Court File and Parties

BRAMPTON COURT FILE NO.: CV-18-3527 TORONTO COURT FILE NO.: CV-09-383329 DATE: 2020 07 16

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

Carolyn Liddy Plaintiff

Glenroy K. Bastien, for the Plaintiff

• and -

City of Vaughan, Anna Mauro, Bill Robinson and Michael Ridgwell Defendants

Andrew Heal and F. Philip Carpenter, for the Defendants City of Vaughan, Bill Robinson and Michael Ridgwell Emilio Bisceglia and Fernando Souza for the Defendant Anna Mauro

ENDORSEMENT ON COSTS

Tzimas J.

INTRODUCTION

[1] The action by the plaintiff, Ms. Liddy, against the defendant, Anna Mauro, was dismissed in its entirety on January 24, 2020. The action against the other defendants, referred to as the “City of Vaughan Defendants”, was dismissed prior to the conclusion of the trial on the consent of the parties and with costs payable by Ms. Liddy to the City of Vaughan Defendants in the sum of $10,000.

[2] My reasons for judgment outlined in substantial detail the procedural history that spanned a period of over ten years, the agreed facts, the parties’ evidence, my findings, and my legal conclusions, see Reasons for Judgment, Liddy v. City of Vaughan et al., 2020 ONSC 514. I do not propose to repeat my analysis in any detail, except where it is necessary to explain the relationship of those findings to my findings on costs. Accordingly, this endorsement ought to be read in conjunction with my Reasons for Judgment.

[3] The parties were unable to agree on costs, though they were strongly encouraged to do so. I received written submissions from both, which I reviewed. The Defendant seeks costs in the sum of $650,024.12 on a substantial indemnity basis. In the alternative, she proposes costs of $613,805.36, consisting of partial indemnity costs until her Rule 49 Offer of January 18, 2018 and substantial indemnity thereafter. Their full costs came to approximately $714,000.

[4] Ms. Liddy opposes the claim and submits that costs should be awarded on a partial indemnity scale and in any event no more than 50% of the actual costs. She also challenges the disbursements claimed as excessive and unnecessary.

[5] For the reasons that follow and having regard for the parties’ submissions and the principles that inform the measure of reasonableness, I fix costs at $585,000 inclusive of all disbursements and applicable taxes in favour of Ms. Mauro.

POSITION OF THE PARTIES

a) The Defendant, Anna Mauro

[6] Ms. Mauro submitted that she incurred total costs of $714,487.97. She claims costs on a substantial indemnity basis of $650,024.12. In the alternative, she seeks costs of $613,805.36, consisting of costs on a partial indemnity basis to January 18, 2018 and on a substantial indemnity basis thereafter, inclusive of H.S.T. and disbursements.

[7] January 18, 2018 is significant because that was the date of Ms. Mauro’s Rule 49 Offer to Settle, which remained open for acceptance until the commencement of the trial, 11 days later. In accordance with that offer, Ms. Mauro was prepared to pay Ms. Liddy $50,000 to settle the claim. Parenthetically, that offer complemented the City of Vaughan’s offer to pay an additional $50,000 to settle Ms. Liddy’s claim against the City of Vaughan defendants. Had Ms. Liddy accepted the two offers, she would have received $100,000 and would not have been exposed to the current extraordinary cost consequences. Counsel for Ms. Mauro expressly submitted that: “The amounts offered to settle are not indicative of what the defendants thought [Ms. Liddy’s] claims were worth, but rather, a graphic demonstration of the legal fees involved to bring this action to completion at trial.”

[8] Ms. Liddy did not accept these offers. After the trial commenced on January 29, 2018, Ms. Mauro offered $70,000 following a mid-trial settlement conference with Justice Archibald, but Ms. Liddy rejected that as well. In the period after the mistrial, (see paragraphs 48 and 49 of Reasons for Judgment), and just before the trial recommenced on November 22, 2018, Ms. Mauro offered to agree to a dismissal of the action without costs. Ms. Liddy preferred to see the trial to its conclusion.

[9] In her submissions, Ms. Mauro acknowledged that Ms. Liddy served an offer to settle for $155,000. However, Ms. Liddy’s offer included a number of open-ended terms that would have costs Ms. Mauro significantly more than $155,000.

