Court File and Parties
COURT FILE NO.: CV-20-635228 DATE: 20220329 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Business Development Bank of Canada AND: ROC Ice Cream Inc. and Kelly Ann Bovair a.k.a. Kelly A. Bovair and Justin H. Carter
BEFORE: J.T. Akbarali J.
COUNSEL: Sean N. Zeitz, for the Plaintiff Jeffrey J. Simpson, for the Defendant Kelly Ann Bovair a.k.a. Kelly A. Bovair No one appearing, for the Defendants ROC Ice Cream Inc. and Justin H. Carter
HEARD: March 28, 2022
Endorsement
Overview
[1] The plaintiff moves for summary judgment on a guarantee. The defendant guarantor resists the motion, arguing that the guarantee fails for want of consideration, or, alternatively, that in the circumstances of this case, it would be unconscionable to enforce the guarantee.
Brief Background
[2] I deal with the facts in greater detail in my analysis, below. At this stage, it suffices to provide some brief background to the litigation.
[3] The plaintiff bank made two loans to the corporate defendant, one for $100,000 and a second for $65,000. There is no dispute that the defendant Justin Carter was a shareholder, director, and involved in the management of the corporate defendant. The defendant Kelly Ann Bovair was Carter’s spouse at the time the loans were advanced. There is no evidence before me to indicate the status of their relationship today.
[4] There is no dispute that Carter and Bovair each signed a guarantee, guaranteeing the loans of the corporate defendant.
[5] The plaintiff originally obtained default judgment against all defendants. Subsequently, Bovair moved to set aside default judgment against her. The plaintiff consented to do so.
[6] The default judgment against the corporate defendant and Carter has not been challenged. No amounts have been paid in respect of the judgment.
[7] The plaintiff and Bovair agree that this matter should be determined summarily by way of this motion. The plaintiff is the moving party. Bovair has not cross-moved for summary judgment, but the parties urge me to determine the matter finally on its merits on this motion one way or the other. The economics of this case make a trial impractical.
[8] The heart of Bovair’s defence is that she signed the guarantee as a result of misrepresentations made by Carter, and that the plaintiff knew or should have known that it was possible that her signature was procured by undue influence, misrepresentation, fraud, or that the transaction was unconscionable. According to Bovair, this knowledge required the plaintiff to ensure she received independent legal advice, and having failed to do so, it would be unconscionable to allow the plaintiff to enforce the guarantee. Separately, but relatedly, she argues that a guarantee should be set aside for want of consideration when a guarantor, like her, is an accommodation guarantor only, and the loan has been procured by misrepresentations by the debtor, or the party receiving the benefit of the loan (here, the corporate defendant and Carter).
[9] Although Bovair deposes that she did not read the documents she signed, including the guarantee, she specifically does not rely on the doctrine of non est factum on this motion.
[10] Bovair advances no cross-claim against Carter or the corporate defendant.
Issues
[11] The issues I must determine are:
a. Is this case appropriate for summary judgment? b. Does the guarantee fail for want of consideration? c. Did the plaintiff have an obligation to ensure that Bovair received ILA?
Conclusion
[12] For the reasons below, I conclude that summary judgment is appropriate in this case. I find that the guarantee is valid and enforceable, and I grant the plaintiff’s motion for summary judgment.
Is this case appropriate for summary judgment?
[13] In Hryniak v. Mauldin, 2014 SCC 7, at para. 47, the Supreme Court of Canada held that summary judgment motions must be granted whenever there is no genuine issue requiring a trial. At para. 49, the Court he explained that there will be no genuine issue requiring a trial when the court is able to reach a fair and just determination on the merits on a summary judgment motion. “This will be the case when the process (1) allows a judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.”
[14] I am satisfied that the record before me allows me to make a fair and just determination on the merits of this case. While there are matters on which the parties depart, as will become clear, I am able to resolve the issues on this motion without having to make findings of credibility. Moreover, given the amount at stake in this litigation, a summary judgment motion is a far more proportionate procedure to resolve the issues that this proceeding raises.
[15] The parties both seek a summary determination. While their agreement to that effect is not dispositive, it reflects the reality of the situation with which they are faced. At a time when the court’s backlog is significant due to the pandemic, the court and parties must bring practical solutions to bear to ensure access to justice without unduly burdening the court or the parties with lengthy and unnecessarily complex proceedings that do not offer sufficient additional benefit to offset their increased costs.
Does the guarantee fail for want of consideration?
