Court File and Parties

COURT FILE NO.: CV-21-4196-00 DATE: 2022 04 22 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

ALEXANDRA TANG, 2505006 ONTARIO CORPORATION and 2510516 ONTARIO LTD Plaintiffs

Counsel: Adam Jarvis, for the Plaintiffs

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XPERT CREDIT CONTROL SOLUTIONS INC. aka RIGHT CHOICE BUILDERS INC. aka XPERT CREDIT CONTROL and SAM JOSHI aka SANJIVE JOSHI, SHAN MANGAL, PYRAMID PROPERTIES MANAGEMENT & CONSTRUCTION INC., 2748236 ONTARIO INC., SHAYNA DALLAS aka SHAYNA NASCIMENTO aka SHAYNA KASH aka SHAYNA LAURENT aka SHAYNA LAUREN ELIZABETH DALLAS, 2697909 ONTARIO INC., BHALLA AJIT and GURPAL SINGH Defendants

Counsel: Karanpaul Randhawa for defendants; Shan Mangal, Pyramid Properties Management & Construction Inc.; 2748236 Ontario Inc.; and Gurpal Singh Samir Chhina for defendants Shayna Dallas, and 2697909 Ontario Inc.

Costs Endorsement

P.A. DALEY J.

[1] This decision follows my ruling granting the plaintiffs’ motion for leave to register a Certificate of Pending Litigation (“CPL”) in respect of property municipally known as 1073 Westmount Ave., Mississauga, ON – see: Tang v. Xpert Credit Control Submissions Inc., 2022 ONSC 1493.

[2] The plaintiffs, as the successful parties on the motion, seek their costs on a substantial indemnity basis from the defendants Shayna Dallas (“Dallas”) and 2697909 Ontario Inc. (“269”), being the only defendants who opposed the plaintiffs’ motion.

[3] The defendants dispute that the plaintiffs are entitled to costs of the motion and further submit that in the event any costs were to be awarded they should be ordered as costs in the cause.

[4] The plaintiffs’ claims against the defendants arise from their claim of an ownership interest in the subject property which is based on alleged unconscionability relating to a mortgage, which it asserts must be set aside. It is further asserted on behalf of the plaintiffs that valid title to the subject property was not conveyed to the defendants Dallas or 269 as bona fide purchasers of the property for value without notice. It is further asserted on behalf of the plaintiffs that the defendants Dallas and 269 conspired with others to defraud the plaintiffs.

[5] In succeeding on their motion, whereby the Plaintiffs were granted leave to register a CPL, the material issues at stake in the action as a whole were not determined, however I concluded that the plaintiffs had established a case for entitlement to a CPL in accordance with section 103 (1) of the Courts of Justice Act, R.S.O. 1990, c. C.43.

[6] It is urged on behalf of the defendants that as the issue of liability in the action remains to be determined at trial, costs of the CPL motion should be left as costs in the cause.

[7] The plaintiffs were entirely successful on their motion and as such they are presumptively entitled to costs. Furthermore, the costs incurred on the CPL motion relate to a distinct procedural step. The awarding of those costs should, in principle, follow the event, although the outcome of the motion will not be determinative of success in the action as a whole.

[8] The plaintiffs seek their costs on a substantial indemnity basis in the sum of $65,000 inclusive of disbursements and taxes, as set out in the plaintiffs’ costs outline which was delivered to counsel for the defendants on the return of the motion on February 23, 2022.

[9] The defendants state in their costs outline that the costs they have incurred on the CPL motion are $17,750.74 on a partial indemnity basis and $26,625.74 on an full indemnity basis.

[10] Having considered the defendants’ submissions as to the plaintiffs’ entitlement to costs, I have concluded that they have not displaced the plaintiffs’ presumptive entitlement to costs on the CPL motion. The issue as to the level of costs therefore remains to be determined.

[11] Apart from their principal submission that costs should simply be awarded in the cause, the defendants do not offer submissions in response to the plaintiffs’ request for substantial indemnity costs. The defendants do not take any issue with the quantum of the disbursements incurred by the plaintiffs relating to the motion.

[12] In considering the plaintiffs’ request for costs on a substantial indemnity basis, it is necessary to review the history of this litigation leading up to the hearing of the CPL motion.

[13] The informational record submitted on behalf of the plaintiffs shows, in summary, the following:

(a) At the request of counsel for the plaintiffs, on January 13, 2022, a virtual hearing took place in order to obtain an urgent motion date for the plaintiffs’ CPL motion, given that the defendants refused to cooperate in scheduling same. (b) The defendants initially refused to attend examinations on affidavits in accordance with a notice of examination, and to produce documents for inspection as referenced in a defendant’s affidavit filed in response to the plaintiffs’ motion. (c) Having undergone cross-examination on the defendants’ responding affidavit evidence, the defendants refused or failed to comply with undertakings given on that cross examination prior to the return of the CPL motion. (d) As a result of the defendants’ refusal to agree to refrain from any dealing with the property pending a CPL motion, the plaintiffs of necessity registered a caution on title and sought an urgent hearing date for their CPL motion.

[14] After having obtained the urgent motion date of February 23, 2022, at the virtual hearing of January 13, 2022, counsel for the plaintiffs delivered an offer to settle the CPL motion whereby the motion would proceed unopposed, without prejudice to a motion for summary judgment scheduled by the defendants for October 2022. The defendants did not accept this proposal prior to the hearing of the CPL motion. Subsequent to that proposal, having received no reply, the plaintiffs advised counsel for the defendants that they were seeking costs in the sum of $15,000 in addition to the terms previously outlined.

[15] Following receipt of the defendants responding affidavit on February 4, 2022, on the CPL motion, counsel for the plaintiffs delivered a Request to Inspect seeking to review specific documents set out in the defendants’ affidavit. This request was not responded to by the defendants and their counsel simply advised that such requests could be made during cross-examination of the deponent and undertakings may be given at that time with respect to the production of any documents.

[16] During the course of the cross-examinations on their affidavit material, the defendants undertook to deliver answers to undertakings by February 16, 2022. None of the undertakings given during the cross-examination were complied with prior to the hearing of the CPL motion.

[17] Following the service of the factum on behalf of the plaintiffs, on January 20, 2022, the plaintiffs served a Request to Admit upon counsel for the defendants. No Reply to the Request to Admit was ever delivered by the defendants.

[18] The plaintiffs delivered a second offer to settle of February 9, 2022, remained open for acceptance to and including the return date of the motion on February 23, 2022. The offer was in the following terms:

1. Shayna Dallas and 2697909 Ontario Inc. agree to pay the Plaintiffs $15,000 (FIFTEEN THOUSAND) in legal fees by delivering certified funds made payable to “DH Professional Corporation, in trust” by no later than February 23rd, 2022 on account of costs incurred on the motion for a Certificate of Pending Litigation;
2. Shayna Dallas agrees to provide responses to all undertakings given during her examination conducted February 9, 2022, within 30 days of accepting this Offer to Settle;
3. Shayna Dallas and 2697909 Ontario Inc. shall consent to an Order granting a Certificate of Pending Litigation on the property referred to as “Westmount”;
4. This Offer to Settle is without prejudice to the rights of Shayna Dallas and 2697909 Ontario Inc. to bring a motion returnable on Oct 20, 2022, to have the Certificate of Pending Litigation removed and/or have the motion determined on its merits at such time;
5. This Offer to Settle may only be accepted in writing and all previous offers to settle the motion for a Certificate of Pending Litigation are hereby revoked; and
6. This Offer to Settle expires 1 (one) minute after the commencement of the Motion currently scheduled for February 23, 2022.

[19] Rule 49.02 (2) of the Rules of Civil Procedure provides that the costs consequences of serving an offer to settle, apply equally to motions subject to necessary modifications.

[20] Counsel for the plaintiffs submits that they are entitled to the costs of the CPL motion on a substantial indemnity basis given that the outcome of their motion was better than the terms contained in their offer to settle and further on the basis that the defendants acted unreasonably in their conduct so far as the unnecessary steps taken in relation to the CPL motion are concerned.

[21] The conduct of the defendants so far as the CPL motion is concerned appeared to involve stonewalling and hardball strategies with respect to the scheduling of the motion and the conduct of the examinations prior to the motion hearing date. That alone, while unacceptable, does not rise to conduct that is so egregious as to warrant costs on a substantial indemnity basis.

[22] However, the plaintiffs’ offer to settle was clearly reasonable and constituted a compromise in that it called for the CPL being registered for a time-limited period up to and including the return of the defendants’ summary judgement motion on October 20, 2022, at which point in time the CPL could be removed by the court on that motion, depending upon the outcome of the defendants’ motion.

[23] Thus, I have concluded that the provisions of rule 49.10 of the Rules of Civil Procedure are engaged in this case and that the defendants failed to accept an offer, which was timely, and which constituted a compromise of the plaintiffs’ position in that it was left open to the defendants to seek to have the CPL vacated at the time of their summary judgement motion in October 2022. In my view this concession constituted a compromise which further enhance the value of the plaintiffs’ offer.

[24] Exceptions to the costs consequences of rule 49.10 of the Rules of Civil Procedure should be made only where, after giving proper weight to the policy of the general rule to be an incentive to settlement, and the importance of reasonable predictability in the even application of the rule, the interests of justice require a departure: Niagara Structural Steel (St. Catharines) Limited v. W. D. LaFlamme Ltd., 58 OR (2d) 773, 19 CPC (2d) 163 (C.A.).

[25] Having considered the informational and evidentiary record filed in respect of the issue of costs, I see no basis upon which to depart from the terms of rule 49.10 and I have therefore concluded that this is a proper case for an award of substantial indemnity costs payable by the defendants.

[26] As is apparent from review of the plaintiff’s detailed costs outline, a substantial amount of time was necessarily spent on the CPL motion by the plaintiffs’ counsel, with the assistance of an articling student. I have concluded that it was reasonable to have an articling student assist on the various tasks as outlined in the costs outline.

[27] Having regard to the factors set out in rule 57.01 of the Rules of Civil Procedure, I have concluded that, on a substantial indemnity basis, given the nature of the evidentiary record that was presented on behalf of the plaintiffs, the relatively complex transactional history giving rise to this action, the amounts at stake in the action and the importance of the issues to the plaintiffs, all of these considerations favour the plaintiffs as to the fixing of a proper costs amount payable by the defendants.

[28] Furthermore, the conduct of the defendants, as outlined above, tended to lengthen and complicate the process by which the CPL motion ultimately came before the court. Also, by their failure to answer undertakings and to produce documents, when requested further complicated and expanded the litigation unnecessarily.

[29] Apart from submitting that costs should simply be left as costs in the cause, the defendants made no submissions with respect to the quantum of costs as claimed and outlined in the plaintiffs’ costs outline. The costs outline submitted sought costs on an all-inclusive basis of $63,439.13, however those costs did not include costs necessarily incurred to register the caution on title, the preparation of the plaintiffs’ cost submissions, nor the costs incurred to file and register the CPL. Therefore, recognizing those additional costs I have concluded that an award of costs in the sum of $65,000, on a substantial indemnity basis, is fair and reasonable in the circumstances of this case and is an amount that is proportionate to the claims at stake in the action and represents a sum that the defendants should reasonably have expected to pay if unsuccessful on this motion.

[30] In the result, the defendants Dallas and 269, as jointly and severally liable, shall pay to the plaintiffs the costs of this motion in the sum of $65,000 within 30 days from the date of release of this endorsement.

DALEY J. DATE: April 22, 2022