Court File and Parties

COURT FILE NO.: 6398/18 DATE: 2020 05 26 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: First National Financial Corporation, Plaintiff AND: John Doe 1 and John Doe 2, Defendants Donald Bodkin, Moving Party

BEFORE: Coats J.

COUNSEL: James Riewald, Counsel for the Plaintiff Ranjan Das, Counsel for the Defendants Donald Bodkin, Self-Represented

Costs Endorsement

(THE PLEADINGS AND ALL DOCUMENTS IN THIS ACTION ARE SEALED AND ALL COURT PROCEEDINGS ARE HELD IN CAMERA PURSUANT TO THE ORDER OF MILLER J., DATED SEPTEMBER 19, 2018)

[1] At paragraph 79 of my February 19, 2020, Endorsement I provided for written submissions on costs. I have since received and reviewed the following:

1. Costs Submissions of First National Financial Corporation (“First National”);
2. Written Costs Submissions of the Respondents, John Doe 1 and John Doe 2 (the “Defendants”);
3. Costs Submissions of Donald Bodkin (“Mr. Bodkin”); and
4. Reply Costs Submissions of John Doe 1 and John Doe 2.

[2] I have also received written confirmation that First National will not be filing Reply Costs Submissions.

[3] The history of this matter is set out in my Endorsement of February 19, 2020. Mr. Bodkin’s Motion, brought in the mortgage enforcement action between First National and the Defendants, was dismissed.

1. Summary of First National’s Position:

[4] First National was wholly successful in responding to the motion of Mr. Bodkin and should receive costs in the amount of $12,522.43. This amount represents costs on a full indemnity basis, HST and disbursements.

[5] First National submits that it is entitled to all of its legal fees pursuant to paragraph 36 of the Standard Charge Terms and that deference ought to be given to the understanding the parties had in relation to costs (Royal Bank v. Edna Granite & Marble Inc., 2017 ONSC 3377 at para. 17). First National also relies on the principle that a mortgagee is not to be out of pocket by reason of a default under a mortgage (Royal Bank v. Dees, 1980 CarswellOnt 448 (Ont. H.C.), [1980] O.J. No. 1315, at para. 9).

[6] First National’s position is that this proceeding could have been a straight forward mortgage enforcement action. It has been complicated by Mr. Bodkin’s repeated motions for stays of enforcement. Mr. Bodkin ought to bear the legal costs First National has incurred as a result of his interference in First National’s mortgage enforcement proceeding. First National ought not to be out of pocket by reason of Mr. Bodkin’s motion.

[7] With respect to the amount claimed for costs, First National submits that the work on this matter was undertaken by a lawyer with an appropriate level of expertise and the rates charged were reasonable. It is First National’s position that the time expended and costs incurred are proportional to the amount at stake and the complexity of the issues raised. Further, the costs are in line with Mr. Bodkin’s expectations.

[8] First National acknowledges that Mr. Bodkin is not a party to the Mortgage Agreement. First National’s costs and legal fees will be added to the mortgage pursuant to its agreement with the mortgagors. First National submits that Mr. Bodkin ought to be liable for same.

2. Summary of the Defendants’ Position

[9] The Defendants seek their costs on a substantial indemnity scale in the amount of $14,058.44 inclusive of fees, HST and disbursements.

[10] The Defendants submit that the court has broad discretion in deciding whether to award costs, to whom to award costs and in determining the amount of costs awarded. Rule 57.01 of the Rules of Civil Procedure sets out the factors a court may consider when deciding costs: R.R.O. 1990, Reg. 194. Even with these factors, the court’s authority under rule 57.01 (1) remains discretionary. Consideration of experience, rates charged, and hours spent is appropriate; however, this is subject to the overriding principle of reasonableness in the context of a particular case. (M & M. Homes Inc. v. 2088556 Ontario Inc., 2019 ONSC 6400 at paras. 8 to 12).

[11] The Defendants’ specifically refer to paras 14 and 15 of M & M Homes Inc. in regard to the purposes of the modern costs rules as follows:

[14] Modern cost rules are designed to foster three fundamental purposes: (1) to indemnify successful litigants for the cost of litigation; (2) to encourage settlement; and (3) to discourage and sanction inappropriate behaviour by litigants: Fong v. Chan, (1999), 46 O.R. (3d) 330, at para. 22. In 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, [2010] O.J. No. 5692, at para. 10, Perrell, J. identified two further purposes: (1) to facilitate access to justice, including access for impecunious litigants; and (2) to discourage frivolous claims and defences.

