Court File and Parties

Court File No.: CV-20-758 Date: 2021-06-09 Superior Court of Justice - Ontario

Re: Jessica Coutinho, Plaintiff And: Ocular Health Centre Ltd., Defendant

Before: Justice D.A. Broad

Counsel: Robert A. Konduros, for the Plaintiff James M. Wortzman and Catherine E. Allen, for the Defendant

Costs Endorsement

[1] The parties have been unable to resolve the issue of costs in respect of the defendant’s unsuccessful motion for summary judgment and have now each delivered written submissions on the costs of the motion.

Plaintiff’s position

[2] The plaintiff seeks costs of the motion on a full indemnity basis in the sum of $70,777.55 comprised of $62,475 in respect of fees (based upon an actual rate of $850/hour), disbursements in the sum of $160 and HST on fees and disbursements in the sum of $8,142.55.

[3] The plaintiff’s Costs Outline expresses the claim for fees on a partial indemnity basis in the sum of $25,725.

[4] The plaintiff points to two Offers to Settle served by her on January 28, 2021 and February 3, 2021 respectively. In her first Offer the plaintiff offered to accept the sum of $7,000 plus costs as agreed upon or assessed. In her second Offer she agreed to accept the sum of $6,000 plus costs as agreed upon or assessed on the basis that the defendant shall discontinue, with prejudice, its action against the plaintiff in file CV-20-681.

[5] The plaintiff points out that the defendant made no offer to settle and submits that the court can take into account her willingness to settle for a reasonable amount and the fact that no offer was forthcoming from the defendant.

[6] The plaintiff submits that the summary judgment motion was complicated and extensive cross examination on affidavits took place. Notwithstanding the fact that the plaintiff’s claim is within the jurisdiction of the Small Claims Court, the defendant made serious allegations of fraud against the plaintiff which, if not proven at trial, may attract an award of substantial indemnity costs.

Defendant’s position

[7] The defendant submits that there should be no costs of the motion on the basis that the action ought properly to have been brought in the Small Claims Court. Alternatively, it says that the costs of the motion ought to be in the cause.

[8] The defendant argues that the plaintiff’s Offers to Settle should not be taken into account. The plaintiff’s first Offer to Settle was withdrawn when the second Offer was served which required the defendant to discontinue, with prejudice, a separate ongoing action as against the plaintiff involving numerous defendants. The defendant points out that the plaintiff did not beat her Offer to Settle.

[9] The defendant points out that it did not know that the plaintiff had mitigated all of her common law damages until her cross examination on February 22, 2021 and the plaintiff did not abandon her $200,000 claim for punitive and/or aggravated damages until the return of the motion. The defendant says that it should not be penalized by having to pay the plaintiff significant costs when it did not know until the return of the motion that the claim fell within the monetary jurisdiction of the Small Claims Court.

[10] In the alternative, the defendant submits that costs should be fixed on the Small Claims Court scale. It further submits that there is no basis for an award of full indemnity costs. The defendant says that the court should apply the principle of proportionality to significantly reduce the plaintiff’s claim for costs.

Guiding principles

[11] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, provides that "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.”

[12] The factors to be considered by the court, in the exercise of its discretion on costs, are set forth in sub rule 57.01(1), including, in particular:

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged, and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed.

[13] The Court of Appeal has observed that modern costs rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behavior by litigants (see Fong v. Chan, 1999 CanLII 2052 (ON CA), [1999] O.J. No. 4600 (Ont. C.A.) at para. 24).

[14] Justice Perrell in the case of 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, [2010] O.J. No. 5692 (Ont. S.C.J.) reformulated the purposes of the modern costs rules, at para. 10, as follows:

(1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements.

[15] The usual rule in civil litigation is that costs follow the event and that rule should not be departed from except for very good reasons (see Gonawati v. Teitsson 2002 CanLII 41469 (ON CA), [2002] CarswellOnt 1007 (Ont. C.A.) and Macfie v. Cater, 1920 CanLII 401 (ON SC), [1920] O.J. No. 71 (Ont. H.C.) at para 28).

[16] It is well known that the overall objective in dealing with costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful party. The expectation of the parties concerning the quantum of costs is a relevant factor to consider. The court is required to consider what is "fair and reasonable" having regard to what the losing party could have expected the costs to be (see Boucher v. Public Accountants Council (Ontario), 2004 CanLII 14579, [2004] O.J. No. 2634 (Ont. C.A.) at para. 26 and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, 2005 CanLII 1042, [2005] O.J. No. 160 (Ont. C.A.)).

Discussion

[17] In my view, the plaintiff was the successful party on the motion, and I see no basis to depart from the usual rule that costs should follow the event. In particular, there is no basis for the costs of the motion to be ordered to be in the cause.

[18] Conversely, I see no basis for an award of full indemnity costs, nor of costs on a substantial indemnity scale. There was no inappropriate conduct on the part of the defendant that is worthy of censure by an award of substantial indemnity costs, and rule 49.10 of the Rules of Civil Procedure has no application as the plaintiff did not obtain an order as favourable or more favourable than the terms of her Offer to Settle dated February 3, 2021 which was open for acceptance at the commencement of the hearing of the motion.

[19] The number of hours spent by counsel for the defendant (67.9 hours) was roughly equivalent to the number of hours spent by counsel for the plaintiff (73.5 hours). It was thus within the reasonable expectation of the defendant that plaintiff’s counsel would devote that amount of time in responding to the motion, and that, if unsuccessful, it would be obliged to pay partial indemnity costs on that basis.

[20] I do not accept the defendant’s submission that costs should be on a Small Claims Court scale in the circumstances. There is no provision in the Small Claims Court rules for the bringing of a motion for summary judgment. Moreover, the defendant’s motion was based upon the application of O. Reg 228/20: Infectious Disease Emergency Leave under the Employment Standards Act, 2000, S.O. 2000, c.41, an issue upon which there was no previous authority. There was value in having the issue determined by the Superior Court of Justice.

[21] Applying the principle of proportionality, I would allow a partial indemnity counsel rate of $275 per hour to the plaintiff for the sum of $20,212.50 in respect of fees plus HST thereon in the sum of $2,627.63 for a total of $22,840.13. I do not see the basis of the plaintiff’s disbursement claim for travel/mileage to file material at the courthouse totaling $160.

Disposition

[22] On the basis of the foregoing, it is ordered that the defendant pay to the plaintiff costs in the sum of $22,840.13 within 30 days hereof.

D.A. Broad

Date: June 9, 2021