Court File and Parties
COURT FILE NO.: CV-18-610299
DATE: 20210205
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
KINECTRICS INC.
Plaintiff
– and –
FCL FISKER CUSTOMS & LOGISTICS INC., DON ANDERSON HAULAGE LIMITED and NORMAN A. STEVENSON
Defendants
Marie-Pier Nadeau, for the Plaintiff
James Manson, for the Defendants Don Anderson Haulage Limited and Norman A. Stevenson
HEARD IN WRITING: February 5, 2021
Endorsement on Costs
SANFILIPPO J.
[1] By Reasons for Decision issued on November 3, 2020, I dismissed the motion brought by the Defendants, Don Anderson Haulage Limited and Norman A. Stevenson (collectively “Anderson Haulage”) for summary judgment under Rule 20.01(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Summary Judgment Motion”), and I granted a motion brought by the responding party Plaintiff, Kinectrics Inc. (“Kinectrics”), for leave to deliver affidavit evidence after the completion of cross-examinations, under Rule 39.02 (the “Evidentiary Leave Motion”): Kinectrics Inc. v. FCL Fisker Customs & Logistics Inc., 2020 ONSC 6748 (the “Decision”).
[2] In paras. 97 and 98 of the Decision, I encouraged the parties to confer and agree on the costs of both Motions, and if unable to agree by November 30, 2020, to request the scheduling of a Chambers Appointment to establish a process for the delivery of written cost submissions. As the parties could not agree on the issue of costs, a Chambers Appointment was held at their request on December 3, 2020, and a timetable was implemented for the delivery of written cost submissions by December 22, 2020. The parties completed the delivery of their material according to the timetable.
I. THE PLAINTIFF’S CLAIMS FOR COSTS
[3] Kinectrics seeks costs against Anderson Haulage of both the Summary Judgment Motion and the Evidentiary Leave Motion. Kinectrics does not seek any costs against the Defendant, FCL Fisker Customs & Logistics Inc., which took no part in the Motions.
[4] Kinectrics seeks costs on a partial indemnity basis as follows:
(a) On the Summary Judgment Motion, costs in the amount of $101,305.95, consisting of legal fees in the amount of $59,253, HST of $7,702.89, disbursements of $2,085.84 and expert fees of $32,264.22.
(b) On the Evidentiary Leave Motion, costs in the amount of $11,812.10, consisting of legal fees in the amount of $10,170, HST of $1,322.10 and disbursements of $320.
[5] Kinectrics submitted that its claims for costs were fair and reasonable, in that the hourly rates claimed are 60% of the actual solicitor and client fees and the number of hours of docketed lawyer’s time approximates the time docketed by the lawyers for Anderson Haulage. Kinectrics claimed the amount of $32,264.22 incurred in expert reports on the submission that the expert reports were tendered as part of the Summary Judgment Motion. Kinectrics contended that the expense of the Evidentiary Leave Motion was unnecessary because Anderson Haulage ought to have consented to the tendering of the further evidence as it was addressed at a case conference before Justice Steele. Moreover, Anderson Haulage had time to deal with the additional evidence before the return of the Summary Judgment Motion for hearing.
[6] Anderson Haulage submitted that the amount of Kinectrics’ claims for costs were excessive and well-beyond the reasonable expectation of Anderson Haulage. Anderson Haulage contended that the expense of the expert reports should be disallowed as the expert evidence will be used at trial. Anderson Haulage submitted that Kinectrics obtained an indulgence to file affidavit evidence after cross-examinations through the Evidentiary Leave Motion and, having received the indulgence, should not also receive a cost award.
A. Applicable Principles
[7] 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, 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), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 38; Zesta Engineering Ltd. v. Cloutier (2002), 2002 CanLII 25577 (ON CA), 21 C.C.E.L. (3d) 161 (Ont. C.A.), at para. 4.
[8] Absent special circumstances, “costs follow the event”: Bell Canada v. Olympia & York Developments Ltd. (1994), 1994 CanLII 239 (ON CA), 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), 2005 CanLII 16071 (ON CA), 75 O.R. (3d) 405 (C.A.), at paras. 48-52.
