Court File and Parties

COURT FILE NO.: CV-19-01292 DATE: February 15, 2023 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Jackman Construction Limited, Plaintiff/Defendant by Counterclaim AND: Collin Lee Brown and Cristen Lee-Ann Brown, Defendants/Plaintiffs by Counterclaim AND: Ironwood Development Inc., Defendant by Counterclaim

BEFORE: MacNeil J.

COUNSEL: B. Carter – Lawyer for the Plaintiff/Defendant by Counterclaim E. D’Agostino – Lawyer for the Defendants/Plaintiffs by Counterclaim No one appearing on behalf of Ironwood Developments Inc., Defendant by Counterclaim

Additional Reasons Concerning Costs

[1] This decision deals with the costs of a summary judgment motion made by the Plaintiff for the amount it says was owing for renovation work it performed at the Defendants’ residential property, and for all declarations and judgments necessary to give effect to its construction lien rights.

[2] By my decision released November 22, 2022, the Plaintiff was unsuccessful in obtaining summary judgment but some ancillary relief was granted to it in terms of being given leave to amend its reply and defence to counterclaim and an order that the Defendants provide the amount of applicable holdbacks pursuant to s. 39(4.1) of the Construction Act, R.S.O. 1990, c. C.30.

[3] The parties were unable to settle the issue of costs of the motion and so have made written submissions.

The Law

[4] Section 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.

[5] Rule 57.01(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that, when the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs. Tariff A of the Rules of Civil Procedure establishes the fees and disbursements that are allowable under Rules 57.01 and 58.05.

[6] Rule 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.

[7] Rule 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.

[8] Modern 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: see Fong v. Chan, 1999 CarswellOnt 3955, 128 O.A.C. 2 (Ont. C.A.), at para. 22; and 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, 2010 CarswellOnt 9939 (Ont. S.C.J.), at para. 10.

[9] The primary principles in fixing costs are fairness, reasonableness and proportionality.

[10] As 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.)

[11] Generally 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] 4 S.C.R. 3 (S.C.C.), at para. 251.

Analysis

[12] The Defendants were successful in obtaining a dismissal of the summary judgment motion. As a result, they are presumptively entitled to costs. The issue is what is the appropriate quantum of costs that they should be awarded.

Position of the Plaintiff

[13] The Plaintiff argues that the motion was significant in moving the matter forward, in curing certain procedural defaults, and in each party developing their case. The Defendants received an opportunity to obtain the evidence of potential witnesses of the Plaintiff under oath which they would not normally have under the provisions of the Construction Act. Accordingly, the motion has benefitted both parties in terms of the overall litigation.

[14] The Plaintiff argues that costs should be “in the cause” since the trial judge will be in the best position to determine the costs of the motion in relation to how the fundamental issues in the action are ultimately decided. It relies on TDL Group Limited v. 1060284 Ontario Limited, at para. 41, in support of this argument.

[15] In the alternative, the Plaintiff submits that no order for costs is justified because there was divided success in that the Defendants were ordered to provide all information required of them under s. 39(1) of the Construction Act and the Plaintiff was granted leave to amend its reply and defence to counterclaim to plead relief against forfeiture, waiver and estoppel.

[16] In any event, the Plaintiff argues that the costs claimed are excessive and unwarranted, and fail to consider the divided success and progress made by the parties as a result of the motion. The Plaintiff submits that the Defendants did not beat their purported offer, dated December 10, 2020, since the Plaintiff obtained certain relief on its motion while the Defendants’ offer contemplated an outright dismissal of the motion. The Plaintiff relies on Canadian Imperial Bank of Commerce v Rockway Holdings Limited), at page 14, in this regard.

[17] The Plaintiff submits that, even on a partial indemnity basis, the costs sought by the Defendants are not within the reasonable expectation of the Plaintiff or justified. The Plaintiff submits that if costs are not reserved to the trial judge, they should be fixed in the range of $15,000 to $20,000.

Position of the Defendants

[18] The Defendants served an offer to settle the motion on December 10, 2020, but that offer was not accepted. The Defendants submit that they have done “as well or better than their offer to settle” and so they seek their costs on a partial indemnity basis up to service of their offer and on a substantial indemnity basis thereafter, fixed in the amount of $48,752.44, all-inclusive.

[19] The Defendants contend that the summary judgment motion had very little chance of success as there was clearly a triable issue given the dispute between the parties on whether a contract existed between them for the renovation work.

