COURT FILE NO.: CV-19-4434-00
DATE: 2023 07 17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
RAH TRANSPORT INC.
Richard Anthony Hudson, Personal Representative for the Plaintiff
Plaintiff
- and -
PRIDE TRUCK SALES LTD. and TPINE LEASING CAPITAL CORPORATION
A. Mann, for the Defendants
Defendants
AND BETWEEN:
TPINE LEASING CAPITAL CORPORATION
Plaintiff by Counterclaim
A. Mann, for the Plaintiff by Counterclaim
- and -
RAH TRANSPORT and RICHARD ANTHONY HUDSON
Defendants to the Counterclaim
AND BETWEEN:
RAH TRANSPORT INC. and RICHARD ANTHONY HUDSON
Plaintiffs by Counterclaim
- and –
PRIDE TRUCK SALES LTD., TPINE LEASING CAPITAL CORPORATION and CLE CAPITAL INC.
Defendants to the Counterclaim
Richard Anthony Hudson, Personal Representative for the Defendants to the Counterclaim
Richard Anthony Hudson, Personal Representative for the Plaintiffs by Counterclaim
A. Mann, for the Defendants by Counterclaim
HEARD: October 31, November 1-4, 2022
COSTS ENDORSEMENT
LEMAY J.
[1] This matter was a Simplified Rules action that proceeded to trial in November of last year. I released my reasons on May 12th, 2023 (2023 ONSC 2893), and RAH Transport and Mr. Hudson were completely unsuccessful in both their claims and in their defence of the counterclaims brought by the Defendant TPine Leasing Capital Corp ("TPine").
[2] In my reasons, I directed the parties to provide submissions on three issues:
a) The damages calculations that I had set out in my decision.
b) The question of whether tax should be included or excluded in the calculation of the lease payments owing to TPine.
c) The costs of the action.
[3] I will deal with each issue in turn. I would note at the outset that, as in my original reasons, I will refer to Mr. Hudson and RAH Transport collectively as the Plaintiffs even though Mr. Hudson was involved in this action in his personal capacity as a Defendant to the counterclaim. I will refer to the other parties as the Defendants for ease of reference. I acknowledge the fact that TPine was a Plaintiff by counterclaim and will return to the significance of that fact later in these reasons.
The Damages Calculations
[4] My decision included an Appendix that set out my arithmetical calculation of the damages in this case. However, given the various components of those calculations, I wanted to give the parties an opportunity to comment on those calculations, and provided them an opportunity to do so in writing.
[5] I received submissions from the Defendants on the issue of the calculations. They advised that, other than an error of $0.04 in the calculation of the damages for the Kenworth, I had performed the arithmetical calculations of the damages correctly. I have reviewed this calculation, and I agree with the Defendants that the calculation should be adjusted as they propose.
[6] The Plaintiffs provided no submissions on this issue. However, the Plaintiffs raised an issue in terms of one of the factual findings in my reasons. My reasons made it clear that I was not entertaining any further submissions on the merits of the case. The issue was whether, based on my findings of fact, the arithmetic in my damages calculation was correct. I will not be considering the merits of the case further.
[7] In light of the foregoing, the total damages payable by Mr. Hudson and RAH Transport are as follows:
a) On account of the Volvo truck, the sum of $1,662.65
b) On account of the Kenworth truck, the sum of $44,914.61
[8] Those amounts are due and payable within thirty (30) days of today's date.
The Tax Consequences
[9] I had also raised the issue of whether there should be any adjustments to the amounts payable to TPine on account of the fact that taxes were being paid on the lease amounts. The Plaintiffs made no submissions in this regard. The Defendants argued that, since the taxes would have been remitted by the Defendant Pride Truck Sales at the time that the leases were assigned to TPine, it is appropriate to calculate the damages inclusive of taxes.
[10] I accept that submission. The damages I have set out in the previous section include the payments on account of taxes. As a result, there will be no change to the amounts that I have awarded in the previous section.
