Court File and Parties

COURT FILE NO.: CV-21-60340 DATE: August 22, 2023 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: James L. Garrett, Plaintiff AND: Niagara-on-the-Lake Sailing Club, Defendant

BEFORE: MacNeil J.

COUNSEL: A. Turner and K. Morris – Lawyer for the Plaintiff/Responding Party A. Mannell – Lawyer for the Defendant/Moving Party

DECISION ON COSTS

[1] This is my decision on costs relating to the summary judgment motion made by the Defendant seeking to dismiss the Plaintiff’s action. My decision in this regard is made further to my Reasons for Decision released May 12, 2023. The Plaintiff was successful on the motion and summary judgment was granted in his favour against the Defendant.

[2] The parties were unable to settle the issue of costs incurred in connection with the proceeding and have made written submissions.

Position of the Plaintiff

[3] The Plaintiff submits that, as he was the successful party on the summary judgment motion, he is entitled to his costs. The matters at issue in the case were important to him, particularly because the declarations granted have the practical effect of restoring his contractual rights as a slip priority note holder, in perpetuity. The Plaintiff seeks costs on a substantial indemnity scale fixed at $59,122.73; alternatively, he seeks costs on a partial indemnity scale in the amount of $45,261.30.

[4] Once the Defendant commenced the summary judgment motion, it was required to put its best foot forward and the Plaintiff had to similarly respond. In responding to the motion, the Plaintiff sought out witnesses with direct knowledge of the time period and events in question, which increased his costs significantly.

[5] The Plaintiff submits that the litigation was vigorously contested, and he was entitled to mount a “robust defence” against the summary judgment motion. There was no unreasonable delay in the proceedings. The Plaintiff acknowledges that he sought the consent of the Defendant to consolidate his action with another action commenced by other slip priority note holders, as the actions had common issues of fact and arose out of the same series of events, and the Defendant refused. The Plaintiff submits that the Defendant took unreasonable positions that distracted the parties from the ultimate issues in the case and resulted in additional costs to the Plaintiff, including an inaccurate calculation of the dockage rates and a failure to provide underlying documents to support those calculations in the original affidavit of documents.

[6] The Plaintiff denies that his costs are far beyond what the Defendant could have reasonably expected. The time dedicated by both parties’ respective counsel to the matter is nearly identical: the Plaintiff’s total time spent is 151.65 hours and the Defendant’s time is 151.6 hours. Senior counsel was used reasonably and sparingly. The work was primarily done by two associates who had similar hourly rates; they handled different tasks but functioned as a single associate without any overlapping time. The division of labour between the Plaintiff’s lawyers utilized expertise and resources to address this complex, document-driven matter. While counsel for the Plaintiff spent more time than the Defendant on the Plaintiff’s factum, this was appropriate in light of the significant implications of the motion’s outcome and the court’s finding in the Plaintiff’s favour.

[7] The Plaintiff submits that he offered on at least three occasions to mediate the dispute between the parties, but those attempts were all refused by the Defendant. The Plaintiff submits that the court should take into consideration the Defendant’s refusal to participate in mediation. He relies on the decision in Canfield v. Brockville Ontario Speedway, 2018 ONSC 3288, 24 C.P.C. (8th) 133 (Ont. S.C.J.), at paras. 55-56, wherein the court held that when opportunities to attend mediation are spurned, such rejection can be a relevant factor when fixing costs. The Plaintiff contends that the Defendant would likely have achieved a better result through mediation than it did as a result of the motion, with lower costs for both parties.

Position of the Defendant

[8] It is the position of the Defendant that this is an appropriate case for the parties to bear their own costs. The Plaintiff had strongly resisted the advancement of the Defendant’s summary judgment motion maintaining that a trial was necessary. Further, the Plaintiff engaged in conduct which caused the Defendant to incur unnecessary legal fees, including requiring the Defendant to respond to the Plaintiff’s “Rule 15 concerns”, bringing a motion seeking the consolidation of his action with another action but not proceeding with that motion, threatening a motion to strike portions of Ms. Urquhart’s affidavit, and taking the position that the Defendant would require an order under Rule 34.07 to examine an affiant on the basis that he lives in Florida when he has a residence in Niagara-on-the-Lake. The Defendant submits that these are examples of conduct that unnecessarily lengthened the duration of the proceeding and were improper and unnecessary steps, as contemplated by Rules 57.01(e) and (f). Accordingly, the Defendant submits that there should be no order as to costs.

