Supreme Court of Nova Scotia
Citation: Kaehler v. SystemCare Cleaning & Restoration Ltd., 2020 NSSC 32
Date: 2020-01-22
Docket: Annapolis Royal, No. SD#411067
Registry: Digby
Between:
Dale Kaehler and Josee Desjardins
Plaintiffs
v.
SystemCare Cleaning & Restoration Limited
Defendant
-and-
3100835 Nova Scotia Limited
Third Party
Library Heading
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Judge: |
The Honourable Justice Pierre Muise |
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Heard: |
By Correspondence |
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Final Written Submissions: |
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Summary: |
The Plaintiffs commenced an action against the Defendant, a franchisor, arising from work performed by an employee of the Third Party, a franchisee, alleging that the employee was acting as agent for the Defendant. The action was ultimately dismissed by the Court of Appeal which granted summary judgment. The Defendant and Third Party sought costs of the action.
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Issues: |
(1) What, if any, costs should be awarded to the Defendant? (2) What, if any, costs should be awarded to the Third Party? |
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(3) Who should pay costs to the Third Party?
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Result: |
The Plaintiffs were ordered to pay the Defendant $12,250 in costs of the action, plus compensable disbursements. The Plaintiffs were ordered to pay the Third Party $5,000 in costs of the action, plus compensable disbursements, as it was reasonable and inevitable that the Defendant would add the Third Party, and the Plaintiff ought to have foreseen it. |
THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET.
SUPREME COURT OF Nova Scotia
Citation: Kaehler v. SystemCare Cleaning & Restoration Ltd., 2020 NSSC 32
Docket: Annapolis Royal, No. SD#411067
Registry: Digby
Between:
Dale Kaehler and Josee Desjardins
v.
SystemCare Cleaning & Restoration Limited
-and-
Third Party
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Judge: |
The Honourable Justice Pierre L. Muise |
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Heard: |
By Correspondence |
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Final Written Submissions: |
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Counsel: |
Kiel Mercer, for the Plaintiffs Matthew McEwen, for the Defendants Cheryl Canning, QC, for the Third Party |
COSTS DECISION
INTRODUCTION
[1] The Plaintiffs commenced an action against the Defendant, a franchisor, arising from work performed by Craig Hubley, an employee of 3100835 Nova Scotia Limited, a SystemCare franchisee, alleging that Mr. Hubley was acting as agent for SystemCare. The Defendant added the Numbered Company as a third party.
[2] The Defendant brought a motion for summary judgment on the evidence. I dismissed the motion. However, the Nova Scotia Court of Appeal: overturned my decision; granted the motion; dismissed the Plaintiffs’ claim; and, awarded costs in relation to the motion and appeal.
[3] The Defendant and Third Party brought motions by correspondence seeking costs of the action. I granted leave for the motions to be made by correspondence.
ISSUES
[4] The issues to be determined are:
1. What, if any, costs should be awarded to the Defendant?
2. What, if any, costs should be awarded to the Third Party?
3. Who should pay costs to the Third Party?
LAW AND ANALYSIS
ISSUE 1: WHAT, IF ANY, COSTS SHOULD BE AWARDED TO THE DEFENDANT?
[5] The Defendant requests costs of $12,250, based on Scale 2 in Tariff A, using an amount involved between $90,000 and $125,000, plus HST and disbursements.
[6] The Plaintiffs submit that the Defendant’s costs of the action should be in the amount of $850, based on Tariff C and considering that the summary judgment motion took one-half day in chambers. They note that they and the Defendant agreed on that amount as the costs of the summary judgment motion.
[7] The court may grant a defendant, who has been successful on a motion to dismiss a plaintiff’s claim, costs of the action, even though that defendant had already been awarded the costs of the motion, particularly where, as in the case at hand, the parties agreed on the amount of costs in the motion: Bishop v. Nova International Ltd., 2010 NSSC 418; and, Binder v. Royal Bank, 2003 NSSC 265.
[8] It may do so at any time with a view to doing justice between the parties: CPR 77.02(1).
[9] Unless otherwise ordered, Tariff A applies in determining the party and party costs of an action: Armoyan v. Armoyan, 2013 NSCA 136; CPR 77.06.
