Erectoweld Company Limited v. Procor Limited et al., 2026 ONSC 3536
CITATION: Erectoweld Company Limited v. Procor Limited et al., 2026 ONSC 3536
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ERECTOWELD COMPANY LIMITED, Plaintiff
AND:
PROCOR LIMITED, OVERHEAD DOOR COMPANY OF CANADA LIMITED, OVERHEAD DOOR CORPORATION, 1428772 ONTARIO LIMITED, 363993 ONTARIO LIMITED, 2120358 ONTARIO LIMITED, STORA STEELS CANADA LIMITED, STORA ENSO OYJ, 1592079 ONTARIO INC., SHARP MACHINE COMPANY, BELLE INTERIORS INC., SILICON TECHNOLOGY CANADA INC., PAUL SKEELS, 1084753 ONTARIO INC., DOREEN HYDE, SYLVIE BOURGEAULT, SHEDDEN INVESTMENTS INC., and PAUL NIGHTINGALE, Defendants
BEFORE: Schabas J.
COUNSEL: Ralph Cuervo-Lorens and Fernanda Martins, for the Plaintiff
Tamara Farber and Mitchell Lightowler, for the Defendants 1428772 Ontario Limited and 1592079 Ontario Inc.
HEARD: In writing
COSTS ENDORSEMENT
Introduction
1In Reasons for Judgment released on December 3, 2025, I dismissed the plaintiff’s action: Erectoweld Company Limited v. Procor Limited et al., 2025 ONSC 6731.
2Costs have been settled by agreement between the plaintiff and the other defendants who were still in the action at trial, Procor Limited, Doreen Hyde and Sylvie Bourgeault. However, no agreement has been reached with the defendants 1428772 Ontario Limited and 1592079 Ontario Inc., which own 2076 Speers Road and which I referred to as “2076” in my Reasons, and do so again here.
3I have now received costs submissions from 2076 and from Erectoweld.
42076 seeks costs on a substantial indemnity basis, or alternatively, costs of $750,000 (inclusive of HST) on a combined partial indemnity and substantial indemnity basis. 2076 relies on an offer to settle made on March 20, 2025, offering to be let out of the action for $100,000, and relies on the conduct of the Plaintiff in pursuing what it describes as a “meritless action.” Erectoweld submits there is no basis for an elevated award of costs and that even 2076’s partial indemnity claim of $573,334.89 may be “reasonably considered on the high side.”
General principles
5The awarding of costs promotes three primary objectives: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan (1999), 1999 CanLII 2052 (ON CA), 46 O.R. (3d) 330 (C.A.) at para. 22.
6Under the Courts of Justice Act, R.S.O. 1990, c. C. 43, s. 131(1), there is broad discretion in determining costs. Subrule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, lists factors to be considered. In addition, the court should have regard to the principle of proportionality and seek to balance the indemnity principle with the objective of facilitating access to justice. As Rule 1.04(1.1) states:
In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.
7The overall objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances: Boucher v. Public Accountants Counsel for Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.). In Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66, Epstein J.A. stated at para. 52:
The overriding principle is reasonableness. If the judge fails to consider the reasonableness of the costs award, then the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. In [Boucher], this court emphasized the importance of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding at para. 37, where Armstrong J.A. said “[t]he failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice.”
8The awarding of costs is not an exact science. As the overarching principle is that costs must be fair, reasonable, and proportionate, the court need not engage in an exact measure or detailed analysis of the dockets: Boucher, at para. 26; Harley v. Harley, 2023 ONSC 4611, at paras. 34-35; Bender v. Dulovic, 2023 ONSC 4753, at paras. 24-25; Persampieri v. Hobbs, 2018 ONSC 368, at para. 33, citing Zesta Engineering Ltd. v. Cloutier (2002), 2002 CanLII 25577 (ON CA), 21 C.C.E.L. (3d) 161 (Ont. C.A.), at para. 4; Brophy v. Harrison, 2019 ONSC 4377, at para. 15, citing Apotex Inc. v. Egis Pharmaceuticals (1991), 1991 CanLII 2729 (ON CTGD), 4 O.R. (3d) 321 (C.A.).
9An award of costs on a substantial indemnity basis is exceptional. As the Court of Appeal stated in Davies, at para. 40:
… while fixing costs is a discretionary exercise, attracting a high level of deference, it must be on a principled basis. The judicial discretion under rules 49.13 and 57.01 is not so broad as to permit a fundamental change to the law that governs the award of an elevated level of costs. Apart from the operation of rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made.
10An elevated award of costs may be justified when the conduct of the unsuccessful party is considered reprehensible, egregious and worthy of sanction. The mere fact that the unsuccessful party committed misconduct giving rise to the proceeding is generally not a sufficient basis for substantial indemnity: Hunt v. TD Securities Inc. (2003), 2003 CanLII 3649 (ON CA), 66 O.R. (3d) 481 (C.A.), at paras. 129-133.