[9] Alternatively, the Defendant submits that an appropriate award of costs should not exceed $22,000.00, which represents its costs on a partial indemnity basis factoring in a reduction of $5,000.00 for the time spent responding to the Plaintiff’s frivolous conduct, as described in the paragraph above. The costs claimed by the Plaintiff are excessive, disproportionate to the matters at issue, and are far beyond what the Defendant could have reasonably expected to pay if unsuccessful.

[10] The Plaintiff’s actual costs are $72,984.16. He chose to retain a Toronto law firm and have four lawyers, an articling student and a law clerk, with hourly rates ranging from $250.00 to $750.00. The underlying dockets in support of his costs claim have not been provided, which complicates the assessment of the reasonableness of the claim and makes it impossible to accurately determine the duplication of work between lawyers. The matter was not complex and did not require a specific level of expertise that could only be found through Toronto counsel.

[11] The Defendant’s actual costs are $43,450.55, nearly $30,000.00 less than those incurred by the Plaintiff. The Defendant submits that its partial indemnity costs, being $27,026.90, represent a quantum that is reasonable and one that it could have expected to pay if unsuccessful.

[12] The Defendant denies that its decision to decline the Plaintiff’s requests to mediate should be a consideration in fixing costs. The Rules of Civil Procedure do not impose mandatory mediation on matters brought in the Central South Region. The Defendant submits that it made attempts to settle.

General Principles

[13] 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.

[14] 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 establishes the fees and disbursements that are allowable under Rules 57.01 and 58.05.

[15] 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.

[16] 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.

[17] 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 CanLII 2052 (ON CA), 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 (Ont. S.C.J.), at para. 10.

[18] The primary principles in fixing costs are fairness, reasonableness and proportionality. An award of costs should be proportional to what was at stake.

[19] 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: see Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3 (S.C.C.), at para. 251.

[20] As stated by the Ontario Court of Appeal in Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 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 CanLII 25577 (ON CA), 2002 CarswellOnt 4020, [2002] O.J. No. 4495 (Ont. C.A.), at para. 4.)

Analysis

Plaintiff’s conduct does not disentitle him to costs

[21] As previously noted, the Defendant argues that there should be no order as to costs relating to the motion for summary judgment in light of the Plaintiff’s conduct that, the Defendant contends, was improper and unnecessary and served to lengthen the duration of the proceeding. I do not agree that the Plaintiff’s conduct, as identified by the Defendant, is of so egregious or objectionable a nature that it disentitles him to an award of costs on the motion. Much of what is described in the Defendant’s written submissions appears to me to be in the nature of things that can typically arise in litigation.

[22] The Defendant should have foreseen that the Plaintiff would incur legal fees in preparing a proper defence to the motion for summary judgment and, as such, if the Defendant was unsuccessful in its motion it would be held liable for those costs.

[23] The Plaintiff was the successful party on the motion, and I see no reason to depart from a result that is other than costs following the event. As a result, the Plaintiff is entitled to costs. The question is what is the appropriate quantum of costs that should be awarded.

Substantial indemnity costs

[24] With respect to the Plaintiff’s claim for costs on a substantial indemnity scale, I do not find that the Defendant’s conduct was reprehensible or scandalous or outrageous such that an award of costs to the Plaintiff on a substantial indemnity basis is warranted. Accordingly, I will consider awarding costs on a partial indemnity basis.

