Court File and Parties

COURT FILE NO.: CV-17-4729 DATE: 20190325

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Peel Condominium Corporation No. 346, Plaintiff (Moving Party) Florentine Financial Corporation, Shanawaz Khan, Salim Khan and A & H Asset Auction Inc., Defendants (Responding Parties)

BEFORE: FRAGOMENI J.

COUNSEL: Victor Yee, for the Plaintiff (Moving Party) Greg Marley, for the Defendants (Responding Parties)

HEARD: In Writing

COSTS ENDORSEMENT

COSTS THROWN AWAY

[1] At paragraph 29 of my Endorsement dated May 11, 2018 I stated the following:

29. I am also satisfied that the Defendants are entitled to their costs thrown away from the start of the Small Claims Court action to the hearing of this motion.

[2] The Defendants (Responding parties to the transfer motion) submit that they are entitled to costs thrown away in the all-inclusive sum of $10,708.22. In support of their position the Defendants set out the following factors:

• the issues as pleaded in the Small Claims Court action were not complex, however, the amendments the Plaintiff proposes to make to the pleadings greatly increases the complexity of the action adding several claims for relief;
• the parties must now start from scratch in preparing pleadings;
• as a result, the steps taken in Small Claims Court have been rendered meaningless;
• the time expended on the following steps has been thrown away:
  • reviewing and responding to the Plaintiff’s pleadings;
  • preparing for and attending the settlement conference;
  • preparation for trial including preparing for and participating in a trial management call, adjournments of the trial, receipt and review of documents for trial, preparing witnesses and witness statements for trial.
• the action could have been resolved in November 2017 but for the Plaintiff’s last minute decision to pursue and transfer to Superior Court two weeks prior to trial;
• had the Plaintiff pursued its claims in the Superior Court from the start the parties would not have waited eleven months in Small Claims Court.

[3] The Defendants refer the Court to the decision in Haggan v. Mad Dash Transport Ltd., 2018 ONSC 1889. In that decision I set out the following at paras. 32 to 37:

[32] In Crane Canada Co. v. Montis Sorgic Associates Inc., the Defendants applied for a transfer of claims from Small Claims to Superior Court. In the process of granting the transfer, the Court stated the following:

The respondents have submitted that if the claims are transferred to the Superior Court, the rules of the Small Claims court should continue to apply. Setting aside the question of whether I have jurisdiction to make such an order, it would not, in my opinion, be appropriate to do so. The reason that I have decided to transfer the cases to the Superior Court is because it is the more appropriate forum to deal with these cases. To continue to apply the rules of the Small Claims Court would, in my opinion, be contrary to the reasons underlying that decision. [Emphasis added.]

[33] While I appreciate that the Court’s comments pertain specifically to the Small Claims Court Rules and not provisions in statutes (such as the CJA), the same logic would apply in this case given that the provision at issue (CJA, s. 29) explicitly states that it only applies to costs awards in the Small Claims Court. The matter has now been transferred to the Superior Court such that this provision is no longer applicable.

[34] I am satisfied that the Respondents’ costs thrown away ought to be allowed at the Superior Court level.

[35] Costs with respect to all future steps to be taken in this action now in the Superior Court of Justice are properly reserved to the justice hearing the trial. The justice hearing the trial will determine how to allocate costs and will have the actual time spent on the steps taken and determine, after hearing the merits of the trial, who was the successful party.

[36] I have reviewed the Bill of Costs of the Respondents as it relates to the work conducted in the Small Claims Court action. It includes the following:

• Review Plaintiff’s claim. Draft and review defence. File defence in Brampton Small Claims Court - 3.1 hours
• Correspondence in respect of defence - 3.7 hours
• Preparation of correspondence in respect of settlement conference - .6 hours
• Correspondence with Plaintiff’s counsel re: two adjournments and application - 2.7 hours
• Internal correspondence and correspondence with client re: adjournments and application - 3.7 hours

Total hours for counsel, Heather Weir and Lindsay Moffatt – 13.0

Total hours for Law Clerk, Yadis Vasquez – .40

Heather Weir (14 years at the Bar) – Hourly Rate, $425/hour

Lindsay Moffat (1 year at the Bar) - $255/hour

Yadis Vasquez - $150/hour

[37] I am satisfied that a fair and reasonable amount in all of these circumstances is $3,000.00, all inclusive.

[4] The Defendants seek costs as follows:

Actual Costs $7,803.63 Full Indemnity Costs $7,022.82 Partial Indemnity Costs $4,681.88 Disbursements Total $ 873.12

POSITION OF THE PLAINTIFF (MOVING PARTY)

[5] The Plaintiff sets out its costs thrown away as follows:

Actual Costs $5,887.30 Substantial Indemnity Costs $4,687.24 Partial Indemnity Costs $3,560.63 Disbursements $1,121.61

[6] The Plaintiff submits that the Court should reserve the issue of costs thrown away to be decided by the trial judge hearing the merits of the action with a full record.

[7] The Plaintiff’s submission cannot stand as I have already ordered that the Defendants are entitled to their costs thrown away from the start of the Small Claims Court action to the hearing of the motion. The only issue is quantum. In my view I am able to fix that quantum and it is not necessary to reserve that issue to the trial judge.

[8] The case at bar is similar to the decision in Haggan v. Mad Dash. I am prepared to fix the costs and I am satisfied that the costs thrown away be fixed on a partial indemnity basis.

