2010 ONSC 6721, 2010 ONSC 6721

CITATION : Gatta v. The Corporation of the City of St. Catharines, 2010 ONSC 6721 ST. CATHARINES COURT FILE NO.: 45135/03 DATE: 2010/12/21 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: ) ) GATTA HOMES INC. ) ) ) Peter A. Mahoney and Patrick Maloney, for the Plaintiff ) Plaintiff ) ) - and - ) ) ) THE CORPORATION OF THE CITY OF ST. CATHARINES ) ) ) Iain Peck, for the Defendant ) Defendant ) ) THE HONOURABLE MR. JUSTICE D.J.

TALIANO [ 1 ] The defendant was successful in defending the plaintiff’s claim and now seeks its costs of the action. [ 2 ] The defendant’s position is that it should have its costs on a partial indemnity basis from the commencement of the action to November 6, 2007 fixed in the sum of $26,767 and substantial indemnity costs thereafter fixed in the sum of $64,430, plus its disbursements of $7,442, for a total of $98,639.

Alternatively, the defendant seeks partial indemnity costs throughout in the sum of $72,767 plus disbursements, for a total of $80,209. [ 3 ] The defendant asserts its claim for substantial indemnity costs on two grounds. Firstly, the defendant made an offer to settle the action for an amount that exceeded the judgment. Secondly, the defendant submits that the plaintiff sought punitive damages based on allegations that he had been unfairly treated by the defendant, which allegations tarnished the defendant’s reputation.

In addition, it is submitted that the plaintiff’s unproven allegations that the defendant was abusing its powers under the Planning Act should also attract elevated costs. [ 4 ] The plaintiff’s position is that the defendant is not entitled to substantial indemnity costs under Rule 49.10. But if the court determines that the plaintiff is entitled to partial indemnity costs, those costs should be denied in their entirety or substantially reduced by reason of the fact that the defendant failed to produce an important document (Trial Exhibit 9) prior to trial.

The plaintiff submits that a reasonable and fair partial indemnity costs award would be $58,000 inclusive but because of material non disclosure, no costs should be awarded or, alternatively, any award of costs to the defendant should not exceed $29,000 inclusive. [ 5 ] With respect to the defendant’s claim for disbursements, Mr. Mahoney objects to disbursements incurred for the service of documents in the sum of $650.70 and the further sum of $2,810.03 for counsel for the defendant’s travel and accommodation expenses. [ 6 ] I will deal with the objection to the disbursement claim first.

It was reasonable on the part of counsel for the defendant to subpoena City staff for the trial to ensure their attendance and to organize their attendance in a timely and orderly way. With respect to travel expenses, the action arose and was tried in the City of St. Catharines. However, counsel for the defendant practices in the City of Toronto and accordingly, travel and accommodation expenses which were reasonably incurred in the normal discharge of counsel’s

responsibilities are therefore recoverable. [7] I will also deal briefly with the claim for substantial indemnity costs based on the plaintiff’s allegations of unfair treatment. I amnot persuaded that the mere making by the plaintiff of allegations which were ultimately found to be without merit is sufficient to justifyan elevated costs award. The law is clear that apart from situations involving Rule 49 offers, elevated costs are warranted only “wherethere has been reprehensible, scandalous or outrageous conduct on the part of one of the parties” (see Young v. Young, (SCC), [1993] 4 S.C.R. 3 at p. 134).

The allegations of the plaintiff fall well short of satisfying this requirement for elevated costs. Accordingly, on this ground, the claim for substantial indemnity costs is denied. [8] However, on the alternative ground, it is not disputed that the defendant made an offer in writing to settle this action onNovember 6, 2007 by payment to the plaintiff of $75,000 in damages, plus prejudgment interest, plus costs on a partial indemnity basis.

The offer was open until five minutes after the commencement of trial. [9] However, the offer was not accepted by the plaintiff and the plaintiff prosecuted a claim seeking to recover damages estimated tobe worth $1,019,970 in addition to punitive damages. The plaintiff recovered no judgment of value and its alleged damages wereassessed at $20,000. Statutory Provisions: [10] The award of costs is governed by s. 131 of the Courts of Justice Act, R.S.O. 1990 c.43 as expanded by Rules 49 and 57.01 of theRules of Civil Procedure, R.R.O. 1990 Reg.