Failure to mediate

[25] I acknowledge that, in appropriate cases, a party’s failure to mediate can be taken into consideration when determining costs. In my view, however, this is not such a case. Here, there was no requirement for the parties to resolve the matter or engage in any mediation, and mandatory mediation is not applicable in this jurisdiction. The Defendant was entitled to defend its position. The risk the Defendant took in doing so, however, is that it would find itself in the very situation it now faces, an order requiring it to pay costs to the Plaintiff.

[26] Further, I am not persuaded that the issue being litigated between the parties would necessarily have been successfully mediated, given their disparate positions. As Spence J. noted in Baldwin v. Daubney (2006), 2006 CanLII 33317 (ON SC), 21 B.L.R. (4th) 232 (Ont. S.C.J.), at para. 12:

… Mediation is most likely to be successful where each party considers it has something material to gain from a settlement and appreciates that to achieve a settlement it will need to accept a compromise of its position. Where one litigant is confident that its position will succeed in court, it has little reason to take part in a process that would yield it a lesser result and it is not bound to do so. Indeed, to take part in a mediation in such circumstances could simply prolong the process and add to the cost.

[27] Since the Defendant is already liable to pay costs as the unsuccessful party, I see no need to factor in its refusal to mediate.

Retaining of Toronto counsel

[28] One of the reasons why the Defendant submits that the costs amount claimed is unreasonable is because the hourly rates of the Plaintiff’s counsel are excessive given that they are Toronto rates and this is a Niagara action.

[29] Parties are entitled to retain counsel of their choice. A differential in rates is no basis for reducing the amount of costs payable if the rates sought are reasonable considering relevant factors, such as the seniority of counsel and the complexity of the matter.

[30] In reviewing the partial indemnity hourly rates claimed for the Plaintiff’s lawyers on the bill of costs, I do not find them to be unreasonable in the circumstances.

What is fair and reasonable?

[31] In determining costs, one of the factors to be considered is the reasonable expectation of the unsuccessful party. Here, the total hours claimed by both parties for the summary judgment motion is essentially identical, 151 hours. In my view, this means that the total of hours claimed by the Plaintiff falls clearly within the reasonable expectation of the Defendant.

[32] There are four lawyers identified on the Plaintiff’s bill of costs, along with a law clerk and a student-at-law, for whom costs are being claimed. No dockets or other evidence were filed in support of the claim. Since I was not given detailed dockets, I am unable to ascertain how much time was spent doing what and by whom, and there is insufficient information for me to determine whether all of the legal time claimed is reasonable or whether there is any time/work that is duplicative or excessive. Given the number of individuals involved on the Plaintiff’s file, however, it is reasonable to infer that there would have been some intersection of time and effort amongst them. Accordingly, in my view, a reasonable reduction should be made to the fees claimed in order to reflect this inevitable overlap. I note that the nature of the work described in the Plaintiff’s bill of costs, including for internal meetings and providing guidance to associates, would necessarily involve some overlap of effort and time.

[33] I find that the amount of time claimed to “prepare bill of costs and cost submissions” is high and so I reduce it from 6 hours to 3 hours, which matches the corresponding time on the Defendant’s bill of costs.

[34] In reaching my decision, I have also considered the following factors:

a. It was reasonable for the Plaintiff to have responded to the Defendant’s summary judgment motion in the manner that he did.

b. The matter was of greater than average complexity.

c. The parties were required to put their “best foot forward” on the motion.

d. The issues raised in the proceeding were important to the Plaintiff.

e. The summary judgment motion decision effectively determined the action and so a trial is no longer necessary.

f. The claimed disbursements in the amount of $3,677.02 appear to me to be reasonable.

[35] Having regard to all of the foregoing factors, and considering the balancing exercise required under Rule 57.01 and the guidance provided by the Boucher decision of the Ontario Court of Appeal, I conclude that a fair, reasonable and proportionate sum for costs is $39,325.00, inclusive of legal fees, HST, and disbursements.

Disposition

[36] In the result, the Defendant is ordered to pay to the Plaintiff costs fixed in the amount of $39,325.00, all-inclusive. Costs are ordered to be paid within 30 days.

MacNEIL J.

Released: August 22, 2023