COURT FILE NO.: CV-19-619715 & CV-19-619717
DATE: 2021 06 07
SUPERIOR COURT OF JUSTICE – ONTARIO
IN THE MATTER OF the Construction Act, RSO 1990, c. C.30, as amended
RE: ATLANTIC CONSTRUCTION GROUP INC., Plaintiff
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2567616 ONTARIO INC., DSG GROUP OF COMPANIES INC., 2605097 ONTARIO LIMITED, 2608109 ONTARIO INC. and ROYAL BANK OF CANADA, Defendants
AND RE: ATLANTIC CONSTRUCTION GROUP INC., Plaintiff
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2567616 ONTARIO INC., 2605097 ONTARIO LIMITED, 2608109 ONTARIO INC. and ROYAL BANK OF CANADA, Defendants
BEFORE: Master Todd Robinson
COUNSEL: J. Margie, agent for counsel for the plaintiff (moving party)
A. Kuchinsky and T. Watson, counsel for the defendant, 2567616 Ontario Inc.
HEARD: May 7, 2021 (by teleconference)
COSTS ENDORSEMENT
[1] On January 7, 2021, I heard the motions of Atlantic Construction Group Inc. (“Atlantic”) for orders extending the time for service of its statements of claim, as well as validating service or, in the alternative, for substituted service in each of its two lien actions. For reasons released on April 9, 2021, I granted Atlantic’s motions: Atlantic Construction Group Inc. v. 2567616 Ontario Inc., 2021 ONSC 2658.
[2] Atlantic seeks its partial indemnity costs of the motions in the amount of $14,779.21. Although ultimately unsuccessful in its opposition, 2567616 Ontario Inc. (“2567 Ont”) nevertheless seeks its own partial indemnity costs of the motions in the amount of $17,000.
[3] Costs in a lien action are governed by s. 86 of the Construction Act, RSO 1990, c C.30, which provides the court with broad discretion to award costs against a party or, in particular circumstances, a person who represented that party, including on a substantial indemnity basis. Pursuant to s. 86(2), where the least expensive course is not taken by a party, the costs awarded to that party shall not exceed what would have been incurred had the least expensive course been taken. Also relevant to assessing costs is the requirement that procedure in lien action be as far as possible of a summary character, having regard to the amount and nature of the liens in question: Construction Act, s. 50(3) (formerly Construction Lien Act, s. 67(1)).
[4] By operation of s. 50(2) of the Construction Act (formerly s. 67(3) of the Construction Lien Act), the Rules of Civil Procedure, RRO 1990, Reg 194 apply except to the extent of any inconsistency with the Construction Act. Rule 57.01 of the Rules of Civil Procedure outlines non-mandatory and non-exhaustive considerations for the court in assessing costs. The court has repeatedly held Rule 57.01 is not inconsistent with the Construction Act and may be considered in exercising the court’s discretion under s. 86.
[5] Costs awards should reflect what the court views as a fair and reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier, 2002 CanLII 25577 (ON CA), [2002] OJ No. 4495 (CA) at para. 4; Davies v. Clarington (Municipality), 2009 ONCA 722 at para. 52. The overall objective is fixing an amount that is fair and reasonable in the particular proceeding, having regard to the expectations of the parties concerning the quantum of costs: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 OR (3d) 291 (CA) at paras. 26 and 38.
[6] Atlantic argues the norm is that costs are awarded to the successful party, which should be applied here. Although acknowledging my finding that success was a close call, Atlantic submits that the reasons for not having served the claim offered by Atlantic’s former counsel were honest, whereas I made determinations that evidence tendered on behalf of 2567 Ont was not forthright. Atlantic submits that alone should support partial indemnity costs in its favour.
[7] 2567 Ont argues that courts do not generally award costs to a plaintiff where an indulgence has been granted. 2567 Ont essentially submits that a significant indulgence has been given in this case given my determination that “Atlantic and its counsel made a conscious decision not to serve the statements of claim, ostensibly for self-serving financial reasons” (para. 3). Instead, 2567 Ont argues that costs in cases like this are typically awarded to the defendant.
[8] 2567 Ont is correct that, in those cases before me dealing with extending the time to serve a statement of claim in a lien action, costs were not awarded in favour of the successful plaintiff. Two of the cases cited by 2567 Ont do not genuinely assist its argument. SNS Construction Contracting Ltd. v. Dougall Cabana Inc., 2017 ONSC 3711 is a one paragraph decision with no reasons given for the costs disposition. It is therefore unclear why the defendants were awarded costs. MGI Construction Corp. v. 2273865 Ontario Inc., 2015 ONSC 4716 (Master) also includes no reasons for the costs disposition. However, it is also a case in which the defendants were successful in opposing extension of time to serve the statement of claim insofar as the lien claim. A separate analysis was applied to the non-lien civil remedies being pursued, and extension of time to serve the statement of claim was granted for those non-lien claims.
[9] The third case relied upon by 2567 Ont is my own decision in Petrasso v. Fuller, 2020 ONSC 7915. In that case, at para. 22, I held that it was not unreasonable for the defendant to have opposed the motion and put the plaintiff to the task of satisfying the court why the deadline should be extended. I further held that the price of the court’s indulgence was an adverse costs award. However, a key factor in my costs determination in that case was that the plaintiff’s evidence was “sparse” and that the plaintiff had put forward a “scant evidentiary record”. That is not the case here.
