2021 ONSC 451
COURT FILE NO.: CV-15-095
DATE: 2021 01 19
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
FOX EXCAVATING & GRADING LTD.
Plaintiff
– and –
2012299 ONTARIO INC., CANADIAN IMPERIAL BANK OF COMMERCE, MCAP FINANCIAL CORPORATION and VANDYK- SUMMERHILL LIMITED
Defendants
J. Goode, for the Plaintiff
A. Dhillon, for the Defendants
HEARD: In writing
ENDORSEMENT ON COSTS
MCSWEENEY J:
[1] This is my cost ruling following parties trial. Reasons for decision are reported at 2020 ONSC 5196. I ruled in favour of the Plaintiff, Fox Excavating & Grading Ltd. (“Fox”), in this action under the Construction Lien Act, R.S.O. 1990,
c. C.30 (the “CLA”) (the “Lien Action”). The Defendant, Vandyk-Summerhill
Limited (“VDL”), was ordered to pay Fox the full amount of its claim, specifically
$66,213.30 plus interest in respect of its Lien, and lost profit damages of
$199,000.00.
[2] The Plaintiff was successful and is presumptively entitled to costs. I encouraged the parties to agree on costs. The parties did not agree. I have now received and reviewed their written cost submissions: submission and reply of Plaintiff, responding submissions of the Defendant, and Bills of Costs and authorities filed by each. This is my costs endorsement.
Relevant background
[3] A brief description of the eleventh-hour narrowing of the categories of dispute between these parties is relevant to my assessment of costs.
[4] Originally, Fox had three actions against VDL relating to the same contract with VDL: Court Files 95/15 (“the Lien Action”), which went to trial; 138/15 (“the Trust Action”); and 178/15. These actions were ordered to be tried together, or one after the other.
[5] At the outset of trial, VDL confirmed that:
a. it was no longer disputing the validity, quantum, or timeliness of Fox’s lien;
b. it was no longer pursuing its counterclaim for $500,000 against Fox, nor seeking to set-off any damages found owing to Fox; and
c. it was no longer alleging that Fox breached or repudiated the contract.
[6] In view of the revised position of the Defendant, announced at the start of trial, Fox confirmed it was discontinuing the Trust Action (138/15), subject only to cost submissions to be dealt with at the conclusion of trial. Action 178/15 was stayed by the Court at the joint request of the parties.
[7] As a result, the trial proceeded only on Fox’s two claims in the Lien Action: its claims against VDL for breach of contract and damages for lost profit.
[8] In these circumstances, Fox is entitled to its pre-trial costs of the Lien Action and Trust Action, its costs of the Defendant’s Motion to Amend, and its costs of the trial.
Position of the Parties
[9] Fox seeks substantial indemnity costs of $286,789.40, which total is inclusive of disbursements, experts’ fees, and taxes. In the alternative, it seeks costs on a partial indemnity scale, with a corresponding total of $226,809.96.
[10] The Defendant takes the position that partial indemnity costs are appropriate and argues that Fox’s fees and disbursements claimed are excessive. Neither party relies on offers to settle in support of their positions.
[11] There are three cost questions to be determined: what are the Plaintiff’s partial indemnity fees; what disbursements should be allowed; and are substantial indemnity costs appropriate?
Cost principles in the Construction Lien Context
[12] Costs in construction lien proceedings are governed by section 86 of the CLA. They are expressly within the discretion of the court, and “may be made on a substantial indemnity basis”: CLA, s. 86(1).
[13] In determining the amount of costs payable in a construction lien action, courts typically apply the same factors in Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194: Metron Construction Inc. v. Belleville Racetrack Development Corp., 2011 ONSC 2817 at para. 4.
[14] Determination of costs is not a mathematical or mechanical calculation: it is a determination of what, upon consideration of the relevant factors, is an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding: Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 26.
[15] The factors relevant to my assessment of costs in this litigation are considered below, organized with reference to the corresponding general categories in Rule 57.01(1).