[10] In support of her costs claim, and having regard for the requirements of section 131 of the Courts of Justice Act, R.S.O. 1990, c.C.43 and Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Ms. Mauro submitted that Ms. Liddy’s allegations were serious, they included a claim for punitive damages that were never withdrawn, and variety of mandatory injunctions. Moreover, the claims were rendered complex and very expensive by their changing nature, Ms. Liddy’s inappropriate and obstructive conduct over the ten years, and a tortured procedural history. Illustrative of the changing nature of Ms. Liddy’s claim was her amendment of her claim, seven years into the litigation, in the spring of 2017, where she added a claim for $500,000 in damages against Ms. Mauro. Until that point in time there was no claim for general damages; she only claimed certain mandatory injunctions and punitive damages in the sum of $50,000.

[11] In response to Ms. Liddy’s submissions, Ms. Mauro acknowledged that a costs award must be reasonable. But she also highlighted the role that the parties’ expectations plays in such an assessment to argue further that Ms. Liddy’s own claim for costs thrown away of $446,561.67, at the time of the mistrial, and long before the trial was concluded, underscored very clearly Ms. Liddy’s own appreciation of the cost consequences of the litigation. Ms. Mauro also disagreed with the contention that the City of Vaughan was the cause for the substantial delays and associated costs.

[12] Insofar as Ms. Liddy challenged Ms. Mauro’s disbursements, with a particular concern for Mr. Albanese’ fees of approximately $32,000, Ms. Mauro provided the court with all of the relevant invoices and submitted that Mr. Albanese’s evidence was crucial to the ultimate outcome at trial. She provided all the supporting documentation for the other experts who testified and objected to Ms. Liddy’s suggestion that collectively all of the defendants should have relied on only one expert. Counsel submitted that “Ms. Mauro needed her own expert to provide her and the court with independent and expert technical understanding of the claims.”.

b) The Plaintiff, Ms. Liddy

[13] Ms. Liddy opposed the costs claim. She characterized it unreasonable and excessive and submitted that the costs ought to be assessed on a partial indemnity basis “at no more than 50%” of Ms. Mauro’s total fees. She blamed the City of Vaughan defendants for the delay the numerous motions, and the declaration of the mistrial and furthermore complained that the mistrial resulted in a duplication of effort and fees. She also submitted that Ms. Mauro’s’ disbursements were excessive.

[14] Regarding the various offers to settle from Ms. Mauro and the City of Vaughan, Ms. Liddy submitted that they were unreasonable in all the circumstances. In her view, her evidence was “compelling enough to allow the plaintiff to reasonably believe that she could be successful at trial, and or obtain a better settlement offer in the future”. As far as she was concerned, Ms. Mauro was responsible for the nuisance and water damage to Ms. Liddy’s property. Ms. Liddy expressly submitted that her views were “supported by her several previous counsel and the experts retained by her”. Also in her view, the video evidence made it clear that the water flowed from the common property line onto her property. In light of that visual evidence, she did not believe it was unreasonable to “form the belief that this was caused by the modification the defendant had made to her property”.

[15] Insofar as Ms. Mauro’s costs claim on a substantial indemnity basis is concerned, Ms. Liddy submitted that such costs could only be awarded in instances where a party’s conduct is described as “reprehensible, scandalous or outrageous or worthy of chastisement”. She took exception to any suggestion that her pursuit of her claims or her conduct would attract any such pronounced characterizations or adjectives.

[16] Having regard for the requirements of s.131 of the CJA and Rule 57.01(1), she submits that the court’s discretion must be guided by the overall principle of reasonableness and relied principally, though not exclusively on Boucher v. Public Accountants Council for the Province of Ontario et al., [2004] O.J. No. 2634 for that proposition.

ANALYSIS

[17] Section 131 of the Courts of Justice Act, R.S.O. 1990, c.C.43 provides the court with the discretion to award fair and reasonable costs. Such discretion is to be exercised in accordance with the considerations set out in Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194:

GENERAL PRINCIPLES

Factors in Discretion

57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

(i) any other matter relevant to the question of costs. R.R.O. 1990, Reg. 194, r. 57.01 (1) ; O. Reg. 627/98, s. 6; O. Reg. 42/05, s. 4 (1); O. Reg. 575/07, s. 1.