[10] The Court in Cherubini Metal Works Ltd. v. Nova Scotia (Attorney General), 2008 NSSC 322, did not apply Tariff A in determining the costs of the action following dismissal of the action. In that case, the matter was dismissed in the Supreme Court because it was not the proper forum. However, the matter was not at an end. It would be continuing through alternative dispute resolution mechanisms. The Court considered: the substantial $5,000,000 “amount involved”; that a lot of the work would be of continuing benefit; the highest costs of the summary judgment motion under Tariff C, multiplied by four; and, that other applications had been made in the proceeding. It essentially ordered lump sum costs of 2.5 times the multiplied maximum Tariff C costs, then deducted the costs ordered on appeal.
[11] In the circumstances of the case at hand, the matter is completely at an end, and the work is no longer of continuing benefit. Also, the amount involved is substantially less. Therefore, the reasoning in Cherubini for straying from Tariff A does not obtain in the case at hand.
[12] “The basic principle is that a costs award should afford substantial contribution to the party’s reasonable fees and expenses.” “Substantial contribution” now appears to mean a proportion of reasonable legal expenses that is much is less than two thirds to three quarters: Armoyan, supra.
[13] The “amount involved” suggested by the Defendant is in a proper range. Estimates for required remedial work attached to the affidavit of Mr. Kaehler filed in the summary judgment motion support that range as they total $111,720, $114,681.56 and $118,326.50 respectively.
[14] The Defendant’s total legal fees, with HST, are $53,762.50. Its legal fees, with HST, up to the time work commenced for the summary judgment motion, were $10,463.28. That included all discoveries. The remaining legal fees related to the summary judgment motion, appeal and costs, while at the same time relating to issues in the action itself. A not insignificant part of it involved research and compiling evidence related to issues that would have been of continued benefit had the matter proceeded further. The legal fees appear reasonable.
[15] $12,250 exceeds full indemnity for legal fees up to the start of the work on the summary judgment motion. However, it, combined with $850 in costs of the motion and $1500 in costs of the appeal ordered by the Court of Appeal, only totals $14,600. That is only about 27% of the total legal fees, which is less than substantial contribution. However, I must also consider that a substantial part of the remaining legal fees were only of benefit for the summary judgment motion, the appeal and costs, and that costs of the motion and appeal have already been dealt with.
[16] It is not possible from the detailed statement of account to determine with precision what portions were only for the motion, appeal and cost. Had the matter gone to trial, the questions of agency and interpretation of the franchise agreement would have been central features. Even assuming three-quarters of the remaining legal fees were strictly for the motion, appeal and costs, the remaining one-quarter would be equally attributable to the issues in the action. In that case $12,250 in costs would still be only about 58% of the applicable legal fees and thus in the substantial contribution range.
[17] If the matter had gone to trial, on all issues, not simply the agency issue, there would have been a need to address multiple issues related to the work performed. That would have consumed significantly more preparation time. The extra $2,000 per day of trial would not have compensated for it. In such a case, reaching substantial contribution may have required using Scale 3 of Tariff A or awarding lump sum costs.
[18] Considering these points, a costs award of $12,250 is one that I am satisfied will do justice as between the Plaintiffs and the Defendant.
[19] However, our Court of Appeal, has determined that HST is not to be added to a costs award: G.B.R. v. Hollett, [1996] N.S.J. No. 345 (C.A.), at para 198; Mader v. Lahey, 1997 CarswellNS 572 (S.C.), at para 43, affirmed 1998 CarswellNS 180 (C.A.); and, MacIntyre v. Cape Breton District Health Authority, 2010 NSSC 170, at para 27, affirmed 2010 NSCA 3. Therefore, no HST is to be added.
[20] “Necessary and reasonable disbursements pertaining to the subject of the award” are also to be awarded along with costs: CPR 77.10(1).
[21] None of the disbursements were dealt with along with the costs of the motion or appeal. The Defendant has submitted for compensation disbursements totalling, with tax, $6,068.59.
[22] § 219.6 of Orkin and Schipper, Orkin on the Law of Costs, Second Edition (2019 – Thomson Reuters Canada, Toronto) deals with disbursements. It states that meals and postage are office overhead and not compensable disbursements: Orkin, §§ 219.6(7).4 and 219.6(10).1. The amounts which were submitted under those categories will be deducted. They total, with tax, $168.79.
