COURT FILE NO.: CV-10-395662
DATE: November 25, 2021
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Helen Frances v. TTC Insurance Company, Toronto Transit Commission, Paul Manherz, Peter Ashbourne, Julie Stafford, John Doe, Faruk Hatia and The Toronto Police Services Board;
BEFORE: ASSOCIATE JUSTICE C. WIEBE
COUNSEL: Adam Romain for Helen Frances; Chad Townsend for TTC Insurance Company ("TTCIC"), Toronto Transit Commission ("TTC"), Paul Manherz, Peter Ashbourne, Julie Stafford and Faruk Hatia (together "the TTC Defendnats");
David A. Gourlay for The Toronto Police Services Board ("TPSB").
DECISION: August 16, 2021.
COSTS DECISION
[1] On August 16, 2021 I released my reasons for decision containing my final decision on the Discovery Issues portion of the motion Ms. Frances started in February, 2020. My reasons contained a summary of the oral rulings I gave over the three days of hearing of the Frances motion concerning the undertakings and refusals given by the defendants at their discoveries.
[2] I ruled on 166 individual undertakings and refusals, as counsel advised there was no grouping. An entire fourth day, June 3, 2021, was devoted to the argument about the time limits to be imposed on further discovery of the defendants and whether they should reattend at these discoveries at their own expense. I notice now that I made an error in my reasons – in paragraph 6 the first day of argument should have been stated to be April 8, 2021, not April 9, 2021.
[3] In my reasons, I required that the parties deliver written submissions on the costs of the motion concerning the Discovery Issues. This schedule was amended after counsel advised of scheduling difficulties. The Frances written costs submissions were received on September 23, 2021 and October 8, 2021. The written costs submissions of the TTC Defendants were received on October 4, 2021. The TPSB filed no submissions and does not seek costs, and Ms. Frances does not seek costs against the TPSB. I have reviewed these written submissions and now give my decision as to costs.
[4] Mr. Romain argues that Ms. Frances should be awarded $228,395.58 in substantial indemnity costs and suggests that this award be divided pro rata between the six TTC Defendants, namely a substantial indemnity award against each of the TTC Defendants. Mr. Townsend argues that there should be no order as to costs.
Result
[5] I am satisfied that Ms. Frances is the successful party on this motion and is entitled to an award of costs. Concerning the 166 undertakings and refusals that were argued and based on my reasons for decision, I count that only 42 questions did not require an order against the TTC Defendants. This is a proportion of 25%.
[6] But I note that the vast majority of these TTC "successes" involved questions these defendants answered during this motion. This hardly represents a successful result for the TTC Defendants. On the issue of the time limits for discovery and the costs of the future discoveries of the TTC Defendants, Ms. Frances was entirely successful.
[7] I order that Ms. Frances be awarded the costs of this motion. There will be some reduction due to the limited successes of the TTC Defendants.
Conduct
[8] Mr. Romain argued at length that the costs award should be on a substantial indemnity basis. His criticisms of the conduct of the TTC Defendants that had merit are the following:
• A failure to disclose relevant documents prior to the examinations, leading to the disclosure of relevant documents and supplementary affidavits of documents during the motion;
• A failure to comply with undertakings for an inordinate amount of time contrary to the Rules and the 2015 Master Abrams order;
• Excessive refusals and non-responsive and evasive answers to relevant examination questions as I noted in my Reasons;
• Unreasonable and constant interventions at discovery by Mr. Townsend as I noted in my Reasons;
• Changing positions from the reasonable one stated by Ms. Ferreira earlier in this litigation of allowing Ms. Frances to examine each TTC Defendant for seven hours to the more recent position stated by Mr. Townsend of curtailing the examination of the TTC Defendants on account of the strict wording of Rule 31.05.1(1), despite the obvious imbalance that rule created to the detriment of Ms. Frances;
• Changing positions during this motion to now not wanting to pursue the TTC counterclaim, namely the very claim which contains the fraud allegation against Ms. Frances that caused this entire proceeding in the first place.
[9] However, on consideration I am not prepared to find that the TTC Defendants should be punished with an award of substantial indemnity costs. As stated by Justice Vermette in Manning Developments Inv. v. Corporation of the Town of Lakeshore, 2021 ONSC 6382 at paragraph 12, substantial indemnity costs are warranted in rare and exceptional cases where a party has engaged in conduct worthy of sanction, such as where there is scandalous, reprehensible and outrageous conduct. Justice Vermette drew a distinction between such conduct and "hard fought litigation that turns out to have been misguided." I note that the conduct of the unsuccessful party in that case was described by the victor as including a meritless proceeding, claiming urgency where none existed, ambushing during reply, improperly refusing to be questioned on the evidence, dishonouring undertakings and bringing disruptive post-hearing motions. The judge did not find such conduct as meriting an award of substantial indemnity costs.
