Court File and Parties

Court File No.: CV-18-181 (Brantford) Date: 2019/11/14

Superior Court of Justice - Ontario

Re: Michele Guz, By Her Estate Administrator, Ted Guz and IEC Group Inc., Plaintiffs And: Sandra Olszowka and Sandra Olszowka, in her capacity as Estate Trustee for the Estate of Helen Olszowka, Defendants

Before: Justice D.A. Broad

Counsel: Matthew J. Lambert, Counsel for the Plaintiffs Holly V.A. Cunliffe, Counsel for the Defendants

Costs Endorsement

[1] The parties have been unable to settle the issue of costs and have each delivered written submissions on costs.

[2] The defendants seek substantial indemnity costs in the total amount of $32,434.14 comprised of fees in the sum of $26,511.75, HST on fees in the sum of $3,446.53 and disbursements in the sum of $2,475.86.

[3] The defendants argue that they were entirely successful on the motions, and the court’s disposition was nearly identical to the proposal presented by the defendants in their “with prejudice” Offer to Settle dated February 4, 2019, prior to commencement of the plaintiffs’ motion. As such, rule 49.10 of the Rules of Civil Procedure is engaged, supporting an award of costs to them on a substantial indemnity basis.

[4] The plaintiffs submit that no costs should be awarded in respect of the motions, or alternatively, the costs of the motions should be reserved to the trial judge.

[5] With respect to the defendants’ Offer to Settle, the plaintiffs point out that the Offer included a stipulation that the plaintiffs provide an undertaking to pay damages for loss of interest on one-half of the proceeds of sale that would have otherwise accrued to the defendant Sandra Olszowka had she received all of the sale proceeds. The plaintiffs say that this stipulation was not reflected in the court’s disposition of the motions. Accordingly, substantial indemnity costs are not warranted.

[6] The plaintiffs also submit that the hours claimed by the defendants’ counsel and the number of lawyers in respect of which costs are claimed, and their hourly rates, are excessive. Moreover, they say that, in exercising its discretion in awarding costs, the court should have regard to the principle of proportionality set out in rule 1.04 (1.1). The plaintiffs say that the defendants acknowledged that the motions were not complex. Moreover they submit that the motions were not overly important as they did not resolve the substantial issues in the action.

Guiding Principles

[7] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, provides that "subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid."

[8] The factors to be considered by the court, in the exercise of its discretion on costs, are set forth in subrule 57.01(1), including, in particular:

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

[9] The Court of Appeal has observed that modern costs rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behavior by litigants (see Fong v. Chan, 1999 CanLII 2052 (ON CA), [1999] O.J. No. 4600 (Ont. C.A.) at para. 24).

[10] Justice Perrell in the case of 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, [2010] O.J. No. 5692 (Ont. S.C.J.) reformulated the purposes of the modern costs rules, at para. 10, as follows:

(1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements.

[11] It is well known that the overall objective in dealing with costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful party. The expectation of the parties concerning the quantum of costs is a relevant factor to consider. The court is required to consider what is "fair and reasonable" having regard to what the losing party could have expected the costs to be (see Boucher v. Public Accountants Council (Ontario), 2004 CanLII 14579, [2004] O.J. No. 2634 (Ont. C.A.) at para. 26 and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, 2005 CanLII 1042, [2005] O.J. No. 160 (Ont. C.A.)).

Discussion

[12] In my view rule 49.10 is not engaged so as to support an award of substantial indemnity costs to the defendants. The defendants’ Offer to Settle included a stipulation requiring the plaintiffs to provide an undertaking to pay damages for loss of interest on half of the proceeds of sale. More importantly, it did not provide for a restriction on the right of the defendants to encumber the Patterson property pending a sale, as provided for in the court’s disposition which was necessary to make the defendants’ proposal realistic and reasonable.

[13] In my view, the plaintiffs have not demonstrated any reason why the normal rule that costs of a motion should follow the event should not be applied. The defendants were the successful parties on the motions, and no sound basis has been advanced to suggest that they should be denied costs, or that costs should be reserved to the trial judge. The defendants are entitled to costs of the motions on a partial indemnity basis.

[14] I find that at certain stages of the motion proceeding there was duplication in the involvement of counsel for the defendants. With respect to receipt and review of the plaintiffs’ motion record, preparation of responding motion materials and correspondence and communication with counsel there appeared to be involvement of senior counsel in reviewing the work of more junior counsel. It appears that two lawyers attended on the cross-examinations and two lawyers and a summer student were involved in preparation of the Factum and Book of Authorities. Although the involvement of multiple lawyers with different levels of experience may be justified within the firm’s retainer arrangements with its clients, such involvement would not necessarily have been within the reasonable expectation of the opposing parties.

[15] Applying the principle of proportionality, I would reduce the defendants’ partial indemnity fee component from $17,674.50 to $14,000 plus HST thereon in sum of $1,820, and disbursements including HST in the sum of $2,475.86 for total partial indemnity costs of $18,295.86.

Disposition

[16] It is ordered that the plaintiffs pay to the defendants their costs on a partial indemnity basis the sum of $18,295.86 within thirty days hereof.

D.A. Broad J

Date: November 14, 2019