COURT FILE NO.: CV-16-554708
DATE: 20220720
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MANOUCHER BARADARAN, FARIBA BARADARAN, SABA BARADARAN, a minor through her Litigation Guardian, MANOUCHER BARADARAN and SAMA BARADARAN, a minor through her Litigation Guardian, MANOUCHER BARADARAN
Plaintiffs
– and –
63225955 CANADA INC., o/a ELITE APPLIANCE SERVICE and ELECTROLUX CANADA
Defendants
Manoucher Baradaran, Self-Represented Plaintiff
Alana M. Daley and A.J. Billes, for the Defendants
HEARD: July 18, 2022
a.p. ramsay j.
[1] The sole remaining defendant in the action, 6325955 Canada Inc. o/a Elite Appliance Service (“the defendant”), seeks its costs of the action, including cost thrown away for trial preparation, following the release of my decision dated March 11, 2022, dismissing the action of the remaining plaintiff, Manoucher Baradaran, pursuant to r. 52.01(2)(c) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, for failing to participate at his own trial.
[2] In the absence of an agreement on costs, the parties were invited to schedule a case conference to address costs.
[3] The plaintiff did not attend at the case conference on May 3, 2022, where a timetable was established for the exchange of Costs Submissions and Bills of Costs, but received notice of the order, which was served on him at his email address. The plaintiff filed no responding materials but attended today. The defendant filed Costs Submission and a Bill of Costs seeking hybrid costs (partial and substantial indemnity costs) in the amount of $139,739.85 including HST, plus disbursements of $17,805.61.
[4] This product liability action involved alleged damage to a refrigerator and resulting property damage. The plaintiff alleges that on July 17, 2013, a technician attended at his house to carry out some repairs to an ice dispenser of the fridge, and, while completing repairs, either damaged or did not close the water pump inside the fridge which, in turn, caused water to leak from the main floor to the basement, below, damaging the ceiling, wall and carpet in the basement area.
[5] The plaintiffs sued the manufacturers of the fridge. On consent, the claims of all the plaintiffs, save that of the remaining plaintiff, were dismissed in June 2018.
[6] The defendant Elite is seeking costs of the action solely against the plaintiff.
[7] The plaintiff did not challenge the amount being sought, or any aspect of the Bill of Costs. He did query why there was time spent for preparation when the trial did not proceed, but for the most part, his arguments related to submissions previously made on motions before me that have been dealt with. The only new argument is that the plaintiff would abandon his appeal if the defendant were to abandon its demand for costs.
[8] The $139,786.85 being sought by the defendant consists of $24,882.00 for costs on a partial indemnity scale up to February 9, 2022, and $83,066.00 for costs on a substantial indemnity scale for trial preparation, attendance and submissions from February 10 to May 4, 2022, plus $14,033.24 for HST, and $17,805.61 for disbursements.
B. ANALYSIS
[9] Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, governs the court’s jurisdiction to award costs and provides that:
131 (1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
[10] The relevant factors which the court must consider in exercising its discretion to award costs are set out in r. 57.01(1) of the Rules, which provide as follows:
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.
Defendant’s offers to settle
[11] The defendant submits that it served an offer to settle on the plaintiff under r. 49 on January 19, 2022. The offer to settle was for a dismissal of the action without costs and expired on January 20, 2022, prior to the commencement of the trial, and therefore would not attract the cost consequences under r. 49.10, but may engage r. 49.13, which permits the court to take into consideration any offer to settle in determining costs.
[12] The defendant also submits that it served an offer to settle dated November 28, 2014. The terms of the offer were “to pay $500.00 as the cost for the ice-maker part of the refrigerator that required replacement, referred to in the proceeding”, open for acceptance until the commencement of trial, in exchange for a release, and confidentiality agreement, a dismissal of the action without costs, and the defendant forgoing the pursuit of any costs incurred to date. However, that offer to settle was served in the Small Claims proceedings action and no authority has been provided by the defendant to indicate that the court may take that offer into account when determining costs.
[13] An examination of the pleadings in the two proceedings, the parties to the proceedings, and the nature of the claims advanced in both, alone, would suggest that the offer to settle in the Small Claims Court action, and any costs incurred for those proceedings, should not be considered.
[14] However, as noted above, the court may take any offer to settle into consideration despite the lack of strict compliance with r. 49.10: Elbakhiet v. Palmer, 2014 ONCA 544, 121 O.R. (3d) 616; rule 49.13.
[15] Rule 49.13 provides as follows:
Despite rules 49.03, 49.10 and 49.11, the court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.
