Court File and Parties

COURT FILE NO.: CV-17-571518 DATE: 20190215 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

J.A.L. DEVELOPMENTS INC. Plaintiff – and – RESIDENCES OF SPRINGHILL INC., PAUL ROSSETTO, FAUSTO ROSSETTO, STEPHANIE ROSSETTO, ROSSBRO DEVELOPMENTS INC., ROSSBRO PROPERTIES INC., ROSSBRO PROPERTIES LIMITED, EMMA ROSSETTO, MATTHEW ROSSETTO, MPAR HOLDINGS INC. AND SILVIA RICCIARDI Defendants

AND BETWEEN

RESIDENCES OF SPRINGHILL INC. Plaintiff by Counterclaim – and – J.A.L. DEVELOPMENTS INC., PHILIP GORDIN, LAURA GORDIN, JESSICA ROBIN TARR, SUSAN GORDIN AND PHILIP GORDIN PROFESSIONAL CORPORATION Defendants by Counterclaim

Counsel: David Winer, for the Plaintiff by Counterclaim/Respondent Mitchell Wine, for Defendants by Counterclaim J.A.L. Developments Inc., Philip Gordin and Philip Gordin Professional Corporation, and appearing on behalf of the Moving Parties on this motion Jessica Tarr, for the Moving Parties/Defendants by Counterclaim Laura Gordin, Jessica Robin Tarr and Susan Gordin

Costs Endorsement re: Rule 21 Motion

[1] This Rule 21 motion was heard on December 11, 2018 and my Reasons for Decision were released on January 14, 2019 (“Reasons”).

[2] The motion was brought by the Defendants by Counterclaim, Laura Gordin, Jessica Robin Tarr and Susan Gordin (the “Gordin Family Members”), to strike certain paragraphs of the counterclaim and to dismiss the counterclaim as against them. Jessica Tarr is both a Defendant by Counterclaim and counsel of record for the Gordin Family Members. The motion was argued by co-counsel Mitchell Wine who acts for the Plaintiff and the other three defendants to the counterclaim. I granted the motion and ordered that the counterclaim be dismissed as against the Gordin Family Members, with costs (of the motion as well as any defence costs that they incurred in responding to the counterclaim).

[3] I did not order that any paragraphs of the counterclaim be struck because of their potential relevance to the continuing claims against the other Defendants by Counterclaim J.A.L. Developments Inc., Philip Gordin and Philip Gordin Professional Corporation and I was clear that the costs in favour of the moving parties should not include any costs of these remaining Defendants by Counterclaim.

[4] I encouraged counsel to attempt to reach an agreement on the costs payable by Residences of Springhill Inc./Plaintiff by Counterclaim (“RSH”) to the Gordin Family Members, but they were not able to do so. The parties have since filed their costs submissions in accordance with the schedule that was set out in my Reasons.

Positions on Costs

[5] The Gordin Family Members seek:

a. substantial indemnity costs of $46,204.12 (inclusive of fees, disbursements and taxes) on the basis that the allegations were in the nature of fraud and it is in the court’s discretion to award a higher scale of costs in such circumstances;

b. in the alternative, a hybrid of partial indemnity costs up to the date of their November 1, 2018 settlement offer in which they offered to settle for a dismissal of the counterclaim against the Gordin Family Members and partial indemnity costs of the motion less $100, which would have led to the same result that was achieved by them on the motion, thus they claim to be entitled to substantial indemnity costs from and after November 1, 2018 for a combined total of $35,708.00 (which I assume is inclusive of fees, disbursements and taxes); or

c. in the further alternative, partial indemnity costs of $31,263.15.

[6] The Gordin Family Members break down the split between their costs of the Rule 21 motion and their costs of the action to be:

a. on a partial indemnity scale, $12,166.23 (motion) and $19,096.90 (action); and

b. on a substantial indemnity scale, $18,026.15 (motion) and $28,177.97 (action).

