COURT FILE NO.: 16-69957

DATE: 20190820

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Joanne Tibbles and Royal LePage Team Realty Brokerage

Plaintiffs

– and –

Craig Gloster

Defendant

John Paul Zubec and Brent Craswell, for the Plaintiffs

Jeff Saikaley and Andrea Baldy, for the Defendant

HEARD: In writing

REASONS WITH RESPECT TO COSTS

H.J.WILLIAMS J.

Overview

[1] The plaintiffs Joanne Tibbles and Royal LePage Team Realty Brokerage brought an unsuccessful action for defamation and unjust enrichment against the defendant, Craig Gloster. The plaintiffs’ claim was dismissed following a five-day trial.

The positions of the parties

[2] Mr. Gloster seeks costs on a partial indemnity basis to the date of either of two offers he made and on a substantial indemnity basis after the date of the offer. Mr. Gloster concedes that neither of his offers qualifies as an offer under Rule 49 of the Rules of Civil Procedure. He argues that they should nonetheless be taken into consideration under Rule 49.13.

[3] The plaintiffs argue that Mr. Gloster should not be entitled to costs because, although I dismissed the plaintiffs’ action, I found that Mr. Gloster had written a defamatory letter about Ms. Tibbles. The plaintiffs also argue that Mr. Gloster should not be awarded costs because he took an uncompromising approach to settlement.

Factors

[4] The factors to be considered when fixing costs are set out in Rule 57 of the Rules of Civil Procedure and include, in addition to the result and any offers to settle, the principle of indemnity and the amount of costs an unsuccessful party could reasonably expect to pay. They also include the amount claimed and recovered, the complexity of the proceeding and the importance of the issues. The court may also consider the conduct of the parties, whether any step in the proceeding was inappropriate, whether appropriate admissions were made and any other matter relevant to the question of costs.

Analysis

Is the successful defendant entitled to costs?

[5] In this case, I see no reason to depart from the general rule that the successful party, Mr. Gloster, is entitled to costs.

[6] I do not accept the plaintiffs’ argument that Mr. Gloster should be deprived of costs because I found that he had defamed Ms. Tibbles; I also found that Mr. Gloster had extended an appropriate apology to Ms. Tibbles, that Mr. Gloster’s defamatory letter was protected by qualified privilege and that Ms. Tibbles had suffered no damages.

[7] I also do not accept the plaintiffs’ argument that Mr. Gloster should not be awarded costs because of an uncompromising approach to settlement. The plaintiffs argue that Mr. Gloster, who had made an offer to settle of $4,500.00, acted unreasonably by later refusing to accept a $7,500.00 offer from the plaintiffs. While it is true that, had Mr. Gloster accepted the $7,500.00 offer, the parties would have been able to part ways sooner and without incurring further legal fees, it does not lie in the mouth of plaintiffs, whose action was dismissed, to argue that a defendant should have been more generous with them in order to save them all from a trial. A better argument and one that is consistent with the outcome at trial is that Ms. Tibbles should have accepted Mr. Gloster’s August 29, 2018 offer of a without-costs dismissal. I note also that the plaintiffs’ $7,500.00 offer remained open only for two days; after two days, the offer also required Mr. Gloster to pay the plaintiffs’ substantial indemnity costs following its date.

What is the appropriate scale of costs?

[8] Mr. Gloster made an offer to settle in the all-inclusive amount of $4,500.00 on December 21, 2016. This offer was withdrawn on March 20, 2017. This offer does not qualify as a Rule 49 offer because it did not remain open until the commencement of the trial.

[9] The week before the trial, on August 29, 2018, Mr. Gloster offered to consent to a without-cost dismissal of Ms. Tibbles’ action. That offer remained open until 5 p.m. August 31, 2018. This offer also was not a Rule 49 offer.

[10] On May 9, 2017, the plaintiffs made their $7,500.00 offer. After May 11, 2017, this offer required Mr. Gloster also to pay the plaintiffs’ substantial indemnity costs for all steps after May 9, 2017. This offer remained open for acceptance until five minutes after the commencement of the trial.