Section 131 of the Courts of Justice Act provides: [S]ubject 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 thediscretion of the court, and the court may determine by whom and to what extent the costs shall be paid. [11] The relevant provisions of Rule 57.01 (1) are produced below as follows: In exercising its discretion under

section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the resultin the proceeding any offer to settle or to contribute made in writing, (0.

a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs, as well asthe rates charged and the hours spent by that lawyer; (0.

b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for whichcosts are being fixed; (

a) the amount claimed and the amount recovered in the proceeding; (

b) the apportionment of liability; (

c) the complexity of the proceeding; (

d) the importance of the issues; (

i) any other matter relevant to the question of costs. [12] Rule 49 deals with a specific aspect of costs. The intention of the rule is to promote an offer of compromise and to visit a costconsequence upon an offeree who rejects an offer that turns out to be as favourable as or more favourable than the judgment awarded attrial. The circumstances of this case are governed by Rule 49.13 of the Rules of Civil Procedure as explained in S.A.Strasser Ltd. v.Richmond Hill (Town) (1990), 1 O.R. 243, Dunstan v. Flying J Travel Plaza, (ON LRB), [2007] O.J. No. 4089 andDavies v.

Clarinton (Municipality), 2009 ONCA 722 , [2009] O.J. No. 4236. [13] Rule 49.13 provides: Despite rules 49.03, 49.10 and 49.11, the court, in exercising its discretion with respect to costs, may take into account any offer to settlemade in writing, the date the offer was made and the terms of the offer. [14] In considering the foregoing principles, the overriding principle when fixing costs is compliance with a standard of fairness andreasonableness.

Simply said, the court must fix costs in an amount that is fair and reasonable for the unsuccessful party to pay in theparticular circumstances to ensure the fundamental objective of access to justice (see Davies v. Clarington (Muncipality), 2009 ONCA722). Discussion and Disposition: [15] In addressing the relevant portions of Rule 57.01, I note the following. The defence was conducted for the most part by seniorassociates in the offices of Stieber, Berlach LLP at competitive rates which are not objected to.

The full indemnity total as set out in thedockets, which were produced, is $120,577.50. [16] However, counsel for the plaintiff argues that the following amounts should be deleted from the bill as follows:

(a) $1,538.50 which represents dockets relating to a motion for which no costs were awarded. Counsel for the defendantacknowledged that the amount specified in the dockets for the motion is not recoverable and is not included in the full indemnity total. Iaccept this submission. (b) $8,438 which represents counsel’s travel time as estimated by counsel for the plaintiff. Counsel for the plaintiff takes theposition that travel time should not be permitted. Counsel for the defendant relies on Mallory v. Mallory, (ON SC),[1998] O.J.

No 41 where my learned colleague, Quinn J., held that travel time should not only be permitted but should be allowed atcounsel’s full chargeable hourly rate without discount since counsel while travelling, “is representing his/her client to the exclusion of allother clients and their needs.” He went on to conclude that to discount counsel’s hourly rate would ignore the harsh fiscal reality of thebusiness of law.

My view is that, although travel time which is necessary to the performance of counsel’s duties should be compensable,the rate of compensation should be reduced to reflect the fact that the litigator’s skills are not generally engaged during travel time. Thatbeing the case, a lower rate of compensation is more appropriate.

In this case, I would allow travel time at 50% of the substantialindemnity rate and I would therefore reduce the full indemnity bill by $4,219. (c) $1,964.50 which represents clerical or secretarial work which is argued by counsel for the plaintiff, to be part of officeoverhead and therefore not recoverable. Counsel for the defendant indicates that secretaries in their offices do not docket their timeand that the entries in question represent either law clerks or articling students, and their work on the file is compensable.

In my view, itis the work itself that is key to whether or not compensation for the time is recoverable. Here, it appears that the work associated withthese entries is of a clerical nature and therefore part of office overhead. I would therefore disallow this expense. (d) $11,439.50 which represents the value of work done in preparation for a trial which had to be adjourned because a trialjudge was not available. Blame for this development cannot be attached to either side. In normal circumstances, if work is done, itmust be paid for although compensation should not be allowed for duplication of work.

However, preparation for the first trial was doneby counsel who subsequently left the offices of counsel for the defendant and his work had to be duplicated by counsel who replacedhim and conducted the trial. Under these circumstances, it is not appropriate to lay the expense of preparation for the aborted trial at thefeet of the plaintiff. I therefore reduce the bill by $11,439.50. (e) $11,016 which amount represents a 50% reduction of the time it took to prepare written argument.

It is argued by counselfor the plaintiff, that although the actual time incurred to properly prepare written briefs may be accurate, it is unusual to have to preparewritten submissions and therefore such an expense would not have been in the reasonable expectation of the plaintiff who was the losingparty. With respect, I disagree. This was a complex action that required exceptional effort on behalf of both sides both in themarshalling of evidence and in the presentation of argument.

The caliber of the briefs submitted by both sides and the length andcomplexity of the submissions dealt with in written reasons for judgment are testimonials to the difficulties presented by this case. Itwould have been anticipated by both clients that the issues raised by this litigation were going to be costly to present.

