had primary responsibility on the file and was counsel at trial.

ii) Analysis

[42] In Canfield v. Brockville Ontario Speedway, 2018 ONSC 3288, Mew J. said that “the [hourly] rates used for fixing costs should have regard to what clients typically pay. That will vary with the type of work, geographic location and the type of client among other factors” (2018 ONSC 3288, at para. 23).

[43] There is no evidence, or even a submission, as to what hourly rate the Insurer typically pays for R.S. Baldwin’s services. Instead, the plaintiffs submit that no hourly rate was ever discussed between the Insurer and plaintiffs’ counsel.

[44] If the actual hourly rate of $425 claimed by plaintiffs’ counsel in the 2013 action conducted before R.S.J. McNamara was excessive, there is no doubt that the proposed (not actual) hourly rate of $550, in this matter, is also excessive. Taking into consideration the actual hourly rates charged by the two firms who represented the defendants in the present matter, I find that $350 continues to be a reasonable actual hourly rate for R.S. Baldwin in the context of the exercise of fixing costs.

[45] A similar analysis and the same principles serve to reduce the proposed hourly rates for the other timekeepers whose work is reflected in the bill of costs. I do not intend to go through each of the other proposed hourly rates in detail. I shall, however, address the proposed hourly rate for S.D. Baldwin.

[46] S.D. Baldwin was called to the bar in 2014. The proposed hourly rate for his work is $275. That hourly rate is perplexing for a number of reasons. First, the same hourly rate is proposed for two other lawyers—one of whom was called to the bar in 1997 and the other in 2005. No explanation is offered as to why it would be reasonable to apply an hourly rate of $275 for the work of a lawyer with two years’ experience. Presumably no explanation was provided because none exists.

[47] There is no evidence as to the hourly rate typically paid by the Insurer for S.D. Baldwin’s services or for those of any other lawyer with two years’ experience. Ultramar’s bill of costs does not include fees for any work done by a lawyer of that vintage. Kilpatrick/Burns were represented at trial by senior counsel assisted by junior counsel (Melanie Prise). Ms. Prise was called to the bar in the same year as S.D. Baldwin. As of 2016, her actual hourly rate was $170.

[48] Based on the bills of costs submitted on behalf of the defendants, it appears that there is relative consistency in the hourly rates charged by the two firms involved to their respective insurer clients. I draw an inference and find that those hourly rates reflect the hourly rates typically charged to an insurer client.

[49] I find that $170 is a reasonable “actual” hourly rate for S.D. Baldwin for the purpose of fixing costs.

[50] The other timekeepers whose work is reflected in the plaintiffs’ bill of costs are two associate counsel, paralegals, and clerks/assistants:

• Applying the same reasoning and principles discussed above, I find that a reasonable actual hourly rate for lawyer M. Page (a 1997 call) is $250 and for lawyer K. Sprague (a 2005 call) is $205. For both individuals, the actual hourly rate proposed by the plaintiffs is $275; and
• Similarly, a reasonable actual hourly rate for the paralegals is $140 (not the $235 proposed by the plaintiffs) and $110 for clerks/assistants (not the $165 proposed by the plaintiffs).

[51] The rates reflected in the chart below are based on my findings with respect to actual hourly rates. Partial indemnity rates are calculated at 60 per cent of the actual hourly rates. Substantial indemnity rates are based on 1.5 times partial indemnity rates. The chart immediately below summarizes the rates for the timekeepers whose work is included in the bill of costs.

Actual Partial Substantial R.S. Baldwin (1993) $350 210 315 S.D. Baldwin (2014) $170 102 153 M. Page (1997) $250 150 225 K. Sprague (2005) $205 123 185 Paralegal $140 84 126 Clerks/assistants $110 66 99

[52] I turn to the next specific issue to be addressed—the redaction of dockets.

b) Redaction of Dockets

i) Positions of the Parties

[53] The defendants raise the issue of the extent to which the dockets included with the plaintiffs’ bill of costs have been partially or completely redacted. Ultramar submits that:

• In some instances, even the timekeeper’s name is redacted;
• Where entire docket entries are redacted, it is impossible to ascertain the nature of the work done; and
• Even where dockets are only partially redacted, it is difficult to ascertain the nature of the work done.

