Court File and Parties

COURT FILE NO.: C-1255-11-SR DATE: 20170327 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: Patrick J. Gladu and Danielle M. Boyer-Gladu Plaintiffs – and – The Estate of Michel Robineau and Diane Guindon-Robineau Defendants

COUNSEL: Marc A.J. Huneault, for the Plaintiffs Chantal Beaupré, for the Defendants

HEARD: Submissions received in writing

ADDITIONAL REASONS AS TO COSTS, to decision reported at Gladu v. Robineau, 2017 ONSC 37

Gauthier J.

Overview

[1] After a ten-day trial, bifurcated and proceeding in April and November 2016, the plaintiffs were awarded damages in the amount of $47,758.17, being the cost to replace a septic system and the cost to repair a crack in a retaining wall.

Plaintiffs’ Position

[2] The plaintiffs now seek costs on a full indemnity basis of fees in the amount of $106,875 plus H.S.T. of $13,893.75 plus disbursements in the amount of $6,358.40, for a total of $127,127.15. In the alternative, the plaintiffs seek substantial indemnity costs in the amount of $96,187.50, plus H.S.T., plus disbursements for a total of $115,050.27. The substantial indemnity costs sought by the plaintiffs represent 90% of the total indemnity costs.

[3] The plaintiffs rely on my findings that the defendants engaged in deliberate misrepresentation and that the plaintiffs successfully made out the case for civil fraud. This conduct, they say, should attract an award of substantial indemnity costs.

[4] The plaintiffs go further and submit that the defendants’ “active pattern of concealment and misrepresentation meets the high threshold for full indemnity costs.” The defendants’ conduct, they suggest, should trigger the “rare and exceptional remedy” of such full indemnity costs.

[5] The plaintiffs also point to the defendants’ conduct in the course of the litigation (failure to make a reasonable compromise, the self-serving “advisories”, the threats to Patrick Gladu’s status as a municipal employee, and the failure to make basic admissions) as being exceptional circumstances justifying full indemnity costs.

[6] Further, the plaintiffs submit that “an award of costs that exceeds the judgment should not by itself be grounds for denying costs as long as the claimed costs are reasonable in the circumstances of the case.”

[7] The plaintiffs took steps to expedite the trial process, i.e. using all efforts to limit the use of interpreters and consent to a read-in brief.

[8] The costs claimed are reasonable for two days of discovery and ten days of trial.

Defendants’ Position

[9] There should be no costs, or, in the alternative, an order for reduced costs.

[10] The defendants submit that the plaintiffs were only successful on two out of six of the claims they advanced in the Statement of Claim; they were unsuccessful on the largest portion of the claim, i.e. the claim for future lost income, which took the case outside the Simplified Procedure.

[11] The defendants made two offers in the course of the litigation:

1. On September 26, 2014, an offer to buy back the property on certain conditions, and
2. On September 30, 2015, to pay the plaintiffs $40,000.00, no costs.

[12] The offers were reasonable and should result in a no costs order or an order for reduced costs.

[13] The defendants further suggest that the findings of misrepresentation do not automatically trigger a higher costs award. The court retains the discretion to deal with costs in a fair and reasonable manner. The defendants’ conduct does not justify the rare and exceptional award sought by the plaintiffs. In the absence of such exceptional circumstances, the plaintiffs are only entitled to costs on a partial indemnity basis.

[14] The defendants point out that the plaintiffs failed to establish any fraud or negligent mis-representation regarding the well water, damage to the water pipes in the loft, or the sprinkler system. The defendants recognized early on in the proceedings that they had a responsibility regarding the septic system; thus, the two offers referred to above: to buy back the property, and later, to offer a sum equivalent to the cost of a new septic system.

[15] Further, the defendants rely on the plaintiffs’ abandonment of its claim for rescission at trial. The defendants, in these circumstances, are entitled to request their costs relating to the claim for rescission. Alternatively, the plaintiffs are not entitled to any costs relating to the abandoned claim.

