Ontario Superior Court of Justice

Court File No.: CV-21-75279
Date: 2025-02-24

BETWEEN:
Bazar McBean LLP, Plaintiff
– and –
1583057 Ontario Inc. operating as The Pop Shoppe and Brian Alger, Defendants

Appearances:
Daniel Lilko, for the Plaintiff
Brian Alger, self-represented, for the Defendants

Heard: In writing

AMENDED Costs Decision
L. Sheard

Overview

[1] This was an action for a liquidated claim: payment of four invoices. The amount claimed to be owing as of the date of trial was $155,649.21, comprised of the invoiced amount of $57,620.96 plus interest of $98,028.25.

[2] The invoices were rendered for accounting services provided to the corporate defendant, 1583057 Ontario Inc. (the “Pop Shoppe”). The individual defendant, Brian Alger, is the principal of the Pop Shoppe. The plaintiff alleged that Mr. Alger was jointly liable for payment of the invoices.

[3] The trial took less than two days to be heard [1] and was conducted in an efficient manner. It was heard partly by way of affidavit and partly through oral evidence. The documents, including key excerpts from examinations, were collated into a well-organized brief and only two witnesses were called at trial.

[4] The defendants raised four main defences. The two main defences were: 1) the plaintiff’s claim was barred by the Limitations Act, 2002; and 2) the plaintiff was entitled to interest at the rate set out in the invoices. The other two defences were easily overcome: Mr. Alger had signed documents confirming he was personally liable and accepting the invoiced amounts.

Success on the Litigation

(i) Invoices Claimable

[5] In Reasons for Judgment released January 20, 2025 (the “Reasons”), I found that the plaintiff had established entitlement to payment on three of the four invoices. The plaintiff failed to establish delivery of a fourth invoice, which was held to be statute-barred.

[6] Following trial, the parties agreed that the principal owing on the invoices was $56,500.17.

[7] As explained in the Reasons, I concluded that limitation periods were reset from time to time, which entitled the plaintiff to judgment on three of the four invoices.

(ii) Interest Payable

[8] The second significant issue was whether the plaintiff was entitled to charge and collect interest at the rate of 16.1% per annum, as set out in the invoices. The plaintiff’s interest claim of $98,028.25 comprised close to 63% of the total amount claimed.

[9] The plaintiff was unsuccessful in establishing entitlement to prejudgment interest as claimed. As explained in the Reasons, the plaintiff was entitled to prejudgment interest at the Courts of Justice Act (“CJA”) rate.

[10] In its costs submissions, the plaintiff advises that the parties agreed that, by applying the CJA interest rate, the total interest owing to the date of the Reasons totals $2,861.76. They also agreed that the total judgment amount, before costs, and after giving the defendants credit for payments made toward the invoices, is $56,738.39. That figure is arrived at as follows:

• Invoiced Amount: $56,500.17
• CJA Interest: $2,861.76
• Invoice Total: $59,361.93
• Less Payments Made: $(2,623.54)
• Total Judgment: $56,738.39

(iii) Mr. Alger’s Liability

[11] As per the Reasons, Mr. Alger was unsuccessful in his defence that he was not personally liable on the invoices.

(iv) Success on the Action

[12] While the plaintiff asserts that it was successful on its claim, it also acknowledges that the judgment amount of $57,738.39 is significantly less than the $155,649.21 claimed, attributable primarily to the reduction in the interest claimed from $98,028.25 to $2,861.76.

[13] In determining costs, the plaintiff asks that the court find that the plaintiff achieved a better outcome at trial than it would have achieved, had it accepted the defendants’ settlement offer.

Positions of the Parties

[14] The plaintiff seeks partial indemnity costs of $46,698.61. The defendant asks that no costs be awarded or, at the least, that costs be “greatly reduced” from the amount sought.

[15] In its cost submissions, the plaintiff acknowledges that its offer to settle, dated July 30, 2024, ought not to have an impact upon the scale of costs to which the plaintiff is entitled. In that offer, the plaintiff agreed to accept payment of $150,000 in full and final settlement of all claims, in return for which the action would be discontinued without costs.

[16] For his part, Mr. Alger referenced the defendants’ offer to settle dated August 30, 2024, in which they offered to pay a total of $57,620.96 by way of four quarterly instalments: on January 1, 2025, April 1, 2025, July 1, 2025 and October 1, 2025.

[17] Mr. Alger also referenced his settlement negotiations with counsel for the plaintiff, in which he explained that he did not have funds to make payment in full, which is why his offer contemplated payment in four instalments.

Legal Principles

[18] Section 131(1) of the Courts of Justice Act gives the court discretion to determine by whom and to what extent costs are to be paid.

[19] In civil litigation, costs usually follow the event. That rule should not be departed from except for very good reasons: see Gonawati v. Teitsson, Macfie v. Cater at para 28, and Usanovic v. La Capital Life Ins., 2016 ONSC 5795 at para. 7.

[20] Costs are discretionary and, in the exercise of that discretion, the court is to consider the factors set out in Rule 57.01 of the Rules of Civil Procedure:

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; and

(i) any other matter relevant to the question of costs.

[21] In 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, Perell J. reformulated the purposes of the modern costs rules, at para. 10, as follows:

(1) to indemnify successful litigants for the costs 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 the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and
(5) to encourage settlements.

