Court File and Parties

Court File No.: CV-15-541136 Date: 2019-09-13 Superior Court of Justice - Ontario

Between: Chengyun Deng, Ping Deng and Heying Qiu, Plaintiffs And: Danjing Han, Defendant

Before: Madam Justice Kristjanson

Counsel: David Bleiwas, for the Plaintiffs Arman Alemi, for the Defendant

Heard: In Writing

Ruling on costs

[1] This case illustrates the risks of bringing a poorly conceived summary judgment motion.

[2] The plaintiffs brought an action for damages for misrepresentation and/or fraud in relation to the purchase of a residential property. The defendant relies on an oral agreement with at least some of the plaintiffs.

[3] In September 2016, previous counsel for the defendant advised that she would bring a summary judgment motion; counsel for the plaintiffs responded that there were genuine issues requiring a trial, as credibility was a critical issue.

[4] The parties exchanged several affidavits and conducted cross-examinations. The summary judgment motion was scheduled to be heard on March 23, 2017 but was adjourned in advance, on consent, due to a medical issue and was rescheduled for June 19, 2017. The plaintiffs then served a notice of cross-motion for summary judgment. No additional affidavits were delivered in relation to the cross-motion. Counsel for the plaintiffs indicates that the cross-motion was brought for a tactical purpose of inducing the defendant to withdraw her summary judgment motion.

[5] The summary judgment motion was returnable before me on June 19, 2017. The plaintiffs requested an adjournment; counsel with carriage of the matter was not in court because of an injury the night before. The defendant opposed the motion claiming another lawyer from the office could appear. In my endorsement, I stated that I was "surprised and disheartened by this position. Civility and professionalism require counsel to understand that a medical emergency the night before a summary judgment motion will require a medically-necessitated adjournment."

[6] In my endorsement, I advised that counsel could re-attend in Civil Practice Court to reschedule if the defendant chose to do so. I also stated that I had prepared fully for the summary judgment motion and was of the view that the matter was not appropriate for summary judgment, and I would have directed the parties to proceed to trial. I expressed a concern that serious allegations of fraud were central to the plaintiffs' case, and the defendant's allegations of an oral contract were denied by the plaintiffs. I expressed the view that credibility was central to any disposition, and oral evidence would be required.

[7] The defendant discharged the counsel who brought the summary judgment motion and subsequently retained a different lawyer, who advised the plaintiffs that the defendant was abandoning her motion. The defendant subsequently retained Mr. Alemi. The plaintiffs have confirmed they will not proceed with the cross-motion as a result.

The Defendant's Abandoned Summary Judgment Motion

[8] Pursuant to Rule 37.09 of the Rules of Civil Procedure, there is a presumption that the opposing parties are entitled to their costs of an abandoned motion payable forthwith unless the court orders otherwise. Where a motion for summary judgment is abandoned, the entitlement to costs is primarily governed by Rule 37.09(3), subject to reference to Rule 20.06 where applicable: Skycharter v. Eaton Corp., 2005 CarswellOnt 329. Pursuant to Rule 20.06, the court may award substantial indemnity costs on a summary judgment motion where a party has: (i) acted unreasonably by making the motion; or (ii) acted in bad faith for the purpose of delay.

[9] I find that the defendant acted unreasonably in making and pursuing the motion. The defendant ignored several warnings from the plaintiffs' counsel that this was not an appropriate case for a summary judgment motion. Even after responding materials were delivered, the defendant persisted with the motion and required costly cross-examinations on affidavit. I cannot find that the motion was brought in bad faith to delay the action, but it has certainly had the effect of delaying the action considerably.

[10] Although not articulated specifically by the defendant, presumably the motion is being abandoned because the defendant, with the assistance of subsequent counsel, recognized that the motion was unlikely to be successful. Having reviewed all the materials, I formed the view that a summary judgment was not appropriate. It should have been obvious that the motion stood virtually no chance of success. It was not reasonable to bring, nor to persist, in the motion to the eve of argument. As a result, the plaintiffs should be awarded costs on a substantial indemnity basis in accordance with Rule 20.06(a) as was done in Ledore Investments Ltd. v. Murray, 2002 CarswellOnt 1375.

Quantum of Costs

[11] Modern costs rules are designed to advance five purposes in the administration of justice: (1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage and sanction inappropriate behaviour by litigants in their conduct of the proceeding; and (5) to encourage settlements: Fehr v. Sun Life Assurance Company of Canada, 2017 ONSC 2218 at para. 34.

[12] Rule 57.01(1) of the Rules of Civil Procedure provides that in exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider several specified factors. In Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 728, the Court of Appeal, at para. 26, held that the fixing of costs is not simply a mechanical exercise and that, overall, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.

[13] In this case, the plaintiffs' primary lawyer has 20 years of experience. His time was initially billed at the rate of $475 per hour, which then increased to $500 per hour in 2017 and beyond. On a substantial indemnity basis (calculated at 75% of the actual rate) the effective hourly rate is $375 (or less prior to 2017) and is well within the range of reasonable hourly rates charged by lawyers with similar levels of experience. The $225 rate charged by the junior lawyer on this file, Shane Greaves, is similarly reasonable.

[14] The motion was moderately complex. Given that it was a summary judgment motion to dismiss the claim, the issues to be dealt with on the motion were of great importance to the parties and they were entitled to vigorously defend.

[15] The plaintiffs claim fees of $51,245.50 (i.e. $45,350 plus HST) on a full indemnity basis, plus disbursements of $1,879.72 (including HST) for a total of $53,125.22, and $39,843.91 on a substantial indemnity basis. The bill of costs of the defendants was $36,819.27 on a full indemnity basis. I consider the complexity, length and quality of the materials filed by the two parties and their respective bills of costs, and the higher hourly rate of the lawyers for the plaintiffs.

[16] Here, the parties were fully prepared to argue the summary judgment motion; only the plaintiffs' counsel's injury the night before the attendance led to the adjournment, and the motion was abandoned by the defendant after all preparation was completed. In the circumstances set out above, it is fair and reasonable for the plaintiffs to be awarded costs on a substantial indemnity basis, inclusive of HST and disbursements, in the amount of $39,000.00 fixed and payable forthwith, subject to the set-off of $2,000.00, for a total award of $37,000.00, fixed and payable forthwith. The defendants may take no further steps in this litigation until the costs award is paid.

Plaintiffs' Abandoned Motion

[17] The defendant seeks an order setting off her costs of responding to the plaintiffs' abandoned cross-motion for summary judgment. The plaintiffs concede that the motion was brought solely for a tactical purpose, to illustrate to the defendant the absurdity of their position, whereas motions are to be brought with good faith belief in their merits, and not simply as a pressure tactic. The motion was abandoned after the defendant abandoned her motion. No evidence was filed by the defendant in response to the cross-motion. I find that the amount claimed ($5,403.00) for delivery of a brief reply excessive, but order that the defendant may set-off $2,000.00 costs for the plaintiffs' abandoned motion.

Kristjanson J.

Date: September 13, 2019