[18] In Davies v. Clarington (Municipality), 2009 ONCA 722, [2009] O.J. No. 4236 the Court of Appeal identified reasonableness in the circumstances as the overarching principle to be applied in the awarding of costs. Epstein J.A. adopted the elements to be considered in the assessment of reasonableness in the circumstances, as they were outlined by the Divisional Court in Andersen v. St. Jude Medical Inc. (2006) 264 D.L.R. (4th) 557 and they bear repeating here:

1. The discretion of the court must be exercised in light of the specific facts and circumstances of the case in relation to the factors set out in rule 57.01(1): Boucher, [2004] OJ. No. 2634, Moon, [2004] O.J. No. 4651, and Coldmatic Refrigeration of Canada Ltd. V. Leveltek Processing LLC, 75 O.R. (3d) 638 (C.A.).

2. A consideration of experience, rates charged and hours spent is appropriate, but is subject to the overriding principle of reasonableness as applied to the factual matrix of the particular case: Boucher. The quantum should reflect an amount the court considers to be fair and reasonable rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier (2002), 118 A.C.W.S. (3d) 341 (Ont. C.A.), at para.4.

3. The reasonable expectation of the unsuccessful party is to be considered in determining an amount that is fair and reasonable; rule 57.01(1)(0.b).

4. The court should seek to avoid inconsistency with comparable awards in other cases. “Like cases, [if they can be found], should conclude with like substantive results”: Murano v. Bank of Montreal (1998), 41 O.R. (3d) 222 (C.A.), at p.249.

5. The court should seek to balance the indemnity principle with the fundamental objective of access to justice: Boucher.

[19] Epstein J.A. concluded at para. 52:

As can be seen, the overriding principle is reasonableness. If the judge fails to consider the reasonableness of the costs award, then the result can be contrary to the fundamental objective of access to justice. Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant. In Boucher this court emphasized the importance of fixing costs in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding at 37, where Armstrong J.A. said “[t]he failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice.”

[20] Given the various Rule 49 offers, it is also relevant to consider the parameters and operation of that rule. Rule 49 is a self-contained scheme that addresses the treatment and consideration of offers to settle. Its objective is to promote an offer of compromise and visit a cost consequence upon an offeree who rejects an offer that turns out to be as favourable or more favourable than the outcome: see Davies at paragraph 16. For the purposes of this case, the relevant parts of Rule 49 are the following:

WHERE AVAILABLE

49.02 (1) A party to a proceeding may serve on any other party an offer to settle any one or more of the claims in the proceeding on the terms specified in the offer to settle (Form 49A). R.R.O. 1990, Reg. 194, r. 49.02 (1).

(2) Subrule (1) and rules 49.03 to 49.14 also apply to motions, with necessary modifications. O. Reg. 627/98, s. 4.

TIME FOR MAKING OFFER

49.03 An offer to settle may be made at any time, but where the offer to settle is made less than seven days before the hearing commences, the costs consequences referred to in rule 49.10 do not apply. R.R.O. 1990, Reg. 194, r. 49.03.

EFFECT OF OFFER

49.05 An offer to settle shall be deemed to be an offer of compromise made without prejudice. R.R.O. 1990, Reg. 194, r. 49.05; O. Reg. 132/04, s. 11.

COSTS CONSEQUENCES OF FAILURE TO ACCEPT

Plaintiff’s Offer

49.10 (1) Where an offer to settle,

(a) is made by a plaintiff at least seven days before the commencement of the hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing; and

(c) is not accepted by the defendant,

and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer to settle was served and substantial indemnity costs from that date, unless the court orders otherwise. R.R.O. 1990, Reg. 194, r. 49.10 (1); O. Reg. 284/01, s. 11 (1).

Defendant’s Offer

(2) Where an offer to settle,

(a) is made by a defendant at least seven days before the commencement of the hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing; and

(c) is not accepted by the plaintiff,

and the plaintiff obtains a judgment as favourable as or less favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer was served and the defendant is entitled to partial indemnity costs from that date, unless the court orders otherwise. R.R.O. 1990, Reg. 194, r. 49.10 (2); O. Reg. 284/01, s. 11 (2).