The Costs of the Proceeding
a) The Positions of the Parties
[11] The Defendants seek costs on a partial indemnity basis up to the date of the offer and then substantial indemnity costs after the date of the October 19th, 2022 offer to settle. Those costs are sought on the basis that the Offer fully complies with Rule 49 of the Rules of Civil Procedure, the Defendant TPine (who was a Plaintiff by counterclaim) was entirely successful in the counterclaim and the costs sought by the Defendants are reasonable. Counsel for the Defendants also points to the fact that the Plaintiffs unduly complicated this proceeding by making unsubstantiated allegations of fraud. The total costs and disbursements sought are $131,855.87 inclusive of HST.
[12] The Plaintiffs acknowledge that the Defendants were successful and are entitled to some costs. However, the Plaintiffs argue that the costs sought by the Defendants are excessive, as this matter proceeded under the Simplified Rules. The Plaintiffs do not suggest a specific quantum of costs.
[13] The Plaintiffs' costs submissions also contain arguments about his claim that the sticker was not on the Volvo Truck at the time that the truck was inspected in March of 2022. These submissions were not advanced during the merits of the case and are not appropriately considered during the costs submissions. I will not address those arguments further as they are arguments that are more appropriately addressed on a reconsideration or appeal of my decision.
b) The Settlement Offers
[14] The Defendants served a number of offers to settle. There are two key offers that should be considered:
a) A June 22, 2022 offer that was for a payment of $10,000.00 all inclusive from the Defendants to the Plaintiffs. This offer was open without any cost consequences for 30 days, and remained open (with cost consequences) until one minute after the commencement of trial.
b) On October 19th, 2022, the June 22nd, 2022 offer was revoked and an offer for the Defendants to jointly and severally pay the Plaintiffs the sum of $21,154.77 plus pre-judgment interest, costs and disbursements.
[15] I have only been advised of the Plaintiffs' offer of May 11th, 2022. That offer was for $200,000.00 to be paid by each of the Defendants to the Plaintiff, for a total of $600,000. This was an all-in offer and, as a result, there was no additional amount for either costs or interest.
[16] The Plaintiff also made what he referred to as an all-inclusive offer of $60,000.00 after the decision was released. It is not clear to me whether that was an offer to resolve the costs, or whether it was an offer to resolve the entire action. Given my disposition of the costs, this offer is not a factor that figures into the disposition regardless of whether it was an offer to resolve either the costs or the entire litigation.
[17] TPine's October 19th, 2022 offer complies with Rule 49, as it sets out the monetary amount and allows for interest and costs to be agreed upon or assessed. The question is, given that the consequences of Rule 49 are triggered, what scale should costs be awarded on.
c) The Scale of Costs
[18] S & A Strasser v. Richmond Hill (Town), 1990 CanLII 6856, (1990) 1 O.R. (3d) 243 (C.A.), stands for the proposition that, even if a Defendant beats their offer to settle at trial, they are only entitled to partial and not substantial indemnity costs unless there is reprehensible, scandalous or outrageous conduct on the part of the Plaintiff. In this case, TPine is both a Defendant and a Plaintiff. That raises the question of whether Strasser applies to limit the costs that the Defendants can seek to partial indemnity costs.
[19] Counsel for the Defendants did not cite any case-law to suggest that Strasser would not apply to the facts of this case. My own brief review of the case-law seems to suggest that Strasser applies to preclude Defendants with counterclaims from obtaining substantial indemnity costs unless reprehensible conduct can be established: See Henderson (Trustee of) v. Pitters, 2015 ONSC 2, and Spirent Communications of Ottawa Ltd. v. Quake Technologies (Canada) Inc., [2006] O.J. No. 4032 (S.C.J.).
[20] As a result, I am not prepared to conclude that the Defendants should be entitled to substantial indemnity costs in this case merely because they beat their offers to settle. That brings me to the question of whether the Plaintiff's conduct was reprehensible, scandalous or outrageous. While I have concerns with the Plaintiffs' litigation position which I will discuss below, I am not persuaded that those concerns rise to the level of reprehensible, scandalous or outrageous conduct.
[21] As a result, I am of the view that the costs of this matter should be on a partial indemnity basis throughout the action.
d) Quantum of Costs
[22] The issues that the Court should consider when setting the quantum of costs are set out in Rule 57.01 of the Rules. Beyond determining the successful party, the most relevant of those factors in this case are:
a) The complexity of the proceeding;
b) The conduct of any party that tended to shorten or lengthen the proceedings;
c) The reasonable expectations of the unsuccessful party.
