DATE: 202203 28 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: GFL Environmental Inc., Plaintiff/Moving Party AND: Peras Construction Inc., Defendant/Responding Party
BEFORE: JUSTICE L. SHEARD
COUNSEL: Brent Murphy for the Plaintiff/Moving Party John Cintosun, for the Defendant/Responding Party
HEARD: In Writing
COSTS DECISION
Overview
[1] The plaintiff, GFL Environmental Inc. (“GFL”), was successful on its motion for summary judgment against the defendant, Peras Construction Inc. (“Peras”), for payment of $113,870.46, being the balance owing on GFL’s invoice #DV0000004123 dated October 10, 2019, to Peras.
[2] The only issue in dispute on the motion was the amount GFL was entitled to charge for the soil it removed. GFL claimed that Peras agreed to pay $70 per metric tonne (“MT”) of soil removed. Peras claimed that GFL had agreed to charge $52/MT on the first 4000 MT of soil removed, $70/MT for the next 2000 MT, and that the parties had no agreement on what GFL would charge for the final 2,928.82 MT of soil removed. On the motion, Peras did not dispute the quantity of soil removed by GFL, nor the nature of the soil removed.
[3] GFL was successful on the motion and was awarded judgment for the full balance owing of $113,870.46, based on the rate of $70/MT, together with prejudgment interest of 24% per annum calculated from November 10, 2019, to the date of judgment, January 19, 2022, and post-judgment interest at the same rate. By rough estimate, the judgment amount totals $173,245.32: $113,870.46 + prejudgment interest of $59,374.86 ($113,870.46 x 24% 365 x 793 days).
[4] The evidence on the motion consisted of affidavits from GFL’s principal and its Regional Credit Manager, and the affidavit of Peras’s director. The principals were cross-examined on their affidavits and the motion materials referred to the transcripts of those cross-examinations.
[5] As set out in the Reasons for Decision:
i) there was no genuine issue requiring a trial and that a motion for summary judgment allowed the court to fairly and justly adjudicate the dispute and would be a timely, affordable and proportionate procedure;
ii) in oral argument on the motion, counsel for Peras acknowledged that the only evidence as to the nature of the soil removed came from GFL. GFL’s evidence was that all the soil was untreatable;
iii) Peras was unable to identify any document to support the evidence of its principal that GFL had agreed to charge $52/MT for the removal of untreatable soil;
iv) the evidence supported a finding that GFL reduced its originally quoted rate for removal of untreatable soil from $95.75 to $70/MT to match the price Peras had obtained from a GFL competitor. This evidence also supported the inference that Peras was fairly charged by GFL; and
v) GFL established that the amounts invoiced by GFL were consistent with its agreement with Peras.
[6] In the Reasons for Decision, the parties were invited to agree on costs. If they could not agree, costs would be decided by the court. The parties did not agree on costs.
[7] At the court’s direction, the parties submitted Costs Outlines followed by written Costs Submissions to be considered by the court in determining costs. The parties’ Costs Outlines and Submissions have been taken into account in this decision.
The Law
[8] 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.
[9] 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.
[10] 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.
[11] 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.
[12] 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) at paras. 26 and 38.
[13] 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).
Offers to Settle
[14] GFL served an Offer to Settle on April 30, 2021, which reads, in part, as follows:
I am authorized to extend my client’s Rule 49 offer at this time, which is to accept payment of the amount of $81,956.72, representing a reduction in the invoices to $60MT, plus costs on a partial indemnity basis. For the purposes of acceptance prior to any further steps being taken, my client will accept payment of $7,500.00 in costs, for a total settlement of $89,456.72.
Should any further litigation steps be taken, this amount for costs will be withdrawn, and the offer will become “costs on a partial indemnity basis, to be agreed upon or assessed”. This offer remains open for acceptance until 1 minute after the commencement of trial of summary judgment motion unless expressly withdrawn in writing in advance. (sic)
[15] By its terms, the GFL Offer remained open for acceptance until one minute after the commencement of the summary judgment motion.
[16] Peras acknowledges that the GFL Offer qualifies as a Rule 49 offer but states that Peras “balked” at the GFL Offer because it viewed the costs of $7,500 to be excessive.
[17] Paris served its own Offer to Settle dated May 7, 2021, by which Peras offered to make a one-time payment of $25,000. Peras requested that if GFL did not accept the Peras Offer, that a conference call be arranged in order to negotiate a settlement. Peras states that no conference call was initiated and, instead, GFL brought a motion for summary judgment [dated June 17, 2021].
[18] There is no dispute that GFL obtained a judgment that was more favourable than the terms of the GFL Offer. Pursuant to the provisions of r. 49.10 (c) of the Rules of Civil Procedure R.R.O. 1990 Reg. 194, unless the court orders otherwise, GFL is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date.
Positions of the Parties
[19] GFL relies on r. 49.10 (c) and seeks costs of $43,901.56 comprised of fees calculated on a partial indemnity prior to service of the GFL Offer and on a substantial indemnity there after as follows:
Partial indemnity fees before April 30, 2021 $ 5,993.70 Substantial indemnity fees after April 30, 2021 $31,145.60 HST on fees $ 4,828.11 Disbursements $ 1,934.15 Total $ 43,901.56
[20] In its Bill of Costs, GFL has included the time spent by lawyers: one senior lawyer, called in 2008 and two junior lawyers, one called in 2017, and Brent Murphy, who was called in 2018. The lawyers’ time totalled 121.8 hours and law clerk time was recorded at 28.7 hours.
