Background

[1] This is an oppression case in which the plaintiff sought an order requiring the purchase of her Class A shares in Pier 21 at fair value and payment of damages. Following a trial in November and December 2018, I released a decision in this matter on April 12, 2019.

[2] There were three basic issues:

(1) whether a 2012 sale purchase agreement by which Ms. Murray sold 6.9% of her Class A shares back to Pier 21, should be set aside;

(2) the fair value of the Class A shares of Pier 21; and

(3) whether Ms. Murray was entitled to equitable damages for:

(a) non-payment of dividends;

(b) termination from her position as Senior VP of Pier 21; and

[3] In my reasons, I dismissed Ms. Murray’s claim seeking to set aside the 2012 share purchase agreement. Regarding enterprise value, the plaintiff’s expert had valued the shares of Pier 21 at $55 million. The defendant’s expert valued the shares at $20.8 million. I found, following a lengthy issue by issue analysis of each expert’s evidence, that the total value of Pier 21’s Class A shares was $39.3 million. The net monetary effect of all this for Ms. Murray’s Class A shares was that she sought an award of $8.8 million (16% of $55 million). At the outset of the trial, Mr. Star offered, with prejudice, $1.89 million (9.1% of $20.8 million). Ms. Murray was ultimately awarded $3.5763 million (9.1% of $39.3 million)[^1]. Regarding equitable damages, I dismissed Ms. Murray’s claim for damages for unpaid dividends and for Mr. Star’s alleged high-handed and unlawful conduct. I allowed her claim for equitable damages for termination fixed in the amount of $605,579. Thus, from a claim for well in excess of $9.5 million, Ms. Murray obtained an award of about $4.2 million.

[4] There were two subsequent phases to the trial. In the first phase, both parties brought motions to vary my reasons under Rule 59. Success was divided on these motions. I denied the defendant’s motion to decrease my valuation of Pier 21 shares by about $2 million. I also denied the plaintiff’s request to be awarded compound pre- and post-judgement interest at a rate significantly higher than the rate prescribed by the Courts of Justice Act, R.S.O. 1990, c. C.43. My Supplementary Reasons dealing with these issues were released on July 29, 2019. Costs of these motions was reserved.

[5] In the second post-trial phase, I received additional evidence and submissions on the transaction structure that should be employed for the purchase of Ms. Murray’s shares. This was a tax-driven issue in which Ms. Murray sought an order imposing a transaction structure that would be most beneficial to her from a tax perspective. In an Addendum Re: Tax Structure, released April 8, 2020, I denied Ms. Murray’s request for an order adopting her particular request, and ordered, as submitted by the defendants, the transaction to take place on the same basis as the 2012 share purchase agreement. Costs of this phase were also reserved.

[6] At that point, all substantive issues in the trial had been resolved. The only remaining issue related to costs, which both parties had asked be deferred until the aforementioned issues had all been decided.

[7] In June 2020, while reviewing background material in support of the plaintiffs’ expert’s fees, the defendants claimed to have come across docket entries that call into question the plaintiff’s expert’s independence. The defendants prepared another Rule 59 motion, seeking to set aside my findings on fair value at $39.3 million and replace it with the value, based on the defendants’ expert’s opinion, of $20.8 million.

[8] Following a case conference on this issue, I issued an endorsement on July 10, 2020 in which I declined to hear the defendants’ motion. At that point, all substantive issues had been resolved and the defendants had already appealed my decision. I took the view that if the defendants wished to pursue this issue, they must do so with the appellate court on a motion to admit new evidence. The defendants subsequently brought another motion asking for a reconsideration of my decision not to entertain the defendants’ motion to vary my Judgment. I declined to entertain that motion as well.

The Parties’ Positions

[9] The plaintiff seeks costs on a partial indemnity basis (calculated at 70% of full indemnity) in the amount of $1,145,535.27 plus disbursements of $329,540.58 and taxes on these amounts. In the alternative, the plaintiff seeks costs calculated at 60% of full indemnity, in the amount of $981,887.37, plus disbursements and taxes.

