Court File and Parties

COURT FILE NO.: CV-13-494453 and CV-14-496639

DATE: 2019-12-27

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: SCOTT, PICHELLI & EASTER LIMITED, as assignee for CAM MOULDING & PLASTERING LTD., and GENTRY ENVIRONMENTAL SYSTEMS LTD. BY ITS TRUSTEE, SCOTT, PICHELLI & EASTER LIMITED, Plaintiffs

AND:

DUPONT DEVELOPMENTS LTD., THE ROSE AND THISTLE GROUP LTD., FLORENCE LEASEHOLDS LIMITED, BEATRICE LEASEHOLDS LIMITED and ADA LEASEHOLDS LIMITED, Defendants

BEFORE: Sossin J.

COUNSEL: Antonio Conte, Counsel for the Plaintiffs Michael Handler and Emily Evangelista, Counsel for the Defendants

COSTS ENDORSEMENT

OVERVIEW

[1] On March 26, 2019, I heard a motion is brought by Scott, Pichelli & Easter Ltd. on behalf of the plaintiffs, two companies, Cam Moulding & Plastering Ltd. (“Cam Moulding”) and Gentry Environmental Systems Ltd. (“Gentry”) (collectively the “Lienholders”), seeking to oppose confirmation of the Report of Master Albert dated May 17, 2018 (Cam Moulding & Plastering Ltd. v Dupont Developments Ltd., 2018 ONSC 3126).

[2] Master Albert found that the defendants, Florence Leaseholds Limited, Beatrice Leaseholds Limited, and Ada Leaseholds Limited (the “Defendant Mortgagees”), had priority over the Lienholders under s.78(3) of the Construction Act, R.S.O. 1990, c. C.30 (previously the Construction Lien Act), and therefore were entitled to certain funds paid into Court following the sale of the commercial property, located at 1485 Dupont Street, in Toronto, (the “Dupont Property”).

[3] On July 30, 2019, I released my decision (Scott, Pichelli & Easter Ltd. et al. v. Dupont Developments Ltd. et al., 2019 ONSC 4555). I found that Master Albert’s Report should be confirmed in all respects except one. The one area where the Report was not confirmed dealt with the treatment of certain fees and expenses under s.78(3) of the Act. As a result of my analysis, it was the Lienholders and not the Defendant Mortgagees who became entitled to the moneys paid into Court equal to the value of the Lienholders’ liens.

[4] On November 6, 2019, I denied motions from both parties for a reconsideration of this decision (now reported at Scott, Pichelli & Easter Ltd. et al. v. Dupont Developments Ltd. et al., 2019 ONSC 6789).

[5] At the end of the July 30, 2019 decision, I dealt with the costs of the motion, but I set out that it would be necessary to revisit the costs order of Master Albert:

[119] In her supplemental reasons for judgment on costs, dated May 24, 2018, Master Albert concluded that costs should follow the event, and awarded the Defendant Mortgagees costs in the amount of $86,235.50. In light of these reasons, that costs award will need to be set aside and a fresh determination of costs made.

[6] On August 23, 2019, I received submissions on behalf of the Lienholders on the issue of the costs of the action.

[7] The Lienholders state that an offer to settle was made on February 13, 2018, before any evidence was heard in the action. As the result is now better for the Lienholders than the offer, the Lienholders argue substantial indemnity costs should be paid from the time of the offer.

[8] The Lienholders sought $117,279.01 in costs for the action before Master Albert and in their submissions, they now seek this again in recognition of their successful result in the cause.

[9] On November 27, 2019, the Defendant Mortgagees provided their costs submissions.

[10] The Defendant Mortgagees take the position that the main issue in the dispute was the priority of the mortgage under s.78(3) of the Construction Lien Act. The trial took over seven days. The plaintiffs adduced significant evidence on the contamination of the Dupont property and its proper valuation. The issue determined to give rise to the aspect of the Master’s Report not confirmed occupied a very modest half-day portion of a single day.

[11] The Defendant Mortgagees argue that the Lienholders should not be able to recover costs for disbursements of their expert, who gave evidence on issues on which the Lienholders were not successful before Master Albert, and in areas of the Master’s Report confirmed in the July 31, 2019 decision.

[12] The Defendant Mortgagees state that, in awarding her costs, the Master had given consideration to the Defendant Mortgagees’ Rule 49 offer to settle for $90,000.00 in February, 2018, and awarded partial indemnity costs up to that point in time, and substantial indemnity costs thereafter. Master Albert, in applying the Rule 57 factors to the exercise of discretion on costs, reduced the Defendant Mortgagees’ costs requests at trial by approximately 54% and they argue a similar reduction should be applied to any entitlement of the Lienholders to costs of the action before the Master. This calculation would reduce the costs to $45,649.06.

[13] The Defendant Mortgagees argue that the Lienholders’ costs should further be discounted to reflect the fact that they were successful on just one issue. Applying the formula that only 1/14 of the time was spent on this issue and therefore, only 1/14 of the overall costs should be awarded, the Defendant Mortgagees come up with the calculation of $3,260.65, which they submit ought to be the total sum of costs to which the Lienholders are entitled in the action.

[14] Costs are discretionary and informed by the factors set out in Rule 57.01 of the Rules of Civil Procedure. The breadth of this discretion has been confirmed by the Ontario Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario, (2004), 71. O.R. (3d) 291 (C.A.).

[15] The Court of Appeal has made it clear that the overriding principle when fixing costs is that the amount of costs awarded be reasonable in the circumstances: see Davies v. Corporation of the Municipality of Clarington, 2009 ONCA 722, 100 O.R. (3d) 66, at para. 52.

[16] I do not find the arguments of either the Lienholders or the Defendant Mortgagees entirely persuasive.

[17] This case presents a distinct challenge in that the Lienholders have obtained success on an issue which involved a small amount of time and evidence, and were unsuccessful on many other issues which took more time and occupied more evidence. Proportionality of time and evidence is an important factor to consider, but not the only one.

[18] That one successful issue led to the Lienholders obtaining the remedy for which the entire action was brought – namely, access to the funds paid into court equal to the amounts owing on their liens with respect to the Dupont Property. Success in obtaining the remedy sought is also an important factor.

[19] Taking all the factors into account, I find it reasonable that the Lienholders are entitled to costs of $35,000.00 for the action. Therefore, the Defendant Mortgagees shall pay the Lienholders $35,000.00 in costs, all inclusive, within 30 days of this endorsement.

Sossin J.

Released: December 27, 2019