[11] Mr. Gloster acknowledges that neither of his offers was a Rule 49 offer but argues that he should nonetheless be awarded partial indemnity costs to December 21, 2016, the date of his $4,500.00 offer, and substantial indemnity costs thereafter or, alternatively, partial indemnity costs to August 29, 2018, the date of his offer of a without-costs dismissal, and substantial indemnity costs thereafter. In the further alternative, Mr. Gloster requests partial indemnity costs.

[12] Mr. Gloster argues that, although Rule 49 does not provide for substantial indemnity costs to be paid to a defendant, there is authority for a defendant to be awarded substantial indemnity costs when the defendant makes an offer and the plaintiff’s action is dismissed. In support of this argument, Mr. Gloster relies in part on S & A Strasser Ltd. v. Town of Richmond Hill, 1990 CanLII 6856 (ON CA).

[13] In 2009, the Court of Appeal clarified the appropriate application of S & A Strasser Ltd. In Davies v. Clarington, 2009 ONCA 722, the Court of Appeal noted that it had repeatedly said that costs on a scale greater than partial indemnity are warranted in only two circumstances: (1) where specifically authorized through the operation of an offer to settle under rule 49.10; or (2) where the losing party has engaged in behaviour worthy of sanction.

[14] The principle that substantial indemnity costs are available only in the two categories of cases identified in Davies was affirmed by the Court of Appeal more recently in St. Elizabeth Home Society v. Hamilton (City), 2010 ONCA 280 at para. 90 and AB2000 Software Corporation v. Infinium Capital Corporation, 2015 ONCA 829 at para. 41.

[15] S & A Strasser Ltd. does not support the proposition that substantial indemnity costs are properly awarded to a defendant simply because the defendant made an offer to settle to a plaintiff in an action which was ultimately dismissed; in such a scenario, for substantial indemnity costs to be awarded, the plaintiff must also have acted inappropriately.

[16] In the case before me, although it is evident from the end result, and probably should have been evident to the plaintiffs sooner than it was, that the plaintiffs should not have started an action against Mr. Gloster, I do not find that their behaviour warranted a punitive costs award.

[17] I have considered Ms. Gloster’s offers. Although Mr. Gloster’s December 21, 2016 offer was reasonable and the plaintiffs would have been better off if they had accepted either that offer or Mr. Gloster’s August 29, 2018 offer, I am not persuaded that either offer would justify an award of costs on other than a partial indemnity basis.

[18] Mr. Gloster shall be awarded costs on a partial indemnity basis.

What is the appropriate amount of costs?

Mr. Gloster’s submissions with respect to the amount of costs:

[19] The partial indemnity costs sought by Mr. Gloster are $70,388.54, representing $66,947.76 in fees, inclusive of HST plus $3,440.78 in disbursements, inclusive of HST. (These amounts include relatively small amounts for fees and disbursements incurred by a law firm which represented Mr. Gloster before he retained his current lawyers.)

[20] Mr. Gloster argues he did what he could to avoid a lawsuit; he apologized to Ms. Tibbles and he told her that he had never sent his letter to the Real Estate Council of Ontario, the Better Business Bureau or Brookfield Global Relocation Services, even though the letter appeared to have been copied to all three.

[21] Mr. Gloster also said that he served a detailed request to admit to the plaintiffs, with a view to shortening the trial. He says that the plaintiffs denied most of the statements, even though they had previously given evidence that confirmed many of them.

The plaintiffs’ submissions with respect to the amount of costs:

[22] The plaintiffs argue that the amount requested by Mr. Gloster is excessive and disproportionate to the amount at stake in the action. They argue that if they had been successful at trial, they would have expected to have been awarded around $30,000.00 in damages, much less than the costs Mr. Gloster is seeking.

[23] The plaintiffs argue that they should not be required to pay for the two lawyers who represented Mr. Gloster at trial. They say that although they were also represented at trial by two lawyers, they had informed Mr. Gloster’s lawyers that the plaintiffs would not be charged for the attendance of the more junior lawyer.

