Court File and Parties

COURT FILE NO.: CV-16-054 (Perth) DATE: 2022-04-19 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: LAURIE RINTOUL and ELEANOR RINTOUL, Plaintiffs AND: GREGORY DRUMMOND and KATHERINE CAPELLO, Defendants

BEFORE: Mr. Justice Graeme Mew

COUNSEL: Richard Butler and Alessia Petricone-Westwood, for the plaintiffs Jonathan Collings, for the defendants

HEARD: In writing, at Kingston

Costs Endorsement

[1] Following a two-day virtual trial, the plaintiffs obtained judgment against the defendants in the amount of $40,000 plus pre-judgment interest and costs: 2022 ONSC 998.

[2] The trial dealt only with the issue of damages. Liability had already been settled. Significantly, as part of that settlement, the defendants had agreed to a court order prohibiting them from once again locating an outdoor wood fired boiler (“OWB”) on their premises for the remainder of their ownership of 233 Gardiner Shore Road, Carleton Place. The defendants also agreed to indemnify the plaintiffs for their costs incurred in relation to the defence of the main action by Beckwith Township, against which the defendants had taken third party proceedings.

[3] The plaintiffs claim costs (inclusive of disbursements and HST) of $101,956.15 on a partial indemnity scale, or $142,139.52 on a substantial indemnity scale in relation to the main action. They also seek costs associated with the third party’s defence of the action in the amount of $12,709.79 on a partial indemnity scale or $19,064.68 on a substantial indemnity basis.

[4] The defendants, if awarded costs, would have claimed $31,025.72 on a partial indemnity scale or $42,307.80 on a substantial indemnity scale.

[5] At first blush, on whatever scale costs are fixed, these amounts are significantly more than the damages recovered.

[6] Not surprisingly, the defendants argue that the principles of proportionality and reasonableness should inform the determination of the costs to be paid to the plaintiffs. They point out that the plaintiffs had originally claimed $1.6 million and yet the amount ultimately recovered was within the jurisdiction of the Simplified Procedure and only just beyond Small Claims Court limits.

[7] The defendants also challenge the reasonableness of Toronto-based counsel claiming what they regard as Toronto rates for a relatively straightforward single-issue case between neighbours in rural Lanark County.

[8] The principles generally applicable to the fixing of costs include the following:

a. Costs are in the discretion of the court (s. 131, Courts of Justice Act, R.S.O. 1990, c. C. 43, and Rule 57.01 of the Rules of Civil Procedure).

b. The normal approach is that costs follow the event and that such costs are awarded on a partial indemnity basis. There are also specific provisions, such as those addressing costs consequences of failure to accept an offer to settle, which can result in a departure from the normal approach.

c. Fixing of costs is not merely a mechanical exercise in reviewing the succeeding party’s costs outline: Agius v. Home Depot Holdings Inc., 2011 ONSC 5272, at para. 11. The amount of costs should reflect an amount that the court considers to be fair and reasonable, rather than an exact measure of the actual costs of the successful litigant: Zesta Engineering Ltd. v. Cloutier (2002), 19 A.C.W.S. (3d) 341 (Ont. C.A.), at para. 4.

d. The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining the amount that is fair and reasonable: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291; Rule 57.01(1)(b).

e. Costs should be proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding (Rule 1.04(1.1)). However, the principle of proportionality should not override other considerations when determining costs. Nor should proportionality be used as a sword to undercompensate a litigant for costs legitimately incurred: Aacurate General Contracting Ltd. v. Tarasco, 2015 ONSC 5980, at paras. 13-17; Dang v. Anderson, 2017 ONSC 2150, at paras. 12-15.

[9] The fact that the costs incurred greatly exceeded the damages recovered by the plaintiffs is not, in and of itself, a reason to decline to award the plaintiffs their reasonable costs: A & A Steelseal Waterproofing Inc. v. Kalovski, 2010 ONSC 2652, at para. 21; Tossonian v. Cynphany Diamonds, 2015 ONSC 766, at para. 18.

[10] Two offers to settle have a bearing on my determination of costs in this case.

[11] Back on 5 February 2018, the plaintiffs had offered to settle with the defendants in the amount of $45,000 plus pre-judgment interest and costs on a partial indemnity basis to be assessed if not agreed. Other terms of that offer essentially replicated the term relating to the removal or use of an outdoor combustion appliance. The offer was stated to remain open for acceptance up until the commencement of trial.

[12] On 20 December 2021, a few weeks before the commencement of trial, and a few weeks after the consent order of Justice Abrams which resolved the issues of liability, the plaintiffs offered to waive their claim for monetary damages provided that the defendants paid the plaintiffs partial indemnity costs calculated to the date of acceptance, or proceeded to an assessment of costs. The offer explained that as of 30 November 2021, the total amount being sought for costs was approximately $104,000.

[13] Neither of these offers was accepted.

[14] Although the trial time was short, this was a result of the settlement of the liability and injunctive relief aspects of the claim nearly two months before the trial. The retention of an expert to analyse the odour, its severity and the hedonic character of the nuisance alleged by the plaintiffs was not unreasonable (the nuisance was only conceded in December 2021).

[15] I do not accept the defendants’ criticisms of the plaintiffs’ employment of specialist counsel from Toronto or the use of a Mississauga-based expert. The reasonable expectations of the party paying costs will typically take into account factors such as the nature of the case and the location of the dispute. In the present case the plaintiffs’ solicitors have an Ottawa office from which the claim was issued and although Toronto counsel were engaged for the trial, the rates charged were comparable to reasonable Ottawa area rates.

[16] In determining the reasonableness of the plaintiffs’ claim for costs, two factors stand out.

[17] The first is that although the amount recovered was well within the monetary limit of the Simplified Procedure, a major objective for the plaintiffs was to obtain injunctive relief, which lies outwith the scope of the Simplified Procedure. The use of the ordinary procedure was therefore reasonable.

[18] Secondly, the plaintiffs were willing to settle their claim on a costs-only basis once the issue of liability (and the injunction) had been resolved. Their offer gave the defendants the option of either agreeing to pay approximately $104,000 for costs or having the costs assessed on a partial indemnity scale.

[19] The defendants could have accepted that offer and, if they felt the plaintiffs’ valuation of costs was disproportionate or otherwise unreasonable, had those costs assessed.

[20] Instead, they proceeded to trial and lost.

[21] While I am not inclined to award any part of the costs on a substantial indemnity scale, Rule 49.10 notwithstanding (because to do so would lead to a grossly disproportionate result), I am persuaded that the plaintiffs should nevertheless recover a significant portion of their costs, despite the relatively modest amount of damages recovered.

[22] Accordingly, I would fix the total amount of costs payable by the defendants to the plaintiffs (including the indemnity in relation to the third party claim) in the all-inclusive amount of $90,000.

Mew J Date: 19 April 2022