[16] Bovair argues that, because she was not a shareholder, officer, or director of the corporate defendant, she received no direct or indirect consideration as a result of the loan the plaintiff advanced to the corporate defendant. She argues that she was an accommodation surety only, that is, a guarantor who provides a guarantee to obtain a benefit for a debtor, often a spouse or a child. Although the plaintiff does not wholly accept Bovair’s self-characterization as an accommodation surety, for the purposes of this argument, I assume she can be properly so described.
[17] Bovair argues that where a loan is advanced based on misrepresentations made by the party receiving the consideration, a guarantee made by an innocent accommodation surety fails for want of consideration. If the misrepresentations were unknown to both the accommodation surety and the creditor, she argues that the risk of failing to ferret out the misrepresentations should fall on the creditor, not the accommodation surety.
[18] A guarantee is a contract like any other, and subject to the same rules of interpretation: Manulife Bank of Canada v. Conlin, [1996] 3 S.C.R. 415, at para. 78.
[19] Bovair argues that the type of consideration given for a guarantee is important. The actual benefit to an accommodation surety is often quite disproportionate to the surety’s liability. For this reason, “the law can be quite protective of accommodation sureties”: see Samuel M. Robinson, “Recent Developments in the Law of Guarantees”, Commercial and Business Litigation Review, Vol. 1., No. 1; August 2016, Canadian Institute, Toronto, at p. 1.
[20] Robinson’s article elaborates on the law’s protection, noting that accommodation sureties, “are entitled to the strict benefit of the protections available to them”, including receiving formal demand for payment: p. 2. However, Robinson’s article does not address the argument Bovair makes, that without consideration flowing to the accommodation surety directly or indirectly, where there is a misrepresentation by the person who receives consideration for the guarantee, the guarantee must be set aside.
[21] Bovair also relies on an article by Vancouver lawyer Peter J. Roberts, QC, “You’re in Trouble. That’s a Guarantee!” December 19, 2012, Lawson Lundell LLP Commercial Litigation and Dispute Resolution Blog. In it, Roberts reviews some then-recent case law relating to guarantees and explores some of the defences to the enforcement of guarantees. He notes that the “law generally holds creditors to a higher standard when dealing with accommodation sureties.” Notwithstanding that higher standard, Roberts also notes that accommodation sureties will not be relieved of liability for technical or trivial breaches of the guarantee contract. An accommodation surety who provides a guarantee can be held to the terms of its obligation under the contract and nothing more.
[22] While Bovair argues in favour of strict protections for accommodation sureties, none of her authorities support the protection she argues applies here: relief from the guarantee she signed because Carter and/or the corporate defendant made misrepresentations to both her and the plaintiff about her role in the business, and to her about her exposure if the corporate defendant defaulted on the loans.
[23] The plaintiff relies on Bank of Montreal v. 1480862 Ontario Inc., [2007] O.J. No. 1494, at paras. 35-36, where the court, relying on Paz Diamonds Israel v. R.M. Diamonds, [1996] O.J. No. 4462, at paras. 27-28, held that the consideration underlying a guarantee need not benefit the guarantor. Rather, it is sufficient if consideration passes from the creditor to the principal debtor, and it may consist wholly of a benefit or advantage conferred by the creditor on the principal debtor as a result of the guarantee.
[24] Bovair argues that Bank of Montreal is not a complete answer to the consideration enquiry, inviting me to find that at a certain point, the risk undertaken by a guarantor can become so disproportionate to any benefit realized by the debtor, that any perceived benefit to the guarantor can become so remote from the actual loan transaction, that there is a failure of consideration to support the contract.
[25] I do not accept this argument. An accommodation surety by definition receives no direct or indirect benefit from a loan advanced to another. On a strictly financial level, her risk is always disproportionate to her benefit. Bovair’s approach invites an assessment into the sufficiency of consideration, which the law does not do. As Estey J. wrote in Calumsky v. Karaloff, [1947] S.C.R. 110, “mere inadequacy of consideration is not a ground for disturbing the contract.”
[26] More recently Kurz J., in Forbes v. Forbes, 2022 ONSC 545, at para. 116, cited Blair J. in Re Canadian Pacific Ltd. (1996), 30 O.R. (3d) 110, at p. 18, who found that comparing a premium paid to one class of shareholders with that paid to another:
is like trying to answer the classic law school question relating to the appropriateness of the price of a bargain – ‘Is a peppercorn adequate consideration?’ It cannot be answered because no one can say with confidence what factors played on the mind of the person accepting the peppercorn or weigh those factors in that person’s stead – and different factors have different meaning for different persons.
