Court File and Parties

Court File No.: 17-62150 Date: 2022-01-04 Ontario Superior Court of Justice

Between: TCA/THIER & CURRAN ARCHITECTS INC., Plaintiff And: ART GALLERY OF HAMILTON, Defendant

Counsel: Carolynne J. Wahlman, counsel for the Plaintiff Brent J. Foreman, Counsel for the Defendant

Heard: In Writing

Costs Decision

Justice L. Sheard

Overview

[1] The plaintiff (“TCA”) sued for payment in respect of services rendered to the defendant (the “AGH”) between May 27, 2015 and June 12, 2015. On December 3, 2015, TCA delivered an account to the AGH for $68,970.14 in respect of those services.

[2] At trial, TCA asserted it had an oral contract with the AGH, formed on or about May 25, 2015, in meetings between TCA’s principal and the Executive Director of the AGH. The issues at trial included whether an oral contract existed, and if so, on what terms. In the alternative, TCA claimed payment on a quantum meruit basis for services rendered.

[3] The AGH defended the claim. The AGH acknowledged it had an agreement with TCA: to assist the AGH in the preparation of a grant application. However, the AGH asserted that in return for its services, TCA agreed to accept an honorarium in the nominal amount of approximately $3,000, which was paid before this claim was commenced.

[4] Following a five-day trial, and for reasons set out in the judgment released November 10, 2021 (the “Judgment”), TCA’s claim was dismissed.

[5] The parties could not reach an agreement on costs. Pursuant to the Judgment, the parties were permitted to make written costs submissions. Para. 136 of the Judgment provides as follows:

[136] As the successful party, the defendant is presumptively entitled to its costs. The parties are encouraged to resolve the issue of costs. If they cannot agree, they may provide written costs submissions not to exceed three pages in length, exclusive of any Bill of Costs or Offer to Settle. The written submissions are to comply with the provisions of Rule 4.01 of the Rules of Civil Procedure. The submissions may be submitted using Caselines or by filing paper copies through the Trial Co-ordinator.

Submissions Received and Considered

AGH Submissions

[6] The AGH delivered its costs submissions on November 25, 2021. These consisted of three pages in submissions together the AGH’s Bill of Costs. The AGH seeks costs on a partial indemnity basis - 60% of the actual fees charged - in the total amount of $94,152.91, inclusive of fees, disbursements and HST.

[7] The Bill of Costs sets out fees allocated to discrete events in the proceedings. For example, the AGH claims payment of $10,000 in respect of “pleadings, including amendment of pleadings and the plaintiff’s request to transfer to simplified procedure, and telephone conference with Arrell J. On February 11, 2020.”

[8] Under the “pleadings” heading, time is shown for the following lawyers:

Curtis D. Tomlinson (“CDT”) - 5.8 hours; Brent J Foreman (“BJF”) – 15 hours; and Geoff B. Daley (“GBD”) 10.4 hours.

[9] Similarly, under the next heading - discovery of documents - a fee of $5,000 is claimed, together with the total time spent by the three lawyers under this heading. There is no break-out of the services rendered by each lawyer or their hourly rates charged.

[10] Fees claimed for preparing for and attending trial and for preparing written closing submissions total $41,000 and include 153.6 hours for BJF and 84.7 hours for a fourth lawyer on the file, Christopher L. Dilts (“CLD”).

[11] Time dockets and invoices were not provided to the court and apart from the headings, the Bill of Costs provides no description of the services rendered by any given lawyer, hourly rates or the fees associated with those services.

[12] The Bill of Costs does not provide the year of call of the lawyers, but does state that CDT has 4 years’ experience, BJF, 36 years’, GBD, 5 years’ and CLD, 6 years’. The action was commenced in 2017 and spanned a period of approximately four years. The Bill of Costs does not identify the dates used when specifying each lawyer’s years of experience.

[13] Under the heading “Contested motion for production of undertakings, to examine the plaintiff on answers to undertakings, to preserve evidence, brought by the Defendant” in the Bill of Costs, the AGH claims a fee of $3,000. The Bill of Costs lists the time spent by BJF and GBD. The Bill of Costs states that the motion was heard on October 25, 2019 and that the AGH was successful, but no order was made as to costs.

[14] As will be seen below, TCA disputes the AGH’s entitlement to claim the costs of this motion. Quite apart from TCA’s submissions, absent an award of costs or an order reserving the costs to the trial judge made by the motions judge, it is unclear on what basis this court could award costs for this motion.

[15] In the Bill of Costs, the AGH claims a fee of $15,000 for the examination for discovery of the defendant’s representative and the preparation and responses to the defendant’s undertakings and the plaintiff’s undertakings. Again, the Bill of Costs lists time spent by three lawyers but provides no particulars of the services rendered by each lawyer, the hourly rates charged, or the fees associated with that lawyer.