[10] The defendants submit that the plaintiff should receive a partial indemnity cost award in the amount of $384,722.98 (inclusive of disbursements and HST) and that the defendants should be awarded substantial indemnity costs in the amount of $123,984.73, partial indemnity costs in the amount of $22,600 and an additional $109,222.04 as partial recovery of expert valuation fees. The net effect of the defendants’ position would be a net cost award to the plaintiff of $128,916.21.

The Percentage of Full Indemnity

[11] The parties both acknowledge the “rule of thumb” starting point that partial indemnity costs would typically represent about 60% of actual incurred costs. Both parties, however, submit that this general approach be amended in this case to reflect the particular circumstances.

[12] The plaintiffs justify an increased percentage to 70% because:

(a) Ms. Murray was found to have been “oppressed”; and

(b) Because of Mr. Star’s conduct, which tended to unnecessarily lengthen the proceedings. This conduct included:

(i) production deficiencies;

(ii) making allegations about Ms. Murray’s personal life and conduct and seeking unreasonably to pursue these allegations in documentary and oral discovery; and

(iii) various other instances of petty, vindictive conduct.

[13] The defendants argue that the percentage should be effectively lower than 60% because the plaintiff pursued many issues and claims in respect of which she was ultimately unsuccessful. I will return to the defendants’ arguments on this when dealing with the “distributive costs” issue and certain Rule 57 factors below.

[14] While it is true that I found Ms. Murray had been “oppressed” by the defendants’ failure to buy her shares and the termination of her position as Senior VP, this finding, of itself, does not impute any moral impropriety or opprobrium. Oppression is a defined term in the Canada Business Corporations Act R.S.C., 1985, c. C-44, s. 241(2), the finding of which enables the Court to grant certain relief in appropriate circumstances. Nothing about a finding of oppression itself attracts a higher or more punitive level of costs.

[15] While no doubt some of Mr. Star’s positions on document production tended to lengthen the proceedings, the mere fact that certain documents which the defendants refused to produce were ultimately ordered by the Court to be produced does not, of itself, warrant elevated costs. More importantly, there is ample evidence in the record that Ms. Murray herself also caused significant delays in the prosecution of her case, including two lengthy adjournments granted at her request.

[16] The plaintiff focuses especially on Mr. Star’s allegation of personal impropriety relating to Ms. Murray while she was employed at Pier 21. Again, while harsh, even exceptionally distasteful things were said, I cannot accept that this rises to the level of warranting an elevated assessment of costs of the action as a whole. The plaintiff herself appears to have wanted it both ways with respect to her emotional state and personal relationship with Mr. Star over the evolution of this case. She made serious allegations against Mr. Star and his alleged “abuse” of his personal relationship with her; but the plaintiff did not want any exploration of her own personal circumstances. An August 30, 2017 endorsement of Myers J. highlights this ambiguity. Responding to a defence motion for answers to questions, among other things, about Ms. Murray’s counselling records and prior employment history, the plaintiff’s counsel made a “clear submission” that allegations of “abuse, control and emotional elements generally” were only for background narrative and were not relied on as part of Ms. Murray’s reasonable expectations or as a basis for damages. “Regardless,” Myers J. wrote, “as pleaded facts, defendant is entitled to ask relevant questions subject to proportionality.” Myers J., although dismissing questions about counselling records and prior employment as speculative and lacking probative value, found that the defendants’ motion as a whole was “reasonably brought in light of the plaintiff’s numerous failures to respond” and awarded no costs.

[17] The issue of Mr. Star’s alleged emotional abuse and control due to the party’s personal relationship surfaced again during the trial in the context of Ms. Murray’s examinations. In the end, I advised both parties that I could not see how exploring these questions (or Ms. Murray’s personal conduct or emotional state) was going to help me decide the issues in this case and no more was said about it (that is, until the submissions on costs).

[18] For all these reasons, I am not prepared to find that Mr. Star’s conduct falls so outside of the norm for hotly contested litigation that an elevated level of costs of the action as a whole is warranted. To the extent there were specific costs incurred in connection with specific steps or costs incurred, they can be addressed in the context of determining quantum based on the Rule 57 factors. Accordingly, in general, I find no basis to depart from the generally accepted “rule of thumb” and will therefore use 60% of actual costs as a starting point for the enquiry.

