778938 Ontario Limited Applicant v. Annapolis Management, Inc. v. Ruby LLP, 2022 NSSC 232

SUPREME COURT OF Nova Scotia Citation: 778938 Ontario Limited v. Annapolis Management, Inc. , 2022 NSSC 232 Date: 20220810 Docket: Halifax , No. 480460 Registry: Halifax Between: 778938 Ontario Limited Applicant v. Annapolis Management, Inc. and Ruby LLP Respondents COSTS DECISION Judge: The Honourable Justice Gail L.

Gatchalian Submissions: Post Hearing by Applicant – June 17, 2022 Post Hearing by Respondents – June 23, 2022 Counsel: Dillon Trider, for the Applicant Peter Planetta, for the Respondents By the Court: Introduction [ 1 ] In a decision dated May 18, 2022, I awarded the Applicant, 778938 Ontario Limited (“Starfish”), a total of $144,010.99 in damages against the Respondents, Annapolis Management Inc. and Ruby LLP (“Annapolis”): 2022 NSSC 139 . I held that Starfish was entitled to its costs. However, the parties were unable to come to an agreement on the amount of costs.

They filed written submissions in support of their respective positions. [ 2 ] In order to understand the position taken by each party, it is important to know that the hearing of this Application was bifurcated into: (

a) a hearing on liability for alleged trespass and nuisance by Annapolis and Starfish’s request for a permanent injunction (the “liability hearing”), heard by the Honourable Justice Kevin Coady; and (

b) a hearing on liability for further alleged instances of trespass by Annapolis and Starfish’s request for damages (the “damages hearing”), heard by me. [ 3 ] The hearing before Coady J. took place over two full days. Coady J. decided as follows: (

a) He confirmed that the NFB Building, a building owned by Annapolis, created a snow load nuisance for the Attica, a building owned by Starfish; (

b) He found that any trespass by Annapolis workers on the Attica roof was either trivial or done with the implied or express consent of Starfish. (

c) He found that there was no nuisance caused by debris on the Attica roof. (

d) He rejected Starfish’s request for a permanent injunction restraining further construction by Annapolis. 2019 NSSC 36 , appeal dismissed 2020 NSCA 19 [ 4 ] Annapolis did not ask Coady J. for an award of costs in the liability hearing, and Coady J. did not make a costs order.

[ 5 ] In the damages hearing, I awarded the following damages to Starfish: (1) $103,922.60 plus HST in general damages, representing the estimated cost of reinforcing the Attica roof to mitigate the risk of damage from the increased snow load; (2) $20,000 plus HST in general damages, representing the estimated cost of tying the Attica’s roof to the NFB Building and replacing copper flashing that was removed and damaged by Annapolis; and (3) $1500 in compensatory damages for instances of trespass in February of 2021. 2022 NSSC 139 [ 6 ] Starfish seeks an award of lump sum costs for the damages hearing in the amount of $44,145.64, inclusive of HST and disbursements, which it says represents 85% of its legal fees incurred in the damages hearing and for one day of the liability hearing.

Starfish says that a departure from the tariff amount is warranted because Annapolis rejected settlement offers that were less than the amount awarded, Annapolis engaged in conduct that added to the delay and expense of the proceeding, and Annapolis failed to admit trespass and nuisance. [ 7 ] Annapolis says that Starfish should be entitled to only $14,563 in costs, based on Tariff C – Scale 1 and $4000 for two days of hearing before me, but that this should be reduced to zero because Annapolis says it is entitled to an equivalent amount of costs for the liability hearing.

Annapolis says that the first settlement offer was criticized by Coady J., that the second settlement offer was not significantly less than the amount awarded, that it did not engage in conduct warranting an increase to the tariff amount, and that it admitted that the snow load risk constituted a nuisance but that it appropriately denied trespass. [ 8 ] In determining costs, the court's overall mandate is to do "justice between the parties": Armoyan v. Armoyan , 2013 NSCA 136 at para. 10 . [ 9 ] The starting point in determining the amount of costs is the Tariffs of Costs and Fees under Rule 77.

