COURT FILE NO.: C-868-12
DATE: 2019-09-09
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
GODERICH-EXETER RAILWAY COMPANY LIMITED
- and -
SHANTZ STATION TERMINAL LTD. and PARRISH and HEIMBECKER LIMITED
Kenneth Peel, Counsel for the Plaintiff
Robert Reynolds and Forrest Hume, Counsel for the Defendants
HEARD: In writing
The Honourable Justice Catrina D. Braid
COSTS ENDORSEMENT
I. OVERVIEW
[1] Goderich-Exeter Railway Company Limited (GEXR) is a railway company that operated a shortline track called the Guelph Line. This track is owned by Canadian National Railway (CN) and connects to lines that are operated by CN.
[2] Parrish and Heimbecker (P&H) is a Canadian grain company. Shantz Station Terminal Ltd. (Shantz Station) is a company that P&H incorporated to operate the Shantz Station Terminal in Breslau, Ontario, which is located along the Guelph Line.
[3] Demurrage is a charge levied for extended use of railcars beyond the free period of time. GEXR asserted that it had the right to charge demurrage to P&H for the delayed unloading of railcars at the Shantz Station Terminal, which P&H refused to pay.
[4] GEXR brought an action against P&H and Shantz Station for unpaid demurrage. For the reasons set out in G.E.X.R. v. Shantz Station and Parrish & Heimbecker, 2019 ONSC 1914, [2019] O.J. No. 2815, I dismissed the action. The facts are set out in detail in that decision and will not be repeated here.
[5] I have now received written costs submissions. The court directed the parties to each file brief submissions, together with relevant Bills of Costs and written Offers to Settle. Although the defendants have requested an opportunity to reply to the plaintiff’s submissions, I decline to grant leave for any further submissions to be filed.
[6] The following issues are addressed in this endorsement:
A. Should the costs decision be deferred until the arbitration between CN and the defendants has been completed?
B. If the answer to the first question is no, what is the appropriate quantum of costs to be paid?
[7] For the reasons that follow, I award $250,000 in costs, all inclusive.
II. ANALYSIS
A. Should the Costs Decision be Deferred Until the Arbitration Between CN and the Defendants Has Been Completed?
[8] P&H and CN embarked on an arbitration process in 2012. GEXR was not a party to the arbitration. P&H sought no relief against GEXR in the arbitration, which did not deal with GEXR’s right to charge demurrage.
[9] Arbitrator Coulter Osborne determined that, in their Memorandum of Understanding (MOU), P&H and CN agreed that only CN would bill P&H for demurrage. He also found that CN had breached its MOU and its promise that CN would be the only carrier that would charge demurrage in connection with the traffic to Breslau during the term of the MOU. On August 9, 2018, the arbitrator awarded damages to P&H against CN for the breach of CN’s promise that it would be the only carrier that would charge demurrage in connection with Breslau. The quantification of damages was adjourned until after the completion of the trial that was held before me.
[10] During the trial, I found that portions of the agreement between P&H and CN are directly contrary to CN’s agreement with GEXR, especially as it relates to GEXR’s ability to bill accessorial charges. This was stated as a fact but was not a finding of liability against CN, who was not a party to this action.
[11] The trial dealt with the issue of whether the defendants were liable to pay demurrage to GEXR. The plaintiff’s costs submissions suggest that GEXR bears no responsibility for the defendants’ costs because CN is responsible for those costs.
[12] I reject this submission. The claim was solely advanced against P&H and Shantz Station, and was dismissed in its entirety. GEXR did not add CN as a party to this action. CN did not compel GEXR to advance this action or to take it to trial.
[13] It is not appropriate to defer this determination of costs until after the arbirtration. The fair approach is to determine the costs owing by GEXR and let the arbitrator decide what additional costs of the defendants (if any) should be paid by CN. I decline to defer the costs determination or to stay the enforcement of this costs ruling until the arbitration is complete.
[14] The defendants are not entitled to double recovery of costs. I direct that the defendants shall provide the following to CN and the arbitrator:
i. A copy of this Endorsement;
ii. A copy of the entire cost submissions filed by the defendants in these proceedings, except the case brief.
B. What Is the Appropriate Quantum of Costs to be Paid?
[15] In its Statement of Claim, GEXR sought judgment of $378,074 (plus taxes) for invoiced but unpaid demurrage charges. GEXR also claimed 18% interest per annum or, in the alternative, pre-judgment interest. At an interest rate of 18%, the claim was valued at more than $800,000 at the time of trial.
[16] At trial, the defendants did not dispute that they owed demurrage. They agreed that they would be liable to CN if CN billed them using the CN tariff. The primary issue, however, was whether the defendants were liable to GEXR for demurrage.