Costs Follow the Event

[19] Another general rule, that costs follow the event, is also in controversy in this case.

[20] The plaintiff argues that she was the clearly successful party. The Court effectively ordered that the defendants pay her over $4 million for her shares and for damages. The plaintiff is therefore, she says, prima facie entitled to costs.

[21] The defendants argue that Ms. Murray was by no means the clear winner in this litigation. They do so on the basis that the Court dismissed many of the plaintiff’s claims.

[22] The defendants take issue with the assertion that they never offered Ms. Murray anything for her shares until the opening at trial, at which time they made a with prejudice concession that Pier 21 would buy Ms. Murray’s 9.1% of the Class A shares based on an enterprise value of $20.8 million (an ‘offer’ of about $1.89 million). The defence claims that offers to purchase Ms. Murray’s shares were made before the commencement of the trial. The evidence does not, however, support the conclusion that a clear offer, capable of acceptance and constituting a binding settlement agreement, was ever made. To the extent there was any “offer”, it was more in the nature of an expression of willingness to possibly buy Ms. Murray’s shares if a “fair market value” acceptable to the defendants could be agreed upon.

[23] This is relevant because, the day before the trial commenced, Ms. Murray had no offer to acquire her shares of any kind, and no offer to pay any form of damages or costs. At the end of the trial, she had a judgment awarding her over $4 million. While it is true that her original claim was for much more than that, this is a circumstance, as I will discuss below, possibly relevant to quantum of costs but not, in the circumstances of this case, sufficient to deprive her of an entitlement to costs. By any measure, Ms. Murray was the effective “winner” in this litigation and is prima facie entitled to her partial indemnity costs.

Distributive Costs

[24] Both parties made submissions on the issue of distributive costs. The plaintiff uses her prima facie entitlement to costs as the “successful” party to further argue that there should be no reduction from her claimed costs for issues in respect of which she was not successful. The plaintiff relies on Oakville Storage & Forwarders Ltd. v. Canadian National Railway (1991), 1991 CanLII 7060 (ON CA), 84 D.L.R. (4th) 326, 5 O.R. (3d) 1 (C.A.) to request an order that all of her costs of the action and the trial should be awarded without reduction.

[25] In Oakville Storage, the Court of Appeal heard an appeal from a judgment, following a long and complex trial, which had imposed a distributive costs order. A distributive costs order is described as a formula under which “the major issues at trial were identified and the party who was successful on each issue was awarded costs for the time and expense attributable to that issue”: Oakville Storage, at p. 331. In that case, five issues had been identified, success identified ‘by issue’ without regard to “overall success” in the action, and a complex, intertwining judgment was issued on the basis of this ‘success by issue’ approach.

[26] The Court of Appeal pointed out the “dubious virtue” of a distributive order for costs. Among other things, some parties had settled and were no longer at the table; offer to settle rules are “result” oriented, not “issue” oriented and a distributive approach would work at cross-purposes with the intended result of those rules. The Court did not decide whether a distributive costs order was ever appropriate (although it found it “difficult to imagine” that it could be) but clearly held that this was not the proper case for any such order. Importantly, the Court found that “individual issues can be dealt with more appropriately under the general discretion and explicit guidance set forth in” Rule 57: Oakville Storage, at p. 333.

[27] In Eastern Power Limited v. Ontario Electricity Financial Corporation, 2012 ONCA 366, the Court of Appeal allowed the appeal of Eastern Power (plaintiff) on one of six claims that were dismissed at trial. The six claims involved a total of $121 million. The one claim on which Eastern Power prevailed on appeal was worth about $8.5 million. The Court of Appeal held that, notwithstanding Eastern Power’s success on appeal on one issue, OEFC remained overwhelmingly the successful party at trial. Eastern Power’s success on the one narrow issue did not disentitle OEFC from an award of trial costs or entitle Eastern Power to an award of trial costs. Nevertheless, Eastern Power’s success on one issue on appeal merited “some consideration” and so the Court of Appeal went on to hold that Eastern Power’s limited success “should be reflected in the quantum of the award to OEFC”: Eastern Power, at para. 18.

