Costs Endorsement

I. Background

[1] In my Reasons For Endorsement dated May 3, 2019 (Prollenium International Corporation v. Vital Esthetique Sarl (2019 ONSC 3004)(the “Reasons”) I granted the Plaintiffs leave to further amend their Statement of Claim. The Defendant Vital Esthetique Sarl (“VES”) appealed which Kimmel J. dismissed by Endorsement and Reasons For Decision dated March 20, 2020 (Prollenium International Corporation v. Vital Esthetique Sarl, 2020 ONSC 1704). VES was subsequently ordered to pay costs of the appeal pursuant to Kimmel J.’s Costs Endorsement dated June 3, 2020 (Prollenium International Corporation v. Vital Esthetique Sarl, 2020 ONSC 3483). The parties requested a timetable for the filing of written costs submissions with respect to the original motion and have done so pursuant to my Case Conference Endorsement dated June 17, 2020.

[2] Both parties seek costs. The Plaintiffs seek $14,892.71 on a partial indemnity scale. VES claims costs of $10,033.04 on a partial indemnity scale, or alternatively, costs in the cause together with costs thrown away forthwith of $2,260. VES further submits that if it is denied costs, the Plaintiffs should not receive any costs either or alternatively, any costs awarded to the Plaintiffs should be in the cause.

[3] The endless disputes of the motion, the appeal and the costs of the appeal have carried over to the parties’ costs submissions on the original motion. Both parties have filed what amount to 3 sets of costs submissions each totaling 7-8 pages including primary and reply submissions for the costs that they seek and responding submissions for the costs sought by the opposing party. The parties have even cited Kimmel J’s appeal and costs endorsements in support of their positions. In my view, the appeal and costs of the appeal involved fundamentally different issues and considerations which are not relevant to determining costs of the original motion and I decline to consider them. Similarly, the parties’ submissions regarding VES’ pending jurisdiction motion are also not relevant. The factors which are relevant to the costs of the original motion are those which relate exclusively to what happened on the original motion, not what happened on appeal or what might happen on the jurisdiction motion.

II. The Law and Analysis

[4] Subject to the provisions of an Act or the Rules, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent costs shall be paid (s. 131(1), Courts of Justice Act (Ontario)). In exercising this discretion, the court may consider the factors set out in Rule 57.01(1).

[5] The overriding principles in determining costs are fairness and reasonableness (Boucher v. Public Accountants Council for the Province of Ontario, (2004) 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.); Deonath v. Iqbal, 2017 ONSC 3672 at paras. 20-21). The general rule is that costs on a partial indemnity scale should follow the event which should only be departed from for very good reasons such as misconduct of the party, miscarriage in procedure or oppressive or vexatious conduct (1318706 Ontario Ltd. v. Niagara (Regional Municipality) (2005), 2005 CanLII 16071 (ON CA), 75 O.R. (3d) 405 (C.A.); 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238 at paras. 10, 12-14).

[6] The Plaintiffs were completely successful on the motion. In my view, there is no reason to depart from the general rule that costs should follow the event in the present circumstances. In reaching this conclusion, I reject VES’ submission that the Plaintiffs sought and received an indulgence of this court which should not only disentitle them to costs of the motion but result in VES receiving costs notwithstanding its vigorous, unsuccessful opposition.

[7] A successful motion for leave to amend a pleading often does not result in a costs order in favour of the moving party as the amendment is often construed as a benefit or an indulgence to the moving party to correct a flaw or defect in that party’s pleading (Ravenda Homes Ltd. v. 1372708 Ontario Inc., 2010 ONSC 5784, [2010] O.J. No. 4465 at paras. 8-9). In Mollicone v. Caledon (Town), 2011 ONSC 883, Michael G. Quigley J. defined an “indulgence” as follows:

