Court File and Parties

COURT FILE NO.: CV-14-499253 DATE: January 10, 2020

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: John Moore Construction Management Inc. v. Artworld Inc. and Evans & Kipling Properties GP Limited, CV-14-499253 (“the Moore Action”); RE: Higgins Electrical Contracting Services Ltd. v. Artworld Inc. and Evans & Kipling Properties GP Limited, CV-14-499258 (“the Higgins Action”);

BEFORE: MASTER C. WIEBE

COUNSEL: Steven D. Gadbois for John Moore Construction Inc. (“Moore”) and Higgins Electrical Contracting Services Ltd. (“Higgins”); Domenic Saverino for Artworld Inc. (“Artworld”);

HEARD: November 18, 2019.

REASONS FOR DECISION

Introduction

[1] On January 24, 2014 Higgins registered a claim for lien in the amount of $31,272.80 on leasehold property owned by Artworld for alleged unpaid work Higgins did as a subcontractor to Moore on the same property. On January 31, 2014 Moore itself registered a claim for lien in the amount of $87,226.10 on the same property for alleged unpaid work Moore did for Artworld.

[2] Both claims were perfected in the above noted actions. These two actions were referred to me pursuant to two judgments of reference from Justice Kristjanson dated April 12, 2017. The first trial management conference took place before me on November 6, 2017. I held another trial management conference on March 5, 2018. At the third trial management conference on October 1, 2018 I ordered a four day summary trial hearing to take place before me on June 13, 14, 18 and 19, 2019. I held a final telephone conference call with counsel in early June, 2019.

[3] The cases settled on June 12, 2019 when Artworld accepted two offers to settle from the plaintiffs. This was the day before the commencement of the trial hearing. Mr. Saverino advised the court of this settlement on that day.

[4] On June 13, 2019 Mr. Gadbois sent Mr. Saverino several documents; consents to two judgments; two draft judgments embodying the settlement; the offers to settle; the acceptances; and, most importantly, two documents entitled Plaintiff’s Summary of Costs showing the calculation of the plaintiffs’ cost entitlement under the settlements plus Mr. Gabois’ time dockets. The total amount shown for Moore was $38,718.85, and the total amount shown for Higgins was $19,830.55.

[5] On June 24, 2019 Mr. Saverino responded by letter advising that Artworld had not agreed to judgments and, concerning costs, inquiring as to Mr. Gadbois’ year of call and the substantial and partial indemnity hourly rates for Mr. Gadbois’ clerk. Mr. Gadbois responded to these inquiries by letter dated June 26, 2019. By letter dated July 2, 2019 Mr. Saverino stated that he would get instructions. By letter dated July 2, 2019 Mr. Gadbois advised Mr. Saverino that he would be bringing a motion before me to enforce the accepted offers if the matter was not resolved in a week.

[6] Mr. Saverino then took steps to have the plaintiffs’ costs claims assessed by trying to take out an appointment with an assessment officer. This despite the clear wording of the judgment of reference that I should determine costs. On July 8, 2019 Mr. Saverino advised by email that an assessment had been scheduled for October 28, 2019. However, on October 16, 2019 Mr. Saverino advised Mr. Gadbois by email that the assessment date of October 28, 2019 had not been secured. Mr. Gadbois then brought this motion before me for an order enforcing the accepted offers.

Motion to enforce settlement offers

[7] At the hearing of the motion on November 18, 2019 I advised counsel of my cost jurisdiction under the judgment of reference and my intention to award costs. However, they both were not ready to argue costs having erroneously assumed that costs would be determined by the assessment officer. At the request of counsel, I adjourned the motion and ordered that the parties deliver written submissions on costs. They have now done so.

[8] In the motion material were the two offers to settle that were accepted by Artworld. Both were made on March 29, 2016 prior to discoveries. Both offers were for payment by Artworld of 90% of the two claims, namely $78,503.49 to Moore and $28,145.52 to Higgins. Both specified prejudgment interest on the offered amount in accordance with the Courts of Justice Act running from specified dates of completion of services and materials to the date of payment. As to costs, both offers stated the following: “costs of this action calculated on a partial indemnity basis to date and on a substantial indemnity basis thereafter.” The parties agree as to the prejudgment interest rate, namely 1.3%. They do not agree on the costs in the settlement.