[16] The Bill of Costs sets out a fee claimed for 1) the pretrial conference; 2) preparation for trial and the trial brief; 3) attendance at trial scheduling court; and, 4) for the trial itself, including written closing submissions. Except for the trial scheduling court, at each event, time is listed for at least two lawyers.

[17] In its costs submissions, the AGH addresses the factors set out at r. 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which are to be considered by the court in exercising its discretion under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C. 43, when determining the costs to be awarded.

[18] In respect of those factors, the AGH asserts that a) the amount claimed was $200,000, “a significant amount to” the AGH; b) the trial was “relatively complex”; c) at trial, the plaintiff proceeded on the basis that it was entitled to $68,970.14 and did not attempt to establish the total amount claimed in the statement of claim; d) the proceeding ought to have been brought under simplified procedure, which would have reduced the legal costs; and, e) the consent of Arrell J. allowing the trial to proceed under the ordinary rules, left it to the trial judge to determine the costs ramifications, if any of rule 76 (simplified procedure).

TCA Submissions

[19] In its submissions, TCA asks either that costs be denied, or, if awarded, to be fixed in an amount significantly lower than the amount sought by the AGH. With respect to the former submission, TCA submits that:

(i) TCA provided a significant service to the AGH and lost money on this venture. The AGH recently received funds for the renovation and still retains the work product of TCA; (ii) TCA made reasonable offers before, and early in the litigation, in amounts lower than the costs now claimed by the AGH; and (iii) Counsel for the AGH refused to provide dockets or invoices, despite request.

[20] With respect to the submission at (iii), above, TCA provided no particulars of requests made by TCA but asserts that Form 57A contemplates that copies of the dockets or other evidence will be attached to support a claim for fees, and copies of invoices will be attached to support a claim for disbursements.

[21] TCA asserts that the AGH’s failure to make an offer during the litigation supports its submission that it be awarded no costs. TCA submits that the principle of “loser pays” is not a rule and that costs may be denied to a successful party who makes no offer: Przyk v. Hamilton Retirement Group Ltd. (The Court at Rushdale), 2021 ONCA 267.

[22] TCA submits that the costs claimed by the AGH offend the principle of proportionality and are outside the reasonable expectations of the amount that TCA would reasonably have expected to have to pay.

[23] When determining the appropriate amount of costs, TCA asks the court to apply the “overriding principle of reasonableness”: Heller v. Uber Technologies Inc., 2018 ONSC 1690 quoting from Boucher v. Public Accountants Council for the Province of Ontario (2004).

[24] TCA asserts that the fees claimed by the AGH for pleadings, and documentary discovery are excessive and that it was unreasonable to have three lawyers assigned to tasks usually handled by legal assistants or clerks.

[25] TCA states that the AGH’s reference to a motion heard on October 25, 2019 is incorrect. TCA states that the motion was heard on November 12, 2019 and that the AGH was successful and claimed partial indemnity costs of $4,870.41. TCA states that the AGH was awarded costs of $3,500 on the motion, which have been paid by TCA.

[26] TCA disputes the AGH’s submissions that, until trial, TCA indicated that it would pursue payment of the full amount claimed in the statement of claim. TCA asserts that in 2018, the parties agreed that the matter would proceed under r. 76 as a claim under $100,000 and on July 15, 2019, counsel for TCA confirmed, in writing, that the amount claimed was $68,970.14.

[27] TCA states that its legal costs, inclusive of fees, disbursements and HST, total $105,951.18, and that its costs would have been lower, but for the conduct of the AGH, including, among things, the AGH’s requests to adjourn the trial.

Request for Further Submissions

[28] Following delivery of TCA’s costs submissions, counsel for the AGH asked for leave to deliver reply submissions. Reply submissions were not contemplated in the Judgment. The AGH stated that TCA had criticized the AGH for not including dockets with its costs submissions; provided the court with distinguishable case law; suggested, incorrectly, that the AGH made no offers to settle; and, criticized the handling of the AGH’s defence. The AGH submits that these are “substantive issues” that require a response.

[29] TCA objects to the delivery of reply submissions but asks that, if the AGH is granted leave, TCA be granted permission to file reply submissions to the AGH’s reply submissions.

[30] I am not persuaded that further submissions are required. As noted earlier in this decision, AGH chose not to provide time dockets or evidence of disbursements notwithstanding that these are contemplated by r. 57.01 and by Form 57A. While TCA’s submissions identify these omissions, it provided no evidence of any requests made by TCA for these documents. As for TCA’s assertion that the AGH made no offers to settle, there was evidence led by both parties at trial showing otherwise.

