Court File and Parties

COURT FILE NO.: 02-CV-239811CM3 DATE: 2020-06-03 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Marvellous Mario’s Inc., Snack Crafters International Inc., 788986 Ontario Limited, 601552 Ontario Ltd., and Mario Parravano AND: St. Paul’s Fire and Marine Insurance Company

BEFORE: J.T. Akbarali J.

COUNSEL: No one appearing for the Plaintiffs David A. Tompkins for the Defendant

HEARD: In writing.

Endorsement

[1] On April 6, 2018, I released a decision arising out of the first phase of a bifurcated trial in two related actions: this one (the “second action”), and action no. 00-CV-198836 (the “first action”): 2018 ONSC 1365. The actions arose after an Indian meal moth infestation in the bakery business operated by the plaintiff, Mario Parravano, through various corporate entities, and in respect of which the plaintiffs sought indemnification from their insurer, the defendant St. Paul’s Fire and Marine Insurance Company.

[2] The first phase of the bifurcated trial was to determine the coverage issues. The second phase was to address the quantum of damages, if I found that the claimed losses were covered.

[3] I concluded that none of the losses claimed in the first action were recoverable under the policy of insurance and dismissed the action. I found that the property and business interruption losses predating one year before the second action was commenced were barred by the contractual limitation period contained in the insurance policy, but that the business interruption losses beginning one year before the commencement of the second action were not barred and could proceed. I then released reasons dealing with costs of the first action: 2018 ONSC 3250. The parties agreed that the determination of the costs of the second action should be deferred until the end of the trial of that action.

[4] Subsequently, the Court of Appeal dealt with an appeal and cross-appeal of my decision. It determined that none of the losses claimed in either action were covered losses, and dismissed both actions in their entirety: 2019 ONCA 635. It remitted the determination of costs of the second action to me. The plaintiffs’ subsequent application for leave to appeal to the Supreme Court of Canada was denied.

[5] St. Paul delivered costs submissions to me on May 13, 2020. At that time, it advised that it had reached out to the plaintiffs’ trial counsel, and to their appellate counsel, to attempt to resolve the issue of costs. Trial counsel advised that he was no longer involved. There was no response from appellate counsel, who was copied on the correspondence.

[6] Through my assistant, I advised that I would allow the plaintiffs until May 31, 2020 to deliver responding costs submissions, and that plaintiffs’ counsel should advise forthwith if they could not comply with the timeline I had set. I received no response from counsel, and no responding materials. I can only conclude that the plaintiffs have chosen not to participate in the determination of costs of the second action.

[7] St. Paul relies on the same bill of costs on which it relied when seeking costs of the first action. In my reasons on costs of the first action, I determined that 65% of the claimed costs from the bill of costs related to the first action. I found that the remaining 35% of those costs, or $91,985, comprised St. Paul’s costs from the second action, and its costs from an earlier action that preceded the first action. I am satisfied that the bulk of these costs relate to the second action. While St. Paul’s now claims the full $91.985 as costs of the second action, some deduction must be made to reflect the costs of the action that preceded the first action. In my view, it is appropriate to deduct 20% from the claimed costs to reflect costs of the preceding action. Thus, St. Paul’s costs of the second action are $73,588.

[8] In my reasons on costs of the first action, I noted that the parties agreed that costs on a partial indemnity scale were appropriate. There is no reason to depart from this scale of costs when determining costs of the second action. St. Paul’s is the successful party with respect to the second action and is entitled to its costs on a partial indemnity scale.

[9] However, in my earlier costs reasons, I also noted that St. Paul was entitled to claim more than 65% of its actual fees paid on a partial indemnity scale. As I explained in my reasons on costs of the first action, at paras. 13-14:

St. Paul argues that it is entitled to claim the amounts it seeks on a partial indemnity basis, even though the amount it seeks is more than 65% of what it was actually billed. St. Paul negotiated a favourable rate from counsel, but that is not a reason to diminish its recovery as long as the total indemnity does not exceed the fees actually charged: Mantella v. Mantella, 2006 CarswellOnt 3176 at para. 7, Hervé Pomerleau Ontario Inc. v. Ottawa (City), 2014 CarswellOnt 2727 at para. 10.

I agree with St. Paul. The goal in fixing costs is not to limit the actual recovery to ensure that it is partial, but rather to consider the pertinent factors to determine the amount of recovery that is appropriate on a partial indemnity basis.

[10] This reasoning continues to apply to St. Paul’s claim for costs of the second action. With respect to the factors relevant to the quantum of recover of partial indemnity costs, I note the following:

a. The plaintiffs’ claimed substantial damages - $4,000,000 – in the second action. b. St. Paul has actually paid over $300,000 in costs over 18 years in respect of the plaintiffs’ actions. It is entitled to some measure of indemnity. c. The plaintiffs have adduced no evidence of their own fees, and did not do so when I determined costs of the first action either. However, their counsel’s hourly rate was higher than that charged by St. Paul’s counsel. I thus infer that they paid the same or more in fees than those paid by St. Paul. Thus, costs in the amount sought by St. Paul would have been within the plaintiffs’ reasonable expectations as the unsuccessful party. d. As I noted in my reasons on costs of the first action, St. Paul has conducted itself appropriately, and behaved responsibly, by, among other things, proposing a bifurcation of the trial which resulted in lower costs being incurred overall.

[11] Considering time expended, the importance of the issues, the conduct of the parties, the reasonable expectations of the plaintiffs, and the principle of indemnity, I find that costs in the amount of $73,588 are fair and reasonable. In addition, it is appropriate to add to this amount some costs to indemnify St. Paul for its efforts to negotiate a costs resolution and prepare costs submissions, given the silence of the plaintiffs. In my view, $2,000 is an amount that is fair and reasonable.

[12] In conclusion, the plaintiffs shall pay to the defendant the sum of $75,588 in costs, all inclusive, within thirty days.

J.T. Akbarali J. Date: June 3, 2020