COURT FILE NO.: CV-17-5302-00
DATE: 2019 12 13
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Alearano Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac, Brain McDowell, Biljana Nizalek, Marielle Pelchat-Morris, Wilma Jesus, Monica Savona, Milena Boland, Frand Demaria, Jurica Biondic, Renato Biondic, Roberta Biondic and Boris Klecina
D. Cunningham, counsel for the Plaintiffs, Peter Pichelli, Todd Leslie, Frank Toth and 958041 Ontario Limited
Plaintiffs
- and -
Ante Kegalj, Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp., 1857325 Ontario Ltd. and Bramption G&A Holdings Inc.
E. Hiutin, counsel for the Defendant, Brampton G&A Holdings Inc.
Defendants
-and between-
Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp. and 1857325 Ontario Ltd.
G. D.E. Adair, Counsel for the Defendants/Plaintiffs by Counterclaim, Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp. and 1857325 Ontario Ltd.
C. Abela, Counsel for the Plaintiffs/Defendants by Counterclaim, Aleardo Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nacny Kostelac, Brain McDowell, Biljana Nizalek, Madelle Pelchat-Morris, Wilma Jesus, Monica Savona, Milena Boland, Frank Demaria, Jurica Biondic, Renato Biondic, Roberta Biondic and Boris Klecina
Plaintiffs by Counterclaim
Aleardo Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac, Brain McDowell, Biljana Nizalek, Marielle Pelchat-Morris, Wilma Jesus, Monica Savona, Milena Boland, Frand Demaria, Jurica Biondic, Renato Biondic, Roberta Biondic, Boris Klecina, Anna Bilich, Emma Faria, Katarina Granic, Anton Granic, Marianne Martinovic, Frank Samardzic and Robert Sokic
J. Macdonald, Counsel for the Defendants to Counterclaim, Robert Sokich and Anna Bilich
G. Karayannides, Counsel for the Defendants to the Counterclaim, Milena Boland, Frank Demaria, Jurica Biondic, Renato Biondic and Roberto Biondic
Defendants
HEARD: In Writing
REASONS FOR DECISION
LEMAY J
[1] I am the case management Judge in this action, which has been before the Courts for more than two years. In my reasons of October 4th, 2019, I dismissed a motion brought by two groups of Plaintiffs to register a CPL or other charge against the title on property. My reasons are set out at 2019 ONSC 5772.
[2] I am now required to fix the costs of this motion.
Background Facts
[3] As I have set out in many decisions, the action in this case relates to the property at 78 Cliffside Drive in Brampton. This litigation commenced in 2017 over the activities of the putative developers, the Vuletics. The Vuletics had sold the property to Brampton G & A, the responding party on this motion. Brampton G & A owes approximately $10 million on a Vendor Take-Back mortgage. The agreement between Brampton G & A and the Vuletics would see the Vuletics receive three (3) lots in the development.
[4] The Plaintiffs are suing the Vuletics, claiming entitlement to the entirety of the monies and property. In the course of case management, the parties had originally agreed to Orders relating to the mortgage and to Brampton G & A's participation in this litigation.
[5] Counsel for a group of the Plaintiffs ("the Caroti Plaintiffs") changed earlier this year and are now represented by Ms. Abela. In addition, two of the other Plaintiffs (Robert Sokich and Anna Bilich) obtained counsel and are now represented by Mr. MacDonald. Those parties moved for a CPL respecting the three (3) lots that the Vuletics may have an interest in, as well as for an Order that the monies from Brampton G & A's mortgages be paid into Court, and that the mortgage be registered on title. The parties represented by Mr. Karayannides did not take part in this motion.
[6] The Vuletics did not oppose an order requiring all monies payable under the mortgage to be paid into Court, and Brampton G & A was prepared to consent to such an Order. Brampton G & A opposed the motion for anything to be registered on title. They were successful, in part because of the fact that this was the second time that these issues had been litigated.
The Positions of the Parties
[7] As the successful party, Brampton G & A seeks costs in the sum of between $51,051.67 and $72,287.20 inclusive of HST and disbursements. These are the partial and substantial indemnity cost amounts that Brampton G & A claims. In addition to its' argument that it is entitled to costs because it was the successful party, Brampton G & A supports its claim for costs on the following bases:
a) Brampton G & A made an offer to settle this motion that should have been accepted, and that triggers costs consequences under Rule 49 of the Rules of Civil Procedure.
b) The moving parties, and specifically the Caroti parties, were attempting to re-litigate an issue that had already been decided.
c) The motion was complex, and was very important to Brampton G & A, as it concerned issues respecting the title to the property that Brampton G & A owns.
d) The amounts claimed by Brampton G & A are reasonable.
