Court File and Parties

COURT FILE NO.: CV-15-519767 DATE: May 23, 2019

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE MATTER OF the Construction Act, R.S.O. 1990, c.C.30

BETWEEN:

ALMOS DEZSI c.o.b. DEZSI CONSTRUCTION Plaintiff Almos Dezsi, self-represented, Tel.: 905-244-7076, Fax: 905-231-9602.

• and -

ANGELA WALKER, PETER WALKER and BANK OF MONTREAL Defendants Angela Walker for herself and Peter Walker, self-represented, Tel.: 416-277-6384, Fax: 416-277-6384.

DECISION: March 29, 2019. Master C. Wiebe

COSTS DECISION

[1] On March 29, 2019 I rendered my trial decision in this case. Mr. Dezsi had claimed (both as a lien and damages for breach of contract) $25,295.05. I dismissed his claim, discharged his claim for lien, and ordered a return of the Walkers’ posted cash security for the Dezsi claim for lien. In their counterclaim, the Walkers had claimed a total of $550,000. I found that they were entitled to be paid only $46,140 plus interest on the money they posted as security ($31,618.82) at the rate of 1.3% running from the date of the order, April 16, 2015, to the date the security is returned. As of today, May 21, 2019, that interest is $1,686.97, which makes the total recovery for the Walkers $47,826.97.

[2] At the end of the trial hearing, as directed, the parties delivered costs outlines, which I summarized at the end of my Reasons for Judgment. As further directed in my decision, the parties delivered written submissions on costs. It was not clear from Ms. Walker’s written submissions as to what costs the Walkers are in fact claiming.

Self-representation

[3] It is well established law that self-represented parties are entitled to costs. However, their entitlement is not the same as that of a party who retains a lawyer throughout. A self-represented party is entitled to only that work that would have otherwise been done by a lawyer and that represented lost time from remunerative activity; see Benarroch v. Fred Tayer & Associates P.C., 2019 ONCA 228 (C.A.) at paragraph 19.

[4] In this case both parties retained lawyers for parts of the reference, but neither of them used lawyers for the trial hearing. In his “Costs Statement,” Mr. Dezsi appears to have contemplated this issue as he identified the costs he incurred for his lawyer and then identified a separate modest amount, $12,204, for “time lost from work for preparation and trial at the contractual hourly rate of $45/h, 240 hours total, plus HST.”

[5] The Walkers retained a lawyer (Andrew Lewis) throughout except for the work of preparing for and conducting the trial hearing. Their “Bill of Costs” shows an amount of 95.5 hours for Mr. Lewis and an amount of 270 hours presumably for Ms. Walker. The largest single item is the 88 hours for the “preparation and attendance at trial . . . 11 full days of trial.” Various hourly rates are then applied depending on the standard of costs claimed. Ms. Walker is a bank manager, and Mr. Walker is a roofing contractor. There was no evidence as to how much, if any, time Ms. Walker spent away from remunerative activity on account of the purely legal work she did on this case. This is particularly troubling for the 88 hours shown as having been spent at the trial hearing, as normally parties attend the entirety of their trials. This issue does affect the other items shown for Ms. Walker as well, as a client with a lawyer will spend time preparing witness statements and participating in the other items of trial preparation work. I must take this evidence deficiency into account in my costs award.

Result and proportionality

[6] Generally, costs follow the event. In this case, there is no doubt that the Walkers were the successful party, as they succeeded in defeating the entirety of Dezsi claim and obtaining recovery on their counterclaim.

[7] However, the Walkers’s success on their counterclaim was significantly reduced by their failure to reasonably mitigate their damages concerning the floor deficiencies and their failure to prove the vast majority of their claimed items in the Scott Schedule. Their success, $47,826.97, was only 8.7% of their claimed $550,000. Mr. Dezsi submitted that at this level of recovery, this case was within the monetary jurisdiction of the Simplified Rules, a submission with which I agree.

[8] This very modest success must be reflected in the costs award in favour of the Walkers. 8.7% of the Walkers claim for partial indemnity costs, $45,311.43, would be only $3,942.09. 8.7% of the Walkers’ claim for substantial indemnity costs, $67,167.15, would be only $5,843.54. This modest result and proportionality will be significant factors in my costs award.

Offers to settle

[9] Another factor I must consider is offers to settle. In their written submissions, written offers to settle appear to have been made by both parties. Some of these were after my Reasons for Judgment which I should not take into consideration in making my award of costs on the judgment itself. One of the points of considering offers to settle is to determine which party made a reasonable effort to resolve this case and avoid the trial hearing. Rule 49 and the costs consequences of Rule 49.10 are predicated on this core consideration.

[10] Mr. Dezsi appears to have made written offers to settle. One was in an email before the trial hearing on January 25, 2018 where he appears to offer receiving $48,000, namely his claim and his accumulated costs. The other was in an email dated February 27, 2018 shortly after the commencement of the trial where Mr. Dezsi offered to accept $75,000 in return for the Walkers keeping “the costs awards that you acquired through your fraudulent claim.” Presumably, this last phrase concerns the interlocutory costs orders the Walkers obtained against Mr. Dezsi. These offers were no compromises at all, which is shocking given how the trial evidence unfolded. Obviously, Mr. Dezsi did not achieve a result that exceeded these offers, and, therefore, they are irrelevant to my costs award.

[11] In the many pages of Ms. Walker’s written submissions I was not able to detect any offers to settle that the Walkers made after the commencement of the Dezsi lien proceeding and before my Reasons for Judgment. Therefore, I conclude that there were none. This is another significant factor in my costs award.

