ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-13-3955-00SR
DATE: 2015-07-29
B E T W E E N:
FATIMA FARZANA
Ralph Swaine, for the Plaintiff
Plaintiff
- and -
AHMAD ABDUL-HAMID
Self-represented
Defendant
HEARD: May 29, 2014,
at Brampton, Ontario
Price J.
Costs Endorsement
NATURE OF PROCEEDING
[1] Mr. Abdul-Hamid won the battle, when he was successful in his motion to set aside the default judgment in this action, but lost the war, when Ms. Farzana later moved successfully for summary judgment against him. The parties have been unable to agree on the costs of Mr. Abdul-Hamid’s motion, which consist of amounts he paid a lawyer to prepare the motion, and the time that he himself spent after his lawyer obtained an order removing himself as Mr. Abdul-Hamid’s solicitor of record. These reasons will address the costs of that motion.
BACKGROUND FACTS
The events that led to the action
[2] Ms. Farzana lent money to Mr. Abdul-Hamid for the purchase of a home. Both parties are Muslims, whose Sharia law prohibits them from paying or charging interest, but permits them, instead, to enter into a partnership called a “Mudarabah,” whereby one party gives money to the other for an enterprise in which they share the “profit”. In 2005, UM Financial Inc. (UM), for a fee, facilitated a loan from Ms. Farzana to Mr. Abdul-Hamid, secured by a second mortgage, in the amount of $24,600, in return for Mr. Abdul-Hamid’s agreement to pay a “profit” of $205 per month for five years, after which he would repay the entire principal amount of the loan.
[3] At the same time, Ms. Farzana entered into a “Lender Agreement” with UM, whereby she invested $100,862 with UM for mortgages, of which $24,600 comprised the loan to Mr. Abdul-Hamid, for a 10% return over a term of two years. Ms. Farzana entered into a further agreement with UM and Mr. Abdul-Hamid in 2007, whereby the second mortgage was renewed, and Mr. Abdul-Hamid’s monthly payments of $205 were continued for further two years.
[4] Mr. Abdul-Hamid continued making the $205 payments until 2011, when UM Advised that it was closing due to financial difficulties and went into receivership. Mr. Abdul-Hamid stopped making payments a short time later. On January 6, 2012 Justice Morawetz made an order in the receivership proceeding, requiring UM to turn over their mortgage files and the payments they had received to the second mortgagees, and left the mortgagors and mortgagees to deal with those loans.
[5] In October 2012, Ms. Farzana’s husband e-mailed Mr. Abdul-Hamid seeking to deal with his second mortgage to Ms. Farzana, but Mr. Abdul-Hamid replied that UM had “scammed” them both and that he understood that he had paid off his second mortgage. In March 2013, he asked for an accounting of the amount he still owed, but in the correspondence that ensued, the parties were unable to resolve that issue.
[6] On September 11, 2013, Ms. Farzana issued a Statement of Claim. No defence was filed, Mr. Abdul-Hamid was noted in default, and Ms. Farzana obtained a judgment against him and a Writ of Possession. On March 6, 2015, Ethan Rogers, a lawyer Mr. Abdul-Hamid retained, moved to set aside the default judgment and obtained an order staying enforcement of a writ of possession. Mr. Rogers later obtained an order removing himself as Mr. Abdul-Hamid’s solicitor of record, and on May 29, 2014, Mr. Abdul-Hamid represented himself at the hearing of the motion that Mr. Rogers had prepared, to set aside the default judgment.
[7] In a decision dated August 24, 2014, I set aside the default judgment on the ground that the evidence failed to establish that Mr. Abdul-Hamid had been properly served and on the ground that he was entitled, at least, to an accounting of the amounts he had paid and the amount that he still owed. I invited the parties, if they were unable to agree on costs, to make written submissions, with a Costs Outline, by September 30, 2014.
[8] Mr. Abdul-Hamid delivered a Statement of Defence on September 23, 2014, and Ms. Farzana later moved for summary judgment.
[9] Mr. Abdul-Hamid sent costs submissions to my judicial secretary on September 30, 2014. He did not submit a Costs Outline, as required, and apparently did not send a copy of his submissions to Ms. Farzana’s lawyer. Ms. Farzana did not deliver costs submissions.
[10] On January 1, 2015, I released preliminary reasons, noting that Mr. Abdul-Hamid had not addressed the factors relevant to a determination of costs, and had not served his submissions and a Costs Outline on Ms. Farzana. By that time, Ms. Farzana’s motion for summary judgment had been heard by Ricchetti J., who had reserved judgment on the motion. On January 22, 2015, while the parties were making their costs submissions on the motion to set aside default judgment, Justice Ricchetti released his decision in Ms. Farzana’s motion, granting summary judgment to her in the amount of $24,600 plus pre-judgment interest.