[28] This did not mean, however, that the Court was making a distributive costs award. The Court held at para. 19 that:

Thus, the unavailability of a distributive costs award does not preclude the court from considering Eastern Power’s limited success. Indeed, the general principles that govern costs decisions [under Rule 57] require us to consider the peculiar features of a given case. Therefore, although we would award trial costs to OEFC and decline to award costs to Eastern Power, in doing so, and in arriving at our ultimate order, we have considered Eastern Power’s success on the narrow inter-area transmission credit issue.

The Court went on to reduce the cost award to OEFC made at trial by 15% to reflect a number of factors under Rule 57, including Eastern Power’s success on the single issue argued on appeal.

[29] What I take from these cases, in the present context, is that the court should not generally analyze each issue in a trial and award costs to various parties depending on their success on that issue. Rather, the court must make an overall assessment of success and make a determination on prima facie entitlement to costs on that basis. Some analysis of relative success may be appropriate, however, in determining the quantum of that entitlement. For example, it may be appropriate to deny recovery for costs associated with an issue on which the overall successful party did not prevail. This is not necessarily the case of course. It is a question of applying all relevant factors under Rule 57 and, in the careful exercise of the Court’s discretion, arriving at a costs award that is fair and reasonable in all of the circumstances.

[30] I will therefore turn to the Rule 57 factors that are at play in this case.

Rule 57 Factors

(a) Fees

The Effect of Partial Success

[31] The defendants’ principal argument for a reduction in the costs claimed involves the interaction of three of the Rule 57 factors, namely the specific results in the proceeding, the amounts claimed and the amounts recovered and what the losing party might reasonably have expected to pay by way of costs. The defendants submit that the plaintiff made essentially five claims and had only limited, or no, success in almost all of them:

(1) the plaintiff’s claim to set aside the 2012 share purchase agreement was dismissed;

(2) the plaintiff’s claim to repurchase of her remaining Class A shares at an enterprise value of $55 million was not accepted. Only a lesser number, which relied on the evidence of both experts, depending on the specific issue in dispute, was allowed;

(3) the plaintiff’s claim for unpaid dividends was dismissed;

(4) the plaintiff’s claim for equitable damages for termination was allowed; and

(5) the plaintiff’s claim for punitive damages was dismissed.

The defendants argue that while the plaintiff’s claims totaled in excess of $9.5 million, in the end she was awarded only slightly more than $4 million. They argue that the plaintiff’s attempt to recover her costs of pursuing unsuccessful claims from the defendant is unreasonable and should be disallowed.

[32] In addition, the plaintiff pursued two significant post-trial issues: 1) an award for the time value of money (seeking an elevated rate of interest, compounded); and, 2) the transaction structure to be used for the purchase of her shares. On both of these issues the plaintiff was unsuccessful and, the defendants submit, she ought not to be indemnified for any of the costs of those proceedings. Indeed, the defendants argue they were successful on both matters and that they are entitled to their costs in the amount of $22,600 and $104,193.35 respectively.

[33] Finally, the defendants apply the “issue by issue” approach to the fair market valuation exercise which consumed the largest part of the trial. They argue that, on most disputed issues between the two valuation experts, the Court did not accept the plaintiff’s expert’s evidence and either accepted the defendants’ expert or found that both positions had equal merit and split the difference between them. On this basis, the defendants argue that the plaintiff should not recover any of the costs associated with the fair market value determination and that the defendants should be given a “credit” by way of reduction to any costs otherwise awarded to the plaintiff, of $96,656.67 (valued at two thirds of their own expert’s fees).

[34] The plaintiff, in reply, argues that the defendants’ issue by issue assessment of costs is contrary to the presumption against distributive costs set out in Oakville Storage. In any event, the plaintiff submits that the facts underlying the request to set aside the 2010 share purchase agreement helped to provide the foundation upon which Ms. Murray ultimately advanced a successful claim for oppression. She also submits that the witnesses who testified on this issue would have testified anyway because their evidence involved other issues as well.

