Court File and Parties
COURT FILE NO.: CV-18-00590020 DATE: 20230109 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ADAM ROWE carrying on business as Clandestine, Plaintiff AND: FRED HAGEMAN’S HOLDINGS LIMITED, JD DESIGN & BUILD INC. and KOSTA MENTIS, Defendants
BEFORE: VERMETTE J.
COUNSEL: Steven D. Gadbois, for the Plaintiff Nadia Condotta, for the Defendant JD Design & Build Inc.
HEARD: In writing
Endorsement as to Costs
[1] On December 12, 2022, I released an endorsement (2022 ONSC 7015) dismissing the motion of the Defendant JD Design & Build Inc. (“JD”) for an order opposing the confirmation of the report of Associate Justice Wiebe dated October 5, 2021.
[2] The parties were not able to agree on costs and have delivered costs submissions.
Positions of the parties
a. Position of the Plaintiff
[3] The Plaintiff notes that he was entirely successful on the motion. He argues that the motion had little chance of success and served only to delay payment of the Judgment and cause the Plaintiff to incur more legal costs.
[4] The Plaintiff states that, as he did before the trial, he made significant efforts to settle the motion. Various offers were made by e-mail, including an offer on November 17, 2021 pursuant to which the Plaintiff would “walk away” from post-trial costs if the matter was settled by November 24, 2021.
[5] On December 8, 2021, the Plaintiff made a formal Rule 49 offer to settle the motion (“December 8, 2021 Offer”). The December 8, 2021 Offer reads as follows:
- The Defendants shall dismiss their Motion served on October 20, 2021, but not filed, opposing confirmation of the Report of Associate Justice Wiebe dated October 5, 2021.
- The Defendants shall consent to the confirmation of the Report of Associate Justice Wiebe dated October 5, 2021.
- If this offer is accepted on or before 5:00 p.m. on December 14, 2021 there shall be no costs payable. If this offer is not accepted on or before 5:00 p.m. on December 14, 2021, the Defendants, Moving Party, shall pay to the Plaintiff, Responding Party, his costs up to December 9, 2021 calculated on a partial indemnity basis and his costs after December 8, 2021 calculated on a substantial indemnity basis.
- This Offer remains open until 1 minute after the commencement of the Hearing of the Defendants, Moving Party’s, Motion.
[6] The Plaintiff seeks costs on a full indemnity basis in the amount of $21,741.20 based on the offer he made on November 17, 2021 or, in the alternative, costs in the amount of $16,999.72 based on the December 8, 2021 Offer. The Plaintiff submits that the time spent on the motion (48.1 hours) was reasonable in the context of a de facto appeal and the legal research that was needed. The Plaintiff also submits that the time spent was increased by the original deficiencies in the motion materials, the efforts to settle the matter, and the additional hearing before Justice Sharma.
b. Position of the Defendant JD
[7] JD submits that while it was unsuccessful on the motion, the motion was not vexatious or frivolous in any manner.
[8] JD argues that even though its offers to settle were not acceptable to the Plaintiff, they were advanced in good faith with the intention of avoiding further litigation.
[9] JD points out that a costs award must be fair, reasonable and proportionate for the unsuccessful party to pay, having regard to the circumstances of the case. It states that fixing costs is not a mechanical exercise that begins and ends with the actual costs incurred by the successful party and a calculation of hours times rate.
[10] JD submits that while the rate of the Plaintiff’s counsel is reasonable, awarding anything other than costs on a partial indemnity scale would be unreasonable given that JD “was trying to negotiate a settlement for costs with respect to its ability to pay in the most efficient manner”. It argues that “[t]he settlement offers, with respect to costs, as well as the issue of costs on review were meant to facilitate paying he Plaintiff within the capabilities of [JD’s] small business.”
[11] According to JD, the appropriate amount of costs to be awarded to the Plaintiff on the motion is $5,000, all inclusive.
[12] JD does not address in its costs submissions the Plaintiff’s December 8, 2021 Offer and its impact on costs pursuant to Rule 49.10 of the Rules of Civil Procedure.
[13] The costs outline uploaded to CaseLines by JD before the hearing of the motion shows that JD’s lawyers spent a total of 39 hours on the motion (plus two hours for the argument of the motion). Based on the costs outline, the costs incurred by JD on a full indemnity basis total $14,513.25.
Discussion
[14] In my view, there is no basis to order costs on a full indemnity basis in this case, and no authorities have been referred to by the Plaintiff in support of such a request. As has been observed in many cases, costs on an elevated scale (which includes costs on a full indemnity basis) are exceptional and are reserved for those situations when a party has displayed reprehensible, scandalous or outrageous conduct: see Quickie Convenience Stores Corp. v. Parkland Fuel Corporation, 2021 ONCA 287 at para. 4. In my view, even though the motion was not meritorious, the conduct of JD in this case does not rise to the egregious level required to award costs on an elevated scale. Hard-fought litigation is insufficient to justify an elevated costs award: see Davies v. Clarington (Municipality), 2009 ONCA 722 at paras. 42-46.
[15] I also note that the offer that the Plaintiff relies upon in support of his claim for costs on a full indemnity basis, i.e. the offer to “walk away” made on November 17, 2021, was not a Rule 49 offer. Further, and in any event, Rule 49 does not provide for costs on a full indemnity basis.
[16] While JD’s conduct does not justify an award of costs on an elevated scale, Rule 49.10 supports an award of substantial indemnity costs from the date of the December 8, 2021 Offer. I find that, in the circumstances of this case, fairness and the interests of justice do not require a departure of the normal costs consequences under Rule 49.10 of the Rules of Civil Procedure. In my view, JD’s arguments about ability to pay are irrelevant. It was JD‘s decision to pursue a very weak motion to oppose the confirmation of the report of the Associate Justice in the face of a Rule 49 offer. JD should suffer the costs consequences of doing so.
[17] I have reviewed the Plaintiff’s costs outline. I agree with JD that the rate used by the Plaintiff’s lawyer is appropriate, i.e. a partial indemnity rate that is 60% of the actual rate and a substantial indemnity rate that is 90% of the actual rate. With respect to time spent and the overall amount sought, I will apply a reduction to the amount sought to ensure that the overall time claimed is reasonable in light of all the circumstances of this case. The reduction will be small as the time spent by the Plaintiff’s lawyer is very similar to the time spent by JD’s lawyers, which is a relevant consideration when determining what is fair and reasonable and within the reasonable expectations of the parties. However, I note that counsel for the Plaintiff is significantly more senior than JD’s main counsel on the motion.
Conclusion
[18] Taking the foregoing into account, as well as the factors set out in Rule 57.01(1) of the Rules of Civil Procedure and the reasonable expectations of the parties, I find that the fair and reasonable award of costs in favour of the Plaintiff for the motion is on a partial indemnity basis up to and including December 8, 2021 and on a substantial indemnity basis starting on December 9, 2021 in the all-inclusive amount of $14,500.00. In my view, this is an amount that JD should reasonably have expected to pay in the event that it was unsuccessful on the motion.
[19] The costs are to be paid by JD to the Plaintiff within 30 days.
Vermette J. Date: January 9, 2023