[27] Kurz J. went on to conclude that the law will not generally enter into an investigation of the adequacy of the consideration, as long as it exists.
[28] Bovair’s argument, were I to accept it, would call into question the validity of any guarantee offered by an accommodation surety, given the difficulties in ascertaining at what point the benefit becomes too remote from the loan transaction. She has no authority in support of this novel proposition.
[29] In my view, to the extent she seeks to tie the failure of the guarantee to alleged misrepresentations, that is better addressed in the context of her second argument, that the guarantee should not be enforced because the plaintiff was obliged in the circumstances to ensure she received ILA, and having failed to do so, the enforcement of the guarantee would be unconscionable.
Did the plaintiff have an obligation to ensure that Bovair received ILA?
[30] Bovair argues that it would be unconscionable to enforce the guarantee in the circumstances of this case. She argues that the plaintiff knew, or should have known, that her signature was procured by undue influence, fraud, or misrepresentation from Carter, or that it was unconscionable that she should sign the guarantee. She argues that, while a bank normally does not have the obligation to ensure that a guarantor receives ILA, in the circumstances of this case, the plaintiff should have referred her for ILA.
[31] Bovair argues that a lack of ILA can be fatal to the enforceability of a guarantee when the guarantee was obtained by undue influence, unconscionability, fraud, misrepresentation, or where the evidence supports a defence of non est factum (the latter of which, as I have noted, she expressly disavows in this case).
[32] In RBC v. 164393, 2019 ONSC 5145, at para. 54, Dietrich J., citing the Court of Appeal in Bank of Montreal v. Featherstone (1989), 68 O.R. (2d) 541 (ONCA), held that “the lack of [ILA] does not invalidate a guarantee in the absence of evidence of non est factum, unconscionability, fraud, misrepresentation or undue influence.”
[33] I accept that if the evidence establishes non est factum, unconscionability, fraud, misrepresentation or undue influence, the bank may have had an obligation to ensure Bovair received ILA. Bovair argues that if the record establishes a reasonable possibility of unconscionability, fraud, misrepresentation or undue influence, and the plaintiff knew or should have known about that possibility, the plaintiff was obliged to ensure she got ILA.
[34] I assume, without deciding, that Bovair is correct, and it is sufficient for an obligation to arise on the part of the bank to ensure she received ILA if the bank knew or should have known about a reasonable possibility of unconscionability, fraud, misrepresentation, or undue influence.
[35] However, the evidence does not go far enough to establish that the bank knew or should have known any such thing.
[36] Bovair filed two affidavits on the motion. In her most recent affidavit, she deposes:
a. The plaintiff’s representative, Kim Elsinga, attended at her home to get the loan documentation signed. “She may have advised of the title of each document (i.e., ‘this is the guarantee that you need to sign’)” but Elsinga did not explain the implications of each document. b. Elsinga did not explain that Bovair would be subjected to a lawsuit and stood to lose her house if the loan went into default. Bovair would not have signed the guarantee had she understood the potential consequences. c. Bovair asked a question about the interest rate for the loans, which seemed high to her. Elsinga replied with words to the effect of ‘that’s how it works with these small loans”. Bovair interpreted the answer as an indication that Elsinga did not know the answer, and that there was no point in asking Elsinga further questions. d. Bovair did not ask any question of, or make further comments to, Elsinga other than small talk for the rest of the appointment. e. “It became apparent to [Bovair], as the documents were being handed to [her] for signature, that [she] had been listed in some of the documents as part owner of [Carter’s] business.” She had never read or been advised of any of the contents of the loan documentation, all of which were prepared by Carter. To the extent her signature appears on any of them, it is only because Carter asked her to sign without explaining the documents to her. f. “[Elsinga] ignored [her] questioning of [Carter], outlined in [her] first Affidavit, with respect to how [she] was shown in any documents as a part owner of his company. [Elsinga] did not appear concerned that the loan application may have contained false information or that [Carter] may have represented to the Bank that [Boviar] held offices with the borrower company that [she] did not, in fact, hold.”