[9] In the Moore motion there is a “Plaintiff’s Summary of Costs.” It shows partial indemnity costs prior to March 29, 2016 of $4,717.19, substantial indemnity costs thereafter of $28,944.66 and disbursements of $5,057. The total is $38,718.85, which is Moore’s claim for costs of the reference. Attached are the dockets Mr. Gadbois rendered in this action. In his written submission, Mr. Gadbois clarified that the partial indemnity costs were 55% of actual costs and that the substantial indemnity costs were 85% of actual costs. The hourly rates shown for Mr. Gadbois, a 1993 call, were $300 and $360, and the hourly rate for his law clerk was $90.

[10] In the Higgins action there was also a “Plaintiff’s Summary of Costs.” It shows partial indemnity costs prior to March 29, 2016 of $3,300.16, substantial indemnity costs thereafter of $13,635.26, and disbursements of $2,895.13. The total is $19,830.55, which is Higgin’s claim for costs of the reference. Attached are the dockets Mr. Gadbois rendered in this action. Again, in his written submission, Mr. Gadbois stated that the partial indemnity costs were 55% of actual costs and that the substantial indemnity were 85% of actual costs. The hourly rates shown were the same as in the Moore motion material.

[11] Mr. Saverino had two complaints. His major complaint was that these documents were not credible reflections of the actual work done. He stated that they contain duplication of figures for items of work that together grossly exceeded the actual work done. In particular, he pointed to dockets for the two cases had equal times for the preparation for and attendance at the examinations for discovery and a pretrial, and that the combination of these figures essentially doubled the actual time spent on that work. He had a similar complaint about certain correspondence and the disbursements. His other complaint was that the claimed costs were disproportionate to the complexity of the issues and the amounts in dispute. Although it is not clear, it appears that Mr. Saverino takes the position that Higgins and Moore should together get no more than $21,645.15, which is 37% of the total of $58,549.40 being claimed.

[12] Mr. Gadbois replied that the alleged duplications were not in fact duplications. The time shown for the discoveries included travel time and meetings with the client in preparation for the discovery. The time shown for the November 5, 2017 pretrial included travel time and wait time. Concerning the October 1, 2018 dockets for his conversations with Higgins and Moore, Mr. Gadbois explained that the imbalance in time dockets was due to the greater complexity of and time spent on the Moore case. Concerning disbursements, Mr. Gadbois explained that the entries for courier costs Mr. Saverino complained of were not in fact duplications but equal allocation of costs between the files.

[13] Having considered these positions, I accept Mr. Gadbois’ explanation as credible. First, I do not have Mr. Saverino’s dockets to compare Mr. Gadbois’ dockets to. Second, I find Mr. Gadbois’ explanations reasonable. While the discoveries themselves might have taken five hours, this could well have involved numerous hours of travel and preparation. The same analysis would apply to the dockets for the pretrial. Mr. Gadbois’ explanation for the one conversation and the courier charges is also credible and I accept it.

[14] Concerning Mr. Savarino’s complaint about disproportionality, I do not accept his argument. Since I did not conduct the trial hearing, I do not know whether the issues were in fact as straight forward as Mr. Savarino’s says. Furthermore, in reviewing my trial management directions I note that it was Artworld, not Moore and Higgins, that introduced the issues of delay, deficiencies and overcharging. The claims of Moore and Higgins were simply for unpaid invoices. Therefore, it appears that it was Artworld that made these cases complicated, and it appears that this complexity was unnecessary as Artworld in the end agreed to pay 90% of the claims and substantial indemnity costs for the bulk of the actions. For Artworld to now claim that the cases were in fact not complicated is self-serving and hypocritical. In these circumstances, a costs claim that totals $58,549.40 on a recovery totaling $106,649.01 on claims totaling $118,498.90 is not disproportionate.

[15] There was one complication in this reference, namely the involvement of the landlord, Evans & Kipling Properties GP Limited. Higgins and Moore noted the landlord in default despite not having a solid case against it. However, the landlord was eventually let out of the actions. Mr. Gadbois stated that he removed $14,919.19 from both of his clients’ costs summaries as a result of this issue. This was not challenged, and no more needs to be said about this issue.

[16] Because Moore and Higgins were not totally successful in these proceedings as against Artworld, I believe that a slight adjustment needs to made to the claimed costs.

