Court File and Parties

COURT FILE NO.: CV-16-555863 REFERENCE HEARD: 2018-01-15, 2018-01-16, 2018-01-17, 2018-01-18 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Melanie Hurn, Applicant AND: Rawle Brathwaite and Ian Braithwaite, Respondents

BEFORE: Master Jolley

COUNSEL: Gillian Fournie, Counsel for the Applicant Christopher Thiesenhausen, Counsel for the Respondent Ian Braithwaite Rawle Brathwaite, in person

COSTS IN WRITING: 6 March 2018

DECISION ON COSTS

[1] On 31 January 2018 I released my decision on this reference and provided the parties with the opportunity to address the issue of costs.

[2] It was agreed that the applicant (“Melanie”) would provide her costs submissions by 16 February 2018 and the respondents would provide their responding submissions by 23 February 2018. The respondent Ian Braithwaite (“Ian”) provided his costs submissions on 23 February 2018. The respondent Rawle Brathwaite (“Rawle”) did not file costs submissions despite two follow up emails from the court office. On 28 February 2018 Rawle was advised that if he did not provide costs submissions by 2 March 2018, the costs decision would be made on the basis of the material filed by Melanie and Ian. As Rawle did not file material by 2 March 2018, this decision is based on the materials that were before me.

[3] By order of Justice Kurke made 31 March 2017, costs of the proceeding were directed to be determined by me. Melanie seeks her costs of both the application for partition and sale and costs of the reference.

[4] In determining costs, I have been mindful of the factors set out in Rule 57 including the amount claimed and recovered, success achieved, the complexity and importance of the matter, unreasonable conduct on the part of any party which unduly lengthened the proceeding, the scale of costs, any offer to settle, the hourly rate claimed, hours spent, the principle of proportionality and the amount a losing party would reasonably expect to pay.

Costs of the Application for Partition and Sale

[5] Melanie incurred actual costs of $46,388.41 in respect of the partition and sale application. She seeks to be fully indemnified for those costs through an award of $30,925.61 payable from the partnership assets, the result of which would be that those costs are effectively shared by the three partners, and an award of $15,462.30 in costs from Rawle. Ian takes the position that Melanie should not be awarded her costs against the partnership but only against Rawle. He also challenges the quantum of costs sought in the event costs are awarded against the partnership.

[6] I find that the costs incurred by Melanie at the application stage were for the benefit of all parties. While Ian consented to a sale once he was served with the application materials, as I found in my reasons released on 31 January 2018, the breakdown in the partnership was caused, in part, because of Ian’s failure to vacate the premises when he agreed and his failure to pay the agreed upon rent during the time he or his nephews resided there. Further, Ian’s consent to the sale did not alleviate the need for Melanie to continue with the partition application given Rawle’s refusal to sell. Melanie should not be required to bear the costs or seek to recoup those costs only against Rawle where Ian equally benefitted from the partition order made. Had Melanie not acted, Ian ultimately would have had to incur the cost of bringing his own partition application to obtain any funds from the property.

[7] I find it is reasonable that the costs of the application for partition and sale be paid from the net sale proceeds so that each partner bears the costs equally. I treat these costs as akin to how debts or obligations of a partnership paid by one partner are treated under the Partnership Act. I also note by analogy the obligation of a partnership to indemnify the partners in respect of payments made by them for the preservation of the business or property of the partnership. The application for partition and sale related to the administration of the partnership and I treat Melanie’s costs to bring it as a partnership expense.

[8] However, I would not award those costs on a full indemnity rate. There is nothing in my view that would warrant a departure from the usual scale of costs on a partial indemnity basis. Further, Ian also incurred costs to respond to the application which he is not seeking from the sale proceeds. It would be unfair, in my view, for him to incur his own costs to consent to the application and also his share of the full indemnity costs of Melanie.

[9] I have also slightly reduced the partial indemnity fees portion sought to $20,000. While the amount is substantially higher than the costs spent by Ian, it was Melanie who was responsible for the lion’s share of the application work. I order that Melanie’s partial indemnity costs of $24,707.10, being fees in the amount of $20,000, HST of $2,600 and disbursements as claimed, be paid to her from the assets of the partnership before distribution.

Costs of the Reference

[10] However, I am of the view that the costs of the reference are to be treated differently. In the reference each party was asserting his or her own claim for funds owed by and owing to the partners personally. This was not an action taken for the benefit of the partnership.

[11] Melanie’s partial indemnity costs for the reference, inclusive of HST and disbursements totaled $15,269.99. She seeks one half of that amount, or $7,635.00, from Ian and one half of her substantial indemnity costs, or $10,983.47, from Rawle.

[12] Ian argues that the costs are excessive when measured against what he could reasonably have been expected to pay in costs in accordance with the principles of fairness, reasonableness and proportionality. While Ian’s actual costs on the reference amounted to $12,000 measured against Melanie’s actual costs of $21,745.00, I find the partial indemnity fees sought by Melanie of $11,853.00 to be reasonable for a four day hearing and for the prepatory work for the reference. I also note that Melanie was successful against Ian on his argument that she should bear the renovation costs to the extent they exceeded their group estimate. Further, I note that Melanie is not seeking a joint and several award of $15,269.99 against Ian and Rawle but a single award of $7,635.00 against Ian.

[13] Ian made an offer to settle to Melanie and Rawle which was slightly better than what he received at the hearing. On 20 October 2017 Melanie’s counsel wrote to Rawle advising, in part, that “Melanie Hurn will accept the settlement offer made by Ian Braithwaite on the condition that you accept it as well.” Melanie could not have accepted the offer without Rawle also accepting the offer and agreeing to the quantum to be paid to Ian, which Rawle did not accept. I find that Melanie was prepared to accept Ian’s offer to the extent she could.

[14] I find it reasonable that Ian pay one half of Melanie’s partial indemnity fees and disbursements, as claimed, for a total owing by Ian to Melanie of $7,635.00.

[15] Absent Melanie’s offer to settle to Rawle made on 20 October 2017, I would have found that Rawle should pay Melanie her costs on the same partial indemnity basis. His positions on the reference, while not borne out, did not substantially lengthen the hearing. However, Rawle had the opportunity to settle by accepting Ian’s offer coupled with Melanie’s offer. Had he done so, he would have fared much better than he did at the hearing and Melanie would have avoided the costs incurred. Melanie obtained a judgment more favourable than the terms of her offer to settle with Rawle. I find she is entitled to her substantial indemnity costs from Rawle from the date of that offer. While I do not have a breakdown by date, it appears that most of the work, other than the original affidavit of Melanie sworn 3 August 2017, was done after the offer was made. Making some deduction for the costs of that affidavit to be awarded on a partial indemnity basis rather than a substantial indemnity basis, I order Rawle to pay Melanie costs in the amount of $9,500.00.

[16] I order that the costs be paid by Ian to Melanie out of his share of the net sale proceeds, now adjusted to account for the application’s legal costs.

[17] I order that the costs be paid by Rawle to Melanie out of his share of the net sale proceeds, as adjusted to account for the application’s legal costs. To the extent that Rawle’s share of the net sale proceeds does not cover his costs ordered to be paid to Melanie, she shall have judgment against Rawle for the balance.

[18] In the event of any disagreement over the calculations, counsel may direct correspondence to me until 16 March 2018 via Ms. Meditskos at Christine.Meditskos@ontario.ca.

Master Jolley

Date: 6 March 2018