Court File and Parties
Court File No.: CV15-022 Date: 2017-05-31 Superior Court of Justice – Ontario
Between: Kim Victor Pearson and Renuka Bhansingh, Applicants Counsel: John D. Middlebro’, for the Applicants
And: John Eugene Corcoran, Respondent Counsel: Roderic T.J. Hinton, for the Respondent
Heard: In writing
Before: Conlan J.
Reasons for Decision on Costs
I. Introduction
The Nature of the Claim and the Result after Trial
[1] The Plaintiffs, Kim Pearson (“Kim”) and Renuka Bhansingh (“Renuka”), sued their former friend, John Corcoran (“John”), for money that they alleged was owed to them.
[2] A trial was held in Owen Sound over four days in late March/early April 2017.
[3] Kim’s claim was allowed in the amount of $155,629.92, less funds already paid by or credited to John, for a principal balance remaining of $50,989.17.
[4] Renuka’s claim was dismissed.
[5] Ancillary relief sought by Kim and Renuka, such as an equitable charge on real property owned by John and/or an injunction, was denied.
[6] On the two most hotly disputed and time-consuming issues at trial, (i) whether John made certain mortgage payments and (ii) whether John made cash payments to or on behalf of Kim and Renuka, John was unsuccessful.
[7] To better understand the factual background, I set out below paragraphs 3 through 23 of my Reasons for Judgment reported at 2017 ONSC 2166:
[3] In January 2015, Kim Pearson (“Kim”) and his common-law partner, Renuka Bhansingh (“Renuka”), the Applicants, issued their Notice of Application.
[4] What led up to that?
[5] In September 1999, the Respondent, John Corcoran (“John”), put a home in Caledon, Ontario (“Heritage”) in his name, along with the mortgage, in trust for his long-time friend, Kim.
[6] Kim and John had known each other for decades. Kim testified that he trusted John like a brother.
[7] What happened with Heritage was done at Kim’s request, as he could not qualify for financing because of limited employment. He had been injured at work with Ontario Hydro in 1988 and had been in receipt of worker’s compensation benefits ever since. Other than some music lessons that he gave and playing in bands, his income was fairly limited.
[8] A similar arrangement between Kim and John had been in place before with a home in Mississauga, Ontario. Although that home was lived in by Kim, the title was held by John, and John was the mortgagor. The down-payment had been made by Kim, and Kim gave post-dated cheques to John to make the mortgage payments.
[9] After selling the Mississauga home in October 1999, the general idea was that the same thing would occur with Heritage.
[10] In fact, Heritage was purchased before the Mississauga property was sold, thus, short-term bridge financing was arranged.
[11] Heritage was, by then, more attractive to Kim as it was more in the country and more suitable for him and Renuka.
[12] Heritage was bought for $300,000.00. Once the bridge financing period was over, on the face of the mortgage document the monthly amount was $1224.00. The Applicants testified that John was actually paid more than that, $1422.00 monthly, to cover property taxes.
[13] Kim and Renuka lived at Heritage from the Fall of 1999 until it was sold.
[14] It was sold in 2005 for the price of $515,000.00.
[15] By then, Kim considered Renuka to be an equal owner of Heritage. They were common-law partners.
[16] The net proceeds of sale were $324,029.11.
[17] Those funds were paid to John and, at Kim’s request, were placed into an ING (later Tangerine) interest-earning savings account (“savings account”). Kim did not need the money right away as he was occupied with caring for his ailing parents and was not sure where he would end up.
[18] It may seem odd to the reader that Kim would have been financially able to forego the immediate receipt of any of the net proceeds of sale. It should be noted that both Kim and Renuka are from wealthy families and had very generous parents. It was not unusual, for example, for Kim to receive regular gifts from his mother by way of cheques for thousands of dollars.
[19] From time to time, monies were paid out of the savings account by John, at the request of Kim and/or Renuka.
[20] At some point, Kim and Renuka started to get worried. They say that John was acting weird and eventually “disappeared”.
[21] Litigation ensued.
[22] A sizeable amount of money, $170,000.00, was then paid out by John to counsel for Kim and Renuka.
[23] More is still owing, according to the Applicants. Just how much more is in dispute.
[8] The six issues for trial were outlined at paragraphs 27 through 33 of the said Reasons for Judgment:
[27] First, is there a valid trust claim at all by Renuka? Or should the Judgment, if any, be in favour of Kim alone?