[17] The defendants submitted that GEXR has neither the contractual right nor the legislative authority to exact demurrage; and that the claim for unjust enrichment should be dismissed. The defendants were entirely successful on these issues and the action was dismissed.
[18] The plaintiff now argues that the defendants were unreasonable in their settlement discussions, including during mediation. The plaintiff has not provided copies of any Offers to Settle, despite the court’s direction to provide copies of relevant offers. The evidence does not establish that the defendants, who had the entire claim dismissed against them after trial, were taking an unreasonable position in refusing to settle this case.
[19] In addition, the plaintiff’s submission that the defendants should have consented to having issues decided on a Rule 21 motion is entirely without merit. Consent is not required to bring a Rule 21 motion, and there is no evidence that the defendants prevented the plaintiff from advancing that motion. This case was factually and legally complex. The trial lasted ten days; and included four witnesses, hundreds of documents and lengthy legal submissions. Given its complexity, this case may not have been well-suited for a Rule 21 motion. I am not satisfied that defendants acted unreasonably in refusing to consent to a Rule 21 motion.
[20] The plaintiff argues that the defendants should not be reimbursed for travel expenses. It relies on the case law stating that a party is entitled to retain counsel of their choice; however, unless there is evidence demonstrating that local counsel is not available, it would exceed the expectation of the other party to expect to be responsible for such additional costs: see Baye v. Canning, 2013 ONSC 5285, [2013] O.J. No. 3892.
[21] At the outset of the trial, one counsel for each of the parties advised the court that they specialize in transportation law, which is a unique and complex area of law. All counsel travelled from out of town for this trial. Both parties should have expected to be responsible for travel costs for opposing counsel if they were unsuccessful at trial.
[22] The defendants were entirely successful at trial and are entitled to costs. They submit that they are entitled to partial indemnity costs in the amount of $301,238.50, inclusive of HST and disbursements.
[23] The plaintiff argues that the costs sought by the defendants are excessive; that there is duplication of work; and that there may be overlap in work that is not apparent because the defendants failed to supply sufficient particulars of the work. However, the plaintiff does not provide a dollar value on what the costs award ought to be.
[24] In determining quantum, the court is to consider the factors set out in Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as well as s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. Those factors include the principle of indemnity, the reasonable expectations of the parties, the complexity of the proceeding, the importance of the proceeding, and the conduct of the parties in litigation. I have considered these factors.
[25] I have also considered the principles in Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), 71 O.R. (3d) 291, [2004] O.J. No. 2634 (C.A.). The fixing of costs should reflect what the court views as a fair and reasonable amount to be paid, rather than any exact measure of the actual costs to the successful litigant.
[26] Although there is some duplication of work, I accept that Mr. Hume was retained as an expert in railway law, and that Mr. Reynolds was a necessary addition to the litigation team because of his expertise in civil litigation in Ontario. The hourly rate charged by the three senior counsel for the defendants was reasonable.
[27] At trial, the parties filed factums and books of authorities. The factual issues were of moderate complexity and the legal issues were highly complex. The issues were of high importance to the parties. The two most important factors are the principle of indemnity, and the amount of costs that the unsuccessful party could reasonably have expected to pay in the event he was unsuccessful.
[28] Although it is preferable, there is no requirement for the losing party, who is not seeking costs, to file a bill of costs. Not filing a bill of costs is a factor that may be taken into account when considering the reasonable expectations of the losing party: see Smith Estate v. Rotstein, 2011 ONCA 491, 106 O.R. (3d) 161, leave to appeal to SCC refused 297 O.A.C. 398, [2011] S.C.C.A No. 441.
[29] If the unsuccessful party wishes to argue that the costs sought are excessive, they should file their own Bill of Costs. This provides a basis for determining whether the amount of time incurred was reasonably within the expectation of the unsuccessful party. In this case, the plaintiff did not produce its own Bill of Costs. In the absence of a costs outline from the plaintiff, it is difficult to gauge what its reasonable expectations were in respect of costs if unsuccessful.
[30] I have reviewed the detailed Bill of Costs of the defendants, the written submissions of the parties and the cases provided. I find that a fair and reasonable award of costs is $250,000, inclusive of HST and disbursements.
III. CONCLUSION
[31] This court orders that GEXR shall pay costs to the defendants in the amount of $250,000, inclusive of taxes and disbursements. These costs are payable forthwith.
Braid, J.
Released: September 9, 2019
COURT FILE NO.: C-868-12
DATE: 2019-09-09
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
GODERICH-EXETER RAILWAY COMPANY LIMITED
- and -
SHANTZ STATION TERMINAL LTD. and PARRISH and HEIMBECKER LIMITED
Respondent
COSTS ENDORSEMENT
CDB
Released: September 9, 2019