COURT FILE NO.: CV-18-590020
DATE: September 28, 2021
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF the Construction Act, R.S.O. 1990, c.C.30
BETWEEN:
ADAM ROWE carrying on business as CLANDESTINE
Plaintiff
Stephen D. Gadbois, for the plaintiff, Tel.: 519-884-0800 (ext. 225), Fax: 519-884-1026.
FRED HAGEMAN’S HOLDINGS LIMITED, JD DESIGN & BUILD INC. and KOSTA MENTIS
Nadia Condotta for JD Design & Build Inc. and Kosta Mentis; Tel.: 416-256-1600 (ext. 347), Fax: 416-256-0100.
Defendants
REASONS: July 30, 2021.
Associate Justice C. Wiebe
COSTS AND INTERST DECISION
[1] On July 30, 2021 I released my Reasons for Decision concerning the trial hearing in this matter. I held that the plaintiff, Adam Rowe, has a lien in the amount of $35,643.03 on an original lien claim of $36,761.73. Concerning the set-off and counterclaim of the defendants, JD Design & Build Inc. (“JD”) and Kosta Mentis, in the original amount of $104,725.60 and reduced at trial to $60,210.60 and then in closing argument to $28,210, I dismissed the counterclaim in its entirety.
[2] As directed, counsel then delivered written submissions on costs. These were received in August, 2021. Mr. Gadbois submitted that Mr. Rowe should be awarded $46,326.42 in costs. Ms. Candotta submitted that Mr. Rowe should be awarded no more than $10,000.
[3] My jurisdiction on costs is defined by the Construction Act, R.S.O. c. C30 (“CA”) section 86. This section gives the court a broad jurisdiction to award. The only requirement specified by that section is in section 86(2), namely that the costs awarded a party cannot exceed what it would have cost that party to take “the least expensive course of action.” I view section 86(2) as incorporating the principle of proportionality.
[4] In exercising its broad jurisdiction on costs under this section, the court obtains guidance from Rule 57.01 of the Rules of Civil Procedure, including the factors outlined therein. Furthermore, the court must be aware that its jurisdiction on costs must be exercised with the objective of awarding what “is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful party;” see Boucher v. Public Accountants Council for the Province of Ontario, 2004 CanLII 14579 (OCA) at paragraph 26.
Result
[5] There is no dispute that Mr. Rowe is the successful party in this action and is entitled to an award of costs. The issue is the proper amount of that award. I note that Mr. Rowe was not entirely successful in getting the entirety of his claim. This will be factored into my decision.
Settlement efforts
[6] The court has an interest in encouraging settlement, and therefore must scrutinize closely the efforts the parties made to settle this case. While the mandatory aspects of Rule 49.10 are not binding on this court given the broad jurisdiction granted by CA section 86, the court must consider the offers to settle that were exchanged. This is particularly the case here given the modest amounts in issue.
[7] On August 8, 2018, namely just after the close of pleadings and well before the commencement of this reference, Mr. Rowe made a time limited offer to settle offering to accept the all-inclusive sum of $29,000. This offer was open for acceptance for twenty days. At this time, Mr. Rowe’s costs were minimal. Given the evidence and result, this was a very reasonable offer.
[8] Ms. Condotta argued that the defendants were reasonable in not accepting this offer given their belief in their set-off and counterclaim. I find the defendants’ alleged faith in their set-off and counterclaim, if it existed, ill-founded at best. They in effect conceded that the bulk of their set-off and counterclaim was groundless by reducing those claims by 75% by the time of closing argument. The $28,210 that Ms. Condotta argued for in the end concerned only the issues of travel time and deficiencies. I dismissed both of those claims. I find that the only one that had any semblance of merit was the claim of $12,485 for alleged overpayment due to travel time. However, it appears that the defendants made no attempt at that early stage to even negotiate.
[9] On March 25, 2021, namely about a month before the trial hearing, Mr. Rowe made an offer to settle offering to accept $23,772.76 plus prejudgment interest plus costs on a partial indemnity basis to that point and substantial indemnity costs thereafter. Mr. Rowe’s actual costs to that point were $41,394 plus disbursements. The offer appears to have been for the Rowe claim less the travel time costs.
[10] Ms. Condotta argued that this was an unreasonable offer given the costs claimed. I do not agree. Mr. Gadbois showed in his costs submission that Mr. Rowe’s partial indemnity costs up to March 25, 2021 were $22,836.40. Costs were by this point were an inevitable part of any recovery given the evidence and the work Mr. Rowe had to do to prove his claim and defend the counterclaim. That the defendants did not accept this offer is frankly astonishing.
[11] The defendants made offers to settle. On September 24, 2019, before the commencement of this reference, the defendants made an offer whereby both parties withdrew their claims and the defendants recovered the posted security. On March 30, 2021, a few weeks before the trial hearing, the defendants offered to pay the all-inclusive sum of $10,000. Given the evidence, I do not find these offers in any way reasonable.
[12] Mr. Gadbois showed that Rowe made numerous unsuccessful attempts to settle the case and clarify the issues in dispute. On the eve of trial Mr. Rowe even offered to mediate. The defendants said they would participate in the mediation only if Mr. Rowe paid for it. Ms. Condotta tried to explain this conduct. She said there was no obligation for the defendants to participate in a mediation and that they were rightfully skeptical of the value of a mediation due to their counterclaim. This just shows me that the defendants were unreasonably dismissive of the plaintiff’s claim as their case was weak. They also seemed more interested in “grinding” the plaintiff down with the costs and anxiety of litigation than in reaching a fair settlement.