[35] Regarding the two post-trial matters, the plaintiff submits that these were not “motions” in any normal sense but, in substance, a continuation of the trial. Thus, awarding costs to the defendants on these two issues would amount to a distributive costs order. In any event, the plaintiff points out that both parties brought post-trial motions to vary and there was divided success, such that the defendants should not receive an award of costs in any event.

[36] Regarding the costs associated with proving the fair value of Pier 21’s Class A shares, the plaintiff rejects the defendants’ characterization of the net effect of the evidence and the Court’s analysis of that evidence. Her point is that, in the result, the Court did not accept the defendants’ expert’s valuation at $20.8 million. While the Court did not accept the plaintiff’s expert’s number ($55 million reduced during the trial to $52 million) either, the Court did find that the value of Pier 21 was substantially higher than that recommended by the defendants and that $39.3 million represents about 70% of what the plaintiff was seeking on this issue.

Analysis

[37] As noted earlier in this Decision on Costs, a separate issue by issue analysis is generally not appropriate when determining entitlement to costs. Some overall assessment of relative success may be appropriate in determining the quantum of a party’s entitlement in the context of a consideration of applicable Rule 57 factors.

[38] In this case, the 2012 share purchase agreement claim was a separate issue. The evidence relating to that issue was, for the most part, quite distinct substantively and temporally. As I found in my Reasons For Decision of April 12, 2019 when considering the plaintiff’s argument against a limitations defence, the events relating to the 2012 share purchase agreement had no “impact whatsoever on what happened in connection with the payment of bonuses/dividends, the right to equitable compensation arising out of Ms. Murray’s termination in 2014 or the right to a buyout of Ms. Murray’s shares at fair value as of February 2015”: Reasons for Decision of April 12, 2019, at para. 37.

[39] A significant amount of time was devoted to the 2012 share purchase agreement issue during the evidence and in the written and oral submissions which followed. It was a significant issue. Based on Ms. Murray’s going in valuation of $55 million, the additional 6.9% of Class A shares would have been worth about another $3.8 million; at the valuation found by the Court of $39.3 million, about another $2.7 million; and, even at the valuation proposed by the defendants, about another $1.4 million.

[40] But whether it was reasonable for the plaintiff to pursue the claim is not the issue. The issue is whether it is reasonable to expect the defendants to indemnify the plaintiff for her costs of pursuing a freestanding claim which was dismissed following the trial. Applying the logic of the Court of Appeal in Eastern Power, I find that it is not.

[41] Having found that some reduction to the plaintiff’s costs claimed on account of the dismissed 2012 share purchase agreement claim is justified in principle, the task then becomes how to monetize that reduction. The defendants claim to have “estimated” that this issue consumed between 25 to 33% of discovery and trial time. The basis for this estimate, however, is not anywhere set out.

[42] A review of the plaintiff’s costs outline does not help because, not unreasonably, it is not structured around substantive issues but around generic tasks or stages, such as pleadings, discovery, trial preparation, trial and the like.

[43] Based on my own notes, recollections of the trial and my Reasons for Decision, it seems to me that this issue represented more like 15 to 20% of the total time and effort put into this action.

[44] The claim for breach of fiduciary duty (which was also dismissed) was made largely in support of the plaintiff’s claim to set aside the 2012 share purchase agreement.

[45] It is harder to reach similar conclusions on the other dismissed claims (such as the claims for dividends or for punitive damages) because little time was spent on them at trial and it would be next to impossible to extract, from the totality of the costs incurred, any accurate sense of what portion of the total was devoted to these issues. All I can do is keep these claims in mind when trying to arrive at a number that is fair and reasonable in all the circumstances.

[46] When I take all of these factors into account, I find that an overall reduction of 20% of the plaintiff’s claimed partial indemnity costs (after deduction of all other specific deductions required by this Decision on Costs) is appropriate in the circumstances. This reduction reflects the fact that the plaintiff was not successful on: (1) her claims to set aside the 2012 share purchase agreement; (2) breach of fiduciary duty; (3) payment of dividends; and (4) punitive damages.

