COURT FILE NO.: CV15-136 DATE: 20180628
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Jesse Fulton and Nicole White, Plaintiffs v. KOA Aloha Inc., Defendant
BEFORE: The Honourable Justice C.J. Conlan
COUNSEL: Erroll G. Treslan, for the Plaintiffs Christopher J. Staples, for the Defendant
E N D O R S E M E N T
Conlan J.
I. Introduction
[1] Jesse Fulton (“Jesse”) and Nicole White (“Nicole”), the Plaintiffs and common law spouses, were in a dispute with their former friends, Shane and Shelly Anderson (“Shane” and “Shelly”), husband and wife.
[2] Jesse and Nicole sued KOA Aloha Inc. (“KOA”), the Defendant and the real estate holdings company operated by Shane and Shelly.
[3] Jesse and Nicole ran a business called Shreducation. It was a high performance snowboarding coaching program. Jesse, an accomplished athlete having prior experience with Canada’s Olympic snowboarding team, was the original coach. Nicole handled the administration.
[4] Two of Shane and Shelly’s children were involved with Shreducation. High performance snowboarders from various places would come to Blue Mountain each season and stay at housing provided to them. For a while, Shreducation rented housing for the athletes.
[5] Shane and Shelly bought two units at Wintergreen Place, a condominium complex near the Mountain. An arrangement was made whereby Jesse and Nicole could use one of the units, 116, as Shreducation’s team house. In time, Jesse and Nicole could purchase 116 and have it as their own. The bargain included some reduction in Shreducation fees for Shane and Shelly’s two children.
[6] As nothing was reduced to writing, a dispute ensued between the parties as to what the terms of the deal were.
[7] 116 was bought by Shane and Shelly in September 2012, and the transaction closed in October of that year (along with the deal on their other unit, 125). The down-payment and closing costs for 116 were $55,332.43. The Andersons borrowed some money from Shane’s friend. A mortgage was secured for the balance of the purchase price. Shreducation moved in as of December 2012, after extensive renovations were undertaken, paid for mainly by the Andersons.
[8] The athletes paid rent for staying at 116. During the off-season, the unit was available to be and was rented by the public at large.
[9] By December 2014, the balance on the mortgage against 116 was $157,977.37. By then, however, things had soured between the parties. In correspondence addressed to Nicole and Jesse dated November 6, 2014, the Andersons effectively stated that, for various reasons, Jesse and Nicole would not be acquiring 116.
[10] At trial, there were several issues to decide: (i) whether there was an agreement between the parties with regard to 116, (ii) if so, what its terms were, (iii) whether KOA breached the agreement, and (iv) if the Plaintiffs were entitled to a remedy for breach of contract, should that remedy be specific performance of the sale of 116 from KOA to them, or should it be monetary damages, and if so how much?
[11] There being no written agreement in existence, the Defendant relied on section 4 of the Statute of Frauds, R.S.O. 1990, C. S.19, as amended, as being a complete defence to the action. That argument was rejected by this Court.
[12] Alternatively, it was submitted on behalf of KOA that no clear agreement had been proven by the Plaintiffs, and thus, there could not have been any breach committed by the Defendant. That argument also failed.
[13] In the further alternative, it was argued on behalf of KOA that the Andersons were entitled to terminate the agreement because the Plaintiffs had not complied with its terms. Similarly, that submission was not accepted by this Court.
[14] Finally, KOA’s position was that, if some remedy was granted to the Plaintiffs, it should be monetary damages and not specific performance. That final argument by KOA was accepted by this Court, although the monetary damages awarded to the Plaintiffs was significantly higher than what the Defendant’s position was.
[15] Judgment was granted in favour of the Plaintiffs in the amount of $71,146.69, plus prejudgment interest commencing on November 6, 2014 as per the Courts of Justice Act, plus post-judgment interest as per the Courts of Justice Act.
II. The Positions of the Parties on Costs
[16] As the successful side and the parties presumptively entitled to some costs, Jesse and Nicole request $61,990.36 in costs (substantial indemnity) or $55,086.06 (partial indemnity). A Bill of Costs has been filed on behalf of the Plaintiffs.
[17] Jesse and Nicole rely upon Rule 49.10(1) of the Rules of Civil Procedure:
49.10 (1) Where an offer to settle,
(a) is made by a plaintiff at least seven days before the commencement of the hearing;
(b) is not withdrawn and does not expire before the commencement of the hearing; and
(c) is not accepted by the defendant,
and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise. R.R.O. 1990, Reg. 194, r. 49.10 (1); O. Reg. 284/01, s. 11 (1).
[18] Jesse and Nicole also rely upon the conduct of the Defendant in making the trial much longer than it needed to be.
[19] KOA relies heavily on Rule 76.13 of the Rules of Civil Procedure and argues as follows, at paragraphs 1, 2, 3, 4 and 11 of its written submissions on costs:
The plaintiff’s claim was for specific performance of an agreement to purchase the condominium unit at issue in this action or in the alternative damages in the amount of $150,000 plus additional unspecified damages equal to the purchase price of furnishings supplied by the plaintiffs to the unit.
The Court denied the plaintiffs’ claim for specific performance and awarded damages in the amount of $71,146.69, an amount within the monetary jurisdiction of the simplified procedure under Rule 76 of the Rules of Civil Procedure.
Rule 76.13 states in part as follows:
(2) Sub-rules (3) to (10) apply to a plaintiff who obtains a judgment that satisfies the following conditions:
- The judgment awards exclusively one or more of the following:
i. Money.
ii. Real property.
iii. Personal property.
