Court File and Parties

Citation: Beatty v. Wei, 2017 ONSC 5086

Court File No.: CV-16-557418 / CV-16-560475

Date: 2017-08-25

Superior Court of Justice - Ontario

Re: Jonathan Beatty and Jacqueline Beatty, Applicants And: Zhong Wei and RE/MAX PREMIER INC., Respondents

And Between: Zhong Wei, Applicant And: Jonathan Beatty, Jacqueline Beatty, Harold Balchand, and RE/MAX PREMIER INC., Respondents

Before: Mr. Justice P.J. Cavanagh

Counsel: John Lo Faso and David Morawetz, for the Applicants Patrick Bakos, for the Respondent Zhong Wei Amanda Gibson, for the Respondents, Re/Max Premier Inc. and Harold Balchand

Heard: Submissions in Writing

Costs Endorsement

[1] Zhong Wei (“Wei”) was successful in opposing the application by Jonathan Beatty and Jacqueline Beatty (the “Beattys”). Wei was also successful on his application in obtaining an order that he is entitled to rescind the agreement of purchase and sale and treat it as void ab initio, and that he is entitled to the return of the deposit held by Re/Max Premier Inc.

[2] Wei seeks costs on a partial indemnity scale in the amount of $30,000 inclusive of disbursements and HST.

[3] The Beattys submit that no costs should be awarded to Wei because (i) Wei alleged in the evidence tendered on these applications and in his factum that the Beattys knew that the subject property (the “Property”) was a marijuana grow-op and failed to disclose this fact to Wei, or they were reckless in regard to their representation to Wei that the Property had never been a marijuana grow-op, and (ii) Wei produced no evidence that remotely suggested that the Beattys had knowledge that the Property had previously been used as a grow-op or were reckless as to the truth of their representation.

[4] The Beattys submit, in the alternative, that no costs should be awarded in favour of Wei because:

a. Wei’s counsel failed to comply with the timetable set by order of McEwen J. dated February 13, 2017 including by failing to deliver a factum (that was due on May 15, 2017) until May 30, 2017;

b. Novel arguments were advanced on the applications and the law is unclear, and the Beattys brought their application reasonably and it was resisted reasonably by Wei.

[5] The Beattys submit, in the further alternative, that the costs claimed are excessive because too much time was spent on certain activities recorded in the time dockets of Wei’s counsel and, if costs are awarded, they should be awarded in a reduced amount of $5,000.

[6] On the hearing of the applications, Wei took the position (citing Petersen v. Matt, 2014 ONSC 896 as authority) that where a latent defect is discovered, there is a presumption that the seller knew about the defect and that the seller has an onus to show that he or she could not possibly have known of the defect. Wei submitted that the Beattys made the representation and warranty in the Illegal Substances Clause with reckless disregard for the truth and, therefore, that they cannot meet their onus of showing that they could not possibly have known of the defect. The Beattys disputed that they had such an onus, and they submitted that Petersen was incorrectly decided. I did not find it necessary to decide whether the Beattys breached an obligation to disclose a latent defect.

[7] Given the way in which the applications were argued, I exercise my discretion not to decline to make an award of costs in favour of Wei, the successful party. I do not regard the issues raised on these applications as sufficiently novel that no costs should be awarded to the successful party.

[8] With respect to the amount of costs, in my view, some of the time spent by Wei’s counsel for research, factum preparation, and time spent on a motion heard by Master Pope (in respect of which a costs order was made) would not have been within the reasonable expectations of the Beattys, the unsuccessful parties, and should not be allowed. Having regard to the principles expressed in Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 and Rule 57.01(1), I fix costs to be paid by the Beattys to Wei in the amount of $26,436.43, comprised of fees of $20,000, disbursements of 3,395.07, and HST of $3,041.36.

[9] Re/Max Premier Inc. (“Re/Max”) was named as a respondent in the application commenced by the Beattys because it held the deposit. Wei brought an application in which he named the listing agent, Harold Balchand as a respondent, and he asserted that Mr. Balchand and Re/Max had made misrepresentations. The parties agreed that Wei’s application would be converted to an action and that the allegations of negligence would be addressed in the action and not on the application. Wei does not seek costs against Mr. Balchand or Re/Max, and Re/Max and Mr. Balchand submit that no costs should be awarded against them on the applications. The costs of Re/Max and Mr. Balchand arising out of Wei’s application shall be determined by the trial or motions judge in that proceeding.

Cavanagh J.

Date: August 25, 2017