SUPERIOR COURT OF JUSTICE

IN THE MATTER OF THE CONSTRUCTION LIEN ACT, R.S.O. 1990, C.c.30

Court File No. CV-11-424621

Between: 2183164 Ontario Inc. carrying on business as Kandel Constructions—

Plaintiff

And: Shirin Gillani, Sadrudin Gillani and Royal Bank of Canada –

Defendants

And Between: Shirin Gillani and Sadrudin Gillani ---

Plaintiffs-by-Counterclaim

And: 2183164 Ontario Inc. carrying on business as Kandel Constructions, Magdy Kandel and Iyad Ghunaim

Defendants-by-Counterclaim

BEFORE: MASTER SANDLER ON WRITTEN SUBMISSIONS

COUNSEL: for the moving parties, the defendants (except Royal Bank of Canada) and plaintiffs-by- counterclaim: F.M. Soccol

for the responding parties, the plaintiff and defendants-by-counterclaim: W. Ribeiro

REASONS FOR DECISION RE COSTS

[ 1 ] In my Reasons dated June 12, 2012, disposing of the main motion, I dealt partly with the costs issues at para’s [86]-[88] of those Reasons.

[ 2 ] At para. [86] therein, I fixed the costs of the two abortive cross-examinations of Iyad Ghunaim (“IG”) at $4615.19 and ordered that those costs be paid by the plaintiff forthwith.

[ 3 ] As to the costs of the motion itself, I ruled that the plaintiff is also to pay the costs of the motion to the defendants forthwith, once those costs have been quantified, on a partial indemnity basis. I required submissions as to quantum to be in writing and set deadlines. The defendants’ costs submissions (substantially, but not exactly, in accordance with Form 57B) were served and filed on June 21. The plaintiff’s submissions were due within 10 days after being served with the defendants’ submissions. The ten-day time period expired on Tuesday, July 3. It is now Tuesday, July 10 and no submissions have been received so I will now proceed to fix the quantum of costs using only the defendants’ submissions.

[ 4 ] The defendants’ submissions include a Bill of Costs. The Bill claims $10,277 in “Legal Fees” based on an hourly rate of $320 for Mr. Soccol, $160 per hour for Cheryl Wong, an associate of Mr. Soccol, and $75 per hour for a law clerk. There was a total of about 34 hours of lawyer time. This amount of $10,277 is said to be on a “Substantial Indemnity Basis” or, as I take it, what Mr. Soccol will be charging his clients.

[ 5 ] The disbursements claimed total $435.50. The total costs claim is $10,712.50. HST is $1392.63. The “Grand Total” ( as it is called) is $12,105.13.

[ 6 ] The amount claimed on a “Partial Indemnity Basis” is reduced to the amount of $8500. This is the amount the defendants seek, together with the above-noted costs amount, previously fixed in my earlier Reasons, of $4615.19, for a total of $13,115.19.

[ 7 ] The defendants’ submissions show that the defendants made an offer to settle the motion on April 20, 2012, five days before the motion was to be argued. This offer proposed a consent court order setting a date and time for the cross-examination of IG on the plaintiff’s construction lien claim and, on default, the lien was to be “automatically discharged”, plus an order for the costs of the abortive cross-examinations fixed at $2500 to be paid to the defendants forthwith, plus an order for security for costs in the total amount of $30,000 “payable in two stages”. There was no counter-offer.

[ 8 ] The defendants did much better on the motion, as noted in my Reasons of June 12, 2012, so the plaintiff would have been much better off if it had accepted the offer although it would have had to pay $2500 and post $15,000 as security for costs, immediately.

[ 9 ] As to the complexity of the motion, it was quite complex as detailed in my said Reasons and there was a large volume of materials, all as described in para.’s [1] and [17].

[ 10 ] The motion raised, inter alia, the important question as to whether or not the plaintiff’s lien should be ordered discharged under s. 47 of the Act. The lien was having a harmful impact on the lives of the defendants as detailed in para. [20] of my Reasons. The lien claimed an amount of $96,937.78, a significant amount for both this particular plaintiff and these particular defendants.