Burden of Proof

(3) The burden of proving that the judgment is as favourable as the terms of the offer to settle, or more or less favourable, as the case may be, is on the party who claims the benefit of subrule (1) or (2). O. Reg. 219/91, s. 6.

DISCRETION OF COURT

49.13 Despite rules 49.03, 49.10 and 49.11, the court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer. R.R.O. 1990, Reg. 194, r. 49.13.

[21] With these broad principles in mind, I turn to my specific consideration of the circumstances of this case. My point of departure for this analysis is paragraph 3 of my judgment where I noted: “The overriding thrust to Ms. Liddy’s claims against all of the defendants was to challenge any and all development and construction activities on the Mauro property as illegal and contrary to various by-laws and regulations.”. The reality is that once the trial started, one by one, Ms. Liddy started to abandon her claims as they related to Mr. Mauro’s purchase of a sliver of land at the back of his property and the construction of the accessory buildings. Prior to the declaration of the mistrial, she also agreed to a dismissal of the personal claims against Bill Robinson and Michael Ridgwell. Then several days into the resumption of the trial before me, Ms. Liddy agreed to the dismissal of her claims against the City of Vaughan. But Ms. Liddy’s own gradual woodshedding of her own claims came only after the Mauros incurred very substantial costs.

[22] Regrettably, these late in the day dismissals did nothing to reduce the Mauros’ costs. Although the dismissal of the City of Vaughan claims ought to have eliminated any suggestions of an improper relationship between Gino Mauro and the City of Vaughan officials and representatives, and indeed, that specific allegation should have been withdrawn concurrently with the City of Vaughan claims, it continued to be pursued. A significant part of Mr. Mauro’s cross-examination focused on his interactions as they related to the purchase of the sliver of land, the construction of the retaining wall, and the construction activities in relation to the installation of the swimming pool and the accessory structures. Even though Ms. Liddy advised the court early on that she was not seeking damages in relation to the sliver of land and the retaining wall, she nonetheless challenged Mr. Mauro on those issues in an attempt to establish that he was incredible and demonstrated a pattern of acting in bad faith.

[23] In the same vein, the cross-examinations of City of Vaughan employees persisted on challenging the Mauros’ conduct. The unmistakable implication of those questions was that the Mauros consistently defied the applicable city by-laws and regulations, which in turn caused Ms. Liddy to suffer damages.

[24] In the result, and most significantly, Ms. Liddy did not withdraw the claim for punitive damages. Although in his closing submissions, counsel advanced a half-hearted argument to support such a claim, the formal claim continued to allege that:

“The defendant Mauro ought to be required to pay punitive damages, to punish her for knowingly illegal developing the Adjacent Property, knowing or ought to have knowing that such illegal development would cause damages to Liddy’s Property, and taking illegal advantages of her and her husband’s close relationship with certain employees and elected officials of the City.

This allegation, which went to the very heart of Mr. Mauro’s integrity and credibility, remained a dark cloud that hung over the entire proceeding and required the Mauros to incur very substantial costs to defend themselves.

[25] With these overriding observations, I turn to my consideration of the Rule 49 and other offers to settle, and the applicable Rule 57 principles to be applied to the exercise of my discretion.

i. Offers to Settle

[26] Ms. Mauro’s offers to settle were reasonable and substantial. Consistent with the objectives of Rule 49, Ms. Mauro’s offers of January and February 2018 represented a bona fides attempt at compromise even though her own expert evidence consisted of very robust conclusions pointing to poor grading and a failing swale on Ms. Liddy’s side of the common property line, where the water was always designed to flow.

[27] Given the complete dismissal of her claims, Ms. Liddy would have been infinitely better off had she accepted the offers from both Ms. Mauro and the City of Vaughan. Not to put too fine a point, but if Ms. Liddy had accepted the January 2018 offer, she would have saved significant legal costs of her own and she would have received $100,000. Such a savings would have permitted her to hire properly qualified landscape engineering experts to address the problems in her own backyard, instead of relying on individuals who were oblivious to the significance of grading requirements.