- The total of the following amounts is $100,000 or less, exclusive of interest and costs:
i. The amount of money awarded, if any.
ii. The fair market value of any real property and of any personal property awarded, as at the date the action is commenced.
(3) The plaintiff shall not recover any costs unless,
(a) the action was proceeding under this Rule at the commencement of the trial; or
(b) the court is satisfied that it was reasonable for the plaintiff,
(i) to have commenced and continued the action under the ordinary procedure, or
(ii) to have allowed the action to be continued under the ordinary procedure, by not abandoning claims or parts of claims that do not comply with sub-rule 76.02(1), (2) or (2.1).
(4) Sub-rule (3) applies despite sub-rule 49.10(1) (plaintiff’s offer to settle).
The action did not proceed under Rule 76 at the commencement of the trial. Rule 76.13 therefore prima facies applies to deny the plaintiffs costs of this action (regardless of any offers to settle) unless the Court is satisfied that it was reasonable for the plaintiffs to have commenced and continued the action under the ordinary procedure or to have continued the action without abandoning its claims to specific performance or damages in excess of $100,000. It is the submission of the defendant that it was not reasonable to so proceed, or in the alternative, the decision to so proceed should be a factor considered by the Court in reducing any award of costs herein.
As a result, it is submitted that the plaintiffs are not entitled to costs of the action but in the event that the Court determines that some costs should be paid, such should not exceed $25,000.
III. Settlement Offers
[20] On April 1, 2015, in writing, before the action was even commenced, the Plaintiffs offered to settle the dispute for $40,000.00. That offer was open for acceptance until April 17, 2015. It was not accepted. The Plaintiffs did better than that after trial.
[21] On November 16, 2015, in writing, the Plaintiffs offered to settle the case for $40,000.00 plus $5,966.92 in costs. That offer was open for acceptance until December 4, 2015. It was not accepted. The Plaintiffs did better than that after trial.
[22] On December 14, 2016, in writing, the Plaintiffs offered to settle the case for $50,000.00. That offer was open for acceptance until December 23, 2016. It was not accepted. The Plaintiffs did better than that after trial.
[23] On March 10, 2017, in writing, the Plaintiffs offered to settle the case for $53,000.00. That offer was open for acceptance until March 24, 2017. It was not accepted. The Plaintiffs did better than that after trial.
[24] On January 17, 2018, in writing, the Plaintiffs offered to settle the case for $53,000.00. That offer was open for acceptance until January 31, 2018. It was not accepted. The Plaintiffs did better than that after trial.
[25] I pause here to note that the latter four offers to settle presented by the Plaintiffs were actually open for acceptance until just after the trial started, but they were subject to additional costs in favour of the Plaintiffs if accepted by KOA after the deadlines noted above.
[26] This Court is aware of two settlement offers made by KOA, neither of which was accepted by the Plaintiffs and both of which the Plaintiffs beat after trial: $11,500.00 (February 19, 2016) and $20,000.00 (December 22, 2017).
IV. Basic Legal Principles on Costs
[27] I must keep these things in mind in making the decision on costs:
(i) the Plaintiffs are presumed to be entitled to some costs;
(ii) the Plaintiffs bear the burden of proving that they are entitled to the costs consequences outlined in Rule 49.10(1);
(iii) all settlement offers are relevant, regardless of whether they fall within Rule 49.10;
(iv) quantum of costs is largely discretionary;
(v) the objective is to make an award that is fair, just and reasonable in all of the circumstances, including the prudent expectations of the losing side;
(vi) costs should generally bear some proportionate connection to the result achieved;
(vii) cost awards are designed to partially indemnify successful litigants, encourage settlement and discourage or sanction inappropriate conduct by litigants; and
(viii) in determining the quantum of costs, I should consider the various factors outlined in Rule 57.01(1) and Rule 76.13 (in fact, the latter Rule is relevant to both entitlement and quantum).
V. Decision
[28] I agree with the Plaintiffs that they tried much harder than KOA to settle this dispute, and that their offers to settle were more reasonable than those of Shane and Shelly, and that they beat all of the offers to settle (on both sides) after trial, and that the majority of the trial time was consumed by or on behalf of the Defendant.
[29] On the other hand, I agree with KOA that the Plaintiffs’ recovery falls within the monetary jurisdiction of Rule 76 and that the Plaintiffs ought to have abandoned their claim for specific performance prior to the start of the trial. I still think that it was reasonable, however, for the Plaintiffs to continue the action under the ordinary procedure and claim in excess of $100,000.00 in monetary damages.
[30] In the end, I agree with Mr. Staples that “the [Plaintiffs’] decision to so proceed should be a factor considered by the Court in reducing any award of costs herein” (paragraph 4 of KOA’s written submissions on costs).
[31] $25,000.00 in costs in favour of the Plaintiffs, as suggested by KOA in the alternative, is too low. That figure would not give enough credit to the Plaintiffs’ persistent and very reasonable efforts to resolve the litigation.
[32] In all of the circumstances, I have decided that the most fair, just and reasonable quantum of costs in favour of the Plaintiffs is $45,000.00, all-inclusive.
[33] That represents partial indemnity but has been further reduced to account for the Rule 76 issue.
[34] This Court orders that KOA pay that sum to the Plaintiffs within thirty days of the date of this Endorsement.
Conlan, J. DATE: June 28, 2018