Court File and Parties

Court File No.: CV-15-11016-00CL Date: 2016-08-08 Superior Court of Justice – Ontario (COMMERCIAL LIST)

Re: TERRACAP INVESTMENTS Inc., Plaintiff And: CREDIT CAPITAL IMMOBILLIARI, S.A., PATRIGEST, S.A. and CREDIT ANDORRA, S.A., Defendants

Before: MESBUR J.

Counsel: Matthew B. Lerner and Brian Kolenda, for the Plaintiff (responding party on the motion) Luis Sarabia and Anisah Hassan, for the Defendants, (moving parties on the motion)

Heard: In writing

Costs Endorsement on Motion Heard May 30, 2016

[1] The defendants moved before me to stay this action. I dismissed the motion “with costs to the plaintiff fixed, as agreed, at $13,000 all-inclusive on a partial indemnity scale.” My decision went on to provide:

If there are offers that would affect the scale of costs, then costs are fixed at $20,500 on a substantial indemnity scale. If the parties cannot agree on the scale of costs, they may send me any relevant offers, and a one-page outline, setting out their position on the appropriate scale of costs.

[2] Before I released my decision, I provided the parties with a 2-week window in which to resolve the motion and the action. They did not. Not only that, they have been unable to agree on the appropriate scale or quantum of costs.

[3] The motion was argued on May 30, 2016. On April 21, the plaintiff made an offer to settle the motion on the basis the motion would be withdrawn, with a consent order providing Ontario is the most convenient forum for the plaintiff’s claim. The plaintiff would waive costs up to and including the date of the offer. If the defendants accepted the offer prior to its expiry (on the date of the motion) then the defendants would pay partial indemnity costs from the date of the offer to the date of acceptance. After the date of the offer, the parties would be conducting a cross-examination of one of the affiants for the motion, and would have to prepare for the motion as well as argue it. The defendants did not accept the offer.

[4] The defendants made no offer to settle the motion prior to its being argued. Instead, during the 2-week negotiation window after arguing the motion, on June 10 the defendants proposed the following:

a) There would be a consent judgment entitling the plaintiff to the € 400,000 held in escrow, without costs to either party; and

b) The plaintiff would execute “a Release in a form to be agreed upon but providing, among other matters, that Terracap (together with all of its agents, subsidiaries, related corporations, employees or agents) releases, remises and forever discharges, without limitation or qualification, all of the Defendants from all manner of claims or potential claims, in any jurisdiction, arising from or relating to the transaction between Terracap and the Defendants to purchase and lease of the Andorran properties referenced in the Agreement of Purchase and Sale.

[5] The defendants’ offer expired on the earlier of 5 calendar days from the making of the offer, or the release of my reasons. The defendants’ offer therefore expired on June 15.

[6] The plaintiff takes the position that its offer bears on the issue of the scale of costs since if accepted, the result to the defendant would have been the same as, or better than the result of the motion. The plaintiff argues it should receive partial indemnity costs to the date of its offer and substantial indemnity costs after that date. It reasons the result on the motion means the defendants could have had a better result (no costs) had they simply immediately accepted the plaintiff’s offer. The plaintiff seeks costs of $17,765.71 in total. It comes to this figure on the basis that 36% of its actual costs were incurred before the offer, with the balance being incurred after. It applies these percentages, pro rata, to the partial and substantial indemnity costs the parties agreed were appropriate. In doing so, however, the plaintiff is arithmetically incorrect. The parties agreed on $13,000 for partial indemnity costs. On the plaintiff’s reasoning, it would receive 36% of this sum, or $4,680, and 64% of the $20,500 they agreed was the substantial indemnity figure. That latter calculation would yield $13,120, for total costs of $17,800.

[7] The defendants take the position no costs should be payable, in light of their offer, or alternatively, the plaintiff should be entitled only to $13,000 on a partial indemnity basis.

[8] I disagree that no costs should be payable. The defendants offer was not severable, and contained a significant additional term, namely a release of all other claims between the parties. That provision went far beyond the purview of the motion. It does not surprise me the plaintiff did not accept it. I cannot see the defendants’ offer, taken as a whole, should affect entitlement to costs, particularly since it was not made prior to argument of the motion.

[9] The defendants go further, and suggest that on the motion they were in the position of the “plaintiff” (as moving party) and therefore the costs consequences of rule 49.10(2) of the Rules of Civil Procedure have no application, since the rule does not impose costs consequences upon an unsuccessful plaintiff who fails to accept a settlement offer.

[10] I disagree. Costs are ultimately in the court’s discretion. The court has limited resources. Parties are encouraged to act reasonably, settle matters where they can, and reserve precious court time for matters that warrant it. This motion and the underlying claim should have been settled. I gave the parties an opportunity to do just that. They did not.

[11] The motion alone could and should have been settled. Given the result on the motion, the plaintiff’s offer was reasonable, and should have been accepted. As I see it, the plaintiff’s position on costs is more than reasonable. As a result, the plaintiff will have its costs of the motion, fixed at $17,800 all inclusive, on the basis of the calculation set out in paragraph 6, above.

[12] The defendants raise one final issue. They seek “direction” in relation to paragraphs 38 and 39 of my decision, in which I rejected their argument that Andorran law would have to be proved if the case proceeds in Ontario. As I see it, the trial judge will ultimately determine this issue if it remains a contentious issue at the time of trial. I make no further comment on it.

MESBUR J. Released: 2016-08-08