COURT FILE NO.: 14-62031
DATE: 2019/11/19
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Louis Facchini (Carrying on Business Under the Firm Name and Style of “First Porter Consultancy”), Plaintiff
AND
The Attorney General of Canada and Paul Piché, Defendants
BEFORE: Justice P.E. Roger
COUNSEL: William J. Sammon, Counsel for the Plaintiff
Matthew Johnson, Jennifer Bond and Mary Roberts, Counsel, for the Defendants
HEARD: In Writing
COSTS ENDORSEMENT
Overview
[1] The plaintiff was unsuccessful following a three-week trial held in February 2019. The plaintiff sued the defendants for damages totaling approximately two million dollars, alleging negligent misrepresentation, negligence, and defamation (see: Facchini v. The Attorney General of Canada, 2019 ONSC 3902).
Position of the Parties
[2] The defendants are asking for costs in the amount of $523,724.90. Their actual rate or full indemnity fees total $571,913.61, and their disbursements total $69,703.44 ($62,178.75 of their disbursements relate to the invoices of their expert witness). They seek their disbursements together with their fees on a partial indemnity basis up until September 7, 2018, the date of their offer to settle, and their fees on a substantial indemnity basis after September 7, 2018. The defendants argue that their offer to settle, coupled with the conduct of the plaintiff during trial, and his allegations of bad faith, warrant an elevated costs award.
[3] On September 7, 2018, the defendants made an offer to settle the action by offering to pay to the plaintiff the all-inclusive amount of $100,000. The offer remained open for acceptance until after the commencement of the trial. The defendants argue that in addition to their offer, the conduct of the plaintiff unnecessarily lengthened the trial, which, together, should entitle them to a higher scale of costs. They argue that the plaintiff unnecessarily lengthened the trial by requiring the testimony of witnesses whose evidence, they allege, was not necessary, and by unduly focusing on damages. As well, the defendants argue that an elevated scale of costs is required because of the plaintiff’s unfounded allegations of malice and bad faith.
[4] The plaintiff argues that there should be no costs of the action awarded to the defendants because the defendants repeatedly failed to produce relevant documents. He argues that in the interest of fairness, a message should be delivered to the Federal Crown that it must retain and disclose in a timely manner all relevant documents or else be sanctioned. He argues that in this case the proper sanction would be for the defendants to receive no costs or, alternatively, a nominal amount.
Relevant Law and Factors That May Be Considered When Addressing Costs
[5] The costs of a proceeding are in the discretion of the Court (Courts of Justice Act, R.S.O. 1990, c. C. 43, s. 131 (1)). That discretion must be exercised on a principled basis (Davies v. Clarington Municipality, 2009 ONCA 722, 100 O.R. (3d) 66, at para. 40). Fixing costs is not merely a mechanical exercise; the amount awarded should, considering all the circumstances, be fair and reasonable (Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.)). In a proper case, costs may be awarded against a successful party (rule 57.01 (2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194).
[6] Rule 49.10 of the Rules of Civil Procedure applies differently to plaintiffs than to defendants. Under that rule, a defendant is not entitled to substantial indemnity costs only because it made an offer to settle that is greater than the amount awarded - the rule provides that the defendant is entitled to partial indemnity costs from the date of the offer unless the court orders otherwise (see: Davies, at para. 40; St. Elizabeth Home Society v. City of Hamilton, 2010 ONCA 280, 319 D.L.R. (4th) 74, at para. 90; and Re Conforti, 2015 ONCA 708 at para. 17). The Court of Appeal and the Supreme Court have indicated that elevated costs are warranted if (1) authorized under rule 49.10, or (2) justified by the reprehensible, scandalous, or outrageous conduct of one of the parties (see: Re Conforti, at para. 18; and Elekta Ltd. v. Rodkin, 2012 ONSC 2062, at para. 40). As well and in any event, an offer to settle is a factor to consider when awarding costs (see: rule 49.13 and more generally s. 131(1) of the Courts of Justice Act).
[7] The factors which may be considered when awarding costs, in addition to success and any offer to settle, are listed in rule 57.01 of the Rules of Civil Procedure.
Analysis
[8] The defendants were the successful parties in this action. I found that the defendants did not owe a duty of care to the plaintiff. I also found that negligent misrepresentation, negligence, and defamation were not established. The duty of good faith was also argued by the plaintiff, and I found no legal basis for the plaintiff to successfully advance this argument.
