Court File and Parties

Court File No.: CV-24-00729970-0000
Date: 2025-02-27
Ontario Superior Court of Justice

Between:
2682200 Ontario Inc., Devin Pritchett, Plaintiffs
– and –
2687737 Ontario Inc., Defendant

Appearances:
Roy Tofilovski, for the Plaintiffs
Joshua David Hemmings, for the Defendant

Heard: In Writing

Costs Endorsement

Callaghan J.

Introduction

[1] This is the cost award in the above noted matter. The defendant was successful on the motion and is presumptively entitled to its costs.

Preliminary Issue: Timing of Costs Request

[2] The plaintiffs raise a preliminary issue. It states that the defendant filed its costs request some 48 hours after the time set out in my decision for making a request for costs. The exact timing of the filing of the defendant’s request is of some dispute. Nonetheless, the plaintiffs request that I deny costs on that basis. As I dismiss the plaintiffs’ argument, I will not parse the arguments as to the exact timing of the defendant’s filing.

[3] It is within my authority to extend the time that I have allotted. While timelines are to be adhered to by the parties, I am also of the view that matters should be disposed of on the merits, unless there is good reason to do otherwise. This is a principal well recognized in the rules of practice as seen in Rule 2.01 which directs that a court may excuse an irregularity and may grant such relief to secure the just determination of the matters in dispute. This includes dispensing with time requirements: Rule 2.03. In the circumstances, it would be unjust to deny the entitlement of costs on the asserted failure to serve cost submissions on the appointed hour, particularly as there is no prejudice to the plaintiff in any late filing that may have occurred.

Scale of Costs and Offers to Settle

[4] The defendant seeks costs on a substantial indemnity scale for a portion of its fees. Counsel correctly asserts that costs on this higher scale may be awarded under Rule 49 or where the conduct of a party warrants such an award: Davies v. Clarington (Municipality) et al., 2009 ONCA 722, at para. 10.

[5] In this case, the defendant made a formal offer on December 17, 2024, not to seek costs if the plaintiffs agreed to dismiss their motion in advance of argument. The defendant requests the higher rate of costs from December 17 onward.

[6] The impact of an offer differs if it is made by a plaintiff or defendant. A successful plaintiff is entitled to a presumptive uplift in the scale of costs from partial indemnity to substantial indemnity where it receives an award greater than its offer. An offer from a defendant to a plaintiff does not trigger an increased scale of costs under Rule 49.10. Cost shifting for a defendant allows the defendant to obtain a partial indemnity cost award where the plaintiff succeeds but obtains an award as favourable or less favourable than the defendant’s offer. The Court of Appeal has held that Rule 49.10 has no application in cases where the plaintiff failed to succeed: Schwark v. Cutting, 2010 ONCA 299, at para. 6. As such, the defendant in this case is not entitled to the higher substantial indemnity scale of costs based on its offer to settle the motion for a dismissal on a without costs basis as it was an offer for increased costs in the event the plaintiffs failed to succeed: Scapillati v. A. Potvin Construction Limited; Davies v. Clarington (Municipality) et al., 2009 ONCA 722, at para. 45.

[7] There are circumstances where an offer not in accord with Rule 49.10 may be considered in granting a higher award of costs: Rule 49.13. However, the Court of Appeal has made it clear that this sub-rule is not so broad as to override the cost framework of Rule 49.10. As such, in this case, costs are payable on a partial indemnity scale unless there has been some conduct that justifies the higher substantial indemnity scale, such as “reprehensible, scandalous or outrageous conduct” on the part of one of the parties: see Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66, at paras. 29-30; Standard Life Assurance Company v. Elliott (2007), 86 O.R. (3d) 221, at para. 9; Osmani v. Universal Structural Restorations Ltd. et al., 2023 ONSC 1041, at para. 9; and Best v. Lancaster, 2015 ONSC 6269, at para. 142.

Conduct of the Parties

[8] The defendant cites certain actions in the run-up to the oral argument that it says warrants a cost award on the higher substantial indemnity scale, including the advancement of arguments that were later abandoned. I am not persuaded that the higher scale of costs is warranted. In my view, there is nothing that the plaintiffs did that meets the high threshold of conduct that can be considered “scandalous, reprehensible or outrageous” which would shift the scale of costs to substantial indemnity. As the Court of Appeal noted in Davies v. Clarington (Municipality) et al., 2009 ONCA 722, at para. 45, there is a distinction between a litigation strategy that may be misguided and conduct that warrants the higher scale of costs. This case involves the former, not the latter.

Assessment of Costs

[9] In reviewing the defendant’s bill of costs, the defendant seeks fees on a partial indemnity basis of $22,842. This request is based on actual costs incurred of $38,070. I have carefully reviewed the hourly rate charged and the hours incurred. I find them both to be reasonable having regard to the issues and matter being litigated. I should add that I received no bill of costs from the plaintiffs by which to compare.

[10] This was a preliminary motion. Certain work done by the defendant in respect of the motion was work necessary for the action, such as reviewing the claim and addressing the claim with the client. This work will have continued value and may be recouped if the defendant is successful at trial or if the action is otherwise dismissed. As such, I would deduct a modest amount from the award at this time. I would therefore set the fees plus taxes at $18,000. The disbursements were $2,683. I would allow all the disbursements but for the notice of intent to defend which is a disbursement which would be incurred in any event. I assess disbursements at $2,490. The total cost award shall be $20,490.

Reasonableness of the Award

[11] Finally, it is important to consider whether this a reasonable amount having regard to the factors set out in Boucher v. Public Accountants Council for the Province of Ontario. In my view such an award is reasonable, proportionate and in line with both the complexity of the motion and the significance of the motion to the parties. It is also an amount of costs that the plaintiff should expect to pay having failed to make out its motion for an injunction, CPL, or request for security.

Disposition

[12] The plaintiffs shall pay to the defendant’s costs of $20,490 payable within 30 days.

Callaghan J.
Released: February 27, 2025