COURT FILE NO.: CV-12-0069 and CV-11-1858 DATE: 2020 04 21 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: NANAK HOMES INC. (Plaintiff/Responding Party) v. DEVENDER ARORA, VISHWAS DHEKNEY and BANERJEE & ASSOCIATES LTD. (Defendants/Moving Party)

and between

NANAK HOMES INC. (Plaintiff/Responding Party) v. ONTARIO CORPORATION 1238585 operating as KAMCO TECHNIQUES LTEE, and/or ONTARIO CORPORATION 2061584 operating as KAMCO ENGINEERING SERVICES LTD. (Defendants/Moving Party) v. EMCON CONSTRUCTION LTD., AQUA MECHANICAL CONTRACTING LTD., AIRWILL ELECTRICAL SUPPLY LTD., BATTAGLI ASSOCIATES INC. and DEVENDER ARORA (Third Parties) v. VISHWAS DHEKNEY, BANERJEE & ASSOCIATES LTD. now carrying on business as EXP SERVICES INC. (Fourth Parties)

BEFORE: McSweeney J.

COUNSEL: Maria Ruberto and Jill Snelgrove, for Nanak Homes Inc. (Plaintiff/Responding Party) Peter J. Mitchell, for Ontario Corporation 1238585 operating as Kamco Techniques Ltee (Defendant/Moving Party) Adrian Visheau and Jeffrey A. Armel, for Vishwas Dhekney and Banerjee & Associates Ltd. (Defendants/Moving Party) Luisa J. Ritacca and Edward L. Marrocco, for Former Counsel of the Plaintiff (LawPRO)

HEARD: Heard in writing

Endorsement

OVERVIEW

[1] This is my decision on costs arising from the dismissal of the Plaintiffs’ two actions for delay for reasons reported at 2019 ONSC 6654.

[2] By way of brief background, in 2006 the Plaintiff, Nanak Homes Inc. (“Nanak”), contracted with several parties to construct residential townhouses in Mississauga, Ontario. The project was completed in 2008. The sole owner and principal of Nanak was Dr. Verinder Malhotra. On behalf of Nanak, Dr. Malhotra commenced two civil actions against the parties to the townhouse construction contracts. Nanak sued for negligent construction and design, and for breach of contract.

[3] On May 4, 2011, Nanak commenced the first action by Notice of Action against Devender Arora, Vishwas Dhekney, and Banerjee & Associates Ltd. (the “Dhekney Action”). On January 6, 2012, Nanak started its second action by Notice of Action against Ontario Corporation 1238585 operating as Kamco Techniques Ltee, and/or Ontario Corporation 2061584 operating as Kamco Engineering Services Ltd (“Kamco” and the “Kamco Action”).

[4] On February 5, 2014, the defendant Kamco started a third-party action against seven third parties:

(i) Emcon Construction Ltd.(“Emcon”); (ii) Aqua Mechanical Contracting Ltd. (“Aqua”); (iii) Airwill Electrical Supply Ltd. (“Airwill”); (iv) Battaglia Associates Inc. (“Battaglia”); (v) Mircom Inc. (“Mircom”); (vi) M.M. Associates Ltd. (“M.M.”); and (vii) Devender Arora (“Arora”).

[5] Third-party Arora, an engineer who worked on the project, was also a named defendant in the Dhekney Action. Arora then commenced a fourth-party action against his two co-defendants in the Dhekney Action: Vishwas Dhekney (“Dhekney”) and Banerjee & Associates Ltd. (“Banerjee”) (together the “Dhekney Defendants”). The Dhekney Defendants then issued a counterclaim against the third parties in the Kamco Action.

[6] On December 15, 2016, the Dhekney and Kamco Actions were consolidated into what will be referred to as the “Main Action”.

[7] On December 31, 2018, the parties appeared before Seppi J. on motions to dismiss these actions. However, the motions were adjourned to July 3, 2019 to permit LawPRO to file materials on the merits. Costs of this appearance were also reserved to me.

[8] On July 3, 2019, I heard the motions to dismiss both of the Plaintiff’s actions on the basis of delay (“the motions”). I granted the motions by endorsement of November 20, 2019.

[9] In my endorsement I stated the following with respect to costs:

a. The Defendants were successful in having the Main Action dismissed for delay and are therefore entitled to their costs of the motions. b. If the Defendants also sought their costs of the respective actions, they could return a motion before me under r. 24.05.1. c. Further, the relief requested in the motions to dismiss included an indemnity for third-party costs (sought by Kamco against Nanak). Such relief could also be sought by a motion before me under r. 24.05.1, to be heard in writing. d. The following dates shall apply to the service and filing of cost submissions to determine costs of these motions, costs of the actions, and any claims relating to third parties:

i. The Defendants shall serve and file all written costs submissions by December 2, 2019. ii. The Plaintiff shall serve and file its responding costs submissions by December 16, 2019. iii. The Defendants shall serve and file any reply submissions by December 24, 2019.

