Endorsement on Costs

Court File No.: CV-21-29818
Date: 2025-01-27
Ontario Superior Court of Justice

Between:
Stevan Pokrajac and Tesla Digital Inc., Plaintiffs
– and –
The Corporation of the Town of Essex, John Doe and John Doe 2, Defendants

Appearances:
Soumya Roop Sanyal, for the Plaintiffs
Tim Crljenica, for the Defendants

Heard: In Writing

Justice: Jasminka Kalajdzic

Introduction

[1] The Defendant brought a motion to dismiss the Plaintiffs’ action for delay for failing to comply with a court-ordered timetable and for various breaches of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“Rules”). On December 24, 2024, I released my decision denying the Defendant’s motion but ordered a new litigation timetable peremptory on the Plaintiffs.

[2] At the conclusion of my reasons, I encouraged the parties to agree on costs. I noted that I was prepared to consider formal costs submissions but that, based on the Plaintiffs’ conduct in the litigation, I was inclined to award costs to the Defendant.

[3] I have now received the parties’ submissions and have considered their arguments. Based on all the circumstances and the applicable law, including the Court of Appeal’s recent call for courts to be less tolerant of litigants’ delay, I order that the Plaintiffs pay costs of the motion to the Defendant in the amount $4,000, inclusive of fees, disbursements and HST. These are my reasons.

Litigation Background

[4] The parties have been involved in a bylaw dispute since 2017. The Plaintiffs commenced this action in March 2021. Since then, they have taken no steps to advance the litigation.

[5] At the Defendant’s request, four dates for examination for discovery were set. The examinations did not proceed on any of those dates for reasons entirely attributable to the Plaintiffs.

[6] On January 26, 2023, Dube J. ordered a litigation timetable pursuant to which the action was to be set down for trial by March 29, 2024. Except for the late delivery of a draft affidavit of documents, the Plaintiffs did not comply with any of the timetable’s requirements.

[7] On July 11, 2024, the Town brought this motion to dismiss the action for delay and for breaches of the Rules and the order of Dube J. It was originally returnable on September 3, 2024 but was adjourned on consent to give the Plaintiffs an opportunity to file responding material.

[8] As of September 3, 2024, the Plaintiffs had not: amended the Statement of Claim to correct a misnomer; served a sworn affidavit of documents; conducted examinations for discovery; or set the case down for trial.

Motion to Dismiss Action

[9] The motion to dismiss the action was argued on December 3, 2024. I made the following findings:

a. The Plaintiffs had violated Dube J.’s order and therefore were in breach of rr. 3.04(4)(b) and 60.12. Although I had the jurisdiction under both rules to dismiss the action as a result of the breach, I exercised my discretion not to dismiss as the non-compliance was compensable in costs.

b. The Plaintiffs had failed to attend examinations for discovery on April 2, 2024 and June 10, 2024, for which certificates of non-attendance were issued. Because I was not persuaded that the conduct of the Plaintiffs amounted to an abandonment of the action, I declined to exercise my discretion pursuant to r. 34.15(1)(b) to dismiss the action.

c. As of the date of the hearing, the Plaintiffs had still not served a sworn affidavit of documents. However, in light of Plaintiffs’ counsel’s undertaking to the court to file a sworn affidavit within 15 days of the court’s order, I declined to dismiss the action pursuant to r. 30.08(2)(b).

d. There had been a lengthy delay in prosecuting the action, but it was not “inordinate” when compared to other cases. According to Langenecker v. Sauvé, 2011 ONCA 803, 286 O.A.C. 268, prejudice to the Defendant could not be presumed, and the Defendant had not offered evidence of case-specific prejudice. As a result, I did not dismiss the action for delay.

[10] At the conclusion of my reasons for decision, I emphasized that my dismissal of the motion was not to be interpreted as condoning the manner in which the Plaintiffs had conducted the litigation. I set a new timetable for the litigation and made it peremptory on the Plaintiffs due to their history of delay and non-compliance with a court order.

[11] I also noted that the motion was necessary because of the Plaintiffs’ failure to abide by Dube J.’s order and the Rules. It was only after bringing the motion that the Plaintiffs retained new counsel and undertook further steps in the litigation. I also stated that, subject to the submissions of counsel, I was inclined to award costs to the Defendant based on the Plaintiffs’ years of inaction and non-compliance with Dube J.’s order.

Parties’ Positions on Costs

[12] The Plaintiffs submit that I should not depart from the ordinary rule that costs follow the event. They say that because I did not grant the motion to dismiss the action, I should order the Defendant to pay partial indemnity costs in the amount of $6,277.50.[1]

[13] The Defendant seeks costs on a substantial indemnity basis of $5,000 plus HST and disbursements of $1,171.82. The Defendant submits that it would be appropriate to sanction the Plaintiffs’ multiple breaches of the Rules and of a court order with a costs order.