[8] Brampton G & A seeks to have these costs paid 50 percent by the Caroti parties and 50% by the Sokich parties.
[9] The Caroti parties oppose the granting of costs to Brampton G & A on the following grounds:
a) The Caroti parties obtained substantial success in this motion, as they obtained all of the relief they sought except for the granting of a CPL on the property. In addition, the Order issued in April of 2018 did not prevent any liens on the property, and this was an oversight on Brampton G & A's part.
b) Brampton G & A's offer to settle was not capable of being accepted and, in any event, Brampton G & A did not do as well as their offer to settle.
c) Brampton G & A's costs are excessive and not proportional. These costs also do not reflect time spent only on the motion.
[10] The Sokich parties adopt many of the arguments advanced by the Caroti parties. In addition, the Sokich parties argue that the split in costs should not be 50/50, but instead should reflect the number of plaintiffs represented by each counsel.
[11] Brampton G & A provided responding submissions in which it argued that the moving parties' costs on the CPL portion of the motion were unreasonably low, and that the arguments about the offer to settle are flawed.
Issue #1- Who Was the Successful Party?
[12] Answering this question is often less complicated than the arguments make it seem. As noted by Pazaratz J. in Scipione v. Scipione (2015 ONSC 5982) the question the Court has to determine is who got what they asked for?
[13] In this case, the moving parties obtained some relief, particularly having the monies paid into Court, and having restrictions placed on the lots owned by the Vuletics. However, the bulk of the motion concerned the granting of a CPL on the property, and Brampton G & A was the successful party on that point.
[14] As a result, Brampton G & A is entitled to its costs for this motion, but those costs should be reduced to take into account the fact that the Caroti and Sokich parties received some relief for bringing this motion, even if that relief was on consent.
Issue #2- The Offer to Settle
[15] Brampton G & A offered to settle this motion on the following terms:
All future dollar amounts payable under the subject vendor take back mortgage (the "VTB"), will be paid into Court. Indeed, our client has already advised that it is prepared to do so, even if this offer if not accepted;
The balance of the relief sought by your respective clients as moving parties will be dismissed, with costs payable to our client on a partial indemnity basis (as agreed or ordered by a Court), less $3,000.00;
To avoid any doubt, the offer sent in our email dated July 26, 2019, at 11:06 a.m. is hereby withdrawn and no longer capable of acceptance;
This offer can only be accepted in writing;
This offer must be accepted by all of the moving parties – to avoid any doubt, if one set of moving parties accepts this offer, but the other does not, this will not constitute acceptance of this offer;
This offer will remain open for acceptance for one minute after the commencement of the motion, at which point it will expire and will no longer be capable of acceptance.
[16] In my view, this is not a valid Rule 49 offer for three reasons. Each of these reasons is, on its own, sufficient to find that the Offer is not a valid Rule 49 offer.
[17] First, this offer required all of the moving parties to agree on the outcome of the motion. No one party could accept it and avoid the cost consequences. As a result, if the offer was a valid Rule 49 offer, it would have created a situation where, for example, the Sokich parties could have accepted the offer and still been responsible (on Brampton G & A's submission) for $35,000.00 in substantial indemnity costs (half of what was claimed). This is not the type of offer that is contemplated by Rule 49. Rule 49 offers are designed to result in the settlement of cases, and this offer created a disincentive to settle unless everyone settled.
[18] Second, for this offer to be effective, it would have required the consent of the Vuletics, which was not forthcoming until less than seven days before the hearing of the motion. The reason that the offer would have required the consent of the Vuletics is that the payments on the mortgage were due to the Vuletics, and were not required to be paid into Court. This change in the mortgage terms would have required either the approval of the Vuletics or a Court order. A Court order not on consent could not have been made until the hearing of the motion. As a result, the offer was not capable of acceptance by the moving parties until consent was obtained from the Vuletics. In short, this offer did not become a valid offer until the time for making Rule 49 offers had passed.
