Court File and Parties
COURT FILE NO.: CV-20-644392
DATE: 20201022
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DAIMLER TRUCK FINANCIAL, a business unit of Mercedes-Benz Financial Services Canada Corporation
Applicant
– and –
9936726 CANADA INC. operating as TIGER TOWING AND HEAVY RECOVERY, TIGER TOWING AND HEAVY RECOVERY operating as a Sole Proprietorship of BALWANT SINGH SRAN, and RUDRAKSHA TRANSPORT LTD.
Respondents
COUNSEL:
Elaine Gray and Matthew Bradley, for the Applicant
Yuvraj S. Chhina, for the Respondents 9936726 Canada Inc. operating as Tiger Towing and Heavy Recovery, and Tiger Towing and Heavy Recovery operating as a Sole Proprietorship of Balwant Singh Sran
No one appearing for the Respondent Rudraksha Transport Ltd., although on notice of the proceeding
HEARD: August 17, 2020 (Decided August 28, 2020; Supplemented by written submissions on costs filed September 18 and 25, 2020)
BEFORE: KIMMEL J.
REASONS FOR DECISION REGARDING COSTS
The Result of the Application and of This Costs Decision
[1] This urgent application was heard on August 17, 2020 and decided by reasons released August 28, 2020. The applicant, Daimler Truck Financial, a business unit of Mercedes-Benz Financial Services Canada Corporation (“MBFS”) was granted an order pursuant to s. 23 of the Repair and Storage Liens Act, R.S.O. 1990, c. R.25 (the “RSLA”) and s. 67(1) of the Personal Property Security Act, R.S.O. 1990, c. P.10 (“PPSA”) for immediate and permanent possession of four freightliner trucks identified as #1941, #0085, #0517 and #3987 valued at approximately $280,000.00 (the “Trucks”). My decision:
a. Granted MBFS immediate and permanent possession of the four Trucks;
b. Declared that Tiger Towing had no lien against the Trucks under the RSLA;
c. Declared that Tiger Towing had no right to seize and did not have the right to sell the four Trucks in May of 2020.
[2] The Trucks, owned by MBFS, were leased to Rudraksha Transport Ltd. (“RTL” or the “lessee”). RTL went into default of its lease payments. RTL did not participate directly in this proceeding. The Trucks were in the possession of the respondent 9936726 Canada Inc., operating as Tiger Towing and Heavy Recovery (“Tiger Towing”), which claimed a repairer’s or storer’s lien under the RSLA over the Trucks. I found against Tiger Towing and in favour of MBFS in all aspects of their opposing positions.
[3] I afforded the parties the opportunity to make written submissions on costs if they could not reach an agreement after the release of my decision. No agreement was reached. I received cost submissions from the applicant on September 18, 2020 and from the respondent on September 25, 2020. These are the reasons for my decision to award the applicant its partial indemnity costs in the amount of $36,658.08 for fees, plus applicable taxes and claimed disbursements.
Guiding Principles
[4] Costs are within the discretion of the court to award under s. 131 of the Courts of Justice Act, R.S.O. 1990 c. C-43 (“CJA”). The factors to consider in the exercise of that discretion are set out in Rule 57.01 and include:
a. The principle of indemnity under Rule 57.01(0.a), including the experience of the lawyer for the party entitled to costs as well as the rates charged and the hours spent by that lawyer;
b. Under Rule 57.01(0.b), the amount of costs that the unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
c. The amount at issue in the proceeding (Rule 57.01(a));
d. The complexity of the proceeding (Rule 57.01(c));
e. The importance of the issues (Rule 57.01(d));
f. The conduct of a party that unduly lengthened or complicated a proceeding (Rule 57.01(e), (f) and (g);
g. Any other matter relevant to the question of costs (Rule 57.01(i)).
[5] Offers to Settle, whether they fall strictly within Rule 49.10 or not, are also a relevant consideration for awarding costs.
[6] It is commonly understood, as this court reiterated in Tesla Motors Canada ULC v. Ontario (Ministry of Transportation), 2018 ONSC 5062, 144 O.R. (3d) 701, at para. 67, that:
Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v. Public Accountants Council (Ontario), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (Ont. C.A.), at paras 26, 37.
[7] This engages the consideration of both the principle of indemnity for the successful party (57.01(1)(0.a)) and the expectations of the unsuccessful party (57.01(1)(0.b)).
Positions of the Parties on Costs
The Applicant’s Position
[8] The applicant was consistent in its position that Tiger Towing had failed to produce evidence that it was a “repairer” or a “storer” of the Trucks within the meaning of the RSLA; therefore, the applicant maintained that Tiger Towing could have no possessory lien pursuant to either s. 3 or s. 4 of the RSLA. The applicant was also consistent in its position that, once Tiger Towing gave up possession of the Trucks to RTL, in order to enforce a non-possessory lien pursuant to s. 7(5) of the RSLA, Tiger Towing needed written proof of RTL’s acknowledgement of the indebtedness represented by the invoices issued for towing services, which Tiger Towing did not initially produce and then produced in a piecemeal way without clear or persuasive evidence to support the acknowledgement having been provided.
