Court File and Parties

Court File No.: 5651/14 Date: 2017-01-16 Ontario Superior Court of Justice

Between: Brian Coghlan, Plaintiff/Defendant by Counterclaim – and – Unique Real Estate Holdings Inc. and Brent Lipke, Defendants/Plaintiffs by Counterclaim

Counsel: R. A. Dinnen, for the Plaintiff/Defendant by Counterclaim David Cameletti, for the Defendants/Plaintiffs by Counterclaim

Heard: In writing

Decision on Costs

Wilcox, J.

[1] The Reasons for Judgment in which the Plaintiff’s motion for summary judgment was successful allowed the parties to file costs submissions if costs could not be agreed upon. Submissions were filed by both sides.

[2] Section 131 of the Courts of Justice Act leaves the decision of by whom and to what extent costs are to be paid to the discretion of the court, subject to the rules. Rule 57.01(1) of the Rules of Civil Procedure sets out the factors that the court may consider in addition to the result in the proceedings and any written offers to settle in exercising that discretion. Rule 1.04(1.1) of the Rules of Civil Procedure requires the court to make orders that are proportional to the importance and the complexity of the issues, and to the amount involved, in the proceedings.

[3] The Plaintiff, as the successful party, is presumptively entitled to its costs. The defendant does not dispute that, but strenuously opposes the quantum the plaintiff seeks, which totals $86,000.00, including about $2,377.00 in disbursements.

[4] As pointed out in the Reasons for Judgment, this case arose out of a real estate deal in which the agreement of purchase and sale was for the corporate defendant to purchase a property from the plaintiff for $950,000.00, which transaction that defendant failed to complete. As part of the agreement of purchase and sale, that defendant had paid a $50,000.00 deposit. The plaintiff sued the defendants for $200,000.00, comprising $150,000.00, being the alleged difference between the $950,000.00 that the purchaser had agreed to pay and the $800,000.00 that the vendor allegedly was able to get from the subsequent purchaser, plus the estimated $50,000.00 costs thrown away as a result of the defendants’ refusal to complete the transaction. The Statement of Claim was later amended to add a claim for forfeiture of the $50,000.00 deposit.

[5] The indication was that the main action was not proceeded with by the plaintiff beyond plaintiff’s counsel’s clerk producing an Affidavit of Documents. There is no indication that discoveries took place. Rather, the plaintiff brought its motion for summary judgment for forfeiture of the deposit and other relief, and its efforts were directed at that. At the outset of the argument of that motion, plaintiff’s counsel indicated that if the motion was successful, as it was in the end, the rest of the claim would be abandoned. The materials filed for the motion were not extensive and there were no cross examinations on the affidavits.

[6] At its highest, then, this case was a dispute over up to $250,000.00 but, practically, was about the $50,000.00 deposit. The total court time in the plaintiff’s Bill of Costs is only 6.5 hours spread over two court appearances to argue the motion for summary judgment.

[7] The plaintiff submits that it made an offer on September 24, 2014 which remained open for acceptance until the court’s judgment was released, which offer was less favourable to the plaintiff than the court’s judgment, thereby entitling the plaintiff under rule 49.10(1) of the Rules of Civil Procedure to substantial indemnity costs from the date the offer was served.

[8] Defence counsel responded that the offer included that the defendants pay costs of $96,000.00, in addition to $16,904.00 for principal and pre-judgment interest. Therefore, it argued, rule 49.10(1) of the Rules of Civil Procedure does not apply because the plaintiff did not achieve a result at least as favourable as the terms of the offer. I agree, and would not apply rule 49.10(1) of the Rules of Civil Procedure in these circumstances.

[9] The proceeding was not highly complex. As noted in the reasons, much of the evidence was available in the form of the parties’ exchange of e-mails, printouts of which were filed. The factual situation was straightforward. There was a legal issue of what to do in the circumstances.

[10] Defence counsel raised the issue of whether the plaintiff is entitled, as it claims to be, to its costs for the entire action, which would amount to rewarding the plaintiff for abandoning the rest of the action after not proving its claim for damages arising out of the failed sale or dealing with the defences raised in mitigation. I find that it makes little difference in the present case where scarcely less could have been done in the main action before proceeding to the motion for summary judgment.

[11] The defence argued that the total costs here should be in the range of $10,000.00 to $14,000.00. In support, it attached its Bill of Costs for $13,278.39, claiming a similar level of experience to plaintiff’s counsel.

[12] The plaintiff sought to have the individual defendant, Brent Lipke, made liable for the plaintiff’s costs of this action, as well as the corporate defendant. I note that Brent Lipke was the representative of the corporate defendant throughout and signed the agreement of purchase and sale in its behalf. He is said to be a shareholder and director of the defendant company. The reasons for judgment record that he did not act in a personal capacity except allegedly as the guarantor of a vendor take back mortgage. The plaintiff seeks to ground his liability for costs on his actions on behalf of the corporate defendant in repudiating the agreement and the allegation that it would be unconscionable to allow him to escape the remedies owing to the plaintiff arising from his alleged breach of his unspecified personal obligations to the plaintiff. No authority is given for this position. The Ontario Court of Appeal set out in ScotiaMcleod Inc. v. Peoples Jewellers Ltd. (1995) 26 O.R. (3d) 481 the circumstances in which directors may be held personally responsible for actions carried out in the corporate name. (See also Lobo v. Carleton University, 2012 ONSC 254, [2012] O.J. No. 63, upheld on appeal at 2012 ONCA 498, [2012] O.J. No. 3161, and Density Group Ltd. v. H.K. Hotels LLC, 2014 ONCA 605, [2014] O.J. No. 3865 paras. 163-169). No argument was made for Brent Lipke’s personal liability in these terms. I do not find that he is personally liable to the plaintiff for costs in the circumstances of this case.

[13] In summary, I have taken into account the factors enumerated under rule 57 of the Rules of Civil Procedure, including the principal of indemnity, the result achieved, and the complexity of the matter, as well as the application of the principal of proportionality. In addition, I have considered the principles set forth by the Court of Appeal in Boucher v. Public Accounts Counsel for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), and Davies v. Clarington (Municipality) (2009), 100 O.R. (3d) 66 (C.A.), specifically that the overall objective of fixing costs is to fix an amount that is fair and reasonable for an unsuccessful party to pay in the particular circumstances, rather than an amount fixed by the actual costs incurred by the successful litigant. I conclude that an award of partial indemnity costs in the amount of $17,000.00 inclusive of disbursements and HST would be a reasonable one in the circumstances, and I order Unique Real Estate Holdings Inc. to pay to Brian Coghlan that amount within 30 days.

Justice J. A. S. WILCOX Released: January 16, 2017