[54] Of particular note are the dockets redacted for work done by S.D. Baldwin. At an hourly rate of $275, the 116.7 hours of work for which the dockets are redacted equates to $32,092.50 in fees. The other redacted dockets total approximately $4,000 ($2,805 for R.S. Baldwin for 5.1 hours at $550/hr.; and $1,290 for a paralegal for 5.5 hours at $235/hr.).

[55] The defendants request that the $36,190 in proposed fees be removed entirely for the purpose of fixing costs. The plaintiffs’ response is that the dockets were redacted to prevent disclosure of matters that are the subject of either litigation or solicitor-client privilege. The plaintiffs submit that if the dockets were not redacted, then creativity would be sacrificed at the expense of transparency.

ii) Analysis

[56] I reject the plaintiffs’ position and agree with the defendants. Plaintiffs’ counsel are experienced litigation counsel. I find that they were aware of the following matters from the outset of their handling of this case:

a) The potential for the action to proceed to trial; b) Whether the plaintiffs were successful or unsuccessful at trial, it might be necessary to address the issue of costs; and c) In either scenario, it might be necessary for plaintiffs’ counsel to submit their dockets to the court as part of the exercise of fixing costs (awarded to or against the plaintiffs).

[57] It may be for internal purposes, or the purpose of accounting to the Insurer, that plaintiffs’ counsel keep detailed dockets that include privileged information. There is nothing inappropriate about doing so.

[58] Plaintiffs’ counsel had the option, before submitting dockets in support of the Outline, to edit the substance of the concerning entries by removing privileged information. The dockets could have been edited to disclose sufficient information to (a) describe the work done, (b) permit the defendants to respond, and (c) permit the court to consider the dockets. There is nothing inappropriate about editing the dockets in that manner.

[59] In Dickson v. Kellett, 2018 ONSC 4920, I considered the evidentiary requirements on a motion, pursuant to r. 7.08, for approval of a settlement on behalf of a party under a disability (2018 ONSC 4920). Addressing whether it is necessary on such a motion to disclose privileged information, I noted the following at para. 33:

It is incumbent upon counsel to craft the supporting materials in such a way that the evidentiary requirements are met without, unnecessarily, disclosing information that is subject to solicitor-client or litigation privilege: “If [counsel for the moving party goes] further than need be to convince the court … that is his problem”. [Citations omitted.]

[60] The same applies to dockets filed for the purpose of fixing costs. It is incumbent upon counsel to provide opposing parties and the court with dockets that describe the work done without, unnecessarily, disclosing information that is properly the subject of a claim for privilege.

[61] The plaintiffs did not take issue with Ultramar’s calculation of the value of work associated with the redacted dockets. I therefore rely on the $36,190 as calculated by Ultramar, including the breakdown of that figure between timekeepers.

[62] When fixing costs, I have not considered any of the dockets redacted in whole or in part. I have reduced the total of the fees identified by $36,190 and excluded the relevant dockets.

c) Fixing Costs

[63] Before turning to the factors to be considered in fixing costs, it is necessary to calculate the total of the “actual” fees based on (a) the revised hourly rates determined above, and (b) the reduction of the total because of the elimination of the redacted dockets.

[64] Attached as Appendix A is a chart setting out the revised “actual” fees ($153,405), the partial indemnity fees to June 9, 2016 ($35,640), and the substantial indemnity fees from June 9, 2016 forward ($96,780). In summary, the partial and substantial indemnity fees calculated in Appendix ‘A’ total $132,420 ($35,640 + $96,780).