[16] I am not inclined to exercise my discretion under r. 49.13 to take into account either offer to settle. The first was in the context of the Small Claims Court proceeding, the second dated January 19, 2022, expired the following day. The offer was for a dismissal of the plaintiff’s claim against the defendant without costs in exchange for a release. The time for acceptance was unreasonable especially as the plaintiff was representing himself. Additionally, no affidavit of service has been filed to confirm that the offer to settle was even served, and for that matter, the manner of service. It is conceivable that the offer had expired before being served.
Proportionality
[17] In determining costs, one of the overarching considerations is whether the costs award is reasonable, fair and proportionate in the circumstances of the case, having regard to the factors set out in r. 57.01(1) and the reasonable expectations of the party: Boucher v. Public Accountants Council for the Province of Ontario, 2004 CanLII 14579 (Ont. C.A.), at para 26.
[18] The principle of proportionality is enshrined in r. 1.04(1.1) of the Rules of Civil Procedure, which provides:
In applying these 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.
[19] When assessing proportionality, the court may consider the factors enumerated in r. 57 of the Rules of Civil Procedure, the principle of indemnity, the hourly rate claimed, time spent, and the amount the unsuccessful party reasonably expected to pay: Chandran v. National Bank of Canada, 2011 ONSC 4369, 95 C.C.E.L. (3d) 322, at para. 24, aff’d 2012 ONCA 205, 99 C.C.E.L. (3d) 277.
Scale of Costs
[20] The defendant submits that costs on a substantial indemnity basis is warranted because of the existence of their offers to settle, costs thrown away for trial preparation, the conduct of the plaintiff and the inherent jurisdiction of the court.
[21] With respect to the costs consequences set out in r. 49.10, which depend on which party delivers the offer to settle, I note that this case was not determined on its merits. On even a generous reading of r. 49.10, the costs sanctions which flow from an offer to settle are dependent upon the plaintiff having received judgment. In any event, r. 49.10(2), which deals with a defendant’s offer to settle, does not provide for a higher scale of costs if the plaintiff were to obtain a judgment as favourable as, or less favourable than, the defendant’s offer to settle. In such case, the rule provides that the plaintiff is entitled to costs up to the date of the offer to settle, and the defendant is entitled to costs from the date of the offer, but only on a partial indemnity scale.
[22] Rule 49.10(2) of the Rules of Civil Procedure applies where a defendant exceeds its offer to settle and where the plaintiff has recovered a judgment of some value: S & A Strasser Ltd. v. Town of Richmond Hill et al. (1990), 1990 CanLII 6856 (ON CA), 1 O.R. (3d) 243 (C.A.) [S & A. Strasser]; Dunstan v. Flying J Travel Plaza, 2007 CanLII 44819 (Ont. S.C.) [Dunstan].
[23] As in the Dunstan decision, here the plaintiff did not recover a judgment of any value. But, unlike Dunstan, in this case, there was no trial of the case on the merits. The defendant’s reliance on Dunstan is distinguishable: the case went to trial and a valid rule 49 offer to settle was in place. Smith J. relied on Carthy J.A.’s comments in S & A. Strasser, for the proposition that the court may exercise its discretion to award substantial indemnity costs where the defendant made an offer to settle “and the plaintiff did not recover a judgment of any value after trial” (emphasis added): Dunstan, at para. 13. There is no judgment in the present case.
[24] As for costs thrown away for trial preparation, I am not convinced that the court should award a higher scale of costs. The defendant relies on the decision of Dunphy J. in Lochner v. Callanan, 2016 ONSC 3379. In that case, the plaintiffs, who were not the litigation guardian of their son, opposed a settlement reached by the Public Guardian and Trustee on behalf of their son, who was a person under a disability. They did not show up at trial. They did not seek an adjournment of the trial. Orders were made which they were appealing. In this case, the plaintiff did show up at the trial. He brought an unsuccessful motion to adjourn the trial. He conveyed that he was appealing the adjournment request and decided not to participate further in the trial. There is no evidence before me that the plaintiffs were unrepresented in Lochner. In this case, the plaintiff has made it known from time to time that he is receiving the advice of a lawyer, but that does not take away from the fact that he is in fact unrepresented.
