COURT FILE NO.: CV-09-394106

DATE: 20151023

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Can-Win Leasing (Toronto) Limited, Plaintiff

AND:

Rafael Moncayo, Defendant

BEFORE: R. F. Goldstein J.

APPEARANCE:
Licio Cengarle, for the Plaintiff, Moving Party
Rafael Moncayo, on his own behalf

HEARD: In Writing

ENDORSEMENT

BACKGROUND

[1] Clifford Irwin and Rafael Moncayo were partners in Can-Win, a company that bought and sold used trucks. Can-Win obtained a line of credit for $750,000.00 that was personally guaranteed by Mr. Irwin and Mr. Moncayo. Mr. Irwin eventually locked out Mr. Moncayo. He personally re-paid the debt to the bank. He did it in order to reduce the exposure of his other, unrelated collateral. He caused Can-Win to make a demand from Mr. Moncayo. Mr. Moncayo did not pay. Can-Win then sued. On February 6, 2013 I dismissed the action with costs: Can-Win Leasing (Toronto) Limited v. Rafael Moncayo, 2013 ONSC 851. Can-Win appealed. The Court of Appeal dismissed the appeal: Can-Win Leasing (Toronto) Limited v. Rafael Moncayo, 2014 ONCA 689.

[2] Mr. Moncayo now seeks his costs. He seeks $12,093.30 from Can-Win, including disbursements. He says that even as an unrepresented party he is entitled to costs.

[3] Mr. Licio, counsel for Can-Win, says that Mr. Moncayo is not entitled to costs or disbursements. Despite losing a summary judgment motion, a trial, and an appeal Can-Win’s counsel persists in the strange belief that his client was right, and that Mr. Moncayo was both lucky and wrong. I disagree. In my view Mr. Moncayo is entitled to costs and reimbursement of his disbursements.

ANAYLYSIS

[4] The over-arching principle in matters of costs is that the court should set an amount that is fair and reasonable in the circumstances: Boucher v. Public Accountants Council for Ontario, 2004 14579 (Ont.C.A.), 71 O.R. (3d) 291, [2004] O.J. No. 2643 (C.A.).

[5] Furthermore, the usual rule is that costs are awarded to the successful party: Schreiber v. Mulroney, 2007 31754 (ON SC), [2007] O.J. No. 3191 (Sup.Ct.). The rule is not “costs are awarded to the successful party, except where the successful party is self-represented.”

[6] The leading authority in Ontario dealing with self-represented plaintiffs is Fong v. Chan (1999) 1999 2052 (ON CA), 46 O.R. (3d) 330 (C.A.). Sharpe J.A. laid down the principle that costs should not be awarded for the time and effort that any litigant must devote to a case. Rather, costs should only be awarded where a self-represented litigant can show that he or she had to devote effort to the work ordinarily done by a lawyer to conduct the litigation. The self-represented litigant must also show that he or she incurred an opportunity cost. The lost opportunity is the ability to earn income lost by devoting time and resources to the case.

[7] The British Columbia Court of Appeal determined in Skidmore v. Blackmore (1995), 1995 1537 (BC CA), 122 D.LR. (4th) 330 (B.C.C.A.), a case favourably cited by Sharpe J.A. in Fong, that costs rules serve more than one purpose. They exist to promote settlement, to discourage unnecessary steps in litigation, to sanction improper behaviour, and, of course, to indemnify the winning party. I see no reason why the purposes of costs should not apply equally to self-represented parties. If a self-represented party can be sanctioned with costs because he or she launches a frivolous lawsuit or insists on maintaining an unmeritorious position, then it makes no sense that a self-represented party who conducts litigation properly, and wins, is not entitled to indemnification.

[8] That said, however, indemnification for what? Disbursements, clearly. A self-represented party is entitled to disbursements no less than any other party, barring padding – although padding of bills is certainly not confined to self-represented persons.

[9] The rule was interpreted in Mustang Investigations v. Ironside, 2010 ONSC 3444, 103 O.R. (3d) 633 (Div.Court). The Court in that case was very clear that a self-represented party must show that he or she has devoted time and effort to work ordinarily done by a lawyer. That, however, is not enough. A self-represented party must also show that he or she had incurred an opportunity cost by foregoing remunerative activity. As Cumming J. put it: “Simply stated, no proof of opportunity cost, no nominal costs available.”

[10] Even where a self-represented party can show an opportunity costs, a self-represented litigant should only receive a nominal, moderate, or reasonable allowance: Tiago v. Meisels, 2012 ONSC 5090, [2012] O.J. No. 4227.

[11] Although I must obviously apply the principles in Fong and Mustang, I query whether it is time for a higher court to re-visit these principles in light of the comments of Karakatsanis J. in Hryniak v. Maudlin, 2014 SCC 7, [2014] 1 S.C.R. 87 notwithstanding that that case was decided in the context of summary judgment motions. A critical concern of the Court is the reduced access to justice that is a reality in our province, and that reality includes the prevalence of self-represented parties. This is not because self-represented litigants do not have good cases, or that they indulge in frivolous or un-meritorious litigation (although undoubtedly some do – as do some represented parties). Rather, as Karakatsanis J. recognized, it is because access to justice is prohibitively expensive. Honest people of modest means – which describes Mr. Moncayo – find it increasingly difficult to afford a lawyer. This was a problem that Cumming J. recognized in Mustang. He noted that in some cases an injustice might result. He responded, however, by upholding the principle but also by pointing out that the problem was more appropriately addressed by the Rules Committee or the legislature.

[12] Frankly, I find it unfair that a person in Mr. Moncayo’s position is must show that he is only entitled to nominal costs. This case illustrates just exactly how unfair it is. Mr. Moncayo was put out of business by the high-handed actions of Mr. Irwin. He found himself locked out of his own business by a partner of more significant means and greater business sophistication. Mr. Irwin, knowing that he had driven Mr. Moncayo out of business, pursued a lawsuit which he lost. Mr. Moncayo was forced to defend himself and was successful on a summary judgment motion, at trial, and on appeal. He was not on some quixotic, frivolous quest.

[13] Mr. Moncayo has estimated that he spent a total of 67 hours as follows:

• Attending the pre-trial;

• Attending the mediation;

• Attending the trial; and,

• Travel.

[14] Mr. Moncayo estimates that he was earning $41/hour at the time the business ceased operation. This adds up to an amount of $2747.50. Unfortunately, however, I must exclude this travel and preparation time pursuant to the principle laid down in Fong. I find that the hourly amount, however, is reasonable. That is the amount he could have expected to earn at another job.

[15] Mr. Moncayo also estimates that he spent a total of 33 hours and 20 minutes attending legal clinics and obtaining information, including driving time. I accept that this time represents a lost opportunity to earn income. It is time that a lawyer would have had to devote to the case. Mr. Moncayo should be awarded $1366.60 for the time spent.

[16] Mr. Moncayo indicated that he spent 150 hours in preparation for his defence. I find this amount excessive. He spent a considerable amount of time attending legal clinics. That said, I accept that there was at least some opportunity cost associated with trial preparation. I think 50 hours is a reasonable amount. Mr. Moncayo is therefore entitled to a further $2050.00.

DISPOSITION

[17] In my view a fair and reasonable amount for Mr. Moncayo’s lost opportunity to earn income is $3,416.60. Mr. Moncayo is also entitled to the full reimbursement of his disbursements of $610.00, including mileage and a mediation fee.

[18] Mr. Moncayo is therefore entitled to a total amount of $4026.60. The Plaintiff shall have 30 days to pay from today’s date.

R.F. Goldstein J.

Date: October 23, 2015