Court File and Parties

COURT FILE NO.: 19-68057 DATE: 2021/03/03 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: NHDG (GREEN MOUNTAIN) INC., Plaintiff AND: THE HAMILTON TELEPORT LTD., Defendant

BEFORE: Mr. Justice D.A. Broad

COUNSEL: Michael J. Valente, Counsel for the Plaintiff H. Keith Juriansz, Counsel for the Defendant

Costs Endorsement

[1] The parties have been unable to settle the question of costs in relation to the plaintiff’s unsuccessful motion for release to it of the monies paid into its lawyers’ trust account in exchange for the discharge of the vendor take-back mortgage held by the defendant on the property which is the subject of the action. The parties have now delivered their written submissions on costs as directed in my Endorsement dated January 18, 2021.

Position of the Defendant

[2] The defendant seeks costs for both the motion ultimately returnable July 9, 2020 before Justice Whitten and adjourned by him on that date pending and the motion argued before me. The amount which the defendant claims for costs is the sum of $17,641.94 on a partial indemnity basis broken down as follows:

Fees inclusive of counsel fee for appearance $14,075.00 HST on fess 1,829.75 Disbursements including HST 1,737.19 TOTAL $17,641.94

[3] The defendant submits that a vigorous defence to the plaintiff’s motion was required given that the relief sought by the plaintiff threatened the defendant’s claim for the balance of the sale price. The funds in trust replaced the defendant’s mortgage security and had the plaintiff succeeded on its motion, the defendant’s claim would have been transformed into an unsecured debt.

[4] The defendant further submits that the plaintiff needlessly complicated and delayed the proceeding. Significant time was spent by the defendant in responding to what it characterized as “voluminous” materials filed by the plaintiff. Following the determination that the motion would proceed in writing the plaintiff served a new Motion Record which necessitated a fresh responding Motion Record from the defendant and an exchange of new Factums.

[5] The defendant states that in order to account for the degree of duplication between the materials prepared for the motion before Justice Whitten and the motion before me the overall time spent with respect to both motions was reduced in its Costs Outline.

[6] The defendant submits that the plaintiff brought an ill-conceived an ill-defined motion and argues that the unreasonableness and lack of proportionality of the plaintiff’s conduct should be weighed by the court in assessing costs. It says that the plaintiff cannot claim that it did not expect to have to pay the costs sought by the defendant.

Position of the Plaintiff

[7] The plaintiff does not oppose an award of costs in favour of the defendant but states that in the circumstances such costs should be no more than within the range of $5,000 all-inclusive.

[8] The plaintiff submits that, because Justice Whitten heard no submissions with respect to the plaintiff’s motion for release of the trust funds, no costs should be awarded to the plaintiff for attendance at the July 9 motion. In the alternative, the duplication and overlap between the two motions justify a deduction of at least 75% of the costs sought by the defendant for its attendance at the July 9 motion. The defendant also submits that an insignificant amount of time was spent at the Case Conferences pertaining to the motion at issue and therefore no costs should be awarded to the defendant on account of the Case Conferences.

[9] The plaintiff disputes the defendant’s submission that it attempted to relitigate an issue previously decided by Justice Parayeski who ordered that the Discharge Amount (as defined in the motion material) shall be held in trust “pending further order of the Court.” Due to what it says were procedural delays caused by the defendant, the plaintiff submits that it had good reason to move to request payment out of the funds in trust.

[10] The plaintiff denies that it did anything to complicate or delay the proceeding.

[11] The plaintiff submits that the court should consider the conduct of the defendant to date in any costs assessment including what the plaintiff says were the defendant’s non-compliance with the timetable imposed by the February 21, 2019 order and various delays in scheduling and confirming examination for discovery dates, such that examinations for discovery have yet to be commenced.

[12] Although the plaintiff was unsuccessful on the motion, it submits that it had an arguable case and its efforts to seek the release of the trust funds were reasonable given the dilatory conduct of the defendant.

Guiding Principles

[13] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, provides that "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."

[14] The factors to be considered by the court, in the exercise of its discretion on costs, are set forth in subrule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, including, in particular:

(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.

[15] The Court of Appeal has observed that modern costs rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behavior by litigants (see Fong v. Chan, [1999] O.J. No. 4600 (Ont. C.A.) at para. 24).

[16] Justice Perrell in the case of 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, [2010] O.J. No. 5692 (Ont. S.C.J.) reformulated the purposes of the modern costs rules, at para. 10, as follows:

(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 the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements.

[17] The usual rule in civil litigation is that costs follow the event and that rule should not be departed from except for very good reasons (see Gonawati v. Teitsson, [2002] CarswellOnt 1007 (Ont. C.A.) and Macfie v. Cater, [1920] O.J. No. 71 (Ont. H.C.) at para 28).

[18] It is well known that the overall objective in dealing with costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful party. The expectation of the parties concerning the quantum of costs is a relevant factor to consider. The court is required to consider what is "fair and reasonable" having regard to what the losing party could have expected the costs to be (see Boucher v. Public Accountants Council (Ontario), [2004] O.J. No. 2634 (Ont. C.A.) at para. 26 and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, [2005] O.J. No. 160 (Ont. C.A.)).

Analysis

[19] I am unable to accept the plaintiff’s submission that the costs determination should take into account the reasonableness for it having brought the motion. As indicated above, the usual rule is that costs follow the event, which should not be departed from except for very good reasons. In my view no good reasons have been advanced in this respect.

[20] The parties each lay at the other’s feet responsibility for the delay which has marked the proceeding to date. Based upon the evidence available to me, I am unable to ascribe blame to one party to the exclusion of the other for the failure to adhere to the timetable as previously agreed to, or to gauge the degree to which responsibility for delay should affect the costs determination for the motion.

[21] In the circumstances the most important factors listed at subrule 57.01(1) (0.a) to (i) are (0.a) the principle of indemnity, (0.b) the amount of costs that the plaintiff, as the unsuccessful party, could reasonably expect to pay in relation to the motion, (c) the complexity of the motion, and (d) the importance of the issues on the motion.

[22] Unfortunately, the plaintiff did not file its own Costs Outline which may have provided insight into its reasonable expectations with respect to costs.

[23] The issues on the motion were of moderate complexity but were important to both parties, but particularly to the defendant as its security for the balance of the sale price of the subject property pending determination at trial of the amount owing was at risk.

[24] It appears from its Costs Outline that, of the partial indemnity fees ($14,075) claimed by the defendant, the sum of $3,840 was attributable to the period up to and including July 9, 2020.

[25] The plaintiff did not take specific issue with the time spent by counsel for the defendant as set forth in its Costs Outline, except to point to duplication represented by the motion before Justice Whitten and the suggestion that time spent in relation to the Case Conferences should not be included. The plaintiff similarly did not take issue with respect to the hourly rates for the individuals who worked on the file as set forth in the defendant’s Costs Outline.

[26] In recognition of the likelihood of some degree of duplication, and applying the principle of proportionality, I fix the defendant’s costs of the motion at $11,500 inclusive of fees, HST and disbursements. I find this amount to be fair and reasonable and within the reasonable expectations of the plaintiff.

Disposition

[27] It is therefore ordered that the plaintiff pay to the defendant costs of the motion fixed in the sum of $11,500 all inclusive within 30 days hereof.

D.A. Broad, J. Date: March 3, 2021