Party and party costs of an Application in Court must, unless the judge who hears the Application orders otherwise, be assessed by the judge in accordance with Tariff A as if the hearing were a trial : Rule 77.06(2). [ 10 ] A judge has the discretion to add or subtract from the tariff amount: Rule 77.07(1). Furthermore, a judge “may award lump sum costs instead of tariff costs”: Rule 77.08.

Tariffs are the norm, and there must be a reason to consider a lump sum: Armoyan , supra at paras.14-15. [ 11 ] The basic principle is that a costs award should afford a substantial contribution to, but not amount to a complete indemnity to, the party's reasonable fees and expenses: Armoyan , supra at para. 16 . [ 12 ] The tariffs deliver the benefit of predictability by limiting the use of subjective discretion: Armoyan , supra at para. 17 . [ 13 ] In order to determine the appropriate amount of costs in this case, I will consider: (

a) whether one of the hearing days before Coady J. should be taken into account in the costs award for the damages hearing; (

b) what the tariff amount would be; (

c) the amount claimed in relation to the amount recovered [ Civil Procedure Rule 72.07(2)(a)]; (

d) offers of settlement that were not accepted [ Civil Procedure Rule 72.07(2)(b)]; (

e) whether the conduct of Annapolis affected the speed or expense of the proceeding [ Civil Procedure Rule 72.07(2)(e)]; (

f) whether Annapolis failed to admit something that should have been admitted: [ Civil Procedure Rule 72.07(2)(h)]; (

g) whether the above-noted factors suggest an amount of costs that substantially indemnifies Starfish for its costs; and (

h) whether Annapolis is entitled to seek, in the damages hearing, costs of the liability hearing. Number of Hearing Days [ 14 ] In my view, only the two hearing days before me should be taken into account in this costs decision. Starfish was largely unsuccessful in the hearing before Coady J. While Coady J. confirmed that the snow load risk caused by the NFB Building constituted a nuisance, he found that Annapolis had always acknowledged the need to reinforce the Attica roof and admitted its responsibility to pay for the reinforcement: at paras.9, 13, 15, 17, 19 and 31.

Thus, while the finding of a snow load nuisance was relevant to the request of Starfish in the damages hearing for an award of damages representing the cost of reinforcing the Attica roof, I find that this issue should not have taken up much time in the hearing before Coady J. The Tariff Amount [ 15 ] The argument of Annapolis in favour of Scale 1, which is less than the normal or basic scale, is not persuasive. Annapolis says that the damages hearing was not overly complex. However, it involved the filing of affidavits, cross-examination on affidavits, and oral

and written submissions, over the course of four separate dates. In my view, the starting point is Tariff A – Scale 2, the basic or normal amount, which, based on the amount involved, is $16,750 plus two days of hearing at $2000 per day for a total of $20,750. This is the starting point for the determination of the appropriate amount of costs in this matter.

The Amount Claimed in Relation to the Amount Recovered [ 16 ] I awarded Starfish $61,550 less than what it claimed. [ 17 ] In the damages hearing, Starfish claimed a total of $205,560.99, comprised of: (1) $103,922.60 plus HST for the estimated cost of reinforcing the Attica’s roof; (2) $20,000 plus HST to tie the Attica’s roof to the NFB Building and to replace the copper flashing; (3) $13,050 in compensatory or equitable damages in lieu of the denied injunction for trespass, representing what Annapolis should have paid to access the Starfish roof; and (4) $50,000 in punitive damages for the February 2021 instances of trespass. [ 18 ] I rejected Starfish’s request for: (

a) compensatory or equitable damages and (

b) its request for punitive damages for the February, 2021 trespass, but I awarded $1500 in compensatory damages for the February, 2021 trespass. [ 19 ] This factor would tend, on its own, to support a lower amount than Tariff A – Scale 2. Offers of Settlement that were not Accepted [ 20 ] The first settlement offer, made in September of 2018, does not support a higher amount than the tariff amount.

Annapolis is correct that Coady J. criticized the conduct of Louis Reznick, the principal of Starfish, at that time, finding that he created barriers to an effective working relationship and that he bore responsibility for the impasse: at para.19. [ 21 ] The rejection by Annapolis of the second settlement offer would tend, on its own, to support an increase to the tariff amount. Starfish offered to settle for $125,000, inclusive of HST, in September of 2021.