[10] Contrary to 2567 Ont’s position, there is no general rule that a plaintiff who seeks the court’s indulgence by extending the time for service of its statement of claim is disentitled from recovering costs. Although made in the context of setting aside a registrar’s dismissal in a non-lien action, I agree with Sweeny J.’s following comments in JPW Niagara Limited v. Sullivan Mahoney Lawyers, 2020 ONSC 6762 at para. 10:
A blanket assertion that a plaintiff (or indeed any party) is not entitled to costs if that party seeks the court’s indulgence is not consistent with the general principles of costs. It does not discourage litigation. It does not encourage resolution. It allows responding parties to take unreasonable positions because there is no risk of costs being awarded against them. There is no general rule that a party seeking an indulgence is not entitled to costs; nor should there be. The issue of costs is an exercise of discretion.
[11] Similarly, I agree with Flynn J.’s comment in Cambridge Bingo Centre v. 149974 Ontario Limited, 2018 ONSC 935, also made in the context of setting aside a registrar’s dismissal in a non-lien action, that the fact of a plaintiff seeking the indulgence of the court does not mean that a defendant can oppose it on a no-risk basis (para. 67).
[12] 2567 Ont’s decision to oppose Atantic’s motions was not unreasonable. Indeed, after reviewing the evidence and considering the arguments made, I found that Atlantic’s success was a close call. Nevertheless, Atlantic was successful in its motions, which were hard fought. Extensive materials were exchanged and filed comprising over 1,000 pages, including motion records, cross-examination transcripts, detailed facta, and supporting case law. Cross-examinations on affidavits took place, with undertakings given and fulfilled. Well-prepared and focused oral submissions were made by both parties at the hearing.
[13] Where a plaintiff seeks the court’s indulgence, it would be inconsistent with costs principles to require that a defendant’s opposition be found unreasonableness before costs are awarded against that defendant. Nevertheless, although 2567 Ont’s decision to oppose was not itself unreasonable, the manner of opposition resulted in heightened costs of the motion. My determination that 2567 Ont’s responding position relied on less than forthright affidavit evidence and unsubstantiated allegations of prejudice is a relevant consideration in costs. Notably, Dr. Gill’s affidavit evidence was ultimately held to be “convenient and self-serving, appearing in some instances to be cutely incomplete, if not disingenuous” (para. 44).
[14] In my view, albeit that Atlantic has been granted an indulgence, this is not a case where it is fair or just to deny Atlantic its costs, particularly since much of those costs were incurred solely as a result of the position taken by 2567 Ont in its opposition.
[15] The issues on the motions were important to both parties. For Atlantic, the lien remedy is a significant one providing security in the lands. Conversely, for 2567 Ont, the liens tie up title to the lands, impacting 2567 Ont’s ability to deal with them.
[16] With respect to quantum, considering what 2567 Ont was charged to oppose the motion and the partial indemnity costs it seeks, the costs claimed by Atlantic are within 2567 Ont’s reasonable expectations for what it may have been required to pay in the event of unsuccessful opposition. The hours and rates claimed by Atlantic are reasonable having regard to the experience of counsel and the extent of materials and cross-examinations. In fact, Atlantic claims the same partial indemnity rate for its lead counsel (a 1995 call) as 2567 Ont does for its lead counsel (a 2011 call). Atlantic’s overall hours claimed are less than those claimed by 2567 Ont. Disbursements claimed are reasonable.
[17] Nevertheless, Atlantic’s motions needed to be brought. There was no obligation on 2567 Ont (or the other defendants who did not oppose) to consent to Atlantic’s motions, failing which Atlantic was obliged to satisfy the court that extension was appropriate. Accordingly, Atlantic had to prepare its motion records and supporting affidavit regardless of 2567 Ont’s opposition. In my view, Atlantic is not entitled to those costs. However, they are not discretely identified in Atlantic’s costs outline. Rather, they are lumped with legal research, preparation of Atlantic’s factum and brief of authorities, and correspondence. I have accordingly made a reasonable estimate of the portion of that block of costs allocable to motion record preparation.
[18] I have also taken into consideration that, pursuant to Rule 39.02(4)(b) of the Rules of Civil Procedure, a party who cross-examines on a motion affidavit (other than a motion for summary judgment) is liable for the partial indemnity costs of every adverse party on the motion in respect of the cross-examination, regardless of the outcome, unless the court orders otherwise. I do not view that rule as being inconsistent with the provisions of the Construction Act. It follows that 2567 Ont is presumptively entitled to its partial indemnity costs of Atlantic’s cross-examination of Dr. Gill, unless I order otherwise.
[19] In this case, I am not satisfied that the circumstances are such that I should order otherwise. However, 2567 Ont’s costs outline comprises only two blocks of time: a substantial block lumping together all time expended prior to the motion hearing (albeit described with particularity in the “fee item” column), and the anticipated legal fees regarding the motions hearing. By lumping all pre-hearing time together, it is impossible to discern the extent of costs incurred in preparation for and attendance at Dr. Gill’s cross-examination. I accordingly estimate a $500 partial indemnity reduction.
[20] For these reasons, I find that the fair and reasonable amount of costs payable by 2567 Ont to Atlantic in respect of these motions $11,000.00, inclusive of HST and disbursements, on a partial indemnity basis, payable within thirty (30) days. Order accordingly.
MASTER TODD ROBINSON
DATE: June 7, 2021```