COURT FILE NO.: 17-74085
DATE: 20210518
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
THE RIVERSIDE PROFESSIONAL CENTRE INC. Plaintiff/Moving Party
– and –
THE OTTAWA HOSPITAL Defendant/Responding Party
COUNSEL:
Glenn R. Solomon, for the Plaintiff/Moving Party
David Sherriff-Scott, Lawrence A. Elliot, Karen Perron and Laura E. Robinson, for the Defendant/Responding Party
HEARD: In Writing
DECISION ON COSTS
R. Smith J.
Overview
[1] The Ottawa Hospital (“TOH”) was successful in opposing the plaintiff Riverside Professional Centre Inc. (“RPCI”)’s motion for summary judgment. In fact, all claims against TOH were dismissed, including the claim that it had breached the terms of the lease, the claim for arrears of revenue generated by 40 parking spaces and 7 encroaching parking spaces in Lot B, the claim for damages of approximately $4,200,000, injunctive relief and aggravated punitive damages of $400,000. In addition, TOH was successful in obtaining a grant of easement over the Access Road.
[2] TOH seeks costs of $586,141.79 inclusive of disbursements on a substantial indemnity scale for both the summary judgment motion and in the action because all of the plaintiff’s claims were dismissed.
[3] The Riverside Professional Centre Inc. submits that the costs should only be awarded for the summary judgment motion and not for the whole action, that costs should only be awarded on a partial indemnity basis, and that the time spent and the hourly rate claimed is excessive.
Factors
[4] The factors to be considered when fixing costs are set out in Rule 57 of the Rules of Civil Procedure and include in addition to success, the amount claimed and recovered, the complexity and importance of the matter, unreasonable conduct of any party which unduly lengthened the proceeding, scale of costs and any offer to settle, hourly rate claimed, the time spent, and the amount that a losing party would reasonably expect to pay.
Success
[5] TOH was completely successful on the summary judgment motion brought by the plaintiff, such that the plaintiff’s claim was dismissed, and TOH was granted an easement over the shared Access Road. RCPI was unsuccessful on all of its claims.
Complexity, Importance and Amount Claimed
[6] Several issues were raised in the summary motion, including a claim for $4.2 million in damages, and aggravated and punitive damages of $400,000. RCPI alleged that TOH had breached the terms of the lease by failing to provide 250 parking spaces for its exclusive use. RCPI alleged that TOH’s failure to provide the required number of parking spaces had caused it to be unable to lease space in its medical office building, causing it $2.2 million dollars in damages. The parties had shared the parking space without complaint for about 25 years.
[7] Extensive affidavit evidence was required to outline the conduct of the parties over many years, from when the agreements were entered into in 1989 to the present, including structural changes at the Riverside Hospital, changes in hospital privileges and market changes over time.
[8] RPCI presented an expert report and two other witnesses on damages, and TOH responded with detailed affidavit evidence in its own expert report. The evidence was voluminous and cross-examinations took place over a lengthy period.
[9] The issues were important to both parties and in particular to TOH, which was accused of acting in bad faith and in a deliberate egregious and high-handed manner. These accusations attacked TOH’s integrity and character as an institution.
[10] The amount claimed of $4.6 million dollars was substantial and the plaintiff did not recover any damages.
Scale of Costs and Offers to Settle
[11] In Laczko v Alexander, 2012 ONCA 872, para. 2 the Court of Appeal held that costs on a substantial indemnity scale should only be awarded where there was reprehensible conduct which was “egregious behaviour deserving of sanction”. I find that RPCI’s behaviour did not reach this level and did not rise to a level deserving of sanction by awarding substantial indemnity costs.
[12] The conduct of RPCI in bringing the motion for summary judgment allowed the issues to be decided, albeit against the plaintiff, and saved the parties time and expense and made efficient use of judicial resources as contemplated by Hyrniak.
[13] RPCI argued that none of the offers to settle made by TOH triggered the mandatory cost consequences of Rule 49.10. However, TOH submitted that an offer to settle on October 13, 2020, more than 7 days before the hearing which remained open until 1 minute after the commencement of the hearing of the motion. TOH offered to continue to segregate 250 parking spaces for RPCI’s use, to install an automated ticket entry system, to continue to remit 90% of the revenue from 40 monthly parking passes, TOH would receive an easement over the Access Road and the 7 parking spaces on the leased lands, and TOH would pay $250,000 to RPCI.
