COURT FILE NO.: CV-16-543855 DATE: 20210201
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
YORK REGION CONDOMINIUM CORPORATION NO. 890 and PACIFIC MALL DEVELOPMENTS INC.
Plaintiffs
– and –
MARKET VILLAGE MARKHAM INC., THE REMINGTON GROUP INC., KENNEDY CORNERS REALTY INC. and KENNEDY-STEELES HOLDING LIMITED
Defendants
Robert S. Harrison and Jonathan F. Lancaster, for the Plaintiffs
Kenneth Prehogan, Lia Boritz and Kelsey Gordon, for the Defendants Market Village Markham Inc. and The Remington Group Inc.
Ronald B. Moldaver, for the Defendants Kennedy Corners Realty Inc. and Kennedy-Steeles Holding Limited
HEARD IN WRITING: February 1, 2021
ENDORSEMENT ON COSTS
A.A. SANFILIPPO, J.
[1] In Reasons for Decision issued on June 29, 2020, I rendered judgment in this action: York Region Condominium Corporation No. 890 v. Market Village Markham Inc., 2020 ONSC 3993 (“Reasons for Decision”). On the issue of costs, I encouraged the parties to discuss and agree on costs and, if not able to reach agreement, to request the scheduling of a chambers appointment to establish a timetable for the delivery of written submissions on costs: Reasons for Decision, at para. 391.
[2] By Chambers Appointment Endorsement issued on September 1, 2020, I implemented a process for the delivery of written submissions on costs, through a timetable that provided for the completion of written cost submissions by November 12, 2020. The parties completed the delivery of their material according to the timetable, with an additional submission agreed to by the parties.[^1]
I. THE CLAIMS FOR COSTS
[3] The parties presented two claims in costs:
(a) The Plaintiffs, York Region Condominium Corporation No. 890 and Pacific Mall Developments Inc. (collectively, “Pacific Mall”) sought an award in costs against the defendants Market Village Markham Inc. and The Remington Group Inc. (collectively, the “Market Village Defendants”);
(b) The Defendants Kennedy Corners Realty Inc. and Kennedy-Steeles Holding Limited (collectively, the “Kennedy Defendants”) sought an award in costs against the Plaintiffs.
[4] I will address these cost demands in order.
A. The Plaintiffs’ Demand for Costs
(a) The Parties’ Positions
[5] On the issue of entitlement to costs, the Plaintiffs submitted that there was no reason to depart from the general principle that costs follow the event. The Plaintiffs submitted that they were successful in obtaining the relief required to preserve their legal and property interests, throughout challenged by the Market Village Defendants, and are thereby entitled to an award in costs, which they sought on a partial indemnity basis.
[6] The Plaintiffs’ Bill of Costs sought costs of the trial and the action, payable by the Market Village Defendants, in the amount of $1,667,757.54, consisting of fees on a partial indemnity basis in the amount of $1,191,317.70, taxable disbursements of $103,945.85, non-taxable disbursements of $204,109.73 plus applicable HST of $168,384.26. The Plaintiffs’ Bill of Costs stated that their actual costs (between solicitor and clients) in this action were $2,709,658.84.
[7] The Market Village Defendants acknowledged that costs are normally ordered to be paid by the unsuccessful party to the successful party on a partial indemnity basis and agreed that there is no reason to depart from this general principle. However, the Market Village Defendants contended that success in this action was divided because the Plaintiffs were granted only certain of the multiple declarations sought at trial and were denied their request for a permanent injunction. To reflect this divided success, the Market Village Defendants submitted that the Plaintiffs’ cost award should be discounted to no more than 50% of the proven partial indemnity costs.
[8] The Market Village Defendants submitted that the Plaintiffs’ Bill of Cost was excessive. They pointed to the sizable difference between the parties in the amount of billed lawyers’ fees. The Market Village Defendants’ Bill of Costs showed that they incurred $1,008,463.25, plus HST, in lawyers’ fees whereas the Plaintiffs incurred double this amount in lawyer’s fees: $2,112,454.25 plus HST.
[9] The Market Village Defendants contended, further, that the Plaintiffs’ success in this action should be evaluated on an issue-by-issue basis: by attributing an assessed amount of costs to each issue and then reconciling the costs so awarded to the Plaintiffs against the costs so awarded to the Market Village Defendants. These Defendants submitted that a distributive cost award of this nature would result in either each party bearing their own costs or a modest cost award in favour of the Plaintiffs.