[9] The defendants made an offer to settle on September 7, 2018, offering to pay to the plaintiff the all-inclusive amount of $100,000. As indicated above, the costs consequences of this offer to settle under rule 49.10 do not entitle the defendants to substantial indemnity costs (but rather to partial indemnity costs from the date of the offer); it is nonetheless a factor to be considered. Indeed, if the plaintiff had accepted that offer, a three-week trial would have been avoided and the plaintiff would have received $100,000.
[10] The defendants’ lawyers were appropriately experienced for the handling of this matter and the hourly rates charged are reasonable. However, too many lawyers and paralegals worked on this matter for the defendants, and generally too many hours were docketed. I find that two lawyers attending the trial and one paralegal would have been reasonable. I recognize that this was a complicated matter, with complicated production issues (I will come back to the latter), but nonetheless find that too much time was spent on pleadings, document production, research and opinions, drafting the mediation and settlement conference brief, preparing for discovery, preparing for trial, and that too many lawyers and staff attended the trial. I therefore find that the amounts sought for fees should be significantly reduced.
[11] I find that the plaintiff understood that, if unsuccessful, he might have to pay significant costs. The plaintiff is represented by an experienced lawyer who would have discussed this with his client. The plaintiff has not filed a bill of costs or a cost outline; he was not required to do so. However, that is a factor that I can consider when considering the amount of costs that the plaintiff, here the unsuccessful party, could reasonably have expected to pay (see: Smith Estate v. Rotstein, 2011 ONCA 491, 106 O.R. (3d) 161, at para. 50). Nonetheless, the plaintiff correctly expected, as he argued, that duplication and unnecessary costs would be avoided by ensuring that not too many lawyers and paralegals worked on the file and attended at trial.
[12] This was a complex action involving complex legal and factual issues of liability and damages. It was also difficult for the government to identify relevant documents, which caused a number of issues relating to the production of documents, apparently because of the number of employees and governmental agencies involved.
[13] The issues raised in this action are important to the parties. The plaintiff was impacted personally and financially by the criminal charges, and this action was important to him to seek redress for what he perceived to have been the wrongful conduct of the defendants. Similarly, the disposition of these issues was important to the Federal Crown for a number of reasons, probably including the precedential value of such a decision. As a result, it was reasonable to expect that costs for both sides would be significant - both sides wanted to be successful.
[14] However, as indicated above, I find that the actual rate or full indemnity fee amount sought by the Crown is out of proportion with the complexity and importance of this matter. Full indemnity fees in the range of about $300,000 would have been more reasonable (than the amount of $572,000 claimed by the defendants). However, I disagree to some extent with the arguments of the plaintiff concerning the defendant’s disbursements. For the most part I find the invoices of the defendants’ expert fair and reasonable. The significant difference in cost between the two experts reflects their respective levels of engagement. The plaintiff’s expert was asked to make assumptions from which he calculated damages. This was, by comparison, a simple mandate. The defendants’ expert reviewed documents to opine on damages. The difference in approach, and the usefulness of his opinion, justify most of the amounts charged by the defendant’s expert. I would, however, reduce his accounts by $12,000 to reduce the time of his assistant and to reduce some of his time spent editing his report.
[15] The Crown argues that the conduct of the plaintiff unnecessarily lengthened the duration of this trial; I disagree. I found during this trial, as per the comments made in my written Reasons for Decision (see: Facchini, at para. 124 – 126), that the defendants did not disclose all relevant documents. This became apparent during the trial when documents that should have been identified earlier were produced just prior to trial (and during trial), when Crown witnesses brought with them relevant documents not previously disclosed by the defendants, when a senior government employee testified that it was her practice to destroy emails after two years without keeping a paper or other copy, and when the evidence established that senior government employees sent and received an email asking that communications on sensitive issues about this matter be kept to a minimum.
[16] I politely cautioned the government at the conclusion of trial that its significant size must be managed to ensure that, like all litigants, it meets its obligations of disclosing relevant documents. I stressed orally and repeated in my written reasons (see para. 126) that the size of the Federal Crown cannot be used as a shield to limit the government’s responsibility to meet its legal obligations in that regard. I therefore do not accept the Crown’s arguments that the conduct of plaintiff unnecessarily lengthened the trial. On the contrary, I find that the plaintiff acted reasonably when he summoned former and current government employees as witnesses at trial under rule 53.07. The unsettled state of the Crown’s document production justified these requests (even if the time spent was ultimately not overly productive). For the same reasons, I find that the plaintiff did not spend too much time on damages.
