Court File and Parties

COURT FILE NO.: CV-17-583838 DATE: 20190116 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 1705371 ONTARIO LTD. carrying on business as B & A MASONRY, Plaintiff AND: LEEDS CONTRACTING RESTORATION INC. and PETER DURIC Defendants

BEFORE: Cavanagh J.

COUNSEL: William Ribeiro, for the Plaintiff Sakina Babwani, for the Defendants

HEARD: By Written Submissions

Costs Endorsement

[1] The plaintiff was the successful party on the defendants’ motions to set aside the default judgment against Leeds Contracting Restoration Inc. (“Leeds”) and the noting in default against both defendants. The plaintiff was also successful on its motion for default judgment against the defendant Peter Duric.

[2] The plaintiff submits that costs should follow the event. The plaintiff seeks costs on a substantial indemnity scale or, alternatively, on a partial indemnity scale.

[3] The plaintiff submits that it should be awarded costs against both defendants on a substantial indemnity scale because, it submits, Mr. Duric was not transparent and/or attempted to mislead the court in his affidavit sworn in support of the defendants’ motion. The plaintiff also relies upon the fact that the defendants in their reply factum had argued that the plaintiff should pay costs of their motion on a substantial indemnity scale on the ground that it made unfounded allegations of dishonesty and deceit against Mr. Duric and misrepresented facts on the motion.

[4] Subject to the costs consequences provisions of the Rules of Civil Procedure, only in exceptional cases are costs to be awarded on a substantial indemnity scale. Costs on a substantial indemnity scale are reserved for rare and exceptional cases where the conduct of the party against whom costs are ordered is reprehensible or where there are other special circumstances that justify costs on the higher scale. Among other circumstances, costs may be awarded on a substantial indemnity scale where there is reprehensible conduct by a party either in the circumstances giving rise to the claim or during the course of the proceedings. See Fehr v. Sun Life Assurance Company of Canada, 2017 ONSC 2218 at paras. 43-44 and authorities cited in those paragraphs.

[5] In my endorsement, I found that Mr. Duric had materially changed his evidence in relation to a key factual statement when he was cross-examined and that he unjustifiably refused to answer proper questions directed to testing the truthfulness of his evidence. I drew adverse inferences from Mr. Duric’s refusal to answer proper questions on his cross-examination.

[6] The defendants submit that there were no findings that Mr. Duric’s conduct was deceitful or dishonest or that he engaged in conduct that was reprehensible, outrageous or scandalous. The defendants also submit that there was nothing improper in them making submissions with respect to costs in their reply factum.

[7] I accept the defendants’ submissions. Although I found that Mr. Duric had materially changed his evidence when he was cross-examined, I did not make a finding that he was deliberately dishonest or deceitful, or that he had otherwise engaged in reprehensible conduct. The fact that the defendants made submissions in their reply factum seeking costs on a substantial indemnity scale is not a factor that supports an award of costs against them on a substantial indemnity scale.

[8] I conclude that the plaintiff is entitled to costs on a partial indemnity scale.

[9] The plaintiff provided a Bill of Costs in support of its submissions. The plaintiff seeks fees on a partial indemnity scale in the amount of $15,757.50 (calculated as 60% of its full indemnity fees) together with disbursements in the amount of $2,945.65 and HST in the amount of $2,309.76, for a total of $21,012.91.

[10] The defendants submit that the amount claimed is excessive for the following reasons:

a. In the default judgment against Leeds, costs were awarded in the amount of $1,340.50. The default judgment has not been set aside and, therefore, the plaintiff has already been awarded costs for preparation of the statement of claim and noting Leeds in default and these costs should not be awarded again. b. The amount of time claimed by the plaintiff (7 hours) for legal services in relation to preparation for the motion for default judgment against Mr. Duric and attendance at motions court on May 18, 2018 (when the motion was adjourned pursuant to the endorsement of McArthur J.) is excessive. The defendants submit that it should not have taken the plaintiff’s counsel, a certified specialist in construction law, six hours to research a simple issue for an uncontested motion. c. The amount of time claimed by the plaintiff for responding to the defendants’ motion to set aside the consequences of default (59.3 hours) is excessive. The defendants submit that (i) the plaintiff should not be awarded costs for dealings with the process server regarding service of motion materials, (ii) the time spent to prepare for the cross-examination of Mr. Duric was excessive, (iii) the time spent cross-examining Mr. Duric was excessive because many unnecessary questions were asked, and (iv) the time spent preparing motion materials, corresponding with counsel for the defendants, and doing legal research was excessive. d. The amount claimed for disbursements is excessive. In particular, the disbursement for a writ search under Teranet Express ($400) is excessive. The defendants also submit that the plaintiff is claiming the same disbursements under the headings “HST Disbursements” and “HST Exempt Disbursements”. The defendants do not specify which disbursements they say were claimed twice.

[11] Rule 57.01(1) of the Rules of Civil Procedure provides that in exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider a number of specified factors. Rule 57.01(3) provides that when the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs.

[12] In Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 728, the Court of Appeal, at para. 26, wrote that the express language of rule 57.01(3) of the Rules of Civil Procedure makes it clear that the fixing of costs is not simply a mechanical exercise and that, overall, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.

[13] I agree with the defendants’ submission that the plaintiff was already awarded costs in the default judgment against Leeds for preparation of the statement of claim and noting Leeds in default. I reduce the amount claimed by the plaintiff against Leeds by $840 to reflect this adjustment. I allow the claim for fees for this item against Mr. Duric in the amount of $840.

[14] I do not agree that the amount claimed for services in relation to the plaintiff’s motion for default judgment against Mr. Duric and the attendance before McArthur J. on May 18, 2018 is outside of the range of time for the services that would be reasonable.

[15] With respect to the plaintiff’s claim for costs in relation to responding to the defendants’ motion to set aside the consequences of default, in my view, the amount claimed falls within the range of costs that would be fair and reasonable for the defendants to pay for this motion. I do not agree that there should be a reduction because of time spent preparing for and conducting the cross-examination of Mr. Duric. I also take into account that the defendants did not provide a costs outline to show the amount of time that was spent by their counsel on this motion. As a result, I am unable to evaluate the reasonableness of the time spent by plaintiff’s counsel in comparison with the time spent by counsel for the defendants. See Risorto v. State Farm Mutual Automobile Insurance Co. (2003), 64 O.R. (3d) 135 at para. 10.

[16] I fix the plaintiff’s fees on a partial indemnity scale against Leeds in the amount of $14,917.50. I fix the plaintiff’s fees on a partial indemnity scale against Mr. Duric in the amount of $15,757.50.

[17] In its Bill of Costs, the plaintiff has broken down the claim for disbursements into those on which HST was charged and those which are HST exempt. These are separate disbursements. I allow the disbursements as claimed and fix them in the amount of $2,945.65.

[18] With respect to the claim for costs against Leeds, HST on the fees (reflecting a reduction of $840) and on the “HST Disbursements” is fixed in the amount of $2,200.56.

[19] I therefore fix costs to be paid by Leeds to the plaintiff in the amount of $20,063.71 inclusive of fees, disbursements and HST.

[20] I fix costs to be paid by Mr. Duric to the plaintiff in the amount of $21,012.91 inclusive of fees, disbursements and HST.

Cavanagh J. Date: January 16, 2019