Court File and Parties

COURT FILE NO.: CV-18-81160 DATE: 2023/03/08 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Chantrs Blinds, Plaintiff, (Responding Party on the Motion) AND: 2037208 Ontario Inc. and Sonia Perna, Defendants (Moving Party on Motion)

BEFORE: Somji J

COUNSEL: Joseph Griffiths, Counsel, for the Plaintiff (Responding Party) Andrew Lister, Counsel, for the Defendants (Moving Party)

HEARD: In Writing

Costs Endorsement

[1] The Defendants/Moving Party 2037208 Ontario Inc. and Sonia Perna (hereinafter “Ms. Perna”) seek substantial indemnity costs in the amount of $10,838.32 following their success on a motion to obtain security of costs: Chantrs Blinds and Shutters Inc. v 2037208 Ontario Inc., 2022 ONSC 6852.

[2] The Plaintiff and Responding Party on the motion, Chantrs Blinds, argues that costs should be reserved in the cause or alternatively, if costs are fixed by this court, they should be capped at $3500 and payment deferred until after trial.

[3] The issues to be decided are one, whether a costs award should issue at this time or be reserved for after trial, and two, if a costs award is to be made, what is the appropriate quantum?

Analysis

Issue 1: Should a costs award be issued at this time?

[4] Courts have broad discretion to determine to whom costs should be paid and the quantum: s. 131(1) Ontario Courts of Justice Act, R.S.O. 1990, c. C.43, as am.

[5] As a general rule, costs on a partial indemnity scale should follow the event and should only be departed from for very good reasons such as misconduct of the party, miscarriage in procedure, or oppressive or vexatious conduct: 1318706 Ontario Ltd. v. Niagara (Regional Municipality) (2005), 75 O.R. (3d) 405 (C.A.) at para 51; 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238 at paras. 10-14.

[6] In this case, Chantrs Blinds does not dispute that that Ms. Perna was the successful party on the motion, but seeks that costs be reserved in the cause and alternatively, if fixed, payment ordered only after the final outcome of the matter. Counsel does not explain why the circumstances of this case is such that the costs award should not follow the motion or if costs are fixed, why payment should be deferred but rather cites cases to be considered.

[7] The first case cited Compass Mechanical Contracting Inc. v Aim Recycling Hamilton, 2022 ONSC 4656, is a decision where security of costs was awarded by the motions judge. In that case, the plaintiff argued that it had no assets or ability to pay and security of costs would result in forcing them to declare bankruptcy. The motions judge found that it was just to order Compass to post a reasonable amount of security for costs given it was still an active corporation. In the final paragraph of the decision, the judge considers costs for the motion and concludes that the justness of a costs award depends on who is successful at trial but unfortunately, does not elaborate why. The decision contrasts other jurisprudence cited by Chantrs Blinds where costs for a motion addressing security of costs was awarded following the motion hearing. The factual circumstances in Compass were also distinct. Compass had provided considerably more financial disclosure and stronger arguments on alleged impecuniosity whereas in this case undertakings have still not been complied with and there is a paucity of evidence on the financial status of Chantrs Blinds. If Chantrs Blinds takes the position that this case is akin to the circumstances in Compass Mechanical Contracting, it was incumbent on counsel to specifically explain why.

[8] Counsel cites TMS Lighting v KJS Transport, 2014 ONSC 7148 at paras 17, 61-62 to highlight that a costs awards must be proportional. TMS Lighting was costs endorsement following a civil trial. The endorsement reiterates the principles that costs normally follow the event and are generally awarded on a partial indemnity basis save in exceptional cases: TMS Lighting at paras 20 and 22. The endorsement notes that trial costs are determined following trial but that costs related to a damages hearing should be deferred: TMS Lighting at para 22. While the principles out in TMS Lighting for assessing costs are sound, the decision does not address the circumstances in which costs on a motion should be deferred.

[9] Chantrs Blinds has not provided any principled basis for why in the circumstances of this case costs should not be ordered and if costs are fixed, why payment should be deferred.

Issue 2: If a costs order is to be made, what is the appropriate quantum?

[10] In exercising their discretion to order costs, judges may consider the factors set out in Rule 57.01(1) Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”). These factors include: the experience of counsel and rates charged; the unsuccessful party’s ability to pay; amounts claimed and amount recovered; apportionment of liability; importance of issues and complexity of the proceedings; and the conduct of the parties.

[11] Costs over partial indemnity are warranted in only two circumstances. The first involves the operation of an offer to settle under rule 49.10 of the Rules where substantial indemnity costs are explicitly authorized. The second involves sanction-worthy behaviour by the losing party: Davies v Clarington (Municipality) et al., 2009 ONCA 722 at para 28.

Complexity and importance of issues

[12] Ms. Perna argues that the complexity of the motion and the parties’ complete success on the motion justifies an elevated costs award.

[13] A motion on security of costs is not necessarily a complex motion, but it became so in this case largely because of the paucity of the evidence filed by Chantrs Blinds. As stated in paragraph 26 of the motion decision, Chantrs Blinds did not file evidence of impecuniosity. As a result of its failure to do so, it was necessary to determine if there was a high chance of success on the merits of the claim which I found Chantrs Blinds failed to demonstrate because of the minimal evidence and analysis provided: Chantrs Blinds at paras 31 and to 35. Furthermore, while Chantrs Blinds emphasized that the merits of the case was the determinative factor, it failed to cite jurisprudence on whether there is a distinction in how the issue of merit should be analyzed in cases where impecuniosity is or is not established: Chantrs Blinds at paras 28 and 29. It is for these reasons that the motion became complex requiring, as Ms. Perna’s counsel pointed out, a 51 paragraph decision.