[37] In her first affidavit, she does not detail any questions that she asked of Carter in front of Elsinga. Rather, she deposes:
a. “After [Elsinga’s] arrival, [Carter] advised [her] for the first time that, without [her] knowledge, [she] was a director and shareholder of ROC Ice Cream Inc. and that he had advised the Bank of same. [Elsinga] witnessed Justin telling [her] this for the first time.” b. “As a result, [she] understood that [she] was required to sign, by virtue of being a director and shareholder of ROC, the personal guarantee that would make [her] personally liable for the loan and put the family home in jeopardy. [She] was under the mistaken impression that this was simply part of the duties and functions of a shareholder and a director of a company to execute the documents required to get that business off the ground, including the loan documents and the guarantee in question.” c. She felt considerable pressure to execute the documents and not to ask for clarification or to request time to consult with a lawyer. She was under the impression that she was required to sign the documentation by virtue of the fact that she was a director and shareholder of the company. d. She was “not entirely comfortable” with the documents she was being asked to sign, but felt she had no choice. She had not previously seen nor read all of the documents she was being asked to sign, and particularly, the personal guarantee. e. The corporate defendant was never organized. No shareholder certificates, consents to act as director, resolutions or corporate by-laws were ever issued or signed. Bovair now understands that she is not, and has never been, an officer, director or shareholder of the corporate defendant.
[38] Elsinga deposes that she reviewed the letter of offer and guarantees with Carter and Bovaird, and asked if they had any questions prior to signing. Ms. Bovair had no questions, and expressed no concerns.
[39] According to Elsinga, at the time the loan documents were signed, she had no knowledge as to whether Bovair took an active role in the business, whether she worked there or contributed time and energy to the business at any point, or whether she was part of the decision process or not. She had no knowledge if Bovair knew she was a shareholder of the borrower. “At no time did [Bovair] discuss or communicate any of these matters to [Elsinga].”
[40] The documentary evidence in the record reveals that:
a. Bovair and Carter signed two guarantees, one in respect of each loan. The guarantees are a page in length and clear on their face that the guarantors, jointly and severally, unconditionally guarantee payment of 100% of the amounts owing by the borrower, and that liability will continue until the liabilities of the borrower are repaid in full. b. By the signing line of the guarantees, each signor is identified as a guarantor. c. An application for financing, signed by Bovair, indicates that Bovair is a manager and 30% owner of the corporate defendant. Bovair’s signature on that document describes her as a guarantor. d. The articles of incorporation identify Bovair as an incorporator, but identify only Carter as a director. Bovair is not identified as a director or officer on a corporate search of the corporate defendant. e. A business plan submitted to the plaintiff by Carter identifies the owners of the corporate defendant as Carter and Bovair. It does not identify Bovair as part of the management team. It appears this business plan was submitted with the first application for financing which was not signed by Bovair. There is no evidence Bovair ever saw this business plan. f. Bovair signed a “statement of personal affairs” which set out her assets, including a personal residence valued at $650,000 with a mortgage of $168,000, and her liabilities. The statement of personal affairs includes questions asking if she owned shares in any private company other than the corporate defendant, to which the answer is no.
[41] Carter has not filed any evidence on this motion. I do not have the benefit of his evidence as to what occurred at the meeting.
[42] Elsinga’s evidence and Bovair’s evidence do not accord with respect to what occurred at the meeting at Bovair’s and Carter’s home. However, were I to disregard Elsinga’s evidence entirely, I could not conclude on the basis of Bovair’s evidence, taken at its highest, that the plaintiff knew, or should have known, that it was reasonably possible that Bovair signed the loan documentation and guarantee as a result of fraud, misrepresentation, undue influence, or that the transaction was unconscionable. In particular:
a. I am troubled by the lack of specificity in Bovair’s evidence. While she refers to her “questioning” of Carter, at no point does she explain what she asked him. Moreover, by her own evidence, she believed she was a shareholder and director. There is nothing in Bovair’s evidence but a bald suggestion that Elsinga should have realized something was amiss, without any explanation of what Bovair may have said to lead Elsinga to question what was happening. This is the crucial issue, and Bovair has glossed over it in her affidavit. b. Bovair’s own evidence makes it plain that she understood that by signing the guarantee she was risking her personal assets, yet she signed without objection. There is no evidence she raised any concerns about taking on this risk in front of Elsinga at the meeting. c. It is uncontroverted that Bovair took no steps after signing the loan documentation to raise concerns with the plaintiff. She argues she did not know the funds had not been advanced immediately, but there is no evidence that she enquired of either the plaintiff or her spouse as to the state of the loan. d. There is no evidence that Bovair took any steps to obtain