1605041 Ontario Limited v. 2424033 Ontario Ltd.

BARRIE COURT FILE NO.: CV-17-1000

DATE: 20190926

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 1605041 Ontario Limited, Applicant

AND:

2424033 Ontario Ltd., Respondent

BEFORE: The Hon. Mr. Justice G.M. Mulligan

COUNSEL: R.C.M. Belsito, Counsel for the Applicant

E. Bisceglia and S. Turajlich, Counsel for the Respondent

HEARD: By written submissions

COSTS ENDORSEMENT

[1] This matter proceeded by way of a trial, heard May 15 and 16, 2018. For Reasons released on November 27, 2018, judgment was granted in favour of the respondent, 2424033 Ontario Ltd. (242). By way of a supplementary motion brought by 242, pursuant to r. 59.06(1), 242 was successful in seeking relief with respect to an amendment of the judgment regarding calculations for missed mortgage payments. That motion was opposed by 1605041 Ontario Limited (160). 242 was successful.

[2] The parties have now made submissions with respect to the costs of that motion and the trial that preceded it.

[3] 242 submits that it was the successful party. It seeks costs on a partial indemnity basis until its r. 49 offer and substantial indemnity costs thereafter. Costs sought can be broken down as follows:

Item

100% Partial Indemnity up to date of the 242 Offer

Substantial Indemnity from date of the 242 Offer forward

Fees (and HST)

$32,088.00

$ 53,570.00

Subtotal Fees

$32,088.00 + $53,570.00 =

$ 85,658.00

HST on Fees

$ 11,135.54

Disbursements

$ 11,554.92

TOTAL

$108,348.46

Position of 160

[4] 160 submits that success at trial was divided and each party should bear their own costs. For comparison purposes, 160 submits that its costs on a substantial indemnity basis were $95,183.10, including HST and disbursements.

Success at Trial

[5] In my view, 242 enjoyed substantial success at trial. It was found that it had a valid and enforceable first right of refusal and obtained a monetary judgment by way of supplementary reasons indicating that $395,200 was required to discharge the mortgage between the parties.

Offer to Settle

[6] 242 made various offers to settle prior to trial, including a r. 49 offer made February 27, 2018. 242’s offer to settle requested payment of $375,000 to discharge its mortgage on the subject property, and it required 160 to honour its right of first refusal pursuant to terms of a joint venture agreement and the second mortgage between the parties. That offer was not accepted by 160.

[7] 160 made its own offer to settle dated August 11, 2017, indicating that it would pay $350,000 into court towards discharging the second mortgage, subject to a trial to have the court fix the actual quantum owed. The offer to settle made no reference to the right of first refusal contained in the joint venture agreement or the mortgage between the parties.

[8] Rule 49 provides consequences when r. 49 offers are not accepted. Rule 49.10(1) provides:

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

[9] In my view, 242 has received a judgment as favourable or more favourable than its r. 49 offer and is therefore entitled to partial indemnity costs to the date of the offer and substantial indemnity costs thereafter.

Analysis

[10] It is well-settled that s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides considerable judicial discretion on the issue of fixing costs. Rule 47.01 of the Rules of Civil Procedure sets out various factors that the court can consider in exercising this discretion, including the principle of indemnity, the amount of costs an unsuccessful party would expect to pay, the complexity of the proceeding and the importance of the issue. Those principles were highlighted by the Ontario Court of Appeal decision of Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634. At para. 26, Armstrong J.A. stated:

In particular, this rule makes it clear that the fixing of costs does not begin and end with a calibration of hours times rates. The introduction of a cost grid was not meant to produce that result, but rather, to signal that it is one factor in the assessment process, together with the other factors in Rule 57.01. Overall, as the court has said, the objective is to fix an amount that is fair and reasonable for an unsuccessful party to pay in a particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.

Conclusion

[11] I have reviewed the Bill of Costs submitted by 242 and find that the time spent, and hourly rate are reasonable under the circumstances. I therefore award costs on a partial indemnity basis to the date of the r. 49 offer in the amount of $32,088 plus HST, together with substantial indemnity costs from the date of the r. 49 offer in the amount of $53,570 plus HST. I find that the disbursements claimed of $11,554.92 are fair and reasonable and are comparable to the disbursements incurred by 160. I therefore award costs, including HST and disbursements in the amount of $108,348.46, payable by 160 to 242 within thirty days of the release of this decision.

MULLIGAN J.

Date: September 26, 2019