COURT FILE NO.: CV-18-589411 DATE: 20181016 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Royal Bank of Canada, Plaintiff (Defendant to the Counterclaim) AND: James Fordyce Davidson and Mavis Davidson, Defendants (Plaintiffs by Counterclaim)

BEFORE: Copeland J.

COUNSEL: Jeffrey Kukla, for the Plaintiff (Defendant to the Counterclaim) Sam Davies, for the Defendants (Plaintiffs by Counterclaim)

HEARD: October 15, 2018

Endorsement

Introduction

[1] The plaintiff brings a motion for summary judgment on a mortgage, and some credit card debt. At the outset of the hearing of the motion, counsel for both parties advised that all but two issues are proceeding unopposed. The issues which are contested are: (i) whether the plaintiff is entitled to an order for possession of the mortgaged property; and, (ii) costs.

[2] For sake of clarity, the following relief is unopposed: (i) an order that the defendants pay the plaintiff $205,803.17, and post-judgment interest at the rate of 2.64 percent per annum from the date of judgment (the mortgage debt); (ii) an order that the defendants pay the plaintiff $5,135.22, and post-judgment interest at the rate of 24.99 percent per annum from the date of judgment (the credit card debt); and, (iii) an order dismissing the defendants’ counterclaim.

[3] With respect to the unopposed relief, I am satisfied on the record before me that there is no genuine issue requiring a trial in the sense set out in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87. The record before the court is clear that the defendants entered into both the mortgage contract, and the credit card contract. And the record clearly proves the amounts owed.

The Request for an order for possession

[4] The plaintiff argues that the mortgage terms provide for a right of the plaintiff to take possession of the property as one of the available remedies for a default on the mortgage. The plaintiff argues that it has met the notice requirements to be entitled to possession.

[5] The defendants do not argue that the plaintiff has not met the legal criteria to be entitled to an order of possession. Rather, the defendants argue that they now have new financing lined up (not yet closed), and on this basis the court should not grant an order for possession. I note that a document outlining the new financing was handed up to the court, but not formally proven as part of the record. The defendants intend to register this new financing today. They do not dispute any of the fees or interest due to the plaintiff, but ask that an order for possession not be made.

[6] I am satisfied that the plaintiff is entitled to an order of possession of the mortgaged property. Paragraph 7.3(1)(i) of the standard charge terms of the mortgage gives the plaintiff the right on default to take possession of the property. The record before the court is clear that the defendants are in default on the mortgage, and this is not contested by the defendants. On this basis, I find that the plaintiff is entitled to an order for possession. Further, I am satisfied on the record before the court that the plaintiff has met the requirements of Rule 60.10 of the Rules of Civil Procedure for leave to issue a writ of possession. The record shows that the plaintiff did an occupancy check of the premises, and the sole occupants are the defendants. Further, the record shows that the required notices demanding possession were served on the defendants (as well as notice of this motion).

[7] As a practical matter, it does appear that the defendants will be in a position in a matter of days to have new financing in place to satisfy their debts to the plaintiff. The defendants are effectively asking the court not to make the order of possession on the basis of assuming the new financing will close as planned, and they will repay their debts to the plaintiff and discharge the mortgage. Although I accept that the defendants make this argument in good faith, given the history of this matter, I find that it is not appropriate for the court to deny the plaintiff relief it is otherwise entitled to on the basis of this promised last minute financing.

[8] The history of this matter is that due to the defendants’ financial circumstances, they ran into difficulty meeting their financial obligations under the mortgage and the credit card debt in the summer of 2017. Throughout the fall of 2017, there was communication between Mr. Davidson and the plaintiff, where payment agreements were negotiated for the defendants to make various payments, to address their default on the mortgage. In general terms, the defendants would then make a couple of payments, but then again fall behind. Although it looks likely that the defendants’ new financing will be put in place, given the history, I find it is not appropriate to deny the plaintiff relief it is otherwise entitled to because of this defendants’ last-minute arranging of new financing.

