Court File and Parties

Court File No.: CV-12-462203 Date: 2019-07-26 Ontario Superior Court of Justice

Between:

Michael Craig o/a Synergy Work Solutions Plaintiff

– and –

CEO Global Network Inc. Defendant

Counsel: Howard Markowitz, for the Plaintiff Kevin L. MacDonald, for the Defendant

Heard: In writing – July 26, 2019

Endorsement on Costs

Sanfilippo, J.

[1] In this action, the Plaintiff, Michael Craig, sued for damages alleged to have been sustained by the Defendant’s termination of a Consulting Agreement. By reasons rendered on June 10, 2019, I granted Judgment to the Plaintiff against the Defendant CEO Global Network Inc. (“CEO Global”) in the amount of $150,899, plus pre-judgment interest in accordance with the Courts of Justice Act, R.S.O. 1990, c. C.43: Craig v. CEO Global Network Inc., 2019 ONSC 3589.

[2] The parties delivered written submissions on costs, in accordance with paragraphs 134-136 of my reasons. I will provide my determination of the issue of costs through this endorsement.

[3] The Defendant did not challenge the Plaintiff’s submission that costs follow the event, as is the general principle: Bell Canada v. Olympia & York Developments Ltd., 1994 CanLII 239 (ON CA), 1994 ONCA 239, 17 O.R. (3d) 135; Yelda v. Vu, 2013 ONSC 5903, leave to appeal refused, 2014 ONCA 353, 64 M.V.R. (6th) 177 at para 11. As the Plaintiff obtained Judgment, and in the absence of any defence offer to settle that affects my assessment of the issue of entitlement, I find that the Plaintiff is entitled to an award of costs.

[4] The Plaintiff submitted a Bill of Costs that detailed costs on a substantial indemnity basis of $41,400.00 in fees and disbursements, and HST in the amount of $5,382.00 for a total of $46,782.00, all inclusive, and on a partial indemnity basis in the amount of $24,150.00 for fees and disbursements, and HST in the amount of $3,139.50 for a total of $27,289.50, all inclusive. The Defendant conceded that the amounts set out in the Plaintiff’s Bill of Costs are reasonable.

[5] The parties’ submissions raised two issues: first, the Plaintiff sought costs on a substantial indemnity basis while the Defendant maintained that costs should be awarded on a partial indemnity basis, and; second, the Defendant contended that I should exercise my discretion to reduce the amount of costs awarded to the Plaintiff by fifty percent because of his conduct. I will consider these issues in order.

A. Has the Plaintiff Established a Basis for an Award of Costs on an Elevated Basis?

[6] The Plaintiff maintained that he should be awarded costs on a substantial indemnity basis because he delivered two offers to settle: one pre-litigation and one during litigation. He relies on Rule 49.10(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as follows:

49.10 (1) Where an offer to settle,

(a) is made by a plaintiff at least seven days before the commencement of the hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing; and

(c) is not accepted by the defendant,

and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.

[7] The Plaintiff delivered an offer to settle on July 23, 2012, prior to the initiation of this action, proposing settlement by payment by the Defendant of the amount of $167,000.00, plus costs. Even leaving aside issues pertaining to the status of this offer to settle as a pre-litigation offer and that it was not open for acceptance at the start of trial, the Plaintiff did not obtain a Judgment as favourable or more favourable than the terms of this offer to settle. This offer to settle does not meet the requirements of Rule 49.10(1).

[8] The Plaintiff delivered a further offer to settle on September 20, 2012, after the initiation of this action. The Plaintiff proposed settlement through payment by the Defendant of the amount of $110,000 plus HST and required that the Defendant fund the Plaintiff’s legal fees in his capacity as a defendant in an unrelated legal action in which Mr. Craig and CEO Global were co-defendants at the instance of TEC Canada Ltd. (the “TEC Action”).

