Razar Contracting Services Ltd. et al., 2023 ONSC 6891
COURT FILE NO.: CV-22-0462-00
DATE: 2023-12-06
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: NORTHWEST ANGLE 33 FIRST NATION v. RAZAR CONTRACTING SERVICES LTD., AD HANSLIP LTD., AINSWORTH INC., AGASSIZ DRILLING (2000) LTD., BELLS CONTRACTING 2018 LTD., BESTWAY RENTALS & SALES, CRANE STEEL STRUCTURES LTD., DELCO AUTOMATION INC., DOMINION DIVERS (2003) LTD., ICONIX WATERWORKS LP, LONG BEACH CONSTRUCTION, 2343432 ONTARIO INC. o/a MIKE NENISKA CONTRACTING, MR. GRAVEL INC., PRO-GEN (THUNDER BAY) INC., SOLID SILVER CONSTRUCTION LTD., STONHARD division, RPM CANADA, WEARING WILLIAMS LIMITED, BREAKING GROUND DRILLING AND BLASTING INC. and CANADA REVENUE AGENCY
HEARD: In writing
BEFORE: Fregeau J.
COUNSEL: R. Lepere, for A.D. Hanslip Ltd.
T. Fry and R. Walichnowski, for Long Beach Construction
N. Wainwright, for Pro-Gen (Thunder Bay) Inc.
J. Blackett, for Canada Revenue Agency
Endorsement on Costs
Background
[1] The applicant, Northwest Angle #33 First Nation (“NWA #33”) brought an application seeking an interpleader order allowing them to pay $1,204,516.55 (the “Fund”) into court. The Fund was held by NWA #33 in relation to a construction project on the First Nation.
[2] Razar Contracting Services Ltd. (“Razar”) was the general contractor on the project. NWA #33 sought to pay the Fund into court and for a claims process to be established to provide for the orderly and equitable distribution of the Fund amongst sub-contractors of Razar. The application was opposed by Pro-Gen (Thunder Bay) Inc. (“Pro-Gen”) and Canada Revenue Agency (“CRA”), two creditors of Razar who asserted priority claims to the Fund.
[3] In my Endorsement dated February 21, 2023, I dismissed the priority claims of Pro-Gen and CRA and ordered that the Fund be deposited with the Accountant of the Superior Court of Justice. I further ordered that a summary hearing be conducted to determine the respondents’ respective entitlements to the Fund. In a subsequent endorsement on costs, it was ordered that NWA #33 was entitled to partial indemnity costs in the amount of $10,000.00 to be paid from the Fund.
[4] In anticipation of the entitlement of the respondents to their respective portions of the Fund being determined at the summary hearing, I ordered that the costs of the respondents for the interpleader application were reserved to the summary hearing.
[5] On October 11, 2023, a Case Conference was held. The distribution of the Fund amongst the respondents was resolved on consent. Warkentin J. ordered that the issue of costs be returned to me on the understanding that some but not all respondents were seeking costs against Pro-Gen and the CRA.
[6] The following have now been filed:
Cost Submissions and Bill of Costs of A.D. Hanslip Ltd.;
Cost Submissions and Bill of Costs of Long Beach Construction;
Responding Cost Submissions and Costs Outline of Pro-Gen;
Responding Cost Submissions of CRA; and
Reply Cost Submissions of A.D. Hanslip Ltd.
The Positions of the Parties
A.D. Hanslip Ltd.
[7] A.D. Hanslip Ltd. (“AD Hanslip”) submits that it was agreed amongst the respondents that it would take the lead on opposing the priority claims of Pro-Gen and CRA with Long Beach Construction (“Long Beach”) primarily assisting.
[8] AD Hanslip requests its costs related to the defence of the priority claims of Pro-Gen and CRA on the application on a partial indemnity basis in the amount of $7,650.79, inclusive of HST and disbursements.
[9] AD Hanslip submits that payment of these costs should be divided equally between Pro-Gen and CRA due to the difficulty in determining what amount of the costs sought relate to the respective claims of Pro-Gen and CRA.
