Court File and Parties

Court File No.: CV-19-119 Date: 2022-04-08 Superior Court of Justice - Ontario

Re: Tycorra Investments Inc. dba Wabash Canada Inc., Tycorra Group Inc., Tycorra Leasing Inc. and Tycorra Fleet Solutions Inc., Plaintiffs And: PNC Equipment Finance, a Division of PNC Bank Canada Branch and PNC Financial Services Group, Inc., Defendants

Before: D.A. Broad

Counsel: Paul Fruitman, Niklas Holmberg, and Joseph Stonehouse for the Plaintiffs, Linda Fuerst and Fahad Siddiqui for the Defendants

Costs Endorsement

[1] The parties have evidently been unable to resolve the issue of costs and both sides have delivered written submissions on costs.

[2] In their motion, the defendants sought an order:

(a) dismissing the plaintiffs’ action under rule 21.01(1)(a) of the Rules of Civil Procedure;

(b) in the alternative, striking out the plaintiffs’ Fresh As Amended Statement of Claim (the “Fresh Claim”) in its entirety, without leave to amend, pursuant to rule 21.01(1)(b);

(c) in the further alternative, dismissing all claims advanced by Tycorra Group Inc., Tycorra Leasing Inc. and Tycorra Fleet Solutions Inc. (collectively, the “Additional Tycorra Plaintiffs’) under rule 21.01(a) or an order under rule 21.01(1)(b) striking out all references to the Additional Tycorra Plaintiffs in the Fresh Claim.

[3] In my Endorsement reported at 2022 ONSC 159 I ordered that:

(a) the claims of the Additional Tycorra Plaintiffs shall be struck out and dismissed as disclosing no reasonable cause of action, without leave to amend;

(b) the Additional Tycorra Plaintiffs shall be removed as plaintiffs in the title of proceedings and all references to them shall be struck from the Fresh Claim;

(c) the claim of the plaintiff Tycorra Investments Inc. dba Wabash Canada Inc., Tycorra Group Inc. in respect of dealings by the defendants with TFI Transport 2 LP (“TFI”) shall be struck out as disclosing no reasonable cause of action, with leave to amend in accordance with the draft Amended Fresh As Amended Statement of Claim appended a Schedule C to the plaintiffs’ Factum; and

(d) the balance of the defendants’ motion be dismissed.

[4] The plaintiffs and the defendants each seek costs of the defendants’ motion to strike under rule 21, each side claiming that they were the successful parties on the motion.

[5] The plaintiffs seek costs in the amount of $75,000, which they characterize as being “slightly above” their partial indemnity costs of $66,246.54 and below their substantial indemnity costs of $99,187. The quoted partial indemnity amount is comprised of $55,123.20 in respect of fees, HST on fees in the sum of $7,166.02, estimated lawyer’s fee for appearance $3,593.40, and disbursements in the sum of $363.92.

[6] The defendants seek costs in the sum of $21,445.32 comprising three-quarters of their total partial indemnity costs of $28,593.77. The quoted total partial indemnity amount is comprised of fees in the sum of $25,021.04, HST on fees in the sum of $3,252.73, and non-taxable disbursements in the sum of $320.

[7] The plaintiffs submit that the defendants’ only success was to be granted their “further alternative” relief of having the Additional Tycorra Plaintiffs removed as plaintiffs. The plaintiffs say that removing these subsidiary plaintiffs does not materially alter the case or the relief sought. The plaintiffs say that although the court accepted the defendants’ argument that a claim involving a lease to TFI should be struck, it found that the defect in the claim resulted from a drafting error that could be easily corrected by an amendment.

[8] The plaintiffs also submit that the defendants’ delay in bringing the rule 21 motion justifies an award of increased costs against the defendants, relying on rule 21.02 which provides that “a motion under rule 21.01 shall be made promptly and a failure to do so may be taken into account by the Court in awarding costs.”

[9] The defendants submit that they were successful on three of the four issues decided on the motion. The motion removed three of four plaintiffs and narrowed the claims to be discovered and determined. The defendants say that as the moving party under rule 21, since it enjoyed some success, it is entitled to the costs of its motion with an appropriate reduction to reflect the fact that it was only partially successful.

