SUPERIOR COURT OF JUSTICE - ONTARIO

RE: SYMTECH INNOVATIONS LTD., Plaintiff

-and-

FIT ERGONOMICS INC., D'ARCY JOSEPH SHEEDY, PETER DANIEL SHEEDY, and D'ARCY JR. SHEEDY, Defendants

BEFORE: FL Myers J

COUNSEL: Robert Sniderman, for the Plaintiff

Julia A. Toso, for the defendants

HEARD: October 18, 2021

ENDORSEMENT

[1] By endorsement dated July 5, 2021, reported at 2021 ONSC 4766, I granted summary judgment to the plaintiff against the defendant FIT Ergonomics Inc. finding that FIT owed Symtech $103,650.53 pursuant to accepted purchase orders and invoices for construction services rendered.

[2] With interest, the judgment against FIT is for approximately $160,000.

[3] FIT was the general contractor on a project and Symtech was one of its subcontractors. FIT has not been fully paid by the owner and claimed that the terms of its agreement with Symtech was that FIT was only required to pay Symtech once the owner paid FIT. This directly contradicted the written terms agreed between FIT and Symtech. FIT raised several other equally untenable defences. It claimed that invoices marked “n30” were not due. It argued that a $3,100 invoice that was expressly agreed upon as an extra ought to have been included in the original scope of work. It denied that interest was due despite the invoices saying that they bore interest at 2% per month. It argued that Symtech’s delayed performance raised a triable issue without showing that it suffered any loss of revenue let alone net income from the timing.

[4] Symtech’s claim was based on the documents. FIT responded with a kitchen sink of allegations. FIT’s counsel’s Costs Outline is so modest that it is apparent that there was little consideration of the validity of the positions taken. FIT just threw what it could to see what stuck. Symtech therefore bore the practical burden to put together the documentation, invoice-by-invoice, to show how each of FIT’s points was incorrect. Moreover, to defend against the “pay when paid” allegation, Symtech had to dig into the state of accounts between the owner and FIT and obtained a vital concession from the owner on a Rule 39.03 examination that owner was not holding back any money from FIT in relation to Symtech’s work.

[5] FIT made this motion in a simplified procedure case much more difficult than it ought to have been. To the extent that Ms. Toso relies on caselaw suggesting that simplified procedure matters should be approached in a summary way, it was her client that adopted the scorched earth approach.

[6] The plaintiff offered to settle in October, 2020 for just over $100,000 waiving all interest. If not accepted within a few day, the plaintiff required payment of its partial indemnity coasts.

[7] The compromise on the invoices was worth about $3,000. That Is not very much. But interest at 2% simple interest per month amounts to approximately $58,000. FIT would have paid $100,000 plus costs instead of $160,000 plus costs had it accepted the offer. There is no question that Symtech beat its offer and is entitled to its costs on a substantial indemnity basis after the date of the offer under Rule 49.

[8] FIT argues that the case is under simplified procedure and therefore the $50,000 costs cap in Rule 76.12.1 applies.

[9] The costs cap was part of a parcel of recent amendments associated with an increase in the maximum damages available under the simplified procedure to $200,000. This increase meant that cases that could otherwise have gone to a jury would now be dealt with summarily. The quid pro quo was that the simplified trials would be limited to five days duration and costs would be capped.

[10] This case is different. It is not a summary trial. The parties and the court created a hybrid process that provided more rights that in a normal simplified case but coupled them with a summary motion hearing process:

[33] I also agree with Ms. Toso that summary judgment is not the preferred course in an action under the Simplified Rules. But, each case should get the amount of process it needs. When I was asked to schedule this motion in Civil Practice Court, I was concerned about possible unfairness to the defendant due to a lack of discovery. I ordered the exchange of affidavits of documents to that end. I allowed cross-examinations and Rule 39.03 examinations under summons despite the normal motion process under Rule 76 not contemplating examinations.

