Court File and Parties

COURT FILE NO.: C-919-12 DATE: 2020-01-07 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Strassburger Holdings Limited and Strassburger Windows and Doors Limited, Plaintiffs AND: XCG Consultants Ltd., Defendant XCG Consulting Limited, Tom Williams, D. Grant Walsom, Kevin Shipley, Philip John Gray and Christine L. Hill, Proposed Defendants

BEFORE: Justice G.E. Taylor

COUNSEL: Natalie Mullins and Jessica Boily, Counsel for the Plaintiffs/Moving Parties Christopher Reain and Matthew Shiota, Counsel for the Defendant/Responding Party Alex Flesias, Counsel for the Proposed Defendants, XCG Consulting Limited, Tom Williams, D. Grant Walsom and Kevin Shipley Peter Hertz, Counsel for the Proposed Defendants, Philip John Gray and Christine L. Hill

Cost Endorsement

[1] The plaintiffs were successful on their motion to add a number of defendants to the action, to amend their Statement of Claim to assert new claims against the new defendants and to increase the amount claimed as damages from $5 million to $8 million.

[2] The parties have made written submissions regarding the costs of the motion. This is my ruling with respect to costs of the motion.

[3] The plaintiffs seek substantial indemnity fees of the motion in the amount of $67,720, inclusive of HST, plus disbursements of $4,853.34, inclusive of HST. The plaintiffs say that the defendants and proposed defendants made the motion much more complicated than was necessary.

[4] The position of the defendant, XCG Consultants Ltd. (“Old XCG”), is that the plaintiffs were granted an indulgence by being allowed to amend their Statement of Claim. Because of this indulgence, Old XCG seeks its partial indemnity costs of the motion in the amount of $11,495.15, inclusive of HST, plus disbursements of $860.52, inclusive of HST. Old XCG says that any costs awarded should be “in the cause”. In the alternative, Old XCG submits that there should be no costs of this motion awarded to any of the parties.

[5] The added parties, XCG Consulting Limited (“New XCG”), and the current directors of Old XCG and New XCG, rely on the special wording in Rule 26.01 of the Rules of Civil Procedure regarding amendments to pleadings and say that New XCG should be awarded costs of the motion in an unspecified amount to be determined by the judge who ultimately determines the liability of New XCG and the current directors.

[6] The added parties, Gray and Hill, who are former directors of Old XCG and New XCG, take the position that costs should be awarded in the cause or alternatively that there should be no costs of this motion awarded to any of the parties. Gray and Hill do not suggest an amount at which costs of the motion should be fixed.

[7] All respondents take the position that the costs sought by the plaintiffs are excessive.

[8] Rule 26.01 of the Rules of Civil Procedure states that: “… the court shall grant leave to amend a pleading … unless prejudice would result that could not be compensated for by costs or an adjournment.”

[9] Rule 57.03(1) of the Rules of Civil Procedure directs the court hearing a contested motion to: “… fix the costs of the motion and order them to be paid within 30 days” unless “… the court is satisfied that a different order would be more just …”

[10] This motion was not brought on the eve of trial. The motion was brought because of developments that occurred after the action had been commenced and following the completion of examinations for discovery. As stated in my Endorsement granting the amendments, there is no need to be concerned about prejudice to Old XCG and the added defendants. Further, in my view, an award of costs to a responding party on a motion to amend a pleading is for the purpose of compensating for any prejudice occasioned by the amendment. In the present action, there is no need to make an order compensating Old XCG or the added defendants, by way of a cost order in their favour. The claims included in the amendments are based on facts which arose after the action was commenced. If the new claims are not tenable, Old XCG and the added defendants will be entitled to the costs of any further discovery as part of the costs of the action.

[11] In my view, primarily because of the actions of the Old XCG and the added defendants, this motion was made more complicated than was necessary. However, I do not completely absolve the plaintiffs for causing this motion to be as lengthy and complex as it became.

[12] The plaintiffs were successful on this motion after a full day of submissions. It was certainly open to Old XCG and the added defendants to take a less adversarial approach to the motion and assert the position at trial that the amendments are without merit. As I said in my Endorsement, if the defendants are correct in their positions that the claims are baseless, the plaintiffs could be facing significant adverse costs consequences of the action.

[13] The added defendants suggest that costs be reserved to the trial judge. In my view I am in a better position to fix the costs of this motion than the trial judge would be.

[14] In my view, the plaintiffs are entitled to their costs of the motion.

[15] However, the plaintiffs are not entitled to substantial indemnity costs. Old XCG and the added defendants were entitled to oppose the motion to amend. In Davies v. Clarington, 2009 ONCA 722, the Court held at paragraph 40 that elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made. There was no conduct on the part of Old XCG or the added defendants which would fall into the category of reprehensible conduct.

[16] I agree with the submissions of Old XCG and the added defendants that the costs sought by the plaintiffs are excessive. The costs sought are much greater than what the unsuccessful parties could reasonably have anticipated for a practice motion, even one that was vigorously opposed.

[17] The added defendants chose not to provide me with any indication of the costs incurred by them in responding to the motion. I therefore have only the Costs Outline of Old XCG as some indication of the costs that would have been within the reasonable expectation of the unsuccessful parties on the motion.

[18] Counsel for the plaintiffs spent 106 hours preparing for and attending at all aspects of the motion. In contrast, counsel for Old XCG spent 58 hours preparing for and attending at all aspects of the motion. Lead counsel for the plaintiffs, who was called to the bar in 2002, claimed a partial indemnity hourly rate of $440, which is more than the actual hourly rate charged by senior counsel to Old XCG.

[19] None of the responding parties take exception to any specific item of disbursement in the plaintiffs’ Costs Outline.

[20] I am fixing costs. I am not assessing costs. In my opinion, an amount which is fair and reasonable, in all of the circumstances, at which to fix the plaintiffs’ costs of this motion, is $25,000, inclusive of disbursements and HST.

[21] I am not satisfied that it would be more just to make an order that the costs to which the plaintiffs are entitled, be payable in the cause or in any event of the cause. I have considered making the cost award payable, as between the responding parties, other than jointly and severally to reflect the lesser involvement of the added parties compared to that of Old XCG. In the absence of any evidence about the costs incurred by the added parties, I have decided to make the costs to which the plaintiffs are entitled, payable jointly and severally by the responding parties. The costs are payable within 30 days.

G.E. Taylor J. Date: January 7, 2020