Court File and Parties
Oshawa Court File No.: CV-15-94016-00 Date: 20200429 Superior Court of Justice - Ontario
Re: Barry Picov and Picov Farms Ltd., Plaintiffs/Moving Parties And: Generac Power Systems Inc., Sonepar Canada Inc., Osso Electric Supplies Inc., a division of Sonepar Canada Inc., Total Power Ltd., Plan Group Inc., Genserve Ltd. and John Doe, Defendants/Respondents
Before: The Honourable J. Dawe
Counsel: M. Forget, for the Plaintiffs/Moving Parties S. Sud, Counsel for the Defendant/Respondent Generac Power Systems Ltd. R. Horst, Counsel for the Defendants/Respondents Sonepar Canada Inc. and Osso Electric Supplies Inc., a division of Sonepar Canada Inc. T. Lampropoulos and B. Mantynen, Counsel for the Defendant/Respondent Genserve Systems Inc.
Heard: In Writing
Endorsement re costs
[1] On February 7, 2020 I granted a motion brought by the plaintiffs Barry Picov and Picov Farms Ltd. (“Picov and Picov Farms”) and made an order awarding them two different forms of relief. First, I made an order pursuant to Rule 5.04(2) of the Rules of Civil Procedure amending their Statement of Claim to substitute Robar Residence Corporation as the plaintiff in their place. [1] Second, I set aside an ex parte costs order that had been made against them in September 2019 in favour of the defendant Genserve Systems Inc. (“Genserve”).
[2] All of the defendants opposed granting Picov and Picov Farms the first of these forms of relief, while Genserve alone opposed granting the them second form of relief.
[3] Picov and Picov Farms, having succeeded on both prongs of their motion, now seek their costs. I directed the parties to file written costs submissions.
I. The motion to amend
A. Positions of the parties
1. Picov and Picov Farms
[4] Picov and Picov Farms argue that they should be granted their costs of the motion to amend on a substantial indemnity basis, submitting that the defendants’ arguments were “spurious” and that it was unreasonable for them to oppose the motion.
[5] They seek substantial indemnity costs of $18,036.98, all inclusive. If costs are awarded on a partial indemnity basis, they seek $14,175, all inclusive.
2. Genserve
[6] Genserve submits that the plaintiffs should not be awarded any costs in relation to the motion to amend the pleadings, emphasizing that the motion was only necessary in the first place because Picov and Picov Farms’s own counsel initially named the wrong parties as plaintiffs, which was an error that could easily have been avoided.
[7] Genserve argues further that if costs are awarded against the defendants, there are no legitimate grounds for awarding substantial indemnity costs, and that a reasonable award of partial indemnity costs would be $10,000 all inclusive.
3. Sonepar
[8] Sonepar Canada Inc. and its division Osso Electrical Supplies Inc. (“Sonepar”) agrees with Genserve that there is no basis for awarding costs against the defendants on a substantial indemnity basis. Sonepar also agrees that “[t]here is a reasonable argument that the plaintiffs should be entitled to no costs”. Finally, Sonepar agrees with Genserve that if costs are awarded to the plaintiffs, $10,000 all inclusive would be an appropriate amount.
4. Generac
[9] Generac Power Systems Inc. (“Generac”) did not file materials on the motion, but its counsel appeared and made brief submissions opposing the motion to substitute Robar as the plaintiff.
[10] Generac acknowledges that it should bear its share of any costs awarded against the defendants, and otherwise adopts Sonepar’s submissions.
B. Analysis
[11] As Perrell J. noted in Amelin Resources, Inc. v. Victory Energy Operations, L.L.C., 2019 ONSC 239 at para. 13:
The most general rule about costs, not to be departed from without good reason, is that costs at a partial indemnity scale follow the event, which is to say that normally costs are ordered to be paid by the unsuccessful party to the successful party on a partial indemnity scale.