(b) Analysis
[10] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides the court with discretion in the determination of costs. The exercise of this discretion may be guided by the principles set out in Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and applicable jurisprudence, having regard for the overriding principles of reasonableness, fairness and proportionality: Barbour v. Bailey, 2016 ONCA 334, at para. 9; Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, at para. 12; Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), at para. 38; Zesta Engineering Ltd. v. Cloutier, [2002] O.J. No. 4495 (C.A.), at para. 4.
[11] Absent special circumstances, “costs follow the event”: Bell Canada v. Olympia & York Developments Ltd. (1994), 111 D.L.R. (4th) 589 (Ont. C.A.); Yelda v. Vu, 2013 ONSC 5903, at para. 11, leave to appeal denied, 2014 ONCA 353; St. Jean v. Cheung, 2009 ONCA 9, at para. 4. Although there is no absolute entitlement to costs, the successful party is entitled to a reasonable expectation of an award of costs in the absence of special circumstances: Bell Canada, at p. 596; 1318706 Ontario Ltd. v. Niagara (Municipality) (2005), 75 OR (3d) 405 (C.A.), at paras. 48-52.
(i) Divided Success
[12] Pacific Mall was successful in establishing the basis for issuance of four declarations. Pacific Mall submitted, in my view correctly, that the issuance of these declarations addressed the overarching dispute between the parties of whether the Market Village Defendants can proceed to implement the development plan pursued by the Market Village Defendants and referred to at trial as the “MV Development Project”.
[13] But the Plaintiffs sought further declarations as well as permanent injunctive relief and were not successful in establishing a basis for the issuance of the other declarations or the claim for permanent injunctive relief. The Plaintiffs sought and failed to obtain a declaration that would limit the rights under the 1994 Market Village Easement and the 1994 Pacific Mall Easement to uses and intensity that were “consistent with and of a nature and extent similar to … in the case of Market Village, a shopping centre generally of the configuration and size of the Market Village Centre as it existed in 1994 and as it existed at the time of issuance of the notice of action”: Amended Statement of Claim, at para. 1(d).
[14] This claim for declaratory relief was central to one of the core issues in this case: whether the Market Village Defendants could, in the context of the Reciprocal Easements, intensify the use of their land on the Composite Site. The determination of this declaration impacted the ongoing use of the parties’ Composite Site, both in relation to the MV Development Project and beyond this project to any others that might be proposed by the Market Village Defendants. I found that the extent of use of the Reciprocal Easements is based on the nature of the commercial retail uses present at the time of their grant in 1994 but is not limited to the uses and intensity that existed in 1994, provided that the degree of intensification does not substantially interfere with or overburden the Reciprocal Easements: Reasons for Decision, at paras. 132, 153, 351(c) and 355.
[15] Further, each of the four declarations granted was specifically referable to one feature of the MV Development Project: its proposed construction on MV Servient Land. Each granted declaration was limited “to the extent that the MV Development Project involved changes and attendant work on the MV Servient Land”, but without determination whether a reformulated development proposal designed to be built without any construction on MV Servient Land would substantially interfere with or overburden the Reciprocal Easements. Had the Plaintiffs established the entirety of the declaratory relief that they claimed, there would have been greater restriction on the possibilities for re-development of the Composite Site.
[16] And last, the Plaintiffs sought, and were denied, permanent injunctive relief. I do not accept the Plaintiffs’ submission that the dismissal of the claim for permanent injunctive relief is less meaningful in my assessment of costs because it was “without prejudice to the Plaintiffs’ right to seek remedies in the event of non-compliance with the declaratory relief that has been granted”: Reasons for Decision, at para. 369. In the event of breach of a declaratory order, the Plaintiffs would have been entitled to seek remedies, including injunctive relief, without having sought such relief at trial.
[17] For these reasons, I conclude that the Plaintiffs were successful in obtaining certain of the declaratory relief that they sought in this action and were more successful than the Market Village Defendants. To use the terminology expressed by the Court of Appeal in Mihaylov v. 1165996 Ontario Inc., 2017 ONCA 218, at para. 8, the Plaintiffs succeeded on the dispute that “drove” the proceeding. But ultimately success was divided, both in the result, highlighted by the dispute regarding restriction of the use of the Reciprocal Easements to the configuration and size of the shopping malls in 1994, and on an analysis of the declarations and permanent injunctive relief that I declined to grant.
