Court File and Parties
COURT FILE NO.: CV-12-470005 DATE: 20190524 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MICHEL DRAKOULAKOS, Plaintiff (Defendant by Counterclaim) AND: MARTHA STIRPE a.k.a. MARTHA DRAKOULAKOS and MARK STIRPE and 1166054 ONTARIO LIMITED, Defendants (Plaintiff by Counterclaim)
BEFORE: Cavanagh J.
COUNSEL: Patrick Summers for the Plaintiff (Defendant by Counterclaim) Ronald P. Bohm for the Defendants (Plaintiff by counterclaim)
HEARD: By Written Submissions
Costs Endorsement
[1] After a ten day trial, I reserved my decision. I later granted judgment in favour of the defendants dismissing the plaintiff’s action and allowing the counterclaim of the defendant Martha Stirpe. This is my decision with respect to costs.
[2] The plaintiff accepts that the defendants, as the successful parties, are entitled to costs. The plaintiff raises several issues, and I address each in turn.
Are the defendants entitled to costs on a substantial indemnity scale after the date of their offer to settle on October 25, 2018?
[3] The defendants submit that they made three offers to settle on terms that were more favourable to the plaintiff than the judgment at trial and, accordingly, they are entitled to partial indemnity costs to the date of the first offer to settle and substantial indemnity costs thereafter pursuant to rule 49.10(2) of the Rules of Civil Procedure.
[4] Rule 49.10(2) does not provide for an award of substantial indemnity costs in favour of a defendant. In Iannarella v. Corbett, 2015 ONCA 110 the Court of Appeal addressed the approach to costs where a plaintiff’s claim is dismissed and the defendant had made a substantial offer to settle which was not accepted. The Court of Appeal held at para. 139 that outside of rule 49.10, to make an award of substantial indemnity costs as a matter of judicial discretion, the court must find that the party has been guilty of egregious misconduct in the proceeding. The defendants do not submit that substantial indemnity costs are justified on this basis.
[5] A very small amount of time was spent at trial with respect to the counterclaim of Martha Stirpe. There was no discrete offer to settle the counterclaim which was open for acceptance without settlement of the main action. The defendants are entitled to costs of the action and the counterclaim on a partial indemnity scale.
Are the defendants entitled to costs of their motion for summary judgment, including the appeal of the motion judge’s decision to the Court of Appeal?
[6] The defendants had brought a motion for summary judgment and they were successful before the motion judge. The basis for the motion was that the plaintiff’s action was statute barred. The plaintiff appealed the decision of the motion judge and the Court of Appeal allowed the appeal, set aside the judgment of the motion judge, and replaced it with an order dismissing the defendants’ motion. The Court of Appeal decided, in the circumstances, that the costs of the motion and of the appeal will be in the cause.
[7] The defendants submit that they are entitled to costs of the summary judgment motion and the appeal on the basis of the decision of the Court of Appeal.
[8] The plaintiff submits that the Court of Appeal’s decision with respect to costs does not fetter my discretion with respect to costs to be awarded in relation to the motion for summary judgment and the appeal. In this regard, the plaintiff relies upon the decision of Perell J. in Nygard International Partnership v. Hudson’s Bay Company, 2018 ONSC 6529 where, at para. 8, he wrote “[c]osts in the cause simply lets the trial judge determine who should be awarded costs for these motions while [taking] the whole of the proceedings including the outcome into account”.
[9] The plaintiff submits that the defendants were unsuccessful on their motion for summary judgment and that the motion delayed the trial for almost two years. The plaintiff submits that I should exercise my discretion and decline to award costs in favour of the defendants for the summary judgment motion and appeal.
[10] It was open to the Court of Appeal to make an order as to costs of the motion for summary judgment and the appeal after having reviewed the evidentiary record and heard submissions. The Court of Appeal could have ordered costs of the summary judgment motion and appeal in favour of the successful plaintiff, or ordered that there be no costs. The Court of Appeal could have ordered that these costs be in the discretion of the trial judge. Instead, the Court of Appeal made an order that these costs be in the cause. An order for “costs in the cause” generally means that costs are awarded to the party who is successful in the cause. This is subject to the judge’s discretion to award or withhold costs on a principled and judicial basis depending upon all of the circumstances of a given case, including the outcome. There are no circumstances that justify withholding costs of the motion for summary judgment and appeal from the defendants who were successful in the cause.
[11] Given the decision of the Court of Appeal, I decline to withhold costs of the motion for summary judgment and the appeal from the defendants.
What rates should be used to determine the defendants’ claim for costs?
[12] The defendants seek costs of lead counsel and second counsel on a partial indemnity scale at hourly rates of $395 and $215, respectively. The plaintiff submits that the hourly rate that should be used for the defendants’ lead counsel should be $350.
[13] The defendants’ lead counsel was called to the bar in 1986 and, at the time of trial, had more than thirty years’ experience as a litigation counsel. This case was an important one for his clients because it involved exposure to the loss of the single share of a corporation in which the individual defendants held their investments accumulated over many years. The case involved relatively complex legal and factual issues. I regard the hourly rate claimed for lead counsel to be reasonable for this case.
Are the defendants entitled to costs of a law clerk who attended at trial?
[14] The plaintiff submits that the time claimed for the professional services of a law clerk who also attended the trial should not be allowed because it would be excessive and unreasonable to allow costs for all three members of the defendants’ legal team.
[15] Given the nature of the issues in the litigation and the importance of these issues for the parties, I do not consider the services provided by a law clerk, including at trial, in addition to lead and second counsel, to be unreasonable or disproportionate. I allow costs for the services of the law clerk at a partial indemnity hourly rate of $120.
Amount to be fixed for partial indemnity costs
[16] The plaintiff did not otherwise challenge the time claimed, except to object to any travel time to and from the offices of the defendants’ counsel in Richmond Hill. Counsel for the defendants confirmed that no travel time was claimed.
[17] I therefore fix costs of the action to be paid by the plaintiff to the defendants on a partial indemnity scale in the amount of $287,291.87 comprised of fees of $239,171.50, HST on fees of $31,092.30, and disbursements including HST of $17,028.07.