[17] I also disagree with the Crown’s arguments that the plaintiff’s allegations of malice and bad faith warrant that costs be ordered on an elevated scale. It was necessary for the plaintiff to plead malice to establish defamation, and it was reasonable to plead defamation. The plaintiff did not allege fraud, and bad faith was unsuccessfully argued on the evidence, not on bald or inflammatory pleadings. On the contrary, the plaintiff and both of his lawyers were always respectful of the witnesses and of the process. As well, the plaintiff’s lawyers did not ask inappropriate or unnecessary questions. This case is therefore quite different from cases where a higher scale of costs was ordered because of bald allegations of inappropriate conduct, or because of reprehensible conduct on the part of one of the parties. Being unsuccessful at trial does not always mean that a legal action should not have been brought, or even that it was devoid of any merit. Here, although the plaintiff was ultimately unsuccessful, I understand why the plaintiff instituted and pursued this action. He felt strongly that he had been wronged by the defendants and he sought redress. As indicated, although the plaintiff’s expectations did not translate into a successful legal action, the plaintiff and his lawyers’ conduct at trial was exemplary. They pursued this action at trial professionally, and the fact that the plaintiff was unsuccessful does not, in the circumstances, warrant a higher scale of costs.
[18] I therefore reject the Crown’s submissions that it should receive substantial indemnity costs from September 7, 2018. I do so because a defendant is not entitled to a substantial indemnity award under rule 49.10 where it makes an offer to settle that is greater than the amount awarded and because I do not find that the plaintiff acted reprehensibly. On the contrary, as indicated above, I find that although the plaintiff made unsuccessful allegations, it was reasonable for him to do so and the evidence adduced during trial did not go beyond appropriately questioning credibility and vigorously presenting his case.
[19] The plaintiff’s costs submissions tend to re-argue unsuccessful arguments or to raise arguments rather than to rely on judicial findings. Nonetheless, as indicated above and in my earlier decision, I agree that the defendants, the federal government, failed to disclose all relevant documents, and that this unnecessarily lengthened the trial. I note, however, that I was not presented a discovery plan and that proportionality in discovery was not argued.
[20] The federal government, considering its status, should be a model litigant. It should therefore have in place appropriate systems to timely search for, identify, and preserve relevant documents for civil actions wherever located amongst its many departments and employees. While I appreciate that this may sometimes be a gargantuan task, and while I sympathize with the difficult task of lawyers acting for the government, a party to a civil action exercising a proportional effort cannot be allowed to rely on its size as an excuse for failing to meet its production obligations. Efficient training of its staff about their obligations and systems must be instituted and maintained. Here, it became apparent from the evidence that the government failed to produce all relevant documents, which lengthened the trial.
[21] But for the defendants noted issues with disclosure of documents, I would have assessed the costs of the defendants, on a partial indemnity scale, at $235,000 (all-inclusive, calculated as: $180,000 for fees and $55,000 for disbursements). Considering all of the above, I find that a fair and reasonable disposition of costs is to award $100,000, all-inclusive. I find that this amount represents a fair and reasonable balance between the costs consequences of the defendants’ success and offer to settle versus the improper conduct of the defendants in failing to timely produce all relevant documents. It indemnifies in part the successful party, recognizes the impact of rule 49.10, recognizes the complexity and importance of this matter to parties, takes into account the amount of costs that the plaintiff could reasonably be expected to pay (in these circumstances), while at the same time it also sends a message to the defendants that it must do better.
Disposition
[22] Consequently, costs of this action are fixed in the all-inclusive amount of $100,000, payable by the plaintiff to the defendants.
Justice P.E. Roger
Released: November 19, 2019
COURT FILE NO.: 14-62031
DATE: 2019/11/19
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Louis Facchini (Carrying on Business Under the Firm Name and Style of “First Porter Consultancy”), Plaintiff
AND
The Attorney General of Canada and Paul Piché, Defendants
BEFORE: Justice P.E. Roger
COUNSEL: William Sammon, Counsel for the Plaintiff
Matthew Johnson, Jennifer Bond and Mary Roberts, Counsel, for the Defendants
COSTS ENDORSEMENT
Justice P.E. Roger
Released: November 19, 2019