[23] The Defendant’s Bill of Costs lists e-Carswell Search / Online Legal Research Fees, with tax, of $1193.70. Computer search expenses: have not been consistently allowed or disallowed; and, may require a close examination of their reasonableness, including whether some of it could have been conducted for free, which may result in a reduction: Orkin, §219.6(9). There is no evidence providing any details explaining the reasonableness of the computer searches. There is only a bare statement of opinion that they were necessary. I note that the cases in the Defendant’s book of authorities have been downloaded or printed from e-Carswell. Those same cases can be obtained for free from CanLII. The Nova Scotia cases can be obtained for free from the Nova Scotia Courts Website. Therefore, those portions of the e-Carswell search fees that were incurred simply to obtain a case known or believed to be pertinent were not reasonably necessary. Only those fees associated with conducting searches to discover pertinent cases, such as word or phrase searches, or a natural language search, would be reasonably necessary. Of course, simply printing or downloading those cases when discovered would be a reasonable expense as it would be the most efficient manner of retrieval. In the case at hand, more likely than not, some portion of the e-Carswell searches were for the purposes of discovering and retrieving, rather than only retrieving, pertinent cases. The evidence does not provide sufficient detail to determine with precision how much. Therefore, I will reduce the Computer search fee amount by 50% which is a reduction of $596.85.
[24] Similarly, in relation to the claims for fax transmission and photocopying, there was no evidence regarding the number of transmissions or pages, nor the rate charged. In addition, it was not indicated whether the photocopying charges included copies made for the client. Therefore, it is difficult to assess whether they are reasonable charges. The description of legal services in the Bill of Costs shows that an overwhelming majority of communication was by email, leaving limited requirement for use of fax. However, the amount claimed for fax transmissions, with tax, is only $31.05. Considering that briefs and affidavits were faxed, that is, more likely than not, a reasonable amount. The amount claimed for photocopies (without tax) is $1,541.50. At $0.10 per copy, that would amount to 15415 copies. That appears excessive. Somewhere in the range of 6000 copies is more reasonable. I will allow $600, plus HST, for a total of $690 for photocopies. That is a reduction of $1,082.73 in photocopying fees.
[25] The remainder of the disbursements were reasonable and necessary.
[26] Deducting $1,848.37 from the $6,068.59 claimed for disbursements, leaves $4,220.22 in necessary and reasonable disbursements for which the Defendant is to be compensated by the Plaintiffs.
ISSUE 2: WHAT, IF ANY, COSTS SHOULD BE AWARDED TO THE THIRD PARTY?
[27] The Third Party seeks $8,000 in costs, plus $1,481.29 in disbursements, inclusive of HST, to be paid by the Plaintiffs, or, in the alternative, the Defendant. It arrives at the costs amount by applying a multiplier of four to the maximum award of $2,000 under Tariff C for a one day hearing, and the approach in Cherubini, supra. Acknowledging they are “not a perfect fit”, it advances them as “guideposts”. It bases the one day hearing length on the half day required for each of the summary judgment motion and appeal.
[28] At the same time, it states that it “is not seeking costs related to the summary judgment motion or appeal”. That is an appropriate concession as its attendance at those proceedings was limited to watching briefs, and, as stated at §407.3 of Orkin:
“No costs should be allowed to parties attending on a motion when they have been served with notice unless they wish to make valid submissions for the consideration of the court.”
[29] The Plaintiffs do not address the quantum of costs for the Third Party. They only argue that any such costs should be paid by the Defendant. That question will be addressed under Issue 3.
[30] The Third Party did not provide any information regarding the amount of legal fees incurred. However, it presented evidence that its lawyer filed a defence to the third party claim and attended discovery examinations of one Plaintiff, one representative of the Defendant and one representative of the Third Party. Therefore, I can look to fees incurred by the Defendant to help arrive at a rough estimate of reasonable legal fees for the Third Party.
[31] The fees incurred by the Defendant in relation to arranging, preparing for, attending and reporting on those discovery examinations, plus subsequent review of documentation received, totalled approximately $8,000. The Third Party’s legal fees for those steps globally would likely be less as the Plaintiffs and Defendant were the primary drivers of the process. The Statement of Defence to the Third Party Claim is brief and is mostly a generic blanket denial. Therefore, the work associated with it would likely not appreciably add to the legal expense. Therefore, in the absence of evidence relating to fees incurred, I will use roughly $8,000 plus HST as the Third Party’s reasonable legal expenses. That amounts to $9,200.