[15] In this era where judges, lawyers and litigants are being urged to use court resources more efficiently, costs orders are routinely being used to shape how litigants approach their use of the justice system. The spectre of a cost award being imposed for taking unnecessary steps or unreasonable positions is intended to encourage litigants to pursue only legally sound proceedings, defences and interlocutory steps. The shift in cost awards away from the sole or primary purpose of indemnification was explained in 1465778 Ontario Inc., at para. 26:

Traditionally the purpose of an award of costs within our “loser pay” system was to partially or, in some limited circumstances, wholly indemnify the winning party for the legal costs it incurred. However, costs have more recently come to be recognized as an important tool in the hands of the court to influence the way the parties conduct themselves and to prevent abuse of the court’s process. Specifically, the three other recognized purposes of costs awards are to encourage settlement, to deter frivolous actions and defences, and to discourage unnecessary steps that unduly prolong the litigation. See Fellowes, McNeil v. Kansa General International Insurance Co. (1997), 37 O.R. (3d) 464 (Ont. Gen. Div.), at 467 and 472.

[12] The Defendants are seeking costs on an elevated scale, (substantial indemnity at 90% of actual), for the following reasons:

a. Mr. Bodkin did not serve the Defendants’ counsel with the motion when it was first heard on November 20, 2019. Mr. Bodkin failed to provide a Book of Authorities to Defendants’ counsel except on the day of the hearing on January 8, 2020. b. This resulted in prejudice to the Defendants in that the notice to vacate was temporarily stayed, which has caused the Defendants economic harm. The Defendants also incurred elevated legal fees in order for counsel to prepare for separate hearing dates due to adjournments necessitated by failure of Mr. Bodkin to provide material. c. Mr. Bodkin has claimed an interest in the property, but he has not moved his application forward. If he had, this motion would likely have not been necessary. Mr. Bodkin’s delay has resulted in costly litigation. d. Mr. Bodkin failed to provide any authorities for the propositions he put forward.

[13] Subrule 57.01(4)(c) specifically provides that nothing in rule 57.01 or rules 57.02 to 57.07 affects the authority of the court under s. 131 of the Courts of Justice Act to award all or part of the costs on a substantial indemnity basis. “Unsuccessful litigants should expect to pay similar amounts by way of costs across similar pieces of litigation involving similar conduct” (M & M Homes Inc., para. 10). The Ontario Court of Appeal in Net Connect Installation Inc. v. Mobile Zone Inc., 2017 ONCA 766, at para. 8 provided guidance on full indemnity costs and substantial indemnity costs as follows:

[8] While we would not interfere with the costs award made by the motion judge, we would express a cautionary note on this issue. In this case, the motion judge awarded costs on a full indemnity basis. There is a significant and important distinction between full indemnity costs and substantial indemnity costs. An award of costs on an elevated scale is justified in only very narrow circumstances – where an offer to settle is engaged or where the losing party has engaged in behaviour worthy of sanction: Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.) at para. 28. Substantial indemnity costs is the elevated scale of costs normally resorted to when the court wishes to express its disapproval of the conduct of a party to the litigation. It follows that conduct worthy of sanction would have to be especially egregious to justify the highest scale of full indemnity costs.

[14] In this case, it is the Defendants’ position that awarding substantial indemnity costs would express the Court’s disapproval of Mr. Bodkin’s conduct in the litigation. The Defendants’ submit that Mr. Bodkin’s motion significantly interfered with the Defendants’ property rights, was wholly devoid of merit and could have been avoided if Mr. Bodkin had moved his application ahead. The Defendants’ position is that this is compounded by the fact that Mr. Bodkin is a lawyer and experienced litigant.

3. Summary of Mr. Bodkin’s Position:

[15] Mr. Bodkin acknowledges that successful parties, absent misconduct, are generally entitled to their costs; however, the court has broad discretion in considering costs, including the discretion not to award costs.

[16] Mr. Bodkin argues that one basis for not awarding costs is the novelty of the case. Mr. Bodkin relies on para. 35 of Fischer v. I.G. Investment Management Ltd., 2014 ONSC 6260 in support of this:

[35] Thus, the novelty of the facts and the uncertainty of the law made it reasonable for both the Plaintiffs and the Defendants to have their day in court to debate the preferable procedure criterion. Underlying the principle that it may be appropriate to order no costs in novel cases is the notion that where the law is uncertain, it is appropriate to attenuate the litigation chill associated with possible adverse costs consequences. In these circumstances, in my opinion, it is appropriate that each party should bear their own costs regardless of the outcome.

[17] Mr. Bodkin’s position is that this motion was novel. In this mortgage enforcement action First National is seeking to enforce its mortgage against the Defendants. It is Mr. Bodkin’s allegation that the Defendants precipitated the default of First National’s mortgage which is secured by a property in Mississauga, Ontario. The property is occupied by Mr. Bodkin. Mr. Bodkin has occupied the property for approximately 14 years. The nature and terms of the agreement/arrangement between Mr. Bodkin and the Defendants is in dispute. This is the subject of a separate application. In this action before me, First National seeks monetary damages from the Defendants in the amount of $112,109.39. The Defendants are in the witness protection program. They did not defend First National’s action.