[14] This was a very reasonable offer as TOH achieved a result that was more favourable than its offer, as it had offered to pay $250,000 to RPCI, which was not ordered. An easement was granted over the Access Road and while an easement was not granted over the 7 encroaching parking spaces in Lot B, the result was almost the same, as TOH was allowed to keep the revenue from the 7 parking spaces and could continue to administer and use the 7 spaces.
[15] Under Rule 49.10 where a defendant makes an offer to settle, and achieves a more favourable result after the hearing, it is entitled to receive partial indemnity costs from the date of the offer to settle. This is a significant incentive if the plaintiff enjoys some success but achieves less than the defendant’s offer. However, where the plaintiff’s claim is completely dismissed and achieves zero success, the effect of the offer is nullified because the defendant is entitled to partial indemnity costs in any event.
[16] In S & A Strasser Ltd. v. Richmond Hill (Town), 1990 CanLII 6856 (ONCA) Carthy J. awarded substantial indemnity (solicitor-client) costs to a defendant who exceeded its offer to settle in circumstances where the plaintiff’s case was dismissed.
[17] Since 1990 there has not been very many decisions following S & A Strasser. In addition, the Court of Appeal in St. Elizabeth Home Society v. Hamilton (City), 2010, 319 O.L.R. [4th] 74, 2010 ONCA 280, 266 O.A.C. 136 (C.D.) reached the opposite finding. Rule 49.10 limits a defendant to partial indemnity costs from the date of its offer to settle. Based on the St. Elizabeth Home Society decision, I will not award substantial indemnity costs on the basis of the offer to settle under Rule 49.10.
[18] Rule 49.13 provides the court with discretion to consider offers to settle when awarding costs. TOH made several very reasonable offers to settle which RCPI decided not to accept. In addition to the offer to settle of October 13, 2020, an offer was made on April 13, 2018, in May of 2018 and December 17, 2018, all of which were very reasonable proposals to settle the parking issues in a fair manner.
[19] Notwithstanding the discretion under Rule 49.13, making reasonable offers to settle is but one factor in deciding on the amount of costs to be awarded.
Hourly Rates, Time Spent and Costs of the Action
[20] I agree with TOH’s submission that the costs of the action, as well as for the summary judgment motion, should be awarded because the plaintiff’s action was completely dismissed and costs on a partial indemnity basis for the entire action should follow the dismissal.
[21] The time spent was extensive, but the issues raised were serious for TOH as its integrity was being challenged and a substantial claim of $4.6 million dollars was being made against it. The case was also complicated because the evidence covering the previous 30 years had to be presented. This included detailed evidence on the use of parking Lot B over many years. In addition, there was expert evidence on damages which had to be challenged, extensive affidavits of documents had to be provided and lengthy cross-examinations were conducted over a week.
[22] I conclude that given the complexity of the claim covering over 25 years, that the time spent to obtain a superb result was reasonable.
[23] Counsel for TOH also divided the work between senior and junior counsel. A substantial part of the work was performed by more junior counsel. A team approach to performing legal services has been recognized as a reasonable way to proceed, and I find this was the case in these circumstances.
[24] I find that the hourly rates claimed by both senior and junior counsel were reasonable in the circumstances, given their experience, the complexity of the case, the substantial amount involved, and the excellent results achieved by counsel.
Amount the Losing Party Would Reasonably Expect to Pay
[25] RPCI is a sophisticated party and had retained and dismissed at least 5 Toronto counsel, including its counsel who argued the summary motion. As a result, I infer that RPCI was well aware of the substantial legal costs that he was incurring when pursuing this litigation. The hourly rates of a senior Toronto counsel which it retained, would have been equivalent, if not higher, than the hourly rates charged by senior Ottawa counsel.
[26] RPCI had received several very fair and reasonable offers to settle from TOH, at least one of which they exceeded at the summary judgment motion. Notwithstanding the very reasonable offers to settle, RPCI chose to “roll the dice” in an attempt to obtain a greater financial outcome on the summary judgment motion, which forced TOH to spend a lot of time to appropriately defend the claims made against it.
[27] For these reasons I find that the amounts claimed by TOH on a partial indemnity basis would be in accordance with RCPI’s reasonable expectations.
Disposition
[28] For the above reasons, RCPI is ordered to pay costs to TOH on a partial indemnity basis of $370,000 for fees inclusive of HST plus disbursements of $28,000 inclusive of HST for a total of $398,000.
Released: May 18, 2021
COURT FILE NO.: 17-74085
DATE: 20210518
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
THE RIVERSIDE PROFESSIONAL CENTRE INC. Plaintiff/Moving Party
– and –
THE OTTAWA HOSPITAL Defendant/ Responding Party
REASONS FOR decision
R. Smith J.
Released: May 18, 2021