[10] AD Hanslip contends that the costs claimed are fair and reasonable given the following factors:
The partial indemnity hourly rate claimed by counsel for AD Hanslip ($260/hr, 2006 call) is reasonable;
The amount claimed is within the reasonable expectations of the unsuccessful parties with respect to an application which included responding materials, a factum and oral submissions;
The response to the priority claims of Pro-Gen and CRA was important to all parties because had they been successful, the funds available to the respondents would have been substantially reduced;
By having two of the respondents take the lead in opposing the claims of Pro-Gen and CRA, overall costs were reduced;
Given that NWA #33 was awarded costs of $10,000.00 for bringing the interpleader application which essentially proceeded on consent, the combined costs of AD Hanslip and Long Beach should be equal to, or more than the costs awarded to NWA #33; and
Counsel for AD Hanslip was lead counsel in opposing the claims of Pro-Gen and CRA and should therefore be awarded more in costs than Long Beach.
Long Beach Construction
[11] Long Beach seeks its costs related to the defence of the priority claims of Pro-Gen and CRA on a partial indemnity basis in the amount of $6,283.20, inclusive of HST and disbursements.
[12] Long Beach submits that AD Hanslip took the lead in opposing Pro-Gen’s claim, that it took the lead in opposing the claim of CRA, that they were jointly successful on behalf of all other respondents and that an award of costs should reflect that result.
[13] Long Beach submits that the partial indemnity hourly rates charged by its counsel (T. Fry $212.50/hr, 2000 call, R. Walichnowski $100/hr, 2018 call) reasonably reflect their respective levels of experience. Long Beach contends that work was appropriately delegated to junior counsel (29 hours vs 13 hours) and that the costs sought are well within the range of what an unsuccessful party should have expected to pay given the work involved.
[14] Long Beach joins with AD Hanslip in submitting that the costs awarded should reflect the importance of the result to all respondents. Long Beach calculates that if Pro-Gen and CRA had been successful in their priority claims, the Fund would have been diminished by approximately 40%.
[15] Long Beach submits that the costs it is seeking ($6,283) amount to only 1.3% of what Pro-Gen and CRA claimed in priority to all other respondents. Long Beach suggests that the costs sought are entirely proportionate when considering the “downside”, had Pro-Gen and CRA been successful.
Pro-Gen (Thunder Bay) Inc.
[16] Pro-Gen concedes that partial indemnity costs should follow the result. Pro-Gen submits, however, that it should not be required to contribute to any costs awarded to Long Beach and that the amount of costs it is ordered to pay to AD Hanslip should be reduced from the amount claimed to reflect the element of learning in AD Hanslip’s Bill of Costs. Pro-Gen submits that it should be ordered to pay costs of $3,250.00, all-inclusive to AD Hanslip and nothing to Long Beach.
[17] Pro-Gen submits that the total time spent at the hearing of the application was divided approximately equally between its priority claim and the priority claim of CRA. Pro-Gen contends that it is therefore logical and reasonable that CRA and Pro-Gen only be responsible for costs associated with the issues each of them raised. In other words, the costs associated with Pro-Gen’s priority issue should be paid by Pro-Gen and the costs related to CRA’s priority claim should be paid by CRA.
[18] It therefore follows, according to Pro-Gen, that it should not be required to contribute to any costs awarded to Long Beach because Long Beach, in responding to the priority claims, focused its submissions almost exclusively on CRA’s priority claim and simply endorsed AD Hanslip’s submissions in opposition to Pro-Gen’s priority claim. Pro-Gen submits that a review of the factum filed by Long Beach and of my February 21, 2023, Endorsement supports this submission.
[19] Pro-Gen submits that AD Hanslip’s Bill of Costs should be reduced from $7,650.79 to $6,500.00 (both figures all-inclusive) to reflect the fact that entries for Mr. Carr reflect an element of learning and duplication. Pro-Gen contends that Ms. Lepere played a supervisory role in relation to Mr. Carr with approximately 2-5 hours of Mr. Carr’s docketed time being educational and non-recoverable as costs from an opposing party.
[20] Pro-Gen, for the sake of completeness, submits that the time docketed by Long Beach, as set out in its Bill of Costs, is excessive (13.7 hours more than AD Hanslip) given that AD Hanslip played the lead role in advancing their joint position in opposition to the priority claims.