[17] For these reasons, I find that it is reasonable and fair to award Moore $36,000 in costs, and Higgins $18,000 in costs. The total costs award is, therefore, $54,000. These are the costs up to this motion. These figures need to be inserted into the settlement judgments for enforcement purposes.

Costs of the motion

[18] The only outstanding issue was the costs of the November 18, 2019 motion. In their written submissions, the parties did not include the costs of the motion. They also did not serve costs outlines for the motion. Therefore, on January 2, 2020 I circulated an email ordering that the parties deliver such costs outlines by January 8, 2020. They have now delivered their costs outlines for the motion and further written submissions.

[19] Mr. Gadbois submitted costs outlines for Higgins and Moore. Each one showed figures for actual costs and partial indemnity costs. Higgins and Moore each claim the figure shown for actual cost in the amount of $5,173.88, making the claimed total cost award for both $10,347.76. Mr. Gadbois argued that Artworld forced this motion by not dealing with the plaintiffs’ costs entitlement in good faith and in a timely way. Mr. Saverino submitted two costs outlines each showing $2,514.26 in partial indemnity costs and $3,234.63 in substantial indemnity costs. He argued either that there be no costs award or that the plaintiffs pay costs. He argued that the motion was initially unnecessary as the parties had agreed to an assessment of costs, and then agreed to adjourn the motion to allow for written submission on costs.

[20] I find that this motion was necessary. The assessment officer had no jurisdiction to award costs, which is clear for the judgment of reference. Therefore, a motion before me to enforce the settlement was inevitable unless the parties reached an agreement on interest and costs. They agreed on interest, but not on costs. I fault Mr. Gadbois only for being sidetracked by the defendant’s assessment proposal, not moving before me faster to enforce the settlement, and not being willing on November 18, 2019 to argue costs. I note that it was primarily to be fair to Mr. Saverino that Mr. Gadboise agreed to adjourn the motion to allow for written submissions.

[21] Therefore, the key issue is this: which party did not act reasonably to resolve the costs issue and avoid this motion? I find that it was Artworld. Artworld had all the information it needed to initiate a meaningful discussion as early as June 13, 2019. But it chose not to take a position on the record as to the plaintiffs’ costs entitlement in the accepted offers for almost six months, namely until Mr. Saverino’s written submission of December 9, 2019. This was after the motion was brought. As noted above, I also find that Artworld’s position on costs as not having credibility. Therefore, Higgins and Moore are entitled to costs of the motion.

[22] I also find that Higgins and Moore should be paid substantial indemnity costs for this motion. Being forced by Artworld to bring this motion, substantial indemnity costs for the motion are consistent with the accepted offers. Furthermore, Artworld’s conduct in forcing and responding to this motion as described above shows that Artworld was not acting in good faith, namely that it was delaying the enforcement of the settlement.

[23] I will discount the Higgins and Moore claims on account of the fact they appear to be for “actual costs,” not substantial indemnity costs. Also, I am not prepared to accept the bulk of the cost Higgins and Moore claim for the attendance on November 18, 2019, which I found to be largely a waste of time. A conference call to set a schedule for written submissions on costs could have easily been done instead.

[24] Given all these factors, I award Higgins substantial indemnity costs of this motion in the amount of $3,500 and Moore substantial indemnity costs of this motion in the amount of $3,500, to be paid as a part of the judgments to enforce the settlement. These figures are also consistent with what Artworld should reasonably expect to pay given its costs outlines.

Judgments

[25] I, therefore, grant judgments enforcing the accepted offers to settle with the prejudgment interest rates being 1.3% running for the specified dates, the post-judgment interest rates being 3%, costs of the Moore action in favour of Moore in the amount of $36,000, costs of the Higgins action in favour of Higgins in the amount of $18,000, costs of this motion in favour of Moore in the amount of $3,500 and costs of this motion in favour of Higgins in the amount of $3,500.

[26] Mr. Gadbois must provide my Assistant Trial Coordinator with copies of the judgments thus drafted. He must include in his covering letter the per diem prejudgment interest amounts so that I can insert the prejudgment interest amounts into the judgments properly showing all figures as of the date of the judgments. He must copy Mr. Saverino. I will then sign the judgments.

DATE: January 10, 2020

MASTER C. WIEBE