[24] The plaintiffs also argue that Mr. Gloster’s lawyers’ decision to file unsolicited written closing submissions was overkill, and they should not be required to pay for them.

[25] With respect to Mr. Gloster’s request to admit, the plaintiffs argue that in July, 2018, they were asked to admit 103 facts and the authenticity of every document listed in Schedule A to Mr. Gloster’s affidavit of documents. The plaintiffs say that they admitted 29 of the facts and the authenticity of several documents.

[26] The plaintiffs also argue that they had suggested that the trial proceed as a summary trial, but that Mr. Gloster had rejected this proposal. The plaintiffs say that their lawyer had also invited Mr. Gloster’s lawyer to contact him to discuss ways in which the trial could be shortened, for example, by preparing a joint book of documents, but that this did not happen.

Analysis with respect to the amount of costs:

[27] I have considered the parties’ submissions with respect to the amount of costs Ms. Gloster should be awarded and the factors listed in Rule 57.01 and I make the following observations:

• I agree with Mr. Gloster that the plaintiffs should not have started this action. Mr. Gloster’s letter was inappropriate and contained some untrue and hurtful statements about Ms. Tibbles. Ms. Tibbles was extremely upset by the letter. However, before Ms. Tibbles started the action, Mr. Gloster had apologized and had told Ms. Tibbles that he had not actually sent the letter to RECO, the Better Business Bureau or Brookfield. Before Ms. Tibbles started her action, she also knew that her colleagues remained supportive of her, despite Mr. Gloster’s letter. Ms. Tibbles in fact told her colleagues to disregard Mr. Gloster’s letter of apology; one of her colleagues, a lawyer who had recommended against the lawsuit, did not learn about the letter of apology until he testified at the trial. Further, although Ms. Tibbles sued Mr. Gloster for damaging her reputation, before starting the action, Ms. Tibbles engaged in conduct of her own that reflected badly on her reputation: she described Mr. Gloster as “an ass hole” to another realtor, who was related to Mr. Gloster; she told the seller of the house Mr. Gloster wanted to buy, who was also a realtor, that she hoped that the house would be sold to someone else; she told a home inspector to run like hell if Mr. Gloster contacted him. It is difficult not to conclude that Ms. Tibbles’ action had as much if not more to do with score-settling than name-clearing.

• Defamation is a technical area of the law. I consider the issues in the case, which included publication, qualified privilege and fair comment, to have been of at least moderate complexity.

• The plaintiffs argue that the proportionality principle requires that the cost of the second lawyer who worked for and attended the trial on behalf of Mr. Gloster should not be recoverable. There is nothing inherently wrong with having more than one professional work on a file or attend a trial. If, when the bill of costs is reviewed, it appears that work has been duplicated, that a professional who attended a trial added no discernible value or that, as a result of a team approach, the total fees exceed the amount the losing party could reasonably expect to pay, the amount awarded will be adjusted downward at that time. I am unable to determine, based on the material submitted, the extent to which there may have been a duplication of effort by Mr. Gloster’s lawyers. To be fair to the plaintiffs, I will assume that there was some duplication. That said, I would be in a better position to assess the reasonableness of Mr. Gloster’s bill of costs if the plaintiffs had filed their own bill of costs or given an indication of their total fees.

• I consider the hourly rates of Mr. Gloster’s lawyers and the other professionals who did work on his behalf to be within a reasonable range.

• I do not take issue with the disbursements claimed by Mr. Gloster.

• I accept the plaintiffs’ submission that their response to Mr. Gloster’s request to admit was prepared in good faith, that they had justification for not making all of the requested admissions and that their response included proposals to streamline the trial.

• I also note that, at the outset of the trial, the plaintiffs’ counsel expressed concern about the potential length of the trial in relation to the amount at issue and expressed an interest in any proposals that might abbreviate the process.

