COURT FILE NO.: CV-19-624070
RELEASED: 2021/04/06
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 2531574 Ontario Inc. O/A SCC Autosport v. Doyle Manufacturing Inc.
BEFORE: Master Graham
HEARD: October 20, 2020
COUNSEL: Maxwell Reedijk for the applicant (moving party on the motion)
Antony Niksich for the respondent
DECISION RE: COSTS
(Re: applicant’s motion to strike the respondent’s Notice of Objection under the Repair and Storage Liens Act, and to direct the return or the seizure of the subject article)
[1] On October 20, 2020, I heard the motion brought by the applicant SCC Autosport to strike the Notice of Objection of the respondent Doyle Manufacturing Inc. under the Repair and Storage Liens Act (“RSLA”), and to direct the return or the seizure of the 2014 Freightliner Argosy on which Doyle was performing customization work. On January 18, 2021, I released my Reasons for Decision (SCC Autosport v. Doyle Manufacturing Inc., 2021 ONSC 400) striking the Notice of Objection and ordering that the Argosy be returned to SCC Autosport.
[2] At the conclusion of the hearing, both counsel filed costs outlines. In my Reasons, I ordered that if the parties could not agree on the disposition of the costs of the motion, they were to make written submissions. I subsequently received and reviewed the submission of SCC Autosport dated February 8, 2021 and the submission of Doyle Manufacturing dated February 26, 2021.
[3] In their costs submission, SCC Autosport submits that it was wholly successful on the motion and that costs should follow the event. This is as expected.
[4] However, SCC Autosport seeks costs of the motion on a substantial indemnity scale, in the amount of $28,857.04, based on my finding that Doyle’s Notice of Objection constituted an abuse of process. SCC Autosport also relies on correspondence of July 25, 2019 and July 30, 2019 in which its counsel stated that Doyle would be “liable for significant costs and potentially other damages for serving a false Notice of Objection” and that the Notice of Objection was an abuse of the RSLA dispute resolution provisions.
[5] Doyle Manufacturing submits that the costs of the motion be reserved to the trial judge in the related action CV-19-629308 between Doyle and SCC Autosport. Doyle submits that the motion dealt with the issue of possession of the Argosy, but the costs of that motion should be left to the trial judge to be determined in the action for moneys claimed.
[6] Doyle further submits that SCC Autosport will not be prejudiced by the court reserving costs to the trial judge but Doyle could be seriously prejudiced by an award of costs against it at this stage. They argue that the trial judge may conclude that SCC Autosport owes Doyle the funds that it claims in respect of its work on the Argosy, in which case SCC Autosport should not have brought the motion.
[7] Doyle further argues that it responded to SCC Autosport’s motion in good faith, by contacting Transport Canada to inquire into Doyle’s legal responsibility for the Argosy, and basing its position on Transport Canada’s statement that it was responsible to ensure compliance with the Motor Vehicle Safety Act. To award costs against Doyle would unfairly punish it for its attempts to comply with its obligations to Transport Canada.
[8] Doyle also contends that the motion involved the novel issue of the application of the RSLA to the modification of the Argosy “glider kit” into a recreational vehicle, and where a matter involves a novel issue, costs should be reserved rather than automatically following the event.
[9] The issues in deciding the costs of SCC Autosport’s motion are whether the costs should be reserved to the trial judge and if not, whether the costs should be awarded on a partial indemnity scale or a substantial indemnity scale. Doyle’s submission does not dispute that SCC Autosport’s partial indemnity costs of $20,212.04 as set out in their costs outline are reasonable.
[10] Doyle’s argument is that the trial judge may conclude that SCC Autosport owes Doyle some or all of its account in respect of its work on the Argosy, in which case, SCC Autosport should not have initiated the motion but rather should have simply paid the account. What this argument fails to recognize is that when the dispute arose between the parties with respect to the return of the Argosy, SCC Autosport paid into court $132,221.36, consisting of the balance owing of $129,971.36 on Doyle’s account, plus $2,250.00 for possible excess storage fees and incidentals.
[11] This procedure, initiated by SCC Autosport, already contemplated the resolution of the issues arising from Doyle’s unpaid account, with the funds paid into court as security for any further amounts determined to be owing to Doyle. If Doyle had not filed its impugned Notice of Objection, and simply allowed the Argosy to be released to SCC Autosport, under RSLA s. 24(13) its lien on the Argosy would have become a charge on the amount paid into court, and it could simply have proceeded with its action to recover its account.
[12] The issue on the motion was whether the Argosy should be released to SCC Autosport based on the payment into court, the purpose of which was to protect Doyle’s right of recovery. Doyle essentially obstructed the RSLA process by its refusal to acknowledge that the dispute was appropriately resolved as an RSLA lien matter, thus forcing SCC Autosport to bring the motion. There is therefore no reason to defer the disposition of the costs of SCC Autosport’s motion.
[13] The second issue is whether SCC Autosport should recover its costs on a substantial indemnity basis or a partial indemnity basis. Although I did find that Doyle’s Notice of Objection should be struck on the basis that it was an abuse of process, the abuse of process in question constituted the addition of $150,000.00 in estimated “custom charges” to their Notice of Objection. This does not amount to the reprehensible, scandalous, outrageous or egregious conduct that would typically warrant an award of substantial indemnity costs. In these circumstances, an award of partial indemnity costs is appropriate.
[14] In the final paragraph of my Reasons, I made the following comment:
54 For the assistance of the parties in resolving the issue of costs, I note from the costs outlines that SCC Autosport’s partial indemnity costs total $20,212.04 ($17,290.00 for fees + $2,922.04 for disbursements) and Doyle’s partial indemnity costs total $27,015.24 ($21,690.00 for fees + $2,819.70 HST + $1,658.04 disbursements). The applicant SCC Autosport was successful on the motion and will likely be entitled to costs. As SCC Autosport’s partial indemnity fees are $4,400.00 less than Doyle’s, Doyle will have difficulty persuading the court that those costs were not within their reasonable expectations.
[15] As stated, Doyle did not take issue with SCC Autosport’s partial indemnity costs of $20,212.04 as set out in their costs outline. Also as indicated in my Reasons quoted above, the fact that Doyle’s figure of $21,690.00 for partial indemnity fees is $4,400.00 more than SCC Autosport’s means that Doyle cannot seriously suggest that SCC Autosport’s figure is unreasonable. Accordingly, Doyle Manufacturing Inc. shall pay 2531574 Ontario Inc. O/A SCC Autosport their costs of the motion fixed at $20,212.04 payable within 60 days.
MASTER GRAHAM
April 6, 2021