Court File and Parties

Court File No.: CV-13-494117 Date: 2021-11-17 Superior Court of Justice – Ontario

Re: Pumpcrete Corporation operating as Modern Crane Corporation operating as Modern Crane, Plaintiff And: Clarke Rigging & Rental Corporation, Cropac Equipment Inc., Terex Corporation, Terex-Demag GMBH and Terex Cranes Germany GMBH, Defendants

Before: Stinson J.

Counsel: Lindsay Lorimer, for the moving party, Terex Corporation Stephen Barbier, for responding parties, plaintiffs

Heard at Toronto: In writing

Reasons for Decision

[1] These reasons concern a dispute over costs claimed by the defendant Terex Corporation. Terex Corporation was one of several related entities that had the word "Terex" as part of their corporate names. Together with several other parties, the Terex entities were sued by the plaintiff for more than $2,000,000 in damages arising from the failure of an industrial crane.

Liability for costs

[2] In its statement of claim the plaintiff alleged that Terex Corporation, together with other Terex entities, was responsible for the loss due to their negligence in, among other shortcomings, the design, manufacture, supply, distribution, assembly and servicing of the crane. From the outset of the litigation, Terex Corporation denied it played any part in the facts or events giving rise to the claim. As it turned out, Terex Corporation was correct, and the plaintiff had no cause of action against it. The plaintiff asserts that there may have been a misnomer of Terex Corporation instead of another Terex entity, but that entity has yet to be added to the litigation and liability as against it has not been established.

[3] Over a period of several years, Terex Corporation asked the plaintiff to let it out of the litigation. That did not happen. At the discovery stage, Terex Corporation asserted that it did not design, manufacture, distribute or sell cranes. In August 2019, Terex Corporation served a Request to Admit in which it asked the plaintiff to concede that Terex Corporation did not design, manufacture, distribute or sell the crane in question. The plaintiff did not respond, thereby admitting those facts. Despite the foregoing, the plaintiff was still not prepared to let Terex Corporation out of the action.

[4] As a result of the plaintiff's unwillingness to let it out of the action, Terex Corporation decided it would bring a motion for summary judgment. It informed the plaintiff of that intention, but still the plaintiff would not agree to let it out. Eventually, a Master made an order directing Terex Corporation to bring its motion by June 2, 2021. It prepared motion materials and served the plaintiff on May 14, 2021.

[5] Soon after the motion materials were served, the plaintiff offered to let Terex Corporation out of the action on a without-costs basis. That offer was not accepted. Instead, the motion went to Civil Practice Court at which the plaintiff's position was that it was unopposed to summary judgment except as to costs. The CPC judge directed that the motion proceed in writing, on the basis that it was confined to the issue of costs.

[6] In turn, the motion came before me. The plaintiff again confirmed that it does not oppose summary judgment in favour of Terex Corporation, save in respect of its claim for costs. Terex Corporation seeks its costs of defending the action and in bringing the motion for summary judgment on a partial indemnity basis, in the total amount of $25,000. The plaintiff strenuously objects to that costs request and points out that not long before the motion was brought, counsel for Terex Corporation had mentioned the prospect of being let out of the action on the basis of payment by the plaintiff of nominal costs only.

[7] Whatever discussions may have passed between counsel in the lead-up to the motion materials being served, regarding potential terms for letting Terex Corporation out of the action, they are both irrelevant and inadmissible. Those were settlement discussions, and no agreement was reached. Thus, they are privileged communications.

[8] The same can be said of the previous communications between counsel regarding whether and when and on what terms the plaintiff might have been willing to let Terex Corporation out of the action. No agreement was reached. Although the plaintiff may have had its reasons for keeping Terex Corporation in the proceeding – possibly in the hope that facts might emerge to prove that aspect of its claim – it ran the risk of being unable to establish liability and the resulting exposure to an adverse order as to costs. The same is true of any plaintiff who chooses to name any party as a defendant but is unable to make out a case against them.

[9] As events unfolded, the plaintiff ultimately determined that it would be unable to establish liability as against Terex Corporation. The fact that the plaintiff finally concluded that it could not succeed against a party that it erroneously named as a party defendant, and then decided not to oppose that party's motion for summary judgment, does not excuse it from its liability to compensate that defendant for the costs it incurred in responding to the claim.

[10] And it is no answer for the plaintiff to say "the defendant offered to go out for no or nominal costs". The plaintiff failed to accept that offer. Having kept Terex Corporation in the litigation as long as it did, the plaintiff now faces the costs consequences of doing so.

[11] I therefore conclude that the plaintiff is liable to pay costs to Terex Corporation.

Scale of costs

[12] Terex Corporation seeks costs on a partial indemnity basis only. I agree there is no reason to depart from that standard scale.

