Court File and Parties
COURT FILE NO.: CV-13-20004
DATE: 20201106
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Tremblar Building Supplies Ltd.
Plaintiff
– and –
1839563 Ontario Limited, The Lighting Boutique Incorporated, Raymond Pittao, 538318 Ontario Ltd., 391568 Ontario Inc.
Defendants
COUNSEL:
Raymond G. Colautti and Anita Landry, for the Plaintiff
John D. Leslie and Michael J. Brzezinski, for the Defendants, The Lighting Boutique Incorporated, Raymond Pittao, 538318 Ontario Ltd., and 391568 Ontario Inc.
No one appearing for 1839563 Ontario Limited
HEARD: in writing
COSTS ENDORSEMENT
KING J.:
[1] The costs issues in this matter are a reminder of the prescient words of Karakatsanis J. in the seminal decision of Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 1, where she stated:
Most Canadians cannot afford to sue when they are wronged or defend themselves when they are sued, and cannot afford to go to trial. Without an effective and accessible means of enforcing rights, the rule of law is threatened. Without public adjudication of civil cases, the development of the common law is stunted.
[2] While those words were written in the context of recognizing the summary judgment process as being a more cost-effective method of resolving disputes, the sentiments they express reverberate throughout the costs issues in this matter. This costs endorsement calls into question the appropriateness of parties expending proportionately outsized legal fees while utilizing scarce and publicly provided court resources, all to resolve a dispute involving the liquidated sum of $30,326.95—an amount that barely exceeded the applicable threshold limit of $25,000. (Parenthetically, if this matter were commenced today, it would be within the jurisdiction of the Small Claims Court.[^1])
[3] That both parties committed legal resources well in excess of the amount of their claims calls into question the true nature of this dispute and, more importantly, its appropriate and proportionate costs consequences.
BACKGROUND
[4] Tremblar Building Supplies Ltd. (“Tremblar”) carries on business in Windsor, Ontario, doing what its name describes.
[5] All of the defendants, except 1839563 Ontario Limited o/a Keystone Construction (“Keystone”), were commonly owned by the defendant, Raymond Pittao. Collectively, Mr. Pittao and the related companies owned the land and building that house The Lighting Boutique (“LB”). LB is a retail store that specializes in selling lights and other household items and appliances. I will refer to all these defendants, i.e., except Keystone, collectively as “the LB defendants.”
[6] In 2013, some of the LB defendants entered into a general construction agreement with the other defendant, Keystone, to undertake a significant interior and exterior construction, renovation, and expansion of their building, which was situated at 4072 Walker Road in Windsor.
[7] During the course of that construction process, Tremblar supplied Keystone with construction materials in the aforementioned amount of $30,326.95. It is not disputed that the product was received by Keystone and incorporated into the LB project. However, before the construction project was completed, Keystone went bankrupt. That bankruptcy spawned multiple legal actions. This is one of those actions.
[8] The plaintiffs sought payment from the LB defendants for the value of the goods provided to the project. The plaintiffs asserted that they were entitled to this amount on the basis of either a trust established pursuant to the provisions of the Construction Act, R.S.O. 1990, c. C.30 and/or the principle of unjust enrichment. The plaintiffs asserted that the LB defendants never paid for the materials.
[9] The LB defendants defended the action on the basis there was no privity of contract between Tremblar and themselves. Therefore, there was no statutory trust. The LB defendants also submitted that there was no unjust enrichment.
[10] To say the matter was highly contested throughout is an understatement. Without setting out all the details, there were, inter alia, cross-examinations, disputes regarding undertakings, a number of motions, a revised statement of claim, parties added, and a trial scheduled before the matter came before me with both parties seeking summary judgment.
[11] Before the matter was completed, I asked counsel to provide me with their respective bill of costs.
[12] By decision dated February 28, 2020, I dismissed the plaintiff’s claim on the basis there was neither a construction lien trust or an unjust enrichment as defined in law. The reasons are set out at Tremblar v. 1839563 Ontario, 2020 ONSC 1316.
COSTS
LB Defendants
[13] The successful defendants submitted a bill of costs with fees set out as follows:
Actual fees: $58,989.39
Substantial Indemnity: $44,242.04
Partial Indemnity: $35,393.63
[14] They submitted a claim for disbursements as follows:
Photocopying and printing: $ 347.76
Process server/filing: $ 1,418.80
Legal research: $ 2,359.00
Travel expenses $ 2,746.56
Cost award $ 2,000.00
Subtotal: $ 8,872.12
HST: $ 1,153.37
Total: $10,025.50
[15] By letter dated March 31, 2020, the defendants also filed a supplemental claim for additional fees with respect to submissions they were required to make to address to further legal submissions made by the plaintiff.