57.01(0.a) the principle of indemnity
[16] The Defendant disputes the fees charged by the Plaintiff. Its main objections are that (i) the hourly rates are too high; (ii) counsel made unnecessary use of articling student assistance, particularly as “second seat” at trial; (iii) its Bill of Costs contains duplicative or excessive hours spent on specific steps in litigation; and (iv) legal fees paid by VDL into court on the discharge of the Plaintiff’s lien should be deducted from costs awarded to Fox.
[17] Regarding hourly rates, I agree with the Plaintiff at paragraph 25 of its submissions, specifically that its partial indemnity rates are within the rates suggested in the Costs Guidelines, appropriately adjusted for inflation (see First Capital (Canholdings) Corp. v. North American Property Group, 2012 ONSC 1359, 40 C.P.C. (7th) 46, at para. 13.)
[18] Regarding the Plaintiff’s use of student-at-law assistance in its preparation and attendance at trial: I have no issue with the assignment of significant preparation to students-at-law (which latter time was extensive, and appropriately discounted by 50%). The file was detail-intensive but not legally complex.
[19] Staffing the file with more junior lawyers supporting trial counsel “behind the scenes” (i.e. no junior at trial), as the Defendant’s Bill of Costs indicates, was reasonable. Although a different staffing model was used by the Plaintiff’s trial counsel – relying more on students-at-law and law clerks, and help at trial – this
was also reasonable. I note further that the overall total of partial indemnity fees in the parties’ bills of costs were similar, despite their use of different categories of staff to assist the trial lawyer. This further confirms my general observation of the reasonableness of the Plaintiff’s rates and use of staff, subject to the concerns about excessive time noted below.
[20] With respect to the Defendant’s examples of excessive time taken by Plaintiff’s counsel for some steps in the litigation: The Plaintiff submitted a detailed Bill of Costs supported by docket printouts. I find the time expended overall reasonable for the total legal work done work done, including its pre-trial costs of the Lien Action and Trust Action, its costs of the Defendant’s Motion to Amend, and its costs of the trial.
[21] However, I agree with the Defendant that some reduction in fees is appropriate to address excess time claimed in the Plaintiff’s Bill of Costs such as:
a. The Plaintiff claims 20.1 lawyer hours and 7.3 clerk hours for steps described only as: to “Prepare Trial Records Lien Action and Breach of Trust Action; Set matter down for Trial; Attend Assignment Court; Attend Pre-Trial”
[22] In my view, this is unreasonable: trial record assembly and set-down are law clerk or clerical steps; counsel attendance at assignment court and at pretrial, even if preparation and filing of a conference brief were included (which is not listed in the description of work), does not support a claim of more than three full lawyer’s workdays in addition to a reasonable day of law clerk work.
b. The Plaintiff claims 32.1 lawyer hours and 33.5 law student hours for preparation of its closing and reply submissions
[23] This total is excessive. In a trial where “daily attendance and prep for trial” totaled a reasonable 72 hours for counsel, a total of over 50 hours of lawyer and student time for closing submissions is plainly excessive. This is particularly so in this case, where first drafts were prepared by a law student for counsel’s review, and where only two issues ultimately went to trial. Further, Plaintiff counsel had already prepared and filed submissions at the outset of trial in its response to the Defendants’ Motion to amend. Those submissions overlapped with the final submissions following trial, which should have further shortened the preparation time needed.
[24] The above are only two of a handful of examples of excessive time claimed by the Plaintiff. Based on my overall review of the Bills of Costs of the Plaintiff and both parties’ submissions, a reduction of 8% of the total fees claimed by the Plaintiff is an appropriate discounting to address the excessive time found. Subtraction of 8% is a reduction of $8,492.67. The resulting partial indemnity fees allowed therefore total $97,665.64 + HST.
[25] Regarding VDL’s argument that I should deduct of construction lien discharge legal costs paid into court by VDL: The Defendant argues that the
$16,553.30 in legal fees which it paid into court in June 2015 to discharge the
Plaintiff’s Lien, and which were paid out to the Plaintiff as part of the trial judgment, be deducted from costs awarded to the Plaintiff today.
[26] A review of the Plaintiff’s Bill of Costs and dockets on this point indicates that the Bill of Costs relied on by the Plaintiff in its written submissions does not include any docketed time spent prior to July 11, 2015. The lien costs were paid into court in the previous month, June 2015.
