Expert fees of witness whose evidence could not be relied upon by either party was deducted from costs award

Plaintiff owners’ five-unit residential rental property was rendered uninhabitable after developer built multi-unit condominium complex on abutting property. At trial to assess damages, owners failed to adduce evidence of cost to rebuild, so damages were measured based on diminution in value rather than replacement cost. Owners were awarded damages of $1,083,713.26 in lost rent and diminution in value, 11,226.60 in prejudgment interest on lost rental income, less $436,892.13 in insurance money, leaving net damage award of $658,054.28. Hearing was held to determine costs. Owners were awarded partial indemnity costs up to date of developer’s rejected offer, fixed at $135,876 for fees, HST and allowed disbursements fixed at $32,891.11, for total costs of $168,767.11; developer was awarded partial indemnity costs as of date of its rejected offer, fixed at $142,310.90. Result at trial was less favourable than developer’s offer so developer was presumptively entitled to partial indemnity costs from date of offer. Although issue of liability was not yet determined, it was reasonable to consider that owners were successful in claim. When prejudgment interest was added to developer’s $650,000 offer, offer became $693,754.79 which exceeded owners’ trial net damage award by $35,707.06. Developer was presumptively entitled to partial indemnity costs from date of rejected offer. Although there was some basis to discount owners’ partial indemnity fees for calling unnecessary witnesses and exaggerating claim, expert fees of $9,605 of witness whose evidence could not be relied upon by either party was to be deducted from owners’ costs award. Issues were of moderate complexity and were important to parties. Owners’ failure to present evidence to support inflated cost of rebuilding fell short of acting “unreasonable”.

Scaffidi-Argentina v. Tega Homes Developments Inc. (2017), 2017 CarswellOnt 8257, 2017 ONSC 3427, L. Sheard J. (Ont. S.C.J.); additional reasons (2016), 2016 CarswellOnt 13960, 2016 ONSC 5448, L. Sheard J. (Ont. S.C.J.).