COURT FILE NO.: CV-15-529454 DATE: 20160524 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ROYAL BANK OF CANADA, Plaintiff AND: MICHAEL A. LUNARDI, Defendant

BEFORE: R. F. Goldstein J.

HEARD: By Written Submissions

APPEARANCE: Miranda Spence, for RBC, Plaintiff Alistair Riswick, for Michael Lunardi, Defendant

Endorsement

Background

[1] On April 13 2016 I granted summary judgment to the Royal Bank: Royal Bank of Canada v. Lunardi, 2016 ONSC 2541. Briefly, Mr. Lunardi used funds provided by the Bank to buy his partner out of a business. He gave a personal guarantee of up to $1 million. He swore in his materials that he thought the guarantee was only up to $500,000.00. He raised a defence of non est factum. I rejected his defence.

[2] The Bank now seeks substantial indemnity costs of $6,299.75. In the alternative, the Bank seeks partial indemnity costs of $4,737.53. As the winning party, there is no doubt that the Bank is entitled to costs.

[3] There are two issues for me to deal with: first, whether the Court should award substantial indemnity costs; and second, the appropriate amount.

(a) Should substantial indemnity costs be awarded?

[4] The guarantee signed by Mr. Lunardi included a legal costs recovery term: the Bank is entitled to legal costs on a “solicitor and own client basis” for any costs incurred from any action instituted on the basis of the guarantee.

[5] The Bank’s argument is very simple: Mr. Lunardi accepted this term. He also accepted the term as part of a payout agreement when he paid down the loan. These clauses are very common. These clauses will be enforced by the courts unless the Bank has engaged in conduct that “militates against it”: Toronto Dominion Bank v. Berthin, [1994] O.J. No. 2590, 1994 CarswellOnt 4483 (Gen.Div.) per Winkler J. (as he then was) at para. 6.

[6] I agree that the Bank is entitled to its costs on a substantial indemnity basis. It was a contractual term. The contract was freely entered into. It is true that it is a standard term, and that the Bank enjoys immeasurably more relative bargaining power, but the clause is not unconscionable – and Mr. Lunardi’s counsel does not argue that it is. As well the Bank did not engage in questionable conduct that would disentitle it to substantial indemnity costs.

(b) What is the appropriate amount to be awarded?

[7] Mr. Lunardi’s counsel argues that the costs sought by the Bank are excessive. He argues that this was a simple matter where pleadings were exchanged but no discoveries took place. Mr. Lunardi paid the bank almost $24,000.00 in legal fees when he paid off part of the loan in February 2016. The motion was simple and, he says, the Bank should receive costs of no more than $4,000.00.

[8] With all due respect to Mr. Lunardi’s counsel, I cannot agree.

[9] The Court should take into account the reasonable expectations of the parties when determining an award of costs. That include an amount that a party can expect to pay. At the end of the hearing (and before I rendered judgment) I asked each party for a costs outline. Mr. Lunardi’s counsel submitted a costs outline for partial indemnity costs in the amount of $5,140.00. That is midway between the partial indemnity and substantial indemnity costs. I do not see how the amount sought by the bank is out of line when it is only $1,159.38 more than the partial indemnity costs identified by Mr. Lunardi’s counsel.

Disposition

[10] An amount of $6,299.75 is awarded to the Bank as substantial indemnity costs.

R. F. Goldstein J. Date: May 24, 2016