[20] They argue that the summary judgment motion significantly increased the cost of the litigation. The position of the Plaintiff regarding the contractual arrangements between the parties complicated the motion and considerable time had to be spent in untangling the “web” created by the evidence of Nathan Subject and Ryan Subject (“the Brothers Subject”). The Defendants submit that the evidence provided by the Brothers Subject was inconsistent and the motion was of no benefit to the Defendants in terms of proceeding to trial.

[21] The Plaintiff’s only success on the motion was obtaining the alternate relief. However, leave to amend pleadings is mandatory, pursuant to Rule 26.01, unless prejudice would result that could not be compensated for by costs or an adjournment; and the Defendants submit that they had served their affidavit of documents and responded to the Plaintiff’s demand for particulars on November 26, 2020, and that they had answered the s. 39 Construction Act request on November 30, 2020. As a result, they do not agree with the Plaintiff that there was “divided success” between the parties.

[22] The Defendants argue that the time spent as reflected in their submitted Bill of Costs was necessary in all the circumstances and that their offer, the conduct of the Plaintiff’s witnesses and counsel, and the Plaintiff’s purpose in bringing the summary judgment motion all warrant costs payable forthwith on a substantial indemnity basis.

Discussion

[23] With respect to the Plaintiff’s submission that costs should be ordered in the cause, I decline to do so. I find TDL Group Limited to be distinguishable as, in that case, the court was dealing with costs of an interlocutory injunction motion for which the normal practice is to reserve costs to the trial judge. TDL Group Limited was not a summary judgment motion as this was. In my view, it is just for me to determine costs of the motion.

[24] I agree with the Defendants that this was not a situation of “divided success” since the ancillary relief granted to the Plaintiff took up nominal time and argument at the hearing and was procedural in nature.

[25] Rule 20.06 of the Rules of Civil Procedure sanctions costs for improper use of the summary judgment process. As Schreck J. held in Himidan v. 2546579 Ontario Inc., 2018 ONSC 6037, 2018 CarswellOnt 16736 (Ont. S.C.J.), at paras. 8 and 11:

8 … The nature of litigation is such that the outcome is rarely obvious and it is not the court’s role to play “Monday morning quarterback.” In determining whether a party acted unreasonably in bringing a motion for summary judgment, the “omniscience of hindsight” should play no role in the analysis: R. v. G. (D.M.), 2011 ONCA 343, 105 O.R. (3d) 481 (Ont. C.A.), at para.107.

11 While resort to Rule 20.06 may not require a finding that a party acted “egregiously” or in a “reprehensible manner”, in my view it does require some finding of improper conduct. The heading in the Civil Procedure Rules under which Rule 20.06 is found is entitled “Costs sanctions for improper use of rule.” In my view, Rule 20.06 should be employed only in “exceptional circumstances” where a party has behaved improperly: 1095909 Ontario Inc. v. Westmount-Keele Ltd., 2016 ONSC 3507 (Ont. S.C.J.), at para. 10. …

[26] I accept and adopt Schreck J.’s approach in this regard. In this case, I do not find that the Plaintiff engaged in improper conduct so as to warrant awarding costs to the Defendants on a substantial indemnity basis.

[27] The Defendants’ partial indemnity costs and disbursements total $35,521.27, inclusive of HST.

[28] In considering the Bill of Costs submitted by the Defendants, I find that most of the time claimed is reasonable, although some of the time claimed for preparing the factum and argument and for preparing for cross-examinations may be considered excessive. While the hourly rate claimed is high, it is reflective of the seniority of counsel.

[29] Having said that, I do find the amount claimed to be out of proportion to both the nature and complexity of the motion and, therefore, not in accordance with the unsuccessful party’s reasonable expectations. This was a one-day hearing, and while the facts were complicated, given the nature of the parties’ differing evidence, the legal issues were not complex. I also accept the Plaintiff’s argument that the cross-examination of the parties is not entirely wasted as the parties proceed to trial.

[30] In the circumstances, I find that a fair and reasonable amount of legal fees to be awarded to the Defendants for the summary judgment motion, on a partial indemnity basis, is $25,000.00.

[31] As to disbursements, the Defendants claim $3,421.36, inclusive of HST, for expenses incurred relating to cross-examination fees and transcripts and the copying of materials. I accept those disbursements as reasonable and award that amount.

Disposition

[32] Accordingly, for the foregoing reasons and having regard to the factors in Rule 57.01 and the guidance provided by the Boucher decision of the Ontario Court of Appeal, I fix costs payable by the Plaintiff to the Defendants in the total amount of $28,421.36 for fees, disbursements and HST, all inclusive. Costs are ordered to be paid within 30 days.

MacNEIL J. Released: February 15, 2023