Court File and Parties

COURT FILE NO.: 15-62995 DATE: 2020/01/02 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Royal Bank of Canada AND 1643937 Ontario Inc., Lorraine MacDonald, Shawn McHale, Patrick McHale, and Beverly McHale

BEFORE: Justice Heather J. Williams

COUNSEL: J. Ross MacFarlane, Counsel for the Plaintiff Pavle Masic, Counsel for the Defendant/Moving Parties Patrick McHale and Beverly McHale Jason Dutrizac, Counsel for the Defendant/Moving Party Lorraine MacDonald

HEARD: In Writing

Costs Endorsement

[1] The plaintiff, Royal Bank of Canada, was successful in its motion for summary judgment to enforce the defendants’ guarantees. Judgment was awarded against all defendants except for Shawn McHale; the action against Shawn McHale had been stayed.

[2] Because its summary judgment motion disposed of the action, RBC seeks its costs of both the motion and the action.

RBC’s Position

[3] RBC is asking for fees on a substantial indemnity basis. It argues it is entitled to costs on this scale under the terms of its contracts with the defendants. The guarantees signed by the defendants provided that RBC would be entitled to recover all legal costs associated with a demand for payment under the guarantees on a “solicitor and own client” basis.

[4] RBC seeks costs of $84,490.38, inclusive of fees ($63,725.25) and disbursements and HST ($9,315.74).

The Defendants’ Position

[5] The defendants do not take issue with the hours worked, the hourly rates charged or the disbursements in RBC’s bill of costs.

[6] The defendants argue only that the costs awarded to RBC should be on a partial and not a substantial indemnity scale. The defendants acknowledge that the guarantees they signed provide for what are now referred to as substantial indemnity costs but argue that RBC should not be awarded costs on this scale because of its conduct toward the defendants, which the defendants characterize as unfair or inequitable.

[7] The defendants ask that costs be fixed at $70,490.39, inclusive of fees, disbursements and HST.

Analysis

Scale of Costs

[8] In The Trustees of the Labourers’ Pension Fund of Central and Eastern Canada et al. v. Sino Forest Corporation et al., 2019 ONSC 4632 at para. 36, Perell J. summarized case law which considered costs provisions in contracts. Perell J. concluded that, as a general proposition, the court will respect a contractual entitlement to costs, but that the agreement does not exclude the court’s discretion. Where there is good reason for doing so, such as inequitable conduct or special circumstances that would make the imposition of costs pursuant to the agreement unfair or unduly onerous, the court may refuse to enforce the contractual term. It is a matter of contract interpretation whether the successful party is entitled to costs other than on a partial indemnity basis, and it is only when the contract clearly and unequivocally provides for a different scale of costs that the court should depart from the partial indemnity scale.

[9] In this case, I see no reason not to enforce the cost provision in the guarantees. The defendants do not suggest that the term is unclear or equivocal. The conduct the defendants argue in paragraphs 7 through 12 of their costs submissions should disentitle RBC from substantial indemnity costs is either conduct I have already found RBC did not engage in, conduct that was permissible under the terms of the guarantees signed by the defendants or alleged conduct not supported by the evidence on the motion.

[10] RBC shall have its costs on a substantial indemnity scale.

Amount of Costs

[11] Having concluded that RBC is entitled to its costs on a substantial indemnity basis, the only issue to be decided is whether I agree with the defendants’ conclusion that the hours worked, the timekeepers’ hourly rates and the disbursements in RBC’s bill of costs are reasonable.

[12] Rule 57.01 of the Rules of Civil Procedure lists the factors a court may consider in exercising its discretion to award costs under s. 131 of the Courts of Justice Act. In this case, the amount at stake was considerable, the action was of moderate complexity and the issues were important to the parties, particularly the defendants. I am not persuaded that either RBC or the defendants acted unreasonably in the litigation. I consider the time worked and the hourly rates charged by RBC’s legal professionals to be reasonable. I will not look behind the defendants’ approval of RBC’s disbursements.

[13] In Boucher v. Public Accountants Council for the Province of Ontario, 71 O.R. (3d) 291 (C.A.), the Court of Appeal said that costs “should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.”

[14] In the circumstances, I conclude that the amount sought by RBC reflects a fair and reasonable amount to be paid by the defendants. Costs will be fixed in this amount, payable by the defendants jointly and severally.

Conclusion

[15] The defendants, jointly and severally, shall pay RBC its costs of the summary judgment motion and the action in the all-inclusive amount of $84,490.38.

Madam Justice H. J. Williams Date: January 2, 2020