Court File and Parties

COURT FILE NO.: CV-17-571413 DATE: 20200603 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Prollenium International Corporation and Prollenium Medical Technologies Inc., Plaintiffs (Respondents) AND: Vital Esthetique Sarl aka Sarl Vital Esthetique aka Vital Esthetique, Defendant (Appellant)

BEFORE: Kimmel J.

COUNSEL: Eric Brousseau, for the Plaintiffs (Respondents) Murray Teitel, for the Defendant (Appellant)

READ: Written cost submissions dated April 15, April 29, and May 4, 2020

COSTS ENDORSEMENT (appeal from master’s decision)

The Appeal

[1] I dismissed this appeal by the defendant from the order of Master McGraw made May 3, 2019 and upheld the master’s decision to grant the plaintiffs leave to further amend their Amended Statement of Claim. See my reasons released March 20, 2020, Prollenium International Corporation v. Vital Esthetique Sarl, 2020 ONSC 1704. Having been unable to reach an agreement on costs, the parties were given the opportunity to make written cost submissions that I have now read.

[2] The plaintiffs seek payment of outstanding invoices for products delivered in February and April 2015. The proposed amendments resulted in the plaintiff being permitted to plead that the failure to pay the invoices was a breach of not only a 2015 OBL/OEM Manufacturing Agreement or a common law contract for the sale of goods but also possibly a preceding 2013 OBL/OEM Manufacturing Agreement.

[3] The main issue on the appeal was whether the master erred in his conclusion that the proposed amendments (to include a plea that the defendant breached the preceding 2013 OBL/OEM Manufacturing Agreement) did not constitute a new cause of action. I found that the master made no reversible error. Five other arguments that the defendant made in opposition to the amendments were rejected by the master and also by me on the appeal.

[4] One of the considerations on the appeal involved an assessment of which plaintiff was asserting claims under which contract. In reaching my decision on the main issue, I closely examined the existing Amended Statement of Claim and concluded that it plead, albeit inelegantly, all of the original claims and causes of action by both “Prollenium International/Prollenium Medical”. I observed that the vagueness with which the existing Amended Statement of Claim was plead could have been the subject of a demand for particulars or a motion to strike, but it was not. While this court does not endorse vague and unparticularized pleadings, it is for the parties, not the court to demand that those be clarified and particularized. The lack of particularity may have assisted the plaintiffs in this particular case.

The Positions of the Parties on Costs

[5] The plaintiffs/respondents on the appeal argue that they are, as the successful parties, entitled to their costs. They seek their partial indemnity costs of the appeal in the all-inclusive amount of $10,350.96. They have provided examples of other appeals, including appeals involving pleading amendments, in which partial indemnity costs in this range have been awarded to the successful party.

[6] The plaintiffs/respondents argue that the appellant/defendant ought to have expected to pay costs in this range if the appeal was lost, having regard to Rule 57.01(0.b) of the Rules of Civil Procedure. They also argue that this amount of partial indemnity costs is proportionate, having regard to the amount of their claim, which is for approximately $484,000.00 USD (Rule 57.01(a) of the Rules of Civil Procedure).

[7] The plaintiffs/respondents emphasize that the court should have particular regard in a case such as this to the Rule 57.01(0.a) principle of indemnity in awarding the amount of partial indemnity costs that they seek, which has been calculated at 70% of the rates of the lawyers involved. The plaintiffs also note that no time has been charged for the most senior member of their counsel team and that the total number of lawyer billable hours charged was roughly the same for both sides: 41.5 hours for the plaintiffs/respondents and 37.35 hours for the defendant/appellant.

[8] The plaintiffs/respondents also note that the appeal was unduly complicated and lengthened unnecessarily by the appellant re-arguing each and every issue that was before the master, as if it was a de novo hearing (Rule 57.01(e) of the Rules of Civil Procedure), many of which the master had concluded were not relevant to a pleadings amendment motion. They argue that even though the appellant re-argued all of the issues from the master’s motion on the appeal, to which they had to respond, the amount of costs they seek now represents only approximately 2/3 of their partial indemnity bill of costs from the master’s motion. They also note that the issue of the amendment to the pleading was of particular importance (Rule 57.01(d) of the Rules of Civil Procedure) because of the potential impact that their plea of reliance on the 2013 Manufacturing Agreement could have on the defendant’s pending motion that seeks to challenge the jurisdiction and forum of the Ontario Superior Court of Justice.

