GE Canada Equipment Financing G.P. v. 3068485 Nova Scotia Ltd. et al., 2010 NSSC 204

• Judge: Murphy, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: February 26, 2010
• Jurisdiction: Nova Scotia
• Citations: 2010 NSSC 204;(2010), 291 N.S.R.(2d) 328 (SC)

GE Can. Equipment v. 3068485 N.S. (2010), 291 N.S.R.(2d) 328 (SC);

    922 A.P.R. 328

MLB headnote and full text

Temp. Cite: [2010] N.S.R.(2d) TBEd. MY.066

GE Canada Equipment Financing G.P. (plaintiff) v. 3068485 Nova Scotia Limited, DRL Coachlines Limited, DRL Vacations Limited and Ruth Roberts-Tetford (defendants)

(Hfx No. 264303; 2010 NSSC 204)

Indexed As: GE Canada Equipment Financing G.P. v. 3068485 Nova Scotia Ltd. et al.

Nova Scotia Supreme Court

Murphy, J.

May 27, 2010.

Summary:

The plaintiff commenced an action to recover an outstanding loan balance of $633,514.44 plus interest against the principal debtor and three guarantors. Summary judgment was granted against the principal debtor and one of the guarantors, but the amount owing was not paid. Motions for summary judgment against the remaining guarantors (the defendants) were denied. The motions judge ruled that costs should follow the cause. Prior to trial, the defendants filed a motion seeking an order to amend their defence, which was granted. A four-day trial took place.

The Nova Scotia Supreme Court, in a decision reported at [2009] N.S.R.(2d) Uned. 247; 2009 NSSC 414, ordered that the defendants pay damages of $633,511.70, special damages of $2,000, and interest of $174,861.37. If costs could not be agreed upon, the parties were to deliver written submissions. The parties were unable to agree. The plaintiff sought a payment based on the tariff scale. The defendants suggested a lump sum award of 50% of an objective assessment of the plaintiff's exposure to legal fees.

The Nova Scotia Supreme Court awarded total costs and disbursements of $69,473.42. The award included trial costs of $49,750, following Tariff A Scale 2, based on the "amount involved" of $635,511.70, not the judgment amount.

Practice - Topic 6923.1

Costs - General principles - What rules applicable - The parties were unable to agree concerning costs following the plaintiff's obtaining judgment against the defendants - The action was commenced in 2006 and pre-trial steps were undertaken before the revised Nova Scotia Civil Procedure Rules came into effect on January 1, 2009, more than six months before the trial commenced - The defendants argued that the 1972 Rules should apply to the determination of costs, and should be interpreted as limiting the plaintiff's recovery to a contribution only to actual legal expenses incurred, and not a tariff award - The Nova Scotia Supreme Court fixed costs by adopting an amount from a tariff scale - "The more important recent development affecting party/party awards was the 2004 Tariff amendment", which provided for substantially higher cost recovery - "[T]he rule change did not alter the principles upon which an award is based, or diminish the court's discretion to fix an appropriate amount" - See paragraphs 16 and 17.

Practice - Topic 6931

Costs - General principles - Discretion of court - The Nova Scotia Supreme Court considered the following when determining the amount of costs payable - "Costs are normally set according to the tariff, but when reasonable approaches to amount involved or scale under the tariff do not produce a substantial but partial indemnity, the court may depart from the usual and exercise its discretion to order a lump sum. Care should be taken to avoid employing fixed percentages or embracing the party's actual bill over a more generalized assessment" - See paragraph 18.

Practice - Topic 6934

Costs - General principles - Where litigant impecunious (financial hardship) - [See first Practice - Topic 7020.1 ].

Practice - Topic 7003

Costs - Party and party costs - General principles and definitions - Amount involved - The parties were unable to agree concerning costs following the plaintiff's obtaining judgment against the defendants for an outstanding loan balance of $635,511.70 - The Nova Scotia Supreme Court based the costs award on the $635,511.70 and not, as the plaintiff sought, on the $810,373.07 judgment amount, which included special damages and interest - The "amount involved" in the main issue for determination, namely, whether the defendants were liable as guarantors for the outstanding debt, was $635,511.70 - The trial's length and complexity were not affected by the special damages and interest components; they were resolved entirely as a consequence of the decision that the principal debt was owed - In this matter, the debt was relatively large in relation to trial time and complexity - The court determined that restricting "amount involved" to the principal amount owed was more likely to achieve an award consistent with the substantial but only partial indemnity principle - See paragraphs 31 and 32.

Practice - Topic 7004

Costs - Party and party costs - General principles and definitions - Scale of costs - Fixing of - [See second Practice - Topic 7020.1 ].