[9] The September 2012 Offer to Settle does not meet the requirements of Rule 49.10(1) for two reasons: first, the September 2012 Offer to Settle does not state that it remained available for acceptance at the commencement of the trial, as is required by Rule 49.10(1)(b). Second, since I have no evidentiary record on which to quantify the value of the settlement condition that CEO Global fund Mr. Craig’s legal defence of the TEC Action, I have no basis on which to assess whether the Plaintiff obtained a judgment “as favourable or more favourable” than the September 2012 Offer to Settle.

[10] An elevated award of costs is appropriate where a party meets the requirements of Rule 49.10, or where the unsuccessful party has engaged in conduct that is worthy of sanction through an elevated award of costs: Davies v. Clarington (Municipality) et al., 2009 ONCA 722, at paras. 28, 31, 40. The Plaintiff has not established either. I conclude that the Plaintiff’s cost award will be on a partial indemnity basis.

B. Quantification of the Cost Award

[11] The objective of cost quantification is to determine a value that is fair and reasonable for the unsuccessful party to pay, and proportionate, in all the circumstances: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.); Zesta Engineering Ltd. v. Cloutier (2002), 2002 CanLII 25577 (ON CA), 21 C.C.E.L. (3d) 161 (Ont. C.A.); Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519.

[12] The Plaintiff’s Bill of Costs on a partial indemnity basis is $24,150.00 for fees and disbursements, and HST in the amount of $3,139.50 for a total of $27,289.50, all-inclusive. The Defendant conceded that these values are reasonable, in that the time incurred and hourly rates were acceptable, but contended that I should exercise my discretion to reduce the amount of costs because of the Plaintiff’s conduct. The Defendant pointed to the Plaintiff’s late delivery, in the weeks before trial, of material documents that ought to have been produced years earlier, and also his conduct in downloading and maintaining confidential documents that ought to have been returned to CEO Global after termination of the Consulting Agreement, citing paragraphs 95-96, 101-102, 108, 120 and 131 of my reasons.

[13] The findings that I made concerning the Plaintiff’s conduct in discharging his duties under the Consulting Agreement formed part of my decision as explained in my reasons, and I do not accept the submission that I ought to apply them further in my cost assessment. However, I accept the Defendant’s submission that the Plaintiff’s delivery on March 29, 2019, sixteen days prior to trial, of documents that ought to have been produced years earlier should form part of my assessment of costs. This documentary production was significant, including a seventeen-page CEO Global Business Plan, and a thirty-seven-page CEO Global Client List.

[14] In exercising its discretion on the issue of costs, a Court can take into account whether there was conduct that had an impact on the trial process, or its duration, such as a breach or disregard of court Order: Saleh v. Nebel, 2018 ONSC 452, at para. 151 (Div. Ct.). This includes breach of the Rules that rendered the civil procedure less efficient and less effective. The Plaintiff’s late documentary production was in breach of Rules 30.02(1), 30.03 and 30.07. This late production of clearly relevant material after the completion of the pre-trial conference rendered the pre-trial conference less effective. The failure to disclose at the pre-trial conference that further documentary production would be made prior to trial was in breach of Rule 50.04(4).

[15] There are five recognized purposes of cost awards, as set out in 1465778 Ontario Inc. v. 1122077 Ontario Ltd. (2006), 2006 CanLII 35819 (ON CA), 82 O.R. (3d) 757 (C.A.), at paras. 32, 45. They have at their core the principles of providing some indemnity to the successful party, encouraging access to justice and settlement, and discouraging conduct that unduly prolongs the litigation or affects its orderly progression to trial, including through breach of Orders or Rules. I exercise my discretion to reduce the amount of the Plaintiff’s costs because of his breach of the Rules.

[16] After considering all elements of Rule 57.01 and the principles underlying the exercise of my discretion under section 131 of the Courts of Justice Act and considering the objective that the quantification of costs be fair, reasonable and proportionate, I have determined that the Plaintiff shall receive an award of costs payable by the Defendant in the amount of $20,000, all inclusive.

C. Disposition

[17] I award the Plaintiff costs of this action payable by the Defendant in the amount of $20,000, all-inclusive.

Sanfilippo J.

Released: July 26, 2019