[27] I conclude that the legal fees paid by VDL pursuant to the order of Master Wiebe are for legal costs relating to the lien discharge process, and are distinct from the steps taken for which I order costs today. No deduction is required on this point.
What disbursements are allowable?
[28] At paragraph 15 of its submissions the Defendant takes issue several disbursement categories claimed by the Plaintiff. The largest is the cost of the Plaintiff’s damages expert, which I will consider last. The other items challenged are as follows:
a. Claim of $3,352.01 for “Computer legal research”:
[29] The Defendant objects to the Plaintiff’s claim described only as “computer legal research”, which is not supported by explanation or invoice.
[30] I agree with the analysis of Justice Mitrow in Furtney Estate v. Furtney, 2014 ONSC 7259 at para 11. That is, companies such as Westlaw often sell online legal research to law firms at a flat annual rate. It may be reasonable for a law firm to distribute that cost across files requiring research and bill it as a file disbursement. If the firm wishes to recover that amount as reimbursement to their client as part of a cost award in the client’s favour, however, it must file documentary evidence to show that the amount claimed is a reasonable pro- rated fraction of the firm’s online research overhead costs, and that the amount claimed was in fact billed to the client as a disbursement.
[31] In this case the Plaintiff has filed no documentation under either category.
The Plaintiff’s claim of $3,352.01 for “Computer legal research” is therefore disallowed.
b. Claims described as “File” - $2,758.00; “Agents fees” - $616.00; “Register” - $60.00; “Other trial expenses” - $236.69; and “Processing fee – registration” - $10.00
[32] For each of the disbursements listed, it is not clear what the cost was, how the expenditure relates to the litigation, or whether it was charged to the Plaintiff by the firm. While fees paid to an agent could of course be a proper disbursement, in this case no agent’s invoices were filed, nor did the Plaintiff’s the Bill of Costs and supporting dockets mention any agent involvement.
[33] In short, I agree with the Defendant that the Plaintiff has not established its entitlement to reimbursement of these five items from the Defendant. The
amounts claimed in these five categories total $3,680.69. This amount is therefore to be deducted from the total of allowed disbursements.
c. Disbursement claims of “deliveries” - $327.64; and “process servers” -
$3878.75
[34] The Defendant questions these two further disbursements: “deliveries” at
$327.64, and $3878.75 for “process servers”. The objection to “deliveries” is its lack of description; the objection to “process servers” is lack of supporting documentation and high amount.
[35] The Defendant’s own Bill of Costs shows courier costs at $109.99. The Plaintiff does not list a “courier” item. It is a reasonable assumption that “deliveries” in the Plaintiff’s list is the equivalent of what the Defendant calls a “courier” disbursement. The amount of $327.64 for this disbursement for the Plaintiff, in the context of litigation which spanned four years, is reasonable. The “deliveries” item is allowed.
[36] With respect to the Plaintiff’s claim for $3878.75 for “process servers”, I agree with the Defendant that this quantum requires supporting documentation. Typically process servers are used at the commencement of claims. The quantum claimed is high. The Defendant’s Bill of Costs, by contrast, shows just over $1,000 paid for process servers.
[37] In the absence of supporting documentation from the Plaintiff to explain the additional need for process server services in this litigation, the allowable disbursement for process servers is reduced by $2878.75, down to a reasonable amount of $1,000.00.
d. Plaintiff’s Damages Expert Report costs - $72,643.50
[38] The Plaintiff claims $72,643.50 for the cost to retain its damages expert, Mr. Rohan, who prepared an expert report and testified at trial. Mr Rohan’s report and testimony were accepted by the court. He provided the evidentiary basis necessary to enable the court to quantify the lost profit damages of $199,000 claimed by the Plaintiff.
[39] The Defendant disputes this amount, pointing out that its own defence expert was only paid $54,512.50. The Defendant argues that its expert’s fee was a more reasonable cost for a report and trial testimony, and that the Plaintiff’s expert cost reimbursement should be reduced to the same amount.
