Court File and Parties
COURT FILE NO.: CV-15-63529 DATE: January 7, 2022 SUPERIOR COURT OF JUSTICE – ONTARIO
BETWEEN: Dennis Marchand and 7104383 Canada Inc., Applicant AND: Stuart Graham and David Harroch, Respondents
BEFORE: Honourable Mr. Justice Martin James
COUNSEL: Brett Hodgins, Alexander Bissonnette, for the Applicant Jean-Francois Lalonde, Cheryl Letourneau for the Respondents David Harroch and 7104383 Canada Inc. Peter Liston for the Respondent, Stuart Graham
Costs Endorsement
James J.
Background
1This Application involved an application under the oppression provisions of the Canada Business Corporations Act. The Applicant was one of three shareholders in a small, part-time business that ran a minor hockey tournament once a year.
2The Applicant was successful but the amount recovered, $14,555.34, reflected the modest nature of the enterprise. This amount would be well within the monetary jurisdiction of Small Claims Court but for the fact that this special remedy is only available in the Superior Court of Justice.
3The Applicant has submitted a costs outline seeking cost of $42,416.65 on a partial indemnity basis and $56,965.16 on a substantial indemnity basis.
Analysis
4The Applicant claims the benefit of two written offers to settle. On October 1, 2019, the Applicant offered to let the Respondent, David Harroch (“Mr. Harroch”), out of the proceeding on a without costs basis. This offer contained a requirement that Mr. Harroch and the co-Respondent, Stuart Graham (“Mr. Graham”), sign a final release. It was impossible for Mr. Harroch to accept the offer without the agreement of Mr. Graham to sign a final release. Therefore, it was beyond Mr. Harroch’s unilateral control whether to accept the offer or not.
5In addition, Rule 49.11 of the Rules of Civil Procedure, O. Reg. 575/07, s.6(1), requires that in order to invoke the costs consequences prescribed by Rule 49.10, the offer must be made to all the defendants if the defendants are alleged to be jointly and severally liable. The relief sought in the Notice of Application in this case includes a claim for damages on a joint and several basis. The offer in question does not offer to settle the claim against both Mr. Harroch and Mr. Graham.
6In my view, the suggestion that this offer should trigger enhanced costs recovery by the Applicant is without merit.
7The second offer, dated December 5, 2019, was made to both Respondents and provided for a payment of $20,000 including costs together with a release. In Noyes v. Attfield (1994), 19 O.R. (3d) 319 (General Division), the Court said a court that was determining the applicability of Rule 49 should not enter into an ad hoc assessment of costs as of the date of the offer. The way the Applicant drafted the December 5, 2019 offer, requires such an assessment in order to determine whether the Applicant’s result after the hearing was better than the offer.
8On the other hand, the accumulated partial indemnity costs of the Applicant as of December 5, 2019 on an unadjusted basis were over $30,000 and therefore exceeded the amount of the entire offer, not including a compensatory payment of damages.
9As the Respondents point out, the issue of proportionality looms large in this case. The question of whether a litigant should pursue a claim when the costs of doing so are likely to substantially exceed the claim itself, is a valid one.
10Also, the Applicant utilized the services of several lawyers. Dockets were not provided so it is impossible to gauge whether efficiency was maximized, and the time spent on a task was reasonable. Certainly, internal communications between up to six lawyers would be significant.
11At bottom, the amount recovered has to be the main factor in determining a reasonable amount for costs.
12The time spent by the lawyers for the Applicant is significant. I agree that the issues were moderately complex. Without suggesting that the Applicant’s lawyers logged too much time, there is a real issue regarding how much the losing side ought to reasonably expect to pay.
13The Respondent, Stuart Graham, delivered a proposed bill of costs. It is not clear whether the delivery of a bill of costs was intended for comparative purposes or was based on the belief that Mr. Graham was entitled to recover costs. There is nothing in Mr. Graham’s costs submissions that refer to an entitlement to costs so I will assume that the bill of costs is to provide a comparative view of time spent. Mr. Graham says that his full indemnity costs are $10,744.61.
14Mr. Harroch also delivered a bill of costs wherein he submits that his full indemnity costs are $37,125.95.
15This compares with the Applicant’s claim that his full indemnity costs are $62,810.
Disposition
16In all the circumstances, I find that a proportionate and reasonable amount to be paid by the Respondents, considering the nature and size of the claim and the steps taken on behalf of the Applicant, is the sum of $20,000, all inclusive, payable by the Respondents jointly and severally.
Mr. Justice Martin James