[10] In the leading decision on this point in Davies v. The Corporation of the Municipality of Clarington,(2009) 2009 ONCA 722, 100 O.R. (3d) 66 (Ont. C.A.) the Court of Appeal held in paragraph 46 that conduct attracting the sanction of substantial indemnity costs must be in the nature of an abuse of process, "harassment . . . by the pursuit of fruitless litigation." I was tempted to find that the TTC Defendants engaged in such conduct, particularly after Mr. Townsend stated that his clients were not interested in pursuing the counterclaim. It struck me that the TTC Defendants could be sanctioned for having caused this entire proceeding with an allegation of fraud that now they do not want to prove leaving them doing nothing more than defending Ms. Frances' claim.
[11] However, I am not prepared do so. The counterclaim remains alive and there may be a finding of fraud in the end. Furthermore, Ms. Frances is claiming substantial amounts in damages, and the TTC Defendants are entitled to test her case to the letter. Also, I note that many of the issues covered by the disputed questions in this motion concerned the nature and scope of the investigations conducted by the TTC Defendants. The boundaries of relevance may not be as clear in such a case, such as the question of options not taken, considerations not made, angles not pursued, and evidence not obtained. For these reasons, I am not prepared the sanction the TTC Defendants.
Quantum and reasonable expectation of the unsuccessful party
[12] In fixing costs, as stated by the Court of Appeal in the leading case of Boucher v. Public Accounts Council for the Province of Ontario, 2004 CanLII 14579 (ON CA), [2004] O.J. No. 2634 (C.A.), the overriding consideration is the determination of what is "fair and reasonable for the unsuccessful party to pay in a proceeding." This is not a mechanical exercise that focuses only on the time spent by the successful party. But I will start there to see whether there is a reasonable foundation for the costs claimed.
[13] The Frances costs outline shows a partial indemnity figure of $186,017.47. The stated partial indemnity hourly rate for Mr. Romain, $357.50, is not unreasonable for a lawyer of Mr. Romain's experience – 16 years. The hourly rate for the clerk, $65, is also not unreasonable. There was no issue raised about these rates.
[14] The issue is the quantum of time spent on this motion. The total number of hours shown for Mr. Romain and his clerk is 602.6 – 408 hours for Mr. Romain and 194.2 hours for his clerk. There was much to commend in Mr. Romain's work. I particularly applaud the work he and his clerk put into colour-coding the undertakings and refusals chart. This was most helpful in identifying the questions that needed to be addressed and the basis of the dispute in each case. As a result, the motion moved forward much quicker than it otherwise would have. This chart was a work-in-progress as the TTC Defendants kept submitting further answers during the motion.
[15] But the total amount of time put into this motion by Mr. Romain was in my view disproportionate to what this motion required and was unreasonable. Mr. Romain's total time represents about 60 days of work. The clerk's total time represents about 28 days. The motion argument in the end lasted but 4.5 days in total, namely a total of about 28 hours.
[16] I found two items in the Frances costs outline particularly excessive. First, there was the time stated to have been spent on the plaintiff's factum, namely a total of 158.2 hours. This document was excessive as it totaled 70 pages. It addressed some issues that arose, but I did not find the factum of great assistance in determining the issues in the motion. In the end, the motion, while huge in terms of the volume of questions addressed (it started with 213 questions), did not have great legal complexity. There was factual complexity such as in determining the boundaries of relevance concerning the defendants' investigations.
[17] Second, the Frances costs outline shows a total of 207 hours spent by Mr. Romain and his clerk in preparing the undertakings and refusals chart and the motion record. This time was split evenly between Mr. Roman and his clerk and as such amounted to about 16 days of work. This does not include the work of the colour-coding. While there was an inordinate number of undertakings and refusals, constructing the chart should not have taken that amount of time. The affidavit of the clerk was not lengthy.
[18] In determining what is "fair and reasonable for the unsuccessful party to pay" I usually put weight on the unsuccessful party's costs outline. This document usually reflects what the unsuccessful party expects to recover in the event of success, and, therefore, gages what that party should reasonably expect to pay in the event of a loss.
[19] In this case, however, I cannot do that. After the argument, on July 8, 2021, Mr. Townsend uploaded a costs outline that showed a total of only $14,690. This document has no credibility. It shows the time spent by Mr. Townsend's associate, Daniel Styler, as being only 10 hours. The 10 hours is stated to be about drafting the factum and responding affidavit. Mr. Styler swore a 42 page affidavit and two supplementary affidavits. The factum was 29 pages long. The preparation of these two documents would clearly have been much greater than 10 hours. There is nothing in the costs outline for the time Mr. Styler no doubt spent assisting Mr. Townsend in preparing the undertakings and refusals chart. There is nothing for the time spent by Mr. Styler at the argument. I noted Mr. Styler's presence on each day of the 4.5 days, 28 hours, of the argument.