[7] To demonstrate that these amounts are appropriate, they point to an earlier costs award in these proceedings as a benchmark. They submit that it should have been within the reasonable contemplation of RSH that the Gordin Family Members’ costs of the action would be in the range of at least $29,991.00 on a substantial indemnity scale and $22,732.00 on a partial indemnity scale because these were the costs that were requested and ordered, respectively, in favour of another individual who was previously added as a defendant to the action due to her affiliation with RSH, and then released from the action in June of 2018.

[8] RSH argues that there was only partial success on the motion since the requested paragraphs of the counterclaim were not struck, that the costs sought are excessive given that the counterclaim had not proceeded beyond the pleadings to any stage of discoveries and that the costs sought in excess of $46,000.00 were not within the reasonable contemplation of RSH. Further, they question the involvement of both Mr. Wine and Ms. Tarr and ensuing duplication of their efforts as counsel.

[9] In reply, after having received the costs submissions of the Gordin Family Members, the main additional point raised by RSH is that the absence of any costs outline from Mr. Wine or Ms. Tarr suggests that the costs being requested by the Gordin Family Members are not reflective of costs actually incurred by them or of costs that they are obligated to pay. It is submitted that there is no basis for indemnification of any costs in the absence of a certification that they were billed and are liable to pay for the services of either Mr. Wine or Ms. Tarr (and the invoices of Mr. Wine that are addressed only to J.A.L. Developments Inc. reinforce this).

[10] RSH submits in the alternative to the position that there should be no costs awarded, that the costs should be limited to the partial indemnity fees, disbursements and applicable taxes for Mr. Wine with a much reduced allowance for Ms. Tarr. They propose partial indemnity costs in the range of $12,074.20 (or substantial indemnity in the range of $15,561.50), plus HST.

Applicable Law and Principles

[11] Pursuant to s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, the court has a broad discretion when determining the issue of costs. Rule 57.01 sets out some factors that may be considered.

[12] The general law and principles to be applied to a costs award such as this are not contentious and are conveniently summarized by Whitten J. in the case of Cass v. 1410088 Ontario Inc., 2018 ONSC 6959, at paras. 8-21 cited by RSH. I have considered all of these general principles as well as others that were cited in the parties’ costs submissions in the exercise of my discretion.

[13] Costs should follow the event and I have already indicated that the successful Gordin Family Members are entitled to some costs. They were almost entirely successful. My decision not to strike certain paragraphs of the counterclaim that might be relevant to the continuing claims against the other Defendants by Counterclaim does not detract from that.

[14] I have considered the submission made by RSH that no costs should be awarded because, despite the direction in my Reasons, no costs outline was submitted by either counsel for the Gordin Family Members. While this is a factor that I have taken into account in my determination of the appropriate amount of costs, I am satisfied, notwithstanding the absence of a costs outline, that there are costs associated with the now-dismissed counterclaim that the Gordin Family Members are entitled to.

[15] The absence of a costs outline that matches up with the Rule 57.01(1) factors makes my job in determining the quantum of costs more difficult (and any uncertainty should and will operate to their disadvantage in my ultimate determination). However, the costs submissions made on behalf of the Gordin Family Members have provided some details about matters relevant to at least some of the Rule 57.01(1) factors that have allowed me to do substantive and procedural justice to the determination of costs, so the absence of a cost outline is not fatal to their request for costs in this case. (See Larkman Estate v. Briginshaw, citing Beneficial Investment (1990) Inc. v. Hong Kong Bank of Canada, at paras. 3 to 5 and 1508270 Ontario Ltd. v. Laudervest Developments Ltd. (2006), 59 C.L.R. (3d) 120 (Ont. Master), at paras. 30 to 34)

[16] The overall objective of this exercise is to fix an amount of costs that is fair and reasonable for the unsuccessful party to pay in the particular proceeding. In deciding what is fair and reasonable, the reasonable expectation of the unsuccessful party concerning the amount of costs that they may have to pay for a particular step in the proceeding is a relevant factor. (See Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d) 291 (C.A.), at paras. 26 and 38) Since that case was decided, this factor has been expressly incorporated into Rule 57.01(0.b).