[10] Following my endorsement, six motions in writing for costs were filed, as were submissions for costs of the motions to dismiss.

[11] This decision will decide the following categories of costs:

1. The Defendants’ costs with respect to (a) the motions to dismiss, and (b) each action (i.e. the Dhekney Action and the Kamco Action). Presumptive entitlement to costs for these matters flows from the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“the Rules”), as a consequence of my dismissal of the plaintiff’s actions.
2. The third-party costs of four third parties seeking costs against the Plaintiff and/or Defendants. Entitlement to these costs is a matter of discretion for the court to exercise, guided by the factors under r. 57.01(1) of the Rules and the common law.

PARTIES AND CLAIMS

[12] The following chart may assist the reader in understanding the relationships between and among the various parties in these two actions:

Action	Plaintiff	Defendant	Third party	Fourth party
The Dhekney Action	Nanak Homes	Banerjee	N/A	N/A
	Dhekney
	Arora
The Kamco Action	Nanak Homes	Kamco	Emcon	N/A
			Aqua
			Airwill
			Mircom
			M.M.
			Battaglia
			Arora	The Dhekney Defendants (Dhekney & Banerjee)

[13] With respect to the Kamco Action, as noted above, there were also several cross-claims and counterclaims between co-defendants in the third- and fourth-party claims in addition to the claims identified in this chart.

LEGAL FRAMEWORK FOR COSTS

[14] Rule 57.01(1) of the Rules of Civil Procedure sets out the factors that the court may consider when determining costs. In addition to the result in the proceeding and any offer to settle or contribute, the relevant factors are:

(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; (a) the amount claimed and the amount recovered in the proceeding; (b) the apportionment of liability; (c) the complexity of the proceeding; (d) the importance of the issues; (e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; (f) whether any step in the proceeding was, (i) improper, vexatious or unnecessary, or (ii) taken through negligence, mistake or excessive caution; (g) a party’s denial of or refusal to admit anything that should have been admitted; (h) whether it is appropriate to award any costs or more than one set of costs where a party, (i) commenced separate proceedings for claims that should have been made in one proceeding, or (ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and (i) any other matter relevant to the question of costs.

[15] Modern costs rules are designed to foster three fundamental purposes: (1) to partially indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 46 O.R. (3d) 330 (C.A.), at para. 22.

[16] Costs awards, at the end of the day, should reflect “what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties”: see Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), at para. 24.

ANALYSIS: PRELIMINARY ISSUES

Scale of Costs

[17] Several of the parties in this action seek their costs on a substantial indemnity basis, including Kamco, the Dhekney Defendants and Arora. Mircom also seeks costs on a substantial indemnity basis, though it seeks to recover against Kamco. M.M. and Aqua seek their costs on a partial indemnity basis.

[18] Nanak submits that if any costs are awarded, they should be on a partial indemnity scale. It says it did not engage in the reprehensible conduct that is required to justify an elevated award of costs.

[19] The Court of Appeal for Ontario in Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66, has stated that elevated cost awards must be principled. Apart from the operation of r. 49.10, 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: Davies, at para. 40.

[20] For this reason, if I find that Nanak engaged in reprehensible conduct, then costs on a substantial indemnity scale will be justified.

[21] In support of a finding that Nanak engaged in reprehensible conduct, the defendants and third parties emphasize the significant, unexplained delay on Nanak’s part in advancing its litigation.

[22] The Dhekney Defendants argue that costs can be awarded on a substantial indemnity scale “based on unexplained delay, calculated to avoid the party’s legal obligations”. They also note Nanak’s repeated failure to comply with court orders.

[23] Kamco argues for costs on a substantial indemnity scale for the following reasons. Nanak abdicated its responsibility as a plaintiff to advance the main action and its intentional failure to do so lengthened the proceedings and increased Kamco’s costs. Kamco argues that Nanak’s conduct amounted to an abuse of process and should be dealt with harshly. Furthermore, Kamco submits that there is a public interest in the timely resolution of disputes. Defendants should not be left “in a kind of perpetual limbo unable to plan their future with a claim hanging interminably over their heads”. Kamco argues that substantial indemnity costs are necessary to protect public confidence in the administration of justice.

[24] Nanak denies its conduct was reprehensible and submits that it is more accurately described as being a result of “inattention” and a “lack of motivation” than bad faith.

[25] For the following reasons, I find that Nanak engaged in reprehensible conduct such that elevated costs are warranted.