Quantum of costs

[13] The principal objection advanced by the plaintiff to the requested award of costs is that Terex Corporation was just one of the related Terex entities that were jointly represented by the same law firm. The plaintiff points out that those parties filed a joint statement of defence, prepared a single affidavit of documents, presented a single witness for examination for discovery, jointly retained an expert, and were jointly represented by the same counsel for various other steps in the proceeding. The plaintiff argues that, save in respect of the mandatory mediation (in which Terex Corporation did not participate) and an application for an order recognizing and giving effect to a German insolvency proceeding, there were no steps in the litigation under which any of the Terex entities incurred fees apart from the others.

[14] The logical extension of the plaintiff's argument is that, despite having no liability to the plaintiff, Terex Corporation is precluded from recovering any costs because it opted to retain the same lawyer as some of its co-defendants. I disagree. The plaintiff's argument assumes that its co-defendants are willing to "foot the bill" for defending Terex Corporation (or that they can afford to). It also ignores the fact that a separate cause of action was advanced as against Terex Corporation, a fact that is established by the plaintiff's belated acceptance that it cannot succeed against that defendant, yet it continues to pursue the other Terex entities. Whether liability for the claim against them will be established and costs awarded one way or the other, has yet to be determined.

[15] I further note that there were plainly some separate steps taken by counsel for the Terex entities that were solely for the benefit of Terex Corporation, such as the preparation and service of the Request to Admit and the summary judgment motion materials, as well as the ongoing efforts and discussions to persuade the plaintiff to release Terex Corporation from the action. Other steps, such as seeking production and answers to undertakings from Terex Corporation would have been unnecessary were it not named as a co-defendant. As well, the circumstances of Terex Corporation that gave rise to the defence that it alone enjoyed, had to be explored, researched and articulated, and required extra legal effort. Thus, it is simply not accurate to say that no extra expenses were incurred in connection with the defence of Terex Corporation, even though the Terex entities were jointly represented.

[16] I certainly agree that defendants who are jointly represented cannot get double recovery for costs. To the extent that Terex Corporation obtains an award now for its share of the costs of defending the action, the other Terex defendants would be precluded in the future from obtaining those costs against the plaintiff. But that does not warrant a refusal to award any costs now to Terex Corporation.

[17] According to the material filed by counsel for Terex Corporation, considerable effort has been undertaken to separate out the defence costs of Terex Corporation from those of the other Terex entities. I was told that the costs claim currently being advanced represents approximately 10% of the total defence costs of the Terex entities.

[18] Even if some of the amounts for joint work are difficult to subdivide as between Terex Corporation and the other Terex entities, as I have noted, double recovery is not permissible. To ensure this cannot occur, and to preserve the opportunity for the plaintiff to point to the record of this motion when responding to any claim for costs that might later be made by those parties, I expressly direct counsel for these defendants to maintain and make available to plaintiff's counsel (if and when required) the work product relating to the allocation of defence costs as between Terex Corporation and the other Terex entities, as referenced in the Bill of Costs and written submissions filed on this motion.

[19] The plaintiff points out that the Bill of Costs includes charges for motions for which there were no awards of costs. These include the dismissal of a cross-claim (motion granted without costs), a motion to amend the statement of claim (no costs awarded) and three timetabling motions (again, no costs awarded). I agree that these expenses should not be included in the Bill of Costs. They represent minor expenses, however. At most, they total approximately $3,000, and I would reduce the costs claimed accordingly.

[20] Another specific charge that should be excluded is the Mediation Fee of $751.58, in light of the fact that Terex Corporation did not participate in the mediation. I note that Terex Corporation is not advancing a claim for any portion of the expense of retaining an expert.

[21] Apart from the foregoing specific items, the fees claimed are largely reasonable and should have been within the expectation of the plaintiff as amounts it could be ordered to pay if unsuccessful as against Terex Corporation.

[22] I am mindful that the basic principle in awarding costs is to fix an amount that is fair and reasonable. Based on that principle and taking into account the amount in issue (more than $2,000,000), the complexity of the proceeding (fairly complex), the rates charged and the hours spent by counsel (which I consider reasonable), the importance of the issues (especially to Terex Corporation, which has succeeded in having the action dismissed as against it) and the outcome (completely successful to Terex Corporation) I conclude that a suitable award of costs in favour of Terex Corporation on account of its costs of defending the action and in bringing the motion for summary judgment is $20,000. That sum is inclusive of fees, disbursements (except the mediation fees) and all applicable taxes.

Disposition

[23] For these reasons, I order the action dismissed as against the defendant Terex Corporation. I order the plaintiff to pay costs to Terex Corporation in the all-inclusive amount of $20,000. That sum shall be paid within 30 days of the date of release of these reasons.

Stinson J.

Date: November 17, 2021