Lien claimants, beware: the Ontario Superior Court of Justice ("ONSC") is clear – going after baseless claims and causing delays in proceedings comes at a substantial cost.
In 1917196 Ontario Ltd. v. Kazmi, 2023 ONSC 7284, Wiebe AJ of the ONSC considered costs submissions following a construction lien trial that arose from four separate lien claims on four subject lands owned by the defendants1. At trial, Wiebe AJ had to wade through the muddy waters of a dispute over an underpriced project management contract and issues relating to Tarion and building security.2 After nine rescheduled trial management conferences and several counsel changes for the plaintiff, Wiebe AJ concluded that judgment was to be brought against the plaintiff.3 On the costs motion, the parties submitted conflicting costs outlines. The defendant's costs outline set out partial indemnity costs, substantial indemnity costs, and actual costs. The plaintiff's outline set out fees and disbursements on a full indemnity basis. Ultimately, Wiebe AJ ordered costs against the plaintiff on a substantial basis and held the plaintiff company's representative, Mr. Kamil, personally liable for a portion of the costs.4
In coming to her decision to order costs on a substantial basis, Wiebe AJ considered the relevant factors set out in Rule 57.01(1) of the Rules of Civil Procedure, focusing on the result of the trial, settlement offers exchanged prior to trial, and the conduct of the plaintiff. Wiebe AJ found that the defendants were wholly successful at trial, with the Court dismissing the plaintiff's lien claim outright and ordering the damages in favour of the defendants. Further, the defendants made a reasonable offer to settle prior to trial, and at trial, succeeded well in excess of their offer – defeating the plaintiff's claim entirely and obtaining 87% of their counterclaim.5 Finally, the plaintiff's conduct was so egregious as to merit substantial indemnity. Wiebe AJ found that the plaintiff not only withheld critical information, unnecessarily lengthened the action by failing to make admissions of fact, and made sloppy submissions, but more importantly, the plaintiff fabricated its lien claim to extract more money on a project it had underestimated.
Clear in her disapproval, Wiebe AJ directed the plaintiff's representative to personally bear a share of the costs. In doing so, she pinpointed Mr. Kamil's role in the plaintiff's litigation strategy, which was categorized as "extortionary", warranting personal liability for costs.6
The Court also took this case as an opportunity to expand upon the doctrine of proportionality. While the plaintiff pointed to other cases to argue for cost reduction, the Court held firm, distinguishing those situations from the present case on the basis of Mr. Kamil's conduct as a self represented litigant, therefore justifying a significant cost award under Section 86(2) of the Construction Act, which requires the Court to make orders that are proportionate to the importance and complexity of the issues and to the amounts involved in the proceeding.7
Key Takeaway: A Cautionary Roadmap for Construction Litigation
This decision is a critical exploration of the pitfalls and high stakes inherent in construction litigation. For legal professionals, it's a call from the courts to approach such cases diligently, with a thoughtful strategy for settlement offers, and an unwavering commitment to honest litigation practices. For construction companies and their representatives, it is a stark reminder that the foundations of their claims must be as solid as the buildings they construct.
Footnotes
1. 1917196 Ontario Ltd. v. Kazmi, 2023 ONSC384 (CanLII) at para 2.
2. 191 Ontario at para 28.
3. 191 Ontario at para 45 and 135.
4. Kazmi, at para 33.
5. Kazmi, at para 14.
6. Kazmi, at para 31.
7. Kazmi, at para 35.
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