[17] A Rule 49 offer made by a successful defendant can also be a relevant consideration in the exercise of the court’s discretion under s. 131 of the Courts of Justice Act, and in consideration of the Rule 57.01 factors, even if (as is the case here) it does not fit squarely within Rule 49.10(2).

Costs Analysis and Disposition

[18] In the circumstances of this case, I do not think that this is a situation that warrants an award of substantial indemnity costs. Rule 49.10(2) is not directly engaged. Further, although the counterclaim alleged fraud and civil deceit against the Gordin Family Members, it is not automatic that substantial indemnity costs will be awarded. Since the broader allegations of fraud and deceit remain to be determined as against the others, and the allegations against the Gordin Family Members were not taken beyond the pleadings stage, I do not consider that the mere assertion of the counterclaim, in the manner it was pleaded in this case, rises to the level of the type of reprehensible, scandalous or outrageous conduct that requires an award of substantial indemnity costs. The history of the dealings between the parties in this case is sufficiently unique that the deterrent objective that substantial indemnity costs are sometimes awarded to achieve is not a consideration here. (See Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 26 and Goulin v. Goulin (1995), 26 O.R. (3d) 472 (C.J. (Gen. Div.)), at paras. 12-14)

[19] In terms of the quantum of partial indemnity costs claimed, I am concerned about the potential for duplication as between Ms. Tarr and Mr. Wine. The absence of any costs outline from them reinforces this concern. For example, it is certainly conceivable that Ms. Tarr is not actually charging herself and her mother and sister for her time given that she was also a defendant to the counterclaim and Mr. Wine appears to have taken the lead on this motion.

[20] I accept the suggestion of RSH that the focus of the costs award in this case should be on Mr. Wine’s fees and disbursements referable to the motion and for the defence of the Gordin Family Members in the action, with an adjusted allowance for Ms. Tarr. While I do not have a costs outline certifying that the fees presented for Mr. Wine or those for Ms. Tarr in the costs submissions are specific to the Rule 21 motion and to the Gordin Family Members’ defence of the counterclaim, I think that their costs submissions can, fairly read, be taken to be a representation to that effect by them for purposes of calculating an adjusted costs amount. RSH suggests that with the proposed adjustments, the partial indemnity costs award should be in the range of $12,074.20, plus HST.

[21] Most of the specific adjustments made by RSH to arrive at this adjusted partial indemnity costs number (reflected in the calculation at tab 6 to the RSH Reply Costs Submissions) appear reasonable. However, I have also considered, as a countervailing factor to these adjustments, the offer that was made by the Gordin Family Members on November 1, 2018, which was prescient of the eventual outcome of this motion. In the exercise of my discretion, I have added back some of these adjustments to arrive at a round figure of $15,000.00 for the partial indemnity fees and disbursements of the Gordin Family Members, which I consider to be fair and reasonable in the circumstances.

[22] I recognize that this is a high amount of costs relative to the amount that has now been established to be at issue in the counterclaim. However, a higher amount was originally pleaded and I am sure that the suggestion of personal responsibility was a matter of some considerable importance to the Gordin Family Members, irrespective of the amount.

[23] Given that the adjusted partial indemnity amount is less than what was claimed by the defendant affiliated with RSH who was let out of the action at a similar stage, it is reasonable to assume that costs of this magnitude would have been within the reasonable contemplation of RSH, even though it is more than what (in hindsight) the costs outline for RSH allowed for ($7,121.63 inclusive of disbursements and HST).

[24] In the exercise of my discretion, I am awarding the Gordin Family Members their partial indemnity costs of this Rule 21 motion and of the action in the amount of $15,000.00 (inclusive of fees and disbursements) plus HST.

KIMMEL J. Released: February 15, 2019