[65] I compare that amount to the costs proposed or identified by the defendants:

• In their written materials (original and subsequent to receipt of the Response), Ultramar submits that the all-inclusive figure for costs be $120,000 (fees, disbursements, and applicable HST);
• In oral submissions, Ultramar increased that figure to $125,000 to take into consideration a portion of the fees being paid on a substantial indemnity basis; and
• Kilpatrick/Burns submit that $150,000 is a reasonable all-inclusive figure for costs.

[66] I turn to the factors listed in r. 57.01(1) of the Rules of Civil Procedure.

(0.a) Principle of Indemnity

[67] In this matter, the principle of indemnity is not a significant factor. There were no actual hourly rates agreed upon between solicitor and client at any time.

[68] At para. 17 of their December 2018 Response, the following statement is made on behalf of the plaintiffs:

It is the expectation of L & A Mutual that the solicitor and client account of Baldwin Law would approximate fees in the amount of $300,000.00 plus HST and disbursements having regard for the expectation of substantial indemnity entitlements by reason that the Rule 49 Offer of the plaintiffs was less favourable to the plaintiffs than the trial judgment.

[69] I give no weight to that statement. It was made five months after the hearing with respect to costs, at a point in the process when the plaintiffs were fully aware of the problems they face with respect to costs claimed. If it is the Insurer’s expectation that the solicitor-client account will include fees of $300,000, then that expectation can only have arisen during this process. Based on the plaintiffs’ submissions, the Insurer never had any discussion about hourly rates so as to be able to develop such expectations at an earlier stage in the process.

(0.b) Reasonable Expectations of Opposing Party

[70] The partial indemnity fees of Ultramar are $90,430 and of Kilpatrick/Burns are $96,000. It is reasonable for the defendants to expect that the plaintiffs would incur more costs to advance their claim than would the defendants in defending the claim. In addition, if adjusted for substantial indemnity fees from June 9, 2016 forward, both figures would exceed $100,000.

[71] By way of example, at a partial indemnity rate only, the plaintiffs’ fees (as set out in Appendix A) would total $116,825. In comparison to $90,000 and $96,000 that figure is reasonable; it is in keeping with what the defendants could reasonably expect to pay.

a) Amount Claimed and Amount Recovered

[72] The significant claim advanced was that of the Insurer, with damages agreed at $750,000. Even with the reduction of that amount by 40 per cent to $450,000, I find that fees based on the hourly rates determined above and subject to the reductions identified below are proportional to the amount recovered.

b) Apportionment of Liability

[73] More than anything, it is the apportionment of liability that served to reduce the amount recovered. As noted immediately above, even when taking into account the apportionment of liability, the fees based on the hourly rates determined above and subject to the reductions identified below are proportional to the amount recovered.

c) Complexity of the Proceeding

[74] The plaintiffs submit that the proceeding was complex because of the technical nature of the subject matter. The defendants do not dispute that the proceeding was complex.

[75] Kilpatrick/Burns, however, submit that the plaintiffs contributed to the complexity of the matter because of the manner in which the plaintiffs’ case was presented. Kilpatrick/Burns point to the 12 witnesses called to testify and the 57 exhibits entered. I find that neither of those aspects of the plaintiffs’ case establishes that the plaintiffs contributed to the complexity of the proceeding.

[76] I agree with the plaintiffs that the presentation of their case required (a) a historical review of the regulation of fuel handling, and (b) evidence with respect to the standard of care, over time, owed by oil burner technicians and fuel delivery persons.

[77] The fees based on the hourly rates determined in this ruling and subject to the reductions below are in keeping with the complexity of the proceeding.

d) Importance of the Issues

[78] It is not disputed that the issues were important to the parties. They were unable to resolve the action even with the assistance of judicial resources at two pre-trial conferences.

[79] The defendants did not dispute the plaintiffs’ submission that the issues raised by and determined in the proceeding “are important to the development of the jurisprudence in [the] regulated industry” of fuel oil handling.

e) Conduct of the Parties

[80] The parties agreed on the Insurer’s damages, thus reducing the amount of trial time required. Kilpatrick/Burns are critical of the plaintiffs for suing Joe Burns personally. They submit that it was unnecessary to advance a claim against Mr. Burns personally. Kilpatrick/Burns emphasize that Mr. Burns was, at the relevant time, an employee of Kilpatrick. In addition, the plaintiffs neither plead nor argued that the corporate veil of Kilpatrick was pierced so as to establish liability against Mr. Burns personally.

