Court File and Parties

Court File No.: 14-60554 Date: 2019-07-02 Ontario Superior Court of Justice

Between: Hubertus Debruijn, Select Genetics LLC, Plaintiffs (Defendants by Counterclaim) – and – Velthuis Farms Ltd., Defendant (Plaintiff by Counterclaim)

Counsel: Self-represented, for the Plaintiffs (Defendants by Counterclaim) Allison J. Klymyshyn, for the Defendant (Plaintiff by Counterclaim)

Heard: January 22, 2019 (at Ottawa)

Amended Costs Decision

The text of the original Costs Decision released June 28, 2019 was amended on July 2, 2019. The amendment is included in an appendix.

KANE J.

[1] The defendant in this motion seeks costs of this proceeding against the plaintiffs in the amount of:

(a) $80,661 on a substantial indemnity scale, including $8,057 of disbursements and tax; or

(b) $61,300 on a scale of partial indemnity, including $8,057 of disbursements and tax.

[2] Although served, the plaintiffs did not attend on this motion.

[3] The central issues are:

(a) whether this court has jurisdiction to make an award of costs as the claim and counterclaim have each been dismissed;

(b) if the court has jurisdiction, whether the defendant is entitled to an award of costs;

(c) in the alternative, whether the order dismissing this proceeding should be varied to a dismissal with costs;

(d) in the further alternative, whether the order dismissing this proceeding should be set aside and replaced with a dismissal order with costs; and

(e) determination as to what cost, if any, should be awarded.

Background

[4] The plaintiffs commenced this proceeding in London, Ontario, on June 17, 2013.

[5] The plaintiffs brought a motion returnable July 30, 2013 for the appointment of an accountant and for preservation of property. The defendant brought a cross-motion returnable on the same date to require the plaintiffs to provide security for costs and for an order to transfer the proceeding from London to Ottawa. Both motions were adjourned on July 30, 2013.

[6] The plaintiffs ultimately withdrew their motion and consented to the cross-motion to transferring this proceeding to Ottawa.

[7] The defendant filed its defence and counterclaim on November 29, 2013. The plaintiffs filed their reply and defence to the counterclaim in February 2014.

[8] The court on February 28, 2014 ordered this action be transferred to Ottawa and that the plaintiffs within thirty days of that transfer or prior to the examinations for discovery, pay security in the amount of $40,000 for costs up to and including mandatory mediation. That court further ordered the plaintiffs were to pay a further $35,000 into court if this proceeding did not settle at mediation.

[9] This proceeding was transferred to Ottawa on April 9, 2014. The plaintiffs initially failed to pay security as ordered on February 28, 2014 and only complied with that order in response to a motion to dismiss their proceeding.

[10] Examinations for discovery scheduled for February 2015 were adjourned by the plaintiffs to permit them to obtain an expert’s report.

[11] The plaintiffs appointed new legal counsel in Ottawa on June 13, 2014.

[12] A case management timetable at the request of the defendant was set by the Master on October 7, 2015, which extended the previous time limit and required that the proceeding be set down for trial no later than January 1, 2018.

[13] The parties conducted examinations for discovery in January and February 2016 which resulted in a combined total of 132 undertakings.

[14] The defendant between May and October 2017 repeatedly requested the plaintiffs’ answers to their undertakings. The plaintiffs were non-responsive.

[15] Legal counsel for the plaintiffs sought and obtained an order on June 29, 2018 removing it as counsel and was then owed some $57,000. The plaintiffs did not subsequently appoint new legal counsel and did not serve a notice of their intention to be self-represented.

[16] The Registrar on September 11, 2018, issued an administrative dismissal of the plaintiffs’ action for delay for their failure to set their action down for trial within five years as prescribed in Rule 48.14.

[17] The defendant on October 3, 2018 obtained today’s date to argue this motion for costs and prepared and served its Notice of Motion in relation thereto on October 12, 2018.

[18] The defendant alleges that the total of its actual legal costs, including disbursements and tax for legal services in this proceeding including its counterclaim and this motion are in excess of $95,000.

Analysis

[19] Rule 48.14 states that unless otherwise ordered, the Registrar shall dismiss an action for delay if it has not been set down for trial by the fifth anniversary of its commencement. The fifth anniversary after commencement of this proceeding was June 17, 2018. The September 11, 2018 date of this administrative dismissal is almost three months after that fifth anniversary.

[20] An action not set down for trial by that same fifth anniversary must also be dismissed on motion by the defendant pursuant to Rule 24.01 (1) and (2).

[21] A dismissal of a claim pursuant to Rules 24.01, or a counterclaim pursuant to Rule 24.03, permits any party to seek costs by motion within thirty days of that dismissal pursuant to Rules 24.05.1 and 24.06.

[22] Rule 48.14(9) as to the effect of an action being dismissed for delay adopts Rules 24.03 to 24.05, does not adopt the cost provisions in Rule 24.05.1 and is silent as to costs upon a dismissal due to the plaintiff’s failure to set the action down for trial within five years.

[23] The Master in Maple Leave Foods Inc. v. David Guest, 2018 ONSC 6809, paras. 14 and 15, noted the absence of provisions as to cost in Rule 48.14 and determined that the court’s inherent jurisdiction to award costs under 131 (1) of the Courts of Justice Act was thereby restricted by that absence of cost provisions which thereby disentitled that defendant to costs.

[24] The learned Master in Maple Leaf cites no authority for the proposition that silence as to costs under Rule 48.14 thereby prevents the court’s use of its legislated authority in S. 31 of the Courts of Justice Act to award costs.

[25] Rule 48.14 contains no prohibition of a costs award upon an administrative dismissal of an action.

