Introduction:

[1] The plaintiff sought a judgment for $125,647.08. That claim was comprised of $121,408, representing the unpaid balance of demolition and reconstruction charges by him for the benefit of the defendant pursuant to a construction contract plus interest in the amount of $4,239.08.

[2] The defendant counterclaimed for a return of the $128,326.12 which he asserted was overpaid to the plaintiff as well as the cost of correcting deficiencies and accommodation costs arising from delay in construction.

[3] By decision dated May 13, 2022, the plaintiff was awarded judgment in the net amount of $75,013.55 plus pre-judgment interest of $5,216.01 for a total of $80,229.56, net of a setoff in favour of the defendant.

[4] The parties were invited to resolve the matter of costs consensually, failing which written submissions were to be made.

[5] The following decision follows from the submissions received.

Position of the Plaintiff:

[6] The plaintiff seeks a costs award $51,490.63, consisting of partial indemnity costs to the date of an Offer to Settle dated February 10, 2021, and substantial indemnity costs thereafter, plus HST and disbursements of $2,065.28.

[7] In support of his claim, the plaintiff submits that the defendant’s lack of timely response to his documentary disclosure obligations forced the plaintiff to incur costs that were higher than would otherwise have been necessary. He also states that the defendant failed to abandon his claim for reimbursement of overpaid interim payments until trial, meaning that more extensive preparation was required by the plaintiff. The defendant’s punitive damage claim was not pursued at trial, once again requiring more preparation by the plaintiff than necessary.

[8] The amount of setoff awarded was substantially less than sought by the defendant.

[9] The plaintiff acknowledges that the $100,000 amount contained in the Offer to Settle for damages was greater than the judgment awarded but submits that the total offer including proposed costs of $15,000 was less than the damages awarded plus the anticipated costs to be awarded after trial. The plaintiff’s Bill of Costs claims partial indemnity costs to the date of the Offer of $11,733.56 inclusive of HST and disbursements, and $39,757.07 for substantial indemnity costs thereafter, inclusive of HST. As a result, the plaintiff claims entitlement to the presumptive scale of substantial indemnity for costs incurred after the Offer to Settle was served.

[10] The plaintiff states that the $250 hourly rate used on the Bill of Costs was reasonable, and that the daily counsel fee of six hours at trial was about half the time that plaintiff counsel’s ordinarily bills his clients.

[11] The issue was important to the plaintiff, who had no option but to prosecute the claim in response to the defendant’s failure to pay the outstanding final invoice.

Position of the Defendant:

[12] The defendant submits that while some costs award in the plaintiff’s favour is justified, it should be in the range of $25,000 to $30,000 including HST, with disbursements capped at an additional $1,650.

[13] The position of the defendant is that the plaintiff’s Offer to Settle did not meet or exceed the judgment and did not make reference to the defendant’s counterclaim.

[14] As to quantum, the defendant states that the amount claimed is disproportionate to the amount at stake and to the ultimate judgment awarded and as such that it is in excess of what the defendant could reasonably have expected to pay. The defendant submitted his Bill of Costs which by comparison showed about half the fees claimed by the plaintiff.

[15] The defendant denies that his actions unreasonably lengthened the trial proceedings and adds that the plaintiff failed to provide details of his unpaid labour calculation prior to trial, requiring the matter to be fully litigated.

[16] The defendant resists the claim for costs which were incurred by the plaintiff by way of an ex parte motion to set the matter down for trial pursuant to s. 9 of O. Reg. 302.18 on the basis that the step was unnecessary. Since there was no prior consultation as to the trial sittings to which the case was assigned for hearing, defendant’s counsel was required to transfer the file to a different counsel owing to an imminent leave. Plaintiff’s counsel could have discussed the proposed trial sittings with defendant’s counsel and secured a mutually agreeable date.

Analysis:

[17] The court’s discretion to award costs arises from s. 131 of the Court of Justice Act, and the factors which guide the exercise of that discretion are enumerated in rule 57.01 of the Rules of Civil Procedure.

[18] Success is a presumptive factor in favour of an award of costs. There is no dispute that the plaintiff was successful and should therefore be entitled to costs.

[19] I do not take exception to the hourly rate charged by plaintiff’s counsel on a full indemnity rate, given his number of years at the bar.

[20] The fact that counsel has charged six hours time per day at trial rather than some higher number was a choice by counsel, and the defendant should not face an award which is influenced by what was not charged.

