Court File and Parties

COURT FILE NO.: CV-15-00520443-0000 DATE: 20231129 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: J.M.L. HOLDING CORPORATION and GARY MUCHULA, Plaintiffs AND: DAVID RYAN and THE ESTATE OF WILLIAM COLVIN, Defendants

BEFORE: VERMETTE J.

COUNSEL: David S. Altshuller and Jacob Svirsky, for the Plaintiffs Eric O. Gionet and Sabrina A. Lucenti, for the Defendant David Ryan

HEARD: In writing

Endorsement as to Costs

[1] On August 28, 2023, I released an endorsement (2023 ONSC 4892) dismissing the Plaintiffs’ motion for summary judgment as against the defendant David Ryan (“Defendant”).

[2] The parties were not able to agree on costs and have delivered costs submissions.

Positions of the parties

a. Position of the Defendant

[3] The Defendant seeks costs on a partial indemnity basis in the amount of $100,840.93, composed of fees in the amount of $56,925.22 (including HST) and disbursements in the amount of $43,915.71, including $40,621.64 for expert reports.

[4] The Defendant submits that there is no reason in this case to depart from the presumptive general rule that costs follow the event.

[5] The Defendant points out that: (a) the Plaintiffs’ full indemnity fees are almost double the Defendant’s full indemnity fees; (b) the Defendant’s full indemnity fees are about $9,000.00 less than the Plaintiffs’ partial indemnity fees; and (c) the partial indemnity fees sought by the Defendant are approximately $40,000.00 less than the partial indemnity fees of the Plaintiffs. The Defendant submits that this comparison is significant and relevant to the determination of what the Plaintiffs could reasonably have expected to pay should they not succeed on their motion for summary judgment.

[6] The Defendant also notes that the hourly rates charged by the Defendant’s counsel are similar to, or less than, the Plaintiffs’ counsel, and that the number of hours spent by the Defendant’s counsel on the various steps is generally similar to, or less than, the amount of time spent by the Plaintiffs’ counsel on the same task.

[7] With respect to the disbursements related to the Defendant’s expert reports, the Defendant argues that they are fair and reasonable because it was necessary for the Defendant to obtain expert opinions to respond successfully to the motion for summary judgment. The Defendant submits that the presence of an expert report on the standard of care in the Plaintiffs’ motion material necessitated a responding expert opinion by the Defendant. The Defendant notes that all of the Defendant’s responding expert reports were obtained after the Plaintiffs brought their motion for summary judgment, and they were responsive to the issues raised by the Plaintiffs in the motion. The Defendant states that this Court relied upon the conflict between the expert opinions in dismissing the Plaintiffs’ motion.

b. Position of the Plaintiffs

[8] The Plaintiffs submit that it would be more just that costs of this motion be determined after the trial rather than awarded to the Defendant now. They state that the approach of reserving costs of an unsuccessful summary judgment motion for determination by the trial judge has been applied in several recent cases, and many of the considerations present in those cases are also present in this case.

[9] The Plaintiffs argue the following in support of their position:

a. The Court did not find that the Plaintiffs advanced a case that lacked merit or brought the motion as a mere tactic. b. The claims and defences raised at summary judgment remain live issues for trial. c. Much of the work done preparing for the summary judgment motion was not wasted and will benefit the parties at trial and reduce the costs of the trial. Costs thrown away, if any, will only be ascertainable after trial. d. If the Plaintiffs are ultimately successful at trial, it may not be just for the Defendant to recover costs of this summary judgment motion.

[10] In the alternative, the Plaintiffs submit that the costs of the motion ought to be fixed at a maximum of $25,000.00, all inclusive, because a significant portion of the costs incurred by the Defendant to prepare for the motion are not “spent” as the resulting work will continue to be relied on at trial. The Plaintiffs’ position is that costs ought not be awarded now for work such as affidavits, expert reports, examinations, pleadings, and legal research on liability and damages. According to the Plaintiffs, only time spent on case conferences and court attendances specific to this motion, preparation for and attendance at the summary judgment hearing, preparation of cost outlines and submissions, non-expert disbursements, and approximately 45% of the Defendant’s fees claimed for general preparation are arguably specific to the motion for summary judgment.

