Court File and Parties

Court File No.: CV-17-574741 Date: 2021-03-12 Superior Court of Justice - Ontario

Re: WED INVESTMENTS LIMITED, Plaintiff And: SHOWCASE WOODYCREST INC. AND 2442459 ONTARIO INC, Defendants

Before: Paul B. Schabas J.

Counsel: Stephen Schwartz and Darren Marr for the Plaintiff Mark A. Klaiman for the Defendants

Heard: Costs submissions in writing

Costs Endorsement

[1] On January 19, 2021 I released my Reasons for Judgment in this matter, granting judgment for the plaintiff (“WED”) and ordering the defendant Showcase Woodycrest Inc. (“Showcase”) to pay to the plaintiff $3,200,000 as of July 20, 2018, together with pre- and post-judgment interest. The action against 2442459 Ontario Inc. (“244”) was dismissed and the counterclaims by both defendants were dismissed: WED Investments Limited v. Showcase Woodycrest Inc., 2021 ONSC 237.

[2] The plaintiff now seeks its costs from the defendants on a partial indemnity basis until September 29, 2020, and on a substantial indemnity basis thereafter. This is due to the fact that the plaintiff served an Offer to Settle on the defendants on September 18, 2020, offering to settle the action against the defendants for $3,000,000 inclusive of interest and costs. As the plaintiff achieved a better result than it offered, the plaintiff relies on Rule 49.10 of the Rules of Civil Procedure in submitting that it is entitled to substantial indemnity costs from the date the Offer was served.

[3] The amounts sought by the plaintiff are as follows: Pre-Settlement Partial Indemnity $41,471.90 Post-Settlement Fees - Substantial $159,440.99 Disbursements - Total $114,715.32 Total - $315,628.22

[4] The defendants, however, argue that the plaintiff should only receive costs from the defendant Showcase, as the action against 244 was dismissed. The defendants do not dispute the effect of Rule 49 but take issue with the quantum of costs sought. Further, as 244 was successful in having the action against it dismissed, it is argued that 244 should receive costs from Showcase on a partial indemnity basis in the amount of $58,862.29.

[5] I agree with the defendants that the case involved, essentially, two separate actions involving separate defendants. Although the two transactions were negotiated together and largely dealt with together, making it sensible that they be tried together, they were two separate transactions involving two quite separate properties owned by different companies with different ownership structures. While Mr. Kirshenbaum represented both defendants, it was known to the plaintiff that the two defendants had different ownership structures and had separate interests.

[6] I have considered the case law cited by the plaintiff that tells me that Rule 49.10(1) is not to be interpreted based on divided success; however, those cases dealt with divided success involving the same parties and the same cause of action. Barresi v. Jones Lang Lasalle Real Estate Services Inc. 2019 ONCA 884; Skye v. Matthews (1996), 87 O.A.C. 381 (Ont. C.A.). In this case, success was divided differently as the plaintiff succeeded in its claims against one defendant on the transaction involving that defendant, but failed against the other defendant involving a separate transaction.

[7] This does not mean that the plaintiff should not have the benefit of its Offer to Settle, but in my view that benefit should be limited to its success against Showcase. WED did better than its offer even only against Showcase, and therefore ought to be regarded, as it was intended, as an incentive to settle to which Rule 49.10 should apply: Jarbeau v. McLean, 2017 ONCA 115 at para. 82. However, Showcase should not have to bear the costs of the claim against 244 and the rule should only be given effect with respect to the costs attributable to the action against Showcase.

[8] Turning to the quantum of the costs to be awarded against Showcase, I am mindful that I have a broad discretion when determining the issue of costs. Rule 57.01(1) sets out factors to consider in achieving the overall objective of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: Boucher v. Public Accountants Counsel for Ontario.

[9] Applying these principle and factors, I do not agree with the defendants’ submission that the costs should be reduced as they propose. While the plaintiff did advance a theory of damages which I did not accept, and which was the cause of considerable expense and time at trial, the impact of Rule 49.10 would be undermined if I were to start parsing the various claims to chip away at the costs. In my view, it was not unreasonable for the plaintiff to have advanced two approaches to damages, and the costs claimed are reasonable and supported, and in the range of what the defendants ought to have expected to pay if unsuccessful.

[10] Counsel for Showcase nevertheless also suggests that the costs and disbursements should be split equally between Showcase and 244. I do not agree. The more complicated claim related to the Brock Street property, and this occupied more time at trial. WED should receive 60% of the amount claimed, giving effect to the Offer to Settle. Accordingly, I order Showcase to pay costs to the plaintiff in the amount of $189,376.93.

[11] With respect to the action involving 244, the action and the counterclaim were both dismissed. In my view there should be no costs either way as between the plaintiff and 244.

Paul B. Schabas J. Date: March 12, 2021