[26] This litigation dragged on for 8 to 9 years before it was ultimately dismissed. The Defendants and Third Parties spent substantial time trying to obtain sufficient particulars to defend the actions, resolve the dispute, and narrow the issues, largely without success. As noted in my decision to dismiss, it was the role of the Plaintiff to advance its claim. Its failure to do so kept many other parties waiting in uncertainty. I agree with Kamco’s submission that there is a public interest in the timely resolution of disputes. Defendants should not be left in a kind of “perpetual limbo” by a plaintiff’s failure to advance its claim.

[27] The Court of Appeal for Ontario has characterized lengthy, unexplained delays as an abuse of the court’s process: see Marche d’Alimentation Deni Theriault Ltee. v. Giant Tiger Stores Ltd., 2007 ONCA 695, 87 O.R. (3d) 660, at para. 24.

[28] Nanak started two separate actions arising from same construction project. It did not advance either, nor did it respond to reasonable efforts from the defending parties to advance the litigation.

[29] This litigation was a misuse of the civil justice system’s time and resources, for which everyone pays.

[30] Specifically, it causes negative consequences for businesses and the individuals who run them. Delay may keep the possibility of significant liability hanging over the defendants’ businesses. The evidence on these cost motions confirms that Nanak’s delay had real consequences for real people over a significant period of time. Adversely impacted parties in these actions included Vishwas Dhekney, whose retirement was delayed by Nanak’s actions.

[31] In short, Nanak’s conduct was reprehensible. Elevated costs on a substantial indemnity scale are warranted.

[32] Accordingly, in assessing each of the cost claims, I will proceed on the basis that any costs awarded against Nanak will be ordered on a substantial indemnity scale where such a scale is sought. I will not revisit Nanak’s arguments with respect to the scale of costs in my analysis of each claim.

Kamco’s Claim for Indemnity Against Nanak

[33] Kamco seeks an indemnity against Nanak for its costs in the third-party action as well any costs awarded payable to third parties by Kamco. Nanak opposes such an indemnity on the basis that Kamco chose to join the third parties when it had more reasonable options open to it.

[34] The applicable test for third-party costs was set out by Newbould J. in Guarantee Co. of North America v. Resource Funding Ltd. (2009), 82 C.P.C. (6th) 258 (Ont. S.C.), and confirmed by the Court of Appeal for Ontario in Sanofi Pasteur Limited v. UPS SCS, Inc. et al., 2015 ONCA 88, 124 O.R. (3d) 81.

[35] The court has discretion under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, to determine by whom and to what extent costs are to be paid. This includes the discretion to order an unsuccessful plaintiff to pay the costs of a successful third-party: Guarantee Co., at para. 4.

[36] As a general rule, an unsuccessful plaintiff will not be charged with the costs of a third party: Guarantee Co., at para. 5; Sanofi Pasteur, at para. 77. The rationale for this is that the plaintiff did not sue the third party, did not want them in the case and was not responsible for joining them: see Milina v. Bartsch (1985), 1 C.P.C. (2d) 269, cited with approval in Sanofi Pasteur, at para. 77. In such circumstances courts have considered it unfair to visit the third party's costs on the plaintiff: Milina, at para. 4.

[37] Courts also acknowledge however that there are situations in which fairness requires an unsuccessful plaintiff to bear a successful third party's costs. Such an order may be appropriate in situations including the following: Guarantee Co., at para. 5; Milina, at para. 5:

1. Where the main issue litigated was between the plaintiff and the third party;
2. Where the third party was brought or kept in the matter by reason of the act or neglect of the plaintiff;
3. Where the case involves a string of contracts in substantially the same terms for the sale of goods; or
4. Where the third-party proceedings follow naturally and inevitably upon the institution of the plaintiff's action, in the sense that the defendant had no real alternative but to join the third parties. [Citations omitted].

[38] This is not an exhaustive list. Whether an unsuccessful plaintiff should be ordered to pay a third party’s costs depends on the circumstances of the particular case. Costs remain a matter of discretion, though this discretion must be exercised judiciously: Sanofi Pasteur, at para. 77.

[39] Kamco argues that it had little choice but to claim contribution from the third-party contractors and consultants. The Statement of Claim alleged design errors, which were a shared responsibility between Kamco and the Third Parties, as well as inspection errors, which Kamco says necessarily indicated a problem with the construction. Kamco submits that the third-party proceeding therefore followed naturally and inevitably from the Main Action. Kamco also argues that these alleged design and constriction deficiencies were a central issue to be litigated in the Main Action, which necessarily involves the conduct of the third-party contractors and consultants.

