Court File No.: 903/19

Date: 2021-01-05

Superior Court of Justice - Ontario

Re: KODE CONTRACTING LTD., Plaintiff

And:

BK INDUSTRIAL POWER INC., o/a BK Machinery and ABRAHAM KOOLMEES, Defendants[^1]

Before: Justice I.F. Leach

Counsel: Linda Smits and William W. Fawcett, for the Plaintiff

Abraham Koolmees, lay person and principal of BK Industrial Power Inc., granted leave to represent the corporate defendant, pursuant to Rule 15.01(2) of the Rules of Civil Procedure, solely for purposes of the plaintiff’s motion addressed herein

Abraham Koolmees, self-representing

Heard: In writing

Endorsement

Costs of Summary Judgment Motion and Action

Introduction

[1] On November 30, 2020, I released my substantive endorsement dealing with the plaintiff’s motion for summary judgment against both defendants in this action, brought pursuant to the “simplified procedure” set forth in Rule 76 of the Rules of Civil Procedure.

[2] For the reasons set forth in that earlier endorsement:

a. granted the plaintiff summary judgment in relation to its claims against the corporate defendant, ordering that defendant to pay the plaintiff damages in the amount of $100,000.00; and

b. dismissed the plaintiff’s request for summary judgment in relation to its claims against the defendant Mr Koolmees.

[3] Because my decision was reserved after hearing of the summary judgment motion on November 9, 2020, the parties had been unable to make any submissions regarding costs, having regard to the outcome of the motion. My substantive endorsement therefore set a timetable for the provision of written cost submissions, if the parties were unable to agree on an appropriate resolution of cost issues related to the motion.

[4] The plaintiff complied with that timetable, delivering its initial written cost submissions on December 14, 2020. Those submissions included an attached Bill of Costs, and copies of accounts rendered to the plaintiff by its lawyers.

[5] However, the defendants delivered no responding written cost submissions by the stipulated deadline of December 28, 2020. Nor am I aware of any attempted late filing by the defendants in that regard. In the result:

a. the plaintiff’s request for costs in relation to the motion is unopposed; and

b. no costs of the motion have been sought by either of the defendants, including Mr Koolmees, who was successful in resisting the plaintiff’s motion for summary judgment against him.

[6] In its written cost submissions, the plaintiff seeks an all-inclusive cost award of $7,800.00, (i.e., an award inclusive of all costs, disbursements and applicable HST), payable by the corporate defendant.

General Principles

[7] Pursuant to section 131 of the Courts of Justice Act, R.S.O. 1990, c.C.43, as amended, and subject to the provisions of an Act or rules of court, “the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid”.

[8] This is supplemented by the provisions of Rule 57.01, subsection (1) of which lists a broad range of factors the court may consider when exercising its discretion to award costs pursuant to section 131.

[9] Our courts repeatedly have emphasized that cost awards must not be a simple mechanical or mathematical calculation; e.g., focused merely on details of time spent multiplied by hourly rates, or a tabulation of disbursements actually incurred.

[10] Rather, all cost claims are subject to the “overriding principle of reasonableness”, as applied to the factual matrix of the case, pursuant to the ultimate “cross check” required by such authorities as Boucher, Moon and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC (2005), 2005 1042 (ON CA), 75 O.R. (3d) 638 (C.A.), and Anderson v. St Jude Medical Inc. (2006), 2006 85158 (ON SCDC), 264 D.L.R. (4^th) 557 (Ont.Div.Ct.).

[11] The overall goal is to award costs in an amount that is “fair and reasonable for the unsuccessful party to pay in a particular proceeding”, rather than a sum tailored to an exact measure of the actual costs of a successful litigant. See Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634 (C.A.), at paragraph 26, and Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. no. 4495 (C.A.), at paragraph 4.

[12] In my view, these principles, emphasizing the court’s duty to act as an objective gatekeeper to ensure the reasonableness of cost claims, apply even where a claim for costs is unopposed, as it is in this case.

Entitlement

[13] Although the overall results of the plaintiff’s motion may have been mixed, (i.e., insofar as the plaintiff obtained summary judgment against one defendant but not the other), the plaintiff’s motion and action were entirely successful vis-à-vis the corporate defendant, which is the only defendant from which the plaintiff is seeking costs.