[9] I am satisfied that a fair and reasonable amount is $4,000.00 all-inclusive of fees, taxes and disbursements.

COSTS OF THE TRANSFER MOTION

[10] The Plaintiff was successful at the motion in that an order was granted transferring the Small Claims Court action to the Superior Court.

[11] The Plaintiff seeks costs as follows:

Actual Costs $7,169.85 Substantial Indemnity Costs $5,735.88 Partial Indemnity Costs $2,867.94 Disbursements Total $ 573.25

[12] The Plaintiff sets out the following factors in support of its position:

• the transfer and leave to amend pleadings were sought and granted by the Court;
• the Defendants ought to have paid the arrears under protest first in order to stop the interest and legal costs from accruing;
• the matter was very important to the Plaintiff as it is statutorily required to pursue its remedies;
• the transfer was necessary as Small Claims Court lacked the jurisdiction to grant the additional claims for relief requested by the Plaintiff and as such the transfer motion had a high likelihood of success;
• the Defendants should have consented to the transfer motion.

POSITION OF THE DEFENDANTS

[13] The Defendants set out the following costs:

Actual Costs $19,017.50 Substantial Indemnity Costs $17,115.75 Partial Indemnity Costs $11,410.00

[14] The Defendants submit the following:

• a motion to transfer is not inherently complex, however, the Plaintiff created unnecessary complexity by asserting facts and putting forward arguments not relevant to the transfer motion. The Defendants had to respond accordingly;
• the motion was extremely important to the Defendants facing the risk of an increased interest claim along with the costs thrown away in Small Claims Court;
• Plaintiff’s counsel advised the Defendants’ counsel on or around October 17 2017, approximately two weeks before the trial of the within action, for the first time that it would now be seeking an amount upwards of $45,000.00, in addition to other relief, and that it would be bringing a motion to transfer to Superior Court if the Defendants did not agree to pay approximately $45,000.00 in settlement. The Defendants rejected this offer, which represents nearly double the Small Claims Court jurisdiction and more than double the Plaintiff’s claim.
• The notice of motion was served on or around October 27, 2017, and noted that the Plaintiff intended to rely on an affidavit from an employee of the Plaintiff’s lawyer’s office.
• Counsel agreed on a hearing date of January 18, 2018. However, on January 10, 2018 – nearly three months after serving the Notice of Motion and only 6 days prior to the scheduled motion hearing, the Plaintiff served a motion record of approximately 200 pages, with affidavit evidence not from a member of the Solicitor’s office as anticipated, but from the president of the Plaintiff Corporation.
• The Defendants were therefore forced to seek an adjournment of the hearing, which would ensure there was opportunity to sufficiently review the evidence presented, serve and file adequate responding material, and to allow the opportunity to cross-examine if appropriate.

[15] I am satisfied that the Plaintiff is entitled to costs of the transfer motion. I agree with the Plaintiff’s position that if the Defendants had consented to the transfer and only argued about costs thrown away then the time spent and expenses incurred by the Plaintiff on the transfer motion would have been greatly reduced and the duration of this proceeding would likely have been shortened.

[16] The Plaintiff submits that condominium litigation is different from other types of litigation and that the condominium is entitled to its legal costs incurred on a full indemnity basis. In support of this proposition, the Plaintiff refers to Sennek v. Carleton Condominium Corporation No. 116, 2018 ONSC 1921 at para. 20. At para. 44 in Sennek, the Court states:

[44] In fixing costs in this case, I adopt the reasoning of Kane, J. found at para. 17 of Carleton Condominium Corporation No. 396 v. Burdet, 2015 ONSC 9 (“Burdet”), that costs entitlement under the Act are not limited to the costs provisions of s. 31 of the Court of Justice Act and rule 57 [11]. Rather, pursuant to ss. 85(1) and 85(3)(c) of the Act, the costs incurred by a condominium corporation include “all reasonable legal costs and reasonable expenses incurred in connection with the collection or attempted collection of the unpaid amount”.

[17] It is my view that this procedural motion to transfer the proceedings from Small Claim Court to the Superior Court of Justice does not attract a higher level of costs. This argument that a higher level of costs ought to be awarded to the Condominium in connection with the collection or attempted collection of the unpaid amount may be advanced following trial and a hearing of the merits of the action.

[18] The transfer motion is a procedural motion and does not fall within the parameters set out in para. 44 of Sennek.

[19] The Plaintiff ought to have commenced this action in the Superior Court of Justice, with all claims advanced, from the start. It was because of these actions that a transfer motion was necessary. As I indicated, the defendants should have consented to the motion to transfer and argued the issue of costs thrown away. The Plaintiff was successful in the motion to transfer, however, I am satisfied that costs should be based on a partial indemnity basis. Whether any costs from the date of the transfer motion to the completion of the trial should be based on a higher scale will be determined by the trial judge.

[20] I am prepared to fix costs on a partial indemnity basis. I am satisfied that costs in the sum of $4,000.00 all-inclusive is reasonable.

[21] Order to issue as follows:

1. The Plaintiff shall pay to the Defendants’ costs thrown away in the sum of $4,000.00 all-inclusive.
2. The Defendants shall pay to the Plaintiff its costs of the motion to transfer in the sum of $4,000.00 all-inclusive.
3. In the circumstances, the amount of costs payable by each of the parties is set off as against each other.

FRAGOMENI J. DATE: March 25, 2019