[40] Kamco further argues that as a result of Nanak’s failure to provide full disclosure or particulars, it was unable to further particularize or otherwise advance its third-party claim or to determine which of the Third Parties might be partly or wholly liable. Without the requisite information to assess liability, Kamco was unable to determine which parties might be released from the action and had no choice but to maintain its third-party claims. In these circumstances, the third parties were brought into, and kept in, the proceedings due to the failure or neglect of Nanak to particularize and otherwise advance its claims in a timely way.

[41] Nanak submits that it named as defendants in the Dhekney Action and the Kamco Action all parties that it believed to be liable to it for damages. Kamco chose to name the Third Parties when it had other options available to it. Therefore, Kamco should be responsible for the costs of those third parties.

[42] I agree with Kamco’s submission that given the claims for negligence with respect to the townhouse project, naming the other subcontractors and consultants on the project followed naturally from Nanak’s claim against Kamco. A key issue to be litigated in the Main Action was the alleged design and construction deficiencies, which necessarily involved the potentially negligent conduct of the third-party contractors and consultants. It was prudent and reasonable in these circumstances for Kamco to bring the Third Parties into the action as it did.

[43] I also agree with Kamco’s submissions that Nanak’s failure to particularize its claim prevented Kamco from advancing or particularizing its third-party claim. Without further particulars, Kamco could not narrow or resolve any of the issues with respect to the potential liability of these third parties and could not make an informed decision as to whether to release any of them from the litigation.

[44] Having considered these submissions and the law on this point, I find that this is an appropriate case in which to exercise my discretion to visit third-party costs on the plaintiff and to grant Kamco an indemnity against Nanak.

[45] This case falls into the established examples set out in Guarantee Co. In particular, one of the main issues to be litigated was between the Plaintiff and the Third Parties, namely, the alleged design and construction deficiencies. The Third Parties were brought into the litigation in part because of Nanak’s failure to particularize the claim and kept in the litigation in part because of Nanak’s failure to advance its claim. Finally, the third-party proceedings followed naturally and inevitably in the sense that Kamco had no real alternative but to join the Third Parties.

[46] For these reasons, Kamco’s request for an indemnity against Nanak for costs of the third-party action is granted.

PART 1: DEFENDANTS’ COSTS

[47] I must decide the Defendants’ costs claims for both the motions and the Main Action. I repeat here for ease of reference that there are effectively three defendants, each of whom seeks costs with respect to the Main Action: (1) Devender Arora (“Arora”), named personally in the Dhekney Action; (2) the Dhekney Defendants, consisting of Vishwas Dhekney and Banerjee & Associates Ltd., who have filed joint costs submissions; and (3) Kamco, which consists of two named numbered corporate defendants, operating as Kamco Techniques Ltee and Kamco Engineering Services Ltd, who have also filed joint costs submissions.

[48] With respect to the motions, Kamco seeks its costs of its motion to dismiss the Kamco Action. The motion to dismiss the Dhekney Action was brought by the Dhekney Defendants only, and therefore Arora is not seeking costs of that motion: only the Dhekney Defendants seek costs.

[49] Arora has not separated his costs incurred as a named defendant in the Dhekney Action from his costs incurred as a third and fourth-party in the Kamco Action. His costs outline does not enable me to discern which costs were incurred as a result of which action. Therefore, I deal with his costs claim globally below in Part 2: Third-party Claims.

Costs of the Motions to Dismiss

(a) Dhekney Defendants’ Costs

[50] The Dhekney Defendants were successful on their motion to dismiss the Dhekney Action and are entitled to their costs. They are also entitled to some of their costs for the December 31, 2018 adjournment before Seppi J., the costs of which were reserved to me.

[51] The Dhekney Defendants seek costs on a partial indemnity scale up to the date of an Offer to Settle made on June 25, 2019 and substantial indemnity costs thereafter for a total of $18,232.11 including HST and disbursements. Nanak submits that the Dhekney Defendants should be awarded $8,500 in costs, all inclusive.

[52] With respect to the quantum of costs, Nanak objects to the inclusion of 10.5 hours for court attendance on a day in which it asserts that less than 3 hours were actually spent in court. It further argues that the Dhekney Defendants relied in large part on the argument made by Kamco.

[53] With respect to the scale of costs, Nanak submits that no cost consequences should flow from the Offer to Settle of June 25, 2019. Nanak submits that the offer does not trigger the cost consequences under Rule 49 of the Rules because it did not dispose of the motion with finality. Further, since the offer did not bind Kamco, Nanak argues that LawPRO would still have had to argue the delay motion on July 3, 2019 and if Kamco were successful, the Dhekney Defendants could have revived their motion regardless of the offer to settle.

