COURT FILE NO.: CV-18-00597968
DATE: 2019 10 17
SUPERIOR COURT OF JUSTICE – ONTARIO
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ROYAL & SUN ALLIANCE INSURANCE COMPANY OF CANADA, Plaintiff
AND:
EURO LANDSCAPE & GROUNDS INC., PARRHILL FINANCIAL SERVICES INC., and MARK CICHON, Defendants
BEFORE: Ricchetti J.
COUNSEL: A. Punzo, for the Plaintiff, Royal & Sun Alliance Insurance Company of Canada (“RSA”)
A. Warner, for the Defendants
HEARD: By written submissions
ENDORSEMENT
Background
[1] Written submissions were received from counsel.
[2] Partial Judgment was granted in favour of RSA for the reasons dated July 19, 2019.
[3] Costs of the summary judgment motion were reserved.
Position of the Parties
[4] RSA claims $44,803.18 “for its actual costs of this motion from January 9, 2019”. RSA relies on the “Indemnification” provision in the Indemnity and Security Agreements (“ISA”) (described in my reasons) which provide that RSA is entitled to its counsel’s fees and disbursements “on a solicitor and client basis, and legal fees of claimants counsel.”
[5] The Defendants submit that RSA’s cost evidence claimed falls short of establishing the fair and reasonable costs incurred for the motion, regardless of the scale of costs. In any event, the Defendants claim that any cost award should be reduced due to RSA’s error naming the wrong parties to the claim, failing to correct such error when it came RSA’s attention and nevertheless proceeding with the partial summary judgment motion resulting in unnecessary additional costs and delay.
The Law
[6] Generally, a court will enforce contractual terms for costs. In Bosse v. Mastercraft, 1995 CanLII 931 (ON CA), [1995] O.J. No. 884 (C.A.), para. 66 the Court of Appeal stated:
As a general proposition, where there is a contractual right to costs, the court will exercise its discretion so as to reflect that right. However, the agreement of the parties cannot exclude the court’s discretion; it is open to the court to exercise its discretion contrary to the agreement. The court may refuse to enforce the contractual right where there is good reason for so doing ‑ where, for instance, the successful mortgagee has engaged in inequitable conduct or where the case presents special circumstances which render the imposition of solicitor and client costs unfair or unduly onerous in the particular circumstances.
[7] Even when the court determines to enforce a contractual term for costs, it remains with the court to ensure that the full indemnity costs are fair and reasonable. In Romspen Investment Corp. v. 6711162 Canada Inc. (2014), 19 C.B.R. (6th) 131, at para. 3, Brown J. (as he then was) stated:
While Romspen is entitled to full indemnity costs by virtue of the mortgage, a contractual right to the costs of enforcement proceedings is subject to the court’s over-riding duty to ensure that costs awarded are fair and reasonable. Put another way, when a party, relying on a contractual term, seeks an award of full indemnity costs, the party must demonstrate that the costs sought are reasonable full indemnity costs.
ANALYSIS
[8] RSA submits that since the court found that RSA’s prior expenditures were included in the judgment awarded, then RSA’s subsequent expenditure, being its legal costs of this partial summary judgment motion, should also be included on a full indemnity basis.
[9] I disagree.
[10] Paragraphs 106 and 108 of my reasons referred to subsequent expenditures. However, it does not follow that legal costs of the motion (or other legal costs associated with litigation) claimed by RSA, are not subject to the court’s overriding judicial obligation and discretion to ensure they are fair and reasonable.
[11] I am satisfied that RSA’s claimed legal costs of the motion are subject to being fair and reasonably incurred for this partial summary judgment motion.
[12] Let me deal with the issue of the erroneous named Defendants. I agree that this error was not immediately corrected when it came to the Plaintiff’s counsel’s attention in the Statement of Defence. This resulted in a delay in the disposition of this motion. I agreed that the subsequent amendment and delay increased this motion’s legal costs to some extent. It is not reasonable, and the Defendants should not be required to pay these increased legal costs caused by the amendment and delay.
[13] I have reviewed RSA’s Bill of Costs. I agree that RSA’s Bill of Costs does not have enough information and detail to permit the Defendants’ counsel or this court to determine whether the amount claimed by RSA for legal costs of this motion is fair and reasonable regardless of the scale of costs. For example, there is no breakdown of the hours claimed by counsel or the legal services provided by counsel for those hours. This is particularly important in this case because there are many aspects to RSA’s involvement in numerous proceedings relating to this project such as the claims of contractors and suppliers unrelated to this partial summary judgment motion.
[14] Further, there is no way to determine whether (or the extent) of the costs incurred arising from the erroneous named Defendants.
[15] RSA points to various offers made prior to the motion in correspondence between counsel. On February 26, 2019, RSA offered to settle against the Defendants on terms that were as favourable as ordered against Parrhill and more favourable as ordered against Euro/Cichon. RSA made a further offer on March 7, 2019 which increased the amount of the proposed settlement against Euro/Cichon to over $3.1 million dollars (essentially the amount awarded by the court). I agree that the Plaintiff’s offers were as good as awarded by this court on the partial judgment motion.
[16] RSA is entitled to costs. I see no reason not to award “solicitor client costs”.
[17] What are fair and reasonable costs on a solicitor and client basis for this partial summary judgment motion is the fundamental question.
[18] One indicia of what constitutes fair and reasonable costs is what the Defendants would have expected to pay if they lost the partial summary judgment motion. The parties were provided their Cost Outlines prior to this court’s decision. The Defendants’ Cost Outline for this partial summary judgment motion, dated April 30, 2019, sought partial indemnity costs of $56,309.25 and $68,375.52 on a substantial indemnity basis.
[19] Given this Cost Outline it is difficult for the Defendants to now object to the amount claimed of $44,803.18 by RSA as “actual” fees and expenses as “solicitor client” costs.
[20] From this I make a deduction of $5,000 for the delay and increased expenses regarding the misnaming of the Defendants.
Conclusion
[21] Considering the above, costs of the partial summary judgment motion is fixed at $39,803.18 all inclusive, payable forthwith by the Defendants jointly.
Ricchetti J.
Date: October 17, 2019
COURT FILE NO.: CV-18-00597968
DATE: 2019 10 17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
RE: ROYAL & SUN ALLIANCE INSURANCE COMPANY OF CANADA, Plaintiff
AND:
EURO LANDSCAPE & GROUNDS INC., PARRHILL FINANCIAL SERVICES INC., and MARK CICHON, Defendants
COUNSEL: A. Punzo, for the Plaintiff Warner, for the Defendants
ENDORSEMENT
Ricchetti J.
Released: October 17, 2019