[12] Both parties made reference to a settlement meeting between the parties that took place in a police station on July 31, 2018, namely prior to closing argument. In attendance were Mr. Dezsi, a friend of Mr. Dezsi’s named “Alan,” and the Walkers. It is not at all clear that even verbal offers to settle were exchanged. Ms. Walker seems to suggest at one point that the Walkers give “a lawyer” $10,000 if Mr. Dezsi “walks away” and the Walkers make a claim on the Dezsi insurance policy (no doubt his liability policy). “Alan” in turn appears to have made no offers for Mr. Dezsi. I am not sure how to interpret the Walkers’ position in this meeting, as it suggests insurance fraud. I make no further comment here.

Complexity

[13] Another factor I must consider is the complexity of the proceeding. While there was much evidence on the floor issue, the issues in this case were not particularly complex. The floor issue, the main issue, was straight forward and understandable.

[14] What mystified me was that Mr. Dezsi consistently did not appear to comprehend the significance of the floor issue, and did not properly prepare for it. He did not call expert evidence. The floor issue was not a complex one, but needed proper preparation. The Walkers in turn had a profound lack of evidence on the non-floor issues, which also were not complex.

Reasonable expectation

[15] Another factor I must consider is the reasonable expectation as to costs liability of the unsuccessful party, namely Mr. Dezsi in this case. Mr. Dezsi’s cost outline showed a total of $27,456.51, namely about half of the Walkers’ partial indemnity claim.

[16] While this is a factor, it will not be a governing factor. The Walkers used a lawyer throughout the reference except for the trial hearing, whereas Mr. Deszi used one only at the outset of the lien proceeding. For some reason that is beyond me, the Walkers chose not to have a lawyer for the trial hearing. In my view, the trial would have gone much more smoothly had the Walkers retained a lawyer for the trial. For instance, the several delays caused by Ms. Walker’s medical conditions would have been avoided. Nevertheless, the Walkers on their own did much more work than Mr. Dezsi in preparing for this trial, preparing witness statements, getting expert evidence, and preparing closing argument. This outweighs the factor of the reasonable expectation of the losing party.

Conduct

[17] There was much discussion in the written submissions about conduct. Ms. Walker pointed out that Mr. Dezsi did not provide proper witness statements, worked without a proper license, did not properly engage his liability insurer, and submitted late evidence. I will not comment on these issues, as I do not view them as being critical to my cost ruling. There is one exception, however. Throughout the trial, I was puzzled by Mr. Dezsi’s steadfast denial of any liability for his floor deficiency, and his steadfast denial of the extent of this issue. When the Walkers delivered expert reports on the floor issue, Mr. Dezsi should have either retained experts on the subject to respond, or tried seriously to settle this case. He did neither, which prolonged this case needlessly in my view. His offers showed no willingness to compromise.

[18] On the other hand, Mr. Dezsi made valid criticisms of Ms. Walker’s conduct. Most significantly was the issue of the improper blocking. This issue was not pled by the Walkers, and was not addressed by any expert report. Suddenly, in the middle of the trial hearing, Ms. Walker began propounding the theory that the delayed squeaking of the floor was caused by this issue. She guided Mr. Tichy to this issue, inappropriately, as Mr. Tichy had not deal with the issue in his report. This issue took up a considerable amount of trial time, needlessly in my view. Mr. Dezsi also accused Ms. Walker of denying him his discovery right. The story here seems somewhat convoluted, and I will not comment on it as a result.

[19] There were, however, other issues concerning the conduct of Ms. Walker and her husband that I did not approve of. First, I was not impressed by Ms. Walker’s incessant argumentative nature. She could not refrain from arguing her case even when she was giving her evidence. This was very frustrating, and needlessly confused and prolonged the trial hearing. Second, she introduced evidence improperly, such as the Phoenix letter that she had obtained during the trial, which letter explained the Phoenix floor plan. She did not produce the author of the letter, which was improper. Mr. Dezsi did not object, and the letter was filed, and I discounted it in the end. This was a further waste of time. Third, and more importantly, she and her husband denied in the witness stand knowing during the Cleary work that there was a risk of future floor squeaking problems throughout the house. The emails at that time, however, clearly indicated that they did knew of that risk. Mr. Dezsi did not bring this out, and it was left to me to comment on the issue.

[20] In the end, I found that both parties had significant conduct issues. I will not, therefore, award the Walkers substantial indemnity costs. I will also consider my comments about the Walkers in my final costs award.

Quantum

[21] Mr. Dezsi did not have specific complaints about the quantum of the Walkers’ costs claim. I will not make further comments as to quantum other than as stated above in my discussion of what self-represented parties should recover in costs.

Award

[22] Considering all of the relevant factors, I have decided to award, and I do award, the Walkers $7,500 in partial indemnity costs. The primary reason for this award is the size of the Walkers’ judgment compared with their counterclaim. The result and proportionality are the major reasons for this ruling.

[23] I also am not impressed by the Walkers’ failure to make reasonable offers to settle prior to the commencement of and during the trial. This award, $7,500, is about 16.5% of the Walker partial indemnity claim. I think this is appropriate in the circumstances.

Prejudgment interest

[24] The prejudgment interest rate on $46,140 of the Walkers’ judgment on their counterclaim as specified by the Courts of Justice Act, R.S.O. 1990, c. C.43 section 128 is 1.3% and runs from November 6, 2014, the date of contract termination. As of today, that figure is $2,724.59.

[25] As stated above, the ordered interest on the posted security is $1,686.97 as of May 23, 2019. These two interest amounts must be paid by Mr. Dezsi.

[26] I have drafted and signed the final report in this matter. A copy is enclosed with this Costs Decision plus instructions on having the report confirmed, which the parties should follow.

Released: May 23, 2019

MASTER C. WIEBE