Court File and Parties
COURT FILE NO.: CV-18-593451 DATE: 20181128 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
WONKYUN BANG and EUNKYUNG MOON Plaintiffs – and – JULIA BENCY SEBASTIAN and SIGNATURE REALTY INC. carrying on business as ROYAL LEPAGE SIGNATURE REALTY Defendants
Counsel: Robert S. Choi, for the Plaintiffs Harpeet Singh Makkar, for the Defendant Julia Bency Sebastian
HEARD: November 28, 2018 (In Writing)
Endorsement on Costs
SANFILIPPO J.
Overview
[1] By Reasons for Decision rendered on October 18, 2018, I awarded summary judgment in favour of the plaintiffs, Wonkyun Bang and Eunkyung Moon. I ordered that the deposits paid by the purchaser defendant, Julia Bency Sebastian, totaling $35,000, shall be transferred to the plaintiffs and applied as a credit toward the damages established as $122,221.33, with the result that Ms. Sebastian is liable to pay the plaintiffs a further $87,221.33 plus pre-judgment interest from August 16, 2018 to the date of judgment and post-judgment interest, in accordance with the Courts of Justice Act, R.S.O. 1990, c. C.43.
[2] In paragraph 76 of my Reasons for Decision, I encouraged the parties to discuss and agree on the issue of costs and, if they could not resolve the issue, to deliver cost submissions according to a timetable set out in paragraph 77 of my Reasons for Decision. The parties delivered cost submissions. The plaintiffs seek a cost award in the amount of $47,964.29, inclusive of taxes and disbursements. The purchaser defendant concedes that the plaintiffs’ partial success in the summary judgment motion entitles them to an award of costs, but submits that the amount claimed is excessive and disproportionate.
[3] For the reasons that follow, I award the plaintiffs costs payable by the purchaser defendant, fixed in the amount of $19,610.13, all-inclusive.
I. Analysis
A. Entitlement to Costs
[4] The general rule is that, absent special circumstances, “costs follow the event”: Bell Canada v. Olympia & York Developments Ltd., 1994 ONCA 239, 17 O.R. (3d) 135; Yelda v. Vu, 2013 ONSC 5903, leave to appeal refused, 2014 ONCA 353, at para 11. In Ehsaan v. Zare, 2018 ONCA 453 at para. 10, the Court of Appeal held that the “general principle that a successful party is entitled to costs should not be departed from except for very good reasons.” The court’s discretion not to award costs to the successful party should be exercised sparingly: Ibid.
[5] The plaintiffs were partially successful in their summary judgment motion. They established an entitlement to damages against the purchaser defendant in the amount of $122,221.33. However, the plaintiffs sought a judgment for this amount in addition to the deposits paid by the purchaser defendant, totaling $35,000, which the plaintiffs argued ought to be forfeited. I dismissed this element of the plaintiffs’ claim, finding instead that the purchaser defendant is entitled to a credit for the deposits paid. As a result, Ms. Sebastian was liable to pay the plaintiffs the amount of $87,221.33 plus pre-judgment interest.
[6] In Lowndes v. Summit Ford Sales Ltd. (2006), 2006 ONCA 11654, 48 C.C.E.L. (3d) 194 (Ont. C.A.), the Court of Appeal stated, as a general principle, that “where success on an appeal is substantially divided … an award of costs of the appeal will not be made.” The plaintiffs attempted to establish a novel entitlement, not supported by any identified case precedent, that a defaulting purchaser is required to forfeit the deposit in addition to being liable for damages established by the vendor. They failed to do so. This results in divided success on this motion, as the purchaser defendant successfully established that she was entitled to a credit in the amount of the deposits. However, the resultant divided success does not escalate to the level of “substantially” divided success, because the plaintiffs won more than they lost, both monetarily and on an issue-based assessment.
[7] As such, I find that the plaintiffs are entitled to an award of costs against the purchaser defendant, but I will consider the divided success in my determination of the amount of costs to be awarded to the plaintiffs.
B. Amount of Costs
[8] Section 131 of the Courts of Justice Act provides the court with discretion to determine the amount of costs. The exercise of this discretion is guided by the factors set out in Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, and applicable jurisprudence.
[9] The plaintiffs seek legal costs in the amount of $39,555.81 plus HST of $5,142.26 for a total of $44,698.07, as well as disbursements totaling $2,934.17 plus HST of $332.05. The total amount claimed for costs thereby totals $47,964.29. This consists of $21,153.31 said to have been incurred in the development of the motion record, including cross-examinations, and $18,400.50 incurred in the preparation of the plaintiffs’ factum and attendance at the hearing. The purchaser defendant submits that the amount claimed is excessive.
