Court File and Parties
COURT FILE NO.: CV-15-519276 DATE: 20230508 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: SHOBROOK CORPORATION Plaintiff (Moving Party) – and – GEORGE GOULET, IVAN MA and ACCESS HEALTH BENEFITS LTD. Defendants (Responding Parties)
Counsel: Derek J. Bell, for the Plaintiff (Moving Party) John Friendly, for the Defendants (Responding Parties) Thomasina A. Dumonceau, for the Third Parties John Bowden and John A. Bowden Insurance Agency Limited
Heard: In Writing
Papageorgiou J.
Costs Endorsement
Nature of the Case
[1] The plaintiff was successful in its motion to amend its Statement of Claim. It seeks substantial indemnity costs in the amount of $43,225.24 and in the alternative partial indemnity costs in the amount of $28,933.
The Court’s Discretion
[2] Pursuant to s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, costs are in the discretion of the court. Rule 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, sets out the factors which courts should have regard to when awarding costs. 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”: Zesta Engineering Ltd. v. Cloutier, at para. 4; Boucher v. Public Accountants for the Province of Ontario (2004), 71 O.R. (3d) 291 (Ont. C.A.), at para. 26; Davies v. Clarington (Municipality) et al., 2009 ONCA 722, 100 O.R. (3d) 66, at para. 52; G.C. v. Ontario (Attorney General), 2014 ONSC 1191.
[3] Judges have a duty to fix or assess costs in reasonable amounts and have a duty to make sure that the hours spent are reasonably justified: Pagnotta v. Brown, [2002] O.J. No. 3033 (Ont. S.C.), at para. 25.
[4] Further, there must be practical and reasonable limits to the amounts awarded for costs and those amounts should bear some reasonable connection to the amount that should reasonably have been contemplated: Toronto (City) v. First Ontario Realty Corp. (2002), 59 O.R. (3d) 568 (Ont. S.C.), at para. 26; Gratton-Masuy Environmental Technologies Inc. v. Building Materials Evaluation Commission, [2003] O.J. No. 1658 (Ont. S.C.).
[5] Rule 57 directs that the Court may have reference to the following factors:
57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) 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;
(0.b) 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;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer;
(h.1) whether a party unreasonably objected to proceeding by telephone conference or video conference under rule 1.08; and
(i) any other matter relevant to the question of costs. R.R.O. 1990, Reg. 194, r. 57.01 (1); O. Reg. 627/98, s. 6; O. Reg. 42/05, s. 4 (1); O. Reg. 575/07, s. 1; O. Reg. 689/20, s. 37.
[6] The Court has the discretion to award substantial indemnity costs, but such costs are “rare and exceptional” and only warranted where there has been reprehensible, scandalous or outrageous conduct on the part of a party: Duca Financial Services Credit Union Ltd. v. Bozzo, 2010 ONSC 4601 at para 5 and Foulis v. Robinson.
Complexity, Importance and Successful Party
[7] The Plaintiff was the successful party and is presumptively entitled to costs.
[8] The motion itself was not overly complex but as I will set out below, the Defendants’ conduct and approach made it unduly complex.
[9] The motion was important to the Plaintiff as it sought to increase the damage claim from $750,000 to $8,700,000.
Conduct which tended to lengthen and unnecessarily cause the motion to be complex
[10] The Plaintiff argues that the Defendants have conducted this matter in a proceduralist, technical manner, ultimately raising multiple objections which were incorrect in fact and law. They cite a shotgun approach to this motion where the Defendants argued every possible argument, whether it was tenable or not. They cite Myers J.s’ decision in Innocan Inc. v Daro Flooring Construction Inc, 2021 ONSC 7558 where he lamented the culture of litigation that remains prevalent in the Toronto Region where instead of moving matters along, parties pursue multiple procedural issues which only result in “costs, costs, costs” and “delay, delay, delay.”
[11] It argues that the culture will not change unless there are meaningful consequences to this kind of behaviour.