legal advice at any time, notwithstanding her identified discomfort with the documents she signed, and her understanding that she had committed her personal assets to guarantee the loan. e. Bovair waited until the funds were advanced, the loan went into default, and payment was demanded from her before raising the spectre of unconscionability. f. Bovair alleges that she is inexperienced in banking, but the record makes clear that she owns a home and holds a mortgage. Moreover, the terms of the guarantee are easily understandable and the guarantee itself is a short document. She alleges no difficulty with English. Whatever Carter may have told her about her exposure as a guarantor, a cursory review of the documents she did sign would have indicated otherwise. Even simply noticing that she was signing on the line meant for “guarantor” would have alerted her to the fact that she was guaranteeing the loans. Moreover, Bovair’s own evidence indicates she understood she was guaranteeing the loans; she deposes she felt she had no choice because of her (mistaken) understanding that she was a director and shareholder. g. Bovair raises the spectre of unconscionability based on misrepresentations made to her by Carter without any indication of the status of her relationship with Carter against whom she has not cross-claimed. I do not place significant weight on this factor, but I note that Carter, even on Bovair’s submissions, received the benefit of the loan (together with the corporate defendant). I have concerns about allowing Bovair to keep silent about her concerns regarding the guarantee until after the loan went into default, and then seek to avoid the guarantee obligation to the plaintiff, while perhaps continuing to provide Carter with the benefit of the assets, including the home in which they reside(d), despite the non-payment of the loans to the plaintiff. h. Bovair’s personal statement suggests her net worth is significantly greater than the value of the outstanding loans based on the most recent payout statement in the record, which includes accrued interest to December 2021. She does not explain any changes in her financial circumstances that could lead me to conclude that she is in danger of losing her house as a result of the enforcement of the loan, although she alleges that possibility is part of what renders the guarantee so improvident for her. i. Bovair’s evidence that Elsinga’s answer to her question about interest rates led her to conclude that Elsinga could not answer any other questions she had about the loan is far-fetched. She may have been dissatisfied with Elsinga’s answer to the single question she posed, but that is hardly a reason not to ask additional questions, especially if she was concerned about the terms of the guarantee she signed or what it meant for her exposure.
[43] The evidence does not support a conclusion that the plaintiff knew it was reasonably possible that Bovair’s signature was procured by fraud or misrepresentation. Moreover, there is no evidence to suggest that the plaintiff had reason to suspect that the transaction was unconscionable. Accommodation sureties regularly provide guarantees to facilitate the plans of those close to them, like a spouse or a child. Moreover, as far as the plaintiff knew, Bovair had an interest in the business. Bovair signed a document indicating she was a 30% owner of the corporate defendant, and at the meeting with Elsinga, believed herself to be a shareholder and director.
[44] Bovair did none of the things she could have done to protect herself from exposure: she did not read the loan documentation she signed; she did not ask questions of Elsinga; she did not contact the plaintiff after signing the documentation to attempt to clarify her obligations or resile from them; she did not seek legal advice; she did not even ask the plaintiff or her spouse whether the funds had been advanced. Instead, she waited until after the funds had been advanced, and the loan went into default, to allege, based on evidence that lacks any particularity whatsoever, that the plaintiff should have saved her from herself, or from her spouse, or both. That is not a creditor’s obligation.
[45] Nor do I accept Bovair’s argument that she was in a position of unequal bargaining power vis à vis the plaintiff or Carter. The evidence does not support that conclusion.
[46] With respect to the plaintiff, Bovair argues she was in a vulnerable position because the loan and guarantee were contracts of adhesion. If that is all it takes to be in a position of unequal bargaining power, thousands of contracts that are entered into daily – from insurance contracts, to terms of service on websites or social media, to drycleaning transactions – are tainted by the vulnerability of one party to another. Plainly that cannot be so. It takes something more to make one party vulnerable to the other, and there is no evidence to elevate the relationship between Bovair and the plaintiff to anything other than a normal commercial relationship.
[47] With respect to Carter, there is scant evidence about the relationship between him and Bovair. He took the lead in negotiating the loan agreement, and she apparently trusted him enough to sign loan documentation without reading it. The former is to be expected when he was seeking funding for a business he was going to run; the latter is equally consistent with carelessness. In any event, even if Bovair was vulnerable to Carter, there is no evidence, apart from her bald statements, to indicate the plaintiff knew it. Bovair’s vulnerability to Carter, if indeed she was vulnerable, might be relevant in a cross-claim, but it is not relevant here without evidence to establish the plaintiff had reason to be aware of, or suspect, such vulnerability.