[26] Iroquois Falls v. Jacobs Canada Inc., 2017 ONSC 5515, para. 61, aff’d 2018 ONCA 412, involved a motion to dismiss for delay brought under Rule 24.05 and not an administrative dismissal order under Rule 48.14. Notwithstanding that distinction, the court of first instance in Iroquois, upheld on appeal, stated:

When read together, Rules 24.05(2) and 24.05 .1(1) contemplated that a court on the motion of a defendant has the authority to award costs if an action could be dismissed for delay under Rule 48.14(1). However, there is nothing in the Rules or any statute that ousts this court’s inherent jurisdiction to award costs. Accordingly, even if I were inclined to issue an order dismissing this action under Rule 48.14, nunc pro tunc to January 1, 2017, I find that this court has authority to order that costs of this action be paid. (Emphasis added)

[27] Rules 20 and 21 as to dismissal of action contain no cost provision similar to Rule 24.05.1.

[28] Courts clearly have jurisdiction to award costs upon a dismissal under Rules 20 and 21 even subsequent to the order of dismissal or if the court in error did not address the issue of cost in its dismissal decision.

[29] Silence as to costs in Rule 48.14 does not thereby prevent the court from exercising its cost jurisdiction under Section 131, which is only exercisable upon the Registrar’s administrative dismissal order being made. The court continues to have jurisdiction for matters resulting from that dismissal including costs or, for example, payment out of money paid into court.

[30] There should be an award of costs as substantial expenses were incurred by the defendant in response to this proceeding including the plaintiffs’ delays and their subsequent decision to not proceed with their action.

Alternative Determination

[31] Alternatively, the Registrar’s order dismissing this action should be varied in accordance with Rules 37.14(1) (c) and 48.14 (10), to permit the defendant in this case to seek costs by motion pursuant to Rule 24.0 5.1(1) as a result of the Registrar’s administrative dismissal for delay.

[32] The plaintiffs’ failure to comply with orders as to security for costs, to provide answers to undertakings by specified dates and the order that the plaintiff set this action down by January 1, 2018 which was prior to the Registrar’s administrative dismissal constitutes conduct which contravened the ordered timetable and appropriate progression of this proceeding. This conduct by the plaintiffs would likely have entitled the defendant to an order of dismissal under Rule 24.01(1), particularly given its mandatory language requiring a dismissal be granted after five years as contained in Rule 24.01 (2).

Cost Award Considerations

[33] Rule 57.01 (1) lists a number of factors to consider in the exercise of the court’s discretion to award costs including:

(a) the results in the proceeding;

(b) the amount claimed in the amount recovered in the proceeding;

(c) the complexity of the proceeding;

(d) the principle of indemnity including the experience level of the lawyer for the party, the rates charged and the hours spent; and

(e) the amount of costs an unsuccessful party could reasonably expect to pay in this proceeding.

[34] The defendant ultimately has been successful in the administrative dismissal of the plaintiffs’ claim. There has been no determination however as to the merits of the claim or the counterclaim which impacts the degree of success which is important as to an award of costs.

[35] The affidavit filed on the motion to be removed as counsel for the plaintiffs indicates that law firm had charged the plaintiffs $62,208 in legal fees between June 2014 and July 2018. That indicates that the amount of time spent by the defendant’s legal counsel during this longer retainer is generally reasonable.

[36] Part of the defendant’s costs include its counterclaim which ended as a result of the dismissal of the main action and the defendant’s decision to not protect and pursue that counterclaim, pursuant to Rules 48.14(9) and 24.03. The defendant is not entitled to costs regarding its dismissed counterclaim.

[37] Cost awards were made on at least some of the defendant’s motions brought to create a schedule or to force the plaintiffs to remedy its delays. It appears those matters are included in the costs outlined and sought on this motion. Such duplication is to be avoided.

[38] Costs on a substantial indemnity scale is not appropriate in this case for the above reasons.

[39] The hourly rates claimed by counsel for the defendant are reasonable given the respective year of call of each lawyer. There should however be a reduction as:

(a) six lawyers, including two more senior lawyers, worked and docketed time on this file; and

(b) five of these lawyers docketed time on this motion.

[40] This was commercial litigation with a higher level of document productions, undertakings and the retaining of experts. That supports some level of complexity.

[41] Cost should be awarded on a partial indemnity scale for the above reasons.

Conclusion

[42] The defendant is awarded costs on a partial indemnity scale against the plaintiffs in the amount of $40,000, including disbursements and tax.

[43] The costs previously paid into court as security on June 11, 2014 by the plaintiffs in this action in London, Ontario, court file no. 1121–13, shall be released to the extent of this cost award to the defendant forthwith.

Mr. Justice Paul Kane Released: July 2, 2019

Appendix A

The text of the original costs decision released June 28, 2019 was amended on July 2, 2019. The additions are below as underlined.

BETWEEN: Hubertus Debruijn, Select Genetics LLC Plaintiffs (Defendants by Counterclaim) – and – Velthuis Farms Ltd. Defendant (Plaintiff by Counterclaim)

Self-represented, for the Plaintiffs (Defendants by Counterclaim) Allison J. Klymyshyn, for the Defendant (Plaintiff by Counterclaim)

HEARD: January 22, 2019 (at Ottawa)

COURT FILE NO.: 14-60554 DATE: 20190702 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Hubertus Debruijn, Select Genetics LLC Plaintiffs (Defendants by Counterclaim) – and – Velthuis Farms Ltd. Defendant (Plaintiff by Counterclaim) AMENDED COSTS DECISION Kane J. Released: July 2, 2019