[11] With respect to disbursements related to expert reports, the Plaintiffs argue that it would be “absurd” to award costs to the Defendant for his expert reports now if they are ultimately rejected at trial and the Plaintiffs’ experts are preferred. The Plaintiffs note that the reports and positions on both liability and damages remain live issues for trial and, if the Plaintiffs are successful at trial, they will be entitled to recover all fees and disbursements related to their expert reports tendered, despite being unsuccessful at summary judgment.

c. Reply submissions of the Defendant

[12] The Defendant submits that the cases relied upon by the Plaintiffs in support of their position that the costs of the motion for summary judgment should be reserved to the trial judge are the exception to the general rule. The Defendant points out that there are numerous cases in which a defendant was awarded costs for successfully resisting a motion for summary judgment brought by the plaintiff.

[13] The Defendant argues that a “costs in the cause” type of cost order would give moving parties in summary judgment motions a significant and unfair cost advantage.

Discussion

a. Entitlement to costs

[14] Rule 57.03(1)(a) of the Rules of Civil Procedure provides that on hearing a contested motion, the court shall fix the costs of the motion and order them to be paid within 30 days, unless the court is satisfied that a different order would be more just. In the circumstances of this motion, I am not satisfied that a different order would be more just. However, I make an exception with respect to the disbursements related to expert reports.

[15] I have reviewed all the cases referred to by the Plaintiffs and the Defendant. Ultimately, each case turns on its own facts and the judge’s assessment of what would be more just in the particular circumstances of the case before them, including the conduct of the parties on the motion and the evidence that they adduced.

[16] Even though I do not find that the Plaintiffs brought the motion for summary judgment as a mere tactic, it is my view that the Plaintiffs should have realized that this case was not an appropriate one for summary judgment. In addition, as pointed out in my endorsement, there were a number of deficiencies in the evidence filed by the Plaintiffs. These factors have to be considered in light of the fact that motions for summary judgment are often time-consuming and expensive and, if unsuccessful, they usually cause delay in the litigation.

[17] While some of the work done on this motion may be used later in the litigation, I am not satisfied that a sufficiently significant portion will be. New evidence will be adduced, which will need to be addressed, and there will likely be new expert evidence (and potentially new experts). Further, legitimate duplication of work will be required given the need for counsel to review the case and prepare again closer to the trial.

[18] In these circumstances, I do not consider that fairness requires that the costs generated by this motion need to be connected to the result at trial. The burden of establishing a sufficient evidentiary record for the summary judgment was on the Plaintiffs, which they failed to do, and it would not be fair to deprive the Defendant of a cost award until trial. See York Regional Standard Condominium Corporation No. 1206 v. 520 Steeles Developments Inc., 2018 ONSC 5563 at paras. 40-41, and Royal Bank of Canada v. 1898936 Ontario Inc., 2020 ONSC 7456 at paras. 20-26.

[19] However, as stated above, I find that it is appropriate to make an exception with respect to the disbursements related to expert reports. These disbursements are significant, and the work done by the experts should be largely reusable for the purposes of the trial. The trial judge will be in a better position to ascertain whether any of these costs were thrown away on the motion. Therefore, the issue of the disbursements related to expert reports is reserved to the trial judge.

b. Quantum

[20] Aside from arguing that the Defendant should not be awarded costs or, in the alternative, should only be awarded partial costs because the work done will be relied on at trial, the Plaintiffs have not taken issue with the quantum of costs sought by the Defendant.

[21] In my view, the quantum of costs sought by the Defendant as reflected in his costs outline is fair and reasonable, especially when compared to the costs set out in the Plaintiffs’ costs outline.

Conclusion

[22] 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 Defendant is in the all-inclusive amount of $60,000.00. In my view, this is an amount that the Plaintiffs should reasonably have expected to pay in the event that they were unsuccessful on the motion for summary judgment. The costs are to be paid by the Plaintiffs to the Defendant within 30 days.

[23] The issue of the disbursements related to the expert reports used on this motion is reserved to the trial judge.

Vermette J. Date: November 29, 2023