[18] Divided success at trial is a factor to be considered in a determination of costs. Rule 57.01(1) requires that the court consider “the result in the proceeding” in exercising its discretion in the determination of costs. Rule 57.01(4) sets out the court’s authority to “award or refuse costs in respect of a particular issue or part of a proceeding”. My determination of the reasonableness, fairness and proportionality of an award of costs in favour of the Plaintiffs will be informed by the divided success of the parties at trial.
[19] The Market Village Defendants submitted that there were two ways that divided success could factor into my determination of costs: either globally, through allocation of a portion of the assessable costs to the successful party realizing divided success; or, a distributive order for costs, where the major issues at trial are identified and the successful party on each individual issue is awarded the costs attributable to that issue.
[20] In urging the implementation of a distributive order for costs, the Market Village Defendants relied on Godfrey v. Good Rich Refining Co., [1939] 2 D.L.R. 779 (Ont. H.C.). In that case, the plaintiff had succeeded on only the first of several claims and had obtained an injunction. Relying principally on Reid, Hewitt & Co. v. Joseph, [1918] A.C. 717, the Court determined costs on an issue-by-issue basis and set off the costs allocated to the plaintiff on successful issues against those allocated to the defendant on claims that the plaintiff failed to establish.
[21] The distributive cost award rendered in Godfrey was commented upon by the Ontario Court of Appeal in Oakville Storage and Forwarders Ltd. v. CNR (1991), 84 D.L.R. (4th) 326 (Ont. C.A.). The Court of Appeal traced the origins of distributive cost orders to two English cases relied upon in Godfrey, both in the period from 1915 to 1918, and stated as follows, at p. 333: “It is not necessary to the present issues to determine whether a distributive award is ever appropriate under our present rules and, while I find it difficult to imagine that it could be, this was certainly not the proper case.”
[22] In commenting on its decision in Oakville Storage, the Court of Appeal in Skye v. Matthews (1996), 87 O.A.C. 381 (C.A.), at para. 15, stated that “Carthy J.A. had considered the merits of distributive cost orders and generally rejected that approach to the allocation of costs in litigation involving a number of issues where success was divided.” The Court of Appeal commented that “[w]hile Carthy J.A. did not totally foreclose the possibility of resort to a distributive costs order, he came close to doing so.”
[23] In Ford Motor Company of Canada Limited v. Ontario (Municipal Employees Retirement Board), [2005] O.J. No. 1377, at para. 51, Cumming J. declined to apply a distributive award of costs stating that “it is very doubtful that a distributive award is ever appropriate under the present Rules.” In Ontario Realty Corporation v. P. Gabriele & Sons Limited, 2009 68828, at paras. 27-35, Newbould J. thoughtfully reviewed the case authorities that had considered distributive cost awards since Oakville Storage and found that in each instance, the Court declined to make a distributive cost award and instead reduced the successful parties costs to take into consideration the divided success. In McLaughlin v. Airston Realty Corp., [2004] O.J. No. 1456, at paras. 9-10, Swinton J. awarded costs to the successful plaintiff but reduced them by 50 percent because the plaintiff was unsuccessful on two issues that took up a substantial amount of trial time. She declined to make a distributive cost award, stating that the “Court of Appeal has made it clear that a distributive costs award should be made only in a rare case”. Justice Swinton made a similar finding in Adatia v. Damji (Receiver of) (2005), 8 C.B.R. (5th) 165. Newbould J. concluded, in Ontario Realty, at para. 35, that where a plaintiff has succeeded on some but not all issues, the plaintiff is entitled to an award of costs, which the trial judge may reduce to take into consideration issues on which the plaintiff was unsuccessful, and that “[o]nly rarely, perhaps, may a distributive cost order be made.”
[24] Like other courts, I do not need to decide whether a distributive cost order is ever appropriate under the present Rules, although it appears that a distributive cost order is more suited to an issue-centric approach to costs as contrasted with the current result-centric approach to costs set out in Rules 57 and 49.
