Court File and Parties
COURT FILE NO.: 55116/14
DATE: 20210407
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Michael Katz and Jana Katz
Plaintiffs
– and –
Bruce Paul Hindrea carrying on business as Hindrea Roofing and Siding and Decra Roofing Systems, Inc.
Defendants
COUNSEL:
Peter A. Mahoney, for the Plaintiffs
Harry Korosis, for Bruce Paul Hindrea
Decra Roofing Systems Inc., not appearing
HEARD: April 1, 2021
Decision on motion
the honourable justice j. r. hENDERSON
INTRODUCTION
[1] The plaintiffs’ claim in this proceeding was administratively dismissed by the registrar pursuant to r. 48.14 of the Rules of Civil Procedure as the action had not been set down for trial by the fifth anniversary of the commencement of the action.
[2] The defendant, Bruce Paul Hindrea (“Hindrea”), now brings this motion for an order that the plaintiffs pay Hindrea’s costs of this action on a partial indemnity basis. The largest single item in the bill of costs submitted by Hindrea’s counsel is the disbursement to Hindrea’s engineering expert, Douglas Fishburn, in the amount of $32,593, inclusive of HST.
[3] The plaintiffs submit that this court does not have the jurisdiction to make a costs order following an administrative dismissal by the registrar pursuant to r. 48.14. In the alternative, the plaintiffs submit that in the circumstances of this case this court should exercise its discretion and order no costs payable to either party.
THE FACTS
[4] In August 2011 the plaintiffs hired Hindrea to replace the existing cedar roof on the plaintiffs’ residence with a new metal roof for a contract price of $29,154.
[5] Pursuant to the contract, Hindrea installed the new metal roof on the plaintiffs’ residence. Thereafter, the plaintiffs experienced problems that they associated with the new roof.
[6] The plaintiffs obtained a preliminary report from Mike Holmes Inspections, at a cost of approximately $500, that confirmed that there were some problems with the roof.
[7] The plaintiffs commenced this action in negligence and breach of contract on April 25, 2014. In the statement of claim the plaintiffs claimed damages of $250,000, plus additional punitive and aggravated damages in the amount of $250,000.
[8] In the summer of 2014, the plaintiffs decided to remove and replace the metal roof that had been installed by Hindrea, and they advised Hindrea and his counsel of their intention to do so. Consequently, Hindrea retained an engineer, Douglas Fishburn, to provide expert advice. The plaintiffs permitted Mr. Fishburn to inspect the roof that had been installed by Hindrea and to observe the property as the roof was removed.
[9] By the end of the summer of 2014 Mr. Fishburn’s invoices for services rendered to Hindrea totalled approximately $10,785, inclusive of HST.
[10] Very little occurred in this matter until the summer of 2016. On August 5, 2016 counsel for Hindrea delivered a letter to counsel for the plaintiffs in which Hindrea’s counsel indicated that it would be necessary for Hindrea to obtain a formal expert report from Mr. Fishburn if the proceeding continued, and that the expected cost of that report would be in the range of $12,000-$15,000.
[11] The August 5, 2016 letter contained an offer to settle whereby Hindrea offered to pay $5,000 all-inclusive to the plaintiffs in full satisfaction of the plaintiffs’ claim. However, the offer was only open for acceptance until such time as Mr. Fishburn re-attended at the property for the purpose of preparing his report, and this was expected to occur in the week of August 8, 2016.
[12] The plaintiffs did not accept Hindrea’s offer to settle, and Mr. Fishburn re-attended at the property on August 11, 2016. Thereafter, Mr. Fishburn completed a lengthy expert report that was served on the plaintiffs on October 6, 2016. Mr. Fishburn’s additional invoices for services rendered for the preparation of the report totalled approximately $21,808, inclusive of HST.
[13] In his report, Mr. Fishburn indicated that there were some modest problems with the roof that had been installed by Hindrea. However, Mr. Fishburn estimated that it would only cost approximately $5,000 to repair those problems.
[14] Again, very little occurred in this proceeding until January 2019 at which time the parties had very brief discussions about possibly settling the case. Those discussions were unsuccessful.
[15] Next, the registrar dismissed the plaintiffs’ action for delay on August 25, 2019, pursuant to r. 48.14.