B. Analysis – Costs of the Summary Judgment Motion
[9] Anderson Haulage did not contest that Kinectrics was successful in the Summary Judgment Motion and is therefore entitled to an award of costs. There was also no dispute between the parties that the costs of the Summary Judgment Motion should be determined on a partial indemnity basis.
[10] Anderson Haulage submitted that the amount of lawyers’ fees claimed by Kinectrics for the Summary Judgment Motion 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). Anderson Haulage stated that its reasonable expectation was that the costs of the Summary Judgment Motion would approach $30,000, not the amount of $101,305.95 claimed by Kinectrics.
[11] Kinectrics’ Bill of Cost on the Summary Judgment Motion claimed 184.7 hours of lawyers’ time at hourly rates that were calculated at 60% of the lawyers’ actual hourly rates. Regarding the number of docketed hours, Kinectrics’ total of 184.7 was higher than the 164.5 hours that Anderson Haulage’s Bill of Costs stated were required to address the Summary Judgment Motion.
[12] I am satisfied that the hourly rates claimed by Kinectrics are within the range of 55%-60% as 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.
[13] Kinectrics submitted that in the determination of lawyers’ fees as part of a cost analysis, the court should not “second-guess successful counsel on the amount of time spent on the case or the allocation of counsel to the tasks at hand”, as stated in Risorto v. State Farm Mutual Automobile Insurance Co. (2003), 2003 CanLII 43566 (ON SC), 64 O.R. (3d) 135 (Sup. Ct.), at para. 9, and applied in Gallo v. Bramalea City Centre Equities Inc., 2019 ONSC 2227, at para. 14. However, the determination of all elements of a cost award, including lawyers’ fees, must be subject to the overriding objective of determining an award of costs that is reasonable, fair and proportionate. In my view, the melding of the court’s objective of ensuring that an award of costs is reasonable, fair and proportionate with recognizing counsel’s choice of staffing and lawyers’ time dedicated to court process was best explained by Nordheimer J., as he then was, in Basdeo v. University Health Network, [2002] O.J. No. 597 (Sup. Ct.), at para. 7, wherein he 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 adopt and will apply this approach.
[14] Here, the amount of lawyers’ time incurred by Kinectrics is higher than the lawyers’ time incurred by Anderson Haulage, but not sufficiently higher to be manifestly unreasonable. I will, however, deduct the counsel fee billed by the Kinectrics lawyer who attended at the hearing of the Motions but was not able to make submissions by reason of having provided affidavit evidence.
[15] I find merit in Anderson Haulage’s submission that the Kinectrics’ staffing of the Summary Judgment Motion with two senior lawyers (2003 and 2007 Years of Call) was “over-lawyered”. This is a factor in my determination of costs.
[16] The Court of Appeal has emphasized that 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.
[17] With this objective in mind, I have taken into consideration, in accordance with Rule 57.01(1)(c) that the issue raised on the Summary Judgment Motion was of moderate complexity. The motion was important to the parties, a factor that I have considered in accordance with Rule 57.01(1)(d). 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). Kinectrics did not deliver all its affidavit evidence before cross-examinations, and Anderson Haulage raised the issue of application of extra-provincial law in a supplementary motion record, resulting in the filing of multiple records by both parties. In my assessment of proportionality, I have taken into consideration that this action involves a claim for $580,000.
[18] In my analysis of a cost award for the Summary Judgment Motion that is fair, reasonable and proportionate, I will award Kinectrics lawyer’s fees of $40,000 inclusive of HST. I will also award the disbursements claimed of $2,085.84.
[19] Kinectrics also claimed for expert fees totaling $32,264.22, consisting of the following: $8,886.70 for Danny Christopher Silman, of SEA Limited, senior fire investigator; $6,566.43 for Vincent Rochon of Roar Engineering, a licensed consulting electrical and fire protection engineer; and $16,811.09 for Daniel Simmons, a Newfoundland and Labrador lawyer. Kinectrics submitted that these expert reports were filed on the Summary Judgment Motion and are thereby recoverable as disbursements, relying on Gallo.