[14] While complexity alone does not warrant a costs award on a substantial indemnity basis as requested by Ms. Perna, there are reasons why I find an elevated costs award over and above partial indemnity should be granted in this case. First, Chantrs Blinds failed to comply with a number of undertakings from discoveries despite numerous attempts by Ms. Perna’s counsel to obtain them. The undertakings related to financial disclosure which was relevant for the determination of whether Ms. Perna should bring a motion for security of costs in defending the claim. The failure to comply with the undertakings also contributed to Ms. Perna’s delay in bringing the motion which opposing counsel then turned around and argued was grounds for dismissing the security of costs motion: Chantrs Blinds at paras 15 and 16. Second, Chantrs Blinds indicated it would file a motion record but then failed to do so: Chantrs Blinds at para 17. While I do not find Chantrs Blinds’ conduct constitutes reprehensible, scandalous or outrageous conduct that warrants costs on a substantial or full indemnity basis, I do find that these breaches constitute unreasonable conduct that warrants an elevated costs award.

[15] I also find that the issues to be decided on the motion were important. Ms. Perna was significantly concerned about the costs she was incurring to defend herself against a corporate client and her ability to recuperate such costs should she succeed. As noted in my decision, the rationale for requiring corporations to establish impecuniosity before proceeding to address the merits of their case is to ensure that shell corporations do not start actions without the corresponding obligations or responsibility in the area of costs: Chantrs Blinds at para 27.

Work Performed and Rates

[16] Ms. Perna’s team of four counsel spent 37 hours preparing for and attending the motion. The bulk of the work was done by counsel called in 2008 (30.75 hours) with lead counsel limiting themselves to 2.15 hours. Junior counsel and a paralegal contributed the remaining 4.05 hours. Counsel spent time communicating with the client, preparing the motion record, factum, and compendium, and attending the motion hearing. Total legal costs including HST and disbursements was $12,007.02.

[17] Chantrs Blinds argues that the amount of work billed is excessive. Counsel points outs that in contrast their costs on the same motion was limited to 10 hours for total of $4520. They cite Ducharme Estate v Thibodeau, 2022 ONCA 661 and Hordo v Zweig, 2022 ONSC 4344, for the proposition that costs awards for motions of this kind must be generally modest.

[18] I find that both decisions are distinguishable. In Ducharme Estate, the Ontario Court of Appeal awarded security of costs in the amount of $20,000. The issue of costs for the appeal was addressed only in the final paragraph where the Court of Appeal ordered costs for the appeal in the amount of $5,100. There is no discussion of the factors considered in arriving at this figure as per r. 57.01(1), and therefore, I find the decision is of little assistance in determining an appropriate costs award in this case.

[19] In Hordo v Zweig, the motions’ judge ordered the respondents deposit security for costs in the amount of $29,350.00 for costs orders issued previously by the Court and which had not been paid by the responding party in addition to $10,000.00 for the responding party’s appeal. In that case, the respondents were appealing the original cost orders to the Supreme Court of Canada. Notwithstanding the pending appeal, the motions’ judge granted security of costs: Hordo at para 20. However, the Court did not find the appellant’s conduct on the motion, which included their obstinacy in refusing to pay the earlier costs orders, reached the threshold of reprehensible, scandalous, or outrageous conduct that warranted substantial or full indemnity costs: Hordo at paras 17 and 22.

[20] These decision do not address the circumstances here, namely Chantrs Blinds failure to provide full, fair, and frank financial disclosure as well as motion record. Chantrs Blinds breaches required opposing counsel to rely on incomplete materials and contest every issue on the motion thereby requiring them to incur more costs to prepare for the motion then they might have otherwise.

[21] Ms. Perna’s lead counsel has 28 years of experience and charged $450/hour and the 2008 counsel that performed the bulk of the work had 14 years of experience and charged $290/hr. I find these rates are commensurate with the years of experience. By comparison, Chantrs Blinds’ counsel has 20 years’ experience and charged $400/hour.

Ability to pay

[22] Chantrs Blinds has not submitted that they are unable to pay a costs award at this time. Their costs submissions are silent on the issue of ability to pay.

[23] Ultimately, in determining quantum of costs, the overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the circumstances rather than the amount of actual costs incurred by the successful party: Rule 57.01 (1) (0.b); see also Boucher v Public Accountants Council for the Province of Ontario, (2004), 71 O.R. (3d) 291 (C.A.) at paras 37-38; Deonath v Iqbal, 2017 ONSC 3672 at paras. 20-21.

[24] Considering all the relevant factors including Ms. Perna’s success on all issues, Chantrs Blinds’ unreasonable conduct, the complexity of the motion, the importance of the issues, the time and rates charged to prepare for the motion, and the absence of evidence or submission on inability to pay, I find that an elevated costs award consisting of fees, HST, and disbursements in the fixed amount of $8,400 is fair and reasonable in the circumstances.

Order

[25] There will be an order that Chantrs Blinds shall pay costs to Ms. Perna in the fixed amount of $8,400 in 30 days.

Somji J. Date: March 8, 2023