[9] Nor was Tiger Towing able to demonstrate that it provided any services in respect of the Trucks that resulted in any improvement or betterment of the Trucks that would enrich or benefit the applicant.
[10] The applicant says it acted reasonably throughout. It asked for the evidence of any possessory or non-possessory lien claims that Tiger Towing was relying on and by making an offer to settle the application, early on in the process, by which the application would be dismissed without costs in exchange for the return of the Trucks, a disclaimer of Tiger Towing’s interest and a release when that evidence was not forthcoming.
[11] The applicant seeks substantial indemnity costs throughout, based on what it seeks to have the court characterize as “egregious or high-handed” conduct of Tiger Towing warranting the expression of the court’s disapproval. It relies upon the case of Jack Ganz Consulting Ltd. v. Recipe Unlimited Corporation, 2020 ONSC 5307. The alleged misconduct by the respondents is primarily tied to the manner in which the responding evidence was disclosed concerning the alleged signed acknowledgements from RTL of the indebtedness, which the court ultimately did not accept.
[12] The applicant claims that its substantial indemnity costs throughout total $67,388.59 (inclusive of all fees, disbursements and applicable taxes). This includes the sum of $4,400.00 in fees attributable to legal professional time spent on the application, but that was not charged to the client (applicant), which the applicant claims should nonetheless be paid by the respondents.
[13] The applicant also relies on the July 28, 2020 Offer to Settle it made, which it claims qualifies for the advantageous cost consequences under Rule 49, entitling the applicant to partial indemnity costs up to the date of the offer and substantial indemnity costs thereafter. No breakdown is provided for precisely how those costs would be calculated.
[14] The applicant seeks an order that the respondents (unspecified, so I assume they mean all of them, including RTL) are jointly and severally liable for any costs awarded.
The Position of the Participating Respondents
[15] The Respondents 9936726 Canada Inc., operating as Tiger Towing and Heavy Recovery, and Tiger Towing and Heavy Recovery operating as a Sole Proprietorship of Balwant Singh Sran were represented and responded to this proceeding. It was acknowledged early on that only the numbered company defined as “Tiger Towing” could have a claim to a lien under the RSLA and only that entity asserted the lien claims.
[16] I found that the Trucks had been towed by Tiger Towing prior to May of 2020, even though I was not satisfied that the precise dates and towing fees were not established. Tiger Towing claims to have outstanding invoices for its towing services in the approximate aggregate amount of $61,000.00. It claims to have acted reasonably in opposing the application to protect its interests, even though it was ultimately unsuccessful. It claims to have acted reasonably by offering to return the Trucks and providing a release if its fees for towing services were paid.
[17] Tiger Towing also points to the fact that it provided undertakings to the court with respect to the preservation of the Trucks and keeping them in Ontario, when requested to do so, and provided the applicant with the location of the Trucks immediately following the hearing.
[18] The respondents dispute that their conduct rose to the level of “high-handed or egregious” warranting the court’s disapproval by an award of substantial indemnity costs. They contend that their opposition was reasonable, including their offer to return the Trucks and provide a release if their towing fees were paid.
[19] They rely on Jennings v. Latendresse, 2013 ONSC 1017 (at paras. 7-8), and argue that their conduct was consistent with what would be expected in an application of this nature. Just because it was not proven and they ultimately lost does not mean that their positions were so egregious as to warrant a punitive costs award on a substantial indemnity scale.
[20] They accept that there may be a cost consequence to having lost the application, but do not agree that there should be an award of substantial indemnity costs. They ask the court to be fair and reasonable in any award of costs that is made. While they suggest an award of no costs, their primary argument is that the court should award less than what the applicant is asking for.
Costs Analysis
[21] There can be no serious dispute as to the applicant’s entitlement to costs. Costs should follow the event in most cases, and this is no exception. The applicant is entitled to an award of costs as the successful party on this application. The issues I need to decide are the scale and quantum of the applicant’s costs.
Scale of Costs
[22] Having considered the submissions of the parties and having regard to the Rule 57.01 factors that are to guide the exercise of my discretion in awarding costs under s. 131 of the CJA, I am awarding the applicant its partial indemnity costs of this application. The conduct of the respondents is no more extreme in this case than that which was considered by the court in the Ganz case relied upon by the applicant in support of its request for substantial indemnity costs. The court stated in that case (at para. 6) as follows:
In addition, the Plaintiff did not engage in egregious, malicious or high-handed conduct, in the proceeding or otherwise, that would warrant an award of substantial indemnity costs. While the Plaintiff’s shifting theories of liability and conduct of the proceeding delayed the matter and put the Defendant to additional legal costs, there is no basis upon which to find that it was malicious. This is not a rare or exceptional case of reprehensible conduct on the part of the Plaintiff. Moreover, the Defendant was awarded costs thrown away when the summary judgment hearing was adjourned.
[23] I do not find that the respondents’ conduct rises to a level that warrants the court’s sanction or disapproval through an award of substantial indemnity costs. My concerns expressed about the timing and sufficiency of the evidence they put forward in the course of responding to this application do not render this an exceptional case of reprehensible conduct.