[19] Finally, there is the question of whether Brampton G & A would have done better than the offer if it had been accepted. Answering this question requires a consideration of the costs that would have been awarded. Counsel for the Sokich parties points to the decision in Yepremian v. Weisz ((1993 CanLII 5483 (ON SC), 16 O.R. (3d) 121), where the Court found that an offer with variable costs could not be fixed and understandable and, therefore, could not trigger the provisions of Rule 49.
[20] In response, Brampton G & A argues that the decision in Yepremian, supra is outdated and that the majority of the Court of Appeal in Rooney v. Graham ((2001 CanLII 24064 (ON CA), 53 O.R. (3d) 685) stated (at paragraph 43):
By stating what happens when an offer contains no provision for costs, rule 49.07(5) implicitly affirms that a Rule 49 offer can contain a provision for costs. Indeed, a plaintiff must be able to include a provision for ongoing party-and-party costs in a Rule 49 offer because even absent such a provision, the plaintiff is entitled to its party-and-party costs once the offer is accepted. If, therefore, a Rule 49 offer can provide for ongoing party-and-party costs, I see no valid reason why a Rule 49 offer cannot also provide for ongoing solicitor-and-client costs.
[21] I accept the position of Brampton G & A that the passage from Rooney, supra applies to this case, and allows them to make an offer where the costs increase after the offer is made.
[22] However, the fact remains that, at the time the offer to settle was made, Brampton G & A's partial indemnity costs were in excess of $45,000.00. For reasons that I will come to, this is not an amount that would ever have been awarded by a Court for this motion. As a result, although the offer for costs might have fallen within the provisions of Rule 49 because an assessment was permitted by the offer, the amounts sought were not reasonable.
[23] For these reasons, I do not view the offer as being a Rule 49 offer. However, I note that the fact that Brampton G & A was prepared to make an offer that had terms similar to where the Court resolved the matter is a factor that should be considered in my costs assessment. It is not a significant consideration, however, because the offer was served after most of the work had been done.
[24] I should briefly note the submission made by counsel for the Caroti parties that they offered to resolve the motion if Brampton brought an interpleader motion. This motion would have had the effect, inter alia, of paying the money into Court. This suggestion was made early on in the litigation and, although it is not a formal offer (and would not have triggered Rule 49 in any event), it is still a factor to be considered in my costs assessment (see Rule 49.13).
Issue #3- The Factors Under Rule 57.01
[25] The remaining issues that the parties have raised all concern at least some of the factors listed under Rule 57.01. I have considered all of those factors in reaching my decision on costs, and have addressed some of them above. I will address others in my analysis below.
[26] However, the factors under Rule 57.01 that are the most relevant in this case, and that have not already been addressed are:
a) The complexity of the proceeding.
b) The amount of costs that an unsuccessful party could reasonably be expected to pay.
c) The conduct of any party that tended to shorten or lengthen the proceeding.
The Complexity of the Proceeding
[27] Brampton G & A justifies its costs in part on the basis that the proceeding is complex. While I agree that this is a complex action, I also note that I have issued a number of decisions and endorsements in this matter. Some of those set out the underlying facts in detail. In addition, counsel for Brampton G & A was intimately involved in the negotiation of the previous Orders respecting the property. As a result, it should not have been difficult to for counsel refamiliarize himself with this matter quickly.
[28] In addition, I have to consider both the complexity of the material on this motion, and the nature of the issues that were raised by that material. At its essence, this was a motion for a CPL. These are not normally complex motions, and the law on when a CPL is granted (or refused) is well established. As a result, the motion itself was a relatively straightforward matter.
[29] The two complicating factors were the fact that there was a pre-existing agreement, and the fact that the underlying transaction and litigation has some complexity. Those factors lead me to two conclusions. First, there is justification for Mr. Hiutin having another colleague argue the motion. Second, this would have been somewhat more complex than the standard CPL motion.
[30] I would also note that the motion was of considerable importance to both parties which, when combined with the complicating factors, justifies a somewhat higher award of costs than would be usual on a motion of this nature.
The Amount of Costs An Unsuccessful Party Would Expect to Pay
[31] The bill of costs submitted by the Caroti parties has total partial indemnity costs in the sum of $15,547.99 inclusive of disbursements and HST. Those costs have a total time spent of 34.0 hours by Ms. Abela, as well as 20.0 hours for a student to do research and 14.0 hours for a law clerk. The specific, detailed docket entries are not provided.
