Court File and Parties

COURT FILE NO.: 1477/16

DATE: 2020 01 15

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 1632093 Ontario Inc. carrying on business as Turn-Key Projects, Plaintiff

AND:

York Condominium Corporation No. 74, Defendant

BEFORE: Conlan J.

COUNSEL: Rahul Gandotra, Counsel for the Plaintiff

Taheratul Haque, Counsel for the Defendant

ENDORSEMENT

I. Introduction

[1] In October 2019, in Milton, this Court heard a summary trial under Rule 76.12 of the Rules of Civil Procedure (“Rules”).

[2] At trial, the Plaintiff, 1632093 Ontario Inc., carrying on business as Turn-Key Projects (“Turn-Key”), had agreed to limit its claim to the sum of $96,622.42, plus interest and costs.

[3] In essence, Turn-Key sued the Defendant, York Condominium Corporation No. 74 (“YCC 74”), for non-payment of various invoices for goods and services rendered. The parties had entered into a construction contract.

[4] For its part, YCC 74 claimed a set-off for alleged deficiencies in the work performed.

[5] In its Reasons for Judgment, this Court allowed Turn-Key’s Claim in part. Some, but not all, of the set-off claimed by YCC 74 was granted. The principal amount of the Judgment in favour of Turn-Key was $61,429.10.

[6] On prejudgment interest, Turn-Key’s counsel, in closing submissions at trial, requested 24% per annum commencing five days after the invoice in question was rendered.

[7] This Court declined to order that.

[8] Instead, it was determined to be more appropriate to allow 24% interest per annum starting on the 46th calendar day after the date of the invoice in question (invoices being due within 45 days).

[9] As there were two invoices that had not been paid, at least not in full, invoice 1608 dated February 21, 2016 and invoice 1606 dated April 11, 2016, this Court determined that it was easier to simply have the prejudgment interest term of 24% per annum apply to the entire $61,429.10 and commence on the date that the Statement of Claim was issued, May 11, 2016.

[10] That was the provisional decision of the Court, subject to the receipt of further submissions by counsel, if so desired.

[11] After the Reasons for Judgment were released to counsel, which Reasons invited written submissions on (i) prejudgment interest and (ii) costs, this Court received what can only be described as an unusual piece of correspondence from counsel for YCC 74. That correspondence asked, among other things, whether the Judgment was a final order, as YCC 74 wanted to know for purposes of an appeal.

[12] In any event, here we are. Both sides have now filed written submissions on costs and on prejudgment interest.

[13] Turn-Key accepted the preliminary assessment of the Court on the issue of prejudgment interest. No request was made to revisit that. Turn-Key requested costs in the total amount of $53,870.59, on a blend of both partial and substantial indemnity recovery.

[14] YCC 74 filed written submissions on the issue of prejudgment interest that did not comply with the express direction of the Court, contained within the Reasons for Judgment, in that they exceed the permissible length of those submissions. Notwithstanding that, so as not to punish the litigant, I read them. YCC 74, despite its counsel saying not a word about the issue during closing submissions at trial until specifically prompted by the Court to do so, although having just had the benefit of listening to the request made by Turn-Key’s lawyer, and despite its counsel when he did address the issue not arguing that Turn-Key should be held to what was prayed for in the Statement of Claim rather than a much higher prejudgment interest rate, now asks that prejudgment interest be limited to that provided for under the Courts of Justice Act (Ontario), hereinafter referred to as the “CJA”. On costs, YCC 74, in written submissions that likewise exceed the express direction of the Court on their permissible length, but which again have been read, requests that Turn-Key be awarded no or a nominal amount of costs from May 11, 2016 to January 18, 2019 and YCC 74 be awarded approximately $43,000.00 in costs, plus disbursements, on a substantial indemnity scale, thereafter.

II. Decision

[15] First, on interest, through no fault on the part of Mr. Gandotra, and I am sure unintentionally, it appears that this Court was misled into thinking that the oral submissions on behalf of Turn-Key at the close of the trial were consistent with what was pleaded in the Statement of Claim. That misapprehension on the Court’s part was further solidified when counsel for YCC 74 did not clarify the matter in his closing submissions at trial.

[16] Upon further investigation now, however, I see that counsel for YCC 74 is correct in that the Statement of Claim did not request prejudgment interest as outlined by Mr. Gandotra at the end of the trial. Rather, the Claim asked merely for prejudgment and post-judgment interest in accordance with the provisions of the CJA.

[17] I am not aware of the Claim, located at tab 1, volume 1 of the Amended Trial Record, ever having been amended. In the reply submissions filed in writing on behalf of Turn-Key, for which I hereby grant leave, there is no argument by Mr. Gandotra that the Claim was ever amended (in fairness to Mr. Gandotra, it should be noted that neither he nor his firm prepared the Statement of Claim).

