Overview

[1] This case involved a dispute between two brothers over ownership of a property in Wasaga beach. Title to the property is registered in the defendant’s name but the property is occupied by the plaintiff.

[2] I issued my decision and reasons for judgement on January 9, 2019 (2019 ONSC 255). I granted summary judgement to the plaintiff. I found that he was the beneficial owner of the property and that the defendant had breached his fiduciary duties as trustee. I ordered that title to the property be transferred to the plaintiff (or alternatively that the property be sold to a third party). I also ordered the defendant to compensate the plaintiff for equity that he removed from the property. However, I dismissed the plaintiff’s claim that the defendant acted in bad faith and denied his request for an order of punitive damages in the amount of $25,000.

[3] I also disposed of the defendant’s motion, much of which was rendered moot as a result of my summary judgement order. I granted the defendant some monetary relief to compensate him for reasonable expenses he incurred as trustee and for damages arising from the plaintiff’s breaches of their agreement. I denied the defendant’s request for an order requiring the plaintiff to indemnify him for potential capital gains tax liability that he might incur as a result of the transfer (or sale) of the disputed property.

Parties’ Positions on Costs

[4] The plaintiff seeks costs on a full indemnity scale in the amount of $47,078.25 or, in the alternative, on a substantial indemnity scale in the amount of $42,709.22. In the further alternative, he seeks costs on an elevated scale beyond partial indemnity ($29,602.12). He also seeks a further $1,500 in costs relating to his counsel’s review of my Reasons for Judgement and preparation of written costs submissions. Notwithstanding the divided success in the case, he argues that he is entitled to his costs because he was successful on the majority of his claims, save and except for his claim for punitive damages.

[5] The defendant argues that full indeminity or substantial indeminity costs would not be appropriate in the circumstances of this case. He submits that costs should be calculated on a partial indemnity scale and should be apportioned against the plaintiff. His submissions are based on the divided success of the parties and on a calculation of the proportionate monetary value of damages awarded to each of them. According to his calculation, the damages suffered by the plaintiff amounted to 13.8% of the total damages suffered by him. He submits that 86% of the partial indemnity costs incurred by him should therefore be apportioned against the plaintiff, with the remaining 14% set off against that sum. Based on this proposed formula, he seeks an order for costs against the plaintiff in the amount of $14,400. In the alternative, he argues that each party should bear his own costs.

Decision on Costs

[6] Rule 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg.194 and s.131 of the Courts of Justice Act, R.S.O. 1990, c.C-43, govern the exercise of my discretion in awarding costs. I have taken all of the relevant factors into consideration.

[7] Although I found that both parties acted unreasonably and in breach of their agreement, neither party conducted himself unreasonably in the context of the litigation. There is therefore no need to use costs to sanction either party for inappropriate conduct. Consequently, indemnification of the successful party is the primary purpose of this costs award.

[8] I find no basis upon which to award costs on an elevated scale.

[9] This is a case of divided success, but in my view, the plaintiff was substantially more successful than the defendant. Although I dismissed the plaintiff’s claim for punitive damages, he succeeded on the vast majority of other issues raised in the motions.

[10] The defendant argues that he was ultimately more successful than the plaintiff because I ordered the plaintiff to resume financial responsibilities for the property, assume or discharge the defendant’s mortgage at his own expense, reimburse the defendant for his out-of-pocket expenses as trustee and compensate him for mortgage, property tax and insurance payments made. I disagree with this submission. None of those issues were seriously contested by the plaintiff. Indeed, the plaintiff acknowledged that he owed the defendant money for mortgage, property tax and insurance payments. He admitted that the defendant was entitled to compensation for reasonable out-of-pocket expenses incurred during the administration of the trust. He demonstrated a willingness to assume the mortgage and all financial responsibilities for the property going forward (indeed, he offered to assume those responsibilities long before the motion hearing). The defendant’s success on those issues was therefore virtually a foregone conclusion.

[11] The central issues in dispute in the litigation were the defendant’s demand for indemnification of his potential liability for capital gains taxes, for compensation for his “troubles” as trustee of the property, and for an order of sale of the property so that he could be paid out of the proceeds of sale. The plaintiff was successful on all of these major issues.