[25] The defendant also urges the court to exercise its inherent jurisdiction. In my view, to penalize the plaintiff in a higher scale of costs because of his interpretation of the rules and procedures of the court would be anathema to the principles of access to justice. Aside from not knowing the status of the representation of the plaintiffs and the other distinguishing features above, I note that Lochner predates the Supreme Court of Canada’s endorsement of the Statement of Principles on Self-represented Litigants and Accused Persons (2006) issued by the Canadian Judicial Council, in Pintea v. Johns, 2017 SCC 23, [2017] 1 S.C.R. 470, at para. 4, and the Ontario Court of Appeal’s comments in Girao v. Cunningham, 2020 ONCA 260, 2 C.C.L.I. (6th) 15.
[26] The defendant’s reliance on Standard Life Assurance Company v. Elliott, 2007 CanLII 18579 (Ont. S.C.), in support of its position for substantial indemnity costs is misplaced. In that case, Molloy J. was dealing with abusive proceedings, which has a particular meaning in the jurisprudence, that were brought for tactical or procedural advantage, and costs against a solicitor personally. That is not the case here. I made no determination that the claim was vexatious.
[27] I am also not persuaded that the plaintiff’s conduct warranted a higher scale of costs.
[28] Nothing in the statute (s. 131 of the Courts of Justice Act) or the rules relied upon by the defendant (r. 49) entitles the defendant to a higher scale of costs. I am not satisfied that the court should exercise “inherent jurisdiction” to award a higher scale of costs for costs thrown away for trial preparation or as a result of the plaintiff’s conduct. I see no basis for awarding a higher scale of costs.
The Complexity of the Proceeding
[29] The defendant submits that this was a technical matter requiring evidence of the mechanics of a fridge and causation. No experts were retained pursuant to rule 53 of the Rules of Civil Procedure. No expert was expected to testify at the trial. The defendant did retain an expert to provide litigation advise. In my view, this was a not a complicated product liability case.
[30] The pleadings are not complex. This is essentially a product liability claim. Though Family Law Act, R.S.O. 1990, C. F.3, claimants were added initially, their claims were dismissed early on.
The importance to the Parties
[31] The defendant submits that the defendant’s “reputation and competence were called into question” with the lawsuit. There is no evidence from the defendant that the existence of the claim went beyond the parties and the impact, if any, on the defendant.
Amount Claimed
[32] The amount claimed in the statement of claim is $268,669.00, which is not significant.
[33] In general, costs should not be disproportionate to the amount claimed, and should be consistent with the objectives of fairness, reasonableness, and the need for proportionality: Elbakhiet at paras. 37 and 38; Muskoka Fuels v. Hassan Steel Fabricators Limited, 2011 ONCA 495, at para. 6.
Time Spent
[34] Counsel for the defendant do not docket their time for normal business purposes as they perform those services on an in-house basis. The Bill of Costs includes a “conservative” estimate of the time spent. The rates were obtained from a schedule posted by the Law Society of Ontario, but is not the rate to the client, as the in-house lawyers do not bill their client.
[35] There were seven lawyers who worked on this file with years of call ranging between 7 to 12 years. Counsel for the defendant conceded that there would have been time involved for reviewing the file and getting up to speed each time the file was transferred.
[36] There were four lawyers and a clerk who are noted to have reviewed documents. This is not a document heavy file. Affidavits of documents were not extensive. Three lawyers and a clerk devoted time to drafting an affidavit of documents and supplementary affidavit of documents. The plaintiff’s affidavit of documents included 38 documents, the co-defendant’s two documents, and the defendant’s 68 documents.
[37] There is time included for discussions with a potential expert, though no expert report was obtained.
[38] As valuable as it may be to the client, it is not reasonable to expect an unsuccessful litigant in an otherwise modest claim to pay for two lawyers to attend case conferences, meet with witnesses, prepare for and attend trial.
[39] Examinations for discovery occupied only one day.
[40] The mediation was half a day. The pre-trial occupied a half day.
Reasonableness
[41] The reasonable expectation of the unsuccessful party is one of the factors to be considered in determining an amount that is fair and reasonable: rule 57.01(1)(0.b); Zesta Engineering Ltd. v. Cloutier (2002), 2002 CanLII 25577 (ON CA), 21 C.C.E.L. (3d) 161 (Ont. C.A.), at para. 4; Davies v. Clarington (Municipality) et al., 2009 ONCA 722, 100 O.R. (3d) 66, at para. 52.
[42] The reasonable expectation of the plaintiff is not known. He indicated during the course of this submissions that he has already spent about $50,000 on lawyers, but it is not clear whether this amount also includes the Small Claims Court proceeding.
Principle of indemnity
[43] In Boucher, at para. 37, the court held that the costs system must be understood in the context of the fundamental objective of access to justice. The court should seek to balance the indemnity principle with the fundamental objective of access to justice: Boucher.