[54] I have reviewed the cost outlines and submissions filed by the Dhekney Defendants. With respect to the Offer to Settle, the Dhekney Defendants offered to settle the motion to dismiss the Dhekney Action one week prior to the hearing, if Nanak agreed to a litigation timetable and payment of the Dhekney Defendants’ costs thrown away in the amount of $8,500.

[55] If Nanak had accepted this offer, it could have continued its action. Instead, the motion to dismiss the action was successful and Nanak’s action was dismissed for delay. The Dhekney Defendants therefore achieved a result that is better than their offer to settle of June 25, 2019.

[56] Nanak argues that the offer did not dispose of the motion with finality because Kamco’s motion would still be outstanding. Nanak also appears to argue that even if Nanak had accepted the offer and continued its litigation, it would be open to the Dhekney Defendants to “revive” their motion to dismiss. Neither argument disrupts my conclusion that the Dhekney Defendants made a reasonable offer to settle which they ultimately exceeded. Their costs are therefore allowed on a partial indemnity basis up to the date of the offer and on a substantial indemnity basis thereafter.

[57] With respect to quantum, the costs outline of the Dhekney Defendants is reasonable overall as to the quantum sought, steps taken, and rates charged, although I made a reduction with respect to the December 31, 2018 preparation costs for the appearance before Seppi J. Costs of the motion to dismiss the Dhekney Action are fixed at $17,000, inclusive of disbursements and HST.

(b) Kamco’s Costs

[58] Kamco was successful on its motion to dismiss the Kamco Action and is entitled to its costs. Like the Dhekney Defendants, Kamco is also entitled to some of its costs for the December 31, 2018 adjournment before Seppi J., the costs of which were reserved to me.

[59] Kamco seeks its cost against Nanak for the period up to December 30, 2018 and then against LawPRO, a non-party, for the period following December 30, 2018, being the time after the motion was adjourned by Seppi J. to permit LawPRO to file materials on the merits. Kamco seeks $53,160.80 in costs against Nanak and $35,666.24 in costs against LawPRO, each amount claimed representing a substantial indemnity rate.

[60] Nanak objects to any costs being ordered against LawPRO as well as to the quantum of costs being claimed against it. Nanak argues that an appropriate costs award for Kamco would be $12,500 all inclusive.

(i) Costs against LawPRO

[61] I find that the claim for costs against LawPRO should be dismissed for the following reasons.

[62] Kamco’s submissions with respect to awarding costs against LawPRO appear to focus primarily on the role of LawPRO counsel’s role both on behalf of the insured lawyer, who accepted much of the blame for the delay in these actions, and on behalf of Nanak in its motion defence after March 2018. In short, Kamco argues that LawPRO’s involvement created a “moving target” designed to confuse and delay, and in fact contributing to delay in having these motions heard.

[63] Nanak submits that LawPRO requested a reasonable adjournment upon being retained and then presented a reasonable and meritorious argument at the next available date. While Nanak concedes that I have the jurisdiction to order costs payable by a non-party in cases of bad faith intervention, it submits that this is not an appropriate case to do so.

[64] The court’s jurisdiction to award non-party costs was recently clarified by the Court of Appeal for Ontario in 1318847 Ontario Ltd. v. Laval Tool & Mould Ltd., 2017 ONCA 184, 134 O.R. (3d) 641. Authority to award costs against a non-party may be found under s. 131 of the Courts of Justice Act (‘CJA’).

[65] In Laval Tool, Strathy C.J.O. explained that any assessment of whether it is appropriate to order non-party costs must begin by considering the court's statutory jurisdiction under s. 131(1) of the CJA. This provision restricts the court's discretion to order costs against non-parties to cases where the "person of straw" test is satisfied. The "person of straw" test is satisfied in circumstances where the court finds that

(1) the non-party has status to bring the action; (2) the named party is not the true litigant; and (3) the named party is a person of straw put forward to protect the true litigant from liability for costs.

[66] The proper inquiry under the person of straw test is whether the intention, purpose or motive of the non-party in putting the named party forward was to avoid liability for costs: Laval Tool, at paras. 59-61.

[67] This is clearly not a case where LawPRO was the “true litigant” who put Nanak forward as the Plaintiff to avoid costs. While there was some argument on the motions as to whether the insured counsel or the plaintiff was the cause of the delay in these actions, this has no bearing on the identity of the plaintiff. The Plaintiff in these actions, which are for negligent constriction and design and breach of contract with respect to the construction of residential townhouses, is clearly Nanak and not LawPRO. The person of straw test has not been met and I find that a costs award against LawPRO is not justified on this basis.