[18] Mr. Bodkin acknowledges that First National ought to be paid the amount actually outstanding on its own mortgage. As set out above, he has filed an application in order for the issues in dispute between he and the Defendants to be determined. In order to remain in possession of the property until the issues between he and the Defendants are determined and it is determined whether or not Mr. Bodkin has a legal interest in the property, Mr. Bodkin tendered payment of the estimated amount outstanding on the Defendants’ mortgage to First National. First National refused to accept the payment. The Defendants refused to authorize First National to accept the payment from Mr. Bodkin. First National returned the mortgage payout tendered by Mr. Bodkin to Mr. Bodkin. Mr. Bodkin submits this is a novel situation. He also argues that it is a novel situation for the mortgagor, in default, to orchestrate a power of sale proceeding against itself.

[19] Mr. Bodkin’s position is that there were not only novel facts in the case, as set out above, there were also novel issues, namely whether the Court has the authority to:

a. compel production of a mortgage discharge statement to a Third Party; and b. compel a mortgagee to accept a mortgage payout from a Third Party and credit such payment to the mortgage in default.

[20] Mr. Bodkin argues that in situations such as this, where both the facts and the legal issues are novel, the Court is enabled to exercise its discretion to order no costs.

[21] In the alternative, Mr. Bodkin submits that the Court’s role in assessing costs is not necessarily to reimburse a litigant for every dollar spent on legal fees. Mr. Bodkin refers to para. 26 of Boucher et al v. Public Accountants Council for the Province of Ontario, 71 O.R. (3d) 291:

[26] It is important to bear in mind that rule 57.01(3), which established the costs grid, provides:

57.01(3) When the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs.

Subrule (1) lists a broad range of factors that the court may consider in exercising its discretion to award costs under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The express language of rule 57.01(3) makes it clear that the fixing of costs is not simply a mechanical exercise. In particular, the rule makes clear that the fixing of costs does not begin and end with a calculation of hours times rates. The introduction of a costs grid was not meant to produce that result, but rather to signal that this is one factor in the assessment process, together with the other factors in rule 57.01. Overall, as this court has said, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.

[22] Mr. Bodkin also refers to para. 4 of Zesta Engineering Ltd. v. Cloutier, [2002] O.J. No. 4495, which provides as follows:

[4] As indicated in our reasons for decision, the appellant is entitled to its costs of the proceedings in this court. Having considered the submissions of the parties, we hereby fix those costs on a partial indemnity basis at $36,000, all inclusive. Our reasons can be briefly stated. We have considered the bills of costs submitted by the appellant. However, we make no specific finding with respect to the amount of time spent or the rates charged by counsel. In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant. We note however that we have discounted the costs related to the investigation of the new evidence as it is our view that those costs should not form part of the costs award for the proceedings in this court. We note further that the costs are awarded in respect of the motion to introduce fresh evidence only. We do not find it appropriate to make an award of costs in respect of the appeal since it was not heard, or disposed of, on the merits. Nonetheless, in arriving at a reasonable quantum, we have taken into consideration the fact that the motion to introduce fresh evidence could not have been brought by the appellant independently of its appeal.

[23] Based on these cases, Mr. Bodkin submits that it is not appropriate to simply take the numbers of hours spent by counsel and multiply those hours by the determined hourly rate.

[24] Additionally, Mr. Bodkin’s position is that the Court should consider the factors in rule 57.01 (1) when exercising discretion to determine costs. Mr. Bodkin particularly relies on rule 57.01(1) (c), (e) and (f).

[25] In regard to rule 57.01 (1) (c), it is Mr. Bodkin’s position that the proceeding was not complex. It was essentially a mortgage enforcement action in which Mr. Bodkin sought to pay First National the amount First National was owed as a result of the default in the mortgage precipitated by the Defendants. First National significantly increased the complexity of the proceeding by refusing to accept the payment tendered by Mr. Bodkin and by refusing to have the payment paid in to court.

[26] With respect to rule 57.01(e), Mr. Bodkin submits that these proceedings were precipitated by the default of the Defendants and unnecessarily lengthened by the “coordinated and concerted actions” of First National and the Defendants. The motion would not have been necessary if First National and the Defendants had agreed to have the mortgage payment tendered by Mr. Bodkin paid into court, to the credit of First National, pending the adjudication of Mr. Bodkin’s application. Further, First National’s objective in the action evolved from seeking recovery of monetary damages to obtaining a Writ of Possession in order for them to sell the Property.

[27] Mr. Bodkin also relies on rule 57.01(1)(f) based on the same considerations outlined above under rule 57.01(1)(e).

4. Summary of Defendants’ Position in Reply

[28] First National chose not to file a reply to Mr. Bodkin’s submissions. I therefore only summarize the Reply position of the Defendants.