[20] In Gallo, the party who successfully resisted a motion for summary judgment claimed costs associated with expert opinion evidence that had been filed. The unsuccessful party contended that the expert opinions related to the action generally, and so their resultant cost should be part of a cost assessment at trial rather than on the summary judgment motion. Justice Faieta rejected this position and included the expert opinion expense as part of his cost assessment on the motion on the basis that the expert reports were used on the motion.
[21] I decline to follow this approach, and will exercise my discretion to exclude the cost of the expert opinions on this motion and leave the expert reports, and their costs, to be addressed at trial, knowing that the expert opinion evidence will form part of Kinectrics’ case at trial. I will explain why.
[22] First, unlike in Gallo, the expert opinion evidence will serve more purposes at trial than it served on the Summary Judgment Motion. On the Summary Judgment Motion, the expert opinion evidence of Mr. Simmons on Newfoundland and Labrador law pertained only to Anderson Haulage’s limitation defence. At trial, the potential application of the Newfoundland and Labrador law applies also to whether Ontario law or the law of Newfoundland and Labrador governs the issue that I referred to in the Decision as the “Carriage of Goods Issue”. Namely, whether the Ontario Highway Traffic Act, R.S.O. 1990, c. H.8 and O. Reg. 643/05 limits the liability of the property damage claim according to a prescribed value per weight of the cargo, as opposed to its actual monetary value. Consequently, Mr. Simmons’ expert opinion evidence has broader and additional use at trial than on this Summary Judgment Motion.
[23] This applies equally to the reports of Mr. Silman and Mr. Rochon, which were tendered on the Summary Judgment Motion solely for the purpose of the issue of discoverability to respond to Anderson Haulage’s limitation defence. Mr. Rochon was not retained to address the issue of discoverability, but rather his expert opinions on the origin and cause of the fire were said to impact the issue of discoverability on the Summary Judgment Motion. The expert engineering evidence, and the investigative evidence, will have broader and additional use at trial than it had on the Summary Judgment Motion.
[24] Second, while the expert reports had a role in the Summary Judgment Motion in establishing that there were genuine issues requiring a trial, the principal purpose of this expert opinion evidence is to assist the Court in the issues raised by Kinectrics at trial. The determination of the Summary Judgment Motion does not exhaust their usefulness.
[25] Third, if I had decided to award costs on this Summary Judgment Motion for these expert reports, and if Kinectrics were ultimately to fail in its action against Anderson Haulage, Kinectrics would have received the cost of expert reports used at trial even though it was the unsuccessful party at trial. This result would be inconsistent with the principle that, absent special circumstances, the successful party is entitled to costs. Consequently, even if I had awarded costs of the expert reports on this Summary Judgment Motion, I would have ordered that the costs are “in the cause”, so that they would only be recovered by Kinectrics in the event of success at trial. The effect of this order would have functionally been the same as declining to award the costs on this motion and leaving the issue of costs of Kinectrics’ expert reports to the trial judge.
[26] For these reasons, I am satisfied, for the purpose of my cost analysis of the Summary Judgment Motion, that Kinectrics has shown reasonable partial indemnity costs of $42,085.84, consisting of lawyers’ fees of $40,000, inclusive of HST, and disbursements of $2,085.84.
C. Analysis – Costs of the Evidentiary Leave Motion
[27] Kinectrics completed its cross-examination on the affidavit evidence filed by the moving party, Anderson Haulage, and then sought to file further affidavit evidence, in contravention of Rule 39.02(1). Anderson Haulage did not consent to the late filing of the further affidavit evidence, necessitating the Evidentiary Leave Motion.
[28] The parties disagreed on the extent to which this issue was addressed at a case conference before Justice Steele, conducted on July 10, 2020. Justice Steele’s endorsement showed that a timetable was established for the further delivery of engineering opinion evidence by both parties, but there was no ruling on Kinectrics’ intention to file affidavit evidence.