“An indulgence is something that is granted as a favour or privilege. It contemplates liberal or lenient treatment to the person who receives it, embracing notions of tolerance. In the context of business or the law in which it is used here it signifies the granting of permission to do something that is time or performance related that would not otherwise be permissible, such as extending a period of time to permit what would otherwise be out of time payment of a sum or performance of an obligation. It connotes notions of forbearance. Indeed, in this sense and in a legal context, it can be seen as the extension of the equity of the Sovereign's grace and mercy to permit an oversight or failure on the part of a litigant to be overlooked.” (Mollicone at para. 14)

[8] Whether the Plaintiffs received an indulgence is not an either/or finding which carries automatic consequences as VES asserts. It is true that the amendment was necessitated by the Plaintiffs’ failure to plead the 2013 OBL/OEM Agreement and related amendments. However, unlike Ravenda, the Plaintiffs were not seeking significant, wide ranging amendments which would fundamentally change their Statement of Claim. In Ravenda, there were 80 amendments, 54 of them disputed, and 76 paragraphs were added to the Statement of Claim. In Mollicone, a Registrar’s dismissal order was set aside where the plaintiff brought the motion 2 years after the dismissal and was found “seriously delinquent in adhering to the time frames for action”. The relief granted to the Plaintiffs in the present case does not constitute this kind of indulgence. As set out in the Reasons, the amendments were related to the same parties, the same transactions, dealings and invoices, the same time period and in support of the same damages already pleaded. To the extent to which the relief granted to the Plaintiffs is characterized as an indulgence, I conclude that it can and should be considered in determining the quantum to be awarded to the Plaintiffs as a further exercise of my discretion in determining costs.

[9] However, it not sufficient to limit my analysis to the success of the parties and whether the Plaintiffs received an indulgence. Additional factors must be considered namely any conduct which tended to unnecessarily lengthen the proceeding (Rule 57.01(1)(e)) and the failure of a party to admit anything it should have (Rule 57.01 (1)(g)).

[10] In this regard, VES raised multiple arguments in its failed attempt to resist the amendments, most with little or no merit, all of which contributed to the time, length and cost of the motion. This included VES’ submissions that the Amended Claim was not legally tenable and that the 2013 Agreement was not enforceable notwithstanding VES’ admission that it believed the product orders at issue were placed under the 2013 Agreement, its approval of subsequent amendments to the 2013 Agreement and its reliance on the 2013 Agreement in its own Statement of Claim. VES also argued that the Amended Claim was a nullity and an abuse of process and asked this Court to make findings of fact and credibility which are in the purview of the trial Judge or a Judge on a summary judgment motion.

[11] What seems to have been lost in all of this is that this was a pleadings amendment motion where the Plaintiffs were not seeking to add new parties. The applicable rule and case law provides that amendments should generally be granted unless actual prejudice would result based on a generous reading and amendments are only untenable if they are clearly impossible of success. While VES was free to adopt a litigation strategy in which it made no concessions and to raise as many arguments as it wished, it did so at the risk of a costs award particularly as the number of arguments increased and the merits of those arguments decreased. It was always open to VES to consent to some or all of the proposed amendments. Even if a moving party receives an indulgence, this only goes so far. It does not give the responding party a blank cheque to raise as many arguments as they choose regardless of merit and inevitably drive up the costs of the litigation without any risk of a costs award. As with many issues which come before the court, an indulgence such as leave to amend must be balanced against the right to reasonably oppose it.

[12] Accordingly, taking into consideration the Plaintiffs’ success, the indulgence received and VES’ conduct which added unnecessary time and costs to the motion, the Plaintiffs are entitled to costs. In determining quantum, in addition to the factors above, I have reviewed the parties’ Costs Outlines, including for the purpose of assessing VES’ reasonable expectations in opposing the motion. Considering all of the relevant factors, I conclude that it is fair and reasonable in the circumstances for VES to pay costs to the Plaintiffs fixed in the amount of $7,000 within 30 days.

Costs Endorsement Released: October 13, 2020

Master M.P. McGraw

Prollenium International Corporation v. Vital Esthetique Sarl, 2020 ONSC 6197

Case Summary

Costs Endorsement

I. Background

II. The Law and Analysis

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 2

Legislation 1