[81] Regardless of whether or not Mr. Burns was a named party, he was an important actor in the events giving rise to the claim. Had he not been named as a party defendant, the plaintiffs might have brought a motion, if necessary, to examine Mr. Burns for discovery as a non-party. In addition, Mr. Burns was a necessary witness at trial. As a result, whether as a party or a witness, he would have testified at trial.

[82] The decision to include Mr. Burns as a defendant did not lengthen the proceeding.

f) Steps in the Proceeding

[83] No submissions were made on this factor.

g) Denial or Refusal to Admit

[84] No submissions were made on this factor.

h) Other Proceedings

[85] This factor is not relevant to the action.

i) Any Other Matter Relevant to the Question of Costs

[86] The defendants have each raised other matters in support of reductions they ask be made to the costs claimed. I shall deal with each of those items separately.

▪ Paralegal, Clerk, and Assistant Time

[87] The $153,405 in fees claimed, as I have calculated them, (para. 64, above), include clerks/assistants fees totalling $10,055 ($5,585 in partial and $4,470 in substantial indemnity fees). Those fees are over and above the $8,550 for the work done by a paralegal.

[88] Ultramar submits that the fees for the work by clerks/assistants should not be included in the costs to be paid by the defendants. In support of that position, Ultramar relies on the decision of R.S.J. McNamara in Middleton. At para. 11 of his decision, R.S.J. McNamara said, “I am not prepared to allow the amounts claimed for the services of law clerks. In my view an unsuccessful Defendant would, quite properly, not reasonably expect to pay those administrative costs in addition to costs for lead counsel, junior counsel and a paralegal.”

[89] From the description provided in the dockets of the work done by the paralegal and by clerks/assistants, I note the following.

[90] First, there is some similarity, in terms of level of responsibility, between work done by the paralegal and that done by the clerks/assistants. I draw an inference and find that some of the paralegal’s work was delegated to the clerks/assistants. The delegation of work in that manner provides a cost-saving to the clients.

[91] Second, I agree with McNamara R.S.J.’s concern about dockets for work that is of an administrative nature. It is reasonable to reduce the fees by $1,500 to account for administrative work done by clerks/assistants. I include in administrative work tasks such as filling out cheque requisitions, liaising with process servers, file organization, printing, and binding documents. Those examples are not an exhaustive list of the administrative work done by clerks/assistants. Much of that work was done subsequent to June 9, 2016, when it would otherwise attract the substantial indemnity rate.

[92] A small portion of the work done by the paralegal could also be described as administrative in nature. The exercise of fixing costs does not require a detailed review of dockets and a strict arithmetic approach. A portion of the work done by the paralegal has already been excluded with the elimination of redacted dockets. A further reduction of $500 is reasonable for administrative work done by the paralegal.

[93] In summary, I reduce the fees claimed by $2,000 for work of an administrative nature done by either the paralegal or by the clerks/assistants.

▪ Work for which Costs are not Recoverable

[94] I agree with the submission by Ultramar that costs are not recoverable for:

a) The motion on consent for an order granting the plaintiffs leave to amend their statement of claim, where the order was silent on the issue of costs (Delrina Corp. v. Triolet Systems Inc., 165 O.A.C. 160 (C.A.)); and b) The adjournments of the trial in 2014 and 2015, for which no costs orders were made (Sioux Lookout v. The Attorney General et. al., 2010 ONSC 3721, at para. 35).

[95] I reduce the fees claimed by $1,000, for work with respect to the motion and the adjournments.

▪ Plaintiffs’ Associate Counsel

[96] Kilpatrick/Burns submit that in addition to reducing fees for work done by S.D. Baldwin in relation to redacted dockets, the fees for his work should be further reduced because attending as associate counsel at trial was a “learning experience” for him. Kilpatrick/Burns point to the fact that S.D. Baldwin did not conduct any of the examinations or cross-examinations of witnesses.