[25] Rather, I conclude that this is not one of the rare instances where a distributive cost order is appropriate, and I thereby decline to make a distributive cost award as requested by the Market Village Defendants. I do so because the costs sustained by the parties in litigating the issues claimed are intertwined between the relief granted and that denied and because the declaratory relief granted was, in substance, sub-sets of the relief sought. The Plaintiffs succeeded at trial, but the declaratory relief granted was restricted “to the extent that the MV Development Project involved changes and attendant work on the MV Servient Land” and was not the bar on intensification post-1994 sought by the Plaintiffs. The issue-by-issue cost analysis required by a distributive cost order is not available where, as here, the claims sought are declarations granted in part and the related costs are incapable of being distinguished between elements of success and failure.
[26] I will instead reduce the amount of costs that I will award to the Plaintiffs to reflect their divided success in this trial. In terms of percentage reduction, I have found that the Plaintiffs were successful in establishing half the relief claimed at trial, and half of the objective pursued. The Plaintiffs were successful in obtaining declarations that establish that the MV Development Project would substantially interfere with and thereby breach the Pacific Mall Easement, would exceed any right of relocation under the Pacific Mall Easement, would overburden the Market Village Easement and would breach the covenant not to erect any barriers and create obstacles, all “to the extent that the MV Development Project involved changes and attendant work on the MV Servient Land”. The Plaintiffs failed to obtain the other declaratory relief sought and failed to establish a basis for permanent injunctive relief. I view this as equally divided success, for the purpose of my determination of the issue of costs.
[27] I exercise my discretion to award the Plaintiffs 50% of the overall amount assessed, as an appropriate allocation for the Plaintiffs’ divided success at trial.
(ii) Analysis of the Plaintiffs’ Cost Submission
[28] The Plaintiffs’ Bill of Costs, delivered in accordance with Rule 57.01(5), sought costs on a partial indemnity basis of $1,667,757.54, but due to an arithmetic error, the actual amount of the submission was slightly lower: $1,667,147.33. This was comprised of the following: (i) lawyers’ fees of the action in the amount of $867,491.20 plus HST of $112,773.85 for a total of $980,265.05 (“Pre-Trial Fees”); (ii) lawyer’s fees for the trial in the amount of $323,286.50 plus HST of $42,027.24 for a total of $365,313.74 (“Trial Fees”); (iii) taxable disbursements of $103,945.85 plus HST of $13,512.96 for a total of $117,458.81, and; (iv) non-taxable disbursements of $204,109.73.
[29] The Market Village Defendants contended that the amount of costs sought by the Plaintiffs ought to be reduced by 10% to reflect time spent by them in prosecuting their case against the Kennedy Defendants. The Plaintiffs submitted that their Bill of Costs does not contain any fees or disbursements relating to their claim against the Kennedy Defendants. I saw no evidence in the Plaintiffs’ cost submissions of costs pertinent to the claim against the Kennedy Defendants, except perhaps their pleading, which would be modest. I decline to deduct any amount from the Plaintiffs’ Bill of Costs by reason of the Plaintiffs’ inclusion of the Kennedy Defendants in this action.
[30] The lawyers, clerks and law student fees claimed by the Plaintiffs are on a partial indemnity basis, calculated as 60% of the solicitor and client fee. I am satisfied that this is within the range set out by the Court of Appeal and this Court for partial indemnity fees: Canadian National Railway Company v. Royal and Sun Alliance Insurance Company of Canada, 2007 ONCA 531, at para. 6; Eastern Power Limited v. Ontario Electricity Financial Corporation, 2012 ONCA 366, at paras. 11, 26; Inter-Leasing, Inc. v. Ontario (Revenue), 2014 ONCA 683, at para. 5; Bain v. UBS Securities Canada Inc., 2018 ONCA 190, 46 C.C.E.L. (4th) 50, at para. 32; Stetson Oil & Gas Ltd. v. Stifel Nicolaus Canada Inc., 2013 ONSC 5213, at paras. 24-25; GB/Plasman v. APP Holdings, 2013 ONSC 6401, at paras. 13-14. I am also satisfied that the hourly rates charged by the Plaintiffs’ legal advisers are reasonable for the level of seniority of the lawyers involved.
