Court File and Parties

Court File No.: CV-17-581301 Date: 2019-03-14 Superior Court of Justice - Ontario

Re: JUNYI ZOU and TIAN LE, Plaintiffs/Defendants by Counterclaim And: SASWATA SANYAL and SHALINI SANYAL, Defendants/Plaintiffs by Counterclaim

Before: Cavanagh J.

Counsel: Christopher Tan and Dr. Ran He, for the Plaintiffs/Defendants by Counterclaim Suvendu Goswami, for the Defendants/Plaintiffs by Counterclaim

Heard: By Written Submissions

Costs Endorsement

[1] The action involves a real estate transaction which was not completed. The plaintiffs were the sellers and the defendants were the buyers. The plaintiffs were successful on a motion for summary judgment that was heard on January 23, 2019. They seek costs of the action.

[2] There are two issues:

a. Whether rule 49.10(1) applies such that the plaintiffs are entitled to costs on a partial indemnity scale for the period of time to January 8, 2018, the date that the plaintiffs served a written offer to settle, and on a substantial indemnity scale from that date, unless the court orders otherwise. b. The amount of costs to be paid.

[3] On January 8, 2018 the plaintiffs served on the defendants an offer to settle pursuant to rule 49.10 by which the plaintiffs offered to settle the action on the following terms:

a. The deposit held by the plaintiffs’ real estate broker in the amount of $40,000 and any interest accrued thereon shall be paid to the plaintiffs; b. The defendants shall pay an additional $110,000 to the plaintiffs within 10 business days of acceptance of the offer; c. The parties agree to execute a mutual release in the form set out at Schedule “A” to the offer to settle; and d. Upon receipt of the deposit and the additional settlement amount, the plaintiff shall discontinue the action and the defendant shall discontinue any claim within the action, without costs.

The offer to settle was stated to be open for acceptance until the commencement of the trial.

[4] Pursuant to the judgment granted on the plaintiffs’ motion for summary judgment, the plaintiffs are entitled to payment of the $40,000 deposit and payment of damages in the amount of $154,256.38.

[5] The plaintiffs submit that because they obtained a judgment that is more favourable than the terms of the offer to settle they are entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date.

[6] The defendants submit that the form of release that was appended as Schedule “A” to the offer to settle includes a provision that required either party not to make any derogatory, defamatory or disparaging remarks against the other party in any manner whatsoever including through social media. They submit that this provision is one which “constituted [a] vague uncertain future event which by its very broad nature and unconnected to the proceeding herein was difficult to control and which simply amounted to ‘an agreement to agree’”.

[7] The defendants rely upon D’Anscenzio v. Nichols, 2018 ONSC 7760 in support of their submission that, given the non-disparagement provision in the proposed release, the costs consequences of rule 49.10 are not triggered. In D’Anscenzio, the plaintiffs’ offer to settle included a requirement that the parties enter into a mutual full and final release with respect to all matters raised or which could have been raised in the proceeding. The form of the release was not appended to the offer to settle. Kane J. held at para. 38 that the insertion of the requirement for a release to be negotiated and agreed upon in the future as a term of a written settlement offer introduces a future unknown beyond the control of the offeree, and that the plaintiffs could have avoided that uncertainty by inserting the release wording in the offer. Kane J. concluded that the release condition prevented the offer from qualifying as a rule 49.10 offer.

[8] In this case, the form of the release to be signed by the defendants upon acceptance of the plaintiffs’ offer to settle was appended to it. The form of release contains standard provisions, with the exception of the “non-disparagement” provision which provides that the parties “agree that neither party shall make any derogatory, defamatory or disparaging remarks about the other party in any manner whatsoever including through social media”.

[9] In considering the costs consequences of a party’s failure to accept an offer to settle in circumstances where an offer to settle contains a non-monetary term, the court must consider the non-monetary term as part of the offer to settle, and decide whether the opposing party obtained a judgment that is as favourable or more favourable than the terms of the offer to settle. The burden of proving that the judgment is as favourable as the terms of the offer to settle, or more or less favourable, as the case may be, is on the party who claims the benefit of rule 49.10(1) or (2): Rule 49.10(3) of the Rules of Civil Procedure.

[10] Although I do not regard the non-disparagement provision to be a standard term of a release to be given as part of a settlement of an action for breach of contract, the wording of the provision is not unclear or uncertain, as was the case in D’Anscenzio. The amount of the judgment ($194,256.38) significantly exceeds the amount of money that the plaintiffs offered to accept in their offer to settle ($150,000). The plaintiffs’ inclusion of the non-disparagement provision in the form of release to be given upon acceptance of the offer to settle was not, in my view, unreasonable, and it does not lead me to conclude that the judgment was not more favourable to the plaintiffs than the terms of their offer to settle.

[11] I conclude that the plaintiffs have met their burden of proving that the judgment is as favourable or more favourable as the terms of the offer to settle. Pursuant to rule 49.10(1) of the Rules of Civil Procedure, the plaintiffs are entitled to costs on a partial indemnity scale to January 8, 2018 and on a substantial indemnity scale from that date.

[12] The plaintiffs seek costs on a partial indemnity scale based upon 60% of their full indemnity fees and costs on a substantial indemnity scale based upon 90% of their full indemnity fees. The partial indemnity fees claimed for the period of time to January 8, 2018 are $3,048, and the substantial indemnity fees claimed for the period of time from January 8, 2018 are $23,647.50. Some of the time spent preparing material for the summary judgment motion was before January 8, 2018 and some was after January 8, 2018.

[13] The calculations of fees are based upon hourly rates of $210 for senior counsel and $120 for second counsel for partial indemnity fees, and hourly rates for these counsel of $315 and $180, respectively, for substantial indemnity fees. The plaintiffs do not object to these hourly rates, and they are not unreasonable for this case.

[14] The defendants submit that the amount claimed for fees is excessive. They submit that this was a straightforward case of breach of contract, and that the plaintiffs included documents in their motion record that were unnecessary and duplicative. The defendants submit that the amount of time claimed for fees should be reduced to reflect duplication of efforts and also on the ground that the amount of time spent was more than was reasonable for the services that were provided. The defendants submit that the all-inclusive amount of $12,000 would be fair, reasonable and proportionate.

[15] The defendants did not provide their own costs outline. In Risorto v. State Farm Mutual Automobile Insurance Co., (2003), 64 O.R. (3d) 135 the court held that the relative expenditures, at least in terms of time, by adversaries on opposite sides of motion is a relevant consideration where there is an allegation of excess in respect of a particular matter. In the absence of a costs outline from the defendants, I am not able to compare the relative expenditures of time in this case. I take the absence of a costs outline from the defendants into consideration when I evaluate the reasonableness of the time claimed by the plaintiffs.

[16] The action was not complicated, but there were a number of defences raised by the defendants that the plaintiffs were required to address. The motion record included two affidavits and additional documents. There was a cross-examination of a witness for the defendants for 2-3 hours. The plaintiffs’ delivered a 30 page factum and a reply factum.

[17] I have considered the factors in rule 57.01(1) of the Rules of Civil Procedure as well as the principle in Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.) at para. 26 that the objective in fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding. I regard the fees claimed to be reasonable for this action and within the range of fees that the defendants would expect to pay as costs in the event that they were unsuccessful in opposing the plaintiffs’ motion for summary judgment.

[18] I fix costs to be paid by the defendants to the plaintiffs in the amount of $33,039.76 comprised of fees (including HST) of $29,715.88 and disbursements (including HST) of $3,323.88.

Cavanagh J. Date: March 14, 2019