[97] I reject the Kilpatrick/Burns submission for a number of reasons. S.D. Baldwin’s attendance at trial may well, at least in part, have been a learning experience. He had two years’ experience at the date of trial. He was not, however, a mere observer at the trial. He argued at least one motion. R.S. Baldwin relied on the assistance of S.D. Baldwin on a number of occasions with respect to evidence of the historical regulation of fuel handling.

[98] The parties are in agreement that there was complexity to the proceeding. That complexity was sufficient for Kilpatrick/Burns to be represented by both senior counsel and associate counsel. The latter, Ms. Prise, was present throughout the majority of the trial. It was because of a personal matter that Ms. Prise did not remain until the conclusion of trial.

[99] I note that R.S. Baldwin’s docketed hours from the date of the Offer forward are 205.9 and S.D. Baldwin’s are 137.1. I find the ratio of their respective docketed hours in that period to be reasonable given their respective roles as senior counsel and associate counsel at trial. I make no further reduction of the fees for the work done by S.D. Baldwin (i.e., other than the reduction above based on redacted dockets).

d) Summary – Fees

[100] The starting point, by my calculation, is a total of $132,420 for fees claimed by the plaintiffs. I reduce that sum by $3,000 based on (a) administrative work docketed by the paralegal and clerks/assistants, and (b) work for which there are no fees recoverable.

[101] I fix the plaintiffs’ fees at $129,420. The H.S.T. payable on that amount is $16,824.60.

e) Disbursements

[102] The disbursements claimed by the plaintiffs are $36,654.70. That figure includes applicable H.S.T. The disbursements claimed are itemized in a four-page appendix to the Outline.

[103] Although itemized, the list of disbursements does not provide the detail required to ascertain what all of the disbursements are. For example, there are two entries for “Expert Fees”, totalling $6,195 (not including H.S.T.), for which the name of the expert is not identified. The nature of the services provided by the expert is not described.

[104] By contrast, there are two entries for “Expert Reports”, both of which identify F.P. Amo as the author of the report. Mr. Amo was called by the plaintiffs to give evidence at trial. There is also an entry for “Expert Fees”, identifying Pedersen Engineering as the expert. Mr. Pederson was called by the plaintiffs to give evidence at trial.

[105] In the absence of an explanation as to who the experts are and the nature of the work done, neither the opposing parties nor the court are in a position to consider the reasonableness of the disbursements incurred for the “Expert Fees” described in para. 103, above. I reduce the disbursements by $7,000 ($6,195 + H.S.T.) for that reason.

[106] As another example, there are numerous entries for “Process Server”, without any description of the documents served in relation to any of those entries. The total disbursements for Process Server are approximately $2,400 (plus H.S.T.). In the absence of any explanation, I reduce that amount by one-third ($800 + H.S.T.).

[107] There are also travel-related expenses for which no explanation is offered. It appears that plaintiffs’ counsel were required to travel (from Belleville) to Kingston and to Ottawa for the purpose of conducting examinations for discovery. There is a travel expense of $75 entered in the name of the individual plaintiffs. No explanation for that expense is provided. I find no basis for allowing a travel expense for the individual plaintiffs. That amount is excluded from disbursements allowed. The list of disbursements indicates that amount is not subject to H.S.T.

[108] Ultramar made no submissions with respect to disbursements incurred by the plaintiffs. Ultramar took somewhat of a back seat to Kilpatrick/Burns at trial. It is not surprising that the disbursements Ultramar incurred total approximately $10,300 (incl. H.S.T.).

[109] The disbursements incurred by Kilpatrick/Burns total approximately $50,700 (incl. H.S.T.). Of that amount, approximately $7,300 relate to travel (from Toronto), accommodation, and meals for counsel—whether at examinations for discovery in either Kingston or Ottawa, or for the trial in Belleville. When that amount is removed, the disbursements incurred by Kilpatrick/Burns total $43,400.

