Sandham v. Diamond Estates Wines & Spirits Ltd., 2022 ONSC 3670

Court File and Parties

COURT FILE NO.: CV-20-74632 DATE: 2022-06-20

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Russell Sandham, Plaintiff AND: Diamond Estates Wines & Spirits Ltd., Defendant

BEFORE: MacNeil J.

COUNSEL: Tatha Swann – Lawyer for the Plaintiff Chris Dockrill – Lawyer for the Defendant

ADDITIONAL REASONS TO MOTION DECISION DATED FEBRUARY 7, 2022, CONCERNING COSTS

Costs submissions considered in Chambers.

Overview

1This decision deals with the costs of the summary judgment motion brought by the Plaintiff on his action for wrongful dismissal. He was successful on the motion and was awarded damages totalling $208,448.64.

2The parties were unable to settle the issue of costs incurred in connection with the summary judgment motion and have made written submissions.

Position of the Plaintiff

3It is the position of the Plaintiff that his offer, dated May 11, 2021, constitutes a compliant offer under rule 49 of the Rules of Civil Procedure, R.RO. 1990, Reg. 194 (“the Rules”), and that he was successful in obtaining an award of damages greater than this offer. As a result, he submits that he should be entitled to pre-offer partial indemnity costs from September 2020 until his May 11, 2021 offer in the amount of $9,785.00 and his substantial indemnity costs thereafter in the amount of $24,250.11, plus HST, plus $693.13 in disbursements, for a total of $39,152.80. The Plaintiff asserts that no time or costs would have been saved by commencing the claim under Simplified Procedure as the same limits on procedure and time were complied with. He submits that his lawyers’ rates and time sought are reasonable. He relies on the decision in Pavlov v. The New Zealand and Australian Lamb Company Limited, 2022 ONSC 68, in support of his request for costs.

Position of the Defendant

4The Defendant takes the position that the Plaintiff should be denied costs because the action should have been pursued as a simplified proceeding under rule 76. In the alternative, it submits that the Plaintiff is entitled to costs on a partial indemnity basis in the amount of $11,000.00, inclusive of fees, disbursements and HST, as this amount is consistent with the Defendant’s costs outline and thus reflects its reasonable expectations. It argues that the billing rates and time claimed are excessive. The Defendant further contends that the Plaintiff’s offer does not satisfy the requirements of rule 49 and it relies on Rooney v. Lee, [2001] O.J. No. 1055 (Ont. C.A.), at para. 57, in support of this argument.

General Principles

5Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides that an award of costs is in the discretion of the court.

6Rule 57.01(3) of the Rules provides that, when the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs. Tariff A establishes the fees and disbursements that are allowable under Rules 57.01 and 58.05.

7Rule 57.01(1) sets out factors to be considered by the court in exercising its discretion to award costs, including:

• the result in the proceeding;
• any offer to settle or to contribute made in writing;
• 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;
• 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;
• the amount claimed and the amount recovered in the proceeding;
• the complexity of the proceeding;
• the importance of the issues;
• the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
• whether any step in the proceeding was: (i) improper, vexatious or unnecessary, or (ii) taken through negligence, mistake or excessive caution;
• a party’s denial of or refusal to admit anything that should have been admitted; and
• any other matter relevant to the question of costs.

8Rule 49.10 of the Rules provides costs consequences where a party fails to accept an offer to settle. Where a plaintiff makes an offer to settle that is not accepted and obtains a judgment as favourable as or more favourable than the terms of the offer, rule 49.10(1) provides that the plaintiff is entitled to partial indemnity costs to the date the offer was served and substantial indemnity costs thereafter, unless the court orders otherwise.

9The intent of rule 49.10 is to induce settlements and avoid trials. The Ontario Court of Appeal has held that a court should depart from the costs consequences imposed by rule 49.10 only where, after giving proper weight to the policy of the rule and the importance of reasonable predictability and the even application of the rule, the interests of justice require a departure: Starkman v. Starkman, [1990] O.J. No. 1627, 28 R.F.L. (3d) 208 (Ont. C.A.), at para. 31.

10Rule 1.04(1.1) provides that, in applying the rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.