[48] I do not need to resort to my extended fact-finding powers under r. 20 to conclude that the guarantee is enforceable. Even taking the evidentiary record at its highest for Bovair’s position, I find that the plaintiff had no obligation to ensure that Bovair had ILA before signing the guarantee. There is no evidence to allow me to conclude that it knew, or should have known, that it was reasonably possible that Bovair’s signature was procured by misrepresentation, fraud, undue influence, or that the transaction was unconscionable.
Costs
[49] At the hearing of the motion, Bovair indicated she had proposed that the parties agree on the costs reflected in the plaintiff’s bill of costs, such that the successful party would be awarded that amount. The plaintiff did not agree, arguing that if it was successful, it sought substantial indemnity costs in accordance with the terms of the guarantee.
[50] The plaintiff’s costs outline reflects costs of $25,719.20 all inclusive on a partial indemnity scale, $33,116.74 on a substantial indemnity scale, and $36,815.52 on a full indemnity scale, all amounts net of costs already paid by Bovair of $3,434.78. The defendant did not deliver a costs outline, although I had asked the parties to ensure their costs outlines were uploaded in advance of the motion.
[51] The three main purposes of modern costs rules are to indemnify successful litigants for the costs of litigation, to encourage settlement, and to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 46 O.R. (3d) 330 (ONCA), at para. 22.
[52] Subject to the provisions of an Act or the rules of court, costs are in the discretion of the court, pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The court exercises its discretion taking into account the factors enumerated in r. 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, including the principle of indemnity, the reasonable expectations of the unsuccessful party, and the complexity and importance of the issues. Overall, costs must be fair and reasonable: Boucher v. Public Accountants’ Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (ONCA), at paras. 4 and 38. 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 (ONCA), at para. 4.
[53] The plaintiff is the successful party, and is presumptively entitled to its costs. There are no offers to settle or unreasonable conduct that would justify an award of substantial indemnity costs.
[54] The plaintiff seeks substantial indemnity costs in reliance on the guarantees at issue, which provide that the guarantor unconditionally guarantees “all amounts owing by the Borrower under the Loan at the date BDC demands the Loan, together with interest from the date of demand plus fees and costs incurred by BDC in the enforcement of this Guarantee.”
[55] “Fees and costs” are not defined. In seeking substantial indemnity costs, the plaintiff relies on Manufacturers and Traders Trust Co. v. Amlinger, 2006 CarswellOnt 5238 (S.C.J.), at para. 57, where the court ordered substantial indemnity costs based on the term of a guarantee that provided for reimbursement for “all expenses, … including without limitation costs of collection and actual attorney’s fees and disbursements…”
[56] The plaintiff also relies on Potential Renewables Inc. v. Deltro Electric Ltd., 2019 ONCA 779, at para. 54, where the Court of Appeal awarded full indemnity costs in accordance with the provisions of the agreement at issue in that case. The wording of the term at issue does not appear to be reproduced in the Court of Appeal’s reasons.
[57] I have no difficulty with the argument that an agreement that provides for payment of substantial indemnity costs, or actual costs, is a basis to order costs on an elevated scale. In this case, however, the guarantee does not specify the scale of costs. I thus conclude that costs on a partial indemnity scale are appropriate.
[58] In terms of the quantum of costs, I note that the time spent by counsel is appropriate, keeping in mind that this case included drafting the pleading, obtaining default judgment, reviewing the materials on the motion to set aside default judgment, and negotiating a resolution to that motion, and arguing the motion before me, the scope of which went beyond a typical summary judgment motion on a guarantee. I accept that counsel have worked to keep costs proportionate to the amounts at stake in the proceeding. The materials were well-prepared, and counsel were well-prepared for the two-hour hearing before me. I note that defendant’s counsel was prepared to agree to costs to the successful party in accordance with the plaintiff’s partial indemnity costs, which suggests the amount claimed for partial indemnity costs is within Bovair’s reasonable expectations.
[59] In my view, however, counsel has pegged partial indemnity costs too high. In my view, given the actual fees of $32,732.50, partial indemnity costs should reflect fees of $21,276.13. Attendance at the hearing should be calculated at $747.50, being two hours of Mr. Zeitz’s time on a partial indemnity rate (65% of his actual rate). This being so, after HST and disbursements, and after allowing Bovair credit for costs already paid of $3,434.78, partial indemnity costs of $23,415.00 are fair and reasonable.
[60] I therefore order:
a. The plaintiff’s motion for summary judgment is granted. b. The defendant Bovair shall pay the plaintiff’s all-inclusive costs, net of amounts already paid, of $23,415, within thirty days. c. Order to go in accordance with the draft I have signed.
J.T. Akbarali J. Date: March 29, 2022