[21] Under the supervision of the more senior lawyer, Mr. Murphy was given carriage of this matter: he attended the examinations for discovery and argued the motion. The litigation began in late 2020. In the course of the litigation, Mr. Murphy’s hourly rate increased from $275 to $400.
[22] Peras asserts that the costs claimed by GFL are “excessive, disproportionate and unreasonable”. Peras takes particular issue with the increase in the hourly rate charged by Mr. Murphy and the number of lawyers involved in the file.
[23] Peras submits that given the number of lawyers involved and their respective experience, the work ought to have been accomplished in a fraction of the docketed time. Peras also submits that the costs claimed are disproportionate to the amount Peras would have reasonably expected to pay “for the motion” and are extreme in that the costs claimed equal approximately 40% of the total amount claimed. (That assertion does not appear to take into account the significant amount awarded in prejudgment interest).
[24] Peras does not suggest an amount that would be appropriate for the court to award in costs.
[25] In the Costs Outline submitted by the counsel for Peras, Peras states that its full indemnity costs are $13,037.32, broken out as follows: $10,837.50 in fees, disbursements of $790.94, and HST on fees of $1,408.88. Peras was represented by one lawyer, John Cintosun, whose year of call is 2013. Mr. Cintosun’s billing rate is shown to be $250.00.
Analysis
Offer to Settle
[26] Pursuant to r. 49.10 (c), unless the court orders otherwise, GFL is entitled to its costs calculated on a substantial indemnity basis from and after April 30, 2021. I find no basis to order otherwise.
[27] The GFL Offer represented a true compromise of GFL’s claim and allowed for Peras to accept the invoice amount and to have the costs assessed. The reason given by Peras for not accepting the GFL Offer - that the costs of $7,500 were extreme - makes little sense given the option to have the costs fixed or assessed.
[28] It is difficult to view the Peras Offer of $25,000 as a reasonable attempt to compromise, in view of the position Peras took as to the rates it ultimately acknowledged it had agreed to pay GFL.
Complexity and Failure to make Admissions
[29] GFL submits that this action ought to have been of average complexity but for the many arguments raised by Peras. I accept those submissions.
[30] In its Factum, Peras asserted, for example, that:
a) some of the soil removed was treatable and that GFL wrongly charged Peras the full untreatable rate for such soil;
b) that summary judgment was not appropriate because there were issues that required a trial, such as, for example, the determination of the proportion of treatable and non-treatable soil removed;
c) the weight of the soil removed was in issue as there were scale tickets that were not signed.
[31] As noted in my Reasons for Decision, in oral submissions on the motion, Peras acknowledged that it did not dispute the amount of soil removed, nor that the soil that was removed was untreatable. By raising arguments in its Factum that it (properly) abandoned on the hearing, Peras added to the complexity of the proceedings and to the costs that were incurred by GFL to respond to the arguments.
Importance to the Parties
[32] GFL submits that the issues and the amount claimed in the proceeding were important to GFL. GFL submits that unpaid accounts are important to the stability of GFL’s business and that the motion for summary judgment was significant as it disposed of all issues raised in the litigation. I accept those submissions.
Hourly Rates and Time Spent
[33] GFL submits that the experience of the lawyers and the hourly rates and the time spent are all to be considered when awarding costs. GFL acknowledges the increase in Mr. Murphy’s hourly rate and explains that it occurred, in part, by reason of Mr. Murphy’s transfer to his law firm’s Vancouver office.
[34] While I accept the explanation for the increase in Mr. Murphy’s hourly rates, in my view they are higher than might reasonably be expected to be charged by a lawyer called in 2018.
Reasonable Expectations
[35] GFL submits that Peras should reasonably have expected to pay costs in an amount similar to the costs now claimed by GFL, on the basis that the costs to be awarded to GFL would be calculated on a substantial indemnity basis after the date of the GFL Offer.
[36] I accept that submission in part. However, whereas Peras should reasonably have expected that GFL would be awarded its substantial indemnity costs if GFL obtained a judgment in an amount equal to or greater than the GFL Offer, in my view, both the time spent and the hourly rates claimed by GFL exceed an amount that is fair and reasonable, even when applying substantial indemnity rates to a portion of the fees.
[37] In reaching that conclusion, I have reviewed the time spent and the fees charged as set out in Peras’ Costs Outline. However, I find that both the hourly rate charged, and the time spent, by Mr. Cintosun, fall well below what one would have reasonably expected for the defence of the action and the motion for summary judgment.
Disposition
[38] Having given consideration to the provisions of r. 49.10 and r. 57, and the applicable case law, I exercise my discretion to award the costs of this action to GFL in the amount of $35,834.15 comprised of fees of $30,000, 13% HST on the fees of $3,900, plus disbursements of $1,934.15. This award represents partial indemnity costs of $5,900 to the date of the GFL Offer and substantial indemnity costs thereafter of $24,100.
L. Sheard J.