[10] In my analysis of the amount of costs, I have taken into consideration the factors set out in Rule 57.01, as follows:
a) Staffing of the Motion (Rule 57.01(1)(0.a)): The purchaser defendant submitted that the costs sought by the plaintiffs ought to be reduced because the plaintiffs’ preparation and argument of the motion materials were conducted by three lawyers (two senior) and involved 113.8 hours of work. I agree with the finding by Nordheimer J., as he then was, in Basdeo v. University Health Network, [2002] O.J. No. 597 (S.C.J.), at para. 7, that it is not “the role of the court to second-guess the time spent by counsel unless it is manifestly unreasonable in the sense that the total time spent is clearly excessive or the matter has been ‘over-lawyered’.” While I consider that the time spent on this summary judgment motion is high, I do not find that the time spent was “manifestly unreasonable”. Similarly, the partial indemnity rates charged, ranging from $300.00 to $365.40, are reasonable in light of the experience level of the counsel.
b) Complexity of the Motion (Rule 57.01(1)(c)): The motion was a straightforward breach of contract claim made more complex by two factors: the plaintiffs’ argument concerning the forfeiture of the purchaser’s deposit; and the purchaser defendant’s reliance on the doctrine of frustration in circumstances where it was not applicable.
c) Reasonable Expectation of Cost Exposure (Rule 57.01(1)(0.b)): In determining costs, I can consider the unsuccessful party’s reasonable expectation concerning the potential cost award. The purchaser defendant submitted that her reasonable expectation of costs was $13,173.01, being the amount of costs incurred by her for her own legal representation, on a partial indemnity basis. She contends that a party responding to the plaintiffs’ motion could not have anticipated a cost exposure that is almost one-half of the total amount in issue.
d) Offers to Settle: Rule 49.10 provides for cost consequences resulting from a party’s failure to accept an offer to settle where the result at trial is as favourable as or more favourable than the offer to settle. Rule 49.02(2) makes this Rule applicable to motions. Both parties served the other with an offer to settle that will be considered in the assessment of costs:
i) The plaintiffs delivered an offer to settle dated August 3, 2018, more than seven days before the hearing, offering to settle for $116,500 plus costs incurred to that date on a partial indemnity basis, with credit to the purchaser defendant for the $35,000 deposits. Under this offer, the purchaser defendant would have owed $81,500 to the plaintiffs, which is less than the amount of $87,221.33 plus pre-judgment interest the purchaser defendant owed according to my judgment. As such, the plaintiffs contend that they ought to receive partial indemnity costs to August 3, 2018 and costs on a substantial indemnity basis thereafter, in accordance with Rule 49.10(1), as the offer made to the purchaser defendant was more favourable to her than the judgment.
ii) The purchaser defendant delivered an offer to settle on August 7, 2018, more than seven days before the hearing, offering to pay $85,000, with credit for the deposits of $35,000, meaning that the purchaser defendant would pay the plaintiffs a further $50,000. This is less than the amount of $87,221.33 plus pre-judgment interest awarded by my judgment. The plaintiffs thereby achieved a result better than the purchaser defendant’s offer, making this offer irrelevant for the consideration of costs.
The plaintiffs’ offer to settle meets the requirements of Rule 49.10(1). The plaintiffs have thereby established that they are entitled to costs on a substantial indemnity basis after August 3, 2018, the date of delivery of their offer to settle. While I have a discretion to “order otherwise” on the basis of Rule 49.10(1) and section 131(1) of the Courts of Justice Act, I decline to do so. In Niagara Structural Steel (St. Catherines) Ltd. v. W.D. LaFlamme Ltd. (1987), 1987 ONCA 4149, 58 O.R. (2d) 773 (C.A.), the Court of Appeal made clear that the purpose of Rule 49.10 is to foster settlement and that this purpose would be compromised if the court frequently determined costs in a manner other than that provided by the Rule. See also: Data General (Canada) Ltd. v. Molnar Systems Group Inc. (1991), 1991 ONCA 7326, 6 O.R. (3d) 409 (C.A.); Walker Estate v. York-Finch General Hospital (1999), 1999 ONCA 2158, 43 O.R. (3d) 461 (C.A.), aff’d 2001 SCC 23, [2001] 1 S.C.R. 647.