Practice - Topic 7006

Costs - Party and party costs - General principles and definitions - Purpose of party and party costs - The parties were unable to agree concerning costs following the plaintiff's obtaining judgment against the defendants - The plaintiff sought party/party costs based on the tariff scale - The defendants suggested such an award would be excessive - The Nova Scotia Supreme Court addressed the issues raised by the parties "based on the premise that party/party costs should represent a reasonable, predictable, and substantial indemnity for expenses incurred. Awards should also encourage settlement and promote sensible conduct of court proceedings" - See paragraph 14.

Practice - Topic 7020.1

Costs - Party and party costs - Entitlement to party and party costs - Successful party - Quantum - The parties were unable to agree concerning costs following the plaintiff's obtaining judgment against the defendants - The defendants claimed that the case was too simple to warrant a tariff-based award, that case law and the financial position of the defendant Roberts-Tetford supported a below-tariff lump sum award - They submitted that the plaintiff ought to have disclosed its legal fees, that the court should objectively assess the plaintiff's exposure to legal fees at not more than $52,000 and award 50% of that amount - The Nova Scotia Supreme Court declined to fix a lesser "lump sum" amount - The court rejected the defendants' post-trial characterization of the proceeding as "garden variety" - The case law did not persuade the court that prescribing a lump sum was the preferred way to award costs in this case - The costs regime did not require disclosure of fees unless solicitor/client costs were claimed - Roberts-Tetford had substantially more assets than she admitted - She attempted to avoid liability by giving evidence which was not credible - Even if she had only modest means, "that does not give rise to a right to litigate without responsibility for costs consequences" - See paragraphs 20 to 28.

Practice - Topic 7020.1

Costs - Party and party costs - Entitlement to party and party costs - Successful party - Quantum - The parties were unable to agree concerning costs following the plaintiff's obtaining judgment against the defendants - The plaintiff suggested that the court diverge from the basic Tariff A Scale 2 in fixing costs, and that an increased Scale 3 award would be appropriate because the defendants' conduct "adversely affected the speed or expense of the proceeding" (rule 77.07(1)) - The Nova Scotia Supreme Court agreed with the plaintiff's assertion that it was required to respond to issues raised at the last minute and to go to trial no longer able to rely on evidence the defendants had previously given - However, the court was not satisfied that the obstacles warranted a Scale 3 costs award, "which is normally reserved for a complicated or prolonged trial involving more complex issues and testimony than this case generated. A 'basic' scale tariff award premised on a significant amount in issue, with the added prescribed component of $2,000.00 for each trial day, should be sufficient to substantially indemnify [the plaintiff] for its expenses" - See paragraphs 29 and 30.

Practice - Topic 7065

Costs - Party and party costs - Counsel fees - Lump sum - [See first Practice - Topic 7020.1 ].

Practice - Topic 7117

Costs - Party and party costs - Special orders - Lump sum in lieu of taxed costs - [See first Practice - Topic 7020.1 ].

Cases Noticed:

Campbell v. Jones et al. (2001), 197 N.S.R.(2d) 212; 616 A.P.R. 212; 2001 NSSC 139, refd to. [para. 18].

Founders Square Ltd. v. Nova Scotia (Attorney General) (2000), 186 N.S.R.(2d) 189; 581 A.P.R. 189 (S.C.), dist. [para. 23].

Smith v. Michelin North America (Canada) Inc. (2008), 262 N.S.R.(2d) 337; 839 A.P.R. 337; 2008 NSSC 66, dist. [para. 23].

Windsor v. Poku (2003), 214 N.S.R.(2d) 88; 671 A.P.R. 88; 2003 NSSC 95, dist. [para. 27].

Kaye v. Campbell (1984), 65 N.S.R.(2d) 173; 147 A.P.R. 173 (C.A.), dist. [para. 27].

Statutes Noticed:

Civil Procedure Rules (N.S.), rule 1.01 [para. 29]; rule 77 [para. 10]; rule 77.07(1) [para. 19].

Costs and Fees Act, R.S.N.S. 1989, c. 104, Schedule A [para. 10].

Rules of Civil Procedure (N.S.) - see Civil Procedure Rules (N.S.).

Rules of Court (N.S.) - see Civil Procedure Rules (N.S.).

Counsel:

David G. Coles, Q.C., and Joshua J. Santimaw, for the plaintiff;

Gavin Giles, Q.C., and D. Jeffrey Aucoin, for the defendants.

This costs matter was determined by way of written submissions, the last of which was received on February 26, 2010. Murphy, J., of the Nova Scotia Supreme Court, delivered the following written decision on May 27, 2010.