[12] I agree that the Defendants’ conduct has tended to lengthen this matter and make it more complex than was required.
[13] The Plaintiff first raised its intention to amend its Statement of Claim in August 2019. It was not heard until January 2023, more than three years later. While some of it was due to mediation and COVID, a significant reason for the delay was the result of tactical roadblocks raised by the Defendants. I need not repeat the history as it is fully set out in my reasons found at 2023 ONSC 371 but provide the following summary:
[14] In December 2019, Plaintiff’s counsel sent a copy of proposed amendments to the Defendants’ counsel and asked whether the Defendants would consent to the amendments. Defendants’ counsel replied that he did not see his clients consenting to the amendments.
[15] In order to resolve the amendment issue on consent, the Plaintiff revised its amendments such that the only amendment made would be to replace the damages amount with a higher number. When the Plaintiff asked the Defendants to consent to the revised amendment, the Defendants at first would not confirm their position on the amendment, requiring the Plaintiff to book the first appearance before Master Sugunasiri (as she then was) on this issue. Only after the motion was scheduled and the Plaintiff had served its motion materials did the Defendants confirm that they would oppose the motion, by filing responding materials.
[16] Ultimately the motion was resolved on the basis that the Plaintiff would abandon its motion to amend and that it could be raised at the outset of trial.
[17] In late January 2021, the Defendants first advised the Plaintiff that if a motion to amend was brought at trial, the Defendants would seek to adjourn the trial in order to obtain discovery on the proposed amendments. To move this matter forward and avoid wasting court time, the Plaintiff offered dates in February and March 2021 for a further day of discovery. Rather than accepting the Plaintiff’s offer, the Defendants decided to wait until the amendment motion was decided at trial before determining whether to conduct a further discovery.
[18] Given the Defendants’ stated intention to seek an adjournment at trial should the amendment motion be raised at that time, the Plaintiff sought to have its motion decided prior to trial. In response, the Defendants took the unreasonable position that Master’s Sugunasiri’s Order dated January 9, 2020 prohibited the Plaintiff from bringing its motion prior to trial.
[19] In March 2021, the parties booked a case conference before Master Sugunasiri to decide the amendment issue. The Plaintiff served its Motion Record on the Defendants prior to this case conference.
[20] A second case conference was held by Master Sugunasiri was held on April 7, 2021. At that case conference, the Defendants took the position that the Plaintiff would have to bring two motions to obtain the relief sought: first, a motion to seek leave to bring the amendment motion after the matter had been set down for trial pursuant to r. 48.04(1); second, the Defendants took the position that only after leave was granted could the Plaintiff bring its motion to amend.
[21] The Plaintiff raised the inefficiency of this process with the Defendants on April 7, 2021, This inefficiency was also recognized over a year later in the Endorsement of Myers J. dated July 12, 2022.
[22] The Defendants’ position that two motions were required for the Plaintiff to obtain the relief sought was contrary to r. 1.04, which states that the Rules shall be liberally construed to secure the just, most expeditious and least expensive determination. The only possible reason for the Defendants to propose this structure was to delay and complicate the amendment motion.
[23] Black J ultimately directed the parties to have all issues relating to the proposed amendments heard together. It was unreasonable and improper for the Defendants to use the Rules in this manner.
[24] On April 8, 2021, Plaintiff’s counsel sent Defendants’ counsel a copy of the long-motion form and asked if he could sign the form on behalf of the Defendants. The Defendants’ counsel advised that he could not and also advised, for the first time, that the action against the Defendant Mr. Goulet was stayed because Mr. Goulet had filed for bankruptcy in 2018. The Plaintiff had a right to be notified of the bankruptcy filing at the time, as it was a contingent creditor.
[25] As a result, the Plaintiff’s motion to amend was delayed by several months as the Plaintiff obtained an order to lift the bankruptcy stay against Mr. Goulet and to revive the Defendant Access Health who had been dissolved. This too, the Defendants failed to notify the Plaintiff of. Indeed, Defence counsel purported to make submissions on behalf of Access Health although it had been dissolved.