[16] Hindrea requests his costs of this action on a partial indemnity scale. Excluding the fees for the preparation of this motion, the bill of costs presented by Hindrea’s lawyers includes partial indemnity fees for the action to be approximately $7,800, inclusive of HST. The bill of costs also includes disbursements of $34,269, inclusive of HST. The largest single disbursement is $32,593, inclusive of HST, for Mr. Fishburn’s services.
ANALYSIS
[17] Section 131(1) of the Courts of Justice Act provides the Court with a broad overarching authority to make costs orders. It reads as follows,
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.
[18] Rule 48.14 of the Rules of Civil Procedure directs the registrar to dismiss an action for delay if “[t]he action has not been set down for trial or terminated by any means by the fifth anniversary of the commencement of the action.”
[19] In my view r. 48.14 does not provide the registrar with the authority to make a costs order, but it also does not limit or restrict the broad authority with respect to costs that is conferred on a judge by s. 131 of the Courts of Justice Act.
[20] Plaintiffs’ counsel relies upon the decision of Marrocco J. in Daniels v. Grizzell, 2016 ONSC 7351, to support its submission that a court does not have the authority to make a costs order in the present circumstances. I disagree with this submission. In my view, the Daniels decision only provides direction as to the authority of a registrar, not a judge.
[21] At paras. 5-12, Marrocco J. clearly provides his interpretation of r. 48.14 in the context of actions that may or may not be taken by a registrar. I find that his comments at para. 9 about r. 24.05.1 were not intended to restrict the authority of a judge. Accordingly, I find that the statements made in the Daniels decision are limited to the authority of a registrar.
[22] I acknowledge that Master Brott in Maple Leaf Foods Inc. v. David Guest, 2018 ONSC 6809, may have relied upon the Daniels decision as authority for the proposition that a judge does not have jurisdiction to make a costs order after a r. 48.14 dismissal. In my view, to the extent that Master Brott relied upon Daniels for this proposition, the decision in Maple Leaf Foods is not correct.
[23] The best review of the law in this area is the decision in Hubertus Debruijn, Select Genetics LLC v. Velthuis Farms Ltd., 2019 ONSC 3806. In that case the plaintiffs’ action was administratively dismissed by the registrar pursuant to r. 48.14 and the defendants brought a subsequent motion for costs.
[24] At para. 24, Kane J. confirmed my view of the Maple Leaf Foods decision by noting that the Master in Maple Leaf Foods cited no authority for the proposition that silence as to costs under r. 48.14 prevented the court from using its legislated authority under s. 131 of the Courts of Justice Act to award costs.
[25] At para. 25, Kane J. wrote, “Rule 48.14 contains no prohibition of a costs award upon an administrative dismissal of an action.”
[26] Further, at para. 29 Kane J. wrote:
Silence as to costs in Rule 48.14 does not thereby prevent the court from exercising its cost jurisdiction under Section 131, which is only exercisable upon the Registrar’s administrative dismissal order being made. The court continues to have jurisdiction for matters resulting from that dismissal including costs or, for example, payment of money paid into court.
[27] In my view, the comments of Kane J. in the Debruijn decision are accurate statements of the law. I specifically reject the plaintiffs’ submission in this case that the Debruijn decision is restricted to cases in which money has been paid into court.
[28] Therefore, I find that this court has the authority, pursuant to s. 131 of the Courts of Justice Act, to make a costs order after there has been an administrative dismissal by the registrar pursuant to r. 48.14.
[29] As I indicated above, s. 131 provides the court with a broad authority to make orders as to costs. Where an action has been dismissed or abandoned there is no presumption of entitlement to costs. In these circumstances, the court retains a discretion to determine both entitlement to, and the quantum of, any costs order.
[30] In the present case many of the factors set out in r. 57.01 favour Hindrea’s request for a costs order. In particular, I accept that a dismissal of this action was important to Hindrea. The plaintiffs made a claim against Hindrea for $500,000 in total damages and that claim hung over Hindrea’s head for five years prior to the dismissal.