[34] There is no point in ordering a summary trial now. This case does not involve credibility findings. Even if the plaintiff put in better evidence of its project manager, the documents on which I find the contractual terms would not be affected.

[35] I can both find the facts based on the record and apply the law to those facts fairly. This is a case in which “light touch case management” at CPC seems to have worked well by creating a customized process that got the parties into court relatively quickly and affordably.

[11] I suppose FIT may now be questioning my final sentence as it is no longer protected by the costs cap because the case morphed into a hybrid process outside of Rule 76. However, in my view, that is a problem of its own creation. If sought more process protections at CPC. It chose to throw the kitchen sink at the plaintiff’s claim regardless of the merit of the proffered defences.

[12] The defendants offered to settle for approximately $70,000. For the sake of a $30,000 possible saving they went ahead without considering the trust claims that are in issue against the individual operating minds of FIT. Now, FIT has decided that it will not appeal, but it is also not confirming that it will pay or secure the judgment. Therefore, the trust claims that I deferred in my prior Endorsement need to be scheduled. The owners seem to be sending a message that they will not capitalize FIT to meet its liabilities. Accordingly, I will schedule the hearing of the trust claim as well. Costs are plainly not the driving factor for the defendants.

[13] Some costs must have been incurred in relation to the trust claim that is not yet resolved. But, the reason it is not resolved is that the defendants have yet to make proper disclosure under s. 39 of the Construction Act despite the statutory requirement and my order requiring them to do so. They say they need another 60 days to figure out when they paid out funds on this project. That strikes me as odd given computer spreadsheets. I certainly hope that they are not moving assets or incorporating a newco to take FIT’s corporate opportunities to leave it insolvent. I know that no counsel would assist clients move assets or corporate opportunities away from the reach of an existing judgment a creditor.

[14] Because the plaintiff does not have the defendants’ accounting, it has been unable to do much work on the trust issue. It has asked for disclosure repeatedly. But without the accounting, it has not been able to work on the merits of the issue.

[15] I agree with Ms. Toso that the process of setting a costs figure as between parties is not a mechanical exercise of multiplying hours times rates alone. I also agree that the partial indemnity rates used by counsel in this case are high for relatively junior counsel. I accept that at each stage, the hours billed are on the high side. There are also multiple timekeepers involved in the same tasks so some allowance for duplication and inefficiency should be made.

[16] The plaintiff seeks $6,570 before HST on a partial indemnity basis for fees incurred before October 30, 2020. In my view $5,000 plus HST (totalling $5,650) is a fair and reasonable amount for FIT to indemnify the plaintiff for the services to that time.

[17] After October 30, 2020, the plaintiff claims costs of $68,950 before HST on a substantial indemnity basis. The hourly rates could be based off 90% of counsels’ actual rates to their client. The rates claimed in the Costs Outline are well below that. But, the hours claimed are too high. Adjusting for some modest amount for the trust issue, an amount for overlap and duplication, and some for just plain excessiveness, in my view costs of $50,000 before tax (totalling $56,500) is a fair and reasonable for FIT to substantially indemnify the plaintiff for the services provided after that time.

[18] Disbursements, inclusive of tax are allowed at $509.28.

[19] I disagree with Ms. Toso’s submission that the defendants’ costs exceed the quantum to which a party opposite would reasonably expect. I can only wonder to what extent there was even a discussion on the defendants’ side of the likely effects on costs of the positions they adopted and pressed. Of course, if they are concerned to contain costs, they can avoid a whole other set of examinations and hearings on their personal liability for trust claims simply by paying the judgment or securing it pending some payment event on terms to be agreed with the plaintiff.

[20] This order is without prejudice to any costs order that may be made after the completion of the trust hearing and considering any liability of the personal defendants for the costs of that or this hearing, if any.

[21] The trust hearing, if necessary, will be held before me on January 28, 2022. This date was set with the assent of both counsel.

FL Myers J

Date: October 19, 2021