[14] The Defendant also argues that the motion could have been avoided if the Plaintiffs had agreed to a settlement proposed on November 22, 2024. Under the proposal, the Plaintiffs would agree to a new litigation timetable and pay the Defendant partial indemnity costs of $3,000, inclusive of disbursements and HST.

Law and Analysis

a. General Principles

[15] Section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, and r. 57.01(1) of the Rules afford broad discretion to fashion a costs award that the court deems fit and just in the circumstances.

[16] Section 131(1) of the Courts of Justice Act provides:

Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

[17] Rule 57.01 sets out a number of general principles a court may consider in exercising its discretion under s. 131. In addition to the result in the proceeding, courts may consider, among other factors, the principles of indemnity and proportionality, the reasonable expectations of the parties, whether any steps in the proceeding were unnecessary, and the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding.

[18] Rule 57.01(2) stipulates that the “fact that a party is successful in a proceeding or a step in a proceeding does not prevent the court from awarding costs against the party in a proper case.”

[19] The discretion of the court must be exercised in light of the specific facts and circumstances of the case in relation to the factors set out in rule 57.01(1): Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, 75 O.R. (3d) 638 (C.A.).

[20] As Firestone J. observed in Lakew v. Munro, 2014 ONSC 7316, at para. 57: “Costs are in the absolute discretion of the court. A successful litigant has no right to costs, but only a reasonable expectation of costs.” See also: Brian Stucco Construction Inc. v. Nili-Ardakani, 2021 ONSC 8541, at para. 10 (citing Calibur Tool v. Ecotemp Manufacturing, 2020 ONSC 2511) and Mark M. Orkin & Robert G. Schipper, Orkin on the Law of Costs, 2nd Edition (Aurora: Canada Law Book) (loose-leaf updated 2024-Rel. 8), at § 1:1 (“provincial legislation, while not granting any new power to award costs, made all costs in the discretion of the court which now has full power in all cases to determine by whom and to what extent costs are to be paid. A successful litigant has, therefore, a reasonable expectation of receiving an award of costs, but this is subject to the court's absolute and unfettered discretion to award or withhold costs, as well as to applicable rules of court”).

[21] In keeping with the discretionary nature of costs, the list of circumstances that may justify an order of costs against a successful party is not closed. Costs have been awarded against successful parties if there has been misconduct of the parties, miscarriage in the procedure, or oppressive and vexatious conduct of proceedings: 1318706 Ontario Ltd. v. Niagara (Regional Municipality), at para. 50. Costs have also been awarded to unsuccessful parties when they brought proceedings that helped clarify the law: Fontaine v. Canada (Attorney General), 2017 ONCA 26, 137 O.R. (3d) 90.

b. Costs Orders Where Blameworthy Conduct

[22] The manner in which litigation is conducted may constitute blameworthy conduct that attracts an extraordinary costs award: Pillar Resource Services Inc. v. PrimeWest Energy Inc., 2017 ABCA 19, at para. 72.

[23] Delay and the failure to abide by a court-ordered timetable are a form of litigation misconduct: Business Development Bank of Canada v. I Inc., 2013 ONSC 1749, at para. 37. For example, in Mustapha v. Windsor Casino Limited, 2011 ONSC 5089, the plaintiff was ordered to pay costs, despite successfully moving to set aside administrative dismissal of his action, because of his two-and-a-half-year delay in prosecuting the action.

[24] As the Alberta Court of Appeal recently stated in Stubicar v. Calgary (City) Subdivision and Development Appeal Board, 2023 ABCA 98, at para. 52: “Litigation misconduct exists if the successful party has demonstrated a blatant disregard for the fundamental objects of the civil procedure system or its obligations under governing rules of court or court orders, and in doing so, impaired the legitimate interests of the unsuccessful party”.

[25] The Ontario Court of Appeal also recently reiterated that the fundamental object of our civil justice system is to secure the most expeditious determination of proceedings. In Barbiero v. Pollack, 2024 ONCA 904, at para. 15, the Court confirmed the need for a shift in litigation culture from justifying delay to achieving the most expeditious determination of civil proceedings.

[26] Barbiero involved a successful motion to dismiss a class action for delay. In dismissing the plaintiff’s appeal, the Court revisited the oft-cited test for delay in Langenecker and altered the test in two ways: first, by creating a presumption that an action not set down for trial by the fifth anniversary of its commencement qualifies as an “inordinate” delay (at para. 22); and second, by stipulating that the passage of time, on its own, can constitute sufficient prejudice to dismiss an action for delay rather than create only a rebuttable presumption of prejudice (at para. 15).

