Court File and Parties

COURT FILE NO.: CV-17-581976

DATE: 2020-04-09

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: MELISSA MAGNOTTA as the Representative of the Estate of JOSEPH MAGNOTTA and MELISSA MAGNOTTA, Plaintiffs

AND:

ZIAOZENG YU, XIAHONG MAO and SUTTON GROUP-ADMIRAL REALTY INC., Defendants

BEFORE: Schabas J.

COUNSEL: Alfred J. Esterbauer and Arleen V. Huggins, for the Plaintiffs Michael R. Kestenberg and Michael Kleinman, for the Defendants

HEARD: February 12, 2020

COSTS ENDORSEMENT

[1] On February 18, 2020, I released my Reasons for Decision in this matter, granting judgment in favour of the plaintiffs, enforcing an Offer to Settle that requires the defendant Yu to pay to the plaintiffs $550,000. The plaintiffs now seek their costs on a substantial indemnity basis of $36,316.46. The defendants argue that costs should be fixed at $15,000.

[2] I award the plaintiffs the amount they seek. In my view, the plaintiffs are entitled to their costs on a substantial indemnity basis, and the amount requested is reasonable.

[3] The plaintiffs offered to settle their motion to enforce the Offer to Settle early on in this proceeding, on August 7, 2019, for $500,000. This offer remained open for acceptance until the hearing on February 12. As the plaintiff obtained a judgment more favourable than the offer, by operation of Rule 49.10(1), they are entitled to costs on a substantial indemnity basis.

[4] Although the defendants argue that costs on a substantial indemnity basis should not be awarded unless "special grounds exist to justify a departure from the usual scale" such as "reprehensible conduct", this is not the case when an offer is made which complies with Rule 49.10(1).

[5] In applying the Rule, I have considered the defendants' submission that they had a legitimate legal position and therefore should not punished by costs on a higher scale. I do not disagree with that, but the application of Rule 49 is not limited to situations where the losing party's case has no merit. The Rule is meant to promote settlement by providing a tool which creates incentives to settle, and would not be effective if it could easily be overridden by an assertion of a tenable legal argument.

[6] Turning to the quantum, both parties prepared costs outlines that are comparable, although the defendants' outline is a little lower, as they would have sought substantial indemnity costs of $27,586.07. This suggests that the amount sought by the plaintiffs is not unreasonable or beyond what the defendants could reasonably have expected to pay in costs.

[7] This was an important motion, and both parties were represented by experienced counsel. The defendants have raised an issue, however, regarding Ms. Huggins' time, as she was both a witness and attended as counsel. They submit her time should not be included, pointing out that they did not claim time for their solicitor's work in preparing his affidavit. They also take issue with the costs associated with the cross examination of Ms. Morris and the number of timekeepers involved. This is why they argue for a much lower award of costs.

[8] I agree that there should be a reduction in the amount claimed, but would not reduce it as drastically as suggested by the defendants. Ms. Huggins provided valuable work to her clients in preparing this motion, and overall the amount sought is not unreasonable.

[9] Recognizing that the fixing of costs is not a science, and that the overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular circumstances, rather than an amount fixed by actual costs incurred by the successful litigant (see Boucher v. Public Accountants Counsel for Ontario, 2004 CanLII 14579 (ON CA)), and having regard to the factors in Rule 57.01(1) and the operation of Rule 49.10(1), I award costs of $30,000, inclusive of disbursements and HST, payable by the defendants to the plaintiffs.

Schabas J.

Date: 2020-04-09