Executive Summary: Key Legal and Evidentiary Issues

• Both parties succeeded partially at trial, but College Grain Inc. was ultimately awarded the higher net judgment.

• Wilhelm Concrete argued its offer to settle should trigger cost protections under Rule 49.10, but the court disagreed.

• The court found the offer would have required College Grain to abandon a successful counterclaim, making it less favourable.

• College Grain’s partial settlement efforts were informal and not Rule 49-compliant, limiting their cost impact.

• The court emphasized proportionality, noting modest recovery amounts and rising trial costs.

• Costs were capped at a reasonable level despite larger claims and expert involvement.

Background and claims

634573 Ontario Limited, operating as Wilhelm Concrete, sued Jay Shackelton and College Grain Inc. for $105,774.23 in unpaid invoices related to the construction of grain silos. In response, the defendants counterclaimed for $717,570, alleging construction deficiencies, including water infiltration and resulting damage.

Following a trial, the court awarded Wilhelm Concrete $97,754.04 for unpaid invoices. However, College Grain succeeded on its counterclaim, obtaining a judgment of $177,897.34. After applying a set-off, College Grain emerged with a net recovery of $80,143.30. The parties then made submissions regarding costs.

Arguments on costs and settlement offers

College Grain requested $156,448.99 in costs, including partial indemnity fees, HST, and disbursements. Wilhelm Concrete opposed the amount, arguing the trial had a divided outcome and asserting that their earlier offer to settle should limit any adverse cost award under Rule 49.10 of the Rules of Civil Procedure.

Wilhelm Concrete had offered to settle in 2019 for an undisclosed amount that did not include interest but required College Grain to sign a broad release waiving all related claims. The court found this offer to be less favourable than the outcome at trial because College Grain would have had to abandon its counterclaim, which ultimately succeeded. Thus, Rule 49.10 did not apply in Wilhelm’s favour.

College Grain pointed to multiple pre-litigation attempts to resolve the matter, including a $50,000 offer against the invoices, but these offers were not formalized in writing and therefore did not trigger Rule 49.10’s cost consequences either.

Proportionality and discretion in awarding costs

Justice E. ten Cate considered Rule 57.01 and the proportionality principle, noting that both parties had limited success and the total recovery was modest relative to the litigation costs. He observed that while Wilhelm Concrete nearly recovered its full claim, College Grain’s counterclaim was largely unsuccessful in quantum, despite netting the greater overall result.

Because the proceeding was commenced before January 1, 2020, simplified rule caps on costs did not apply. Still, the court used the policy behind the simplified procedure to guide a fair and proportionate cost award.

Outcome and winner

The court awarded College Grain Inc. $50,000 in partial indemnity fees plus $6,500 in HST and $35,886.52 in disbursements, for a total cost award of $92,386.52. While both parties had partial success, the court found College Grain was the net successful party and entitled to a proportionate cost recovery. The ruling balanced fairness with restraint, avoiding excessive costs in a moderately valued construction dispute.