[24] The principle of indemnity, which is a relevant consideration under Rule 57.01(0.a), does not translate into an award of full or even substantial indemnity costs in most cases. Those are the exceptions; the norm is partial indemnity costs, barring exceptional circumstances which have not been demonstrated in this case. The respondents refer to the case of Laczko v. Alexander, 2012 ONCA 872, for this proposition, which is not controversial.
[25] An award of the applicant’s claimed partial indemnity costs strikes the right balance in this case. While the respondents’ conduct has not been found to be so reprehensible as to entitle the applicant to be fully or even substantially indemnified, the applicant should also not find itself to be too far out of pocket for having been put to the trouble of hiring a lawyer and bringing this application to enforce its legal rights.
[26] Awarding the applicant its claimed partial indemnity costs leads to a fair and reasonable outcome in the circumstances of this case, even though it leaves the participating respondents with not only their unpaid invoices for towing services but also an obligation to pay costs to the applicant for their unsuccessful opposition to this application.
[27] The costs consequences of Rule 49.10 are not easy to apply to a situation such as this where one of the terms of the applicant’s Rule 49 offer was a requirement for a release from the respondents, including RTL who was not represented and did not participate in the proceeding, and over whom the participating respondents presumably could not exercise any control. The court cannot order that release. The parties did not argue the question of what the implications of a requirement for a release have on a Rule 49 offer and its cost consequences, and I expect that there is law on this point.
[28] However, because of the involvement of this third party, I do not consider it fair and reasonable in this case to order the participating respondents to be ordered to pay substantial indemnity costs based strictly on Rule 49.10 and I decline to exercise my discretion to make such an order in the circumstances of this case.
Quantum of Costs
[29] The bill of costs of the applicant indicates $36,658.08 for fees on a partial indemnity scale. It is noted that the actual fees were $61,096.80 and that the client received a reduction of $4,400.00 from those fees on its bill, so the client was only charged $56,696.80 in fees corresponding to the work outlined in the applicant’s bill of costs. These fees do not include the applicable HST. The claimed disbursements are $5,253.14 (inclusive of HST).
[30] The participating respondents’ bill of costs indicates their partial indemnity costs to be $39,210.80 (before applicable taxes) and disbursements of $3,081.83 (including taxes). Their fees on all scales are higher than the applicant’s. Their lower disbursements are accounted for primarily by lower transcript costs.
[31] The bill of costs of the unsuccessful parties is one data point to consider in assessing their expectations. In this case, the higher claimed fees of the respondents are indicative that the amounts claimed by the applicant are reasonable. Consistent with that, no specific criticism or complaint was made about the amounts claimed by the applicant. Furthermore, I consider the rates and applied percentages, as well as the number of hours billed, to calculate the applicant’s partial indemnity costs to be reasonable in the circumstances.
[32] The exercise of discretion in fixing costs includes an overall assessment of fairness and reasonableness. This was an urgent proceeding pertaining to Trucks owned by the applicant and valued at approximately $280,000.00 that the applicant was seeking to locate and recover possession of. The participating respondents aggressively opposed the relief sought and were not immediately forthcoming with information concerning the whereabouts of the Trucks. Overall, I consider it to be fair and reasonable that the applicant be awarded its all-inclusive partial indemnity costs fixed in the amount of $36,658.08 for fees (plus applicable taxes), plus disbursements of $5,253.14 (inclusive of HST).
[33] I find that the respondents should not enjoy the benefit of any discount against the costs awarded for the reduction that the applicant received from its counsel. The partial indemnity fee costs awarded are far below the actual costs the applicant incurred. Further, the applicant did make a settlement offer which in spirit was reasonable and could have avoided the proceedings, even though I have decided not to strictly apply the cost consequences of Rule 49.10.
Order and Implementation
[34] In the exercise of my discretion under s. 131 of the CJA and having regard to the factors in Rule 57.01, I am ordering that the respondents Tiger Towing and RTL jointly and severally pay the applicant its partial indemnity costs in the amounts indicated above, within 30 days. RTL is equally responsible for what transpired in connection with the Trucks, even though it chose not to participate in this application directly.
[35] Notwithstanding Rule 59.05, this costs decision is effective from the date hereof and is enforceable without any need for entry and filing. In accordance with Rules 77.07(6) and 1.04, 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 decision may nonetheless submit a formal Order for original signing, entry and filing when the court returns to regular operations.
Kimmel J.
Released: October 22, 2020
COURT FILE NO.: CV-20-644392
DATE: 20201022
BETWEEN:
DAIMLER TRUCK FINANCIAL, a business unit of Mercedes-Benz Financial Services Canada Corporation
Applicant
– and –
9936726 CANADA INC. operating as TIGER TOWING AND HEAVY RECOVERY, TIGER TOWING AND HEAVY RECOVERY operating as a Sole Proprietorship of BALWANT SINGH SRAN, and RUDRAKSHA TRANSPORT LTD.
Respondents
REASONS FOR DECISION REGARDING COSTS
Released: October 22, 2020