Court File and Parties
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Gergley Jakab and Ontario Heavy Xpress Ltd., Plaintiffs
AND:
Clean Harbors Canada, Inc., Defendant
BEFORE: MacNeil J.
COUNSEL: C. Wahlman – Lawyer for the Plaintiffs K. Kernick – Lawyer for the Defendant
REASONS FOR DECISION CONCERNING COSTS
1This action was brought for recovery of the value of a transport truck owned and operated by the Plaintiffs that was damaged by a fire. The matter was tried over three days. By my Reasons for Judgment, I dismissed the action.
2The parties were unable to agree on costs. As a result, written submissions were received. This is my decision on costs as between the parties.
Position of the Defendant
3The Defendant seeks an award of costs in the amount of $55,055.71 for fees and disbursements. The Defendant argues that it made five offers to settle throughout the course of the litigation and, since the Plaintiffs were unsuccessful and not awarded any damages, each one of these settlement offers was more favorable to the Plaintiffs then the judgment obtained by them. The Defendant submits that the Court should award it costs on a partial indemnity basis for steps taken prior to and including August 27, 2019, the earliest of the settlement offers, and costs on a substantial indemnity basis for steps taken after that date, and 100% of its disbursements.
4The Defendant disputes that its law firm “over-lawyered” the matter, as contended by the Plaintiffs. It further submits that, while this was meant to be a Simplified Procedure action, in reality, the Plaintiffs’ counsel insisted on conducting lengthy direct examinations of her witnesses and making unsuccessful and unnecessary procedural objections throughout the trial that added to the length and complexity of the matter. The Defendant submits that, since the Plaintiffs unnecessarily prolonged the litigation, regardless of the offers to settle, an award of substantial indemnity costs is appropriate.
Position of the Plaintiffs
5The Plaintiffs submit that the amount of costs claimed by the Defendant is disproportionate and well outside reasonable expectations. They indicate that this has been a Simplified Procedure action from the beginning, the claim was minor, the trial was short, and that the legal fees should reflect this. For comparison’s sake, the Plaintiffs advise that their total legal fees, on a full recovery basis, were $35,814.50 for time and $3,061.49 for disbursements.
6The Plaintiffs argue that substantial indemnity costs should not be awarded since there was no egregious conduct by them and, further, that Rule 49.10 consequences do not apply because their claim failed (see Scapillati v. A. Potvin Construction Ltd. (1999), 1999 CanLII 1473 (ON CA), 175 D.L.R. (4th) 169 (Ont. C.A.)).
7The Plaintiffs submit that the hourly rates charged by counsel for the Defendant are not reasonable. They also contend that the time claimed for preparation of the affidavit of documents, discoveries, the pre-trial conference, and trial preparation is excessive; and that time has been entered by lawyers for scheduling and serving documents which are administrative tasks. Further, the Plaintiffs are concerned that multiple lawyers and a student docketed for the same tasks and they should not be responsible for paying for internal training of junior lawyers.
8With respect to the disbursements claimed, the Plaintiffs submit that the Defendant seeks costs for an expert witness whose evidence was ultimately not accepted by the Court; and that the amount of disbursements is excessive, especially as defence productions were minimal.
General Principles
9Section 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.
10Rule 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.
11Rule 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.
12Generally speaking, substantial indemnity costs will be awarded where there has been “reprehensible, scandalous or outrageous conduct on the part of one of the parties”. The fact that a proceeding has little merit is no basis for awarding substantial indemnity costs: Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3 (S.C.C.), at para. 251.
13Rule 49.13 of the Rules of Civil Procedure provides that 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.
14Rule 1.04(1.1) of the Rules 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.
15Modern 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 CanLII 2052 (ON CA), 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.
16Ultimately, in fixing costs, the primary principles remain fairness, reasonableness and proportionality.
17As stated by the Ontario Court of Appeal in Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 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 CanLII 25577 (ON CA), 2002 CarswellOnt 4020, [2002] O.J. No. 4495 (Ont. C.A.), at para. 4.)
Analysis
18I am of the view that the amount of legal fees sought by the Defendant exceeds what is fair and reasonable in the circumstances of this case and does not accord with the unsuccessful parties’ reasonable expectations.
19I am of the opinion that costs should not be awarded on a substantial indemnity basis in the circumstances, including that the conduct of the Plaintiffs and/or their counsel did not rise to the level of being reprehensible or egregious so as to warrant substantial indemnity costs; and that the Defendant’s August 27, 2019 offer to settle did not satisfy Rule 49.10 as it was withdrawn before the commencement of the trial. I also accept the Plaintiffs’ argument that since the claim failed, Rule 49 has no application: see Scapillati v. A. Potvin Construction Ltd. (1999), 1999 CanLII 1473 (ON CA), 122 O.A.C. 327, 44 O.R. (3d) 737 (Ont. C.A.), at para. 63, citing S & A Strasser Ltd. v. Richmond Hill (Town) (1990), 1990 CanLII 6856 (ON CA), 1 O.R. (3d) 243 (Ont. C.A.), at p. 245.
20With respect to legal fees, while the Defendant was entitled to pursue its defence in the manner it deemed appropriate, the amount awarded should be proportional to the amount claimed and the complexity of the proceeding. This action did not involve complicated facts or legal issues. With respect to the time claimed, there are four lawyers and one student-at-law identified on the Defendant’s bill of costs, including two senior counsel and two junior counsel. 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 costs amount claimed to be out of proportion to both the nature and complexity of the proceeding.
21Having regard to the balancing exercise required under Rule 57.01 and the guidance provided by the Boucher decision of the Ontario Court of Appeal, I am satisfied that awarding partial indemnity costs to the Defendant in the amount of $20,000.00, inclusive of HST, is fair, reasonable and proportionate in the circumstances.
22With respect to disbursements, the Defendant claims $2,700.00 for fees paid to their expert witness. Tariff A provides that “a reasonable amount” can be awarded for experts’ reports “that were reasonably necessary for the conduct of the proceeding”. In this case, I decline to allow the claimed expert’s fee as I am not satisfied that the expert report and evidence was helpful to the Court or reasonable. This reduces the amount for disbursements by $2,700.00. Accordingly, I allow disbursements in the amount of $1,921.71, inclusive of HST.
Disposition
23Based on the foregoing, the Plaintiffs are ordered to pay to the Defendant costs in the amount of $21,921.71, inclusive of HST and disbursements. Costs are ordered to be paid within 60 days.
B. MacNeil J.
MacNEIL J.
Released: October 13, 2022