[40] Having considered the parties’ submissions, I allow the Plaintiff’s expert report fee as a reasonable disbursement in this case. My conclusion is supported by the following observations:
a. The Plaintiff’s expert was retained and required to review all the documentation relating to the parties’ contract, familiarize himself with the components of cost calculation, and develop a methodology for
calculating the profit that the Plaintiff would have earned (i.e. amount billed per terms of contract, less forecasted expenditures) if the Defendant had permitted it to complete its work under the contract. This was a necessarily detailed and time-consuming task, and one which was not performed by the Defendant’s expert.
b. The Defendant’s expert largely accepted the analytical framework proposed by the Plaintiff’s expert. He confined his own analysis to reviewing the Plaintiff’s report and providing what he described as a “limited critique”. The critique report was significantly smaller in scope and focused on challenging a few of the foundational assumptions and calculations in Mr. Rohan’s report. Mr. Sethi offered his opinion that Fox’s lost profit calculation of $199,000 was too high, but did not offer his own calculation.
c. It is also worth noting that in its scope, level of analysis, and detail, the work product of the plaintiff’s expert, Mr. Rohan, was more than twice the size of the critique by Mr. Sethi, the Defendant’s expert. The disbursement cost of Mr. Rohan’s full report and testimony, at
$72,643.50, was 33% more than the Defendant’s cost of $54,512.50.
d. In short, the Plaintiff’s expert was necessary to substantiate the damages claimed and was fully successful in doing so. By contrast, the
critique report required the Defendant’s expert to do substantially less work and analysis. The differential in costs of the two reports is commensurate with the difference in detail and value of their respective expert contributions to the trial.
e. I further note that at the time the Plaintiff retained Mr Rohan, the Defendant had yet to abandon its counterclaim against Fox for greater damages than Fox was claiming in the Lien Action. It was therefore necessary for the Plaintiff to go to the time and expense of ensuring its expert was thoroughly prepared to justify his opinion of the Plaintiff’s lost profits. Had Mr Rohan failed to do so successfully, the Plaintiff would not have proved its claim.
[41] For the reasons above, I conclude that the expert fees incurred by the Plaintiff are reasonable, were necessary to prove its case, and are within the range of what the Defendant would have expected to pay. The full amount of
$72,643.50, is therefore included in the disbursement costs to be reimbursed by the Defendant.
57.01(1)(a) the amount claimed and the amount recovered in the proceeding
[42] The Defendant argues that the fees and disbursements claimed are disproportionate to the outcome achieved by the Plaintiff. I do not agree. In the
context of this litigation, as summarized above, the Plaintiff was required, until the first day of trial, to be prepared to prosecute 2 separate but related actions and defend a $500,000 counterclaim, as well as multiple allegations of breach of contract by its client. The costs claimed are proportionate to that necessary work in the categories in which costs are now owing to the Plaintiff as a result. In this regard I note further that the Plaintiff was fully successful in achieving precisely the relief it claimed, and in prevailing over a breach of contract counterclaim of
$500,000, over all defences raised both up to the date of trial and following, as well as in proving its original claims at the trial.
[43] For its part, the Defendant was completely unsuccessful in its defences, as noted in my reasons for decision at para 108: “None of the defences pleaded or argued by the defendant [VDL] met the evidentiary threshold to constitute valid defences at law to either its breach of contract of damages claimed.” Fox was ultimately entirely successful at trial and VDL was entirely unsuccessful.
57.01 (c) the complexity of the proceeding
[44] I have earlier referenced the entitlement of Fox to its costs of the various phases of proceeding. With respect to the complexity of the issues in the Lien action, the claim by Fox was straightforward: a) a claim for unpaid invoices and
b) a claim for damages resulting from VDL’s breach of contract. The claim for unpaid invoices was not complicated in itself. However, it was made factually complicated by a range of allegations against Fox pleaded by VDL as defences
and as counterclaim, starting in 2015. VDL’s aggressive pursuit of the counterclaim and multiple defences strategy complicated the proceedings and continued over the years until abandoned the day before trial.