[32] The bill of costs submitted by the Sokich parties has partial indemnity costs in the sum of $4,645.97 inclusive of disbursements and HST. It does not have any detailed day by day docket entries, although Mr. MacDonald's bill is broken out into different categories, and it is easier to see where he spent his time.
[33] In my view, the amount incurred by the Caroti parties in this action is excessive for the nature of the work that was done. While I can see a need for detailed submissions, I am concerned that Ms. Abela spent close to a week's worth of time on this motion. If I accept that eight billable hours in a day is a reasonable working day, then Ms. Abela spent nearly 4 ½ working days on this motion in addition to the time spent by the student and the law clerk. This seems excessive to me, although it is not beyond the realm of reasonable possibility given the amount of material that was filed on the motion.
[34] Mr. MacDonald's bill, on the other hand, is somewhat low for a motion of this nature. It represents an exceedingly efficient use of time. I suspect that this resulted, in part, from the fact that Ms. Abela took the lead on much of the work in this case.
[35] This brings me to the bill from Brampton G & A. Having said that the $15,000.00 in partial indemnity costs incurred by the Caroti parties is excessive, it follows that the $51,051.67 in partial indemnity costs sought by Brampton G & A are completely unreasonable.
[36] A cursory review of Brampton G & A's bill will illustrate why their costs are completely unreasonable. Consider the following:
a) A student spent 96 hours conducting research and reviewing the book of authorities. As I set out at paragraph 33, above, an 8 billing hour day is a reasonable assumption. Indeed, to bill an eight hour day, even the most efficient counsel will have to be in the office for more than eight hours. On that calculation, conducting the research and preparing the book of authorities took the student two and a half weeks. I cannot see how that is possible, much less justifiable.
b) Mr. Hiutin spent 27 hours preparing his client's Affidavit. Again, on an 8 hour billing day that is approximately three and a half days. The Affidavit was not nearly that complicated.
c) Then, Mr. Hiutin spent 15.3 hours, which is nearly two days, writing the factum. That is merely an excessive amount of time. However, it becomes unreasonable when the next entry is considered. A first year lawyer also spent 36.9 hours writing the factum. In other words, a factum on what was at most a moderately complex motion took Mr. Hiutin and his colleagues seven business days of time to prepare. The factum I received did not justify anywhere near this amount of time. This is particularly true when it is remembered that the research time has already been accounted for elsewhere
d) Even after all of this work, Mr. Macklin, who argued the motion, spent two and a half days preparing and attending for the argument of this motion. The attendance was a one hour appearance at 9:00 am, and the parties did not have to wait for anyone else before they were heard. As a result, the bulk of Mr. Macklin's time was spent in preparation. Given the work that had already been done by Mr. Macklin's colleagues, this amount of time is also significantly beyond what is reasonable.
[37] When the total amount of time is added up, Brampton G & A's counsel spent 222 hours on this motion. It amounts to five and a half weeks of lawyer and student time. Week long trials have been done in less time. The amount of time spent by Brampton G & A on this motion is completely out of proportion to the issues before the Court, and cannot be justified by this Court. I am not prepared to use the amount of time claimed by Brampton G & A as a proxy for the reasonable expectations of the parties. I hasten to add that I am not making any finding that the work was not done. I am only concluding that the amount of time expended was unreasonable and excessive.
[38] This brings me to Brampton G & A's reply submissions. In those submissions, Brampton G & A asserts that the time spent by the moving parties understates the total costs of this motion. For the reasons set out above, I disagree.
[39] I also do not see anything in either of the moving parties' bills of cost that would suggest that they have underclaimed for the amount of time that they spent on the CPL portion of the motion. Indeed, as I have already stated, the costs incurred by the Caroti parties for the entirety of the motion seem to me to be somewhat excessive.
[40] As a result, I view the reasonable expectation of the parties as falling somewhere between the amount incurred by the Sokich parties and the amount incurred by the Caroti parties.
[41] I would note that my analysis on this point also addresses the principle of indemnity as set out in Rule 57.01.
The Conduct of a Party that tended to Shorten or Lengthen the Litigation
[42] There is one point I wish to address on this criterion. It is the fact that the issue of the CPL on the property had already been dealt with by the parties back in 2018. As a result, this motion was, in part, a duplication of work that had already been done. This is conduct that tended to lengthen the litigation, and supports an increase in the amount of costs payable.