[29] The Defendants’ position is that Mr. Bodkin in his costs submission has attempted to reargue the merits of his motion. Further, Mr. Bodkin has failed to put forward a costs outline making it difficult to determine Mr. Bodkin’s reasonable expectations with respect to costs and making his challenge of the Defendants’ costs “no more than an attack in the air.”

[30] The Defendants’ submit that the issues on the motion were not novel. The issue of whether the court has the jurisdiction to order a mortgagee to provide a discharge statement to a third party with no established interest in the property was canvassed in detail in Royal Bank of Canada v. Trang, 2016 SCC 50, and distinguished by me on this motion. The issue of whether the court has jurisdiction to compel a mortgagee to take payment in full of its mortgage from a third party with no established interest in the property and no redemption rights is addressed by the Mortgages Act, the relevant sections of which the court considered. Mr. Bodkin provided no authority to rebut clear law on persons entitled to make such payments.

[31] Further, the Defendants’ argue that this motion, put in the context of the main action, was simply a third stay motion, similar to two others brought by Mr. Bodkin. The Defendants claim that this is a third attempt by Mr. Bodkin to delay the determination of his application and whether he has an equitable interest in the Property.

[32] In specific reference to Mr. Bodkin’s written submissions, the Defendants’ reply as follows:

a. The Defendants are seeking costs on a substantial indemnity basis and do not seek actual costs; b. Mr. Bodkin admits in paragraph 22 of his written submissions that the motion was complex with the meaning of rule 57.01; and c. The Court ruled on February 19, 2020, that First National never had an obligation to accept Mr. Bodkin’s attempt to pay out the mortgage.

[33] The Defendants’ lastly submit that due to COVID-19 and the consequent emergency measures, Mr. Bodkin cannot be evicted from the property. In the circumstances, the Defendants request that their Costs be paid forthwith (and not within 30 days as originally requested).

5. Analysis

[34] I do not accept the position of First National that it is entitled to rely on a provision in the Standard Charge Terms to seek full or substantial indemnity costs. Mr. Bodkin is not a mortgagor. He is in not a signatory to the mortgage. He does not have the rights of a mortgagor nor the obligations. First National has no mortgage relationship with Mr. Bodkin. In my view, First National is entitled to partial indemnity costs.

[35] The Defendants’ claim substantial indemnity costs. In my view, applying the guidance provided at para. 8 of Net Connect Installations Inc., Mr. Bodkin’s litigation conduct was not such that the court should express its disapproval by awarding substantial indemnity costs. Mr. Bodkin served the Defendants once directed to do so. The failure to provide the Book of Authorities resulted in an adjournment so Defendants’ counsel could properly prepare and the additional court attendance necessitated is addressed by awarding costs for this unproductive attendance. The Defendants are entitled to partial indemnity costs.

[36] I reject Mr. Bodkin’s submission that this was a novel case. It was a motion in a mortgage action. Mr. Bodkin raised claims not previously litigated. This does not make them novel. The resolution involved distinguishing current caselaw and reviewing the provisions of the Mortgages Act. In my view the law was not unclear or uncertain.

[37] As set out above, First National and the Defendants are each entitled to partial indemnity costs. I have considered the factors set out in rule 57.01 (1). The motion was of medium complexity. I can make no determination on the material before me that the Defendants “precipitated” the default in the mortgage, in the sense that they did so to deliberately affect Mr. Bodkin’s claim. Neither can I conclude that First National and the Defendants acted in a “coordinated and concerted” manner against Mr. Bodkin.

[38] In fixing the amount of costs I am mindful that this is not a mechanical exercise and that I must determine what is fair and reasonable for Mr. Bodkin to pay. I also must consider proportionality. Mr. Bodkin did not file a costs outline so I do not know his expectations by understanding his own costs.

[39] First National is claiming a total of $12,974.43. In the second page of the written submissions it is indicated that this is at a full indemnity rate. In the Costs Outline the column heading indicates Substantial Indemnity. Mr. Riewald attended court twice in November of 2019. Mr. Das did not attend court on these occasions. Mr. Bodkin shall pay to First National costs in the amount of $9,000, inclusive of fees, disbursements and HST. The hours expended are reasonable. The hourly rates are reasonable.

[40] The Defendants are claiming substantial indemnity costs. As set out above I am awarding partial indemnity costs. According to the Defendants’ Costs Outline, the partial indemnity costs are $9,420.07. Mr. Bodkin shall pay costs to the Defendants in the amount of $8,500. This is to reflect that Mr. Das had two less court attendances than Mr. Riewald. Otherwise the hours expended and the rates are reasonable.

[41] The costs shall be paid to First National and to the Defendants within 30 days of today. The Defendants have asked that costs be paid forthwith. In my view, 30 days is reasonable.

(Original signed by) Coats J. Date: May 26, 2020