Volta Electric Ltd. v. 2136615 Ontario Ltd. and Everlast Group Ltd.

CHATHAM COURT FILE NO.: CV-18-181 DATE: 2021-08-06

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Volta Electric Ltd. Plaintiff

– and –

2136615 Ontario Ltd. and Everlast Group Ltd. Defendants

Counsel: Brian Han, Counsel for the Plaintiff Patricia Joseph and Andrea Lee, agents for Douglas Loucks, Counsel for the Defendants

HEARD: May 26, 2021

RULING ON COSTS

CARROCCIA J.

Introduction

[1] The only issue for the court to decide is costs in relation to a motion which was ultimately dealt with on consent. On May 26, 2021, the court heard oral submissions as to costs. Those submissions were supplemented by written material including caselaw. The decision of the court was reserved.

[2] The substantive issue, which was resolved on consent, resulted in an order being made that grants the following relief: leave to bring the motion under s. 67(2) of the Construction Lien Act, R.S.O. 1990, c. C.30, as amended; leave nunc pro tunc, for the plaintiff to deliver a request to admit (“RTA”), dated December 14, 2020; and for the defendants to deliver their Response to the RTA, dated March 30, 2021.

[3] This motion was argued by Ms. Lee and Joseph as agents for counsel for the defendants as a result of the involvement of the LawPro.

[4] The contested issue is who is entitled to costs.

Background

[5] The action arises out a construction lien dispute between the plaintiff, an electrical subcontractor, and the defendants, general contractors, regarding the supply of electrical services to a condominium development. The contract is dated July 2017, so the provisions of the former Construction Lien Act apply.

[6] Prior to the scheduled trial, on December 14, 2020, the plaintiff served a notice under the Evidence Act, R.S.O. 1990, c. E.23, along with an RTA on the defendants’ counsel.

[7] A case conference was held with Howard J., on December 18, 2020, at which time the trial which had been scheduled to be heard during the sittings at Chatham commencing January 11, 2021 (along with another unrelated matter involving the same defendant) was adjourned at the request of the defendants after their counsel, Mr. Loucks, advised that Mr. Victor Boutin, the President of the corporate defendant had been involved in an accident on December 9, 2020, suffered an injury, and was under doctor’s orders to avoid stressful activity for two months. The letter from the doctor had been shared previously with counsel for the plaintiff.

[8] As a result, Howard J. ordered the trial to be adjourned and traversed to the trial list for the sittings commencing September 20, 2021 peremptory on the defendants.

[9] Counsel for the defendants did not respond to the RTA in a timely way. Mr. Loucks indicated that he did not become aware that an RTA had been served until January 8, 2021. He then communicated with counsel for the plaintiff to request an extension of time to serve a Response. The plaintiff refused to consent to an extension of time to serve the Response to the RTA. The defendants’ counsel then served a pro forma Response seven days after the deadline outlined in rule 51.03(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[10] The RTA was served by the plaintiff four days after counsel for the defendants served the plaintiff with a copy of the doctor’s letter describing the extent of Mr. Boutin’s injuries.

[11] The defendants filed a motion on January 14, 2021, to be heard based on written material only, for an order seeking leave to withdraw the deemed admissions and requesting an extension of time to serve a more comprehensive Response to the RTA. The plaintiff filed a responding motion record on January 25, 2021. On January 26, 2021, DeSotti J. denied the defendants’ motion because it was contested and therefore could not be dealt with in writing, but had to be dealt with on a motions date and argued orally.

[12] As a result, the defendants filed a motion dated March 10, 2021, to be argued orally seeking the same relief. In his affidavit sworn March 5, 2021, in support of that motion, Douglas Loucks swears that he “inadvertently missed” that the December 14, 2020 fax sent by Mr. Moubarak, counsel for the plaintiff, included an RTA in addition to the Evidence Act notice and that is why he did not respond to it.

[13] He indicated in his affidavit that he was “embarrassed by [his] oversight” and did not immediately notify counsel for the plaintiff about it.

Position of the Parties

[14] The plaintiff seeks costs of this motion and the motion in writing, dated January 14, 2021, on a partial indemnity basis in the amount of $9,526.57 inclusive of HST which represents 49.4 hours time spent by four different lawyers.

[15] The plaintiff takes the position that counsel for the defendants, Mr. Loucks, misrepresented the reason for the defendants’ failure to provide a timely Response to the RTA which resulted in the motion being brought twice by the defendants. In other words, any costs incurred were the direct result of Mr. Loucks actions and could have been “resolved amicably” had he not been “disingenuous” in his explanation during a January 11, 2021 email exchange.

[16] The plaintiff takes the position that had Mr. Loucks been more forthcoming, the plaintiff would not have incurred the costs it did in opposing both motions. The plaintiff does not, however, address the position taken by the defendants following the appointment of counsel by LawPro to act as agents for counsel for defendants, that the plaintiff required leave to file the RTA in the first place which they did not obtain.

[17] The defendants seek to recover their costs on a substantial indemnity basis in the amount of $13,401.14, inclusive of HST, which represents a total of 62 hours of time spent by three lawyers, an articling student and a law clerk.

[18] The defendants’ counsel takes the position that the failure to respond within 20 days to the RTA occurred due to inadvertence, because Mr. Loucks believed that on December 14th, 2020, he had only been served with a notice under the Evidence Act and that the plaintiff should have acted more reasonably in consenting to the extension of time requested by Mr. Loucks.

[19] Furthermore, the defendants take the position that pursuant to s. 67(2) of the Construction Lien Act, R.S.O. 1990, c. C.30 (as it then read), a party is prevented from taking interlocutory steps in a claim, except those provided for in the Act, without consent or leave of the court and accordingly, the plaintiff required the defendants’ consent or leave of the court, neither of which he had, prior to serving the RTA.

The Legal Framework

[20] Pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, an order for costs is within the discretion of the court. Rule 57.01(1) of the Rules of Civil Procedure sets out the factors to be considered in the exercise of that discretion.

[21] In particular, the court can take into account the following factors:

R. 57.01(1)

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

[22] The Construction Lien Act provides for a different procedure to be followed when dealing with construction lien actions than ordinary actions.

[23] As Master Polika says in GTA Structural Steel Ltd. v. 20 Ashtonbee Holdings Ltd., [2005] O.J. No. 4999, at paras. 26-28:

A comparison of the provisions of the Act with the Rules of Civil Procedure demonstrates that the Act provides for a construction lien action a complete procedural regime as do the Rules of Civil Procedure for other actions. In respect of the Rules of Civil Procedure the Act in section 67(3) specifically provides that “except where inconsistent with this Act, and subject to subsection (2), the Courts of Justice Act and the rules of court apply to pleadings and proceedings under this Act.” There is no specific provision for security for costs motions in the Act as compared to the Rules of Civil Procedure. However, it is clear that resort to such an interlocutory step is subject to leave of the court as provided in section 67(2).

I find that in terms of procedure it is the express provisions of the Act which must govern. In dealing with the question of appeal under the Act when there was a clash between section 71 of the Act and the Courts of Justice Act in respect of appellate provisions the Court of Appeal in Bird Construction Co. v. C. S. Yachts Ltd. (1990), 17 C.L.R. 225, 38 O.A.C. 147, held that the Act was the special act and the Courts of Justice Act was the general act such that the provisions of the Act prevailed. On a similar basis I find that the procedural regime of the Act prevails over that of the Rules of Civil Procedure. In other words procedural justice to the parties in a construction lien action is that as set out in the Act as opposed to what may be provided by the Rules of Civil Procedure. In that respect if there is to be recourse to interlocutory proceedings and any attendant additional procedural justice as a consequence then the conditions precedent set out in section 67(2) must be satisfied.

It follows that on a plain reading of section 67(2) in order to take interlocutory steps, not provided for by the Act, which would include a motion for security for costs as such an interlocutory step is not specifically provided for in the Act, the moving party must obtain the consent of the court. The consent of the court pursuant to section 67(2) is only available on proof that the step is necessary or would expedite the resolution of the issues in dispute. Either condition must be satisfied in order for the court to grant leave to take the interlocutory step, herein the motion for security for costs.

[24] More recently, Conlan J. dealt with the question of whether to order costs in the context of motions which were resolved on consent and which included an issue of the expiration of a lien through inadvertence of counsel. He says at para. 36: “There is no sacrifice of a client’s rights to correct a clear and simple mistake made by opposing counsel on something that has nothing to do with the merits of the dispute between the parties.”[^1]

[25] An RTA is generally a tool used to “foster the timely adjudication of a claim on its merits. It is not a means by which to avoid addressing the merits”.[^2]

[26] In Docouto v. Ontario (Attorney General), [2000] O.J. No. 3322, Nordheimer J. was dealing with an issue where the facts are similar to those in this case. In that case, counsel for the defendants submitted a “place holder” Response to an RTA two days late. He then requested that counsel for the plaintiff consent to the late filing of a proper Response which they declined to do, so a motion was brought.

[27] In his decision, Nordheimer J. says, at para 21:

While this motion was necessitated by the error of counsel for the defendants it does seem to me that for the sake of two days, the extension of time ought to have been consented to by the plaintiff.

Analysis

[28] This motion was dealt with on consent at the eleventh hour. The costs incurred by both sides could have been avoided.

[29] The plaintiff purported to serve the RTA “under the Rules of Civil Procedure and or the Construction Act.” Under the Construction Lien Act, he required consent or leave of the court to bring this interlocutory step, neither of which he had.

[30] The plaintiff was aware, on the date that he served the RTA, that Mr. Boutin had suffered an injury and was under a doctor’s care. He served the RTA four days after being provided with a note from Mr. Boutin’s doctor confirming the injury.

[31] The email exchange between the parties that took place on January 11, 2021, does not make reference to the fact that Mr. Loucks, through his own inadvertence, had failed to respond in time. Instead he refers to his inability to obtain instructions from his client due to his injury for that failure.

[32] Mr. Moubarak, in his costs outline, indicates that if Mr. Loucks had simply advised of his inadvertence in the first place, then the motions would not have been necessary, and he would have worked with Mr. Loucks to amicably resolve the issues. The difficulty I have in accepting that statement is that Mr. Loucks did just that in his affidavit sworn January 14, 2021. He says in that affidavit:

I was working remotely on December 14, 2020 and did not see the fax until the next time I attended at my office. When I did look at the fax, I mistakenly believed that it contained only a notice under the Evidence Act.

I only became aware that the plaintiff had served a request to admit when I received a copy of it attached to an email sent by a law clerk in Mr. Moubarak’s office on Friday, January 8, 2021 at 10:40 pm. …. [^3]

[33] And yet, counsel for the plaintiff maintained his position opposing the defendants’ motion to withdraw the deemed admissions as a result of his failure to file a Response in time and for an order extending the time to file a Response.

[34] I do not find that Mr. Loucks was being “disingenuous” or “misrepresenting” the situation. He did not, however, disclose the reason for his failure to reply in the January 11, 2021 email exchange.

[35] The request by Mr. Loucks to be permitted to file his Response by the end of February was not unreasonable. It appears that the plaintiff was trying to gain a strategic advantage in the litigation by refusing to agree to a reasonable extension to the filing of the defendants’ Response.

[36] There were settlement offers proposed by both parties in this matter. Counsel for the plaintiff was advised by letter, dated February 18, 2021, that Glaholt Bowles, LLP had been appointed by LawPro to act as agents for Mr. Loucks and suggested a resolution of the issue on consent on a no costs basis.[^4] At that time, counsel for the plaintiff agreed to resolve the matter on consent in exchange for the payment of $10,000 in costs.[^5]

[37] On March 5, 2021, Glaholt Bowles made a further effort to resolve the issue on consent and reiterated their position that leave was required to serve the RTA, and that the matter should be resolved on a no costs basis. The plaintiff indicated a willingness to resolve the substantive issues, but only upon the payment of costs by the defendants in the amount of $7,000.

[38] In the consent order filed with the court, the plaintiff acknowledges that leave is required to deliver the RTA and seeks an order granting leave nunc pro tunc for the plaintiff to deliver the RTA.

[39] One of the factors that a court can take into account in determining costs is the conduct of any party that tended to lengthen unnecessarily the duration of the proceedings. In my view, the position taken by the plaintiff unnecessarily lengthened the proceedings involved in this motion. Despite the fact that counsel for the plaintiff takes the position that if Mr. Loucks had been forthcoming about the reason for his failure to respond, he would have been more accommodating, that does not appear to be the case based on the material before me.

Conclusion

[40] Whether the reason for the request for additional time was as a result of counsel’s inadvertence or the inability to obtain instructions from his client due to his injury, either reason represents a reasonable basis to seek a short indulgence from counsel for the plaintiff and ought to have been agreed to. The trial had already been adjourned and the short delay could have been accommodated and would not have impacted upon the new trial date scheduled.

[41] For these reasons, I agree that the defendant is entitled to costs on a partial indemnity basis. Accordingly, an order will go that the plaintiff will pay to the defendants costs fixed in the amount of $6,000, plus HST, for a total of $6,780.

[42] Since counsel have already provided the court with a consent draft order subject to this decision on costs, I will sign the draft order with the amount of costs payable inserted where applicable.

“original signed and released by Carroccia J.”

Maria V. Carroccia Justice

Released: August 6, 2021

[^1]: Encompas v. 2503147 Ontario Inc., 2020 ONSC 6283. [^2]: Furgiuele v. Don Casselman Global Enterprises, 2013 ONSC 7032 at para. 44. [^3]: Motion Record of the Defendants, dated January 14, 2021, Affidavit of Douglas Loucks sworn January 14, 2021, paras. 12 and 14. [^4]: Responding Motion Record of the Plaintiff, dated May 19th, 2021 at Tab 2, Exhibit I. [^5]: Responding Motion Record of the Plaintiff, dated May 19th, 2021 at Tab 2, Exhibit K.