COURT FILE NO.: CV-19-00000240-0000
DATE: 2019/10/16
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Canadian Western Trust Company (In Trust for RRSP Plan #10084752 and Plan #10084190), Plaintiff
AND
1324789 Ontario Inc., Martha Lorraine Beach, Johnathan Gary Beach and 1073650 Ontario Inc., Defendants
AND
1324789 Ontario Inc., Martha Lorraine Beach, Johnathan Gary Beach and 1073650 Ontario Inc., Plaintiffs by Counterclaim
AND
Canadian Western Trust Company (In Trust for RRSP Plan #10084752 and Plan #10084190), Heliotrope Investment Corporation, Magenta Capital Corporation and Magenta Mortgage Investment Corporation, Defendants by Counterclaim
BEFORE: Justice R. Ryan Bell
COUNSEL: Charles Merovitz, for the Plaintiff/Defendant by Counterclaim
Charles Hammond, for the Defendants/Plaintiffs by Counterclaim
Denise Sayer and Adam Stikus, for the Defendants by Counterclaim Heliotrope Investment Corporation, Magenta Capital Corporation and Magenta Mortgage Investment Corporation
HEARD: In writing
Costs ENDORSEMENT
[1] The defendants (the “Beach parties”) sought a certificate of pending litigation over nine parcels of land to stop power of sale proceedings. I dismissed the motion on the basis that the Beach parties failed to meet the threshold requirement because they have no reasonable claim to an interest in land.
[2] As the successful parties on the motion, Canadian Western Trust Company and the other defendants by counterclaim (collectively, the “Marshall parties”) are entitled to their costs. The Marshall parties seek their costs on a full indemnity basis ($30,843.85) or, in the alternative, on a substantial indemnity basis ($24,919.60).
[3] The Beach parties acknowledge that the Marshall parties were successful on the motion and are presumptively entitled to their costs; however, they say that costs on a partial indemnity basis are appropriate. They also submit that the quantum claimed is excessive.
Scale of Costs
[4] In my view, this is not a case for costs on a full indemnity basis. The issue is whether costs on a substantial indemnity basis are warranted.
[5] Substantial indemnity costs are very much the exception; they should be awarded in “rare and exceptional cases to mark the court’s disapproval of the conduct of the party in the litigation” (Hunt v. TD Securities Inc. (2003), 2003 3649 (ON CA), 66 O.R. (3d) 481, at para. 123). The conduct in question must be “reprehensible, scandalous or outrageous” (Young v. Young, [1993] 4 S.C.R. 3, 1993 34 (SCC), at para. 250).
[6] Not every case of unsuccessful allegations of fraud will result in an award of substantial indemnity costs because not all attempts will amount to reprehensible, scandalous or outrageous conduct; however, where a party makes such allegations unsuccessfully at trial and with access to information sufficient to conclude that the other party was merely negligent and neither dishonest nor fraudulent, costs on a substantial indemnity scale are appropriate (Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, at para. 26, citing M.M. Orkin, The Law of Costs (2nd ed. (loose-leaf), at para. 219).
[7] As Lax J. stated in Manning v. Epp, [2006] O.J. No. 4239 (S.C.J.) at paras. 7-9:
Costs on the higher scale can be awarded as a form of chastisement and as a mark of the court’s disapproval of a litigant’s conduct… The task for the court is to punish and deter unwarranted allegations and egregious conduct, but without discouraging the tenacious pursuit and advancement of serious claims of impropriety in a proper case.
[8] The Beach parties’ motion was an ill-conceived effort to stop power of sale proceedings in the absence of any evidence of fraud or any pleading of fraud in relation to the mortgages. They relied on the alleged “fraudulent scheme” set out in paragraph 27 of their statement of defence and counterclaim even though on its face, this allegation of fraud had nothing to do with the validity of the mortgages or the Beach parties’ ability to redeem the mortgages.
[9] If the Beach parties had any basis to alleged deliberate wrongdoing by the Marshall parties in relation to the mortgages, they ought to have tried to prove their allegation. They did not. This was not the tenacious pursuit of a certificate of pending litigation founded on a serious claim of fraud in relation to the mortgages. In my view, the pursuit of the motion was reprehensible litigation conduct that justifies punitive cost sanctions.
[10] The Marshall parties are entitled to their costs of the motion on a substantial indemnity basis.
