Falkenham Backhoe Services v. Yu

Falkenham Backhoe Services v. Yu Court Supreme Court Date 2022-02-10 Citation 2022 NSSC 44 Docket Hfx. No. 341156 Judge/Registrar/Adjudicator Bodurtha, John P. (Honourable Justice) Document Type Decision Decision Content SUPREME COURT OF Nova Scotia Citation: Falkenham Backhoe Services v. Yu, 2022 NSSC 44 Date: 20220210 Docket: Hfx. No. 341156 Registry: Halifax Between: C.R. Falkenham Backhoe Services Limited Plaintiff v. MZDHNS Builders Inc., Ashraf Eldah, Michael Yu Defendants COSTS DECISION Judge: The Honourable Justice John Bodurtha Heard: Motion by Correspondence Final Written Submissions: August 24, 2021 Costs Decision: February 10, 2022 Counsel: Michael Maddalena, Counsel for the Plaintiff Andrew Christofi, Counsel for the Defendant, Michael Yu MZDHNS Builders Inc. and Ashraf Eldah, Self-Represented Defendants By the Court: Introduction [1] The Plaintiff, C.R. Falkenham Backhoe Services Limited, and the Defendant, Michael Yu, agreed to a dismissal of the Plaintiff’s claim provided leave was granted to have costs determined by the Court. A Consent Order for Dismissal was issued on July 12, 2021. The parties filed their written submissions regarding costs on August 24, 2021. Background [2] This action was commenced by the Plaintiff in 2010 under the Builders’ Lien Act, RSNS 1989, c. 277 (the “Act”). The amount claimed by the Plaintiff was $46,953.11 for amounts owing for the installation of sewer and water lines that it provided at the request of the general contractor, MZDHNS Builders Inc. (“MZDHNS”), to several parcels of land owned by the Defendant, Michael Yu. [3] The Defendant, Michael Yu, purchased the land from Everley Developments Limited during the period when work was being performed on the land by MZDHNS and the Plaintiff. [4] There were no other lien claimants. Ashraf Eldah, one of the principals of MZDHNS, has not participated in the proceeding. The only active participants in the proceeding have been the Plaintiff and the Defendant, Michael Yu. [5] The Plaintiff made a demand to Mr. Yu, pursuant to section 32 of the Act, on February 14, 2014. Mr. Yu responded to the demand on February 21, 2014. The Plaintiff and Mr. Yu began exchanging relevant documents for a period of time. On September 25, 2017, Andrew Christofi (Mr. Yu’s current legal counsel) sent an email to Plaintiff’s counsel explaining what had transpired to date regarding the requested documents. He advised that the documents were in the possession of another law firm, Clyde A. Paul & Associates. He stated he had been in contact with that firm and was told that the file would be set aside for his review. Mr. Christofi then followed up on September 14, 2017 but received no response. [6] On August 14, 2020, an Appearance Day motion was brought by the Prothonotary to dismiss the action for want of prosecution. The Plaintiff opposed the motion and it was adjourned to December 4, 2020. [7] On August 14, 2020, after the Appearance Day motion, the Plaintiff’s counsel reiterated its demand for documents and inquired as to the Defendant’s availability for discovery in October/early November. [8] A discovery subpoena was issued on October 15, 2020 requiring the Defendant, Michael Yu, to attend for discovery on November 17, 2020 and bring the requested documents. [9] On November 15, 2020, the Defendant provided the Plaintiff with the real estate transaction file from Clyde A. Paul and Associates regarding the purchased lots. [10] On November 17, 2020 at the discovery of Mr. Yu, he gave two undertakings. On December 7, 2020, Mr. Yu provided the documents that they received from Clyde Paul’s office in relation to the undertakings provided. Position of the Plaintiff [11] The Plaintiff argues that it should be awarded costs because the Defendant failed to make reasonable disclosure of the state of accounts as required by section 32(1) of the Act. In addition, it states that the Defendant was not forthcoming with the disclosure of information regarding payments and this failure to disclose in a timely manner “caused or contributed to the delay and expense of the proceeding”. [12] The Plaintiff argues that the Defendant should pay the costs relating to the discovery including the costs for the court reporter: $2,000 and $403.65, respectively. Position of the Defendant, Mr. Yu [13] Mr. Yu argues that the action was without merit and was dismissed. Section 41 of the Act caps costs to the successful party at 25% of the value of the lien claimed, in this case $11,738.28 not inclusive of disbursements. The Defendant seeks a lump sum payment of $7,500 plus disbursements in the amount of $508.48, and $250, inclusive of disbursements for the costs of this motion, for a total of $8,258.48. Issues [14] The following issues are before the Court: 1. What party is entitled to costs? 2. What is the appropriate amount of costs? 3. What is the appropriate amount of disbursements? 