11Modern costs rules are designed to advance five main purposes: (1) to indemnify successful litigants for the cost 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 and sanction inappropriate behaviour by litigants; and (5) to encourage settlements: Fong v. Chan, 1999 CarswellOnt 3955, 128 O.A.C. 2 (Ont. C.A.), at para. 22; 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, at para. 10.

12Ultimately, in fixing costs, the primary principles remain fairness, reasonableness and proportionality.

13As stated by the Ontario Court of Appeal in Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d) 291 (Ont. C.A.), at para. 26, when fixing costs, the calculation of hours and time rates is only one factor to be taken into account. The overall objective is "to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant." (See also Zesta Engineering Ltd. v. Cloutier, 2002 CarswellOnt 4020, [2002] O.J. No. 4495 (Ont. C.A.), at paragraph 4.)

Analysis

14The Plaintiff’s May 11, 2021 offer to settle was an offer that the Defendant was capable of accepting. It was made at least seven days before the hearing, was not withdrawn, did not expire before the commencement of the hearing, and was not accepted by the Defendant. I am satisfied that the Plaintiff achieved a result which was as favourable as or more favourable than this offer. Therefore, prima facie, the offer entitles him to the costs consequences of rule 49.10.

15I accept the Plaintiff’s calculation of the total amount of damages awarded. Since this total exceeds $200,000 in the end result, rule 76.13(3) does not apply to deny the Plaintiff his costs. If I am wrong in accepting the Plaintiff’s calculation, however, I find that, in proceeding by way of summary judgment, the Plaintiff accomplished the same purpose as that intended by the Simplified Procedure under rule 76 and, therefore, this is not an appropriate case to deny the Plaintiff his costs under rule 76.13: Sinnathamby v. Chesterfield Shop Ltd., 2017 ONSC 106, at para. 17.

16In this case, I do not see any reason to depart from the cost consequences imposed by rule 49.10. The Plaintiff’s May 11, 2021 offer was reasonable and represented a compromise as desired by rule 49.10. As explained in Rajic v. Atkins, 2011 ONSC 6771, at para. 11:

It is a well-known principle that the purpose of rule 49 is to encourage parties to make reasonable offers to settle to resolve litigation short of a trial. If a party chooses to proceed to trial in the face of a reasonable offer to settle from the adverse party, he or she does so knowing that there may be adverse cost consequences. The Court has a wide discretion with respect to making orders of costs and the particular facts of the situation giving rise to the entitlement of costs must be scrutinized.

17I have reviewed the bill of costs submitted by counsel for the Plaintiff. I find that the hourly rates set out therein, on both a partial indemnity and a substantial indemnity basis, are reasonable.

18While the Defendant argues that an award of $11,000 is in line with its costs incurred, I am satisfied that more legal work was involved for the Plaintiff to prosecute his case than for the Defendant to defend against it so an amount greater than this is to be expected to be claimed.

19I am of the view, however, that the total fees amount sought by the Plaintiff exceeds what is fair and reasonable in the circumstances of this case and does not accord with the unsuccessful party’s reasonable expectations. With respect to the time claimed, there are three lawyers identified on the Plaintiff’s bill of costs, one lead counsel and two junior counsel. I was not given detailed dockets so I am unable to ascertain exactly how much time was spent doing what and by whom. The summary judgment motion did not involve complex legal issues and did not require significant fact-finding or assessment of issues of credibility. In reviewing the information contained in the bill of costs, it does appear to me that there is some duplication and/or excessive time spent on the work completed for this proceeding. I find the amount claimed to be out of proportion to both the nature and complexity of the proceeding and the stage of the litigation reached. In the circumstances, I find that a fair and reasonable amount of legal fees to be awarded is $28,000.00 plus $3,640.00 HST, for a total of $31,640.00.

20With respect to the list of disbursements, I accept these as reasonably necessary to be incurred for the orderly conduct of the matter. I allow the disbursements as claimed in the amount of $693.13, inclusive of HST.

Disposition

21In the result, the Defendant is ordered to pay to the Plaintiff costs in the amount of $32,333.13, inclusive of HST and disbursements. Costs are ordered to be paid within 30 days.

B. MacNeil J.

MacNEIL J.