POSITIONS OF THE PARTIES
[11] Mr. Abdul-Hamid requests his costs of the motion in the amount of $11,141.68, including disbursements of $100 (photocopies). Ms. Farzana does not propose a precise disposition of the costs issue, but says that she incurred wasted costs of an initial attendance due to Mr. Rogers’ failure to confirm the motion, and that Mr. Abdul-Hamid’s own costs were increased unnecessarily by his counsel’s failure to confirm the initial hearing date and by Mr. Abdul-Hamid’s repetitive and sometimes self-contradictory arguments. She also notes that having regard to the ultimate outcome of the action, both parties would have been better off if the motion to set aside default judgment had never been brought.
ANALYSIS AND LAW
a) General principles
[12] Rule 57.01(1) contains a non-exhaustive checklist of factors that guide the Court in its reasoning when awarding costs in the exercise of its discretion under section 131 of the Courts of Justice Act. It provides, in part:
57.01(1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the Court may consider…
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(c) the complexity of the proceeding;
(d) the importance of the issue;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(i) any other matter relevant to the question of costs. [Emphasis added.]
[19] I will review the factors that I consider most relevant in arriving at the appropriate costs order in the present case.
a) Indemnity
[13] Indemnification of the successful party is the primary objective, but not the only one, of an order for costs. Other objectives include discouraging unreasonable conduct, encouraging settlement, and facilitating access to justice.
[14] Mr. Abdul-Hamid was successful in his motion to set aside the default judgment, and is entitled to his costs. The fact that Ms. Farzana ultimately obtained summary judgment for repayment of her loan should not obscure the fact that Mr. Abdul-Hamid was entitled to a proper accounting of the payments he made and the balance he owed.
b) Unreasonable conduct and the scale of costs
[15] In the normal course, costs are awarded to a successful party on a partial indemnity scale, but the court has the discretion to order them payable on a substantial indemnity scale in exceptional cases.[^1]
[16] Ms. Farzana asserts that Mr. Abdul-Hamid increased the time required for the motion, by failing to confirm the date for the initial hearing of the motion, and by repetitive argument. I do not have sufficient evidence as to what occurred at the time of the initial appearance, and I am not prepared to attribute the lack of confirmation to Mr. Abdul-Hamid personally. Mr. Rogers was preparing, at that time, to be removed from the record as Mr. Abdul-Hamid’s lawyer, and it is unclear from the material before me whether that accounted principally for the initial adjournment.
[17] I did not find that Mr. Abdul’s argument was unduly repetitive or self-contradictory. He displayed the limited skill that might have be expected from a self-represented litigant dealing with a complex series of transactions that were the basis for the action and the legal principles that apply to setting aside a default judgment.
[18] Ms. Farzana herself engaged in unreasonable conduct. In particular:
(a) Ms. Farzana should have given a more complete accounting to Mr. Abdul-Hamid at the outset of their discussions. This could have avoided the action, not to mention the motion.
(b) Ms. Farzana should not have noted Mr. Abdul-Hamid in default, based on the inadequate efforts that had been made to establish the identity of the person to whom the Claim was delivered. As noted in my reasons of August 24, 2014, I am satisfied that Mr. Abdul-Hamid was not living at the property on October 2, 2013, when he was alleged to have been served, and that the process server delivered the Claim to another person at the property on that date.
(c) As I noted in paragraph 32 of my reasons dated August 24, 2014, Ms. Farzana’s counsel should have been more forthcoming with information to Mr. Abdul-Hamid and his lawyers about the proceeding. His failure to provide this information contributed to the delay in the bringing of the motion to set aside the default judgment.
(d) Ms. Farzana should have consented to setting aside the default judgment and permitting Mr. Abdul-Hamid to deliver a Statement of Defence.
[19] Ms. Farzana has asserted that there were no settlement discussions at the court house on April 22, 2014, and notes that no relevant offers were made by Mr. Abdul-Hamid. Ms. Farzana, also, has not tendered any relevant offers to settle that she delivered.
[20] In summary, I find that while there was some unreasonable conduct by both parties, none was so egregious as to warrant raising the scale of costs to be awarded.
b) Importance and complexity of the motion
[21] While the motion was important to Mr. Abdul-Hamid in enabling him to defend the action, and particularly to secure an accounting, the amount at stake, being the principal amount of $24,600 which Ms. Farzana claimed as the balance of her loan, was modest. Justice Ricchetti’s reasons granting summary judgement disclose that there was no merit to Mr. Abdul-Hamid’s defence to the action for re-payment of Ms. Farzana’s loan, so Mr. Abdul-Hamid’s success in the motion before me, beyond obtaining the accounting to which he was entitled, was a pyrrhic victory.