[23] I will address each of these considerations.
[24] I start with the fact that this is a proceeding under the Simplified Rules. If the action had been started after January 1, 2020, then costs would have been limited to $50,000.00 and disbursements to $25,000, exclusive of HST: See Rule 76.12.1. However, this action was started in 2019, so these limits do not apply.
[25] That being said, the action was brought under the Simplified Rules and the costs should generally be proportional to the claims made in the action. This is a factor that would suggest that the costs claims of the Defendants are excessive, as they are more than double the monies that the Defendant TPine recovered from the Plaintiffs. However, there are other factors that support the costs that the Defendants are seeking.
[26] The Plaintiffs state that this was a simple matter of a contract claim. I disagree. Even at trial, Mr. Hudson was maintaining his allegations that the Defendants had engaged in fraud by improperly creating and altering documents. Although I was able to render my decision without having to address these allegations, counsel for the Defendants would have been required to address these allegations throughout the litigation. This would have resulted in considerable additional time being spent by counsel for the Defendants on this litigation.
[27] The extra time that was spent was, in my view, unnecessary. The Plaintiffs' allegations of fraud in the documents did not materially affect the action as, in the end, there was no dispute that the Plaintiffs had entered into leases for both of the trucks. The Plaintiffs made these allegations unnecessarily and the Defendants should not be required to bear the additional costs associated with defending against those allegations. This is a factor that supports the claim of costs being made by the Defendants.
[28] This analysis also applies to the question of whether the conduct of a party tended to shorten or lengthen unnecessarily the litigation. The Plaintiffs' conduct in this matter tended to lengthen the litigation unnecessarily.
[29] This brings me to the reasonable expectations of the unsuccessful party. In the end, once the allegations of fraud were put aside, this was a simple contractual dispute. An unsuccessful party would have a reasonable expectation of paying a more moderate costs award than what is sought by the Defendants.
[30] However, those expectations would be tempered by the fact that there were multiple parties in this case, and that the Plaintiffs would have been aware of that fact. Indeed, until June 21st, 2021, the Defendant CLE was represented by a different law firm. This separate representation resulted in additional costs being incurred by the Defendants. Indeed, the costs incurred by CLE until it decided to be represented by counsel for TPine and Pride were approximately $40,000.00 plus disbursements and HST.
[31] The Plaintiffs, through their offer to settle, also clearly understood that each of the Defendants had a separate legal identity and a separate role to play in the case. As a result, it would be within the Plaintiffs' reasonable expectations that there would be additional costs as a result of the fact that there were multiple defendants. This is a factor that favours a higher award of costs to the Defendants.
[32] There is one further deduction that should be made from the costs payable to the Defendants. Specifically, there were two counsel present for the entire proceeding before me. I appreciate that the Defendant is not seeking compensation for all of the junior counsel's time. I also appreciate that these opportunities for junior counsel are important. However, the Plaintiff should not be required to pay two counsel fees for the trial (or even part of two counsel fees) in this matter when one firm represented the Defendants.
[33] When all of these factors are considered, I set the costs payable by the Plaintiffs to the Defendants in the sum of $80,000 inclusive of HST and disbursements.
Conclusion
[34] For the foregoing reasons, I am ordering as follows:
a) The Plaintiffs shall pay the Defendants their costs in the sum of $80,000 inclusive of HST and disbursements.
b) The Plaintiffs shall also pay the damages as set out in paragraph 7 of these reasons. Those amounts are over and above the amounts payable on account of the costs.
LEMAY J.
Released: July 17, 2023
COURT FILE NO.: CV-19-4434-00
DATE: 2023 07 17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
RAH TRANSPORT INC.
Plaintiff (Defendant by Counterclaim)
- and -
TPINE LEASING CAPITAL CORPORATION and PRIDE TRUCK SALES LTD.
Defendants (Plaintiffs by Counterclaim)
- and -
RICHARD ANTHONY HUDSON
Plaintiff by Counterclaim
COSTS ENDORSEMENT
LEMAY J
Released: July 17, 2023