COURT FILE NO.: CV-19-1475
DATE: 2021 04 27
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Crawford Chondon & Partners LLP
John L. O’Kane, for the Plaintiff, Defendant by Counterclaim
Plaintiff
(Defendant by Counterclaim)
- and -
Karen L. Fields
Ian St. John and Kim Nusbaum, for the Defendant, Plaintiff by Counterclaim
Defendant
(Plaintiff by Counterclaim)
HEARD: January 27th, 2021
DECISION ON COSTS
LEMAY J
[1] I heard a summary judgment motion in this matter on January 27th, 2021 and released my reasons for judgment on February 10th, 2021 (see 2021 ONSC 1052). It is now time to fix the costs for the summary judgment motion.
[2] The issue in this case was the interpretation of the Partnership Agreement. More specifically, the Defendant was a partner in the Plaintiff law firm. She left the firm in December of 2018 to take the position of City Solicitor with the City of Sault Ste. Marie. The Plaintiff law firm sued to enforce a liquidated damages clause. Other relief was claimed by both sides.
[3] I dismissed the Plaintiff’s claim to enforce the liquidated damages clause. I also granted the Defendant some, but not all, of the other relief that she was seeking. It is against that factual backdrop that I must assess the costs.
Positions of the Parties
[4] The Defendant seeks partial indemnity costs of $46,750.08 inclusive of HST and disbursements. The Defendant advances the following arguments in support of her position:
a) She was substantially successful on the summary judgment motion.
b) The motion was complex in nature.
c) The Plaintiff’s conduct made this motion both longer and more difficult.
[5] The Plaintiff, on the other hand, argues that the Defendant’s costs should be limited to $10,000.00 inclusive of HST and disbursements. The Plaintiff advances the following arguments in support of its position:
a) The Defendant was only partially successful on this motion.
b) The Defendant took unreasonable positions that made a simple motion more complex.
c) There was a significant duplication of time between the two counsel involved from the Defendant’s law firm.
d) The Plaintiff made an offer to settle that demonstrates their reasonableness.
[6] I will address these positions together below.
The Applicable Law
[7] There is no issue that the Plaintiff’s Offer to Settle does not trigger the cost consequences in Rule 49 of the Rules of Civil Procedure. As a result, Rule 57.01 sets out the list of factors that I must consider in assessing costs in this matter. Under Rule 57.01, the first question that the Court must determine is which party was successful.
[8] Rule 57.01 sets out other factors that the Court may consider in fixing costs. In this case, I view the following factors as being relevant:
a) The amount claimed and the amount recovered in the proceeding;
b) The complexity of the proceeding;
c) The offers to settle;
d) The reasonable costs expectations of the losing party.
[9] I will address these principles as I address the issues that have been raised by the parties.
Issue #1 – Who Was Successful?
[10] The Defendant argues that she was substantially successful, while the Plaintiff argues that the Defendant was only partially successful on the motion and that the parties had divided success. I agree with the Defendant’s position, and find that she was substantially, but not completely, successful for the following reasons.
[11] First, the key issue in this case was the Plaintiff’s action to enforce the liquidated damages clause in the partnership agreement and require the Defendant to pay the Plaintiff the sum of $200,000.00. This issue was both the most significant issue and the issue that consumed the most time in preparing and arguing the motion. The Defendant was completely successful on this issue. On this basis alone, the Defendant had substantial success.
[12] Second, I then consider the other issues that the Plaintiff raises supporting their position that success was divided. The biggest issue that the Defendant was not successful on was her claim to be paid her draw for December of 2018. This was a claim for $10,000.00. It was a small claim that did not require much in the way of evidence. The other outstanding claims and adjustments were either agreed to or even less significant than the December draw.
[13] When I consider the result of the case, the Defendant was substantially successful and she should be entitled to most of her costs, on a partial indemnity basis, for this matter. A small deduction should be made from those costs to acknowledge the minor issues on which the Defendant was not successful.
Issue #2 – Offers to Settle
[14] The Plaintiff alleges that I should consider both the fact that they made an offer to settle for approximately 50% of the amount they were claiming and the fact that the Defendant made no offers at all.
[15] I found that the Defendant was not bound by the liquidated damages clause in this case. As a result, the Plaintiff’s offer is of very little assistance to them. That offer would have required the Defendant to pay approximately a year’s net income from her time at the firm. Given the outcome of the case, it was not unreasonable for the Defendant to reject this offer out of hand.
