SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-19-616601

DATE: March 25, 2021

RE: The Reno Pros Inc. v. Blueprint Properties Inc.;

BEFORE: MASTER C. WIEBE

COUNSEL: F. Scott Turton for Blueprint Properties Inc.; Julian Binavince for The Reno Pros Inc.;

HEARING: March 24, 2021.

COSTS DECISION

[1] Mr. Binavince advised me by email on March 16, 2021 that the parties had settled the substance of this action, but not the issue of costs. I, therefore, converted the existing trial schedule into a two-hour videoconference hearing on March 24, 2021 concerning the issue of costs. As directed, both lawyers filed writing submissions in advance.

[2] The written submissions indicated that on a lien claim of $33,374.77, the plaintiff had obtained the result of a payment of $17,000. The parties agree that the plaintiff, the Reno Pros Inc. (“Reno”), should get costs. They want me to determine the quantum of the costs.

[3] Reno submits that it should be paid $22,816.49. Mr. Binavince provided me with a Bill of Costs and a schedule showing the timing of the costs. The $22,816.49 figure is derived from a total of the claimed partial indemnity costs up to September 20, 2020 and the claimed substantial indemnity costs thereafter. In the alternative, Mr. Binavince argued that an award of $16,000 in costs would be acceptable, a figure which includes the Small Claims Court costs for pleadings plus its partial indemnity costs after September 20, 2020.

[4] What happened on September 21, 2020 was that Mr. Binavince on behalf Reno emailed Mr. Turton offering the defendant, Blueprint Properties Inc. (“Blueprint”), to have the case de-referenced and transferred to the Small Claims Court. A month earlier I had on a motion by Blueprint declared the Reno lien expired on account of its failure to preserve its lien within the 45-day lien period, as the old provisions of the Construction Act applied. That order left the remaining action in the Superior Court and subject to the Construction Act. The amount of the claim is within the $35,000 limit of the Small Claims Court. Blueprint did not take up this offer. Mr. Turton emailed back saying Blueprint wanted its costs to date as a condition of the transfer. Mr. Binavince argued that Blueprint should have accepted the offer unconditionally to minimize costs. By not doing so, it should attract a penal measure of costs.

[5] Mr. Binavince also argued that Blueprint acted in a “bullying” fashion and deserves an award of substantial indemnity costs. He argued that the trial affidavit of Mr. Ang, the principal of Blueprint, showed that Blueprint’s accounting for this subcontract showed that Blueprint accepted that it owed money to Reno all along. There was a discussion about what this amount was. Initially, Mr. Binavince argued that it was $13,500; but he accepted later that this figure did not account for two payments Blueprint made to a Reno subtrade which brought the figure down to $8,100. Despite this knowledge, Blueprint raised a set-off and counterclaim of $50,000. Not only was the counterclaim unreasonable and intimidating, according to Mr. Binvince, it exceeded the monetary limit of the Small Claims Court thereby making a transfer to the Small Claims Court difficult.

[6] Mr. Turton responded by arguing that the costs should be no more than what Reno would have gotten in the Small Claims Court for the entirety of this action, namely $1,190. In the alternative, he argued that the limit imposed by the Court of Justice Act R.S.O. 1990, section 29 on costs awards in the Small Claims Court, namely 15% of the result, $17,000, or $2,550, govern.

[7] Concerning the “bullying” point, Mr. Turton relied on Reno’s own accounting to show that the Blueprint backcharge for deficiency correction costs, $34,216.50, exceeded the amount of the Reno lien claim. Therefore, he argued there never was an amount Blueprint knew was owing to Reno.

[8] Concerning the Small Claims Court point, Mr. Turton pointed out that as early as May 14, 2019, two months after the registration of the Reno claim for lien and about a month after Blueprint moved to vacate it, Mr. Turton wrote Mr. Binavince a letter containing the new statutory description of procurement and quoting the June 14, 2018 written request the owner’s insurer sent to Blueprint seeking a quotation for the project. This showed clearly that the old provisions of the Construction Act applied, which meant that the claim for lien of Reno, a subcontractor, had expired. Reno’s declared last date of supply was in December, 2018 and it claim for lien was registered on February 15, 2019. In the letter, Mr. Turton suggested that the claim for lien be removed, the security returned and the action proceed as a personal action. This proposal was not accepted. Mr. Binavince said that he needed an affidavit of the contractor to prove that the lien had expired.

[9] Mr. Turton made another point about offers to settle. On January 16, 2019, Blueprint offered to pay Reno $10,625.85 to settle its account. It gave Reno a cheque for that amount hoping to avoid a claim for lien. When the claim for lien was registered, the cheque was withdrawn. Next, in September, 2020, shortly after my order declaring the Reno lien expired, Blueprint offered to pay $1,000 all inclusive. None of these were accepted. Then in early March, 2021, with the ordered trial hearing looming, Blueprint made an all-inclusive offer to pay $15,000. This lead finally to the serious settlement discussion that led to the settlement on March 12, 2021. Reno made no offer until March, 2021.