[68] Strathy C.J.O. also explained that superior courts of record have inherent jurisdiction to control their own processes and protect them from abuse. In particular, apart from statutory jurisdiction, superior courts have inherent jurisdiction to order non-party costs, on a discretionary basis, in situations where the non-party has initiated or conducted litigation in such a manner as to amount to an abuse of process: Laval Tool, at paras. 65-66.

[69] In this respect, I agree with Nanak’ submissions. I do not find that LawPRO’s actions in defending the motions to dismiss on behalf on Nanak and its former counsel amount to an abuse of process.

[70] Accordingly, Kamco’s request for costs against LawPRO is denied.

(ii) Costs against Nanak

[71] With respect to Kamco’s claim against Nanak, Kamco claims approximately three times the hours claimed by the Dhekney Defendants.

[72] Nanak argues that the amount claimed by Kamco is excessive for a two-hour motion where the work was shared between two parties. In particular, Nanak objects to the time claimed for the preparation for the December 31, 2018 attendance before Seppi J., 35 hours for communication, and 12.9 hours for legal research. Nanak objects to the failure to delegate work to more junior counsel and argues that Kamco is prematurely seeking its costs of the broader action.

[73] The record supports the submission of Mr. Mitchell, counsel for Kamco, that Kamco had additional arguments to make and to meet on the particular facts of their action. Counsel was therefore required to do more preparation than was required of the Dhekney Defendants. However, I agree with Nanak that some reduction is warranted. An additional 80.9 hours claimed for non-particularized “communications with counsel and client and Court” and for “motion preparation”, are excessive and have been reduced accordingly.

[74] Kamco’s costs of the motion to dismiss the Kamco Action are fixed at $19,000.00, inclusive of disbursements and HST, payable by Nanak.

Costs of the Main Action

(a) Position of the Plaintiff

[75] Nanak opposes all cost claims of the Defendants and submits that the parties should bear their own costs. It submits that the Main Action did not progress beyond the early stages of the litigation, namely the exchange of pleadings and some unsworn Affidavits of Documents. While some attempts were made to arrange for examinations for discoveries and a possible mediation, these never took place. Therefore, the parties did not incur the costs of preparing for examinations for discovery or mediation. Further, Nanak submits that the Defendants have already been compensated for their costs of any interlocutory step, other than the motions to dismiss which are the subject of this decision and for which I have already determined that the defendants are entitled to costs.

(b) Dhekney Defendants’ Costs of the Main Action

[76] The Dhekney Defendants seek their total costs of the Main Action against Nanak at a substantial indemnity rate in the amount of $34,404.89, including HST and disbursements. Nanak submits that each party should bear their own costs. As indicated above, any costs awarded against Nanak will be awarded on a substantial indemnity scale.

[77] The Dhekney Defendants submit that all costs incurred were a result of Nanak’s actions and that the two actions were different in form only.

[78] The Dhekney Defendants defended the Dhekney Action and served a demand for particulars. The Dhekney Defendants were then named as fourth parties in the Kamco Action by Third-party Devender Arora, one of their co-defendants in the Dhekney Action.

[79] With respect to the Kamco Action, the Dhekney Defendants reviewed the pleadings in the Kamco Action, defended the fourth-party claim and issued a counterclaim against the Third Parties. The Dhekney Defendants claim they therefore incurred significant extra expense at the pleadings stage. They also prepared voluminous Affidavits of Documents in accordance with the Plaintiff’s discovery plan.

[80] The Dhekney Defendants note that as a result of the large sum sought by the Plaintiff and the fact that Mr. Dhekney was named personally as a defendant, they incurred extra costs because (a) the claim had to be reported to their insurer and (b) Mr. Dhekney was set to retire and therefore sought frequent updates from his counsel.

[81] The Dhekney Defendants’ costs with respect to production, mediation, and the timetable motion are reasonable. However, I find that the nearly 60 hours spent on pleadings is excessive. I also note that I am unable to discern whether and to what degree counsel for the Defendants worked together after the actions were consolidated. Therefore, some reduction is warranted.

[82] I find that the costs of the Dhekney Defendants for the Main Action should be fixed at $25,000, representing costs on a substantial indemnity scale.

(c) Kamco’s Costs of the Main Action

[83] Kamco seeks costs of the Main Action on a substantial indemnity basis for a total of $26,060.16, including disbursements. As indicated above, substantial indemnity costs against Nanak are warranted.

[84] In addition to preparing the pleadings, Kamco notes that it incurred costs in obtaining disclosure and attempting mediation. It points out that Nanak failed to produce a complete, sworn Affidavit of Documents despite several requests and despite a consent order resolving an earlier motion to dismiss the action on the basis that Nanak would serve an affidavit of documents within 45 days.