11In circumstances where courts award costs on an elevated scale, they may provide either full or substantial indemnity to the successful party.
12An elevated award of costs is usually based on conduct during the litigation. Generally, the case for elevated costs arises where serious but unfounded allegations of wrongdoing have been asserted and pressed by the unsuccessful litigant, or the losing party conducted the litigation in an oppressive or unreasonable manner, unnecessarily increasing the length and expense of the action which the court finds worthy of sanction. However, as Epstein J.A. stated in Davies, at para. 45:
Of course, a distinction must be made between hard-fought litigation that turns out to have been misguided, on the one hand, and malicious counter-productive conduct, on the other. The former, the thrust and parry of the adversary system, does not warrant sanction: the latter well may. In [Apotex], substantial indemnity costs were justified as a means [at para. 8] "to discourage harassment of another party by the pursuit of fruitless litigation . . . particularly where a party has conducted itself improperly in the view of the court". [Citations omitted.]
13One example of misconduct giving rise to elevated awards is evidence tampering: see e.g. Turtle Creek Landscape Inc. v. Summit Auto Brokers Inc., 2018 ONSC 512, at para. 6. Another example is “conduct reflecting a patent and persistent disregard for the court’s processes”: Tridelta Investment Counsel Inc. v. GTA Mixed-Use Developments GP Inc., 2024 ONSC 3543 at para. 27.
The claim for substantial indemnity costs
14I am not satisfied that 2076 is entitled to substantial indemnity costs. The action was unsuccessful, but it was not “meritless”, as asserted by 2076, such that the plaintiff should be penalized for making serious and unfounded allegations against the defendants. As noted by Epstein J.A. in Davies, “a distinction must be made between hard-fought litigation that turns out to have been misguided, on the one hand, and malicious counter-productive conduct, on the other.”
15The action survived a summary judgment motion brought by Procor, in which 2076 participated, but at no time did 2076 move to dismiss the action against it. The action raised complicated and challenging issues relating to causation and the source of the contaminant. The action was lengthy and involved complex expert evidence. There was a plausible theory of liability against 2076. Ultimately, Erectoweld failed to prove its case, but this does not support substantial indemnity costs.
162076 complains of “tactical” decisions by Erectoweld that increased costs. However, the examples are assertions of “lengthy discoveries”, complaints of being drawn into the summary judgment motion (which was brough by Procor), rejecting offers to let 2076 out and attempting, too late, to file expert evidence on damages which was in any event disallowed prior to trial. These complaints arise from matters that are part of the “the thrust and parry of the adversary system” and do not warrant elevated costs. Indeed, in my view, the plaintiff conducted an efficient trial, focused on the causation and liability issues. Although the litigation took some 13 years to come to trial, the case involved many parties and many issues to unravel. Erectoweld’s conduct in the action cannot be considered reprehensible, egregious or worthy of sanction.
17The offer to settle by 2076, made on March 20, 2025, in which it would agree to a dismissal of the action upon payment of costs of $100,000, was not a formal Rule 49 offer. The offer is a factor that may be considered in exercising my discretion in awarding costs, but it does not trigger, or require, an award of elevated costs. The plaintiff points to other attempts it made to settle the action prior to trial, but I can give those little weight. In litigation of this kind and length, I have no doubt that there were many discussions about settlement.
Quantum
18Erectoweld does not vigorously oppose the partial indemnity amount sought. Erectoweld’s submission notes that on March 24, 2026, it offered to pay the partial indemnity costs sought by 2076 over a period of 12 months, with interest. Although Erectoweld complains of the number of timekeepers on 2076’s Bill of Costs, it does not otherwise make detailed submissions regarding the quantum claimed. I give little weight to the number of timekeepers, which is to be expected in litigation lasting well over a decade.
19Erectoweld notes that 2076 brought a third-party claim against its consultant who did not identify the contamination when the property was purchased. Any recovery against the consultant might reduce 2076’s losses from the expense of defending this case; however, I have no information on the status of that claim.
202076 was also the secondary defendant in the action. Procor was the primary target of the plaintiff’s case and took the lead role at trial. This reduced the burden on 2076. Nevertheless, 2076’s costs are reasonable having regard to the complexity of the issues, and the nature and importance of the case. They are in an amount that the losing party ought to have reasonably expected to pay.
21In my view, having considered the objectives of costs awards, the factors in Rule 57.01, and that costs should be reasonable in all the circumstances, I award costs on a partial indemnity scale as requested by 2076 in the amount of $573,334.89, inclusive of HST and disbursements.
Paul B. Schabas J.
Date: June 16, 2026