[14] In my view, there is no reason why the plaintiff should not be entitled to an award of costs payable by the corporate defendant in relation to the plaintiff’s motion and action vis-à-vis that defendant.

Scale

[15] Although the court has a broad discretion in relation to costs, our appellate courts repeatedly have emphasized that awards of costs on a partial indemnity basis generally strike the proper balance between cost benefits to be enjoyed by a “winner” and cost burdens to be borne by the “loser”, and that elevated cost awards should be reserved for “rare and most exceptional” cases where the conduct of a litigant warrants condemnation. See, for example, Foulis v. Robinson (1978), 21 O.R. (2d) 179 (C.A.), and Isaacs v. MHG International Ltd., (1984), 1984 1862 (ON CA), 45 O.R. (2d) 693 (C.A.).

[16] In my view, this was not one of those “rare and most exceptional” cases warranting substantial indemnity costs, and the plaintiff appropriately has requested costs only on a partial indemnity basis.

Quantification

[17] In arriving at a global determination of a cost award that is “fair and reasonable” in this particular case, having regard to all the circumstances, my considerations include but are not limited to those outlined below.

Amount Claimed and Recovered – Rule 57.01(1)(a)

[18] Rule 57.01(1)(a) permits the court to consider “the amount claimed and the amount recovered in the proceeding”.

[19] In this case, the plaintiff sought and recovered monetary damages of $100,000.00; i.e., what was, at the time the claim initially was advanced, the maximum amount of damages recoverable under the simplified procedure. Moreover, the evidence I received made it clear that the plaintiff would have been entitled to greater damages, had it not voluntarily “capped” its claim to bring it within the prevailing monetary limits of the simplified procedure.

[20] In the circumstances, this was a claim that merited heightened attention, even under the simplified procedure. In terms of proportionality, a greater degree of time and expense was justified.

Principle of Indemnity – Rule 57.01(1)(0.a)

[21] Rule 57.01(0.a) permits the court to consider, in exercising its cost discretion, “the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer”.

[22] As noted above, the plaintiff has tendered a Bill of Costs and rendered accounts with its written cost submissions.

[23] That material indicates and candidly acknowledges that, in relation to a matter of this nature, a higher than normal number of individuals with varying degrees of legal training and experience were involved in seeing the litigation through from beginning to end vis-à-vis the corporate defendant; e.g., ranging from articling students and associate lawyers with 1-3 years experience, to more senior lawyers with 7-13 years of experience.

[24] However, there are also explanations provided in that regard, (e.g., related to necessary overlap when carriage of the matter necessarily was transferred from one lawyer to another), and the circumstances have in my view been appropriately addressed by a corresponding voluntary reduction in the amount of costs being sought.

[25] Moreover, it seems clear that the matter reasonably was entrusted to more junior counsel in significant measure, when that was appropriate.

[26] I also independently find the hourly rates and partial indemnity percentage employed in calculation of the plaintiff’s Bill of Costs to be appropriate.

[27] As for the hours devoted to this matter, (reflected in the docket entries set forth in the accounts rendered by the plaintiff’s lawyers), I already have noted our courts’ repeated emphasis that cost awards must not be a simple mechanical or mathematical calculation; e.g., focused merely on details of time spent multiplied by hourly rates.

[28] In particular, cost indemnification is tempered not only by the overriding principle of reasonableness, but also by the related need for all involved in our justice system to focus on cost control and proportionality, as emphasized by our Rules of Civil Procedure, and by Rules 1.04(1) and 1.04(1.1) in particular.

[29] Having said that, I also am mindful of the general admonition, voiced by Justice Nordheimer (as he then was) in Basedo v. University Health Network, [2002] O.J. No. 597 (S.C.J.), but embraced by our Court of Appeal in Boucher v. Public Accountants Council (Ontario), supra, at paragraph 27, 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 overly lawyered”.

[30] In this particular case, having reviewed the material filed by the plaintiff, I have no concerns in that regard.

[31] As for the disbursements claimed by the plaintiff, they were slightly greater than what one might have expected in relation to a matter of this nature, but primarily because the defendants were self-representing, in turn calling for elevated courier and service charges. I independently find the claimed disbursements to be reasonable in the circumstances.