[31] The Market Village Defendants’ submission that the Plaintiffs’ cost demand was “excessive and unreasonable” was grounded on a strict numerical comparison: the Plaintiffs’ lawyers’ fees ($2,112,454.25) were twice the amount of the lawyers’ fees incurred by the Market Village Defendants ($1,008,463.25).
[32] The Market Village Defendants contended that this amount of costs was beyond “the amount of costs that an unsuccessful party could reasonably expect to pay”, which is a factor in my consideration of costs as provided by Rule 57.01(1)(0.b). I find merit in this submission. Although the Market Village Defendants are sophisticated land developers who have retained experts for their land development projects and have been involved in municipal applications and real property litigation, I am not prepared to accept that they would have reasonably expected to pay an award of costs that was based on lawyers’ fees that were double the fees that they incurred.
[33] The discrepancy in the lawyers’ fees between the parties is not accounted for by the number of hours of docketed time incurred by each of the parties. The Plaintiffs’ Bill of Costs showed that they incurred 2,260.35 hours of professional time while the Bill of Costs filed by the Market Village Defendants showed that they incurred 1,913.30 hours of professional time in defending the action. The Plaintiffs contended that this discrepancy in the number of hours docketed by the professionals acting for both sides is explained by the different roles of the parties in this action and supported by the materials filed. I acknowledge that this is a factor. In Stetson, at para. 17, Newbould J. observed that “work to be done by a plaintiff to build a case is far more than the work needed to be done by a defendant to defend the case.”.
[34] The basis for the Plaintiffs’ lawyers’ fees being double the lawyers’ fees of the Market Village Defendants does not derive from the hourly rates of each of the professionals or the higher number of hours docketed. It derives from the Plaintiffs’ staffing of the lawyers for the litigation tasks involved in this action. The Plaintiffs staffed the litigation steps involved in the four-year development of this action and the trial with two senior lawyers (1974 and 1993 Years of Call), applying hourly rates commensurate to lawyers of this seniority, in addition to the use of associate lawyers, articling students and clerks. The Market Village Defendants were represented by a single senior lawyer (1980 Year of Call) supported by associate lawyers.
[35] In Basdeo v. University Health Network, [2002] O.J. No. 597 (S.C.J.), at para. 7, Nordheimer J., as he then was, stated that it is not “the role of the court to second-guess the time spent by counsel unless it is manifestly unreasonable in the sense that the total time spent is clearly excessive or the matter has been ‘over-lawyered’”. I agree. Having already found that the time docketed by the Plaintiffs’ lawyers was not “manifestly unreasonable”, I turn to whether the Plaintiffs ‘over-lawyered’ by over-staffing.
[36] Parties in litigation may staff their legal team as they consider advisable but that does not mean that the fees so incurred are necessarily recoverable in a cost award. Rather, the staffing deployed by the party seeking costs, and the expense thereby generated, is a factor in the determination of a cost award that is reasonable, fair and proportionate.
[37] The objective of quantification of costs is to determine an amount that is fair, reasonable, and proportionate, understanding that the mathematical quantification of what the successful litigant has spent in legal fees is pertinent but not dispositive. In Zesta, at para. 4, the Court of Appeal stated: “In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.” The quantification of costs is not a mere mathematical exercise in as much as a determination of what is fair and reasonable: Boucher, at para. 38.
[38] This was undoubtedly complex real property litigation, a factor that I have considered in accordance with Rule 57.01(1)(c). This action involved complex re-development initiatives, formulated intensely from 2007 to the time of trial, through five sets of architectural drawings that were filed with the Corporation of the City of Markham in the period from May 21, 2010 to November 5, 2018. The Composite Site shared by the parties has a unique configuration – triangular and bordered by a rail line – that presented distinct challenges in the use of the rights of access and parking contained in their Reciprocal Easements. The action involved the expert testimony of four expert witnesses. Each party delivered written closing submissions in excess of 100 pages and drew on principles from several legal areas.
[39] The issues were important to the parties’ real estate development interests, a factor that I have considered in accordance with Rule 57.01(1)(d). The issues arising from this action were important to the parties’ contractual and property rights, and related business interests, and affected valuable property holdings. The litigation was important to the redevelopment initiatives sought to be advanced by the Market Village Defendants and was important to Pacific Mall’s continued operation of its mall.