[47] The analysis of the two post-trial proceedings is more clear-cut because the plaintiff has identified specific cost claims associated with those proceedings. The plaintiff’s motion to vary (including the request for elevated interest) involves a partial indemnity claim of about $3,000. The request to permit evidence on the transaction structure, and the subsequent written hearing on the transaction structure itself, together involve partial indemnity costs of about $43,000.

[48] I agree with the defendants that it would be unreasonable, and contrary to the defendants’ reasonable expectations, to require the defendants to indemnify the plaintiff against costs incurred in pursuit of discrete issues at trial in respect of which she was unsuccessful. There was mixed success on the motions to vary (and the motion for compound interest was dismissed) and the plaintiff’s motion for an order directing her preferred transaction structure was entirely dismissed. Again, on the logic of the Court of Appeal’s analysis in Eastern Power, I find it fair and reasonable to reduce the plaintiff’s claimed partial indemnity costs by a total of $46,000 on account of the post-trial proceedings.

[49] The defendants also claim, however, that the two post-trial proceedings were pursued as distinct motions and, as a result, the costs of those two proceedings should be not only valued, but also awarded, based on which party was successful. The defendants argue that the plaintiff chose to pursue these particular claims in this way, and not as a part of the trial proper. Accordingly, the defendants argue that the presumption against distributive costs for a trial does not apply in the circumstances of this case. The defendants, therefore, submit that costs should be payable by the plaintiff to them for both these post-trial proceedings. The defendants seek partial indemnity costs in the amount of $22,600 for the motion about compound interest and substantial indemnity costs in the amount of $104,193.35 for the motion on transaction structure.

[50] There is much to be said for the defendants’ position, in principle, that having chosen to bring these claims by way of post-trial, free-standing motion, the normal presumption against distributive costs does not apply. Although I granted the plaintiff leave to advance her claim concerning the transaction structure after the trial and after the release of my Reasons for Decision, I did so reluctantly and with misgivings. In addition to the policy issues surrounding costs described by the Court of Appeal in Oakville Storage, there are other, equally important policy issues associated with the obligation on parties to advance all of their claims in one proceeding so that all related issues can be resolved together.

[51] The first round of motions involved several issues. Neither party achieved any material “success” on these motions. For this reason, I would not award the defendants’ any of their costs on the motions to vary. This would, it seems to me, violate the spirit of the distributive costs rule and involve many of the allocation problems outlined by the Court of Appeal.

[52] I come to a different conclusion on the transaction structure motion, however. This was an entirely free-standing issue. The costs incurred were substantively and temporally distinct from all the other costs of the trial. This was a claim that could and should have been dealt with in the trial proper. Had the plaintiff done so, the costs would no doubt have been significantly less than they ended up being. Parties should be discouraged from approaching issues piecemeal this way. The plaintiff was entirely unsuccessful on this issue. I therefore not only decline to award the plaintiff her costs of this proceeding but award the defendants their costs. I do not agree with the defendants, however, that substantial indemnity costs are warranted. Having regard to proportionality and what the losing party might reasonably expect to pay, I award the defendants’ $50,000 on account of their costs of the transaction structure proceeding. This shall operate by way of additional deduction from the costs awarded to the plaintiff.

[53] Regarding the plaintiff’s costs of proving fair value for the purchase of her Class A shares, I am unable to agree with the defendants’ argument that these costs should be eliminated or reduced on the basis that the plaintiff was “not successful” on this issue. The defendant’s argument on this point is pure sophistry. It also directly violates the rule on distributive costs. The defendant went to trial on a value of $20.8 million. I assessed the value at $39.3 million. This was less than the plaintiff asked for but more than zero, which was effectively all she had before the trial began, and more than the $20.8 million proposed as fair value by the defendants at the opening of trial. The defendants lost on this issue. In no relevant sense can the plaintiff be characterized as having been “unsuccessful” in her claim for a buy-out of her Class A shares at fair value. Accordingly, I make no downward adjustment of the claimed partial indemnity costs on account of this issue.

Lawyers and Hours on the File

[54] The defendants argue that the number of lawyers and law clerks and the total hours docketed constitute an unreasonable and unnecessary expense and that the amount claimed should be significantly reduced on this account. The plaintiff had three lawyers throughout the trial. The defendant had two. The plaintiff had a law clerk present throughout the trial. The defendant did not.