[16] The defendants also dispute the appropriateness of certain disbursements claimed by the plaintiffs.

[17] The costs claimed are excessive and disproportionate to the result achieved by the plaintiffs.

[18] The plaintiffs prolonged the trial by calling unnecessary witnesses, engaging in a prolonged and ineffectual cross-examination of Diane Guindon-Robineau, and amending their pleadings on the second week of trial, to increase the claim for lost rental, which claim was ultimately denied.

Analysis and Conclusion

[19] Costs are in the absolute discretion of the court. “In fixing or assessing costs the court must consider the facts and circumstances of the particular case. It is not a mechanical exercise. The court must be fair and reasonable in exercising its discretion to award costs: Boucher v. Public Accountants Council (Ontario).” Thyssenkrupp Elevator v. 1147335 Ontario Inc., 2013 ONSC 2452, 23 C.L.R. (4th) 87, at para. 10.

[20] Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 sets out the relevant factors to be considered by the court.

[21] Awards of costs are meant to meet three objectives: (a) to indemnify a successful party; (b) to encourage settlement; and (c) to discourage inappropriate behaviour by litigants. “Justice is best served when costs are awarded to the successful party and the principle of indemnity is paramount: Waterloo (City) v. Ford, 2008 Carswell Ont. 2692 (Ont. S.C.J. [Commercial List]).” Luxterior Design Corp. v. Janna Gelfand, at para 25. [^1]

[22] As was stated in Boucher: “Overall… the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceedings, rather than an amount fixed by the actual costs incurred by the successful litigant.”

[23] While it is correct that the plaintiffs only succeeded on two out of six of the categories of damages, and that the amount recovered is only approximately 32% of the amount claimed, nonetheless, the issue of the unsuitability of the septic system for the property was by far the most important of all the claims, albeit not the one having the highest monetary value. The issue transcended monetary value and is the issue on which I found that the defendants’ conduct amounted to civil fraud.

[24] I found that, in May 2009, the defendants were aware that the septic system for which they had received approval was inadequate for the property. They actively marketed the property as something different than the property they described in their application for approval of the septic system. I found that the defendants actively misrepresented the state of the loft apartment.

[25] The defendants’ objectionable conduct occurred not only in the form of the civil fraud described in my Reasons, but also after the closing of the transaction. I refer to the “advisories” and the threats they contained. As well, there was the threat described at para. 66 of my Reasons (the 27-page letter that Michel Robineau said he intended to send to various officials who were connected to Patrick Gladu’s employment). The defendants’ conduct following the closing of the transaction was deliberate and high-handed.

[26] The defendants made no attempts to resolve the matter until well into the litigation.

[27] The defendants’ costs submissions include a statement to the effect that the defendants quickly recognized that they had a responsibility regarding the septic system. The facts do not support that statement. In February 2013, the defendants offered to consent to a dismissal without costs. This was almost two years after the Statement of Claim was issued and two and a half years from the time the defendants were put on notice about the plaintiffs’ concerns about the property.

[28] The second offer, to take back the property on conditions, was made some three and a half years after the Statement of Claim was issued and four years after the plaintiffs’ initial request to the defendants to attempt to resolve the issues before legal action. Nothing was being offered for costs.

[29] The defendants’ final offer was made four and a half years after the start of the litigation, ten months after the date originally set for trial, and made no provision for any increase in the cost of the septic system, or for interest, or for costs.

[30] The defendants’ testimony did not leave me with a positive impression of them or their willingness to be forthcoming about the events in issue. I accepted Richard Sanderson’s evidence about the use of the word “guest” to describe the loft apartment over that of Diane Guindon-Robineau. For his part, Michel Robineau indicated under oath that the loft apartment was hooked up to the septic system, he took steps to repair the cold water pipes running to the apartment, and he prepared detailed notes about maintenance of the apartment including the water to same, when in fact, he and the co-defendant had knowingly applied for a septic system permit which would exclude the loft apartment from the system.