[9] The defendant/appellant argues that this motion was necessitated by the poorly drafted statement of claim of the plaintiffs and that it was only brought as an afterthought, in response to the defendant’s jurisdiction/forum motion. Despite losing the appeal, the defendant argues that it should be awarded costs of the appeal in an amount approximating 50% of the block counsel fee that its counsel agreed to charge for this appeal, plus disbursements and taxes, for a total amount of $8,364.18. The defendant/appellant relies on Rule 57.01(2) of the Rules of Civil Procedure which contemplates that there may be circumstances in which the court will award costs against a successful party.

[10] The defendant points to examples of cases in which the court has awarded costs to unsuccessful defendants opposing requests for leave to amend pleadings, which the court has considered an exception to the loser pays rule because the granting of leave to amend is an indulgence to the plaintiff. See Ravenda v. 1372708 Ontario Inc., 2010 ONSC 5784, at para. 9; Hall v. Cloutier, 1997 CarswellOnt 394; Albino & Mike Contracting Ltd. v. James, [1992] O.J. No. 3877, at para. 6.

[11] The defendant/appellant argues, in the alternative, that any costs award to the respondents should be in the cause and the amount should be reduced to a fixed all-inclusive amount of $5,000.00, having regard to the points already noted and also because the costs outline provided by the plaintiffs/respondents was not accompanied by redacted dockets to substantiate the time spent. The defendant/appellant argues that the fees indicated by the respondents’ costs outline of $12,210.00 are excessive and should be presumed to be inflated having regard to the block fee of $12,000.00 that its counsel agreed to charge for the appeal because appellant’s counsel would be expected to have to do more work on an appeal.

[12] In reply, the plaintiffs/respondents seek to distinguish the cases that the appellant relies upon, particularly in the context of an appeal where the motion was lost at first instance and there was no divided success. They maintain that the amount of the fees charged were accurately reflected and certified in the costs outline that was delivered in accordance with Rule 57.01(6) of the Rules of Civil Procedure and that rounding time to 1/10 of an hour is the accepted practice.

Costs Analysis

[13] Having considered all of the arguments, and with particular regard to sub-rules 57.01(0.a, 0.b, and e) of the Rules of Civil Procedure I find as follows:

a. The plaintiffs/respondents are entitled to their partial indemnity costs of this appeal; even if they may have been seeking an indulgence at first instance for permission to amend their statement of claim, having succeeded on the motion, they should not be viewed as seeking an indulgence by responding to an appeal from the master’s order. b. It ought reasonably and objectively to have been within the expectation of the appellant/defendant that it would have to pay costs calculated against a full indemnity amount of approximately $12,000.00 in professional fees, given that is what their counsel had agreed to charge and that they chose to re-litigate every issue that had been argued before the master, requiring the plaintiffs to respond in kind. A full bill of costs and opportunity to review supporting dockets is not necessary or proportionate to fix the appropriate amount of costs on an appeal such as this, particularly when the amount of fees charged by counsel for both sides are approximately the same and there are no red flags. c. I agree with the appellant that 70% of full indemnity is on the high end for the calculation of partial indemnity costs. Partial indemnity costs are typically calculated in the range of 60-66%. I also agree that the vague manner in which the plaintiffs were described in the statement of claim may have assisted the plaintiffs in this particular instance in their request for leave to amend, but that is not a pleading practice that the court condones. I am fixing the partial indemnity fees of the plaintiffs/respondents for this appeal at $7,330.00 (approximately 60% of their actual costs), which translates into an all-inclusive amount of partial indemnity costs of the appeal of $8,975.75. d. I consider this to be an appropriate case in which to apply Rule 57.03 of the Rules of Civil Procedure (by analogy) with respect to the time for payment of the costs of this appeal.

Decision and Implementation of Costs Award

[14] In the exercise of my discretion under s. 131 of the Courts of Justice Act, R.S.O. 1990, c.C-42 and Rule 57 of the Rules of Civil Procedure, I am awarding the plaintiffs/respondents their partial indemnity costs of this appeal, fixed in the amount of $8,975.75 and payable within 30 days of this endorsement.

[15] Pursuant to Rule 59.05 of the Rules of Civil Procedure, this costs endorsement is effective from the date it is made and is enforceable as an Order without any need for entry and filing. In accordance with Rule 1.04 of the Rules of Civil Procedure, no formal Order need be entered and filed unless an appeal or a motion for leave to appeal is brought to an appellate court. Any party to this endorsement may nonetheless submit a formal Order for original signing, entry and filing when the court returns to regular operations.

Kimmel J. Date: June 3, 2020