[12] I agree with the defendants that this is not an appropriate case to award the plaintiffs substantial indemnity costs in relation to the motion to amend. I ruled that the plaintiffs’ counsel’s mistake about who owned the property at the time of the fire could properly be seen as falling within the expanded conception of “misnomer” established by the Ontario Court of Appeal in Mazzuca v. Silvercreek Pharmacy Ltd., and accepted that the preponderance of post- Mazzuca cases supported the plaintiffs’ position on this point. However, as I discussed at para. 25 of my previous reasons, the question of whether Mazzuca is still good law in view of subsequent legislative amendments to the Limitations Act is not as clear-cut as the plaintiffs suggest. In particular, I noted that Veerella v. Khan, [2009] O.J. No. 6347, a Master’s decision that was affirmed by Jennings J. sitting as a single judge panel of the Divisional Court, can be read as supporting the defendants’ position. Even though I ultimately did not agree with the defendants on this issue, I would not go so far as to describe their arguments as “spurious”.
[13] I also agree with the defendants that the plaintiffs’ counsel can be faulted to some extent both for making the initial mistake about the ownership of the property that made the motion to amend the pleadings necessary in the first place, and for then failing to present as fulsome an evidential record on the motion to amend as would have been preferable.
[14] For instance, many of the arguments made by the defendants could have been headed off or neutralized if the plaintiffs’ counsel had simply provided a more detailed explanation in its supporting affidavit about the relationship between Picov and Picov Farms and Robar, the circumstances under which Picov Farms transferred ownership of the property to Robar a few weeks before the fire, and the reasons why counsel remained unaware of this transfer when the Statement of Claim was first prepared. While I ultimately held that the plaintiffs’ failure to lead evidence on these points was not fatal to their position, if they had simply led this evidence in the first place it would have allowed everyone to focus on the real issues in this motion, which very likely would have reduced the litigation cost. In my view, this is a relevant factor for me to take into account when exercising my discretion to award costs: see Rule 57.01(1)(e) of the Rules of Civil Procedure.
[15] That said, I do not consider this factor to be so weighty that it would justify awarding the plaintiffs no costs despite their substantial success on the motion. In this regard, I should emphasize that my criticism of the plaintiffs’ counsel for their somewhat slipshod approach to assembling the supporting evidential record does not extend to their preparation of their legal argument, which was of a very high calibre and was of considerable assistance to me.
[16] On balance, I have decided to exercise my discretion by awarding the plaintiffs partial indemnity costs in a somewhat reduced amount from the $14,175 they seek, which I will fix at $12,000 all inclusive, to be apportioned equally among the defendants [2] and payable forthwith.
II. The motion to set aside the ex parte costs award
A. Positions of the parties
1. Picov and Picov Farms
[17] Picov and Picov Farms argue that they should be granted substantial indemnity costs against Genserve in relation to their motion to have the ex parte costs order set aside. They argue that Genserve’s counsel acted unreasonably by refusing to agree to have the order set aside even after they learned that the plaintiff’s counsel had not attended the motion hearing because he mistakenly thought that all the disputed issues had been resolved and that Genserve would not be seeking costs. Picov and Picov Farms characterize this as a form of “sharp practice” prohibited by Rule 7.2.2. of the Law Society of Ontario’s Rules of Professional Conduct, in that Genserve was taking advantage of a “mistake on the part of [an]other legal practitioner not going to the merits”.
[18] Picov and Picov Farms quantify their costs in relation to this aspect of their motion at $9,599.83 on a substantial indemnity basis or $7,689.00 on a partial indemnity basis (both figures all inclusive).
2. Genserve
[19] Genserve reiterates its position that its original decision to bring a motion to dismiss the action for delay was justified because of Picov and Picov Farms’s own delay in bringing forward their motion to amend their pleadings, which had been adjourned sine die. Genserve argues further that:
It was necessary for Genserve to oppose the Costs Motion, given Plaintiff’s counsel’s failure to explain his non-attendance at the Motion to Strike, given that Plaintiff’s counsel had alleged that counsel for Genserve had breached the Rules of Professional Conduct, and given the confusing and misleading omission of the final email sent by counsel for Genserve on the day before the motion to strike, which enclosed its Bill of Costs, from the Plaintiff’s motion materials for the Costs Motion.
[20] Genserve argues further that its proposed interpretation of Rule 37.14(1)(b) of the Rules of Civil Procedure as limited to “mistakes” caused by some external “interfering or preventing factor” was reasonable.
B. Analysis
[21] This appears to be an unfortunate situation where a minor dispute over a relatively small amount of money – a costs award of less than $2,400 – devolved into a personal spat that led counsel on both sides to make a number of questionable choices.