[40] Both parties engaged in conduct that “tended to … lengthen unnecessarily the duration of the proceeding”, a factor that I have considered in accordance with Rule 57.01(1)(e). The Defendants pleaded that the Plaintiffs delayed in proceeding with this action from when the Market Village Defendants notified the Plaintiffs of their intention to proceed with redevelopment, January 7, 2014, until January 5, 2016, when this action was initiated. The Market Village Defendants varied this position at trial to pertain solely to the Plaintiffs’ claim for injunctive relief, but considerable trial time was consumed in detailed, protracted evidence regarding the timing of the steps taken by the Plaintiffs to advance their claim, most of which was of modest value. The Plaintiffs unnecessarily lengthened the proceeding by seeking broad declaratory relief that was unnecessary to what the Plaintiffs referred to as the core issue in the litigation: the preservation of their legal and property interests with respect to the proposed development plans of the Market Village Defendants. This is evident from the Plaintiffs’ submission that they were successful in attaining their objective by the issuance of four of the eight declarations sought.
[41] In my analysis of a cost award that is fair, reasonable and proportionate, I find that the Plaintiffs’ staffing of two senior lawyers and multiple associate lawyers, articling students and law clerks for the litigation steps necessary to advance this action in the four-year period leading to trial was excessive. The Plaintiffs’ cost demand of $867,491.20 for partial indemnity Pre-Trial Fees resulted from two senior lawyers, along with other professional staff, attending to the following tasks: the drafting of pleadings; production of documents; examinations for discovery; and answers to undertakings. I will reduce the lawyers’ fees claimed by the Plaintiffs for the four-year Pre-Trial Fees. This will include a reduction of the amount of $482,684.30 docketed for trial preparation, again to reflect my assessment of staffing, and I will reduce the $22,561 sought by the Plaintiffs for an undertakings motion.
[42] In terms of the amount of reduction, had the Plaintiffs staffed this case in its four year, pre-trial stage with one senior lawyer and one junior partner or senior associate as opposed to two senior lawyers, even maintaining the remainder of the professional staff, the amount of fees would have been 25-30% less by reason of lower hourly rates. I base this on my review of the partial indemnity hourly rates of the roster of lawyers who worked on this case at varied seniority levels. Accordingly, I am of the view that a reduction in the range of 25-30% is appropriate.
[43] I am more accepting of the lawyers’ fees claimed by the Plaintiff for the trial, even with the two senior lawyers. The Market Village Defendants could reasonably expect that an action of this importance and complexity would be supported by senior counsel at trial and, by the time of trial, were aware, or ought to have been aware, of the magnitude of the cost exposure.
[44] Considering these factors, and in the exercise of my discretion to determine of an amount for lawyers’ fees that is fair, reasonable and proportionate, I will reduce the Plaintiffs’ partial indemnity lawyers’ fees from the amount claimed of $1,191,317.70, plus HST, to $900,000 plus HST.
[45] Last, the Plaintiffs’ claimed taxable disbursements of $103,945.85 (plus HST of $13,512.96) and non-taxable disbursements of $204,109.73, totaling $321,568.54. The non-taxable disbursements were supported by invoices, filed, but I am not satisfied that the claim for taxable disbursements was shown on the materials filed. I will assess $50,000 in taxable disbursements, plus HST of $6,500 and $204,109.73 in non-taxable disbursements for a total of $260,609.73. I have some doubt that this amount of disbursements would have been incurred by the Plaintiffs had their claim focused only on the four declarations that were granted.
[46] I am satisfied, for the purpose of my cost analysis, that the Plaintiffs have shown reasonable partial indemnity costs totaling $1,277,609.73, consisting of $900,000 for partial indemnity legal fees for the action and trial, HST of $117,000 and $260,609.73 in disbursements. These costs will be reduced by 50% to reflect the divided success in this action. I find that these costs are proportionate to the legal issues raised by the valuable shopping mall redevelopment in dispute between the parties in this action.
(c) Conclusions – The Plaintiffs’ Award of Costs
[47] I have concluded that the Plaintiffs were successful in this trial and are thereby entitled to an award in costs payable by the Market Village Defendants. I concluded, on the reasons explained, that the Plaintiffs’ success was divided. On the basis of the divided success and based on my analysis of the issues in dispute and their treatment at trial, I concluded that it is fair, just and proportionate that the Plaintiffs receive 50% of assessed costs on a partial indemnity basis. I will apply this discount for divided success to both the fees and disbursements as I find, from my analysis of the conduct of the trial, the issues involved and the evidence tendered, that the partial indemnity fees and disbursements claimed by the Plaintiffs were incurred for all issues.