[16] These fees included a claim for updating the bill of costs and responding to the additional submissions of the plaintiff. They are as follows:
Actual fees: $6,404.28
Substantial indemnity: $4,803.21
Partial indemnity: $3,842.57
[17] In that letter, counsel for the LB defendants also acknowledged that they had inadvertently included a $2,000 cost award in their initial claim and that this decreased the amount they were claiming for disbursements by that amount, plus applicable HST.
[18] In summary, on my review of the submissions, the LB defendants requested a cost award in the amount of $47,362.70 on a partial indemnity basis, inclusive of HST, as follows:
Partial Indemnity Costs: $35,393.63
Supplemental Costs: $ 3,842.57
$39,236.20
Disbursements: $ 7,765.00
$47,001.20
Plaintiff
[19] The plaintiff submitted a bill of costs inclusive of HST as follows:
Actual rate: $40,185.06
Substantial indemnity: $30,138.50
Partial indemnity: $26,120.29
Disbursements:
Laser Printing $ 576.25
Photocopies $ 270.75
Electronic document capture $ 107.40
Court service fees $ 30.00
Transcripts $ 615.90
TOTAL (including HST) $1,808.34
[20] On a partial indemnity basis, the plaintiff requested costs and disbursements totalling $27,928.65.
ANALYSIS
[21] As Bondy J. stated in Cedar Beach Acres Ltd. v. Ace Ina Insurance Group (16 January 2018), Windsor, CV-12-17909 (Ont. Sup. Ct.) [unreported], at para. 16:
Modern costs rules are designed to advance five purposes in the administration of justice:
(1) to indemnify successful litigants for the costs of litigation, although not necessarily completely;
(2) to facilitate access to justice, including access for impecunious litigants;
(3) to discourage frivolous claims and defences;
(4) to discourage and sanction inappropriate behaviour by litigants in their conduct of the proceedings; and
(5) to encourage settlements.
See: Vester v. Boston Scientific Ltd., 2017 ONSC 2498; Hamilton-Wentworth (Regional Municipality) v. Hamilton-Wentworth Save the Valley Committee, Inc. (1985), 1985 CanLII 1957 (ON SC), 51 O.R. (2d) 23 (H. Ct. J.); Fellowes, McNeil v. Kansa General International Insurance Co. (1997), 1997 CanLII 12208 (ON SC), 37 O.R. (3d) 464 (Gen. Div.); Fong v. Chan (1999), 1999 CanLII 2052 (ON CA), 46 O.R. (3d) 330 (C.A.); Somers v. Fournier (2002), 2002 CanLII 45001 (ON CA), 60 O.R. (3d) 225 (C.A.); British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371; 1465778 Ontario Inc. v. 1122077 Ontario Ltd. (2006), 2006 CanLII 35819 (ON CA), 82 O.R. (3d) 757 (C.A.); Reynolds v. Kingston (Police Services Board) 2007 ONCA 375, 86 O.R. (3d) 43.
[22] I commence this analysis by noting that, in the context of a liquidated claim for just over $30,000, the costs sought by both parties are, on their face, breathtaking.
[23] Being mindful of that, I also note the following general principles.
[24] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides that costs are discretionary:
Subject to the provisions of an Act or rules of court, 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 the costs shall be paid.
[25] The court must also consider the factors prescribed in r. 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which provide:
In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and
(i) any other matter relevant to the question of costs.
[26] While the successful party does not have a guaranteed right to costs, there is a reasonable expectation in this respect.
[27] That principle applies in this situation.
[28] The LB defendants had the right to retain counsel to repel the claim. They took the position that they had no liability because, first, they had paid for these goods by payment to Keystone. Whether that payment was actually made was disputed by Tremblar. Second, and more germane to the decision on the summary judgment motion, the LB defendants took the position that there was neither a trust established pursuant to the provisions of the Construction Lien Act nor was there an unjust enrichment entitlement established. The LB defendants were successful in defending the claim.
[29] However, as prescribed in the seminal costs decision of Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.) [“Boucher”], costs awards should be subject to the overriding principle of reasonableness. This overarching principle requires more than completing a perfunctory mechanical exercise of considering the experience, rates charged, and hours spent.
[30] This principle is further delineated in Zesta Engineering Ltd. v. Cloutier, 2002 CanLII 25577 (Ont. C.A.), at para. 4, as follows:
In our view, the costs award 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.
[31] In considering the principle of reasonableness, I have also considered the comments of the Court of Appeal for Ontario in R & G Draper Farms (Keswick) Ltd. v. Nature’s Finest Produce Ltd., 2016 ONCA 626, 133 O.R. (3d) 395.
[32] In that case, the Court of Appeal reduced the amount of costs awarded by the lower court where it appeared that the parties made a relatively straightforward case complicated and where costs approached the amount collected.
[33] In the case at hand, both parties expended costs in amounts greater than the claim, which was a fixed amount that did not need an assessment of damages.
