Court File and Parties

COURT FILE NO.: CV-17-579691 DATE: 20190704 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

8254125 Canada Inc., 8254141 Canada Incorporated, and 8254133 Canada Ltd. Applicants – and – Celernus Investment Partners Inc. Respondent

Counsel: Ryan Atkinson and Rachel Mester for the Applicants (“Mortgagors”) Ronald Allan and Sunny Rehsi, for the Respondent (“Mortgagee”)

HEARD: March 20, 2019 (with supplementary written submissions on costs completed on June 20, 2019)

Costs Endorsement

KIMMEL J.

[1] For reasons released on May 24, 2019, I accepted the Respondent’s position concerning the interpretation of a settlement agreement between the parties dated November 15, 2016 and I ruled that the Respondent is entitled to receive the $100,000.00 holdback from that settlement (the “Holdback Amount”).

[2] I encouraged the parties to try to reach an agreement on costs. I alerted the parties in my reasons that I would have reservations about making a costs award that represents a significant proportion of the Holdback Amount given the history of this matter.

[3] The parties were not able to reach an agreement on costs and I have now received cost submissions and a costs outline from the Respondent dated June 7, 2019, cost submissions and a costs outline from the Applicants dated June 14, 2019 and a reply cost submission of the Respondent dated June 20, 2019, all in accordance with the schedule that I allowed for in my reasons. Having received and reviewed those submissions, I remain concerned that the time and effort expended by both sides on this matter is disproportionate to the $100,000.00 amount in issue.

The Parties’ Positions on Costs

[4] The Respondent seeks its partial indemnity costs of $24,050.52 inclusive of all fees, disbursements and taxes. The Respondent contends that this is an amount that is fair and reasonable for the Applicant to pay, having regard to Rule 57.01 of the Rules of Civil Procedure and Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d) 291 (C.A.), at para. 26. The Respondent relies upon its success on the main issue decided in the application. It acknowledges that there were other issues (outside of the deciding point of contract interpretation) raised by both parties that did not determine the outcome of the application and suggests that they balance each other out and should not detract from the costs to be awarded to the Respondent who was the successful party.

[5] The unsuccessful Applicants seek a portion of their $40,140.94 in partial indemnity costs. They are asking for an award of costs in their favour in the amount of $7,000.00, on account of what they describe as unnecessary steps, issues and delays attributable to the Respondent. They also argue that I should consider and take into account not just the principle of indemnity but also the objectives of encouraging settlement, discouraging frivolous proceedings and unnecessary steps in litigation and preserving access to justice in my decision regarding costs, relying on the case of Watterson v. Canadian EMU, 2018 ONSC 301 (Div. Ct.), at paras. 8 and 9.

[6] The Respondent in its reply observes that no authority has been provided by the Applicants to support their position that they should be awarded costs as the losing party. The Respondent also challenges the attribution of delay and unnecessary steps and issues to it.

[7] Both sides have made reference to indications by the other that they might appeal. I have not considered or taken those into account. I have otherwise considered and taken into account the parties’ submissions on costs and their costs outlines in reaching my decision on costs.

Analysis and Decision on Costs

[8] I agree with the Respondent’s starting premise that costs should follow the event and that it is entitled to an award of costs as the successful party on this application. I have been given no authority to support an award of costs in favour of the unsuccessful Applicants.

[9] Pursuant to s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”), the court has a broad discretion when determining the issue of costs. Rule 57.01 sets a non-exclusive list of factors that may be considered in the exercise of that discretion.

[10] I have considered those factors that are applicable in this case, including the result of the application, the principle of indemnity (taking into account the experience and rates of the lawyers involved), the amount at issue, the complexity and importance of the issues and the conduct of the parties. I have also taken into account the amount of costs that the unsuccessful parties could reasonably have expected to pay in relation to this application.

[11] I agree with the Respondent that there is an overarching objective in this exercise to fix an amount of costs that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, so I will address that first. In deciding what is fair and reasonable, the reasonable expectation of the unsuccessful party concerning the amount of costs that they may have to pay for a particular step in the proceeding is a relevant factor: see Boucher, at paras. 26 and 38. Since that case was decided, this factor has been expressly incorporated into Rule 57.01(1)(0.b).

[12] A relevant consideration in the assessment of the reasonable expectation of the unsuccessful party concerning the amount of costs that they may have to pay is the amount of their own costs, which is disclosed in the Applicants’ costs outline. The Applicants’ partial indemnity costs of $40,140.94 exceed the partial indemnity costs of $24,050.52 claimed by the Respondent. This differential is accounted for by the slightly higher (relative to year of call) hourly rates of the Applicants’ lawyers and higher number of hours billed. It is an indication that the amount of partial indemnity costs claimed by the successful Respondent was within the realm of the reasonable expectations of the Applicants.

[13] However, as I indicated in my May 24, 2019 reasons, there remains a concern about the amount of costs claimed relative to the amount at issue, which is disproportionate: see Watterson, at paras. 31 and 32. Although this is not a case where the amount of costs claimed exceeds the amount in issue, this is a case where both sides adopted what appears to be a “scorched earth” attitude. It is fair to say that both sides took steps that tended to lengthen and unduly complicate this application by raising many issues extraneous to the central point of contract interpretation. Some of the costs claimed by the Respondent would have to be attributable to the collateral issues raised.

[14] The Respondent takes exception to my initial suggestion of there having been “divided” success because it contends that the Applicants also raised collateral issues and the only issue that mattered was who was entitled to receive the Holdback Amount. Even though the Respondent won that issue, it was not successful on all issues that it raised, including some that occupied significant space in both the written and oral submissions on the application, concerning alleged misrepresentations and rescission. In considering the quantum of costs to award the Respondent this remains a relevant consideration.

[15] In the exercise of my discretion under s. 131 of the CJA and having regard to the factors in Rule 57.01, I am awarding the Respondent its costs of this application fixed in the amount of $12,000.00 in fees, plus all of its disbursements totalling $5,515.36, plus all applicable taxes, payable by the Applicants forthwith. I find this amount to be fair and reasonable in the circumstances.

KIMMEL J. Released: July 4, 2019