Court of Appeal for Ontario

Date: 2018-05-15 Docket: C64797

Judges: Rouleau, Roberts and Fairburn JJ.A.

Between

Parnaz Ehsaan Plaintiff (Appellant)

and

Payam Zare and Erfan Zare Defendants (Respondents)

Counsel

Sean N. Zeitz, for the appellant

Sam Rappos, for the respondents

Heard: May 9, 2018

On Appeal

On appeal from the judgment of Justice B. Glustein of the Superior Court of Justice dated December 7, 2017, with reasons reported at [2017] O.J. No. 5879, and the costs order dated March 5, 2018.

Reasons for Decision

[1] The appellant obtained judgment against the respondents on a motion for summary judgment. The appellant's action arose out of a failed transaction to purchase the respondents' property, which the respondents refused to close. The motion judge granted the appellant judgment in the amount of $118,954.95, including $43,000 for the difference in value of the property from the date of the agreement of purchase and sale to the closing date. The motion judge ordered that there be no costs.

[2] The appellant's appeal is narrow: she takes issue with the amount of $43,000 awarded, submitting that the motion judge erred in taking the average between the parties' respective property appraisals. She also seeks leave to appeal the motion judge's order that she receive no costs of her action or motion for summary judgment.

Damages Issue

[3] With respect to the damages issue, at trial, there was a dispute between the parties as to the appropriate appraised value of the property. The appellant's own appraisal evidence was that the value of the property was between $1.275 and $1.375 million as of the closing date. The respondents' evidence appraised the property as of the closing date at a value of $1.375 million; however, they disputed that value and relied on the lower end of the appellant's appraisal evidence. The motion judge concluded that there was "no basis for the court to prefer one or other of the appraisals" and determined that the "reasonable conclusion" would be to take the midpoint of the highest and lowest appraised values.

[4] The appellant submits that the motion judge erred in failing to take $1.375 million as the value of the property; alternatively, the motion judge should have taken the midpoint between $1.275 and $1.375 million, and then averaged that figure with the higher value of $1.375 million.

[5] We do not accept these submissions.

[6] The motion judge's assessment and calculation of damages are entitled to deference. His explanation as to why he took the average of the figures submitted by the parties, including the absence of a basis to understand which appraisal was preferable, was reasonable on this record. We see no basis to interfere with it.

Costs Appeal

[7] With respect to the costs appeal, the appellant first argues that the motion judge's costs analysis was tainted by what is said to be unfair criticism about the manner in which costs submissions were filed by her counsel. The respondents maintain that their counsel was subject to the same criticism. The parties agree, and the record supports, that they were granted advance permission to file their costs submissions in the way that they did. Even so, we conclude that the motion judge's apparent misperception about the manner of filing had no impact on his ultimate decision.

[8] Second, the appellant maintains that the motion judge erred in principle in failing to award her costs. It is well established that a costs award should be set aside on appeal only if the motion judge erred in principle or the award was plainly wrong: Davies v. Clarington, 2009 ONCA 722, at para. 27.

[9] We agree that the motion judge erred in failing to award any costs to the appellant and that the error justifies appellate intervention.

[10] While an award of costs is always discretionary and the court has the discretion not to award any costs to the successful party, the latter discretion should be exercised sparingly. The general principle that a successful party is entitled to costs should not be departed from except for very good reasons. Examples of the exceptional instances where such an order has been made include: misconduct of the parties; miscarriage in the procedure; or oppressive and vexatious conduct of proceedings. (See: 1318706 Ontario Ltd. v. Niagara (Regional Municipality), [2005] O.J. No. 1907, at para. 50.)

[11] Here, the motion judge erred by depriving the successful party of her partial indemnity costs for conduct that did not rise to the level of misconduct that would justify such a punitive order. Specifically, the motion judge concluded that the appellant's conduct of not accepting the respondents' non Rule 49.10 compliant offers to settle and abandoning her claim for specific performance at the hearing of her motion for summary judgment justified denying her costs. The motion judge reasoned that the failure to accept the offers should be sanctioned by denying the appellant costs from the date the offers were made and by setting off the amount of the appellant's partial indemnity costs to which she would otherwise have been entitled against the wasted costs incurred by the respondents.

[12] While such conduct may have justified a reduction in the appellant's costs, it did not warrant an order that there be no costs in the circumstances of this case, particularly where the appellant was entirely successful.

[13] The motion judge did not factor into his analysis the undisputed fact that the Toronto real estate market was highly volatile between the date the cause of action arose and the date of the summary judgment motion. As a result, the appellant's decisions to continue the specific performance claim until just before the hearing of the motion and to reject the respondents' offers to settle were understandable and hardly unreasonable.

[14] In our view, the motion judge lost sight of the principal objective of costs, to compensate the successful party. He did not give appropriate weight to the fact that the claim was vigorously opposed by the respondents, nor to the appellant's success on her motion for summary judgment against the respondents for the breach of contract and on having the respondents' motion for summary judgment dismissed. It was neither fair, proportionate nor reasonable for the motion judge to deprive the appellant of all of her costs.

[15] Accordingly, we set aside the motion judge's costs order.

[16] The motion judge assessed the appellant's partial indemnity costs in the amount of $38,652.81. We agree that there was no basis to award costs on a substantial indemnity scale. The respondents did not dispute that the fees incurred by the appellant in the action and for the preparation and hearing of the summary judgment motion was reasonable; indeed they were slightly less than the respondents' costs. We see no error in the motion judge's assessment of the amount of the appellant's partial indemnity costs.

Disposition

[17] Accordingly, we dismiss the appellant's appeal with respect to the issue of damages. We grant leave to appeal and allow the appellant's appeal with respect to costs. The appellant is entitled to her partial indemnity costs of her action and the motion for summary judgment in the amount of $38,652.81.

[18] The appellant is entitled to her partial indemnity costs of the appeal in the net amount of $3,500.

"Paul Rouleau J.A."

"L.B. Roberts J.A."

"Fairburn J.A."