Accordingly, I donot reduce the bill on this ground. [17] Based on the foregoing adjustments and on the applicable Rule 57.01(1) factors previously referred to, I reduce the proposedfull indemnity bill of $120,577.50 by $17,623, to arrive at approved full indemnity amount (strictly for the purposes of this assessment)of $102,954.50.

It is doubtful that the plaintiff’s full indemnity bill would be any less since the plaintiff was represented by senior andjunior counsel throughout the whole nine day trial whereas only one counsel appeared for the defendant. [18] Counsel for the defendant has proposed the sum of $26,767 for partial indemnity costs from the start of the action until the dateof the offer to settle. I find this sum reasonable and fair under the circumstances. He proposes substantial indemnity fees of $64,430 forthe balance of the action for a total of $91,197.

Based on the foregoing adjustments, counsel for the defendant’s proposal is fair andreasonable. It is also in keeping with the complexities and importance of the case and with the duration of both the proceeding and trial. In addition, the amount being proposed would not be unexpected by the plaintiff under all of the circumstances. [19] The remaining question then is to what extent the proposed bill should be reduced to compensate for the failure to produceExhibit 9 prior to trial. [20] Mr.

Chapman, who was responsible for the defendant’s productions, testified at trial that although he had made a diligent searchof the City’s records, he did not discover Exhibit 9 until after the trial commenced and it was produced as soon as it was discovered. Mr.Chapman was unable to explain why the document had not been discovered earlier. The failure to produce the document in a timely waymust attract consequences that are influenced by how the lack of disclosure impacted the plaintiff and to policy considerations that arerelevant. [21] The document in question supported Mr.

Chapman’s evidence that he advised the plaintiff to confer with the EnvironmentalDepartment of the City to ascertain their requirements. The plaintiff however did not do so. Had he done so, he would have beeninformed of the City’s environmental requirements prior to making his decision to proceed with the purchase of this land. The firstquestion that therefore must be addressed is: if Exhibit 9 had been produced when it should have been produced, what impact would ithave had on the plaintiff? [22] Mr.

Mahoney, counsel for the plaintiff, states at paragraph 17 of his submissions as follows: …it is possible that the action may have proceeded differently or even that some type of resolution may have been reached. [23] It is noteworthy that the plaintiff does not allege that he would not have proceeded with the negligent misrepresentation aspect ofhis action (which took up the majority of trial time) if the document had been produced in a timely way. That is probably because thedocument itself was open to several

interpretations and was not determinative of the issue that it addressed. In other words, although itwas an important document, it was not a “smoking gun.” The plaintiff’s claim was dismissed not because of the document itself, butbecause the evidence adduced in support of the plaintiff’s case was implausible, contradictory and inconsistent with the defence evidencewhich was preferred. Exhibit 9 merely served to reinforce that conclusion. Even if Exhibit 9 had never been produced, the result of this

litigation would not likely have been any different. [ 24 ] Accordingly, I cannot conclude that it is probable that the plaintiff would not have proceeded had he been aware of the existence of Exhibit 9 prior to trial or that production of the document earlier would have prompted the plaintiff to accept the City’s offer to settle. I say that for this additional reason. [ 25 ] The plaintiff mounted a multi-pronged attack against the City in an effort to force the City to remediate its land in order to accommodate the plaintiff’s proposed development.

However, it was presumptuous on the part of the plaintiff to expect the court to give its blessing to a development that violated Provincial Guidelines applicable to lands impacted by waste particularly in circumstances where the plaintiff had not been forthcoming in his dealings with City staff in the preliminary stages of discussion. The dismissal of the plaintiff’s claims had, in the final analysis, little to do with Exhibit 9. [ 26 ] The next question that arises is: would the earlier production of the document have shortened the trial?

The document related only to the negligent misrepresentation issue and since the wording of the document lent itself to several

interpretations, it is not probable that trial time would have been significantly shortened had Exhibit 9 been produced earlier, although the surprise production of the document during the course of trial did cause some modest trial delay. [ 27 ] Nevertheless, policy considerations require that the City be sanctioned for its failure to produce an important document in a timely way. Under the circumstances, I award the defendant costs in the sum of $75,000 inclusive. ___________________________ Taliano J. Released: December 21, 2010 CITATION : Gatta v. The Corporation of the City of St. Catharines, 2010 ONSC 6721 COURT FILE NO.: 45135/03 DATE: 2010/12/21

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: GATTA HOMES INC. Plaintiff - and – THE CORPORATION OF THE CITY OF ST. CATHARINES Defendant COSTS ENDORSEMENT Taliano J. Released: December 21, 2010