[18] Further, I accept the submission made on behalf of YCC 74 that the Judgment ought not to have contemplated an award of interest in favour of Turn-Key that was requested, for the first time, in closing submissions at trial.

[19] Thus, as I clearly have the authority to do so given the explicit wording of paragraph 65 of the Reasons for Judgment, and out of respect for procedural fairness, notwithstanding counsel for YCC 74’s failure to address the issue with any degree of precision during closing submissions at trial, a clarification to the Judgment is necessary.

[20] The principal amount of the Judgment in favour of Turn-Key remains as previously ordered. The clarification is as follows. Turn-Key shall be awarded prejudgment and post-judgment interest as per the CJA.

[21] If counsel cannot agree on the calculation of the prejudgment interest, which they certainly should be able to do, I may be spoken to by way of a brief teleconference. If necessary, counsel shall arrange that through the trial coordinator’s office.

[22] Second, on costs, we operate under a default system where the “loser pays” principle applies. In other words, it is presumed that a successful litigant after trial is entitled to some costs.

[23] The key objectives of our costs system are to (i) partially indemnify successful litigants, (ii) encourage settlement, and (iii) discourage or sanction inappropriate or bad conduct.

[24] Quantum of costs is largely discretionary. Of course, the Court must consider, among other things, the Rules, the degree of success enjoyed by the party claiming costs, any offers to settle, the reasonableness of the time spent by counsel and the hourly rates charged, and any other relevant factor brought to the Court’s attention by either side.

[25] The overriding goal is to make an award that is fair, just, reasonable, and proportionate, in all of the circumstances.

[26] Here, both sides attempted to settle the case. But, in terms of costs consequences, I am not satisfied that either party is entitled to substantial indemnity costs.

[27] As conceded by Turn-Key, the Judgment allowed a greater sum for YCC 74’s set-off than what Turn-Key had offered before the anticipated motion for summary judgment. Further, Turn-Key’s offer made on August 23, 2019, for $100,000.00 all-inclusive, was only open for acceptance for a few days and expired well before the trial commenced.

[28] YCC 74, at the highest, offered to pay $78,000.00 all-inclusive. Assuming that YCC 74 is correct in stating that the said sum is greater than the amount of the Judgment in favour of Turn-Key, both principal and prejudgment interest (as clarified above), despite YCC 74’s offer to pay $78,000.00 having been extended, on August 27, 2019, to one minute after the commencement of the summary trial, I still would not award to YCC 74 any costs, never mind costs on an elevated scale.

[29] Even where all necessary ingredients of an offer to settle that attracts elevated costs consequences under the Rules are met, a judge has discretion to not award substantial indemnity costs or even to not award any costs at all. Both are exceptional, the latter resorted to sparingly I would think.

[30] Here, YCC 74, with no reasonable explanation at all, whether from its counsel or from its Board member witness at trial, refused to pay to Turn-Key what it always acknowledged was properly owing to it. This was never a case where the amount of the set-off being claimed, even if allowed one hundred per cent, would be equal to, or close to, the principal amount outstanding to Turn-Key. Never was that a possibility, yet YCC 74, for no good reason whatsoever, withheld any further payment to Turn-Key. That, in my view, was improper and should be discouraged.

[31] To sum up thus far, there will be no costs ordered in favour of YCC 74, and if there are any costs ordered in favour of Turn-Key it will not be on anything but a partial indemnity recovery scale.

[32] Should Turn-Key receive any costs? After careful reflection, I have determined that the answer is no.

[33] Arithmetically, it is likely true that Turn-Key was more successful after trial than YCC 74 was. Two things remain, however. First, undoubtedly, on dollars and cents, success was divided. Second, globally, just as many of the arguments advanced on behalf of Turn-Key were rejected by this Court as compared to those submitted on behalf of YCC 74. For example, take the issue of the paint on the suite doors. Turn-Key, as was its right, fought that issue tooth and nail. Numerous alternative arguments were made that the set-off claimed by YCC 74 ought to be disallowed completely or, at the very least, gutted to a nominal amount. The Court had to deal with all of those arguments. All of them were indeed dealt with; and all of them were dismissed. Contextually, therefore, and not just in terms of money, success at trial was truly divided.

[34] Given the divided success, I am of the view that the most appropriate result is that each side shall bear its own costs. So ordered.

[35] It is, thus, unnecessary to deal with the issue of quantum.

The Honourable Mr. Justice C.J. Conlan

Date: January 15, 2020