[27] Barbiero was released after the argument of the motion before me. Although my disposition of the motion would have been the same even under the new test because this action has not yet reached the fifth anniversary of its commencement, the Court of Appeal’s criticism of the civil justice system’s indifference to delay informs my decision on costs. The Court’s call for a culture shift was explicit: “Effecting a culture shift requires not only changing the entrenched culture of indifference to delay manifested by far too many litigants and their counsel, but also identifying and changing those judge-created rules or interpretative glosses that do not promote – and in some cases impede – the ‘prompt judicial resolution of legal disputes’” (at para. 12).

[28] Although it is the exception, not the rule, that costs will be ordered against a successful party, I find that it is appropriate to do so in this case. A plaintiff has a responsibility to move an action along: Barbiero, at para. 6. It is in the interests of the parties and the administration of justice that cases do not languish. Especially if, as here, a defendant has done everything it can to abide by the Rules and court-ordered timetables, there should be a consequence – short of dismissing the action – for a plaintiff who does not meet its burden of diligently prosecuting its action.

[29] Because the preference in our civil justice system is for disputes to be decided on their merits, I exercised my discretion not to dismiss the action for delay. However, I also found it necessary to impose a timetable to ensure that the remaining steps take place as quickly as possible. I made the timetable peremptory on the Plaintiffs to drive home the point that any further delays on their part will attract no further indulgences.

[30] Despite being the unsuccessful party, the Defendant was forced to bring the motion to prompt compliance by the Plaintiffs with their obligation to move the proceeding to its final disposition on the merits. In doing so, the Defendants should not have to bear the full costs of the motion, let alone be required to compensate the Plaintiffs.

c. Costs Orders Where Offer to Settle Refused

[31] The Defendant offered to settle its motion for a consent order imposing a new timetable and partial indemnity costs of $3,000 inclusive of fees, disbursements and HST.

[32] Under r. 49.10(2), where the plaintiff obtains a judgment that is as favourable as or less favourable than the terms of the offer to settle, a plaintiff is entitled to its partial indemnity costs to the date of the offer, and a defendant is entitled to partial indemnity costs from the date its offer was served.

[33] Where, as in the case before me, a defendant includes a fixed amount for costs in its offer, the offer might not be effective for the purposes of r. 49. See Noyes v. Attfield (courts should not enter into an ad hoc assessment of costs as at the date of the offer). On the other hand, courts have also ruled that an expression of the amount for costs as a fixed amount does not invalidate the offer as a general rule: Brown v. Ignace (Township), 2010 ONSC 348, at para. 11.

[34] The Defendant’s Bill of Costs does not itemize work by date. It is therefore not possible for me to determine whether the offer to settle for $3,000 in costs on November 22, 2024 was more or less favourable than the actual costs incurred for the motion to that date. As a result, r. 49 is not operative in the case before me.

[35] Nevertheless, I am of the view that this motion could and should have been avoided, that cooperation among counsel would have been the proper course of action, and that these are appropriate considerations in fixing costs. Rule 57.01(1)(f) lists unnecessary steps in a proceeding as a factor the court may consider in exercising its discretion on costs. Rule 57.01(1)(e) refers to conduct of any party that tends to lengthen the duration of a proceeding unnecessarily.

[36] The Defendant’s offer was a reasonable one. According to their costs submissions, the Plaintiffs incurred more than $10,000 in legal fees to defend against the motion. For a fraction of these expenses, they could have resolved the motion on the very basis on which it was ultimately determined.

[37] The Defendant should not have been forced to bring its motion in the first place. The Plaintiffs’ unwillingness to pay the Defendant $3,000 in costs and secure a consent timetable further contributed to delay and unnecessary proceedings.

Disposition on Costs

[38] For all of these reasons, I order that the Plaintiffs pay partial indemnity costs of the motion to the Defendant in the amount $4,000, inclusive of fees, disbursements and HST, within 30 days of this order. This amount includes the $339 filing fee for the motion and $737 for the certificates of non-attendance and examinations for discovery. I decline to order costs on a substantial indemnity basis as that order of costs against a successful party should be reserved for the truly extraordinary case.

[39] To be clear, this order to pay costs is not penal in nature. Rather, it is granted to discourage parties from ignoring subsisting court orders and their obligations under the Rules. To discourage delay by litigants, there ought to be consequences short of dismissing an action or striking a defence. Costs are an appropriate mechanism for doing so. In this way, this court heeds the call of the Court of Appeal in Barbiero to contribute to a much-needed culture shift in the civil justice system that prioritizes the prompt resolution of legal disputes.

Jasminka Kalajdzic
Justice

Released: January 27, 2025

[1] In their written submissions, the Plaintiffs seek $14,466.82 in partial indemnity costs, but this must be an error since the fees on a partial indemnity scale and the disbursements listed in their Bill of Costs are $5,141.50 and $1,136.00, respectively.