SUPERIOR COURT OF JUSTICE - ONTARIO

Court File No.: CV-09-390497

Dates Heard: December 1 and 2, 2011; April 30, June 7, August 7 and September 3, 2013

RE: 1309395 Ontario Ltd. v. Pronesti Investments Inc., Vincenzo Pronesti, Francesca Pronesti and Dominic Pronesti

Before: MASTER R.A. MUIR

Counsel: Sidney Klotz for the plaintiff
Paul Feldman and Eric Turkienicz for defendants

ENDORSEMENT - COSTS

[1] This costs endorsement is made in connection with a reference hearing held over a period of six days between December 2011 and September 2013. On December 9, 2013 I released my reasons for decision.

[2] The scope of the reference was limited to an accounting with respect to the amounts owing on various mortgages and a determination of whether there were any acts of default by the mortgagor under the terms of the mortgages.

[3] I found that all mortgages were in default as of the date the notices of sale were issued. I also found that the plaintiff had overpaid the amounts owing on four of the mortgages. The plaintiff had underpaid on one of the mortgages. Two of the mortgages remain outstanding and in default. The plaintiff owes the defendants $628,300.00 plus interest on those outstanding mortgages. The net credit to the plaintiff on the overpayments is $28,803.28 plus interest.

[4] The court’s general authority to award costs as between parties to litigation is found in section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, which provides that costs are in the discretion of the court. Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) sets out a non-exhaustive list of factors the court is to consider when awarding costs. Rule 1.04(1.1) is also applicable. It requires the court in applying the Rules to make orders that are proportionate to the importance and complexity of the issues and to the amount involved in the proceeding.

[5] When dealing with costs, the overall objective for the court is to fix an amount that is fair and reasonable for the unsuccessful party who generally must pay the costs of the successful party. See Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. No. 4495 (C.A.) at paragraph 4 and Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634 (C.A.) at paragraph 26. In Clarington (Municipality) v. Blue Circle Canada Inc., 2009 ONCA 722 the Court of Appeal stated as follows at paragraph 52:

Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.

[6] These are the factors and principles I have considered and applied in determining the costs issues on this reference.

[7] The defendants were entirely successful with respect to the issue of default. It is also my view that the defendants were largely successful on the accounting issues. The overpayments made by the plaintiffs are relatively minor and relate almost entirely to the lack of evidence from the defendants with respect to legal fees. It is also important to note that the plaintiff owes the defendants a substantial sum on the two mortgages which remain outstanding and in default. For the most part, the court accepted the defendants’ version of the accounting.

[8] In addition, it is my view that this reference hearing was unduly lengthened by a largely irrelevant cross-examination of Vincenzo Pronesti. The plaintiff insisted on pursuing issues already conceded by the defendants. The plaintiff’s overall approach to this reference hearing appeared to lack focus and was somewhat disorganized.

[9] However, the defendants must also share some of the responsibility for the extended length of the reference. In particular, Mr. Pronesti was generally unfamiliar with many of the issues on which he purported to give evidence and this had the effect of lengthening the process, at least to some extent.

[10] I have reviewed the costs outlines submitted by both sides. It is my view that the total amount of partial indemnity costs requested by the defendants of $27,311.52 is generally fair and reasonable for a six day hearing and having regard to the complexity of this matter and the amounts in issue. However, a deduction should be made to account for the defendants’ lack of complete success.

[11] I have therefore concluded that it is fair and reasonable for the plaintiff to pay the defendants’ costs of this reference hearing fixed in the amount of $18,000.00, inclusive of HST and disbursements.

[12] Counsel for the defendants shall prepare a formal report for my approval and signature within 15 days.

Master R.A. Muir

DATE: February 11, 2014