[55] I am unable to agree with the defendants that the presence of the plaintiff’s law clerk, Ms. Kaill, was in any way unreasonable or unnecessary. This trial was conducted electronically (as a paperless trial). The plaintiff’s law clerk was instrumental in setting up and operating the technology during the trial to ensure that the trial proceeded smoothly and without the need for hard copy documents. Indeed, the defendant’s lawyers periodically relied upon Ms. Kaill to find and project the required documents during their examinations.

[56] I am also, subject to one exception, unable to agree that the plaintiff’s lawyers’ hours for trial preparation should be arbitrarily reduced just because it is a larger number than that generated by the defendants’ lawyers. While the number of hours is high, it is not beyond the sphere of reasonableness, and they are, after all, being assessed at the partial indemnity rate.

[57] The one exception has to do with the presence of three counsel for the plaintiff throughout the trial. I do not take anything away from the able work, presentations and assistance of each counsel. However, in this case the presence of a third lawyer is not an expense for which the defendants should reasonably be held liable, particularly on a partial indemnity assessment of the plaintiff’s costs. For this reason, I reduce the plaintiff’s partial indemnity claim by $65,000 in respect of the third (and fourth) lawyers on behalf of the plaintiff attending the trial.

[58] As will be discussed in connection with “Disbursements” below, the plaintiff seeks reimbursement for the expense of retaining a business valuator (Mr. Wintrip) who, in the end, did not deliver a report or testify. The defendants argue that the invoices from this expert are not recoverable. In addition to the defendants’ complaint about the disbursement for this expense, however, they also argue that a significant component of the fees claimed by plaintiff’s counsel of $61,930.50 associated with time spent working with the experts, should be excluded to the extent it involved working with Wintrip. The defendants argue that the lawyer’s fees for working with experts should be reduced by 50%, to $30,965.25. As will be discussed in more detail below, while I agree that expenses associated with experts who deliver no report and do not testify are generally not recoverable, in this case Wintrip assisted in assembling the factual and documentary foundation for the expert testimony which, had Wintrip not done this, would have been done by Cambridge. Similarly, while it is not possible to identify specifically which hours are associated with which expert, some of the time spent working with Wintrip would have involved assembling the factual and documentary foundation for Cambridge’s later report and testimony. In all of the circumstances, a reduction of 25% of the “working with experts” claim for counsel fees is warranted. This translates into a reduction of $15,000.

[59] The defendants also advanced a number of arguments to rebut the positions taken by the plaintiff on questions of delay, inflammatory pleadings and production and discovery issues. These issues all involved questions of “conduct” raised by the plaintiff in aid of elevating the plaintiff’s claim for costs beyond the normal partial indemnity level. As I have not acceded to the plaintiff’s argument for an elevated level of costs, it is not necessary to deal with these arguments.

[60] The defendants advanced several other arguments on discrete, minor points, which I do not proposed to address individually. Only those reductions specifically identified in this Decision on Costs are allowed. The balance of the arguments for reductions of the plaintiff’s legal fees advanced by the defendants are dismissed.

(b) Disbursements

[61] The defendants also raise a number of arguments against recovery of certain disbursements sought by the plaintiff.

[62] The defendants seek a reduction of E-Discovery costs, essentially on the basis that the plaintiff’s bill for E-Discovery services from Commonwealth Legal exceeds the defendants E-Discovery service costs from Heuristic Discovery Counsel. The mere fact that one party had to spend more on E-Discovery services than another is not a basis, standing alone, to conclude that those E-Discovery service costs were unreasonable. In the absence of some substantive reason to question the validity and reasonability of the plaintiff’s E-Discovery service costs, I am not prepared to make any reduction for this item.

[63] As discussed above, the only valuation upon which the plaintiff relied at trial was the valuation of Cambridge. The plaintiff, however, seeks recovery of costs for valuation services delivered by another valuator, Wintrip, who did not deliver a report or testify at trial. The defendants object to the plaintiff’s request that they pay for bills from an expert in valuation who neither filed a report nor gave evidence.