[10] Mr. Turton argued that the issue of lien timeliness was brought on by Reno’s carelessness, which Mr. Binavince accepted. Mr Turton argued that his May 14, 2019 proposal should have been accepted which he said would have led to the action being transferred to the Small Claims Court. He relied upon Rule 57.05(1) which specifies that where the plaintiff recovers an amount that falls within the monetary jurisdiction of the Small Claims Court, the plaintiff may be denied costs all together. He did not argue for that result, just for the limitation of costs to what would have been recovered in the Small Claims Court. He relied primarily on Construction Act, section 86(2), the subsection that limits an award of costs to what the awarded party would have incurred in costs by taking the “least expensive course.”

[11] Having considered these submissions, I have decided to award Reno $8,000 in costs. Here are my reasons. First, the result must be born in mind. Reno recovered only just over half of its claim. It defeated the counterclaim. Given this result, there is a need to cut the claimed costs.

[12] Second, I am not convinced by the alleged “bullying” point. Mr. Turton’s response made sense. If Reno got its accounting wrong when it registered its claim for lien, it must live with that result.

[13] Third, I am impressed with Mr. Turton’s letter of May 14, 2019. Had Mr. Binavince required an affidavit from Blueprint to verify the transition point, there is no evidence that he asked for one in response to the letter. The letter created a very real issue as to the timeliness of the Reno claim for lien. Reno had an obligation to take the “least expensive course of action” by virtue of Construction Act section 86(2). That meant that it had an obligation to make all necessary and timely inquiries as to the least expensive course of action in this case.

[14] Had that been done, I find that Reno would have confirmed as early as May, 2019 that the lien had expired, that the claim for lien had to be removed and the action had to be transferred to the Small Claims Court to save costs. That transfer could have been done at that time with little cost on consent. After all, at that time there was no judgment of reference, no order for trial and no reference. Also, in 2019 there was no pandemic and the Small Claims Court was functioning. It may in fact have generated a result before court operations were suspended.

[15] On this point I take guidance from the decision of Master Polika in Above All Emergency Services Inc. v. Reuter, 2012 ONSC 4381 at paragraphs 16 to 18. The Master found in that case that a claim for lien in the amount of $80,949 had expired and granted a personal judgment for $12,797. He found that the lien claimant should have known its lien had expired and limited the plaintiff’s costs recovery to what it would have received in the Small Claims Court. He relied on section 86(2) for this result.

[16] Fourth, I do not put much significance in the Reno proposal to transfer the action to the Small Claims Court on September 21, 2020. At that time the Small Claims Court was not scheduling trials. It continues not scheduling trials. That September 21, 2020 Reno proposal should have been made 16 months earlier in response to the Turton May 14, 2019 letter.

[17] I want to make a point here about whether the counterclaim made it impossible to transfer the case to the Small Claims Court. I believe Mr. Turton is right and that it is the net result of the counterclaim that matters; see 2146100 Ontario Ltd. v. 2052750 Ontario Inc., 2013 ONSC 2483 (SJC) at paragraphs 17 and 18. Blueprint had a set-off and counterclaim. Its net counterclaim was well within the monetary jurisdiction of the Small Claims Court.

[18] Fifth, as I am not convinced about the bullying point, I believe I must take proportionality into consideration. This case was not complex. There was no evidence as to the importance of the case to the parties. The project was over. The issue was the quantum of the result. An award of costs in this case should be more proportionate to the quantum of the result.

[19] On the other hand, I am not prepared to accede to Mr. Turton’s position in its entirety. There is a level of culpability with Blueprint. I was given no explanation as to why Blueprint waited for what amounted to 15 months after the May 14, 2019 letter to bring its motion for an order declaring the Reno lien expired. Indeed, Blueprint could have chosen to move under section 45 instead of under section 44 when it moved before me on March 7, 2019. In the subsequent 15 to 16 months, Reno obtained the judgment of reference and the order for trial and started this reference. In this period, court operations at all levels significantly declined due to the pandemic. In this intervening period a significant part of the claimed costs were incurred. This could have been avoided had Blueprint brought its section 45 motion in March, May or June, 2019. Its decision to wait must be accounted for as well.

[20] There was no criticism of the quantum of the Reno costs claim. Therefore, I will not comment on quantum any further.

[21] To reiterate, I conclude, considering all of these factors, that an appropriate award of costs is $8,000 to be paid by Blueprint to Reno. That amount is 40% of Reno’s claim for partial indemnity costs which captures the level of Blueprint culpability in not getting this action tried in the Small Claims Court.

DATE: March 25, 2021

MASTER C. WIEBE