[ 11 ] The relevant statutory provision is s.86(1) of the Construction Lien Act. It covers costs for “motions” as well as other proceedings. The costs order is to be “in the discretion of the court”. The relevant caselaw indicates that the factors listed in Rule 57.01(1) are also to be considered and I have done so, as above-noted. In particular, I have taken into account the factors set out in Rule 57.01(1) (0.a), (0.b), (a), (c), (d), (e) and (i).

[ 12 ] There are a number of reported cases dealing with the costs of successful and unsuccessful motions under s. 47 of the Act and I have considered them. The most helpful are Bot Construction (Ontario) Ltd. v. Dumoulin (2006), 6 C.L.R. (4 th ) 106 (Ont. S.C.J.) ; G. Wright & Associates v. Vance Investments Inc. (2003), 2003 CarswellOnt 3964 (Ont. S.C.J.) ; and Fletcher Construction Co. Ltd. v. 1707583 Ontario Inc. et. al. (2009), 92 C.L.R. (3 rd ) 128 (Ont. Master) .

[ 13 ] In my view, a fair and reasonable figure for costs of this motion including the preparation of all the material, the review of the opposing material, the preparation for the motion, the attendance on the motion, the review of the Reasons, and the preparation of the costs submissions, and the taking out of the formal order, is $6000, plus disbursements of $365.50 for couriers, process servers, searches, and photocopying, but excluding parking ($20) and mileage to and from the courthouse ($50), plus HST of $827.50, for a total of $7193. The total costs payable by the plaintiff to the defendants is therefore $4615.19 plus $7193=$11,808.19, payable forthwith and the formal order shall so provide. This $6000 for fees works out to be about $175 per hour for about 34 hours.

[ 14 ] The defendants also ask that I order all the above-noted costs to be paid, jointly and severally, by the plaintiff corporation and, as well, by both Magdy Kandel (MK) and IG personally. Their involvement in the construction project and in these proceedings is described in my said Reasons. The defendants rely on s. 35 of the Act which their counsel notes is pleaded in their statement of defence and counterclaim, and on s. 131(1) of the courts of Justice Act.

[ 15 ] As to s. 35, there has been no judicial finding that this plaintiff’s lien is for a grossly exaggerated amount or that this plaintiff “does not have a lien” so s. 35 does not apply at this early stage of this proceeding. The defendants’ material suggests this but their material is contested by the plaintiff and only at a trial, where all the evidence is available and can be tested and reviewed, can this determination be made. And, as a result of my ruling on the main motion, such a trial and possible determination will only take place, if at all, in a new action. This current construction lien action has come to an end.

[ 16 ] As to s. 131(1), Mr. Soccol has failed to put forward the relevant cases considering s. 131(1) on the issue of ordering a non-party to pay costs. There are a number of cases on this issue but the most authoritative is Television Real Estate Limited v. Rogers Cable T.V. Limited (1997), 34 O.R. (3rd) 291 (C.A.). This was an appeal against an award of costs against non-parties. This case holds that in order for a court to award costs against a non-party, it is incumbent on the party seeking such an order, here, the Gillanis, to show that MK and IG ( or at least one of them, if only one were to be held liable to pay costs) had status to bring this lien action against the Gillanis; and further, that 2183164 Ontario Inc. was not the “true plaintiff”; and further, that 2183164 was a “man of straw” put forward to protect MK and/or IG from personal liability for costs. Again, the defendants’ material suggests this but their assertions are contested and again, a trial will be necessary for, inter alia, this determination which will the law only take place, if at all, in a new action. So since the defendants have not, and cannot, at this stage, in this action, show what the law requires, I cannot order MK and/or IG personally to pay any of the costs above-fixed and ordered to be paid by the plaintiff corporation.

[ 17 ] I now require Mr. Soccol to prepare a draft order as outlined in para. [89] of my June 12 Reasons, including the provisions as to costs above-noted, and send the draft order to Mr. Ribeiro for approval as to form. I expect Mr. Ribeiro to properly respond as the procedural law requires him to do. The original order and the approved draft (not fax copies or e-mail copies) shall be left with my ATC, Al Noronha, for my signature and he will contact Mr. Soccol when the order is ready for pick-up.

Released: July 10, 2012 _____________________________

Master D.H. Sandler