Case Name:
Colautti Construction Ltd. v. Ashcroft Development Inc.
Between
Colautti Construction Ltd., plaintiff, and
Ashcroft Development Inc., Ashcroft Homes Inc.,
Ashcroft Homes - Central Park Inc., Ashcroft Homes -
Crown Pointe Inc., Crown Pointe Development Inc.,
1070280 Ontario Inc., 1230174 Ontario Inc., David Choo,
and Shanti Choo, defendants
[2003] O.J. No. 5228
[2003] O.T.C. 360
50 C.P.C. (5th) 181
127 A.C.W.S. (3d) 851
Court File No. 01-CV-18487
Ontario Superior Court of Justice
C. McKinnon J.
Heard: November 3, 2003.
Oral judgment: November 3, 2003. Released: December 19, 2003.
(15 paras.)
Practice -- Costs -- Solicitor and client costs -- Measure of solicitor and client costs -- Reasonable charges, reasonably performed -- Counsel fees (incl. premium) -- Entitlement to solicitor and client costs -- Summary judgment proceedings.
Application by the defendants for their costs of the plaintiff s unsuccessful motion for summary judgment on a substantial indemnity basis. In dismissing the plaintiff s motion, the motion judge found that the plaintiff had not been reasonable to bring it. The defendants claimed total legal fees and disbursements of $134,732. The plaintiff argued that much of the legal fees claimed were for trial preparation and not directly referable to the motion. The defendants argued that the matters were not separable, because the summary judgment motion had included all the plaintiffs claims for damages.
HELD: Application allowed. The defendants were entitled to their costs of the motion on a substantial indemnity basis, in the amount of $103,666, payable forthwith. The bringing of the motion was not reasonable. Further, a distinction could not be drawn between legal work done with respect to the motion and the trial; the work would necessarily overlap, and could not be separated.
Statutes, Regulations and Rules Cited:
Ontario Rules of Civil Procedure, Rule 20.06.
Counsel:
Russell Kronick and Raymond G. Colautti, for the plaintiff.
Paull N. Leamen, for the defendants.
COSTS
1 C. McKINNON J. (orally):-- This is a decision with respect to costs resulting from an unsuccessful motion brought by the Plaintiff for summary judgment. The motion was refused by me for reasons reported at (2003), 33 C.P.C. (5th), 230 and [2003] O.J. No. 1492.
2 The Defendants on the motion are entitled to costs on a substantial indemnity basis pursuant to Rule 20.06. I concluded that the bringing of the motion for summary judgment could not be said to be reasonable.
3 A costs hearing was held on November 3, 2003 at which time evidence and submissions relating to the appropriate amount of costs were canvassed.
4 Mr. Leamen filed a bill of costs seeking fees, disbursements and GST in the amount of $134,732.48. The fees leading up to the motion for summary judgment total $105,432.36 based on 80 percent of hourly rates ranging from articling students at $80 per hour and Mr. Leamen's rate of $400 per hour. Counsel fee for three days of hearing is sought payable in the amount of $3,500 per day in accordance with the costs grid contained in Ontario Regulation 284/01.
5 Much of the Defendants' dispute with respect to Mr. Leamen's fees is premised upon the submission that almost all the work embraced in the bill of costs is work expended for the trial of the action, and not directly referable to the motion for summary judgment. Mr. Leamen responds by saying that no such distinction can be made because the summary judgment sought to collect all of the liquidated damages claimed in the statement of claim, amounting to roughly $795,000 and that because the motion for summary judgment embraced all of the contracts between the parties, no distinction can be drawn between the time expended on the motion for summary judgment and the time expended as necessary preparation for the trial of the matter. In effect, all liquidated monetary issues contained in the motion for summary judgment mirrored what would be involved at a trial. The record filed by the Plaintiff comprised 26 volumes filling four banker's boxes. The argument on the summary motion dealt with every aspect of the liquidated damage claim, and consumed three full days of court time.
6 I agree with Mr. Leamen. I am persuaded that it is impractical, if not impossible, to separate work done in preparation for the motion for summary judgment and work done for the trial.