[31] As for the alleged criticism levelled against the AGH in TCA’s costs submissions, allegations that excessive time was spent by opposing counsel is commonly raised as a ground to lower the amount claimed.

[32] I find that nothing contained in TCA’s costs merits granting leave to the AGH to deliver further submissions.

[33] TCA raised a concern that the AGH’s reply submissions served on TCA, had also been provided to me. They had not. I have not been provided with or seen the AGH’s reply submissions and will consider no further costs submissions from either party.

The Law

Costs Awards

[34] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, (the “CJA”) gives the court the discretion to determine by whom and to what extent costs are to be paid.

[35] In civil litigation, costs usually follow the event. That rule should not be departed from except for very good reasons: see Gonawati v. Teitsson and Macfie v. Cater at para 28): Usanovic v. La Capital Life Ins., 2016 ONSC 5795, at para. 7.

[36] Notwithstanding the foregoing, there is no “loser pays rule”, rather, a successful party is entitled to “a reasonable expectation” that it will be awarded its costs, absent “special circumstances”: Przyk, at paras.11, 12).

[37] Costs are discretionary and, in the exercise of that discretion, the court is to consider the factors set out in r. 57.01:

57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(0.a) 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;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

(i) any other matter relevant to the question of costs.

[38] In 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, [2010] O.J. No. 5692 (Ont. S.C.J.), Perell J. reformulated the purposes of the modern costs rules, at para. 10, as follows:

(1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements.

[39] Overall, the objective is to fix an amount that is fair and reasonable, having regard for, among other things, the expectations of the parties concerning the quantum of costs: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.) at paras. 26 and 38.

[40] A costs award should reflect what the court views as a fair and reasonable contribution by the unsuccessful party to the successful party rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier, 2002 CarswellOnt 4020, 118 A.C.W.S. (3d) 341 (C.A.), at para. 4: Fehr et al. v. Sun Life Assurance Company of Canada, 2021 ONSC 8368, at para 83).

[41] R. 57.01(5) provides that, after trial, a party who is awarded costs shall serve and file a bill of costs in Form 57A. Form 57A directs that the claim for fees and disbursements be itemized and that: In support of the claim for fees, attach copies of the dockets or other evidence. In support of the claim for disbursements, attach copies of invoices or other evidence.

[42] The dockets do assist the court in its consideration of the factors set out at r. 57.01 (0.a), but the absence of dockets does not prevent the court from completing its task under s. 131 of the CJA.

Simplified Rules

[43] R. 76 applies to claims for payment of $200,000, exclusive of interest and costs. For actions commenced prior to January 1, 2020, such as this one, the monetary limit is $100,000.

[44] As explained Garisto v. Wang, 2008 ONCA 389 at para. 17:

The purpose of the simplified procedure regime is to reduce legal costs and to enhance access to justice by making available a cheaper and more expeditious procedural regime appropriately geared to the litigation of modest claims.

[45] For example, r. 76.12 provides that in a trial brought under the simplified procedure, evidence-in-chief is to be adduced by affidavit. Cross-examinations and re-examinations are conducted in the usual manner, subject to any time limits set out in the trial management plan. R. 76 also requires that the trial not exceed five days.

[46] TCA submits that as of 2018, the plaintiff proposed and the parties agreed that the matter would proceed “per Rule 76 for under $100,000”. Those submissions appear to conflict with the endorsement of Arrell J., and his letter to counsel dated February 12, 2020 (copies included with the AGH costs submissions), in which he states, in part:

On consent the parties wish this matter to proceed under the ordinary rules for trial as it was commenced and most of the work done to date was prior to the R. 76 amendments of January 1, 2020 [on which date the monetary limit was increased from $100,000 to $200,000]….Any issue on R. 76 costs will be left to the trial judge.

[47] As per the consent of the parties and the order of Arrell J., the trial of this matter proceeded under the ordinary rules. Implicit in the endorsement of Arrell J., is that the parties treated this action as if the ordinary rules applied. For example, as evidenced by the AGH Bill of Costs, examinations for discovery took place over a period of four days, in respect of which BJF records 30.2 hours of time. By contrast, the simplified procedure limits oral discovery to a total of three hours by each party (R. 76.04 (2)).

Analysis

[48] I do not accept TCA’s submission that in determining the AGH’s cost award, the court should consider 1) that TCA lost money on the services it provided to the AGH; and 2) TCA’s implied assertion that, now that it has received building renovation funds, the AGH is using or benefitting from TCA’s work product.