[28] Second, after Heritage sold, how much money in total was paid out of the savings account by John, as authorized by Kim and/or Renuka? The resolution of that question depends on several things including whether John made authorized cash (rather than cheque) payments, and whether John made the mortgage payments without contribution/reimbursement from the Applicants.
[29] Third, did John pay income taxes on the interest earned in the savings account, and if so, how much, and should he be credited for those payments?
[30] The cross-examination of Kim at trial essentially resolved the questions outlined immediately above. Kim admitted that John paid $25,510.79 in income tax on the interest earned. Kim agreed further that John should be credited for that total amount.
[31] Fourth, just exactly how much is owing to Kim and/or Renuka, including interest earned on the net proceeds of sale that were deposited into the savings account?
[32] Fifth, should John be compensated for his role as trustee, and if so, how much?
[33] Sixth and finally, should there be any ancillary relief awarded in favour of the Applicants or either one of them, such as an injunction or some kind of equitable charge against John’s property?
[9] The first issue was resolved in favour of John.
[10] The second issue, a major one, was resolved against John.
[11] The third issue was resolved in favour of John but was not disputed during the trial evidence of the Plaintiffs.
[12] The fourth issue, a significant one, was resolved largely against John.
[13] The fifth issue was essentially a “wash” – John received a small fraction of the trustee compensation that he was seeking.
[14] The sixth issue was resolved in favour of John.
[15] All in all, Kim was more successful than John.
The Positions of the Parties on Costs
[16] The parties have been unable to settle the issue of costs. Written submissions have been filed.
[17] Kim seeks costs on a partial indemnity scale in the total amount of $59,330.68 ($51,125.45 for fees and the rest for disbursements).
[18] No costs are being sought by Renuka.
[19] John suggests that Kim be awarded costs in the total amount of $45,000.00, all-inclusive.
II. Analysis and Conclusion
[20] First, some basic legal principles.
[21] As the more successful party, Kim is presumptively entitled to some costs. That is rightly conceded by John.
[22] Quantum of costs is discretionary. The overriding objective is to make an award that is fair, just and reasonable in all of the circumstances including a consideration of what the more unsuccessful side of the litigation would reasonably expect to pay.
[23] In determining the quantum of costs, I ought to consider Rule 57, in particular, the factors outlined in 57.01(1).
[24] I should also keep in mind the fundamental purposes of modern costs awards: to partially indemnify successful litigants, to encourage settlement, and to discourage inappropriate conduct by litigants.
[25] It is common ground that both sides offered to settle the case before trial, but neither did equal to or better than the offer after trial.
[26] I commend both sides and both counsel for at least making reasonable efforts to settle the case and for streamlining the issues before and during the trial.
[27] John takes issue with some aspects of the Bill of Costs and the time dockets filed by Kim’s counsel. There are objections made to the reasonableness of certain fees (because of, for example, the number of hours spent) and certain disbursements, such as photocopying charges.
[28] I disagree with all of those objections but for the issue of Mr. Lovell and Ms. Horton.
[29] Mr. Lovell, I am sure, worked hard on the case, however, his efforts must be assessed in light of the fact that the spreadsheets that he prepared were inaccurate at first instance, through no fault of his, and, when updated later, disregarded by the Court.
[30] Outside counsel Ms. Horton, retained by Mr. Middlebro’s firm to question Mr. Lovell at trial so as to avoid Mr. Middlebro’ examining another lawyer, Mr. Lovell, who works in the same office, did a splendid job, however, again, her efforts must be assessed in light of the ultimate “non-factor” that the spreadsheets became.
[31] Thus, some reduction from the costs figure sought by Kim is warranted. With that notion, I agree with Mr. Hinton.
[32] I further agree with Mr. Hinton that the costs being sought by Kim should be further reduced to account for the fact that there was some degree of divided success at trial, although by no means anything close to equally divided.
[33] Ignoring the first issue, because Renuka is not seeking any costs, and ignoring as well the rather neutral result on the fifth issue (trustee compensation), the fact remains that John was successful on the third and sixth issues. These were relatively minor items that took up very little trial time, however, they are worth mentioning.
[34] With those qualifications in mind, I elect to reduce the quantum of costs being sought by Kim by just over $9,000.00, for an even $50,000.00, all-in.
[35] I order that John pay to Kim the sum of $50,000.00 for costs.