[10] Moreover, the defendants say that they were entirely successful on the plaintiffs’ principal argument that the motion should be dismissed without considering its merits.

[11] The defendants also submit that they were entirely successful in their motion to strike the plaintiffs’ pleaded claim in respect of TFI. Although leave to amend was granted, the defendants’ success ensures that no further resources are spent on fact discovery or motion practice regarding a hopeless claim.

Guiding Principles

[12] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, provides that "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.”

[13] The factors to be considered by the court, in the exercise of its discretion on costs, are set forth in sub rule 57.01(1), including, in particular:

(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.

[14] The Court of Appeal has observed that modern costs rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlements; and (3) to discourage and sanction inappropriate behavior by litigants (see Fong v. Chan, [1999] O.J. No. 4600 (Ont. C.A.) at para. 24).

[15] Justice Perrell in the case of 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, [2010] O.J. No. 5692 (Ont. S.C.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.

[16] The usual rule in civil litigation is that costs follow the event and that rule should not be departed from except for very good reasons (see Gonawati v. Teitsson, [2002] CarswellOnt 1007 (Ont. C.A.) and Macfie v. Cater, [1920] O.J. No. 71 (Ont. H.C.) at para 28).

[17] It is well known that the overall objective in dealing with costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful party. The expectation of the parties concerning the quantum of costs is a relevant factor to consider. The court is required to consider what is "fair and reasonable" having regard to what the losing party could have expected the costs to be (see Boucher v. Public Accountants Council (Ontario), [2004] O.J. No. 2634 (Ont. C.A.) at para. 26 and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, [2005] O.J. No. 160 (Ont. C.A.)).

Discussion

[18] It is clear that the outcome of the motion was split. The defendants were unsuccessful in their bid to dismiss the plaintiffs’ claims in their entirety but were successful in striking the claims of the Additional Tycorra Plaintiffs, without leave to amend. Although the defendant succeeded in striking the plaintiffs’ claim respecting TFI, it was acknowledged that the defect arose from a drafting error, and the plaintiffs were granted leave to amend to correct it. The plaintiffs’ argument that the defendants’ motion should be dismissed without a hearing on the merits due to delay was unsuccessful. Significant portions of the facta and submissions of the parties were devoted to this issue.

[19] In the case of The Catalyst Capital Group Inc. v West Fac Capital Inc., 2019 ONSC 128 Wilton-Seigal, J. observed that, in a case where the moving defendants were successful in striking most of the plaintiffs’ claims against them, but not the principal claim, the moving parties should be entitled to a portion of their costs, based upon an allocation between the claims struck and the principal claim which survived. The allocation was based on a combination of the relevant portions of the parties’ facta and the time required for submissions.

[20] In my view the relief which the defendants’ achieved, namely the striking of the Additional Tycorra Plaintiffs’ claims in their entirety, and the striking of the claim related to TFI (albeit with leave to amend) were not insignificant. The striking of the Additional Tycorra Plaintiffs’ claims will serve to narrow the issues for discovery and trial significantly and the correction of the TFI claim will also help to clarify and streamline the issues. The defendants also succeeded in their position that the motion should be determined on the merits. They should therefore be entitled to an award of costs. However, their costs should be reduced to reflect the fact that they did not succeed in their main submission, which engaged the most attention in the parties’ facta and submissions, namely that the plaintiffs’ action should be dismissed in its entirely.

[21] The defendants’ partial indemnity costs totalled $28,593.77. The plaintiffs took no issue with the quantum of the defendants’ costs. Indeed, judging by the plaintiffs’ claimed partial indemnity costs, the defendants’ costs would be considered to be well within the plaintiffs’ reasonable expectations.

[22] In my view, the defendants’ partial indemnity costs of the motion should be reduced to fifty (50%), rounded to $14,300 inclusive, to reflect the fact that they did not succeed on their main prayer for relief.

Disposition

[23] It is ordered that the plaintiffs pay to the defendants costs of the motion fixed in the sum of $14,300 inclusive, within 30 days hereof.

D.A. Broad, J. Date: April 8, 2022