Court File and Parties

COURT FILE NO.: CV-18-00600661 DATE: 20180917 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Luciano Sammut AND: Heather McGhee Peggs

BEFORE: Nishikawa J.

COUNSEL: Gregory Sidlofsky and Peter Askew, for the Applicant Kelly Hayden and Eli Lederman, for the Respondent

HEARD: In writing

Costs Endorsement

Overview

[1] On August 21, 2018, I dismissed the Application brought by Luciano Sammut for a declaration that he is entitled, through adverse possession, to ownership and exclusive use of a strip of land along the southern boundary of his property at 300 Pacific Avenue, Toronto: Sammut v. McGhee, 2018 ONSC 4988. I subsequently received costs submissions from both parties.

[2] The Respondent owner of the neighbouring property at 298 Pacific Avenue, Ms. McGhee Peggs, seeks $48,269.35 in costs on a substantial indemnity basis of the entire Application. In the alternative, the Respondent seeks $41,668.34, which represents costs on a partial indemnity basis until the date of her offer to settle, and costs on a substantial indemnity basis thereafter. Ms. McGhee Peggs’ costs on a partial indemnity basis total $32,267.53. All amounts include disbursements and HST.

[3] The Respondent served an offer to settle on July 25, 2018. The offer was for $6,000.00 in exchange for a dismissal of the application.

[4] Mr. Sammut’s view is that only partial indemnity costs are appropriate in the circumstances, and that Ms. McGhee Peggs’ costs are excessive. The Applicant’s own costs for the Application were approximately $24,350.18 on a partial indemnity basis, or $27,515.70 including HST.

Analysis

[5] Substantial indemnity costs may be warranted where a party has engaged in reprehensible, scandalous or outrageous conduct in the proceeding: Davies v. Clarington (Municipality) (2009), 100 O.R. (3d) 66 (C.A.), 2009 ONCA 722, at paras. 28-29.

[6] Ms. McGhee Peggs argues that Mr. Sammut commenced the proceeding in order to interfere with the sale of her property, which was scheduled to close on August 30, 2018. She points to his delivery of a copy of the Notice of Application on the purchaser’s realtor as demonstrating this. The Applicant was aware of the boundary issue since 2015 and 2016 when the fence was relocated, and could have commenced the proceeding then. The Applicant counters that the Respondent engaged in high-handed conduct, such as unilaterally relocating the fence and causing damage to his garden in the process.

[7] It is clear from the record that the parties’ relationship was acrimonious, with less than neighbourly conduct on both sides. In respect of the litigation, I do not find that the Applicant’s conduct was reprehensible such that it is worthy of sanction. Other than questioning the motives behind the timing of the Application, the Respondent does not suggest misconduct on the part of the Applicant or his counsel. An award of costs for the entire proceeding on a substantial indemnity basis is not warranted in the circumstances.

[8] In respect of the Respondent’s request for substantial indemnity costs after her offer to settle, r. 49.10 of the Rules of Civil Procedure does not apply to an offer to settle made by a defendant where the plaintiff’s claim fails. In Davies v. Clarington, at para. 40, the Court of Appeal stated, in the context of a defendant’s offer: “Apart from the operation of Rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made.” (Emphasis in original). See also: Mabe Canada Inc. v United Floor Ltd., 2016 ONSC 5794; Shewchuk v Blackmont Capital Inc., 2015 ONSC 7861; Harte-Eichmanis v. Fernandes, 2012 ONSC 2079. I have found no reprehensible behavior in the conduct of the proceeding that would warrant substantial indemnity costs, whether for the entire proceeding or from the date of the Respondent’s offer. Moreover, I question whether the offer contained a real element of compromise, given the amount and the timing.

[9] Pursuant to the Courts of Justice Act, s. 131(1), the Court has broad discretion when determining the issue of costs. The overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.). Rule 57.01(1) of the Rules of Civil Procedure sets out the factors to be considered by the court when determining the issue of costs. I have considered these factors, as well as the principle of proportionality in R. 1.01(1.1) of the Rules of Civil Procedure, while keeping in mind that the court should seek to balance the indemnity principle with the fundamental objective of access to justice.

[10] The Respondent was entirely successful in defending the Application. The issue was important to both parties, because it would permanently determine the boundary between their properties. From the Respondent’s perspective, the Application would have a significant impact on the sale of her property, for which the closing was imminent. The issues raised by the Application required historic evidence and a review of complicated case law over a compressed period of time. Both parties’ counsel spent comparable time on the Application. The parties engaged in efforts to expedite the matter, and undoubtedly incurred higher costs due to the urgency of the Application.

[11] Based on the foregoing, I fix total costs on a partial indemnity basis at $32,267.53, inclusive of disbursements and HST. This includes costs incurred in the preparation of the costs submissions.

Nishikawa J. Date: September 17, 2018