[44] A consideration of experience, rates charged and hours spent is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case: Boucher. The quantum should reflect an amount the court considers to be fair and reasonable rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering.
Expectation of the Parties
[45] The plaintiff did not file any responding materials or a Bill of Costs. The plaintiff is self-represented but, as noted, did indicate that he has spent about $50,000.00 on legal fees. I do not think this is an adequate guide as to what the plaintiff contemplated paying, if unsuccessful, especially as the context in which he has paid that amount was not explained.
Quantum
[46] The defendant relies on Diamond J.’s decision in Opara v Bell Canada, 2015 ONSC 3160, in support of its position that in house counsel is entitled to its costs. That is not disputed from a now established body of jurisprudence. In Opara, although in house counsel did not docket their time, they maintained records of work performed, which was not the case here, or if it was, that was not argued before me. The same argument used in Opara of the time being a “conservative estimate” was used by the defendant in this case. I note that costs were awarded at the conclusion of a trial in that case and were awarded in the amount of $15,000.00. The defendant had served two offers to settle in that case, one of which complied with rule 49 and a second, which did not, but was taken into consideration under r. 49.13, in the awarding of costs.
[47] Section 36 of the Solicitors Act, R.S.O. 1990, c. S.15, at s. 36 governs costs awarded to a party in a proceeding represented by a salaried lawyer, and provides that:
Costs awarded to a party in a proceeding shall not be disallowed or reduced on
assessment merely because they relate to a solicitor or counsel who is salaried
employee of the party.
[48] In Ontario (Attorney General) v. Rothmans Inc., 2013 ONCA 353, 115 O.R. (3d) 561, at para. 136, the Court of Appeal noted:
[T]he courts in many jurisdictions have adopted the principle that, where a successful party is represented by a salaried lawyer, the proper method of fixing costs is to deal with them as though they were the costs of an independent outside counsel.
[49] The Court of Appeal has long stated that costs are not simply a mathematical calculation. The amount of costs should reflect what is fair and reasonable and in accordance with what the losing party would reasonably expect to pay: Zesta Engineering; Boucher.
[50] While work undertaken by in house lawyers on behalf of their employee is recoverable as against an unsuccessful litigant, the failure to record the time spent makes it all but impossible to determine the time expended and determine the extent of the duplication of time. Costs of salaried lawyers may be reduced due to lower overhead: Corner v. Ontario Minister of Labour, 2010 ONSC 6640; and where a defendant unnecessarily involves two senior counsel, the rate of one may be reduced to that of a more junior counsel: Chen v. Toronto Transit Commission, 2014 ONSC 6673, at paras. 21-23.
[51] The total amount of the bill of costs on a partial indemnity basis is $88,772.60.
C. CONCLUSION
[52] The case was not heard on its merit.
[53] This was not a complex case. The amount being claimed is not significant.
[54] The defendant was successful on its motion at trial to have the action dismissed and is presumptively entitled to its costs.
[55] The scale of costs should be a partial indemnity scale.
[56] The amount claimed by the defendant is excessive and includes duplication of time and efforts by many lawyers. The plaintiff should not bear the costs of the repeated transfer of the file in house and for other lawyers to get up to speed.
[57] Given the six lawyers and one clerk involved on the file, I would reduce the legal fees to $36,000.00 plus HST of $4,680.
[58] The defendant is seeking $17,805.61 for disbursements. A significant amount of that fee relates to expenses for MEA. No report was produced; the amount of $8,000.97 is not assessable. Other reductions include expenses related to the Small Claims Court proceedings and an invoice, not explained, for Investigative Power.
[59] I have allowed a disbursement of $7,752.05.
D. DISPOSITION
[60] I fix the defendant’s costs, on a partial indemnity basis, payable by the plaintiff, Mr. Baradaran, in the of $36,000 plus HST of $4,680.
[61] I fix the defendant’s disbursements, payable by the plaintiff, Mr. Baradaran, in the amount of $7,752.05.
A.P. Ramsay J.
Released: July 20, 2022
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MANOUCHER BARADARAN, FARIBA BARADARAN, SABA BARADARAN, a minor through her Litigation Guardian, MANOUCHER BARADARAN and SAMA BARADARAN, a minor through her Litigation Guardian, MANOUCHER BARADARAN
Plaintiffs
– and –
63225955 CANADA INC., o/a ELITE APPLIANCE SERVICE and ELECTROLUX CANADA
Defendants
COSTS DECISION
A.P. Ramsay J.
Released: July 20, 2022