[26] The Plaintiff was also required to make further amendments to the Statement of Claim to reflect new facts relating to the lift stay order and revival.
[27] Given the difficulties in moving this proceeding forward, in June 2022, the Plaintiff sought the appointment of a Case Management Judge. This motion also was opposed by the Defendants, yet another procedural obstruction. At a case conference held on July 12, 2022, Myers J. rejected the Defendants’ position, and ordered that Black J. would oversee this action up to trial, including all motions.
[28] The Plaintiff’s motion to amend was heard by this Court on January 17, 2023. In relation to the Defendants’ position as to why the court should not grant the Plaintiff leave to bring the amendment motion under r. 48.04(1), this Court found that the Defendants had taken contradictory positions that made “no sense” and that “the Defendants’ approach makes no practical sense as it has strong potential to waste time and expense, as well as judicial resources”.
[29] In the Reasons, it was also recognized that the Defendants had used the motion to amend as an opportunity to file evidence to argue the merits of the case and that the Plaintiff was then required to file its own materials on those issues in response.
[30] The Defendants main response is that the Plaintiffs are at least in part to blame by seeking to amend the Statement of Claim after it set the matter down for trial. The Defendants point out that the law on the test applicable had not yet been addressed by the Court of Appeal and thus the motion was important and germane to the development of the law.
[31] They also argue that the Plaintiff here was seeking a significant indulgence even though the Rules specifically direct that amendments shall be granted unless prejudice which cannot be cured by costs or an adjournment.
[32] I do not accept the Defendants’ arguments.
[33] I am satisfied that the motion was also made unnecessarily complex by the Defendants’ advance of positions which although not tenable, still had to be addressed. The Defendants’ conduct lengthened the proceeding while the Plaintiff continually proposed solutions that would have shorted the proceeding.
[34] As noted by Armstrong J, in Boucher, there are cases where the prospect of a costs award against the losing side will “operate as a reality check for the litigant in discouraging frivolous or unnecessary litigation.”
[35] The Defendants’ conduct over the past three years has substantially and unnecessarily increased the cost of this motion which the Plaintiff has consistently said for the last three years was simply a motion to limit the claim to insurance limits while increasing the damages sought.
[36] The Defendants should have reasonably expected that the way in which they approached this matter would escalate the costs of both parties and lead to a significant costs award.
[37] However, I am not satisfied that this conduct reaches the standard of being reprehensible, scandalous or outrageous as per the applicable authorities.
Time Spent Rates Charged
[38] I have reviewed the Bill of Costs submitted. The rates charged were reasonable given the year of call of Plaintiff’s counsel. The time spent was also reasonable. The Defendants are in no position to complain given that they did not file their own bill of costs.
[39] Therefore, I am satisfied that the Plaintiff is entitled to its partial indemnity costs in the amount of $28,933. I am satisfied that these costs were a reasonably foreseeable consequence of the manner in which the Defendants litigated this motion. I am also satisfied that the Plaintiff should be compensated for the case conferences which they have attended over the past three years to address these issues.
Discovery
[40] The Plaintiff submits that one further day of discovery is sufficient on the increased damages claim given the previous discovery which took place and which touched on all the issues which are relevant to the amendment. The Defendant does not ask for anything other than one additional day.
[41] Therefore, I am ordering that the Defendants may conduct discovery over the period of one day.
[42] The Defendants have sought an order that the Plaintiff provide a further affidavit of documents and/or productions related to the amendment. If the parties cannot resolve this one their own, then I am directing that the Defendants may bring a motion in writing related to any additional productions which it seeks. They may bring it directly to me.
Case Management
[43] Given the way in which this simple matter of an amendment has been dealt with, I am also satisfied that a Case Management Judge should be appointed to replace Black J. who has been moved to the family team.
Papageorgiou J. Released: May 8, 2023