• Although I appreciated Mr. Gloster’s written submissions at the conclusion of the trial and found them to be well done and helpful, I agree that the plaintiffs, who did not prepare written submissions, should not be called upon to pay for the entire cost of Mr. Gloster’s written submissions, when I did not request submissions in writing.

• I have disregarded the reference in the plaintiffs’ costs submissions to the pre-trial conference, which I consider to be irrelevant but which I feel I must mention so as not to be interpreted as condoning it. The plaintiffs wrote that Mr. Gloster’s position that the plaintiffs’ case was “clearly a misadventure from the outset” was “certainly not the view of others who reviewed the case. For example, after the Pre-Trial Conference, Ms. Tibbles believed that she had a viable claim.” I infer from this that the plaintiffs were trying to convey to me that the judge or master who conducted the pre-trial conference painted a rosier picture of Ms. Tibbles’ action than I did ultimately and that, as a result, Ms. Tibbles’ decision to take her case to trial was justified. I consider this portion of the plaintiffs’ submissions, although vague, to be contrary to Rule 50.09 of the Rules of Civil Procedure, which prohibits communication to a trial judge of any statement made at a pre-trial conference. (See Bell Canada v. Olympia & York Developments, (1994), 1994 CanLII 239 (ON CA), 17 O.R. (3d) 135, 1994 CarswellOnt 520 (C.A.); Lyons Estate v. Dr. Freeman et al., 2017 ONSC 533, at para. 16.)

• I have also disregarded the references the plaintiffs and Mr. Gloster made to the mediation, although, in fairness, I must add that Mr. Gloster made his submissions about the mediation in response to those of the plaintiffs. I consider the plaintiffs’ statement that Mr. Gloster refused to make a financial offer and that the mediation failed as a result to be disclosure of a without prejudice settlement communication and contrary to Rule 24.1.14. I do not agree with the plaintiffs’ submission that a party who shows up at a mediation session or pre-trial conference and makes no offer to settle does so at his own peril when it comes time for costs submissions. Rule 24.1.14 states that “all” communications at a mediation are deemed to be without prejudice settlement discussions. The rule applies equally to the party who makes no offer to settle at a mediation and the party who may make a significant offer to settle at a mediation and subsequently take a no-liability position at trial. Parties are supposed to take comfort in knowing that positions taken at a mediation will not be disclosed to the trial judge. There is no exception to the rule for post-trial costs submissions. (See Toronto Transit Commission v. Toronto, 2009 CanLII 2926 (ON SC) at para. 10 per G. R. Strathy J., as he then was.)

Disposition

[28] Having considered all of the above, I have concluded that in these circumstances, the unsuccessful party could reasonably expect to pay fees in the amount of $50,000.00 and that this is a fair and reasonable amount for the plaintiffs to pay in fees in this case.

[29] I am mindful that Ms. Tibbles is an individual, not a corporation, and that she said in her costs submissions that she, and not the plaintiff real estate brokerage, will be responsible for paying any costs award. I take no pleasure in making this costs award against Ms. Tibbles. Mr. Gloster, of course, is an individual as well. I suspect that neither Ms. Tibbles nor Mr. Gloster was in a position to be able to afford costly litigation.

[30] The plaintiffs shall pay Mr. Gloster, fees in the amount of $50,000.00, plus HST in the amount of $6,500.00 plus disbursements inclusive of HST in the amount of $3,440.78, for a total amount of $59,940.78.

[31] In light of the amount of this award, the plaintiffs’ offer to settle the costs issue has no bearing on my decision.

H.J. Williams J.

Released: August 20, 2019

COURT FILE NO.: 16-69957

DATE: 20190820

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Joanne Tibbles and Royal LePage Team Realty Brokerage

Plaintiffs

– and –

Craig Gloster

Defendant

COUNSEL:

John Paul Zubec and Brent Craswell, for the Plaintiffs

– and –

Jeff Saikaley and Andrea Baldy, for the Defendant

reasons with respect to COSTS

H.J. Williams J.

Released: August 20, 2019