Reasonable Expectations of Unsuccessful Party – Rule 57.01(1)(0.b)

[32] In this case, neither defendant chose to file any responding cost material, providing any indication or evidence of what costs either might reasonably have been contemplating in relation to this litigation.

[33] In the result, I think the circumstances are similar to those highlighted in cost decisions such as Risorto v. State Farm Mutual Automobile Insurance Co. (2003), 2003 43566 (ON SC), 64 O.R. (3d) 135 (S.C.J.), wherein a party actively opposing a claim for costs submitted no dockets of its own, rendering its suggestion of cost claim “excess” an “attack in the air”, and warranting an adverse inference that the party from whom such costs were being sought incurred as much or more time and expense addressing the matter.

[34] Certainly, a party who fails to respond to a cost claim in any way whatsoever cannot be in a better position that a party that does – albeit without disclosing its own dockets.

Apportionment of Liability – Rule 57.01(1)(b)

[35] Rule 57.01(1)(b) permits the court to consider, in exercising its cost discretion, “the apportionment of liability”.

[36] In this particular case, there was no apportionment of “liability” as far as the plaintiff’s claim against the corporate defendant was concerned. The corporate defendant was found to be 100 percent liable to the plaintiff for its breach of contract.

[37] Again, as between the plaintiff and the corporate defendant, the plaintiff therefore clearly was the successful party, and entirely successful.

Complexity of Proceeding and Importance of Issues – Rules 57.01(1)(c) and Rules 57.01(1)(d)

[38] Rules 57.01(1)(c) and 57.01(1)(d) permit the court to consider, in exercising its cost discretion, “the complexity of the proceeding” and “the importance of the issues”.

[39] In my view, the plaintiff’s claims against the corporate defendant were relatively straightforward in terms of the legal principles involved; i.e., liability for breach of contract and quantification of damages for an established breach of contract.

[40] As reflected in my substantive endorsement, the facts nevertheless were slightly more complex, owing to the extended and somewhat informal/disjointed manner in which the parties communicated with each other, and the involvement of a banking institution as an additional party owing to the particular financing arrangements involved.

[41] The evidence filed in support of the summary judgment motion made it clear that the generator underlying the contractual arrangements was of considerable importance to the plaintiffs; so much so that a substitute eventually was purchased at considerably greater costs.

[42] Moreover, as already noted, the monetary sums involved were at the maximum then claimable under the simplified procedure.

Conduct and/or Steps that Lengthened Proceeding – Rules 57.01(1)(e) and 57.01(1)(f)

[43] Rule 57.01(1)(e) permits the court to consider, in exercising its cost discretion, “the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding”.

[44] Rule 57.01(1)(f) permits the court to consider whether any step in the proceeding was “improper, vexatious or unnecessary”, or “taken through negligence, mistake or excessive caution”.

[45] In this case, I was struck by the perfunctory nature of the formal defence filed by the corporate defendant, and its failure thereafter to actively defend the claim in any meaningful manner; e.g., by its complete failure to file any material responding to the plaintiff’s motion for summary judgment, in respect of which the corporate defendant did little more than have its principal participate in the relevant teleconference hearing to say little, (especially when statements about matters not in evidence necessarily were disregarded), apart from a request that the plaintiff not be granted the relief it was seeking.

[46] In the result, this seems like the archetype of a case where a defendant, having no meaningful defence to a claim, nevertheless has done the minimum required, in terms of formalities, to delay the plaintiff’s recovery for as long as possible, in turn putting the plaintiff to needless expense and associated frustration.

[47] The corporate defendant’s failure to agree on the costs being sought by the plaintiff, without bothering to file any responding and opposing written cost submissions, strongly reinforces that impression.

[48] In short, a great deal of time and expense could have been avoided, not only by the plaintiff but by a court struggling with finite resources to meet the demands of all those requiring its services, if the corporate defendant simply and reasonably had conceded the merit of claims it apparently had no intention of actually defending.

Refusal to Make Appropriate Admissions – Rule 57.01(1)(g)

[49] This was a factor only insofar as the circumstances, as already noted, strongly suggest that the corporate defendant should have admitted the merits of the plaintiff’s substantive claims and cost claims if it had no real intention to defend them.