[12] I disagree with the defendant’s approach to apportioning costs based on the proportionate value of the damages awarded to each party. That approach ignores the fact that the result of the litigation has much greater value to the plaintiff than merely the amount of damages awarded to him to compensate for the equity that the defendant improperly removed from the the property. The plaintiff has lived at the property with his spouse since 2009. His primary goals in commencing the litigation were: (1) to retain possession and ownership of his family home and (2) to avoid potential financial ruin by having to indemnify the defendant for capital gains tax liability and pay the defendant “fees” for his services as trustee. He achieved both of these goals. Thus although success was divided, the plaintiff was ultimately substantially more successful than the defendant.

[13] As the more successful litigant, the plaintiff is presumptively entitled to his costs. The quantum of costs should, however, be discounted for the fact that he was unsuccessful in his claim for punitive damages. The defendant was required to expend resources defending against the plaintiff’s unmeritorious claim that he acted in bad faith. The plaintiff accused the defendant of reprehensible conduct, but I found that the defendant’s inappropriate actions were largely provoked by the plaintiff’s actions and that the defendant’s behaviour did not constitute a marked departure from common decency. I found in favour of the defendant on the issue of bad faith, so the plaintiff’s total costs award will be reduced to account for this fact.

[14] In my view, the number of hours spent and the hourly rates charged by plaintiff’s counsel are reasonable. The rates are commensurate with counsel’s level of experience. The total fees are within the range of costs that an unsuccessful party could reasonably expect to pay, given the nature and complexity of the issues in dispute.

[15] The issues were of significant importance to the plaintiff because the property in question was his home and his primary (if not sole) asset. Moreover, the value of the property was substantial.

[16] Although no Rule 49 offers to settle were made by either party prior to the hearing, evidence in the record establishes that the plaintiff was prepared to pay the defendant $12,000 to transfer the property to his name several months before the litigation commenced. The defendant had previously demanded that amount of money from him. At the time, there were no arrears in mortgage payments. The amount offered ($12,000) would have compensated the defendant for his payment of property tax arrears and home insurance premiums. It also would have covered the transactional costs associated with transferring title of the property to the plaintiff. This was a reasonable offer to settle, which the defendant not only rejected, but he then began to escalate his settlement demands.

[17] The litigation would likely have been avoided had the defendant not insisted on indemnification of his potential tax liability for capital gains, which was an unreasonable position for him to take (for reasons explained in my decision dated January 9, 2019). Although the defendant made an offer to settle on June 2, 2017 which did not include that indemnification as a condition, the offer in question did not involve a transfer of title to the plaintiff but rather a sale of the property to the plaintiff for a price that was significantly more than the outstanding balance on the defendant’s mortgage at the time. The plaintiff cannot be faulted for having rejected said offer.

[18] Taking all of the above factors into consideration, I find that the plaintiff is entitled to an award of costs on a partial indemnity basis in the total amount of $25,988, inclusive of fees, disbursements and HST (i.e., fees in the amount of $20,000, plus $2,600 HST, plus full disbursements in the amount of $3,388).

[19] The plaintiff instructed his counsel to request a variety of other relief, characterized as additional “costs”, including (but not limited to) an order that the defendant pay expenses associated with a property in Barrie, provide an accounting of funds received when the Barrie property was sold, compensate him for lost rental income on account of the defendant’s refusal to increase the mortgage principal on the Wasage Property in order to fund renovations to the basement (so the space could be rented) and pay damages for additional mortgage interest costs incurred as a result of the defendant’s refusal to transfer title to the property when interest rates were lower.

[20] I have already made my ruling in respect of the plaintiff’s summary judgement motion in this action. I will not now revisit or supplement the relief awarded to him in respect of the Wasaga property under the guise of calculating his “costs”. His claims are effectively claims for additional remedies, to which he is not entitled.

[21] I have no jurisdiction to adjudicate any issues relating to the Barrie property and therefore will not even consider those requests.

Order

[22] The defendant Richard Syrnyk is ordered to pay the plaintiff Ronald Syrnyk’s costs in the amount of $25,988, inclusive of fees, disbursements and HST. These costs are to be paid in accordance with the directions given by me in subparagraph 97(h) and 97(m) of my decision dated January 9, 2019.

Petersen J.

Released: February 22, 2019

COURT FILE NO.: CV-16-5573-00

DATE: 20190222

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Ronald Syrnyk

Plaintiff

– and –

Richard Syrnyk

Defendant

COSTS ENDORSEMENT

Petersen J.

Released: February 22, 2019

Syrnyk v. Syrnyk, 2019 ONSC 1270

Case Summary

Overview

Parties’ Positions on Costs

Decision on Costs

Order

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues