Superior Court of Justice - Ontario

COURT FILE NO.: CV-21-654602

DATE: August 25, 2021

RE: Alumtech Bond Inc. v. Epic Precast Ltd., Suncity Development Ltd. and Ramesh Senthilnathan;

BEFORE: MASTER C. WIEBE

COUNSEL: Robyn Blumberg for Suncity Development Ltd.; Aaron Grossman for Alumtech Bond Inc.

DECISION: June 21, 2021.

COSTS DECISION

[1] On June 21, 2021 I released my decision granting the motion by Suncity Development Ltd. (“Suncity”) for an order declaring the lien of Alumtech Bond Inc. (“Alumtech”) expired, vacating the Alumtech claim for lien, returning the posted security to Suncity and dismissing this action. The motion was entirely successful. The remaining issue is costs. The parties filed costs outlines. In my Reasons I scheduled further written submissions on costs if the parties could not reach an agreement on costs. These written submissions are now done.

[2] My jurisdiction on costs is governed by Construction Act, R.S.O. 1990, c. C.30 (“CA”) section 86. This section makes costs orders “in the discretion of the court.” Section 86(1) expressly authorizes the court to make costs orders “on a substantial indemnity basis.” This broad discretion on costs is subject to one caveat in section 86(2), namely the party entitled to costs cannot get more costs than what it would have cost that party to take the “least expensive course” of action. Finally, it is undisputed that in exercising its discretion on costs the court must consider the factors outlined in Rule 57.01 concerning the awarding of costs.

[3] Suncity seeks $34,700 in substantial indemnity costs for the costs of the motion, $13,200 in substantial indemnity costs for the costs of the action and $1,500 in substantial indemnity costs for the costs submissions, amounting to a total of $49,400. Alumtech submits that Suncity should be awarded $15,000 in costs.

Result

[4] There was no dispute that Suncity deserves costs of the motion as it succeeded entirely in obtaining the relief it sought. I believe it is also entitled to costs of the action as it succeeded to bringing the action to an end even before pleadings were done.

Conduct

[5] Alumtech’s conduct is a significant issue. On January 8, 2021, namely before Alumtech commenced this action, Ms. Blumberg wrote David Martin, Alumtech’s first lawyer, a letter advising that the Old CA applied as the contract between Suncity and Epic Precast Ltd. predated July 1, 2018. She demanded that the Alumtech claim for lien be discharged as it had expired. In the face of this letter, Alumtech did the opposite. It commenced this action on January 12, 2021 purporting to perfect its $26,067.21 claim for lien.

[6] On the same day, January 12, 2021, Alumtech commenced a breach of contract/breach of trust civil action against Suncity and Mr. Senthilathan claiming amongst other things $200,000 in damages for breach of contract. It is undisputed that this civil action included the amount alleged as owing in the lien action.

[7] In this motion, I found that Alumtech admitted in its Statements of Claim in both actions that Epic Precast Ltd. (“Epic”) was the “owner” as defined by the CA section 1(1) and that Suncity was the “contractor” as defined by the CA section 1(1). As a result, I found that the contract between Epic and Suncity, which was undisputedly dated prior to July 1, 2018, was a “contract” as defined by CA section 1(1), thereby making this case subject to the provisions of CA as it read prior to July 1, 2018. I found as a result that Alumtech’s lien had expired as it had not been perfected in time. These conclusions all came from Alumtech’s own pleadings, and vindicated the position taken by Ms. Blumberg in her January 8, 2021 letter.

[8] Furthermore, during this motion Ms. Blumberg expressly raised the pleading admissions in her client’s motion material. Alumtech nevertheless did not address the issue in its evidence. It did not bring a cross-motion seeking an order allowing its pleadings admissions to be withdrawn.

[9] I, therefore, find that this motion and this action were without merit. Alumtech should have focused on its civil action instead. It should have consented to the removal of its claim for lien at the outset. Since the breach of contract damages were pleaded in the civil action, that claim in this action was a duplication. Therefore, Alumtech should not have started this lien action. As a result, Suncity is entitled to substantial indemnity costs of both the motion and the action.

[10] Mr. Grossman argued that Alumtech’s action and motion had merits as it dealt with novel issues. That would have been the case had the pleadings laid the foundation for these issues. They did not. The pleadings in fact confirmed the position of Suncity all along.

Least expensive course of action/proportionality

[11] There is an argument that Suncity should have brought this motion as a CA section 45 motion without notice for a declaration that the Alumtech lien had expired on account of the Alumtech pleading admissions only, and that Suncity should have done this in early February, 2021 instead of the motion under section 44 to vacate the Alumtech claim for lien with security and this motion to retrieve the security. This course of action would have avoided the costs of the vacating motion and indeed the bulk of the costs of this motion.

[12] I find some merit in this argument and will discount the costs award accordingly. However, I will not make a huge discount as there would have been risk in that strategy. There would have been no input or explanation from Alumtech in such a motion. A court might have found it difficult to make the requested declaration despite the clarity of the pleading admissions. Furthermore, time was of the essence in early February, 2021 as Epic was seeking a refinancing and had demanded that the Alumtech claim for lien be removed from title.

[13] Mr. Grossman argued that Suncity “ran up the costs” in its motion material. Indeed, the motion in the end did not turn on many of the issues that Suncity addressed in its motion material – the issue estoppel point, the argument that the Archtitect Contract concerned a different improvement, and all the alleged circumstantial evidence that Suncity was an “owner.” However, I do not fault Suncity for doing so as these were points raised by Alumtech in correspondence and its motion material in defence of its claim for lien. These points had to be addressed.

[14] Mr. Grossman argued that the Suncity claim for costs is disproportionality high since its own claim for lien was only $26,067.21. It is well established that the principle of proportionality should not stand in the way of awarding unavoidable costs incurred due to the unreasonable conduct of the opposing party; see Persampieri v. Hobbs, 2018 ONSC 368 at paragraph 50. I find that the bulk of Suncity’s costs are such unavoidable costs caused by the unreasonable conduct of Alumtech.

Reasonable expectation of the unsuccessful party

[15] In its costs outline, Alumtech shows substantial indemnity costs totaling only $21,241.68. This is considerably less than what Suncity now claims in substantial indemnity costs.

[16] But I agree with Ms. Blumberg that the Alumtech total is misleading as it shows only the costs concerning Mr. Grossman and only the costs of the motion. Mr. Grossman was retained by Alumtech in early May, 2021 after the affidavits were served. There obviously were other costs incurred on account of Mr. Martin that are not reflected in the Alumtech costs outline. Furthermore, there is no evidence from Alumtech as to the costs it incurred in starting this action. I will not make a deduction on account of this factor.

Offer to settle

[17] On March 15, 2021, the day the motion record was served, Suncity delivered a written offer to settle offering to have Alumtech discharge its claim for lien, consent to an order returning the security and pay Suncity partial indemnity costs to date of acceptance. Mr. Grossman argued that this was not a genuine offer to settle as it was not a compromise and required that Alumtech “capitulate.”

[18] I disagree. As I have said, the Alumtech claim for lien and lien action are meritless based on Alumtech’s own admissions. There was compromise as the offer would have spared Alumtech substantial indemnity costs. The offer should have been accepted.

Quantum

[19] Mr. Grossman had criticisms of specific items of claimed costs. For instance, he argued that the $13,200 claimed for the “lien action” was unclear. I disagree, as the Suncity Bill of Costs clearly delineates those costs as being in relation to the action other than this motion, such as the motion to vacate the claim for lien.

[20] Mr. Grossman criticized the 19.9 hours shown for “correspondence” as being unreasonable, particularly as most of that time was that of more senior counsel, Graham Brown, who had minimal involvement with the motion. There is merit to this position, and I will take it into account.

[21] Mr. Grossman pointed out that 4.4 hours is shown for pre-motion investigation and 12 hours for the cross-examinations on affidavits. He argued that this time was not wasted as it will be used in the civil action. I am not convinced by this argument. The focus of this motion was on the Alumtech claim for lien and its preservation and perfection. I fail to see how that would assist in the issues in the civil action where the lien is not an issue.

Conclusion

[22] Having considered all of these factors, I have decided to award, and do award, Suncity $40,000 in substantial indemnity costs for the costs of this motion and the action, to be paid to Suncity by Alumtech in thirty (30) days.

DATE: August 25, 2021

MASTER C. WIEBE