Court File and Parties

Court File No.: CV-19-616491 Date: 2020-03-02 Superior Court of Justice - Ontario

Re: Alexandre Alberto Silva Lucas and Kelly Ramos Avelar Lucas, Applicants And: 1858793 Ontario Inc. o/a Howard Park, Andre Ribeiro and Sofia Ribeiro, Respondents

Before: Schabas J.

Counsel: Leon J. Melconian, Counsel for the Applicants William Ribeiro, Counsel for the Respondent 1858793 Ontario Inc. Andreas G. Seibert, Counsel for the Respondents Andrea and Sofia Ribeiro

Heard: November 28, 2019

Costs Endorsement

[1] On January 2, 2020, I released my judgment in this matter granting relief from forfeiture and awarding specific performance to the applicants arising from an agreement to purchase a condominium unit: Lucas v. 1858793 Ontario Inc., 2020 ONSC 964. I dismissed the respondents’ cross-application to have a Caution on title deleted and for a declaration that the applicants had no interest in the condominium unit. In my Reasons for Judgment, I stated that the applicants were entitled to their costs, and invited written submissions on quantum, which I have now received from all parties.

[2] The applicants seek costs on a “full indemnity” basis in the amount of $73,535.05, including disbursements and HST. On a partial indemnity basis, the amount sought in the Costs Outline is $56,788.45, inclusive of HST and disbursements.

[3] The applicants’ request for costs on a full indemnity basis is based on the submission that the respondents engaged in “grave positive misconduct” which, but for that misconduct, this matter would never have reached the courts.

[4] The misconduct of the respondent 1858793 is described in my Reasons. It includes my finding that 185 sat on its rights and took money from the applicants for 9 months when it was aware of Mr. Duarte’s occupancy of the unit, before purporting to terminate the Agreement of Purchase and Sale. Further, 185 improperly used the alleged breach which arose from Mr. Duarte’s occupancy as a negotiating lever in attempting to avoid its obligation to make repairs in the unit. The misconduct also includes what I found to be a “sham” transaction involving all the respondents in purporting to sell the unit to Sofia and Andre Ribeiro, the children and niece and nephew of the principals of 185, at a below market price and for virtually no consideration.

[5] The respondent 185 submits that there is nothing in its conduct that warrants substantial indemnity costs, noting that it had maintained the position that there had been a breach for many months and that its position was supported by the language in the Agreement of Purchase of Sale and that, at worst, this was simply a breach of contract case. It identified ways in which it felt the applicants had unnecessarily run up costs in the litigation, and that the application was commenced after the agreement to sell the unit to Andre and Sofia. 185 also argues that the applicants’ bill applies excessive hourly rates and that an appropriate award of costs, on a partial indemnity basis, would be in the range of $25,000 to $35,000.

[6] Andre and Sofia submit that they have not engaged in any conduct which would warrant anything above a partial indemnity award, which they submit should be in the range of $30,000.

[7] The Court has a broad discretion when determining the issue of costs. Rule 57.01(1) sets out factors to be considered to achieve a result that is fair and reasonable for the unsuccessful party to pay: Boucher v. Public Accountants Counsel for Ontario, 2004 14579 (ON CA), 2004 14579 (Ont. C.A.). I have had regard to those factors in coming to my conclusion on costs.

[8] An award of costs on a substantial indemnity basis is exceptional. It can arise from the conduct of the unsuccessful party where it rises to a level that is considered reprehensible, egregious and worthy of sanction. As the Court of Appeal stated in Davies v. Clarington, 2009 ONCA 722 at para. 40:

[W]hile fixing costs is a discretionary exercise, attracting a high level of deference, it must be on a principled basis. The judicial discretion under rules 49.13 and 57.01 is not so broad as to permit a fundamental change to the law that governs the award of an elevated level of costs. Apart from the operation of rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made. As Austin J.A. established in Scapillati, Strasser should be interpreted to fit within this framework -- as a case where the trial judge implicitly found such egregious behaviour, deserving of sanction.

[9] An elevated award of costs, however, is usually based on conduct during the litigation. The mere fact that the unsuccessful party committed misconduct giving rise to the proceeding is generally not a sufficient basis for substantial indemnity, as the successful party can be compensated through an award of damages: Hunt v. TD Securities Inc., (2003) 2003 3649 (ON CA), 66 O.R. (3d) 481 (C.A.).

[10] While the respondents’ conduct in the litigation process itself, standing alone, does not merit an elevated award, it must be considered in the context of the respondents’ broader misconduct. In this case, 185 did more than just sit on its rights and attempt to gain minor advantages, but took active improper steps to defeat the applicants’ right to the property and to be unjustly enriched by retaining the large portion of the purchase price already paid by the applicants.

[11] The applicants are not entitled to “full indemnity”; however, they are entitled to at least a partial indemnity award. There is a wide disparity between the parties over what that should be. Fixing costs is, of course, not a mathematical exercise, but requires the Court to award an amount that reflects both the principle of indemnity and is an amount that an unsuccessful party could reasonably expect to pay. Having regard to all the circumstances, I award costs to the applicants, payable by the respondents, in the amount of $45,000, inclusive of disbursements and HST.

Schabas J.

Date: 2020-03-02