Court File and Parties

Court File No.: CV-20-00084212 Date: 2021-02-18 Superior Court of Justice - Ontario

Re: The Corporation of the Township of South Stormont, Plaintiff And: The Kraft Heinz Company, Respondent

Before: Mr. Justice James McNamara

Counsel: Thomas G. Conway/Natalia Rodriguez/Julie Mouris, for the Plaintiff Richard B. Swan/Douglas Fenton, for the Respondent

Heard: In writing

Costs Endorsement

[1] This matter was argued before me on November 25, 2020 for half a day. For reasons given, I dismissed the application of the applicant Township. I concluded my decision by indicating that if the parties were unable to agree on costs, they could make brief written submissions. Those submissions have now been received and reviewed.

[2] It is the position advanced on behalf of the respondent Kraft that they are entitled not only to costs, but those costs should be on a substantial indemnity basis in an amount slightly in excess of $42,000. They submit an elevated award is justified because they made offers to settle as, or more favourable than the result achieved. They also suggest elevated costs are justified on the basis that the applicant Township was less than fully candid in its materials and in argument.

[3] The applicant Township does not dispute that the respondent is entitled to costs but disagree that those costs should be assessed on a substantial indemnity basis. They submit the written offer was not rule 49 compliant, and they vigorously dispute that there was any conduct on their part, in either their materials or submissions, that is worthy of a costs sanction.

[4] Clearly, then, the only issues I need address in this brief endorsement is scale of costs and quantum.

[5] In exercising my discretion under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 to award costs, I must take into account the factors set forth at rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. In fixing an appropriate quantum, I must also be guided by the overriding principle of reasonableness and fairness, and in deciding what is fair and reasonable the expectations of the parties is a relevant factor. I must also have regard to principles of proportionality.

[6] I turn firstly to scale. I share the view of the applicant that this is not a proper case for costs on a substantial indemnity basis. The case law that has developed on costs has repeatedly stated that elevated costs are warranted in only two circumstances. The first involves the operation of an offer to settle under rule 49.10. Substantial indemnity costs are explicitly authorized if the requirements of the rule are met. The other circumstance is where the losing party has engaged in behaviour worthy of sanction.

[7] The costs consequences of rule 49.10 apply in cases where an offer is made, not withdrawn, it is not accepted by the other party and the party who made the offer, here the respondent, then obtains a result as, or more favourable than the offer made. In those circumstances, where it is a responding party, the party is to receive costs on a partial indemnity basis from the date of the offer forward, unless the court orders otherwise. The burden of proof that the result achieved is more favourable than the offer is on the party who claims the benefit of the rule. A fixed, certain and understandable offer is required in order for there to be cost consequences.

[8] I am prepared, in this case, to award the respondent partial indemnity costs but I am not prepared to order anything beyond that scale. First, the offer which was sent in an email is not as fixed, certain, and understandable as it might have been, nor does it deal with the issue of costs to the date of the offer. Second, having heard the motion, I did not find that either party engaged in behaviour worthy of sanction. I reviewed the materials fully in preparation for the motion and heard the arguments. Both factums were well prepared, although there may have been some “gilding the lily”, and while that is to be discouraged, it is hardly unusual or inflammatory. I was not misled by any of the materials. The matter was not a “slam dunk”, for had it been, I would not have had to reserve my decision. The matter was concisely argued as evidenced by the fact it took counsel less than their allotted time to complete their argument.

[9] I turn now to quantum.

[10] The amount of time claimed by both sides is, in my view, was somewhat excessive. This was a reasonably straightforward motion and should not have required the total hours claimed. Additionally, the motion was argued here in Ottawa and the hourly rates suggested by counsel for the respondent are more than would be within the reasonable expectations of the losing party.

[11] Having considered the matter as a whole, in the context of the factors under the rule, I am prepared to allow the respondent’s costs on a partial indemnity basis in the amount of $18,000 plus HST and disbursements.

Mr. Justice James McNamara Date: February 18, 2021