[31] As was stated in Ontario Realty Corp. v. P. Gabriele & Sons Ltd., 2009 CarswellOnt 7705 (Sup. Ct.), the credibility and reliability of a party’s evidence can be taken into account when considering the scale of costs to be awarded.

[32] However, while the defendants’ conduct should attract costs sanctions, the circumstances do not meet the high threshold required for full indemnity costs described in Envoy Relocation Services Inc. v. Canada (Attorney General), 2013 ONSC 2622. The defendants did nothing to delay or confuse the proceeding. Although I found misconduct, I do not conclude that the defendants’ conduct was contemptuous and the defendants did not conduct “a scurrilous attack on the administration of justice.”

[33] In addition, the claim for lost rental, which represented a significant portion of the total amount claimed, and which was the subject of a motion in the course of the trial, which could have been avoided or brought earlier in the proceeding, failed for reasons set out in in paras. 349 to 360 of my Reasons.

[34] I agree with the defendants’ submissions that the plaintiffs should not be awarded any costs for that motion, despite the fact that the motion itself was successful. The claim for lost income ultimately failed.

[35] The defendants did not have the opportunity to avail themselves of the provisions of Rule 23.05(1) in connection with the withdrawal of the claim for rescission of the contract at the opening of the trial.

[36] As a result of balancing all of the above factors, I am of the view that costs on a substantial indemnity basis are reasonable in the circumstances.

[37] The trial was adjourned on two occasions due to the unfortunate circumstances of the defendant, Michel Robineau. This would have resulted in some duplication in trial preparation for which the plaintiffs should not be responsible. Although there is no breakdown of the amount of time spent on trial preparation (141.6 hours), no doubt some portion of that related to duplication due to the adjournments. And, although I agree that the cross-examination of Diane Guindon-Robineau could have been more efficient, the complaint that the plaintiffs called unnecessary evidence is largely without substance. I would also comment that the testimony of Denis Lafreniere was largely unhelpful to the defendants.

[38] If, as the defendants now suggest, they quickly recognized having a responsibility regarding the septic system, then that position did not extend to the trial itself.

[39] The majority of the trial time was devoted to the issue involving the septic system. Little time was devoted to the claims which were unsuccessful.

[40] Although the costs appear disproportionate to the amount recovered, ultimately I note the comment of Gray J. in Cimmaster v. Piccione, 2010 ONSC 846, at para. 19:

[T]he principle of proportionality should not normally result in reduced costs where the unsuccessful party has forced a long and expensive trial. It is cold comfort to the successful party, who has been forced to expend many thousands of dollars and many days and hours fighting a claim that is ultimately defeated, only to be told that it should obtain a reduced amount of costs, based on some notional concept of proportionality.

[41] I suggest these comments are equally applicable to a plaintiff who is forced to exhaust legal proceedings to obtain a finding that the defendants are liable for damages that, but for the blameworthy conduct, would not have been sustained by the plaintiff, and would not have necessitated lengthy and expensive litigation.

[42] After having taken into account the dismissal of the claims other than the septic system and retaining wall, the motion to amend the claim, the ineffective use of court time during the trial by the plaintiffs (i.e. the delay awaiting the attendance of one of the plaintiffs), and the timing of the abandonment of the rescission claim at the opening of trial, I conclude that it would be fair and reasonable to award the plaintiffs their costs in the amount of $75,000, plus disbursements, plus H.S.T. for a total award for costs in the amount of $91,108.40.

The Honourable Madam Justice Louise L. Gauthier Released: March 27, 2017

[^1]: As of March 7, 2017, this decision is cited as Luxterior Design Corp. v. Gelfand, 2014 ONSC 990 on Westlaw, and Luxterior Design Corp. v. Gelfand, 2015 ONSC 990, [2015] O.J. No. 677, on Quicklaw.