[22] As Ms. Farzana correctly observes, in retrospect, both parties would have been better off if the motion to set aside default judgment had never been brought. That said, Ms. Farzana and her counsel might have been able to avoid the motion had they provided, at the outset, a proper accounting of the amounts that Mr. Abdul-Hamid had paid and the amount that he still owed.
c) Hourly rates charged and time spent
[23] Mr. Abdul-Hamid was charged $3,237.00 by the lawyers he initially retained to represent him, as appears from the invoice dated April 9, 2014, from Mr. Rogers’ firm that he filed. Mr. Rogers, who was called to the Bar in 2002, and thus had practiced for 12 years when he performed his work on the file, charged him $330 per hour. His associate, Benjamin Hann, who was called in 2013, and had practiced for one year, charged him $200 per hour.
[24] The “Information for the Profession” bulletin from the Costs Sub-Committee of the Rules Committee (the “Costs Bulletin”), which can be found immediately before Rule 57 in the Carthy or Watson & McGowan editions of the Rules, sets out maximum partial indemnity hourly rates for counsel of various levels of experience. The Costs Bulletin assigns a maximum hourly rate of $225, on a partial indemnity scale, to lawyers of less than 10 years’ experience and $300.00 for lawyers of between 10 and 20 years’ experience.[^2] The upper limits in the Costs Bulletin are generally intended for the most complex and important of cases.
[25] The Costs Bulletin, published in 2005, is now dated. The rate for lawyers of less than 10 years’ experience, at $225 in 2005, is the equivalent of $262.53 today, according to the Bank of Canada’s online Inflation Calculator. The rate for lawyers of between 10 and 20 years’ experience, at $300 in 2005, is the equivalent of $350.71 today. The hourly rates of $200 and $330 that Mr. Rogers and Mr. Hann charged is therefore within the range of hourly rates recoverable by a lawyers of their experience, as suggested in the Costs Bulletin, when adjusted for inflation.
[26] Mr. Abdul-Hamid claims $5,236.91 for the work done by Mr. Rogers and Mr. Hann, consisting of $4,412 for fees, 237.04 for disbursements, and $587.87 for HST. The fees charged represent 16.8 hours at the lawyers’ average hourly rate of $262.50 and 13.37 hours at the hourly rate charged by Mr. Rogers, who apparently performed the majority of the work.
[27] This court has held, on several occasions, that when one party attacks another’s costs as excessive, but does not put its own dockets before the court, the attack “is no more than an attack in the air.” In Risorto v. State Farm Mutual Automobile Insurance Co., (2003), Winkler J., then a motion judge, stated:
The attack on the quantum of costs, insofar as the allegations of excess are concerned, in the present circumstances is no more than an attack in the air. I note that State Farm has not put the dockets of its counsel before the court in support of its submission. Although such information is not required under Rule 57 in its present form, and the rule enumerates certain factors which would have to be considered in exercising the discretion with respect to the fixing of costs in any event, it might still provide some useful context for the process if the court had before it the bills of all counsel when allegations of excess and “unwarranted over-lawyering” are made. In that regard, the court is also entitled to consider “any other matter relevant to the question of costs”. (See Rule 57.01(1)(i). In my view, the relative expenditures, at least in terms of time, by adversaries on opposite sides of a motion, while not conclusive as to the appropriate award of costs, is still, nonetheless, a relevant consideration where there is an allegation of excess in respect of a particular matter. [^3] [Emphasis added.]
[28] In the absence of information from Ms. Farzana as to the time spent by her own lawyer, I find that the time claimed by Mr. Rogers and Mr. Hann was reasonable.
[29] Mr. Abdul-Hamid claims 40 additional hours for his own preparation of material, and an unstated amount of time for travel (although the number of trips are itemized). He claims an additional $600 for “reviewing and preparing additional motion material” but does not particularize the material or offer any explanation as to why it was necessary. He claims a further 13 hours for his attendance at court, including travel, but does not distinguish between the travel time and the time spent at court. Even at the $75 rate he claims based on lost time from his self-employment, his claim is excessive.
[30] I have taken into account that, on Ms. Farzana’s own evidence, the arguing of the motion began at 3:55 p.m. and ended at 6:10 p.m., a period of 2 hours and 15 minutes. I allow this time for court attendance, and an equal time for preparation, for a total of 4.5 hours at the modest hourly rate of $75 claimed by Mr. Abdul-Hamid for his own time. This amounts in total to $337.50. I allow an additional 5 hours of waiting time at half that hourly rate, for an additional $187.50. I am not allowing travel time, as Mr. Abdul-Hamid would have had to spend this time whether he had been acting as his own lawyer or attending court as a litigant. I allow the $100 that Mr. Abdul-Hamid has claimed for photocopies.
[31] The amount charged by Mr. Rogers and Mr. Hann, amounting to $5,236.91, and the amount of $625 which I am allowing for the period when Mr. Abdul-Hamid represented himself, amount, in total to $5,861.91, inclusive of disbursements and H.S.T.