[13] This is the major factor in my decision. This case should have settled and should have settled early since the real claims were modest in size. This did not happen because of the defendants.
[14] Mr. Rowe bases his claim for costs in the amount of $46,326.42 on the following calculus: partial indemnity costs to the date of the March 25, 2021 Rowe offer to settle, and substantial indemnity costs thereafter. This parallels the working of Rule 49.10. The partial indemnity costs claim concerns the bulk of the pre-trial hearing work, while the substantial indemnity claim concerns primarily the trial hearing work. Given the serious efforts by Mr. Rowe to settle this case before trial and the not so serious efforts by the defendants, I think that this is a reasonable submission.
Conduct
[15] Mr. Gadbois pointed out that it took his threats of a motion to get the defendants to take steps to retrieve the Spencer reports. These reports concerned the issue that was raised by the defendants, not the plaintiff, namely the issue of deficiencies. The Spencer reports and the Spencer evidence was a key part of the trial. Mr. Gadbois also pointed out that the defendants did not produce the contracts they had with the owner and the engineering report that was allegedly the basis for the work. Ms. Condotta did not address these allegations in her submissions. I draw the inference that there is merit to these allegations.
[16] Mr. Gadbois asserted that this conduct drove Mr. Rowe to do more work to defend the set-off and counterclaim. This added work involving the Scott Schedule, written interrogatories and the request to admit. I accept that submission.
Proportionality
[17] Ms. Condotta raised this issue alleging that the Rowe costs claim was disproportionately high given the complexity and importance of the case and the amounts in issue. Concerning the amounts in issue, Mr. Gadbois is right that the totality of the amounts in dispute must include the counterclaim. Including the counterclaim, the amounts in issue started as high as $141,487.33. The costs claimed by Mr. Rowe are about 33% of that total. This does not seem unreasonable.
[18] Ms. Condotta argued that this was not a complex case. I do not agree. The evidence had some complexity. The contract was oral and, therefore, had to be ascertained from the evidence. The critical parts of the contract were the issues of scope and travel time. The other critical issue was the repudiation of the contract which involved determining whether there was a fundamental breach and, if so, by whom, and the consequences of that. This involved the application of established legal principles to the evidence concerning payment, the conduct of the parties and accusations between the parties.
[19] Ms. Condotta conceded the importance of the matter to the defendants. She submitted that the defendants fought “to preserve professional relationships which have been irreparably broken.” For Mr. Rowe the importance of this action can be gleaned from the way Mr. Gadbois described the manner of Mr. Rowe and his witnesses throughout, namely unsophisticated persons who were unfamiliar with and terrified by court. That Mr. Rowe would undertake and endure this proceeding is a testament to the importance he placed on it.
[20] In the end, I do not find the Rowe claim for costs to be disproportionate. It is in an amount that the defendants could reasonably have anticipated.
Quantum
[21] There was no criticism of the quantum of the Rowe costs claim. The Rowe costs outline shows the time his lawyers spent on this matter. The bulk was that of senior counsel, Mr. Gadbois, but junior counsel and a clerk were also involved.
[22] The use of Mr. Gadbois was understandable and helpful. The result was evidence-in-chief that was more convincing. The cross-examinations and re-examinations at the trial hearing were also more effective. The rates shown for Mr. Gadbois and the others who worked on this matter are reasonable, as are the disbursements. I have no difficulty with the quantum of the costs claimed.
Interest
[23] Mr. Rowe claims prejudgment and post-judgment interest in accordance with the Courts of Justice Act, R.S.O. 1990, c. C. 43 (“CJA”). The prejudgment interest is at the rate of 1% per annum running from 14 days after the last invoice dated October 25, 2017, namely November 8, 2017. Each invoice was due to be paid in two weeks and therefore this commencement date is accurate. The rate is in accordance with CJA section 128. The prejudgment interest will run until the date of the report that I will issue. As of today, September 28, 2021, this prejudgment interest calculation is as follows: $35,643.03 x 1,427/365 x 1% = $1,393.50.
[24] The claimed post-judgment interest is 2% running from the date of the report. This is in accordance with the CJA section 129. None of these submissions on interest were challenged and I accept them.
Conclusion
[25] In conclusion, considering all of these factors, I award Mr. Rowe $44,000 in costs. This is the amount claimed as discussed above reduced by a small amount commensurate with the amount Mr. Rowe failed to prove on his claim. I believe that this is a fair and reasonable award in the circumstances particularly given the settlement efforts. I also order that prejudgment and post-judgment interest be calculated and awarded as discussed above.
[26] I have prepared a draft report dated as of October 5, 2021, when I intend to sign it. The draft report is enclosed with this costs and interest decision. The parties have until that date to make any comments on the draft report. These comments should be sent by email to my Assistant Trial Coordinator.
Released: September 28, 2021 ______________________________
ASSOCIATE JUSTICE C. WIEBE
COURT FILE NO.: CV-18-590020
DATE: September 28, 2021
ONTARIO
SUPERIOR COURT OF JUSTICE
In the matter of the Construction Act, R.S.O. 1990, c. C.30
BETWEEN:
Adam Rowe carrying on business as Clandestine
Plaintiff
- and -
Fred Hageman’s Holdings Limited, JD Design & Build Inc. and Kosta Mentis
Defendants
COSTS AND INTEREST DECISION
Associate Justice C. Wiebe
Released: September 28, 2021