In University Plumbing v. HTS Engineering and others, the Ontario Divisional Court considered two appeals from orders of a Master a combined costs disposition. The Court overturned one of the order relating to discoveries and set aside the cost disposition, both appeals which typically attract deference. The decision was released on March 10, 2014.

The claim at issue arose in 2007 out of a dispute between the parties involving three residential condominium projects in Toronto, for which the plaintiff was the mechanical contractor. The plaintiff retained HTS to supply heat pumps for the projects. The pumps allegedly failed, and the plaintiff seeks damages as a result.

One of the appeals was brought by the plaintiff with respect to Master Brott’s order that the plaintiff examine one personal defendant on behalf of all personal defendants. Prior to the Master making certain orders regarding remaining discoveries, the parties had agreed that one of the personal defendants could be examined for discovery on behalf of all of the personal defendants (except for one who had already been examined). When the Master asked counsel to advise who that one defendant would be, defendants’ counsel responded that they were prepared to produce either of two individuals. The plaintiff in turn advised that, since one of the proposed individuals, Paul Pilutti, had already been examined on his affidavit filed on the summary judgment motion, the plaintiff was content to treat his examination as the discovery of all of the personal defendants. However, for reasons that were unclear to the Court, the Master ordered that the other individual be examined on behalf of all of the personal defendants.

Justice Nordheimer found that the Master acted outside of her jurisdiction by ordering that an individual other than the one both parties were prepared to accept be examined on behalf of all personal defendants:

[23] In terms of the appeal itself, I begin with the fact that the Master did not have any authority under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 to order that the plaintiff be restricted to an examination for discovery of only one of the personal defendants on behalf of them all. A party is entitled to examine for discovery each and every other party who is adverse in interest: rule 31.03(1). Nothing prevents the parties from consenting to a restriction, and the Master could then incorporate that consent into her order regarding the Discovery Plan but in doing so, the Master would have the follow the terms of the consent.

On the second issue of appellate practice, the plaintiff sought leave to appeal the combined costs order made by the Master on the two motions, arguing that the quantum of costs should have been much greater than the amount ordered ($5,500). The plaintiff pointed to the fact that the defendants had delivered a costs outline seeking costs in the amount of $37,770.21 and the plaintiff had delivered a costs outline seeking costs in the amount of $36,249.70.

Justice Nordheimer acknowledged that leave to appeal a cost order should be granted sparingly and only in obvious cases where there are strong grounds for finding that the judge erred. Nevertheless, he found that the Master did not give sufficient reasons for why “she [chose] to depart so significantly from the amount of costs that both parties had sought.” The Court stated the following:

[30] With respect, the mere recitation of the relevant factors to consider in fixing costs does not explain how those factors were applied in this particular case. Assuming that some reduction in the costs should be made for the divided success on the discovery motion and the mixed success on the amendment motion, fixing costs at $5500 when the parties suggested a level of costs in excess of $35,000 suggests that a significant penalty has been applied against the plaintiff without any indication of why such a penalty would be warranted. I note in that regard that if some penalty was to be applied, it would appear to have been one that ought to have been assessed against the defendants, not the plaintiff, given the Master’s comment that the defendants had not even attempted to resolve the costs issue.

[31] It may be that the Master considered the quantum of costs sought by both parties to be excessive but, if that was the case, then a statement to that effect would have been expected along with the reasons for that conclusion.

[32] In my view, given the absence of any reasons being given for the amount of costs as fixed, and the large disparity between the amount fixed and the amounts sought by both parties, the conclusion reached by the Master in fixing the costs reflects an error in principle and thus cannot stand.