[50] While there certainly is no obligation to settle a disputed claim, obliging a plaintiff to formally prove essentially undisputed claims to the satisfaction of the court is inherently abusive and wasteful.

Any Other Matter Relevant to Costs – Rule 57.01(1)(i)

[51] Apart from the considerations outlined above, in my view, there are no other matters of apparent significance relevant to determining an appropriate award of costs payable by the corporate defendant to the plaintiff.

[52] Without limiting the generality of the foregoing, while the question of costs as between the plaintiff and the defendant Mr Koolmees may have raised different issues and considerations, those would have been separate and distinct from those relating to the plaintiff’s claim for costs from the corporate defendant.

[53] In any event, as no costs were sought in relation to the plaintiff’s claim for summary judgment vis-à-vis the defendant Mr Koolmees, no such costs will be awarded.

Conclusion

[54] Again, the overall goal is to award costs in an amount that is fair and reasonable in a particular proceeding – having examined various factors such as those outlined in Rule 57.01.

[55] Having regard to all the circumstances of this particular case, including the various considerations explored in detail above, and the overriding principle of reasonableness, I think justice will be served if my discretion is exercised so as to award the plaintiff the entire discounted amount of costs it is seeking from the corporate defendant.

[56] An order shall go accordingly, whereby:

a. the corporate defendant is ordered to pay the plaintiff costs of the plaintiff’s summary judgment motion and action vis-à-vis the corporate defendant, fixed in the all-inclusive amount of $7,800.00, (i.e., inclusive of all claims for fees, disbursements and applicable HST), payable forthwith; and

b. no costs are awarded in relation to the plaintiff’s summary judgment motion vis-à-vis the defendant Mr Koolmees.

Settlement of Order

[57] I have been advised by the court office that plaintiff counsel has made inquiries of my willingness to approve a draft order, in light of an apparent failure by the defendants to respond to correspondence seeking approval of that draft order’s form and content.

[58] In particular, plaintiff counsel apparently asked if I would be willing to deal with settlement of the draft order in writing it if was submitted for my consideration, or whether an appointment should be scheduled through the trial coordinator.

[59] Settlement of the formal order is governed by Rule 59.04 of the Rules of Civil Procedure.

[60] Pursuant to Rule 59.04(5), parties represented at the hearing giving rise to the order, (which includes both defendants in this case), must approve the form of a draft order. Where such approval is not received within a reasonable time, Rule 59.04(10) requires the party seeking approval of the order to obtain an appointment before the registrar or judge to settle the form of the order.

[61] In this case, if the defendants continue to ignore correspondence from plaintiff counsel regarding approval of the draft order, plaintiff counsel should communicate with the trial coordinator to obtain a formal teleconference appointment (maximum 30 minutes) before me, in order to settle the order. In preparation for that hearing, plaintiff counsel should supply the court with the plaintiff’s draft order, along with any correspondence exchanged between the parties in that regard.

[62] On a final note: the defendants, who will be receiving a copy of this endorsement, should realize that both the corporate defendant and Mr Koolmees have an obligation to reasonably deal with formal settlement of the draft order, as both formally participated in the hearing of the plaintiff’s summary judgment motion.

[63] If both defendants unreasonably ignore plaintiff counsel’s correspondence seeking approval of the draft order, or unreasonably fail to approve the proposed draft order, thereby putting the plaintiff to needless additional expense involved in securing a formal appointment only to have the draft order formally approved by the court and settled, appropriate costs may be sought from both defendants, and may very well be awarded against both defendants.

[64] In the circumstances, Mr Koolmees should be responding to plaintiff counsel’s correspondence in relation to the draft order as soon as possible.

Ian F. Leach

Justice I.F. Leach

Date: January 5, 2021

[^1]: As noted in my earlier endorsement in this matter, since reported as Kode Contracting Ltd. V. B.K. Industrial Power Inc., 2020 ONSC 7354, the plaintiff had discovered a possible error in its naming of the corporate defendant in this litigation, but had not yet taken steps to amend the style of cause herein. The plaintiff has since done so. In particular, on December 11, 2020, Justice George made an order effectively amending the style of cause herein by removing the periods that had been inserted after each of the two initial letters of the corporate defendant’s name. This endorsement accordingly employs the amended style of cause.