[9] Thus, I find that the plaintiff is entitled to possession of the property at issue, and I grant leave to issue a writ of possession.

[10] Despite his position that the plaintiff is entitled to possession immediately, counsel for the plaintiff indicated in oral submissions that he would not oppose a short delay on the effective date of that aspect of the order, based on the new financing it appears the defendants are likely to be able to put in place.

[11] If the new financing closes, it appears that it will resolve the debts owed by the defendants to the plaintiff. Given the importance of a home to the defendants, I will stay the effect of the order of possession and leave to issue a writ of possession until Tuesday, October 30, 2018. This addresses the defendants’ concern to put new financing in place, without working unfairness towards the plaintiff.

Costs

[12] The plaintiff seeks costs of the motion and the action on a substantial indemnity basis in the amount of $23,780.02. Of this amount, $1,776.66 is disbursements (including HST), and the balance is fees. The plaintiff argues that the mortgage terms entitle it to fees on the substantial indemnity scale, and argues that the costs set out in its costs outline are reasonable. In particular, the plaintiff notes that the defendants have throughout these proceedings required the plaintiff to prove its claim, and they cannot now be heard to complain that the time spent by counsel to build the record for the motion should not have been spent. In addition, the plaintiff points to specific actions by the defendants that increased costs. These actions include failing to agree to a timetable for the motion, which necessitated a chambers appointment to set a timetable; and portions of the defendants’ affidavits regarding telephone communications with staff of the plaintiff, that required gathering evidence of the recordings of the conversations to file as reply evidence.

[13] The defendants argue that the costs sought by the plaintiff are not reasonable. The defendants point to a term of the mortgage agreement that requires that costs incurred to collect the debt, including legal fees, must be reasonable. The defendants argue that the court should consider an offer to settle made by the defendants on October 2, 2018 in relation to costs. The defendants argue that their own lawyer’s costs of approximately $8,000.00 are relevant in assessing the reasonableness of the plaintiff’s costs. And the defendants argue that the total amount of costs sought by the plaintiff is unreasonable in relation to the amount of the debt. The defendants argue that costs should be in the range of $10,000.00.

[14] Pursuant to the Courts of Justice Act, s. 131(1), the court has a broad discretion when determining the issue of costs. Rule 57.01(1) of the Rules of Civil Procedure sets out a non-exhaustive list of factors to be considered by the court when determining the issue of costs. These factors include: the principle of indemnity and the results obtained; the reasonable expectations of the paying party; the amount claimed in the proceeding and proportionality; the complexity of the proceeding; the importance of the issues; the experience of the lawyer for the party entitled to costs; any offers to settle; and, the conduct of a party that tended to lengthen the duration of the proceeding.

[15] The overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: Boucher v. Public Accountants Counsel for Ontario. I have considered these factors, as well as the principle of proportionality (Rule 1.01(1.1) of the Rules of Civil Procedure), keeping in mind that the court should seek to balance the indemnity principle with the fundamental objective of access to justice.

[16] In this case, the plaintiff claims costs on a substantial indemnity basis based on the terms of the mortgage contract. I accept that the contract provides that the plaintiff’s costs to enforce the mortgage and collect the debt be paid on a substantial indemnity basis. In particular paragraphs 1(1) and 7.9 of the standard charge terms of the mortgage provide that costs, including legal fees, to collect the outstanding amount of the mortgage, enforce rights under the mortgage, or take possession of the property are fully reimbursable to the plaintiff under the mortgage, and that legal fees are payable on a “solicitor and own client” basis.

[17] However, those costs must be reasonable. This is so both as a matter of the terms of the contract, and as a matter of the court’s discretion in relation to costs. Section 10 of the RBC Homeline Agreement provides in relation to costs payable in the event of a default that the defendants must pay, inter alia, “any reasonable costs, including legal fees, that we incur to collect or attempt to collect the amount owing” (emphasis added). See also Royal Bank v. Dees, [1980] O.J. No. 1315 (HCJ) at para. 9. This interpretation of the terms of the contract is supported by the overriding discretion of the court with respect to costs, provided for in s. 131 of the Courts of Justice Act, and Rule 57.01 of the Rules of Civil Procedure.