The Conduct of Annapolis [ 22 ] Starfish makes five arguments to support is position that the conduct of Annapolis warrants an upward departure from the tariff amount. [ 23 ] First, Starfish says that Annapolis failed to file a timely notice of contest and required there to be three motions for directions.

However, this conduct was already addressed in a costs award of $1750 against Annapolis by the Honourable Justice John Bodurtha. [ 24 ] Second, Starfish says that Annapolis delayed in finalizing a form of order after the decision of Coady J., resulting in needless correspondence between counsel and to the Court.

I am not prepared to rely on this delay given the conclusion of Coady J. that Starfish was responsible for the impasse between the parties. [ 25 ] Third, Starfish states that Annapolis made a late objection to hearsay evidence on the morning of November 2, 2021, the first day of the damages hearing, resulting in an adjournment and throw away costs for Starfish.

However, I find that both parties bear responsibility for that adjournment: while Annapolis should have made a timely objection to the admissibility of Starfish’s affidavits, which contained hearsay, Starfish should have filed direct evidence of estimates from contractors. [ 26 ] Fourth, Starfish says that o n April 4, 2022, two hours before the hearing of closing submissions in the damages hearing, counsel for Annapolis requested an adjournment of the hearing and of the deadline for Annapolis to file additional submissions, which had been set for the same day, due to counsel’s illness.

I agree with Annapolis that the April 4, 2022 adjournment request was based on the illness of counsel for Annapolis and was therefore justified. [ 27 ] Finally, Starfish says that, two days before the rescheduled damages hearing on March 9 and 10, 2022, Annapolis made a request for an adjournment, which was rejected by me: 2022 NSSC 65 . The adjournment motion lasted one hour. Starfish is entitled to its costs of that motion. I find that an appropriate amount of costs for that motion is $750. A Failure to Admit Something that Should have been Admitted [ 28 ] Starfish states that:

(1) Annapolis failed to admit that their construction would cause additional snow load, which caused Starfish to have to prove this fact with an expert witness at the liability hearing before Justice Coady; and

(2) Annapolis failed to admit to very clear trespasses in their pleadings, requiring Starfish to prove the trespasses. [ 29 ] As already mentioned, Coady J. found that Annapolis had always acknowledged the snow load issue and its responsibility to pay for the reinforcement of the Attica roof, and that any trespass was trivial or with the consent of Starfish. This factor does not warrant a departure from the tariff amount. Substantial Indemnification?

[ 30 ] Apart from the $750 that I find is an appropriate amount of costs for the failed adjournment request by Annapolis, the above- noted factors do not support, in my view, a departure from the tariff amount, which I find is $20,750. [ 31 ] Does this represent a substantial contribution towards Starfish’s costs? Starfish included with its costs submissions a table of fees and disbursements incurred from September 2018 to May 2022. According to that table, which was not supported by an affidavit, Starfish incurred $38,713.37 in fees and disbursements after the March 3, 2020 decision of the Court of Appeal.

Based on this information, a costs award of $20,750 would substantially indemnify Starfish for its reasonable costs related to the damages hearing. Costs of the Liability Hearing [ 32 ] In my view, Annapolis should not, at this point, be permitted to seek its costs of the liability hearing. If Annapolis wished to pursue costs of the liability hearing, it should have sought a costs order from Coady J. The order of Coady J. was finalized. An appeal was taken and dismissed.

Annapolis only made an argument for costs of the liability hearing in response to Starfish’s costs submissions in the damages hearing, and its argument consisted of the following two sentences: “The Respondent is entitled to costs on the liability hearing for the court time and a reasonable amount under tariff A. When these awards are considered it is respectfully submitted that they cancel out.” For these reasons, I decline to award Annapolis costs of the liability hearing.

Conclusion [ 33 ] For the above reasons, I find that a costs award against Annapolis of $20,750 for the damages hearing plus $750 for the adjournment motion would do justice between the parties. [ 34 ] I order that the Respondents, Annapolis Management, Inc. and Ruby LLP pay forthwith to the Applicant, 778938 Ontario Limited, costs in the amount of $20,750 for the damages hearing before me, plus $750 for the March 7, 2022 adjournment motion, for a total award of $21,500, which includes disbursements. Liability for these costs is imposed jointly and severally on the two Respondents. Gatchalian, J.