Court File and Parties

COURT FILE NO.: CV-18-599333 DATE: 2019-07-08 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Edwin Allan, Plaintiff AND: Gordon Fraser Allan, Gordon F. Allan Professional Corporation, Allan Law Barristers and Solicitors and Joyce Marie Allan, Defendants

BEFORE: Master P.T. Sugunasiri

COUNSEL: R.D. Rollo, Counsel, for Edwin Allan/Moving party C. Loopstra, Counsel for Gordon and Joyce Allan/Responding parties

HEARD: July 8, 2019

Costs Endorsement

Overview

[1] The action is a dispute between brothers over a cottage property initially bequeathed to Edwin Allan (“Edwin”) by their late mother and later sold to Gordon Allan (“Gordon”) and his wife Joyce Allan (“Joyce”) by agreement of purchase and sale. Edwin alleges that the sale was improvident and grounds his claim in breach of fiduciary duty, negligent/fraudulent misrepresentation, breach of duty of good faith, deceit, and breach of contract. He seeks the equitable remedy of rescission and reconveyance of the property, or damages.

[2] On February 28, 2019 I dismissed Edwin’s motion to issue a certificate of pending litigation (“CPL”) against the cottage property. Among other things, I found that Edwin’s primary motivation for seeking the CPL was to secure collection of his potential judgment.

[3] The parties appeared before me today to argue costs.

[4] Gordon and Joyce seek $65,000 of largely substantial indemnity costs. They allege that they made several informal offers to resolve the motion and also made a formal r. 49 offer. They claim that Edwin rejected these opportunities to settle and should therefore be liable for substantial indemnity costs from the date of the offer.

[5] Edwin seems to acknowledge that he should pay some costs but argues that the quantum is exorbitant and they should be owed at the end of trial. He also makes the various serious allegation that Gordon and Joyce purposely elevated costs and withheld information to bully him. For example, his counsel asserts that Gordon and Joyce provided him with crucial information at the last minute, preventing counsel and Edwin from making a more informed choice about whether or not to settle the motion.

[6] I fix costs at $20,000 which Edwin must pay within 60 days of today’s date. I agree with Edwin that Gordon and Joyce’s costs claim is exorbitant. They chose to retain the services of senior counsel to work on the motion. Edwin should not be required to pay for that choice. At the same time, Edwin could have achieved his goal of ensuring that there was sufficient equity in the cottage property to cover a potential judgment by settling with Gordon and Joyce prior to their lawyers giving them the Rolls Royce of legal services. The gamble to go forward comes at a price.

Law and Analysis

[7] In this case, there is no dispute that Edwin must pay costs to Gordon and Joyce as the successful parties. I resolve three issues in this endorsement:

a. Are Gordon and Joyce entitled to substantial indemnity costs from the date of their formal offer to settle the motion, namely August 24, 2018? b. What is a reasonable quantum of total costs for Edwin to pay? c. When should Edwin pay costs?

A. Are Gordon and Joyce entitled to substantial indemnity costs from the date of their formal offer to settle the motion, namely August 24, 2018?

[8] Gordon and Joyce are not entitled to substantial indemnity costs.

[9] Section 131 of the Courts of Justice Act and r. 57.01 of the Rules of Civil Procedure governs costs awards. As noted by Master Muir in Kazinakis v Essa [1], the overall objective of the court is to fix an amount that is fair and reasonable. The Ontario Court of Appeal also states that this is not a mathematical exercise. [2]

[10] Rule 49 of the Rules of Civil Procedure sets out the costs consequences where a party makes a formal offer to settle. Rule 49 contemplates offers made by plaintiffs and defendants to resolve actions. The consequences of failing to accept formal offers are different for plaintiffs and defendants. The costs consequences apply to motions with the necessary modifications (rule 49.02(1)).

[11] What are the necessary modifications? Logic suggests that the moving party would be considered the “plaintiff” and the responding party the “defendant”. For the purposes of the CPL motion, Edwin is the “plaintiff” (and as it turns out, is the actual plaintiff in the action) and Gordon and Joyce are the “defendants”.