[85] I note that Kamco used senior counsel almost exclusively despite the availability of junior counsel. While a firm has discretion as to how it resources a file, I find that some reduction is warranted on this basis. Further, as noted with respect to the Dhekney Defendants’ costs on the Main Action, I am unable to discern whether and to what degree counsel for the Defendants worked together after the actions were consolidated. Overall, I find that some reduction is required.

[86] Kamco’s costs of the Main Action are fixed at $25,000 inclusive of disbursements and HST.

[87] Kamco seeks an additional $3,326.69 in costs for the third-party action, representing costs on a substantial indemnity scale. As indicated above, I have rejected Nanak’s position that it should not be liable for any third-party costs.

[88] The costs sought by Kamco on the third-party action are reasonable and are ordered payable by Nanak.

(d) Arora’s Costs

[89] As indicated above, I will address Arora’s costs claim as a global claim in the following section.

PART 2: THIRD-PARTY CLAIMS

[90] The following third parties have brought motions for costs:

1. Devender Arora (“Arora”)
2. Aqua Mechanical Contracting Ltd. (“Aqua”)
3. M.M. & Associates Ltd. (“M.M.”)
4. Mircom Inc. (“Mircom”)

[91] The third parties Emcon Construction Ltd., Airwill Electrical Supply Inc., and Battaglia Associates Inc. did not file motions for costs.

[92] Arora and M.M. seek their costs against Nanak. Aqua takes no position on Kamco’s request for an indemnity. Mircom seeks its costs against Kamco.

Arora’s Costs

[93] Arora seeks costs against Nanak on a substantial indemnity scale for a total of $25,726.15, including HST and disbursements.

[94] As noted above, Arora was a named Defendant in the Dhekney Action, named by Kamco as a third-party in the Kamco Action, and named the Dhekney Defendants as fourth parties in the Kamco action. Arora’s counsel submits that due to the number of parties in the file, the numerous pleadings that were served and had to be reviewed, and the complexity of the various claims, voluminous correspondence was generated on the file. Counsel for Arora also submits that they prepared and circulated to counsel a draft Affidavit of Documents that contained 1,761 items in Schedule A alone.

[95] I find that Arora is entitled to his costs in defending the Dhekney Action and the third-party claim in the Kamco Action. I am not satisfied that it was necessary for Arora to file a fourth-party claim against the Dhekney Defendants, as this could have been done by means of a cross claim. Some reduction will be made on this basis.

[96] As noted above, Arora’s costs outline does not permit me to determine what proportion of his costs are attributable to the defence of the Dhekney Action and third-party claim as distinct from the fourth-party claim.

[97] I find that the costs for which Nanak is properly responsible are fixed and payable to Arora in the total amount of $15,000.

[98] As I have found that Kamco is entitled to an indemnity against Nanak for its third-party costs, Arora’s costs shall be payable by Nanak. These costs will be awarded on a substantial indemnity scale for reasons given above.

Mircom’s Costs

[99] Mircom seeks its costs against Kamco, on a substantial indemnity scale, in the amount of $55,514.81.

[100] Mircom did not defend the Main Action; it only defended the third-party action. Mircom asks for costs on a substantial indemnity basis based on Kamco’s alleged failure to move the action forward and to provide evidence or particulars of its claim against Mircom.

[101] From the perspective of the third party, the onus is on the defendant to advance the third-party claim. Mircom argues that Kamco failed to meet its responsibility to advance the third-party litigation. However, based on the above reasons, I find that the failure to advance the third-party claim originated not with Kamco but with Nanak. Because Nanak failed to particularize its claim against Kamco, Kamco was unable to particularize or advance its third-party claim.

[102] Therefore, whether or not this was visible to Mircom at the time, I have concluded that the responsibility for the non-advancement of the third-party claim lies with Nanak. Mircom’s costs, like those of the other third parties, should be borne by Nanak rather than Kamco.

[103] Having said that, I acknowledge that Mircom played a more active role in the third-party litigation. Mircom made efforts to advance the third-party litigation, and when this did not occur, it brought a motion to dismiss the third-party claim. It brought this motion before Kamco brought its motion to dismiss and unaware that Kamco was preparing a separate motion to dismiss the Main Action at the same time. Given the delay in the third-party claim, it was not unreasonable for Mircom to bring its own motion to dismiss.

[104] Therefore, Mircom is entitled to some contribution to its costs for initial preparation of its motion to dismiss the third-party claim, even though it was ultimately not heard. However, no costs are appropriately awarded against Nanak which were incurred by Mircom after it learned of the motions to dismiss the Main Action against Nanak in its entirety.

[105] In reviewing Mircom’s submissions, I find that the hours spent by Mircom were excessive and a significant reduction in the costs claimed is appropriate.