57.01(1) (d) the Importance of the Issues
[45] This was a commercial dispute pleaded under the CLA by a sole proprietor small business after approximately $66,000 of invoices for work performed were not paid by VDL. Furthermore, after VDL failed to pay the invoices, it then contracted with another excavator on the remaining portion of its contract with Fox. As a result, the issues in the case – payment for work done, and honoring a contract – was of significant business importance to Fox. Not only did VDL never offer to settle the lost profit claim on a commercially reasonable basis, such that Fox could have “cut its losses” in a fair manner, VDL persisted in accusing Fox of dishonest billing practices. The reputation of Fox’s owner, Mr. Spalierno, was the reputation of his whole business as a sole proprietor known in the construction community. It was therefore of significant importance to Fox that it pursue the claim and defeat the allegations against it.
57.01(1) (e), (f) and (g) Conduct of the Defendant
[46] Fox seeks an award of substantial indemnity costs on the basis of the Defendant’s unreasonable conduct throughout the litigation. The Defendant argues essentially that its conduct was simply hard-fought litigation and did not
reach the level of objectionable conduct required for a substantial indemnity award.
[47] The actions of VDL relevant to consideration of substantial indemnity costs are fairly summarized and characterized in the following excerpts from the Plaintiff’s submissions, at paras. 20-21:
(A) VDL proceeded with a motion on the first day of trial to amend its defence to plead that Fox was not entitled to work on all 354 lots on the Project notwithstanding the fact that VDL had already admitted this at Examinations for Discovery and in a Request to Admit. Further VDL did not address the test for leave pursuant to the CLA. VDL wasted one full day of trial on this motion which it should not have brought in the first place given its prior admissions;
(B) notwithstanding VDL’s abandonment of its counterclaim and any claim for set-off against Fox, VDL persisted in making allegations of dishonesty against Fox at trial (see Examination in Chief of Mr. Ma on October 10, 2019) none of which were accepted by the Court and which consumed, together with cross examination, the better part of a trial day from October 10-11, 2019;
(C) VDL made claims of negligent misrepresentation against Fox, none of which were advanced at trial;
(D) VDL alleged that Fox delayed its completion of the Project yet could not even produce one construction schedule showing the Project’s intended completion date, this claim was abandoned at trial;
(E) VDL alleged that Fox abandoned the Project and caused it to incur damages when it was forced to hire a new contractor to complete Fox’s work. In fact, Her Honour found that VDL had decided to replace Fox when it refused to complete the remainder of its work for a lesser price. VDL did not pursue this claim for damages at trial;
(F) VDL advanced an unsupported Counterclaim against Fox in the amount of
$500,000.00 which it abandoned prior to trial; and
(G) VDL continued to argue that the Contract did not entitle Fox to work on all 354 lots notwithstanding VDL’s prior admissions to the contrary and her Honour’s clear finding at the conclusion of the Motion that Fox was required to work on 354 Lots at the Project. VDL wasted at least one day of trial in leading evidence on a point which it had already conceded and which the Court had already pronounced upon.
(2) VDL’s defences were found not to meet the evidentiary threshold to constitute valid defences at law to either its breach of contract or damages claimed. It is respectfully submitted that VDL intentionally invented defences with no factual basis or air of reality in an effort to avoid the consequences of its clear breaches of the contract and to ‘beggar’ Fox into accepting a less advantageous contract for the remainder of its work. VDL’s conduct also certainly lengthened the duration of the proceedings, and the trial, unnecessarily.
[48] The Defendant’s conduct, illustrated by the above examples, had the overall effect of lengthening the proceedings; contained unsubstantiated allegations including serious accusations of dishonest billing practices. Counsel advised the plaintiff immediately before trial of its abandonment of claims and defences, but only after the Plaintiff had spent time and money to respond to each.
[49] As stated earlier, construction lien proceedings are governed by section 86 of the CLA. Costs are expressly within the discretion of the court, and may be made on a substantial indemnity basis. In my view, a substantial indemnity award of costs against the Defendant is appropriate in this case. Such an award in the circumstances of this litigation is supported by the case law, the purpose of the Construction Lien Act, and the Rules of Civil Procedure.
[50] A decision of this court is particularly on point. In 188710 Ontario Ltd. v.