[12] Rule 49.10(2) of the Rules of Civil Procedure sets out the consequences of a “plaintiff” failing to accept a “defendant’s” offer. I put the rule into motions terms:

a. If the defendant/responding party makes an offer at least seven days prior to the motion; b. The defendant/responding party does not withdraw the offer until after the motion starts; c. The plaintiff/moving party does not accept the offer; and d. The plaintiff/moving party obtains an order that is as or less favourable than the offer,

The plaintiff/moving party is entitled to partial indemnity costs to the date the offer was served and the defendant/responding party is entitled to partial indemnity costs from that date, unless the court orders otherwise.

[13] In this case, the plaintiff/moving party Edwin did not obtain an order at all. He is not entitled to partial indemnity costs even to the date of the offer. The defendants/responding parties Gordon and Joyce fared better than their offer to Edwin but rule 49.10(2) does not entitle Gordon and Joyce to substantial indemnity costs. Rule 49 only rewards plaintiffs/moving parties with substantial indemnity costs for offers that fare the same as or better than the judgment/order obtained.

[14] Gordon and Joyce have offered no other reason to award them substantial indemnity costs.

B. What is a reasonable quantum of total costs for Edwin to pay?

[15] According to counsel’s costs outline, Gordon and Joyce are seeking $44,874.75 in partial indemnity costs including disbursements and HST. In my view, $20,000 inclusive of disbursements and HST is more reasonable. I so conclude after considering the following:

a. The issues were important to the parties, but not complicated; b. Edwin’s materials were thin and Gordon and Joyce had to supplement his record to assist me in deciding the motion with the benefit of all of the relevant facts; c. Counsel for Gordon and Joyce spent necessary time on cross-examinations given the fact that Edwin decided to present an affidavit in the name of counsel only; d. Edwin’s own lawyers presented a costs outline with a partial indemnity figure for fees, disbursements and HST of $10,000; e. Gordon and Joyce gave no explanation, when asked, why 56 hours of senior counsel’s expertise was needed to top up 63 hours of time spent by a lawyer 12 years at the bar; f. The 119 hours spent by Gordon and Joyce’s counsel on this motion is excessive given its simplicity and despite how important it was for Gordon and Joyce; g. Both sides made offers to settle. Gordon and Joyce’s first offer was reasonable in its terms but unreasonable in only giving Edwin three days to accept before exorbitant costs were tacked on. Edwin understandably rejected the second and third offers which added on $25,000 and then $30,000 in costs; and h. Edwin ought to have accepted the original offer which adequately protected his true interests.

[16] Turning to Edwin’s accusations of bullying, the record before me does not bear out that allegation. I accept Gordon and Joyce’s submission that Edwin’s knowledge is imputed to his counsel. Edwin would have known prior to being served with Gordon and Joyce’s materials that he had told Gordon that what he was interested in was to receive more money from his sale of the cottage property to them. This was a fact that militated against the CPL. The fact that his counsel did not know that Edwin had told this to Gordon until Gordon and Joyce served their materials does not warrant Edwin’s serious accusations. I have no evidence that Gordon and Joyce were purposely trying to elevate costs and bully Edwin and I am not willing to presume it from the materials and arguments before me.

C. When should Edwin pay costs?

[17] Edwin should pay the all-inclusive amount of $20,000 within 60 days of today’s date. Edwin wants to pay at the end of trial. He has not provided me with any reason to do so. Given the quantum, I do afford him longer than the usual 30 days (r. 57.03 of the Rules of Civil Procedure) to pay.

Disposition

[18] For the foregoing reasons, I order Edwin Allan to pay Gordon and Joyce Allan the all-inclusive amount of $20,000 within 60 days of today’s date.

Original signed Master P. Tamara Sugunasiri Date: July 8, 2019

[1] Kazinakis v. Essa, 2018 ONSC 25. [2] Davies v. Clarington (Municipality), 2013 ONCA 548.