[32] In the circumstances, a lump sum costs award of $5,000 would provide sufficiently substantial contribution and do justice amongst the parties.
[33] The $1,481.29 in total disbursements claimed includes $52.77, inclusive of HST, for meals. That amount will be deducted, leaving compensable disbursements of $1,428.52.
ISSUE 3: WHO SHOULD PAY COSTS TO THE THIRD PARTY?
[34] The Third Party submits that the Plaintiffs should pay its costs because it was necessary and inevitable that it would be added as a third party upon the Plaintiffs commencing the action against the Defendant.
[35] The Plaintiffs submit that the Defendant should pay the Third Party’s costs because: it did not need to add the Third Party; the Third Party provided no evidence or submissions on the summary judgment motion; and, it could have succeeded in the summary judgment motion without adding the Third Party.
[36] The Court in Bishop, supra, at paragraph 10 cited Orkin with approval as follows:
As to the payment of costs to Third Parties, with respect to the law, Orkin, The Law of Costs states at s. 209.7:
The discretion of the court to award costs against an unsuccessful litigant extends as well to third parties. Thus, a plaintiff whose action has been dismissed may be ordered to pay the costs of the third party in addition to those of the defendant, depending on the circumstances of the case. The usual rule is that an unsuccessful plaintiff will not be charged with costs of the third party on the reasoning that the plaintiff did not sue the third party, did not want him or her in the case and was not responsible for joining the third party. Depending on the facts of the case, however, fairness may require that an unsuccessful plaintiff bear a successful third party's costs. Four categories have been distinguished where such an order may be appropriate:
1. where the main issue litigated was between the plaintiff and the third party;
2. where the third party was brought in or kept in by reason of the act or neglect of the plaintiff;
3. where the case involved a series of contracts in substantially the same terms for the sale of goods;
4. where the third party proceedings followed inevitably upon the institution of plaintiff's action in the sense that the defendant had no alternative but to join the third party.
[37] At paragraph 12, it cited with approval the following passage from Chisolm v. Nova Scotia, 2009 NSSC 29:
A plaintiff may be responsible for costs of a third party if the joinder of the third party by the defendant was reasonable in the circumstances. Courts exercise discretion to require an unsuccessful plaintiff to pay third party costs when the issues raised in a third party proceedings are closely linked to or interrelated with those in the main action. Courts determine liability for third party costs after assessing what is fair in the circumstances ...
[38] The general principle that the defendant who added the third party pays the costs is particularly applicable when that defendant has a complete defence and added the third party out of an abundance of caution. However, where the third party proceedings followed naturally and inevitably from the institution of the plaintiff’s claim, it is proper to order the plaintiff to pay the third party’s costs. Even if the third party claim did not follow “inevitably”, where the plaintiff ought to have foreseen the addition of the third party, it may be proper to require the plaintiff to pay at least a portion of the third party’s costs. [Sanofi Pasteur Ltd. v. UPS SCS, Inc., 2014 ONSC 5402, paras 6, 7, 9 and 10.]
[39] In the case at hand, the work which formed the basis of the Plaintiffs’ claim was performed by an employee of the Third Party. The Plaintiff was alleging the Defendant was liable because that employee was acting as agent for the Defendant. Even though the Defendant was ultimately found to have a complete defence, in those circumstances: it followed naturally and inevitably that the Defendant would add the Third Party; it was reasonable to do so; and, the Plaintiffs ought to have foreseen it. Therefore, it is fair in the circumstances, and does justice amongst the parties, to require the Plaintiff to pay the costs of the Third Party.
CONCLUSION
[40] For these reasons, I conclude and order the following:
1. The Plaintiffs shall pay the Defendant $12,250 in costs of the action, plus disbursements (inclusive of HST) in the amount of $4,220.22.
2. The Plaintiffs shall pay the Third Party $5,000 in costs of the action, plus disbursements (inclusive of HST) in the amount of $1,428.52.
3. Those payments shall be made within 30 calendar days of receipt of this decision by the Plaintiffs’ lawyer.
ORDER
[41] I ask counsel for the Defendant to prepare the order.
Muise, J.