[22] Overall, the objective is to fix an amount that is fair and reasonable, having regard for, among other things, the expectations of the parties concerning the quantum of costs: Boucher v. Public Accountants Council for the Province of Ontario at paras. 26 and 38.

[23] A costs award should reflect what the court views as a fair and reasonable contribution by the unsuccessful party to the successful party rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier at para. 4; Fehr et al. v. Sun Life Assurance Company of Canada, 2021 ONSC 8368 at para 83.

Analysis

[24] I first consider the relative success of the parties. While the plaintiff was successful in obtaining a judgment against the defendants, the total judgment amount is approximately one-third of the amount claimed.

[25] With respect to the amount claimed in pre-judgment interest, I find the defendants were successful, as the amount claimed was reduced from $98,028.25 to $2,861.76.

[26] As noted above, the limitation period and the interest claimed were the central issues for trial. The other two defences – Mr. Alger’s denial of personal liability and the defendants’ assertion that the invoices were excessive and/or for work not performed – were all but extinguished by Mr. Alger’s admissions on his examination for discovery.

Offers to Settle

[27] The plaintiff acknowledges that its settlement offer does not entitle it to an elevated costs award. While the defendants' offer to settle exceeded the principal amount awarded, it did not include any amount for costs and, also, contemplated payment over time. Notwithstanding those deficiencies, in my view, the defendants' offer is one that ought to be taken into account pursuant to Rule 49.13.

[28] In his cost submissions, Mr. Alger asserts that, instead of initiating litigation, the plaintiff ought to have engaged in settlement discussions, in recognition of the ongoing professional relationship between the parties extending nearly 23 years. While that submission would carry greater weight had the defendants paid the invoiced amounts (without interest), I understand the defendants to say that the plaintiff has always understood and accepted that the defendants were limited in their ability to pay the invoices.

[29] In my view, the defendants’ offer to settle must be viewed in the context of the parties’ long-standing business relationship and the plaintiff’s knowledge of the defendants’ limited financial wherewithal – as the plaintiff prepared Pop Shoppe’s financial statements and Mr. Alger’s personal income tax returns for many years.

[30] Specifically, in his email to counsel for the plaintiff proposing a payment plan, Mr. Alger specifically disclosed that he would not be able to satisfy the terms of any agreement that required a payment in full, which is why he proposed a payment plan.

[31] The plaintiff submits that had it accepted the defendants’ offer, which did not contemplate payments beginning until January 1, 2025, it would have lost interest, to that date alone, of $1,045.86.

Rule 57 Factors

[32] As to the r. 57 factors, the plaintiff submits that the factors at r. 57.01(1)(0.a) and 57.01(1)(a) are the most relevant.

R. 57.01(1)(0.a) - Principle of Indemnity: experience of counsel, hours spent, and rates charged

[33] The plaintiff’s costs outline sets out the names and years of call of the lawyers with carriage of the claim, the time spent and the hourly rates charged. I note that the majority of the work was performed by Daniel Lilko, who is described as having 7 years’ experience. I find that it was appropriate for this matter to be handled by Mr. Lilko, who would have been a relatively junior lawyer when the claim was issued.

[34] The hours spent were significant: Mr. Lilko reports over 160 hours spent on the claim, including trial, which was approximately one and ½ days. However, the hours spent must also be viewed in the context of the relatively low hourly rate charged. Overall, I do not find the time spent to be overly excessive.

R. 57.01(1)(a) - The amount claimed and the amount recovered in the proceeding

[35] On this factor, the plaintiff submits that it succeeded in obtaining a judgment equal to approximately 36.45% of the amount sought. Conversely, it must be recognized that the defendants succeeded in reducing the plaintiff’s claim by 63.55%.

[36] The plaintiff submits that the outcome achieved should not be a basis to reduce the costs claimed.

[37] I do not agree. To accept the plaintiff’s submission would render r. 57.01(1)(a) meaningless.

[38] In my view, the plaintiff’s lack of success on the interest portion of its claim must be taken into account in fixing costs.

[39] As noted in the Reasons, the plaintiff had never collected interest on invoices, nor ever sent a statement quantifying the interest due. Rather, in his long business relationship with the plaintiff, Mr. Alger had been allowed to pay invoices when he was able to do so and was never charged interest. The plaintiff’s interest claim of $98,028.25 was an unsuccessful overreach which must be reflected in the costs awarded.

Disposition

[40] For the reasons set out, in the exercise of my discretion, I fix the plaintiff’s costs at $18,000, inclusive of disbursements and taxes.

[41] In my view this costs award recognizes the plaintiff’s success in the action; the defendants’ success on the interest issue; the defendants’ offer to resolve the dispute without a trial, which was informed by the defendants’ ability to pay the debt; and is an amount that is fair and reasonable for the defendants to pay.

[42] This costs award is payable by the defendants to the plaintiff within 30 days.

[43] Interest is to accrue in accordance with the CJA.

L. Sheard

Released: February 24, 2025

Corrigendum

1. Page 7 – Paragraph 40: removed “I fix the defendant’s costs at $18,000” amended to read as “I fix the plaintiff’s costs at $18,000”.

2. Page 7 – Paragraph 40: inserted new words “by the defendants to the plaintiff”.

[1] September 3 and 6, 2024
[2] R.S.O 1990, c.C.43
[3] R.R.O. 1990, Reg. 194