[32] Costs of a motion to set aside a noting in default are generally modest, owing to their lack of complexity. The present motion was made more complex by the unusual nature of the mortgage and loan transactions, which were necessary to consider in relation to the merits of Mr. Abdul-Hamid’s defence.
d) Reasonable expectations of the parties
[33] A costs award must be within the reasonable expectation of the unsuccessful parties in order to preserve access to justice. Armstrong J.A. explained the rationale for this principle in Boucher:
The failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice. The costs system is incorporated into the Rules of Civil Procedure, which exist to facilitate access to justice….
In deciding what is fair and reasonable, as suggested above, the expectation of the parties concerning the quantum of a costs award is a relevant factor.[^4]
[34] Borins J.A. explained the rationale for the principle in Moon v. Sher:
The failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice. The costs system is incorporated into the Rules of Civil Procedure, which exist to facilitate access to justice. There are obviously cases where the prospect of an award of costs against the losing party will operate as a reality check for the litigant and assist in discouraging frivolous or unnecessary litigation. However, in my view, the chilling effect of a costs award of the magnitude of the award in this case generally exceeds any fair and reasonable expectation of the parties.
In deciding what is fair and reasonable, as suggested above, the expectation of the parties concerning the quantum of a costs award is a relevant factor.[^5]
[35] I find that Ms. Farzana would reasonably have expected to pay costs in the amount of $5,861.91, especially following the initial hearing which Mr. Rogers attended on Mr. Abdul-Hamid’s behalf, and when the matter proceeded to a further hearing at which Mr. Abdul-Hamid represented himself.
[36] I have considered the following costs awards made in similar motions, which should have informed Ms. Farzana’s expectations as to the costs she might be required to pay if she was unsuccessful in opposing the motion:
(a) In Casino v. Pang, 2009 26919 (ON SC), Roberts J., as she then was, awarded $1,000 on a motion to set aside default judgment.
(b) In Somerville v. Bank of Montreal, 2012 ONSC 5437, at para. 6, Stimson J. awarded a defendant costs on a substantial indemnity scale in the amount of $9,500 for a motion set aside the noting in default, based on a finding of unreasonable conduct by the plaintiff;
(c) In Kim v. Kim, 2014 ONSC 2812, O’Marra J. dismissed a motion for payment of costs of $2,500 in the cause by Master McPhee in a motion to set aside a noting in default, holding that the defendant would not be entitled to enforce those costs unless and until he was successful at trial.
(d) In Emamghorashi v. Nateghi, 2003 2306 (ON SC), Ellen Macdonald, J. awarded the respondent costs of $1,500 on a motion to set aside default judgment.
[37] I have considered the principle of proportionality set out in Rule 1.04 (1.1), which directs that orders be “proportionate to the importance and complexity of the issues, and the amount involved, in the proceeding.” I find that costs in the amount of $5,861.91 are proportionate to the amount that was at stake in the action.
CONCLUSION AND ORDER
[38] For the foregoing reasons, it is ordered that:
- The plaintiff, Ms. Farzana, shall pay to the defendant, Mr. Abdul-Hamid, his costs of the motion on a partial indemnity basis in the amount of $5,861.91, including HST and disbursements, and payable forthwith.
Price J.
Released: July 29, 2015
COURT FILE NO.: CV-13-3955-00SR
DATE: 2015-07-29
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
FATIMA FARZANA
Plaintiff
- and -
AHMAD ABDUL-HAMID
Defendant
COSTS ENDORSEMENT
Price J.
Released: July 29, 2015
[^1]: 131843 Canada Inc. v. Double “R” Toronto Ltd. (1992), 7 C.P.C. (3d) 15 (Ont. Gen. Div., per Blair J., as he then was) at p. 17, approved in Murano v. Bank of Montreal, 1998 5633 (ON CA).
[^2]: “Information for the Profession” bulletin (“the Costs Bulletin”) from the Costs Sub-Committee of the Rules Committee (that the Costs Sub-Committee of the Rules Committee issued to replace the Costs Grid, which it repealed in 2005). The Costs Bulletin has advisory status only and not statutory authority, as it was not included in the Regulation that repealed the Costs Grid.
[^3]: Risorto v. State Farm Mutual Automobile Insurance Co., 2003 43566 (ON SC), ONSC 43566 (), 64 O.R. (3d) 135, at para. 10 (S.C.), per Winkler J., cited in Springer v. Aird& Berlins LLP (2009), 2009 26608 (ON SC), 2009 ONSC 26608 (), 74 C.C.E.L.(3d) 243 (Ont. S.C.), at paras. 10-17.
[^4]: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at paras. 37 to 38.
[^5]: Moon v. Sher (2004), 246 D.L.R. (4th) 440, 2004 39005 (ON CA).