[20] The costs outline shows no more than 45 hours spent by Mr. Townsend on this motion. Taking away the 28 hours Mr. Townsend spent in arguing the motion leaves only 17 hours for Mr. Townsend in preparing the factum, affidavits, undertakings and refusals chart and the argument, plus the time spent on correspondences during the motion addressing the issues raised. That is not credible. 45 hours clearly does not reflect the actual time spent by Mr. Townsend on this motion. In the end, I find this document to be self-serving. It was submitted at a time when it was clear that the TTC Defendants were unsuccessful on this motion and was in my view intended to minimize their costs liability.
[21] I take much guidance on this subject of costs from the decision of Master Sproat in Currie v. Symcor Inc. [2007] O. J. No. 3228, a decision provided to me by Mr. Romain. This decision concerned a refusals motion that lasted 4.5 days, namely the amount of time spent in argument in this motion. There were three refusals motions, one from the plaintiff and two from the two defendants, one of whom was a bank and the other a substantial corporate body. The plaintiff's motion concerned it appears over 150 questions, namely a substantial number but less that what existed at the commencement of the Frances motion. The plaintiff in Currie wanted partial indemnity costs of $74,953.88 (GST incl.) plus disbursements of $4,176.42 for a total of $79,130.30. The defendants wanted their own costs award for their smaller motions. I will focus on the plaintiff's costs.
[22] Master Sproat found that the plaintiff was successful on its motion despite the fact that many of the issues were resolved after the motion began. The Master also did not fault the plaintiff for underestimating the time for the motion, stating that argument on motions commonly overruns the estimated time. She discounted the time spent by one lawyer on responding to the defendants' motions. She granted the plaintiff partial indemnity costs of $62,000 for fees and $4,146.42 for disbursements for a total (with GST) of $69,896.42.
[23] The Master had this to say in paragraph 51 about the reasonable expectations of the defendants concerning the fees award:
There is no doubt that these fees are high. But, that is not the question under consideration. The question is: whether the defendants, all of whom are corporations with undoubtedly substantial means, would reasonably expect to pay a costs award of this magnitude? In my view, the answer is yes. These defendants are not unsophisticated litigants and are fully aware of the costs of litigation. Access to justice is not an issue for these defendants, but is more so an issue for the plaintiff, an individual. It is not fair and reasonable to saddle the plaintiff with the extraordinary costs he has had to expend to pursue answers to proper questions put to the defendants on discovery.
[24] As Mr. Romain pointed out, in present dollars this award would be $87,815.97. In my view, using this as a guide, an award of partial indemnity costs in the amount of $100,000 is an amount the TTC Defendants could reasonably have expected to pay Ms. Frances in partial indemnity costs in the event of a loss. The Frances motion involved more issues and more time than apparently did the plaintiff's motion in Currie, and therefore a larger award is appropriate.
[25] What Master Sprout stated about the reasonable expectation of the defendants in that case could be said of the TTC Defendants in this motion. These defendants represent a large, sophisticated public body that is fully aware of the costs of litigation. Access to justice is not an issue for them; but it is for Ms. Frances. While I find that many of her costs are excessive, it is not fair to saddle her with all the costs she has had to spend pursuing the refusals and undertakings.
Importance
[26] There is no doubt as to the importance of this motion to Ms. Frances. She has been accused of fraud. She is suing for a substantial amount of money. The motion concerned questions that delved into the details of the investigations and decisions by the TTC Defendants in pursuing Ms. Frances.
[27] This importance has only been heightened by the admission by Mr. Townsend that the TTC Defendants are no longer interested in pursuing their fraud allegations against Ms. Frances, an admission that raises serious questions as to the merits of those allegations.
Offer to settle
[28] Mr. Romain referred me to an offer to settle that he delivered on February 27, 2020. I do not take that offer into consideration. It concerned the settlement of the Timetable issues, not the Discovery Issues.
Conclusion
[29] Therefore, in conclusion, taking all of these factors into consideration, I award Ms. Frances $100,000 in partial indemnity costs to be paid by the TTC Defendants in 60 days.
[30] There is an issue of apportionment. Mr. Romain suggested apportioning the costs liability evenly between the six TTC Defendants. That would be $16,666 per TTC Defendant.
[31] I am not prepared to do that. The TTC Defendants have consistently taken a unified position on this motion. I believe the obligation should be a joint obligation. I so order.
DATE: November 25, 2021 ______________________________
ASSOCIATE JUSTICE C. WIEBE