Quantum of Costs
[11] Having concluded that the Marshall parties are entitled to substantial indemnity costs, I must consider the appropriate amount to be awarded. The Beach parties argue that the quantum of costs claimed is excessive.
[12] In Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), the Court of Appeal for Ontario stated that costs “should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.” The costs must not only be reasonable as between a lawyer and her client, but the amount must also be within a range that the unsuccessful party ought reasonably to expect.
[13] The incurring of costs and time spent by counsel is essentially a judgment exercise. The prudence of counsel’s judgment must be considered at the time the work was done. It is inappropriate to apply a test of hindsight to determine whether the time spent was reasonably necessary to advance the client’s position.
[14] The Beach parties submit that the 77 hours spent on behalf of the Marshall parties by counsel and a law clerk was excessive. The Beach parties also say that the involvement of four counsel must have involved some duplication of effort. The Beach parties’ complaint rests with the time spent and not with the rates charged by individual counsel. I find such rates to be reasonable.
[15] In my view, the total amount of counsel fees claimed on a substantial indemnity basis – $23,697.01 – is a fair and reasonable amount in the particular circumstances of this motion. I have reached this conclusion for the following reasons.
[16] First, I am not prepared to second guess the Marshall parties’ decision to involve Paris & Company, given that firm’s involvement in and knowledge of the inter-related actions. The Beach parties initially brought their motion on a without notice basis. Tranmer J. concluded that they ought not to have done so because lawyers for the other parties were already involved in the inter-related actions, and the evidence put forward by the Beach parties was insufficient to warrant proceeding without notice. Tranmer J. required that the Beach parties serve Canadian Western and the other defendants by counterclaim. The inter-related actions were very much implicated in the Beach parties’ motion for a certificate of pending litigation. The defendants by counterclaim were entitled to their choice of lawyer, including counsel of record in the inter-related actions.
[17] Second, the Beach parties brought their motion on short notice. There was no need for them to do so. I also note that in securing the early motion date, the Beach parties significantly underrepresented the total time required for the hearing of the motion. I accept that responding to the motion on an urgent basis increased the costs of the Marshall parties. It may have also resulted in some duplication of effort on the part of counsel. If that was the result, it is one that ought to have been anticipated by the Beach parties as a direct consequence of their election to bring their motion on short notice. I note that the Marshall parties coordinated by preparing a single responding record and one factum on the motion.
[18] Third, it is difficult to address the reasonable expectations of the unsuccessful party withoutat least some information as to the costs and the unsuccessful party incurred in addressing the same issues. In this case, the Beach parties have not provided me with a bill of costs. Such disclosure would have been helpful, given that the Beach parties’ main complaint is that the time spent by counsel for the Marshall parties was excessive.
[19] With respect to disbursements, the Beach parties submit that the claim for disbursements for out of town counsel should not be borne by them. I accept that the Marshall parties should not be entitled to recover the cost of overnight accommodation ($349.64). I will also allow only $500 for train travel expense; the total amount claimed strikes me as high.
[20] Taking into account all of the above, I fix the Marshall parties costs of the motion on a substantial indemnity basis in the amount of $24,500, inclusive of disbursements and HST. This amount is to be paid by the Beach parties within 30 days.
Justice R. Ryan Bell
Date: October 16, 2019
COURT FILE NO.: CV-19-00000240-0000
DATE: 2019/10/16
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Canadian Western Trust Company (In Trust for RRSP Plan #10084752 and Plan #10084190), Plaintiff
AND
1324789 Ontario Inc., Martha Lorraine Beach, Johnathan Gary Beach and 1073650 Ontario Inc., Defendants
AND
1324789 Ontario Inc., Martha Lorraine Beach, Johnathan Gary Beach and 1073650 Ontario Inc., Plaintiffs by Counterclaim
AND
Canadian Western Trust Company (In Trust for RRSP Plan #10084752 and Plan #10084190), Heliotrope Investment Corporation, Magenta Capital Corporation and Magenta Mortgage Investment Corporation, Defendants by Counterclaim
BEFORE: Justice R. Ryan Bell
COUNSEL: Charles Merovitz, for the Plaintiff/Defendant by Counterclaim
Charles Hammond, for the Defendants/Plaintiffs by Counterclaim
Denise Sayer and Adam Stikus, for the Defendants by Counterclaim Heliotrope Investment Corporation, Magenta Capital Corporation and Magenta Mortgage Investment Corporation
COSTS ENDORSEMENT
Justice R. Ryan Bell
Released: October 16, 2019