[64] A party is not normally entitled to recover the cost of experts who, although retained, never filed a report and were never called to give evidence. However, the reasonableness of recoverability depends, ultimately, upon the particular circumstances surrounding the retainer and the nature of the work that was done. Exceptional circumstances need to be shown before such a claim should be allowed. Such circumstances have been shown here, to a limited extent.

[65] Mr. Temple of Cambridge testified that he did not rely on any prior analytical work done by Wintrip. It seems, on the available evidence, that Wintrip was replaced at some point for fear that he did not have the requisite expertise in valuing asset management businesses specifically. These facts would support a denial of reimbursement.

[66] However, that is not the end of the matter. The three main functions of an expert are: i) to assemble the factual and documentary evidence necessary to form an opinion; ii) to analyze the data and prepare a report; and, iii) to testify. The evidence is that Wintrip was intimately involved with counsel in identifying the kind of information that would be required to conduct a proper valuation, both generally and regarding Pier 21 specifically. It is true that none of Wintrip’s own analytical work product was provided to or relied upon by Cambridge. However, it is also clear that the data assembled about Pier 21 through the discovery process was used by Cambridge. Ensuring that an appropriate factual and documentary foundation has been laid for expert testimony is one of the key functions of an expert. If Wintrip did not assist in this work, Cambridge would have had to do it. For this reason, I find the invoices from Wintrip, while not recoverable in full, are recoverable in part. In all of the circumstances, it is appropriate to reduce the total of Wintrip’s invoices by roughly two thirds, a reduction from the Disbursement List attached to the plaintiff’s Costs Outline of $60,000.

[67] The defendants also object to indemnifying the plaintiff against bills she received from tax experts in the amount of $74,607.25. They do so on the basis that the tax experts were retained in connection with the transaction structure issue discussed above, a discrete issue on which the plaintiff was wholly unsuccessful.

[68] I agree with the defendants that it is unreasonable to expect the defendants to pay for expert tax services retained to advance a discrete argument on which the plaintiff was wholly unsuccessful at trial. The fees for tax experts, in the amount of $74,607.25, is disallowed.

[69] I further agree with the defendants, as discussed above, that their costs of the transaction structure motion should be recovered from the plaintiff. This includes a disbursement of $44,810.19 for tax expert fees related to this issue. This shall also operate as a deduction from the plaintiff’s cost entitlement.

[70] The net result of this analysis is therefore a partial indemnity award of costs, which I have rounded, of $608,960 and disbursements of $194,933.33. I find this to be a fair and reasonable amount having regard to the factors engaged under Rule 57, including the result, the amounts in issue and awarded, complexity, and proportionality. I calculate these numbers as follows.

Fees

Starting point: $982,000

Less: 46,000

50,000

65,000

15,000

44,800

Subtotal: 761,200

Less: 20% 152,240

Total: 608,960

Disbursements

Starting point: $329,540.58

Less: 60,000.00

74,607.25

Total: 194,933.33

To these amounts must be added HST as appropriate.

Penny J.

Released: September 25, 2020

COURT FILE NO.: CV-15-10906-CL

DATE: 20200925

ONTARIO

SUPERIOR COURT OF JUSTICE

(COMMERCIAL LIST)

BETWEEN:

EMILY MURRAY and 2327342 ONTARIO INC.

Plaintiffs

– and –

PIER 21 ASSET MANAGEMENT INC., DAVID STAR and 8165246 CANADA INC.

Defendants

DECISION ON COSTS

Penny J.

Released: September 25, 2020

[^1]: All of these numbers reflect some degree of rounding. Accordingly, these amounts are approximate and may not reflect the specific dollar amount due and owing under the terms of my Judgment.

Murray v. Pier 21 Asset Management Inc., 2020 ONSC 5606

Case Summary

Background

The Parties’ Positions

The Percentage of Full Indemnity

Costs Follow the Event

Distributive Costs

Rule 57 Factors

(a) Fees

The Effect of Partial Success

Analysis

Lawyers and Hours on the File

(b) Disbursements

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Expert Witnesses

Financial Outcomes

Issues

Legal Tests 1

Legislation 2