[31] I also accept that this claim was complex as it constituted claims against both the installer and the manufacturer of the roof. Moreover, after the action had been commenced, the plaintiffs amended their pleadings to add a claim for adverse health consequences allegedly caused by Hindrea’s conduct. Because of the complexity of the case, it was imperative for Hindrea to seek out expert advice from an engineer in order to defend the claim.
[32] I also take into account the fact that Hindrea made a reasonable attempt to resolve the action at an early stage. Although Hindrea’s offer to settle does not engage the provisions of r. 49.10, it is evidence of Hindrea’s conduct that was intended to shorten the duration of the proceeding.
[33] I disagree with the submission made by Hindrea’s counsel that the plaintiffs engaged in conduct that unnecessarily lengthened the proceeding. That is, I accept that there was a legitimate foundation for the commencement of this action, and that it was not a frivolous claim. I do not doubt the bona fides of the plaintiffs in commencing the action given the information that the plaintiffs had when the action was commenced.
[34] However, as the action developed it should have become clear to the plaintiffs that if they had any claim, it was exceedingly small. At that point, the plaintiffs should have abandoned the action, resolved the action, or transferred the action to a lower court. Instead, the plaintiffs ignored the action, and left it outstanding to the detriment of the defendants. In hindsight, the plaintiffs should have accepted Hindrea’s offer to settle.
[35] In summary, the plaintiffs started what the plaintiffs believed to be a legitimate action. This initiative by the plaintiffs required Hindrea to take steps and incur expenses to defend the action. By abandoning the claim to an administrative dismissal, the plaintiffs caused Hindrea to needlessly incur substantial costs.
[36] Put another way, the plaintiffs should have thoroughly investigated the merits of their claim before the action was started. In this case, it was Hindrea, not the plaintiffs, who thoroughly investigated the plaintiffs’ claim. Thus, the costs of defending the claim should be borne by the plaintiffs.
[37] For these reasons I find that Hindrea is entitled to his costs of this action on a partial indemnity basis.
[38] Regarding quantum, I have removed the fees associated with this motion from the bill of costs that was presented on behalf of Hindrea. The remaining partial indemnity fees for the action amount to approximately $7,800, inclusive of HST. In my view, this is a reasonable quantum for the fees that should be paid by the plaintiffs.
[39] Regarding disbursements, there is no real issue except for Mr. Fishburn’s invoices. The problem with the Fishburn disbursement is that prima facie it offends the principle of proportionality. The general rule of proportionality is that the parties and their counsel are expected to conduct proceedings such that the cost of the litigation is proportionate to the value of the claim. This concept extends to the conduct of experts who are retained to provide opinion evidence.
[40] The contract price for the work that is the basis of the claim in this case is $29,154. The disbursement for Mr. Fishburn’s services is $32,593. Thus, the cost of the expert opinion and report exceeds the price of the job itself. On first glance, the Fishburn disbursement is out of proportion to the amount of the claim.
[41] However, more than the price of the contract was at stake in this action for Hindrea. The plaintiffs sued Hindrea for damages of $500,000. That is, although the original contract price was $29,154, it was the plaintiffs who chose to raise the monetary ceiling in this action to $500,000. Accordingly, Hindrea had to treat this proceeding as a $500,000 claim. Because of this factor, I will not arbitrarily reduce the Fishburn disbursement.
CONCLUSION
[42] For these reasons it is ordered that the plaintiffs pay to Hindrea his costs of this action, fixed at fees of $7,800, plus HST on fees of $1,014, plus total disbursements of $34,269, for a grand total of $43,083, payable within 60 days.
[43] If the parties cannot resolve the issue of costs of this motion, I direct that the party seeking relief shall deliver written submissions to the trial co-ordinator at St. Catharines within 20 days of the release of this decision with responding submissions to be delivered within 10 days thereafter. If no submissions are received within this timeframe, the parties will be deemed to have settled all of the remaining issues as between themselves.
J.R. Henderson J.
Released: April 7, 2021
COURT FILE NO.: 55116/14
DATE: 20210407
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Michael Katz and Jana Katz
Plaintiffs
– and –
Bruce Paul Hindrea carrying on business as Hindrea Roofing and Siding and Decra Roofing Systems, Inc.
Defendants
DECISION ON MOTION
J. R. Henderson J.
Released: April 7, 2021