[48] The objective of quantification of costs is to determine an amount that is fair and reasonable and proportionate. I am satisfied, for the purpose of my cost analysis, that the Plaintiffs have shown reasonable partial indemnity costs totaling $1,277,609.73, which will be reduced by 50% to reflect the Plaintiffs’ partial success.
[49] Accordingly, having considered all applicable principles, in the exercise of my discretion, guided by reference to the factors listed in Rule 57.01, I conclude that it is fair, reasonable and proportionate to award the Plaintiffs costs on a partial indemnity basis, payable by the Market Village Defendants, fixed in the amount of $638,804.86, all inclusive of legal fees, disbursements and applicable taxes.
B. The Kennedy Defendants’ Demand for Costs
[50] The Kennedy Defendants sought an award of costs payable by Pacific Mall based on their success in this action. Pacific Mall did not contest the Kennedy Defendants’ entitlement to a cost award but took issue with the amount of costs sought by the Kennedy Defendants.
[51] The Kennedy Defendants submitted that they are entitled to “at least” partial indemnity costs, and that they ought to be fully indemnified. On the material filed, I find no basis to award a higher level of costs to the Kennedy Defendants than partial indemnity costs. The Kennedy Defendants demanded throughout that the Plaintiffs dismiss or discontinue the action against them, and the Plaintiffs demanded throughout that the Kennedy Defendants take no role in the action, or in the trial, and agree to be bound to whatever determinations were made. But the parties have not filed any offers to settle compliant with Rule 49 that would support consideration of a different treatment of costs, in excess of costs on a partial indemnity basis, under Rule 49.10.
[52] I will analyse the fair, just, reasonable and proportionate amount of costs to be awarded to the Kennedy Defendants by application, without repetition, of the principles explained earlier.
[53] The Kennedy Defendants filed both a Cost Outline and a Bill of Costs under the title of proceedings for this action and the action brought by Pacific Mall in court file number CV-19-616660 (the “Related 2019 Action”). As explained in the Reasons for Decision, at pp. 18-19, footnote 67, on February 7, 2020 I granted an Order, on consent, dismissing the Related 2019 Action, without costs.
[54] The Bill of Costs and Cost Outline contain overlapping entries that state a claim by the Kennedy Defendants for partial indemnity fees of $94,201.32, inclusive of applicable taxes. These partial indemnity fees are said to be a portion of actual fees of $156,747.95, inclusive of applicable taxes.
[55] The Client Ledger Statement filed by the Kennedy Defendants shows, however, that the Kennedy Defendants incurred actual fees, from the inception of their involvement in this litigation on July 12, 2016 to the end of trial of $120,390.00 and HST of $15,809.59 for a total of $136,199.59. From the end of trial to the completion of the filing of their cost submissions on September 22, 2020, the Kennedy Defendants incurred further legal fees of $7,069.50 plus HST of $919.03 for total fees (billed and unbilled, HST included) are less than the ‘actual fees’ stated in the Bill of Costs. For this reason, the Client Ledger Statement was a more appropriate resource for the assessment of costs than either the Bill of Costs or the Cost Outline.
[56] The Client Ledger Statement quantified disbursements at $1,541.07, inclusive of applicable taxes. The Bill of Costs and Cost Outline showed disbursements of $2,653.60. Again, I will take into consideration the disbursements set out in the Client Ledger Statement and will reduce for non-assessable amounts.
[57] The Kennedy Defendants submitted that the appropriate partial indemnity rate for their senior counsel is $480 per hour, which is 60% of his hourly rate of $800 per hour. This is consistent with the approach taken by Pacific Mall in its cost demand against the Market Village Defendants, which I have accepted, and I accept this partial indemnity rate on the same analysis.
[58] The staffing of the defence by the Kennedy Defendants was appropriate, conducted consistently by the senior lawyer with proportionate associate and law clerk involvement. Pacific Mall contended that the Kennedy Defendants incurred excessive time in attending to litigation tasks and steps that did not involve them. I do not accept this submission. The Kennedy Defendants were entitled to take reasonable steps in their defence. The Kennedy Defendants were served with motion material that was said to involve only the Market Village Defendants, but the Plaintiffs would have a reasonable expectation that the Kennedy Defendants would review the material and monitor developments. I do not accept Pacific Mall’s submission that this amount of time should be deducted.