[106] Considering the preceding factors relating to Mircom’s costs motion, I find that an appropriate award of costs to be paid by Nanak to Mircom on a substantial indemnity basis is $20,000.

Aqua’s Costs

[107] Aqua seeks costs on a partial indemnity scale in the amount of $7,943.91, including HST and disbursements.

[108] Aqua’s work on the construction project involved the HVAC system and the plumbing. It submits that it defended the third-party claim, the Main Action, and the fourth-party counterclaim. It also cross-claimed against the other third parties in the third-party claim and counterclaimed against Banerjee & Associates Ltd. and Kamco in the fourth-party counterclaim.

[109] Aqua investigated the claim as best it could and prepared and served a 98-page Affidavit of Documents. It also notes that it had to review several motion records, report to the client on these motions, and provide its position.

[110] My review of its bill of costs reveals an appropriate use by Aqua of junior counsel. Its fees claimed are appropriate as to quantum and allocation.

[111] Aqua is awarded its costs on a partial indemnity scale, which is the scale it sought. Its costs are fixed at $7,943.91, payable by Nanak.

M.M.’s Costs

[112] M.M. seeks its costs on a partial indemnity basis in the amount of $6,884.64, including HST and disbursements.

[113] M.M. played a modest role in the litigation. Its description of its costs is reasonable.

[114] M.M. is awarded its costs as sought in the amount of $6,884.64. In view of my earlier conclusion regarding indemnity, these costs shall be paid by Nanak.

CONCLUSION

[115] Kamco and the Dhekney Defendants are awarded their costs of the motions to dismiss in the amounts provided above.

[116] The Dhekney Defendants’ motion for their costs of the Main Action is granted.

[117] Kamco’s motion for its costs of the Main Action, including its costs of the third-party action, as well as for an indemnity from Nanak for costs awarded to any third parties, is granted.

[118] Arora’s motion for its costs of the Main Action, including the third-party claim, is granted. However, no costs are awarded for its fourth-party action.

[119] All third-party motions for costs of the third-party claim are granted in the amounts and for the reasons given, with all costs awarded payable by Nanak.

CONCLUDING OBSERVATION

[120] Before concluding, I wish to comment upon the appropriateness of this costs award as a whole.

[121] At $139,155.24, this is a significant costs order against Nanak. However, it must be remembered that Nanak commenced two separate actions, claiming damages totalling $6 million. The claims alleged negligence against the Defendants in the construction and design of the townhouse project and therefore engaged their professional reputations. Because it lacked particulars of the claim against it, Kamco reasonably brought seven third parties into the litigation. For nearly a decade, the possibility of significant financial liability and harm to their businesses loomed over all these parties.

[122] Such a cost award is fair and reasonable in the circumstances. Furthermore, I find that the following factors under r. 57.01(1) of the Rules of Civil Procedure, in addition to my reasons for decision above, support this costs award against Nanak:

a. the importance of the allegations of negligence and breach of contract to these businesses and business owners; b. the significant potential liability in damages, totaling $6 million; c. the principle of indemnifying the parties for their costs over nearly a decade of litigation; d. Nanak’s unnecessary lengthening of the proceedings in failing to advance its own litigation; e. Nanak’s unnecessary commencement of two separate actions with respect to the same project, which were eventually consolidated; and f. the amount of costs Nanak could reasonably expect to pay given the above-noted circumstances of the litigation.

[123] Nanak’s conduct in this litigation was reprehensible and a waste of resources on all sides. This costs award reflects an appropriate portion of the expense that was incurred by these parties due to Nanak’s actions.

ORDER

[124] Nanak Homes Inc. is ordered to pay $139,155.24 in costs, comprised of the following amounts, all of which are inclusive of HST and disbursements:

(a) To the Defendants Vishwas Dhekney and Banerjee & Associates Ltd., $17,000 for their motion to dismiss and $25,000 for the Main Action, for a total of $42,000; (b) To Ontario Corporation 1238585 operating as Kamco Techniques Ltee, and Ontario Corporation 2061584 operating as Kamco Engineering Services Ltd., $19,000.00 for its motion to dismiss, $25,000 for the Main Action, and $3,326.69 for its costs of the third-party claim, for a total of $47,326.69; (c) To Devender Arora, $15,000 for his costs in the Main Action; (d) To Aqua Mechanical Contracting Ltd., $7,943.91 for its costs in the third-party claim; (e) To M.M. Associates Ltd., $6,884.64. for its costs in the third-party claim; and (f) To Mircom Inc., $20,000 for its costs in the third-party claim;

[125] All costs ordered herein are payable within 60 days.

McSweeney J. Released: April 21, 2020