The defendant’s entitlement to costs, and, if so, the appropriate quantum
[34] By my measure, the LB defendants’ costs are wildly disproportionate on a consideration of the following r. 57.01(1) factors.
Amount claimed
[35] The amount claimed was small for a Superior Court action. It barely exceeded the applicable Small Claims Court limit.
i) Success on the motion
[36] The defendants were fully successful in defending the claim.
ii) The complexity of the proceeding
[37] While the legal issues were interesting and not frequently litigated, they were not overly complex.
iii) The importance of the issues
[38] I cannot conclude this matter was of great importance to either party since they both expended more than they respectively could have received or, as were the case, avoided.
iv) Reasonable expectations of the plaintiff
[39] A balancing act is required in considering this issue.
[40] On the one hand, the costs sought by the defendants greatly exceed the quantum they would have been required to pay had they been unsuccessful.
[41] In their cost submissions, the defendants acknowledge that their actual costs in defending the action were $69,014.89. That amount exceeds $70,000 with the supplementary submissions. That disclosure compels the court to ask why a party would incur costs more than double the amount of a $30,000 claim.
[42] I cannot conclude whether the motivation of the defendants was to expend $70,000 and ultimately seek legal fees of approximately $40,000 plus disbursements to defend a liquidated $30,000 claim. In that respect, I must be mindful that I cannot and will not condone a process that will contribute to the already and increasingly unaffordable court system--unaffordable to all except those with deep pockets.
[43] The defendants may have been motivated by litigation strategy with respect to other claims arising out of this project, or dislike for the plaintiffs, or as part of an overarching strategy to send a message to the community that they will spend any amount to repel claims made against them.
[44] On the other hand, in attempting to answer the question of the reasonable expectations of the parties, I must also be mindful that the plaintiff also incurred and sought costs in excess of the damages they would have won, had they been wholly successful.
[45] While seeking costs in excess of damages may have been their prerogative, that is not the prerogative of this court; this court cannot and will not rubber-stamp that approach.
CONCLUSION
[46] After careful consideration, I have concluded that the defendant is entitled to an award of costs that is appropriate and proportionate.
[47] It is obvious that the parties had more at stake in this litigation than the amount claimed.
[48] On the one hand, I question whether it is appropriate that parties utilize the limited resources of this court for such a relatively modest dispute.
[49] On the other hand, however, I note that the plaintiff was not a reluctant participant in this matter. They not only took the matter to completion before this court, but, in doing so, they also sought costs in excess of the value of their claim. The plaintiff had to appreciate that they could be exposed to a reasonable costs award against them should they lose. It would be counter-effective for a plaintiff to assume that it could pursue a claim without any risk whatsoever: see Greenstone (Municipality) v. Marshall Macklin Monaghan Ltd., 2013 ONSC 2030, at para. 5.
[50] Accordingly, I must conclude that the reasonable expectations of Tremblar were that the costs in this matter would be somewhat disproportionate to the pecuniary stakes.
[51] Having said that, I continue to be mindful that the court must recognize proportionality and the need to foster access to justice: Boucher.
[52] The defendants had every right to defend this claim and to do so vigourously. They did that and succeeded.
[53] What they did not have is the right to expect that they would be compensated for their costs, irrespective of the value of the claim they were facing.
[54] Accordingly, I am awarding the LB defendants costs as follows:
Legal fees: $20,000.00
(including HST)
Disbursements: $ 1,766.56
$21,766.56
[55] I note that the amount awarded for costs is greater that would normally be appropriate in this type of case. It is elevated only because the plaintiff, in its own costs submissions, had similar cost expectations had they been successful.
[56] I will comment on disbursements.
[57] With respect to the defendants’ claim for legal research, I note that I have included the amount claimed ($2,359.00) in the allocation of legal fees. There is no information that the LB defendants were required to retain an agent to perform complicated legal research on a specific area of the law. The work was performed by defendants’ counsel. It is not a separate disbursement.
[58] I have not allowed the claim for travel costs of $2,746.56. There is no explanation why travel costs should be awarded in a litigation matter that was conducted in Windsor, Ontario between two law firms with offices and counsel conducting the file from Windsor. While the defendants’ firm also has an office in Toronto, that is not a relevant consideration in this matter.
ORDER
[59] The defendants are awarded costs and disbursements totalling $21,766.56, inclusive of HST. That amount is payable within 30 days.
Original signed by Justice George W. King
George W. King
Justice
Released: November 6, 2020
COURT FILE NO.: CV-13-20004
DATE: 20201106
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Tremblar Building Supplies Ltd.
Plaintiff
– and –
1839563 Ontario Limited, The Lighting Boutique Incorporated, Raymond Pittao, 538318 Ontario Ltd. 391568 Ontario Inc.
Defendants
COSTS ENDORSEMENT
King J.
Released: November 6, 2020
[^1]: Effective January 1, 2020, the Superior Court of Justice Small Claims Court limit was increased to $35,000.