Gartner, 2013 ONSC 2008 [Gartner Costs], at para. 30, the court awarded substantial indemnity costs to the Plaintiff masonry contractor in a CLA action and stated the test for obtaining substantial indemnity costs as follows:
Where a defendant’s acts are a deliberate attempt to frustrate the proceedings by fraud or deception, where the conduct of the defendant is calculated to harm the plaintiff, or where the unreasonable conduct of the defendant compounds the complexity of the proceedings, there are proper grounds to order solicitor-and- client [substantial indemnity] costs.
[51] In 1188710 Ontario Ltd. v. Gartner, 2012 ONSC 6110 [Gartner Litigation], the Defendant property owner had hired the Plaintiff brick and stone mason to renovate a cottage and build a stone fireplace. In the course of the project, the Plaintiff submitted invoices that the Defendant did not pay in full. The Plaintiff filed a lien on the property and started an action, claiming payment for work performed and interest charges for the delay. The Plaintiff was fully successful at trial. In awarding substantial indemnity costs, the court considered that the Defendant had advanced unfounded delay and deficiency claims regarding the Plaintiff’s work and made unfounded accusations of dishonesty, including that the Plaintiff had overbilled on his invoices and stolen from the defendant.
[52] As VDL did in this case, the Gartner defendant abandoned its unproven allegations of dishonesty at trial. The court held that unproven allegations of dishonestly were particularly reprehensible: Gartner Costs, at para. 35.
[53] That court further characterized the Defendant’s actions as conduct which aimed to ‘beggar’ the plaintiff and thereby force it to abandon its claim or settle for less that it was owed. Substantial indemnity costs were considered appropriate for this reason also: Gartner Costs, at para. 38.
[54] Similarly, the tactics employed by VDL in Fox’s Lien Action ran up its costs, put Fox to extensive additional legal work, and extended the cost of the steps required to advance its claim. By immediately challenging the validity of the Plaintiff’s lien, VDL forced Fox to start the Trust Action to ensure that the appropriate Defendant would be accountable for its breach of contract in the event it needed to “pierce the corporate veil”. As I found at trial, the actions of VDL, in forcing Fox to go to trial on a $500,000 counterclaim, defend its reputation, prove its breach of contract claim, and also quantify its lost profit, were designed to force Fox to settle or abandon its suit.
[55] Such an approach amounts in my view to commercial bullying by a large development company of a small business. VDL tried, if not “every trick in the book”, certainly enough tricks, or enough unfounded allegations, to make it enormously more difficult for the Plaintiff to continue to take its litigation all the way to trial.
[56] VDL deliberately pursued a counterclaim and allegations including dishonesty and breach of contract against the Plaintiff, in circumstances where I found on the evidence that VDL was the party which breached the contract and failed to let Fox continue to work on its subdivision project. It pursued an aggressive and harmful defence strategy in what should have been a straightforward invoice payment and lost profit claim. Substantial indemnity costs are an appropriate expression of the court’s disapproval of such conduct.
[57] Further, I must consider that this matter was brought under the CLA. That statue, specific to construction disputes, provides a framework to encourage cost-effective, timely resolution of the type of construction contract disagreement which arose between Fox and VDL. An award of substantial indemnity costs against VDL is further justified in the context where its bullying strategies ran counter to the specific commercial context to which the CLA applies.
[58] A final word with respect to the Defendant’s submission that its conduct was not “reprehensible, scandalous, or outrageous conduct” as required to meet the threshold set out in Apotex Inc. v. Abbott Laboratories Ltd., 2013 ONSC 2958, at para. 17, quoting from Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3, at p. 134. Such costs will only be awarded “in rare and exceptional cases when the court wishes to use this heightened costs award as a signal of the court’s disapproval”: Apotex, at para. 17.