e) Conduct that Affected the Length of the Proceeding (Rule 57.01(1)(e)): The plaintiffs filed materials in support of their claims for financing expenses and carrying costs without a chart or spreadsheet that provided a tabulation of the total value of the claims sought and their constituent elements. Put simply, the source materials were presented without a roadmap. In a motion scheduled for two hours, where time is needed to argue issues of liability and causation, the hearing cannot be consumed in performing basic arithmetic calculations during argument, as was done here. Time was wasted during the hearing on connecting documents to monetary values and then adding and subtracting on the spot. I agree with Myers J. in Wells Fargo Equipment Finance Company v. Montesi Graphics Inc., 2016 ONSC 6507 at paras. 26-27, where he stated that in the absence of a trial:
... [T]he factum is the judge's roadmap for the findings of fact that a party asks the judge to make when he or she is back in chambers writing the decision days, weeks, or even months after the oral hearing. The facts need support in the evidence and it is unhelpful at minimum, to expect the judge to plow through thick records to find the snippets of evidence supporting each particular finding that a party asks the judge to make to support the party's request for or response to judgment. It is counsel's most basic role to provide the judge with the evidence needed to support any finding being sought. This requires specific references to the evidence in the summary of facts in the factum.
This summary judgment motion was longer than required, and was extended to allow for further written submissions, because this principle was not observed.
[11] By analysing the factors set out in Rule 57.01, I conclude that my assessment of the plaintiffs’ cost entitlement for legal fees will begin with a value of $39,555.81, which is partial indemnity costs to August 3, 2018 and costs on a substantial indemnity basis thereafter (Rule 49.10(1)), unaffected by the defendant’s challenge on staffing (Rule 57.01(1)(0.a)) or by complexity (Rule 57.01(1)(c)). I adjust the value of the disbursements claimed in the plaintiffs’ Cost Outline from $2,934.17 to $2,354.10 because I disallow the amount of $580.07 sought for computer searches as unsubstantiated. Adding in HST, this results in legal fees and HST of $44,698.07, and disbursements and HST of $2,660.13 for a total of $47,358.20, all-inclusive.
[12] I will reduce this amount to reflect two factors: first, the hearing was lengthened by the plaintiffs’ lack of clarity on the computation of their financing expenses and the carrying costs; second, and more importantly, the plaintiffs’ success on the motion was divided, as they failed to establish that a purchaser’s deposit should be forfeited in addition to the purchaser’s liability for damages in circumstances in which damages are established. This divided success does not rise to the level of eliminating any entitlement to costs, but it does support awarding only a portion of the costs sought, reflective of the partial success.
[13] But this is not the end of the analysis. The Court of Appeal has stressed that the objective of cost quantification is to determine a value that is fair and reasonable: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 ONCA 14579, 71 O.R. (3d) 291 (C.A.). This cannot start and end with rote, mechanical, arithmetic computation of the legal fees incurred, as was emphasized by the Court of Appeal in Zesta Engineering Ltd. v. Cloutier (2002), 2002 ONCA 25577, at para 4: “[i]n our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.”
[14] In Beaver v. Hill, 2018 ONCA 840 at para. 12, Nordheimer J.A. stated that “proportionality and reasonableness are touchstone considerations to be applied in fixing the amount of costs.” This statement was made in direct reference to Rule 24(12) of the Family Law Rules, O. Reg. 114/99, which specifically refers to these considerations in sub-rule 24(12)(a). However, the objectives of proportionality and reasonableness are equally applicable in this civil matter, on the basis of Rule 1.04(1)(1.1), Rule 57.01(1)(a) and Rule 20.06. It is not enough that the cost quantification be reflective of docketed time and expenses. It must be fair, reasonable and proportionate.
[15] After considering all elements of Rule 57.01 and Rule 49.10(1), allowing for the element of divided success, and mindful of the requirement that the quantification of costs be fair, reasonable and proportionate, I conclude that the plaintiffs shall receive legal fees, payable by the purchaser defendant, of $15,000 plus HST of $1,950, and disbursements, which I have quantified at $2,354.10, plus HST of $306.03. As such, the total cost award granted to the plaintiffs is $19,610.13, all-inclusive, consisting of $16,950 for legal fees and HST and $2,660.13 for disbursements and HST. This is proportionate to the amount in issue, the amount recovered and the purpose and nature of the summary motion that resulted in this judgment.
II. Disposition
[16] Having considered all applicable principles, in the exercise of my discretion I have determined that it is fair, reasonable and proportionate to award the plaintiffs, Wonkyun Bang and Eunkyung Moon, costs payable by the purchaser defendant Julia Bency Sebastian, in the amount of $19,610.13, all-inclusive.
Sanfilippo J.