Court File and Parties

COURT FILE NO.: CV-17-86 (Brantford) DATE: 2019-04-03 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ROYAL BANK OF CANADA, Plaintiff AND: CHUL YUNG KIM and MSI SPERGEL INC. in its capacity as Trustee in Bankruptcy for Chul Yung Kim, Defendant

BEFORE: Mr. Justice D.A. Broad

COUNSEL: J. Ross Macfarlane, Counsel for the Plaintiff Andrew Ostrum, Counsel for the Defendant Chul Yung Kim

Costs Endorsement

[1] The plaintiff and the defendant, Chul Yung Kim (the “defendant”), have been unable to resolve the issue of costs and have now delivered written submissions on costs.

[2] The plaintiff submits that, as the successful party, it is entitled to costs and seeks costs in the sum of $18,784.11 on a partial indemnity scale comprised of fees in the sum of $15,853.50, HST on fees in the sum of $2,060.96, and $2,369.65 for disbursements, inclusive of HST on taxable disbursements.

[3] The defendant acknowledges that the plaintiff was successful in respect of the legal issue concerning the application of the Court of Appeal’s decision in the Lawyers’ Professional Indemnity Company v. Rodriguez 2018 ONCA 171 (C.A.) (“LawPro”) to the facts of the case at bar, but submits there was mixed success on the substantial merits issue. The defendant points out that the plaintiff advanced 17 allegations of fraudulent misrepresentation against the defendant and through the summary judgment process the majority of these allegations collapsed and the scope of the issues for trial has been narrowed to four remaining alleged fraudulent misrepresentations. The defendant submits that his costs in responding to the motion in respect of the 13 alleged fraudulent misrepresentations, which were not pursued by the plaintiff, should be offset against the costs payable to the plaintiff on the motion.

[4] The defendant disputes the plaintiff’s assertion that the “entire motion was unnecessary and ill-conceived” as the court addressed a novel point of law respecting the applicability of the Court of Appeal’s holding in LawPro, and if the plaintiff had been successful on that issue the entire action would have been resolved.

[5] The defendant does not largely dispute the hours claimed by counsel for the plaintiff on the basis that they are relatively similar to the hours spent by counsel for the defendant, but notes that counsel for the defendant undertook a much more labour-intensive course of obtaining and producing documentary evidence responding to all the allegations that the plaintiff had advanced.

[6] The defendant submits that the sum of $5,000 would be a fair and reasonable quantum of costs payable to the plaintiff in respect of the motion.

[7] The plaintiff submits that there was not “mixed success” on the motion, as not only was its claim not dismissed, but significant factual findings were made against the defendant. Plaintiff submits that costs should follow the event.

Guiding Principles

[8] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, provides that "subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the cost shall be paid."

[9] The factors to be considered by the court, in the exercise of its discretion on costs, are set forth in sub-rule 57.01(1) of the Rules of Civil Procedure, to which I have had regard.

[10] It is well known that the overall objective in dealing with costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances of the case, rather than an amount fixed by the actual costs incurred by the successful party. The expectation of the parties concerning the quantum of costs is a relevant factor to consider. The court is required to consider what is "fair and reasonable" having regard to what the losing party could have expected the costs to be (see Boucher v. Public Accountants Council (Ontario), [2004] O.J. No. 2634 (Ont. C.A.) at para. 26 and Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, [2005] O.J. No. 160 (Ont. C.A.)).

[11] The usual rule in civil litigation is that costs follow the event and that rule should not be departed from except for very good reasons (see Gonawati v. Teitsson [2002] CarswellOnt 1007 (Ont. C.A.) and Macfie v. Cater, [1920] O.J. No. 71 (Ont. H.C.) at para 28).

Discussion

[12] I did not understand the defendant to submit that his characterization of the issue respecting the applicability of LawPro as “novel” should disentitle the plaintiff to costs or reduce the quantum of an award of costs. The submission was made in response to the plaintiff’s suggestion that the motion was unnecessary and ill-conceived.

[13] I do not find that the defendant’s motion was ill-conceived. The applicability of LawPro to the facts of the case at bar was not a straightforward or self-evident issue and a determination of the reach of the Court’s findings in LawPro has helped to further develop the law in this area. However, I would not consider the issue as “novel” in the sense of taking it out of the category of cases to which the usual principles respecting entitlement to costs would apply.

[14] I agree that there was mixed success on the motion to the extent that, in response to the motion, the plaintiff narrowed the number of fraudulent misrepresentations upon which it relies. This will have the effect of narrowing the scope of the trial. However, it is noted that the legal issue respecting the application of LawPro remained the predominant issue for argument on the hearing of the motion.

[15] I would reduce the plaintiff’s claim for partial indemnity fees by 1/3 to $10,569 by reason of the defendant’s success in reducing the number of alleged fraudulent misrepresentations at issue and deduct the sum of $160 claimed in error as the disbursement for a filing fee for the plaintiff’s motion record.

Disposition

[16] It is ordered that the defendant, Chul Yung Kim, pay costs to the plaintiff in the sum of $13,581.50, comprised of fees in the sum of $10,569, HST on fees in the sum of $1,373.97 and disbursements, inclusive of HST, in the sum of $1,638.53.

[17] This amount is to be paid within 30 days hereof.

D.A. Broad, J. Date: April 3, 2019