SUPERIOR COURT OF JUSTICE - ONTARIO
Court File No.: CV-14-2593-00
Date: 2014 11 28
RE: 2391286 ONTARIO INC. v. DI PAOLA MIDLAND HOLDINGS LTD. and ROYAL LEPAGE YOUR COMMUNITY REALTY, BROKERAGE
Before: EMERY J.
Counsel:
Robert A. Filkin, for the Applicant
Patrick Di Monte, for the Respondent, Di Paola Midland Holdings Ltd.
No one appeared for Royal Lepage Your Community Realty, Brokerage
COSTS ENDORSEMENT
[1] The applicant was the successful party on its application, having recovered judgment for the full amount of its claim plus prejudgment interest. The applicant now seeks its costs of the application in the amount of $6,425.95 on a “full recovery” basis. The applicant seeks its costs at that level because of a letter written by its counsel dated June 30, 2014 asking for the return of the deposit in full, without payment of interest or costs. The applicant takes the position that this was a fair offer and one that should have been accepted by the respondents without having to resort to litigation.
[2] The respondents oppose this claim for costs. In the submissions made by counsel, the respondents submit there should be no costs ordered for the following reasons:
the case left the outcome doubtful and therefore litigation was reasonable;
the respondents made three options available for the applicant to settle the claim for return of the deposit;
making the claim in the form of the application was an unorthodox manner of proceeding and the application could have been turned into an action;
the affidavit setting out the efforts of the applicant to obtain financing was served just before the hearing date and would have provoked an adjournment but for the respondents’ willingness to have the issue determined expeditiously; and
costs should not be awarded on a substantial indemnity basis as this level of costs is reserved for cases where the unsuccessful party has been unreasonable, obstructive or where the case lacked merit.
[3] The modern rules for costs are designed with three purposes in mind: to indemnify successful litigants of the cost of litigation, to encourage settlement, and to discourage and sanction inappropriate behavior.
[4] Where an offer to settle is served in a civil proceeding at least 7 days before the commencement of the hearing, and is not accepted by the responding party, the party making the offer is entitled to costs on a substantial indemnity basis under Rule 49 from the date the offer is served if that party obtains judgment that is as favorable or more favorable than the terms of the offer to settle. The applicant in this case relies upon the letter from its counsel to the respondents counsel dated June 30, 2014 as an offer to settle under Rule 49.
[5] Rule 49.01 states that a party to a proceeding may serve any other party with an offer to settle any one or more of the claims in the proceeding. In Rule 1.03, the term proceeding is defined as meaning an action or an application. Therefore, an offer to settle may be effective if served by one party on another in an application, provided that all other requirements for making an offer to settle are met.
[6] The respondents do not contest that fact that the applicant was the successful party on the application. Although they resist an award of costs, they do not argue against the presumption that costs generally follow the event.
[7] Here, the applicant was completely successful in the application, and the judgment obtained was more favourable than the offer to settle set out in the letter dated June 30, 2014 because interest was awarded in addition to the order for the respondents to return the deposit in full. Therefore, subject to consideration of the grounds submitted by counsel for the respondents to oppose the request for costs at all, the applicant is entitled to the costs of the application, and those costs should be awarded on a substantial indemnity basis. I address those grounds in the following manner:
My reasons for decision on the application should leave no room for the argument that the outcome of the case was doubtful. I found there to be no material facts in dispute and the application was decided on the language of the agreement of purchase and sale and the documents provided in evidence with respect to whether the condition had been waived or not. Therefore, the applicant should not have been put to the time and expense of litigating to recover its deposit.
Each of the three options offered by the respondents would have required the applicant to receive less than the full amount of the deposit, or would have required the applicant to make a claim in small claims court for the balance. This is not a sufficient ground to oppose costs.
The application was not only an acceptable method of proceeding to make this claim, it is the standard process to ask the court to determine the rights of parties that depend on the interpretation of an agreement between the parties or to pursue relief where there are no material facts in dispute: Rule 14.05 (3) (d) or (h).
The strategy of responding parties on the hearing of an application and a comparison of what they did and what they could have done in the proceeding is of no consequence on an analysis for awarding costs. What matters is what was at issue at the time of the hearing and the ultimate disposition of the matter by the court.
The submissions of the respondents about the type of cases reserved for substantial indemnity costs are directed to situations where there has been no offer to settle served by the opposing party. This submission ignores the fact that the applicant served an offer to settle in the form of the letter dated June 30, 2014.
[8] I find that the submissions made on behalf of the respondents do not persuade me against awarding costs to the applicants. The applicants are entitled to their costs as a successful party. I also find that the letter dated June 30, 2014 is an offer to settle within the meaning of Rule 49.01. As the respondents did not accept that offer, the cost consequences of Rule 49.10 are engaged. All that remains is to determine the quantum of costs to award on a substantial indemnity basis to the applicant.
[9] The applicant has provided me with a Bill of Costs that shows the time incurred by three lawyers and one law clerk on this application, as well as the disbursements incurred on behalf of their client. Mr. Filkin’s time represents the lion’s share of the time of 9.6 hours at an hourly rate of $400 an hour. Another lawyer is shown as having expended 3.3 hours of time at $300 an hour and another lawyer having expended one hour at $225 an hour. The law clerk is shown as having expended one hour at $100 an hour, for total fees with HST amounting to $5,825.15.
[10] I find that those legal fees outlined in the Bill of Costs, together with the total disbursements with HST in the amount $600.79, is fair and reasonable for bringing an application to adjudicate a commercial claim of this nature. This amount is no greater than what the respondents should consider fair and reasonable given the circumstances and what they as the unsuccessful parties could reasonably have expected to pay. This finding is consistent with the principles set out in Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), [2004] 71 O.R. (3d) 291 (Ont. C.A.), and Moon v. Sher, 2004 39005 (ON CA), [2004] O.J. No. 4651, (Ont. C.A.).
[11] That said, Rule 49.10 provides for the payment of costs on a substantial indemnity basis, not for full recovery of a party’s legal fees. I therefore reduce the fees with HST to $5,000.00 for a total costs awarded of $5,600.79 inclusive of disbursements.
[12] I also note that Mr. Di Monte attached the costs decision of Justice Mulligan in Battistella v. Rossi, 2010 ONSC 6729 on which he had appeared as counsel. In Battistella, the court awarded costs in the amount of $5,000 inclusive of disbursements and tax to the successful party who had resisted a motion for summary judgment. I make mention of this decision as it was most helpful to show what the respondents could have reasonably expected to pay to have their day in court.
Emery J.
DATE: November 28, 2014
2014 ONSC 6924
COURT FILE NO.: CV-14-2593-00
DATE: 2014 11 28
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 2391286 ONTARIO INC. v. DI PAOLA MIDLAND HOLDINGS LTD. and ROYAL LEPAGE YOUR COMMUNITY REALTY, BROKERAGE
COUNSEL: Robert A. Filkin, for the Applicant
Patrick Di Monte, for the Respondent, Di Paola Midland Holdings Ltd.
No one appearing for Royal Lepage Your Community Realty, Brokerage
COSTS ENDORSEMENT
EMERY J.
DATE: November 28, 2014