7 With respect to the appropriate amount of costs to be awarded, I have reviewed the dockets of Mr. Colautti, who was counsel for the Plaintiff on the motion for summary judgment. An analysis of Mr. Colautti's documents reveals that he has expended roughly the same amount of time on the file as has Mr. Leamen. Both Mr. Leamen and Mr. Colautti are very senior and experienced lawyers. Neither wastes time. Neither takes shortcuts.
8 I am not prepared to find that Mr. Leamen's time expended on this file and the time expended by his juniors was inappropriate. However, that does not mean that he should be awarded costs for every hour spent on the file. I do not view costs payable on a substantial indemnity basis as being equivalent to costs as between a solicitor and his own client.
9 I am guided by the decision of the Ontario Court of Appeal in Zesta Engineering Limited v. Cloutier, [2002] O.J. No. 4495, where the court stated that the costs award "should reflect more what a court views as a fair and reasonable amount that should be paid by unsuccessful parties than any exact measure of the actual costs to the successful litigant".
10 I am also in agreement with Brockenshire J. in Mosey v. Lally Group Ltd., [2002] O.J. No. 2161 when he stated:
The general theory of costs has always been that the award of costs serves as an indemnity to the client against what the client has to pay his or her own counsel...the new Rule 57.01(3) provides that the court shall fix costs "in accordance with sub rule (1) and the Tariffs". Tariff (A) speaks specifically of "partial indemnity" and "substantial indemnity" scales. The plain meaning, in my view, is that a rate that is awarded is intended to be less than what the client would be obliged to pay his own lawyer, and obviously a partial indemnity rate would be lower than substantial indemnity...
11 In my view, absent bad faith litigation, fundamental to an award of costs is the notion of reasonableness. Costs awarded should neither shock the conscience of the payor nor needlessly enrich the payee. As Matlow J. stated in Toronto v. First Ontario Realty Corp. (2002), 59 O.R. (3d) 568:
There have to be practical and reasonable limits to the amounts awarded for costs and those amounts should bear some reasonable connection to the amounts that should reasonably have been contemplated (by the parties to the litigation). This exercise cannot be reduced now to the rubberstamping of a bill of costs that resembles the cash register slip of a shopper who has gone on a spree.
12 Applying the reasonableness test to the bill of costs submitted by Mr. Leamen, and given the highly complex and difficult litigation, I am persuaded that he should receive very near the highest scale in accordance with the costs grid for his work as counsel on the motion, which I fix in the amount of $3,300 for each day.
13 With respect to the hourly rate to be awarded Mr. Leamen inclusive of the work done by his juniors, I am satisfied that an appropriate hourly rate on a substantial indemnity scale is $280. I am further satisfied that a reasonable amount of time expended for this complex litigation involving the motion for summary judgment is 275 hours. The pre-trial preparation, therefore, shall amount to $77,000. Mr. Leamen's disbursements are agreed in the amount of $9,985. The totals are as follows:
|
|
Preparation time |
$ 77,000 |
|
|
|
Counsel fee at trial |
$ 9,900 |
|
|
|
Disbursements |
$ 9,985 |
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|
|
|
-------- |
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|
|
TOTAL |
$ 96,885 |
|
|
|
GST at 7% |
$ 6,781.95 |
|
|
|
|
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|
|
|
TOTAL OWING |
$103,666.95 |
|
|
|
|
=========== |
|
The amount is payable forthwith.
14 As I explained to the parties during oral argument, should the Plaintiff ultimately be successful at trial, it would not be estopped from seeking costs which would duplicate the costs being awarded in this decision, save and except costs specifically related to the immediate preparation and attendance upon the hearing of the motion for summary judgment because, as I have stated, the work required to bring about the summary judgment is the same work as is required to try the case. When I use the phrase "immediate preparation" I mean preparation time required to prepare the law relating to the test for granting summary judgment, and time spent formulating the factums for use on the motion.
15 I would hope that counsel might agree on an amount payable to Mr. Leamen for the costs hearing before me on November 3, 2003.
C. McKINNON J.
cp/e/nc/qw/qljml/qlkjg