[18] I will address the arguments made by the defendants that the plaintiff’s costs are unreasonable in two sets of factors: first, the offer to settle made by the defendants on October 2, 2018; and second, the plaintiff’s costs in comparison to the defendants’ own costs, and whether the fees charged are excessive because of the amount of time spent, and in relation to the amount of the claim.

[19] I do not find the defendants’ offer to settle to be a significant factor in assessing costs in the circumstances of this case, primarily because of how late in the proceeding it was made. I find that it is not an offer which triggers Rule 49.10(2) of the Rules of Civil Procedure, because the judgment the plaintiff is receiving on the motion is more favourable than the offer made by the defendants. It is more favourable because the offer makes no provision either for costs to the plaintiff, or for possession of the property at issue. Further, in terms of considering the defendants’ offer as a discretionary factor, the offer was made so late that it had little impact on the plaintiff’s costs. It is clear from the dockets included in the plaintiff’s cost outline that almost all of the preparation for the motion was completed before the offer to settle was made on October 2, 2018 (other than the counsel fee to attend for the hearing of the motion – which I address below).

[20] I turn then to the factors of the defendants’ own costs, whether some time spent was excessive, and the amount of costs sought in relation to the amount of the claim. These are all relevant factors to be considered in assessing the reasonableness of costs sought.

[21] I do not find comparing the plaintiff’s fees to the defendants’ fees is particularly helpful in this case. As counsel for the defendants conceded, counsel for the plaintiff is more senior, and thus his hourly rate is appropriately higher. Further, throughout the proceedings, the defendants required the plaintiff to prove every aspect of its case (until the eve of the hearing). This required counsel for the plaintiff to prepare a full record for the motion, prepare reply evidence, and prepare a factum. I note that counsel for the defendants never filed a factum on the motion (although one is required under the rules), which also in part explains the lower fees of the defendants.

[22] That said, I do find that overall the fees portion of the plaintiff’s costs is somewhat high. I draw this conclusion based on both the total amount of fees in relation to the amount of the claim, and because I find that certain entries for fees charged by counsel for the plaintiff are excessive. Without listing every example, I note that plaintiff’s counsel included in his cost outline fees of $3,360.00 for counsel fee for appearance to argue the motion. Although the motion was scheduled for four hours, it was clear from the materials filed that even had it been fully contested, the argument would not have taken more than 1.5 hours. In the event, it took less than one hour. Thus, I find a counsel fee of $3,360.00 is excessive. I also have concern about full hourly rates being billed for travel time, and counsel’s time spent in relation to transcribing collection telephone calls. I appreciate that counsel for the plaintiff argued that it was necessary that a significant amount of counsel time be spent on the latter expense due to the need to expedite the transcriptions. But this is not counsel work, and if counsel could not find a more efficient way to address this, it should still not be billed as counsel time.

[23] In all of the circumstances, I find that reasonable costs on a substantial indemnity basis, given the amount of the claim is $18,000.00, inclusive of HST and disbursements.

Conclusion

[24] The plaintiff’s motion is granted. I grant judgment in favour of the plaintiff as set out in paragraph 2 above, and dismiss the defendants’ counterclaim.

[25] In addition, I make an order granting the plaintiff possession of the property at issue, and leave to issue a writ of possession. However, these aspects of the order are stayed until Tuesday, October 30, 2018.

[26] The defendants shall pay the plaintiff’s costs on a substantial indemnity basis in the amount of $18,000.00, inclusive of HST and disbursements.

[27] Order to go in the form signed today.

[28] No submission was made before me that making the order for possession, but staying its effect for a short time would create any problems for the defendants closing their new financing, and registering it on title. Out of an abundance of caution, I remain seized of this matter in the event there are any issues that need to be addressed with this order in order for the defendants to close the new financing and register it on title.

Copeland J. Date: October 16, 2018