4. Should costs be awarded in relation to these submissions of costs? Analysis Applicable Provisions under the Builders’ Lien Act [15] Section 41 of the Act, addresses costs for actions under that Act and reads as follows: 41 (1) The costs of the action under this Act awarded to the plaintiffs and successful lien holders, shall not exceed, in the aggregate, an amount equal to twenty-five per cent of the amount of the judgment, besides actual disbursements, and shall be in addition to the amount of the judgment, and shall be apportioned and borne in such proportion as the judge who tries the action may direct. (2) Where the costs are awarded against the plaintiff or other persons claiming the lien, such costs shall not exceed an amount, in the aggregate, equal to twenty-five per cent of the claims of the plaintiff and other claimants, besides actual disbursements, and shall be apportioned and borne as the judge may direct. (3) In case the least expensive course is not taken by a plaintiff under this Act, the costs allowed to the solicitor shall in no case exceed what would have been incurred if the least expensive course had been taken. (4) Where a lien is discharged or vacated under Section 29, or where in an action judgment is given in favour of or against a claim for a lien, in addition to the costs of an action, the judge may allow a reasonable amount for costs of drawing and registering the lien or for vacating the registration of the lien. (5) The costs of and incidental to all applications and orders made under this Act, and not otherwise provided for, shall be in the discretion of the judge. [16] Pursuant to section 41(2) of the Act, the maximum costs award not inclusive of disbursements is $11,738.28 ($46,953.11 x 25%). Applicable Civil Procedure Rules [17] Civil Procedure Rule 1.01 addresses the objects of the Rules being the “just, speedy, and inexpensive determination of every proceeding”. [18] Rule 77.02(1) outlines the Courts’ general discretion regarding party and party costs and reads: 77.02(1) A presiding judge may, at any time, make any order about costs as the judge is satisfied will do justice between the parties. [19] Rule 77.03(3) speaks to costs following the event and reads: 77.03(3) Costs of a proceeding follow the result, unless a judge orders or a Rule provides otherwise. [20] Rule 77.06(1) links costs to the tariffs and reads: 77.06(1) Party and party costs of a proceeding must, unless a judge orders otherwise, be fixed by the judge in accordance with tariffs of costs and fees determined under the Costs and Fees Act, a copy of which is reproduced at the end of this Rule 77. [21] Rule 77.07 provides factors which are relevant to increasing tariff costs: Increasing or decreasing tariff amount 77.07 (1) A judge who fixes costs may add an amount to, or subtract an amount from, tariff costs. (2) The following are examples of factors that may be relevant on a request that tariff costs be increased or decreased after the trial of an action, or hearing of an application: (a) the amount claimed in relation to the amount recovered; (b) a written offer of settlement, whether made formally under Rule 10 - Settlement or otherwise, that is not accepted; (c) an offer of contribution; (d) a payment into court; (e) conduct of a party affecting the speed or expense of the proceeding; (f) a step in the proceeding that is taken improperly, abusively, through excessive caution, by neglect or mistake, or unnecessarily; (g) a step in the proceeding a party was required to take because the other party unreasonably withheld consent; (h) a failure to admit something that should have been admitted. (3) Despite Rule 77.07(2)(b), an offer for settlement made at a conference under Rule 10 - Settlement or during mediation must not be referred to in evidence or submissions about costs. [22] Lastly, Rule 77.10(1) speaks to disbursements and reads: 77.10(1) An award of party and party costs includes necessary and reasonable disbursements pertaining to the subject of the award. Costs Principles [23] In Grue v. McLellan, 2018 NSSC 151, Justice Hunt summarized the principles in awarding costs, as described in Armoyan v. Armoyan, 2013 NSCA 136, at para. 6: 6 In Armoyan v. Armoyan, 2013 NSCA 136 (N.S. C.A.), the Nova Scotia Court of Appeal provided direction with respect to the principles to be considered when determining costs. Specifically, Justice Fichaud stated: 1. The court's overall mandate is to do "justice between the parties": para. 10; 2. Unless otherwise ordered, costs are quantified according to the tariffs; however, the court has discretion to raise or lower the tariff costs applying factors such as those listed in Rule 77.07(2). These factors include an unaccepted written settlement offer, whether the offer was made formally under Rule 10, and the parties' conduct that affected the speed or expense of the proceeding: paras. 12 and 13. 3. The Rule permits the court to award lump sum costs and depart from tariff costs in specified circumstances. Tariffs are the norm and there must be a reason to consider a lump sum: paras. 14-15 4. 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: para. 16 5. The tariffs deliver the benefit of predictability by limiting the use of subjective discretion: para. 17 6. Some cases bear no resemblance to the tariffs' assumptions. For example, a proceeding begun nominally as a chambers motion, signaling Tariff C, may assume trial functions; a case may have "no amount involved" with other important issues at stake, the case may assume a complexity with a corresponding work load, that is far disproportionate to the court time by which costs are assessed under the tariffs, etc.: paras. 