[21] As to the number of hours, the plaintiff identifies a total of about 256 hours of lawyer time, plus 14 hours of clerk time. By comparison, but without a detailed breakdown, the defendant’s counsel claims to have spent 140 hours on the matter which is approximately half the plaintiff’s time charged. In general, and particularly in construction litigation, it is common for the plaintiff to spend more time in preparing and prosecuting the claim than that committed by the defendant. It was clear in this case from the exhibits filed and the submissions made that significant time had been spent by the plaintiff. I accept that delayed documentary disclosure by the defendant would have increased the plaintiff’s legal costs as would the defence of the mainly unsuccessful counterclaim. To the extent that the plaintiff’s total bill was increased by inclusion of those items, the defendant bears some responsibility.

[22] Proportionality is an important component of a costs claim. The unsuccessful party should not be asked to pay more that could reasonably have been expected. However, I am not able to conclude that the time charged by the plaintiff was beyond the defendant’s contemplation in a case which required a detailed analysis of a construction project that proceeded, with many revisions, over a lengthy period of time and which included a defence to the substantial counterclaim.

[23] The issues at stake were obviously of importance to both parties.

[24] The ex parte motion to set the claim down for trial was a normal part of the process for which the plaintiff should be entitled to costs.

[25] A key issue is whether the presumptive effect of the Offer to Settle under r. 49.10 applies based on the determination of whether the judgment was “as favourable or more favourable” than the terms of the Offer.

[26] The Offer contained two fixed amounts: $100,000 for the claim and $15,000 for costs, (assuming the Offer was accepted after February 18, 2021) totalling $115,000. The judgment was for $80,229.56 for the claim only, costs being subject to the court’s discretion. As a result, there is uncertainty, which is not to be encouraged in offers.

[27] In Rooney, by her Guardian Rooney et. al v. Graham et. al. reported at 2001 CanLII 24064 (ON CA), [2001] O.J. No. 1055, the Court of Appeal dealt with the issue of uncertainty. The question was whether the increasing amount of costs over time as part of the Offer made it uncertain. In this case, the uncertainty is not the quantum of the Offer, but whether an amount of costs to be awarded should be included.

[28] The purpose of rule 49 is to encourage parties to make reasonable offers to settle and to facilitate the early settlement of litigation. Given the expected normal increase in costs that occurs over time as litigation progresses, the defendant in this case could have accepted the Offer at any time up to the opening of trial which would have limited his liability for costs to $15,000. In effect, from the defendant’s point of view, the offer improved over time. As is contemplated in Rooney, I must make a “mini-assessment” of the plaintiff’s costs claim, in advance of considering the Offer, to then determine its effect. To quote Justice Laskin at para. 57 of Rooney, “In my view, under rule 49.10, all the terms of an offer to settle, including any provision for costs, must be compared with all the terms of the judgment, ordinarily including the disposition of costs (emphasis added).

[29] If I assume, most favourably for the defendant, that the plaintiff would only receive an award of partial indemnity costs, the total would be $49,425.35 inclusive of HST and disbursements. Added to the judgment and prejudgment interest, the grand total would be $129,650.91 which exceeds the $115,000 contained in the Offer.

[30] Although the defendant submits that the Offer did not refer to the disposition of the counterclaim, there was a term that the parties would consent to an order dismissing the action, from which it can be reasonably inferred that the counterclaim was to be dismissed as well.

[31] As a result, the amount recovered at trial was more favourable than the terms of the Offer, and there is no reason why the plaintiff should be disentitled, pursuant to the provisions of rule 49.10(1), to partial indemnity costs to the date of the Offer and substantial indemnity costs thereafter.

Conclusion:

[32] For the foregoing reasons, the plaintiff Jamie Grelowski, operating as JBG Carpentry is awarded partial indemnity costs to the date of the Offer, being $8,556, plus substantial indemnity costs thereafter in the amount of $35,183.25 plus HST and disbursements for a total of $51,490.63.

Reid J.

Released: August 18, 2022

COURT FILE NO.: CV-19-12436

DATE: 20220818

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

JAMIE GRELOWSKI, operating as JBG CARPENTRY

Plaintiff

– and –

DAVID KOEHLER

Defendant

Decision on costs of trial

Reid J.

Released: August 18, 2022

Grelowski v. Koehler, 2022 ONSC 4754

Case Summary

Introduction:

Position of the Plaintiff:

Position of the Defendant:

Analysis:

Conclusion:

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Legal Tests 1

Legislation 1