[59] The total number of hours docketed by senior counsel for the Kennedy Defendants prior to trial, over the course of almost four years of litigation, was 47.5 hours. I am satisfied that the Plaintiffs have shown that there are a small number of docket entries that are not properly claimable, which would call for a modest reduction to the docketed time.
[60] The docket entries, like the trial record show that the Kennedy Defendants’ counsel did not attend all trial days. I do not accept the Plaintiffs’ submission that the Kennedy Defendants’ attendance at trial, on the days that they attended, was excessive and uncalled for by their role in the trial. The Kennedy Defendants did not attend portions of the trial that did not affect them and were absent when excused for part of the evidence tendered by the Market Village Defendants. I find that the staffing of the trial by the Kennedy Defendants was, in the circumstances, appropriate.
[61] In assessing other factors listed under Rule 57.01, the level of cost award sought by the Kennedy Defendants was, in my view, within what the Plaintiffs could reasonably expect to pay: Rule 57.01(1)(0.b). Indeed, there was a dialogue between the Plaintiffs and the Kennedy Defendants about the costs exposure resulting from their involvement in this action from the earliest days of this action.
[62] The conduct of these parties did not tend to shorten or to lengthen unnecessarily the duration of the proceedings: Rule 57.01(1)(e). The Kennedy Defendants did not take all litigation steps in this action: they did not serve an affidavit of documents; they did not attend any examinations for discovery; they did not cross-examine or tender any evidence at trial.
[63] The Bill of Costs stated that the Kennedy Defendants incurred some 159.7 hours of senior counsel time, 9 hours of associate time and 7.7 hours of clerk’s time. However, again, these entries produce values that are approximately 10% higher than the amount of time actually billed to the Kennedy Defendants for legal fees to the end of trial ($120,390 plus HST of $15,650.07 for a total of $136,040.07), as seen in the Client Ledger Statement, and would then have to be further reduced in light of my finding that certain of the docket entries were for services that were not properly claimed in a cost award and that not all disbursements were assessable.
[64] However, to restate the principle expressed by the Court of Appeal in Boucher and Zesta, the analysis of the amount of a cost award is not a mere mathematical or arithmetic exercise. It is a determination of what is fair, reasonable and proportionate. Having considered all applicable principles, in the exercise of my discretion, I conclude that it is fair, reasonable and proportionate to award the Kennedy Defendants costs on a partial indemnity basis, payable by the Plaintiffs, fixed in the amount of $70,000, all inclusive of legal fees, disbursements and applicable taxes.
II. DISPOSITION
[65] For the reasons set out herein, I order as follows:
(a) The Plaintiffs, York Region Condominium Corporation No. 890 and Pacific Mall Developments Inc. (collectively, “Pacific Mall”) are awarded costs on a partial indemnity basis payable by the defendants Market Village Markham Inc. and The Remington Group Inc., fixed in the amount of $638,804.86, all inclusive of legal fees, disbursements and applicable taxes.
(b) The Defendants Kennedy Corners Realty Inc. and Kennedy-Steeles Holding Limited are awarded costs on a partial indemnity basis payable by Pacific Mall, fixed in the amount of $70,000, all inclusive of legal fees, disbursements and applicable taxes.
A.A. Sanfilippo J.
Date: February 1, 2021
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
YORK REGION CONDOMINIUM CORPORATION NO. 890 and PACIFIC MALL DEVELOPMENTS INC.
Plaintiffs
– and –
MARKET VILLAGE MARKHAM INC., THE REMINGTON GROUP INC., KENNEDY CORNERS REALTY INC. and KENNEDY-STEELES HOLDINGS LIMITED
Defendants
ENDORSEMENT ON COSTS
A.A. Sanfilippo J.
Date: February 1, 2021
[^1]: On November 12, 2020, the Market Village Defendants submitted two further cases that were omitted from their costs submissions, with the concurrence of the Plaintiffs on their agreement that the Plaintiffs be permitted to deliver a one-page Addendum, which they did on November 12, 2020. These materials were considered on the consent of the parties.