[29] I granted Kinectrics’ Evidentiary Leave Motion, which was opposed by Anderson Haulage even though Anderson Haulage filed no materials in response to this Motion. Furthermore, by the time of the hearing, Anderson Haulage filed reply evidence of its expert on Newfoundland and Labrador law, rendering the objection to the leave redundant to the extent of the filing of further evidence of extra-provincial law.
[30] Kinectrics claimed $11,812.10 in partial indemnity costs, consisting of $10,170 in legal fees, HST of $1,322.10 and disbursements of $320. Anderson Haulage submitted that the costs claimed on the Evidentiary Leave Motion were “grossly excessive” and that Kinectrics ought not to be awarded costs for obtaining an indulgence. Kinectrics’ Bill of Costs claimed 33.2 hours of lawyers’ time for preparation of the affidavit and factum filed on the Evidentiary Leave Motion. I find that this is unreasonable for a simple motion of this nature, based on a record of largely uncontested facts. This motion occupied modest time in the joint hearing of the motions.
[31] Kinectrics was successful on the Evidentiary Leave Motion and is therefore entitled to costs absent special circumstances. Here, the purpose of the motion was to obtain an indulgence for having breached Rule 39.02(1), and I will factor this into my analysis of costs. I will also weigh my determination that Anderson Haulage’s conduct unnecessarily lengthened this motion and its resultant expense. Anderson Haulage did not file any responding materials on the Evidentiary Leave Motion, rendered part of the motion unnecessary by filing reply expert opinion evidence on the issue of extra-provincial law, and had an opportunity through the court-ordered timetable to file materials that would have rendered the Evidentiary Leave Motion unnecessary, but nonetheless continued in its objection. This caused unnecessary expense.
[32] For these reasons, I am satisfied, for the purpose of my assessment of the costs of the Evidentiary Leave Motion, that Kinectrics has shown reasonable lawyers’ fees and disbursements of $5,000, all inclusive, which I shall reduce to $2,500, all inclusive, to take into consideration that the leave was made necessary by Kinectrics’ breach of Rule 39.02(1).
II. CONCLUSIONS
[33] I conclude, for the purpose of my cost analysis, that Kinectrics has shown an entitlement to reasonable partial indemnity costs on the Summary Judgment Motion payable by Anderson Haulage. The objective of quantification of costs is to determine an amount that is fair, reasonable and proportionate. On the basis of the reasons explained, I find that the fair, reasonable and proportionate quantification of these costs is $42,085.84, all inclusive of legal fees, applicable taxes and disbursements.
[34] I conclude as well that Kinectrics was successful in obtaining the indulgence sought on the Evidentiary Leave Motion. On the basis of the reasons explained, I find that the fair, reasonable and proportionate quantification of these costs to Kinectrics payable by Anderson Haulage is $2,500, all inclusive of legal fees, applicable taxes and disbursements.
[35] In accordance with Rule 57.03(1)(a), these cost awards shall be paid within 30 days.
III. DISPOSITION
[36] For the reasons set out herein, I order as follows:
(a) The Plaintiff, Kinectrics Inc., is awarded costs of the Summary Judgment Motion on a partial indemnity basis payable within 30 days by the Defendants, Don Anderson Haulage Limited and Norman A. Stevenson, fixed in the amount of $42,085.84, all inclusive of legal fees, disbursements and applicable taxes.
(b) The Plaintiff, Kinectrics Inc., is awarded costs of the Evidentiary Leave Motion on a partial indemnity basis payable within 30 days by the Defendants, Don Anderson Haulage Limited and Norman A. Stevenson, fixed in the amount of $2,500.00, all inclusive of legal fees, disbursements and applicable taxes.
Sanfilippo J.
Date: February 5, 2021
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
KINECTRICS INC.
Plaintiff
– and –
DON ANDERSON HAULAGE LIMITED and FCL FISKER CUSTOMS & LOGISTICS INC. and NORMAN A. STEVENSON
Defendants
ENDORSEMENT ON COSTS
Sanfilippo J.
Date: February 5, 2021