Canada Revenue Agency
[21] CRA also concedes that partial indemnity costs should follow the result. However, CRA submits that the issue of costs payable to AD Hanslip and Long Beach was resolved at the summary hearing October 11, 2023, at which time all parties agreed that AD Hanslip and Long Beach were to be paid $5,000.00 from the Fund prior to distribution.
[22] In the alternative, CRA submits that if the court finds that the previous award of $5,000.00 to AD Hanslip and Long Beach is insufficient, then CRA should be required to pay additional costs in the amount of $2,500.00 all-inclusive, to be divided equally between them.
A.D. Hanslip Ltd. Reply
[23] AD Hanslip has filed Reply Cost Submissions to respond specifically to one aspect of CRA’s Cost Submissions. AD Hanslip contends that CRA’s assertion that the $5,000.00 payable to it and Long Beach as part of the consent distribution of the Fund represents the costs they are entitled to from the hearing of the application is misleading and incorrect.
[24] AD Hanslip submits that it was made clear to CRA and all other parties that the $5,000.00 to be paid to it and Long Beach as part of the distribution scheme related only to their efforts to coordinate the resolution. AD Hanslip submits that this is irrelevant to the determination of the costs payable for the hearing of the application.
Discussion
[25] It was the collective decision of all respondents opposing the priority claims of Pro-Gen and CRA that AD Hanslip and Long Beach would jointly take the lead at the hearing of the application, both in oral and written submissions. In my view, this was entirely appropriate as it avoided costly, unnecessary duplication and provided for a more efficient and orderly hearing. All parties, including Pro-Gen and CRA, benefited from this arrangement.
[26] I accept the submission of Long Beach that AD Hanslip took the lead in opposing Pro-Gen’s claim, while Long Beach took the primary role in opposing CRA’s claim. I also accept the submission that of AD Hanslip that counsel for AD Hanslip was the primary lawyer responding to the application at large. This appears to have carried on through to the resolution of the distribution of the Fund.
[27] Finally, I agree that the combined and joint efforts of AD Hanslip and Long Beach exceeded those of NWA #33, such that the total costs awarded to the two of them should equal or exceed the $10,000.00 in costs ordered paid to NWA #33.
[28] I reject the submission of Pro-Gen that it should only be responsible for costs awarded to AD Hanslip. While the logic of that submission is compelling, in my view it fails to properly capture the reality of this joint and collective opposition to the two priority claims advanced.
[29] I agree with Pro-Gen’s submission that AD Hanslip’s Bill of Costs should be reduced to reflect the learning component in the hours docketed by Mr. Carr. I also agree with Pro-Gen’s suggestion that the costs of Long Beach are excessive in relation to those of AD Hanslip.
[30] I reject CRA’s submission that the costs of the application were resolved at the Case Conference. It is plain and obvious from paras. 8 and 9 of Warkentin J.’s October 11, 2023, Endorsement that the issue of costs of the application was being referred back to me.
[31] I find that it is fair and reasonable that AD Hanslip and Long Beach be paid the amount of $10,000.00, all inclusive, as partial indemnity costs on the application. In my opinion, this is well within what an unsuccessful party could expect to pay for this proceeding. I further find
that it is appropriate that this cost award be paid equally by Pro-Gen and CRA and that it be divided on a 60/40 basis in favour of AD Hanslip.
“Original signed by”
The Hon. Mr. Justice J.S. Fregeau
DATE: December 6, 2023
Razar Contracting Services Ltd. et al., 2023 ONSC 6891
COURT FILE NO.: CV-22-0462-00
DATE: 2023-12-06
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Northwest Angle 33 First Nation v. Razar Contracting Services Ltd. et al.
HEARD: In writing
BEFORE: Fregeau J.
COUNSEL: R. Lepere, for A.D. Hanslip Ltd.
T. Fry and R. Walichnowski, for Long Beach Construction
N. Wainwright, for Pro-Gen (Thunder Bay) Inc.
J. Blackett, for Canada Revenue Agency
ENDORSEMENT ON COSTS
Fregeau J.
DATE: December 6, 2023