[43] However, that conduct needs to be balanced against the fact that the Caroti and Sokich parties were successful in getting an agreement to have the proceeds from the mortgage paid into Court. This, in part, justifies the bringing of this motion and is a fact that supports a reduction in the costs payable.
Weighing the Factors
[44] In assessing the reasonable costs, I am cognizant of the fact that the Caroti and Sokich parties achieved something out of this motion. However, I am also cognizant of the fact that Brampton G & A was successful on the bulk of the motion.
[45] I also have to consider the reasonable expectations of the parties, and whether the costs were reasonably incurred. In my view, the costs incurred by Brampton G & A on this motion bear no resemblance to reasonable costs. They are completely unjustifiable.
[46] A reasonable party would expect to have the winning side incur costs that were somewhere between what was incurred by the Sokich and Caroti parties. In my view, that would be a range of somewhere between $7,500.00 and $12,500.00 inclusive of disbursements and HST. Given Brampton G & A's completely unreasonable costs demand, I fix the lower end as the reasonable amount for this motion.
[47] From that amount, some costs should be deducted for the fact that the Caroti parties achieved something out of this motion. A twenty percent reduction to take that fact into account is appropriate, which reduces the costs payable to Brampton G & A to $6,000.00 inclusive of disbursements and HST.
Conclusion
[48] For the foregoing reasons, I order that Brampton G & A is entitled to recover the sum of $6,000.00 inclusive of HST and disbursements on account of the costs of this motion. These costs are to be split on a 75%/25% ratio between the Caroti and Bilich Defendants.
[49] On this motion, I view that split as being appropriate for two reasons. First, as counsel for the Bilich parties points out, the bulk of Brampton G & A's evidence and submissions relates to issues raised by the Caroti parties. Second, and more importantly, the costs of this motion should not be divided up by lawyer, but should be divided up proportionally to the litigants, while understanding that a second counsel representing some of the litigants results in a natural cost increase. As a result, a 75%/25% split is reasonable.
[50] Finally, I want to direct the parties attention again to a concern that I have already raised both in these reasons and elsewhere. This is the second time in this action that I have had to deal with a costs request that is completely out of proportion to the nature of the motion or the time that has been spent on it. The first occasion was my Order with respect to the motion to set aside the summary judgment decision respecting Mr. Kegalj (see 2019 ONSC 3178). In that case, counsel for the Pichelli parties sought costs of nearly $17,500.00 and received costs of $2,000.00.
[51] Brampton G & A's costs for this motion are unjustifiable, just as the costs previously sought by the Pichelli Parties were unjustifiable. In addition, the parties are re-litigating issues that have already been determined by the Court and this litigation has made insufficient progress in the last two years. As I have stated in Court on more than one occasion, I would strongly encourage the parties to consider their positions in terms of the costs and benefits of this litigation.
[52] Finally, I have revised the style of cause to reflect what I understand are the parties issues with it. Any submissions on whether the style of cause is incorrect are to be made within seven (7) calendar days of today's date, failing which this style of cause will appear on all decisions going forward.
LEMAY J
Released: December 13, 2019
COURT FILE NO.: CV-17-5302-00
DATE: 2019 12 13
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Alearano Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac, Brain McDowell, Biljana Nizalek, Marielle Pelchat-Morris, Wilma Jesus, Monica Savona, Milena Boland, Frand Demaria, Jurica Biondic, Renato Biondic, Roberta Biondic and Boris Klecina
Plaintiffs
- and -
Ante Kegalj, Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp., 1857325 Ontario Ltd. and Bramption G&A Holdings Inc.
Defendants
-and between-
Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp. and 1857325 Ontario Ltd.
Plaintiffs by counterclaim
Aleardo Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac, Brain McDowell, Biljana Nizalek, Marielle Pelchat-Morris, Wilma Jesus, Monica Savona, Milena Boland, Frand Demaria, Jurica Biondic, Renato Biondic, Roberta Biondic, Boris Klecina, Anna Bilich, Emma Faria, Katarina Granic, Anton Granic, Marianne Martinovic, Frank Samardzic and Robert Sokic
Defendants
REASONS FOR JUDGMENT
LEMAY J
Released: December 13, 2019