[16] It is true that the Defendant did not make any offers to resolve the litigation herself. However, the Defendant was mostly successful in the litigation. While a settlement offer might have enhanced the Defendant’s claim for costs, the Defendant’s decision not to make an offer to settle is not an unreasonable position on the facts of this case and does not justify any adjustments to the partial indemnity costs that would otherwise be awarded.
Issue #3 – The Complexity of the Motion
[17] The Plaintiff alleges that this was a relatively straightforward motion which was made more complex by the Defendant’s various arguments about why the liquidated damages clause was unenforceable. The Defendant argues that the motion was complex and that she was required to respond to a significant amount of material. I agree with the Defendant’s position on this issue.
[18] I reject the Plaintiff’s assertion that the Defendant’s arguments made this motion more complex. While I determined that the contract would not be set aside on the basis of unconscionability, Plaintiff’s counsel is not correct in his assertion that the Defendant was unsuccessful in a whole series of legal arguments. I simply found it unnecessary to address those legal arguments given the conclusions I reached about the interpretation of the agreement.
[19] The fact that I found it unnecessary to address those legal arguments does not mean it was inappropriate to make those arguments. The interpretation of the partnership agreement was complex as the provisions were intertwined and the language of the agreement was not completely clear.
[20] In addition, there was a considerable volume of material that was filed by both parties on the summary judgment motion. This volume of material was of considerable assistance in understanding the positions of both parties. However, the intertwined nature of the disputed provisions of the partnership agreement combined with the volume of the material that was filed made this motion moderately complex.
[21] The Defendant has also taken the position that the Plaintiff’s conduct made this motion more complex. I do not agree. While the Plaintiff raised a couple of peripheral issues (see paragraphs 27 and 28 of my reasons), those issues were not significant in the adjudication of the case and were easily extricable from the issues I had to decide. The Plaintiff’s decision to advance these issues did not make the motion significantly more complex.
[22] In short, this was a motion of moderate complexity and neither party made it more (or less) difficult to argue. This is a factor that supports a higher award of costs for the Defendant, as the successful party.
Issue #4 – The Reasonable Expectations of the Losing Party
[23] It is somewhat more difficult to assess the reasonable expectations of the losing party in this case, as Plaintiff’s counsel has not included his bill of costs with his costs submissions. The reasonable expectations of the losing party must, therefore, be assessed against the Defendant’s bill of costs and the Court’s view of the motion.
[24] Given the length of the factums, the fact that there was considerable cross-examination of numerous witnesses and the volume of material that was served on the motion record, I do not view the Plaintiff’s suggestion that costs be fixed at $10,000.00 as being reasonable.
[25] This brings me to the Defendant’s bill of costs. The Plaintiff asserts that there was considerable duplication between the time spent by Mr. St. John and Ms. Nussbaum. I agree with this assertion. Although I do not dispute that the time was spent, I am of the view that it was unnecessarily duplicative. This is particularly true since there was additional time spent by a third lawyer who did not appear at the motion. This is a case that would have been more appropriately staffed by one lawyer with some research and other assistance from a junior lawyer. Some reduction in the amount of costs sought by the Defendant is therefore necessary.
[26] This brings me to the partial indemnity rates sought by the Defendant. Counsel has claimed a partial indemnity rate of 75% of their actual rates. Counsel for the Plaintiff argues that it is more appropriate to fix the range of costs for partial indemnity at 60% of their actual rates. I disagree.
[27] The Rules of Civil Procedure no longer includes a costs grid. Therefore, the relationship between partial indemnity costs and actual costs is far less significant than it was fifteen or twenty years ago. On this point, see the discussion in Geographic Resources Integrated Data Solutions Ltd. v. Peterson 2013 ONSC 1041. The partial indemnity costs sought by the Defendant’s counsel are below the inflation adjusted maximums for partial indemnity set out in the Information to the Profession provided by the Costs Subcommittee of the Civil Rules Committee. As a result, I am satisfied that the partial indemnity rates sought by the Defendant’s counsel are not unreasonable.
Conclusion
[28] When all the above factors are taken into account, I am of the view that costs should be fixed in the sum of $35,000.00 inclusive of HST and disbursements and I so order. The Plaintiff is to pay the Defendant these costs within thirty (30) days of the release of this endorsement.
LEMAY J
Released: April 27, 2021
COURT FILE NO.: CV-19-1475
DATE: 2021 04 27
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Crawford Chondon & Partners LLP
Plaintiff
(Defendant by Counterclaim)
- and -
Karen L. Fields
Defendant
(Plaintiff by Counterclaim)
REASONS FOR DECISION
LEMAY J
Released: April 27, 2021