[59] I agree with the Defendant that substantial indemnity costs awards must in general be based on a factual basis of a high level of objectionable conduct. Whether analyzed under the CLA in the construction context, or under the general civil action rubric of the Rules of Civil Procedure, however, I conclude VDL’s conduct in this case reaches the substantial indemnity threshold
[60] In this regard I note that in Apotex, the unsuccessful party “was simply trying to advocate any and all possible grounds of attack it could think of,
regardless of whether the grounds had any air of reality”: at para. 21. In doing so, the unsuccessful party put forth allegations of wrongful conduct that it did not fully pursue during the course of the trial. Commenting on this tactic, the Court was clear that it “does not condone a strategy wherein any number of allegations of wrongful conduct can be pled and a party will be shielded from the resultant cost consequences by choosing to jump ship early”: Apotex, at para. 22.
[61] The court’s analysis in Apotex is directly applicable to the actions of VDL in this case, and I reach the same conclusion.
[62] For the foregoing reasons, the litigation conduct of VDL in the Lien Action, the Trust Action and the Motion, justifies a cost award in favour of Fox on a substantial indemnity basis.
57.01 (0.b) - Overall proportionality, and VDL’s Reasonable Expectations
[63] The trial evidence established that VDL is a sophisticated and experienced developer of large residential developments. Its corporate witnesses testified that it had experience in commercial litigation. As such, VDL would have been aware that its aggressive strategy of counterclaiming and advancing baseless allegations would force Fox to spend significantly more time and legal fees on its claim than it had planned, and would thereby compel it to consider walking away from the litigation or risking significant loss.
[64] Where an experienced litigant like VDL knowingly pushes a Plaintiff to expend more resources than should be necessary to resolve a commercial dispute, it knows that the risk is that, if the strategy fails and the Plaintiff wins, it may expose itself to higher adverse costs at the end of the day. In this case VDL’s defences failed completely. It should therefore have expected to pay substantial indemnity costs, on top of the damages proved. In short, VDL gambled that it would outlast Fox, and it lost.
[65] I conclude that an award of costs on a substantial indemnity basis is both proportionate and within the realm of what VDL could have expected to pay under the circumstances.
[66] Having found that the Plaintiff is entitled to costs on a substantial indemnity rate, the resulting figure, per Rule 1.03, is appropriately calculated in this case as 1.5x the partial indemnity fees.
Summary of Conclusion:
[67] For the reasons given, a fair and just award of costs, reasonable in the circumstances of the Defendant and consistent with what it would have expected to pay, is calculated as follows:
[68] Partial indemnity fees: The Plaintiff claimed $106,158.30 in fees. While the hourly rate and scope of work are reasonable, excessive time spent as described supports a reduction of 8% of the fees claimed. Subtraction of 8% is a reduction
of $8,492.67. The resulting partial indemnity fees therefore total $97,665.64 + HST.
[69] Allowable disbursements: The Plaintiff’s expert fees are allowed in full.
Seven disbursement categories are reduced or disallowed. The total reduction in disbursements is $9,911.45. When this amount is subtracted from the
$94,558.48 claimed, the difference is $84,647.03. With HST on that amount calculated at $11,004.11, the total of disbursements appropriately reimbursed to the plaintiff by the defendant is $95,651.14.
[70] Scale of costs: A substantial indemnity award of costs is justified by the defendant’s conduct. At 1.5x the partial indemnity fees calculated above, substantial indemnity fees amount to $146,498.45 + HST of $19,044.80, for a total of $165,543.25.
[71] Total fees and disbursements allowed: The sum of allowed disbursements and substantial indemnity fees is $261,194.39.
ORDER:
[72] For the reasons given, the Court orders that the Defendant, Vandyk- Summerhill Limited, shall pay to the Plaintiff, Fox Excavating & Grading Ltd., costs fixed in the amount of $261,194.39, which total includes fees, disbursements and HST.
[73] Costs to be paid to the Plaintiff within 30 days.
McSweeney J.
Released: January 19, 2021
2021 ONSC 451
COURT FILE NO.: CV-15-095
DATE: 2021 01 19
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
FOX EXCAVATING & GRADING LTD.
– and –
Plaintiff
2012299 ONTARIO INC., CANADIAN IMPERIAL BANK OF COMMERCE, MCAP FINANCIAL CORPORATION and VANDYK- SUMMERHILL LIMITED
Defendants
ENDORSEMENT ON COSTS
McSweeney J.
Released: January 19, 2021