[110] The defendants would reasonably have expected the plaintiffs to incur disbursements totalling in excess of $30,000. That does not mean, however, that the disbursements incurred by the plaintiffs do not need to be reasonably substantiated. I reduce the disbursements from the $36,654.70 claimed by (a) $7,000 with respect to experts’ fees, and (b) $900 ($800 + H.S.T.) with respect to the process server entries.

[111] In summary, I fix the disbursements at $28,775 (incl. H.S.T.).

Disposition

[112] The plaintiffs’ costs are fixed in the following amounts:

Fees $ 129,420.00 H.S.T. $ 16,824.60 Disbursements (includes H.S.T.) $ 28,755.00 Total $ 174,999.60 Rounded to $ 175,000.00

[113] On the basis of the liability findings made at trial, Ultramar is (a) entirely responsible for the plaintiffs’ costs, and (b) entitled on its crossclaim to recover from Kilpatrick/Burns 50 per cent of the costs paid to the plaintiffs.

Costs of the Process of Fixing Costs

[114] The plaintiffs are awarded costs in excess of the amounts submitted by the defendants. The plaintiffs are also awarded costs in excess of the $170,000 offered by Kilpatrick/Burns for costs (see para. 10 of Kilpatrick/Burns costs submissions). Once again, there is, in any event, no evidence of when that offer was made.

[115] The plaintiffs’ approach to the process of fixing costs is addressed in detail in the two interim endorsements with respect to costs. It is also summarized in the Background section of this Ruling.

[116] The plaintiffs’ approach resulted in the defendants having to respond more than once to submissions made on behalf of the plaintiffs. That approach unnecessarily increased the complexity of and prolonged the process of fixing costs.

[117] The defendants have not requested that they be awarded their respective costs of the process of fixing costs. I see no basis upon which to award them costs of this part of the process.

[118] For those reasons, there shall be no costs payable with respect to the process of fixing costs.

Madam Justice Sylvia Corthorn Released: May 17, 2019

Appendix A

Fees Based on Actual Hourly Rates

Hours	Rate	Fees [1]
R. Steven Baldwin 289.80 [2]	350	101,430
S. Daniel Baldwin 136.60 [3]	170	23,220
M. Page (lawyer) 34.35	170	5,840
K. Sprague (lawyer) 8.80	170	1,495
Paralegal 51.40	140	7,195
Clerks/Assistants 129.30	110	14,225
Total		$ 153,405

Partial Indemnity Fees (to June 9, 2016)

Hours	Rate	Fees
R. Steven Baldwin 89.00	210	18,690
S. Daniel Baldwin 47.90 [4]	102	4,885
M. Page (lawyer) 34.35	102	3,505
K. Sprague (lawyer) 8.80	102	900
Paralegal 24.70 [5]	84	2,075
Clerks/Assistants 84.60	66	5,585
Total		$ 35,640

Substantial Indemnity Fees (June 9, 2016 ff.)

Hours	Rate	Fees
R. Steven Baldwin 205.90	315	64,860
S. Daniel Baldwin 137.10 [6]	153	20,975
Paralegal 51.40	126	6,475
Clerks/Assistants 44.70 [7]	100 [8]	4,470
Total		$ 96,780

Total Fees = $132,420 ($35,640 + $96,780)

Notes

[1] Amounts for fees, where rounded, are rounded to the nearest $5. [2] 289.8 = 294.9 – 5.1 (see para. 54, above). [3] 136.3 = 253.3 – 116.7 (see para. 54, above). [4] 39.9 = 48.5 – 0.6 (see para. 54, above). [5] 24.7 = 30.2 – 5.5 (see para. 54, above). [6] 137.1 = 253.3 – 116.2 (see para. 54, above). [7] 44.7 = 129.3 (total time) – 84.6 (partial indemnity). This figure corrects an error in the Outline. [8] $66/hr. x 1.5 = $99 (rounded to $100)