[22] As discussed in my previous ruling, I am satisfied that the origins of this dispute arose out of a genuine misunderstanding between counsel. Mr. Lampropoulos had expressly indicated in his emails to Mr. Forget that he would be seeking costs, and I accept that he honestly believed that Mr. Forget would be attending the motion to argue the costs issue even though the remaining issues had been resolved. At the same time, I accept that Mr. Forget had misread Mr. Lampropoulos’s emails and honestly believed that Mr. Lampropoulos would not be asking for costs, and that there was accordingly no need for him to attend.
[23] While I agree that Mr. Forget bears primary responsibility for making the initial mistake that led to the costs order being made ex parte, Genserve’s counsel’s response after they learned about Mr. Forget’s mistake in my view left much to be desired. While I am hesitant to characterize Genserve’s counsel’s actions as “sharp practice”, [3] I think they can be fairly criticized for not taking the high road and agreeing to have the ex parte order set aside so that the issue of costs could be determined inter partes on its merits. They could have done this while reserving their right to seek additional costs for their re-attendance if they were ultimately successful in having the costs order upheld. Instead, they took the position that Mr. Forget would have to bring a further contested motion to have the ex parte costs award set aside.
[24] For his part, Mr. Forget can perhaps be criticized for taking the bait and choosing to spend as much time as he did to have a costs award of only $2,400 set aside. While his decision may have been questionable as a matter of proportionality, his position in my view at least had the virtue of being well founded in law, for the reasons given in my previous ruling.
[25] Conversely, I do not agree with Genserve’s counsel that it was “necessary” for them to oppose Picov and Picov Farms’s motion to have the ex parte costs order set aside. The same criticisms about proportionality that can be directed at Mr. Forget can be equally directed at them. I strongly suspect that a strong motivating factor was that they took great umbrage to Mr. Forget’s accusation that they had acted unethically. However, this did not in my view justify their decision to double down on their approach, given the underlying weakness of their legal position.
[26] As I explained in my earlier ruling, I do not question that Genserve’s counsel were frustrated by the plaintiffs’ delay in scheduling their motion to amend their pleadings. Genserve would have been justified in taking steps to have the plaintiffs’ motion to amend, which had been adjourned sine die more than a year earlier, brought forward and heard on its merits or dismissed. If counsel had taken this more focused approach, Genserve might well have been entitled to its costs even after the dispute over scheduling was resolved and the parties had agreed on a timetable.
[27] However, the motion Genserve actually brought was to have the entire action dismissed for delay, which was not a remedy it had any realistic prospect of obtaining in the circumstances. In my view, this disentitled Genserve from receiving its costs of the motion even after it had abandoned its claim for this relief, since it could no longer claim to have been substantially successful. Moreover, this was a point the plaintiffs’ counsel would undoubtedly have made to the court if the costs issue had been argued inter partes.
[28] On balance, while both sides bear some measure of responsibility for causing this dispute to escalate, I think more of the blame can properly be assigned to Genserve. That said, I am not persuaded that Genserve’s degree of fault rises to the high level that would justify awarding costs against it on a substantial indemnity basis.
[29] As the successful parties on this aspect of their motion, the plaintiffs are entitled to their costs on a partial indemnity scale unless there is some good reason to make a different award. If the circumstances had been somewhat different I might well have reduced the plaintiffs’ costs award below the partial indemnity scale to reflect the disproportionality between the time their counsel expended and the small amount that was actually at stake. However, I do not think it would be appropriate to do this in light of my conclusion that Genserve bears a greater share of the responsibility for the escalation of this dispute. Accordingly, I am prepared to award the plaintiffs their partial indemnity scale costs of $7,689, payable forthwith by Genserve.
III. Disposition
[30] In the result, I would award Picov and Picov Farms a total of $19,689 in costs, payable forthwith, apportioned as follows: (i) $4,000 payable by Generac; (ii) $4,000 payable by Sonepar/Osso; and (iii) $11,689 payable by Genserve.
The Honourable Justice Dawe
Date: April 29, 2020
[1] For the purpose of this costs ruling I will continue to refer to Picov and Picov Farms as “the plaintiffs”, since this was their status when their motion was heard and decided.
[2] For the apportionment purposes I will treat Sonepar Canada Inc. and its division Osso Electric Supplies Inc. as a single entity, which is how they conducted themselves on the motion.
[3] See Haider Humza Inc. v. Mohammed Rafiq, 2013 ONSC 3161 at paras. 7-11.