17 and 18; and 7. When the subjectivity of applying the tariffs exceeds a critical level, the tariffs may be more distracting than useful. In such cases, it is more realistic to circumvent the tariffs, and channel that discretion directly to the principled calculation of a lump sum which should turn on the objective criteria that are accepted by the Rules or case law: para. 18. [24] A costs award should represent “a substantial contribution toward a party’s reasonable legal fees and expenses but should not amount to complete indemnity.”: Lyle v. Myer, 2019 NSSC 387, at para. 23. [25] In determining what amounts to a “substantial contribution” towards a party’s costs, the Nova Scotia Court of Appeal suggests that this means something more than 50 percent and less than 100 percent of those costs: Williamson v. Williams, 1998 NSCA 195, at para. 25. [26] The starting point with costs is the tariff. In cases where the tariff approach is more distracting than useful, it is more appropriate to circumvent the tariff and apply the lump sum approach under Civil Procedure Rule 77.08: Armoyan v. Armoyan, 2013 NSCA 136, at para. 18. I see no reason to depart from the tariff approach in awarding costs. This was a settled action because the parties agreed that the action should be dismissed by a Consent Order for Dismissal. The applicable tariff is Tariff F. [27] Tariff F reads as follows: TARIFF F Tariff of fees allowed for Solicitor's Services Allowable to a Party Entitled to Costs in a Proceeding which is Discontinued or Settled Costs on settlement are always a matter of negotiation between the parties. This Tariff F is to be applied if the costs cannot be settled and must be assessed by a taxing officer. The “amount involved” for purposes of this Tariff F is the amount of a settlement without including disbursements. When determining costs in a proceeding, which is settled or discontinued, a taxing officer may assess the amount involved and the costs based on the following Amount Involved Amount of Costs Up to $25,000 Not more than $3,000 $25,001 - $50,000 Not more than $4,000 $50,001 - $100,000 Not more than $5,000 Where the proceeding is discontinued or settled and the amount involved exceeds $100,000.00, costs shall not be more than the total of $5,000.00 plus 2% of the amount in excess of $100,000.00. Analysis Issue 1: What party is entitled to costs? [28] The Plaintiff seeks costs because the Defendant failed to make reasonable disclosure of the statement of accounts as required by section 32(1) of the Act. I find that the Plaintiff has not demonstrated that the Defendant failed to make reasonable disclosure. [29] On the evidence before me, the Plaintiff posed four questions to the Defendant by correspondence dated February 14, 2014. The Defendant responded to the four questions by letter dated February 21, 2014. There is nothing further from the Plaintiff regarding any additional requests for documents until September 22, 2017, where the Plaintiff requests documents be provided by October 5, 2017, pertaining to payments made by the Defendant to Everley Developments Limited and MZDHNS Builders Inc. [30] Counsel for the Defendant responded to this request by email on September 25, 2017 advising that the requested documents were in the possession of another law firm, Clyde A. Paul & Associates, and that he had made inquiries to obtain the documents. Counsel at Clyde A. Paul & Associates advised that the documents would be left for his review. Counsel for the Defendant followed up but did not receive a further response. [31] The next date of significance is August 14, 2020 when an Appearance Day motion was brought by the Prothonotary to have the action dismissed for want of prosecution. The Plaintiff opposed the motion and it was adjourned to December 4, 2020. [32] After the Appearance Day motion, the Plaintiff again requested the documents from September 22, 2017 and acknowledged his understanding that these documents were with another law firm. He also indicated that the parties should set discovery dates. There is nothing in the correspondence to indicate that the Defendant had failed to make reasonable or timely disclosure. What is evident is that the Plaintiff did not take steps to pursue the action, which led the Prothonotary to bring forward a motion to dismiss. [33] After the appearance day motion was adjourned, the Plaintiff requested the documents again, scheduled a discovery and served a discovery subpoena. [34] The Defendant wrote to the Plaintiff on August 17, 2020 to advise that all the liens had been lifted from title and that there was never a contract between the Plaintiff and Defendant. In addition, they stated that the claim was baseless and that they would be seeking costs on a substantial indemnity basis if the claim is pursued. [35] On November 15, 2020, as part of the Discovery Subpoena, the Defendant provided the requested documents from the real estate transaction file from Clyde A. Paul & Associates. [36] On November 17, 2020, at the discovery of the Defendant, the Defendant undertook to make two further inquiries of Clyde A. Paul & Associates. [37] On December 7, 2020, the Defendant provided the Plaintiff the documents it received from Clyde A. Paul & Associates. [38] The next correspondence of significance is the Consent Order for Dismissal issued on July 12, 2021. [39] There is nothing based on these facts