[49] I find neither submission to have merit. TCA unsuccessfully advanced the latter assertion at trial: see para. 127 of the reasons for judgment. As to the former assertion - that TCA lost money on the venture - as the reasons for judgment make clear, it was TCA’s decision to undertake work that went well beyond what was necessary or expected by the AGH, in the hope of securing a future, lucrative contract. As it turned out, that approach did not bear fruit.

Offers to Settle

[50] Both parties led evidence at trial concerning the efforts made to resolve this dispute without litigation, which included the exchange of offers to settle.

[51] TCA submits that the AGH should be disentitled to costs or that its costs should be reduced because TCA made multiple offers to settle after the action was commenced and the AGH made none. I do not accept those submissions. None of the TCA offers referenced in its submissions contemplated a dismissal of the claim, that the AGH successfully defended.

[52] As for TCA’s assertion that the AGH made no offers to settle, the most I am prepared to infer from the AGH’s costs submissions is that none of its offers qualified as r. 49 offers, which might have entitled the AGH to seek costs above a partial indemnity scale.

[53] For these reasons, I conclude that the offers to settle exchanged by the parties have no bearing upon this cost decision.

Implications of Rule 76

[54] In his endorsement, Arrell J. left it to the trial judge to consider the costs implications, if any, of r.76.

[55] R. 76.13 (1) – (3), and (6) set out the negative costs consequences to a plaintiff who chooses not to bring its claim under the simplified rules and obtains a judgment within the r. 76 monetary limits. Those provisions do not apply here, as the plaintiff was unsuccessful.

[56] More to the point, as referenced in Arrell J.’s endorsement, the parties consented to the matter proceeding to trial under the ordinary rules, as the action had been commenced, and most of the work done, prior to the r. 76 increase in monetary limits from $100,000 to $200,000. It is apparent from the Bill of Costs that action was defended without regard to the simplified rules. For example, the examinations for discovery spanned four days, compared to the three hours per party permitted under r.76.04 (2).

[57] For the above reasons, I have determined that r. 76 has no bearing upon this cost decision.

Time Spent and Fees Claimed

[58] I accept TCA’s assertion that the fees claimed by the AGH are excessive. TCA supports its submission that the file appeared to be over-lawyered by reference to the Bill of Costs, which shows that at least two, and often three, lawyers were involved in virtually every step in the defence of this claim.

[59] I find that the time spent, and the fees claimed by the AGH to be disproportionately high when considered in the context of the relatively small amount of money at stake and the nature of the dispute. This was not a complex commercial claim. Rather, this dispute was over whether an oral agreement was reached in meetings between the principals of the plaintiff and the defendant, and, if so, the terms of the agreement. The meetings took place over the course of one day and the bulk of the documentary evidence consisted of relatively brief emails.

[60] At the core of TCA’s claim was whether an oral contract was formed on May 25, 2015 in a brief afternoon meeting between TCA’s president and the Executive Director of the AGH and in their discussions over dinner that evening. Both parties acknowledged that the credibility of these two witnesses was key. In other words, before the trial began, both parties understood that the success or defeat of the claim would likely turn on the finding of the court as to what happened on May 25, 2015.

[61] While TCA also led some evidence to support its claim for payment on a quantum meruit basis, that evidence played a minor role at trial.

[62] In support of the costs claimed, the AGH submits that this claim was “of significant importance” to it; the AGH relies on the generosity and support of its volunteers and local businesses and if TCA had succeeded in its claims, it could have harmed the reputation of the AGH. It is likely that TCA had similar concerns about harm to its reputation. Unfortunately, by its nature, litigation can cause harm to the “winner” as well as to the loser. The overall objective of costs of a cost award is that it be fair and reasonable. Even accepting that this case was important to the AGH, that concern cannot justify a “significant devaluation of the proportionality principle”: Cornerstone Properties Inc. v. Southside Construction Management Limited, 2020 ONCA 380, at para. 21.

[63] The determination of this claim primarily turned on the evidence (and credibility) of the principals of each party, both of whom found themselves defending their professional reputations. Nevertheless, this was a modest claim, involving a discrete and time-limited chronology of events and it was incumbent on both sides to conduct the litigation in a reasonable and proportionate manner.

[64] In my view, in the defence of this claim, it was not reasonable or proportionate to have multiple lawyers engaged in the handling of each step of the litigation, particularly when the lead lawyer was a senior and experienced litigator.

Disposition

[65] In the exercise of my discretion under s. 131, having considered r. 57.01 factors, and, above all, the overriding principles of fairness, reasonableness and proportionality, I fix the AGH’s costs in the total amount of $62,000 inclusive of fees, disbursements, and taxes. In this amount, no award is made in respect of the contested motion respecting undertakings (October/November 2019), as claimed by the AGH.

Justice L. Sheard

Released: January 4, 2022