that persuade me the Defendant has acted unreasonably in providing disclosure pursuant to section 32(1) of the Act. It was the Plaintiff who had to oppose a motion for dismissal because of want of prosecution. The Plaintiff brought no motions to the Court for lack of disclosure by the Defendant. The Plaintiff provided no correspondence to indicate that it was not satisfied with the disclosure that the Defendant had produced nor that its response to the request for documents was not timely. The evidence indicates the documents were in the hands of another law firm, which the Plaintiff acknowledged. [40] Based on these facts, I am not convinced by the Plaintiff’s argument that the Defendant’s failure to disclose in a timely manner caused or contributed to the delay and expense of the proceeding. Again, there is nothing in the evidence that bears this out. The correspondence from the filed affidavits does not show any untimely disclosure; granted, the Defendant had difficulty obtaining documents but kept the Plaintiff apprised of his efforts to obtain the documents from the other law firm. The Plaintiff was satisfied with these efforts and took no other steps to push the litigation forward. [41] Costs follow the event. Based on the information before me from the Consent Order for Dismissal, the Defendant was the successful party. I can only infer that the matter was entirely dismissed because there was no information provided to me suggesting that the Defendant paid anything to the Plaintiff in return for the dismissal. [42] In addition, there is no evidence before me that either party was entitled to costs or the quantum of costs based on the Consent Order for Dismissal. There is no evidence that payments for costs were paid by either party. If there was evidence, I assume it would have been provided. [43] I am not persuaded by the Plaintiff that it should be awarded costs from the Defendant. Issue 2: What is the appropriate amount of costs? [44] The Defendant requests costs in a lump sum amount. I am not prepared to grant the full amount of costs he is seeking. For the reasons that follow, I award $3,500 in costs, plus disbursements, to the Defendant based on the Tariff and taking into consideration the maximum amount imposed under the Act. [45] The “amount involved” for the purposes of Tariff F is the amount of a settlement without including disbursements. I have relied on the Statement of Claim to determine the amount involved because neither party addressed it in their submissions nor provided any evidence to suggest I should rely on a different amount. The Plaintiff claimed payment of the sum of $46,953.11 from the Defendant and that is the amount I have used for the tariff and to determine the maximum amount under the Act. [46] The Defendant provided the requested documents and advised the Plaintiff that there was no merit to their claim on two separate occasions. However, the Defendant did not follow up with counsel from Clyde A. Paul & Associates after he followed up on September 14, 2017 and received no response according to his email of September 25, 2017. [47] On August 14, 2020, the Plaintiff clarified what the records it was requesting should include. The Defendant did not provide any of the requested documents until a Discovery Subpoena was served on him. The documents requested in the subpoena were still not provided until two days before the discovery held on November 17, 2020. After the discovery, the Defendant provided the requested undertakings on December 17, 2020. [48] I find that the Defendant has some responsibility for prolonging the action based on not following up regularly with Clyde A. Paul & Associates to obtain the documents. Although, the documents were not in the possession of the Defendant, they did not actively pursue the documents until served with a discovery subpoena. As a result, I am not prepared to Order the maximum amount permitted under the Act. Issue 3: What is the appropriate amount of disbursements? [49] The Defendant seeks disbursements of $508.48. [50] I have reviewed the expenses and conclude that they are reasonable. [51] I award disbursements in the amount of $508.48. Issue 4: Should costs be awarded in relation to these submissions of costs? [52] I see no merit to the Defendant’s request for costs of this “motion”. The Consent Order for Dismissal was issued and provided 30 days from the date of the issuance of the Order for the parties to make submissions to the Court regarding an award of costs. [53] The Order neither required nor directed the parties to file a motion should they not agree to costs. The Court stated it would entertain submissions and there was no need for a formal motion on costs in this regard. The parties filed written submissions on costs, without the necessity of a hearing. [54] In these circumstances, the Defendant’s request for costs in the amount of $250 for the preparation and advancement of a costs argument is denied. Conclusion [55] I award costs to the Defendant as follows: 1. Amount from Tariff F - $3,500 based on an amount involved between $25,001- $50,000; 2. Disbursements - $508.48 Grand Total - $4,008.48 [56] I am satisfied that this costs award will do justice between the parties pursuant to Rule 77.02(1). [57] I ask that counsel for the Defendant prepare the form of Order. Bodurtha, J.