[28] The February 2018 offer from Ms. Mauro for $70,000 may have caused Ms. Liddy to believe that if she held out long enough, she might extract a higher figure. But by that point, she also knew that Ms. Mauro was not prepared to accept Ms. Liddy’s offer that required payment of $155,000 as well as very substantial uncosted changes to the structures in Ms. Mauros’ backyard. In other words, by February 2018, the parties had staked out their respective markers, and were in a position to evaluate their options. There is no escaping the conclusion that in light of the dismissal of the claim in its totality, acceptance of the February offer would have still amounted to a gain for Ms. Liddy.

[29] By the time of Ms. Mauro’s offer on November 22, 2018 to walk away with a dismissal of the action without costs, Ms. Liddy knew or ought to have known that her witnesses had made several irredeemable admissions that made it virtually impossible for her to satisfy her evidentiary burden. To sum extent, I can understand that after more than nine years of litigation and given Ms. Liddy’s blind determination to go after the Mauros, walking away from it all would have been something very difficult for Ms. Liddy to swallow, let alone to negotiate, but had she accepted that bitter reality, she would not be facing the extraordinary legal costs associated with a dismissal of a 25-day trial and a litigation journey that spanned eleven years and multiple court orders and attendances.

[30] Against that reality, Ms. Liddy’s submission that the offers were unreasonable because in her view, the Mauros were responsible for the nuisance and water damage to her property reasonable, is unfortunate and misguided. The reasonableness of the settlement offers must be considered against the outcome and the objective interpretation of the evidence before the court and not against Ms. Liddy’s originating subjective beliefs. The latter would be relevant to this analysis only if they were borne out by the evidence before the court. In other words, had Ms. Liddy succeeded in her action, one would like to the offers to measure their reasonableness against the actual outcome. But this is not what occurred in this case.

[31] I hasten to add the observation that everyone is entitled to their day in court and nobody suggested that Ms. Liddy was obliged to accept any of the offers before her. However, such decisions have consequences. The unreasonableness of the decision to continue cannot be visited on opposing parties who, in good faith, had every intention to seek a compromise and resolve the dispute once and for all.

[32] Moreover, although Ms. Liddy indicated in her cost submissions that her lawyers and the experts she retained supported her views, the only expert who testified on her behalf admitted to very material problems on Ms. Liddy’s side of the common property line and effectively undermined Ms. Liddy’s subjective beliefs. More dramatically, Ms. Liddy compromised Mr. Ip’s effectiveness even further by restricting the terms of reference for his opinion only to the verification of the water pooling on her property of the water. She did not ask him to undertake any study as to why the problem was occurring and how it might be addressed. In that regard Ms. Liddy compromised her ability to meet her evidentiary burden almost from the get-go.

[33] Insofar as Ms. Liddy thought of her landscapers as individuals with some expertise, they expressly denied any concern or even awareness of any grading issues in Ms. Liddy’s backyard, see specifically paragraphs 75-92 of my Reasons for Judgment. In so doing, the landscapers revealed just how uninformed they were about the very problems they were hired to fix.

[34] The reference to advice by Ms. Liddy’s lawyers engages solicitor and client privilege and is of no relevance to this analysis.

[35] Finally, the videos that showed water crossing the common property line did nothing to bolster Ms. Liddy’s reasonableness. To the contrary, they illustrated the failing swale and demonstrated why the water, that should have been contained along the common property channel, escaped into Ms. Liddy’s property. In so doing, the videos actually corroborated the Mauros’ argument that the escaping water was caused by Ms. Liddy and not because of any of their activities.

[36] In short, having regard for the ultimate outcome, including Ms. Liddy’s eventual decision to abandon all of her claims against the City of Vaughan defendants, the offers to settle were in many respects more than reasonable and should have been accepted by Ms. Liddy.

ii. Rule 57.01(1)(0.a): the principle of indemnity, including, where applicable the expertise of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer

[37] In my review of Mr. Bisceglia’s Bill of Costs, the time spent on this matter is actually very reasonable and efficient. The hourly rates claimed correspond to the levels of seniority. To arrive at this conclusion, I have given specific attention to the dockets underlying the Bill of Costs and I note an overall efficiency in the way Mr. Bisceglia and his colleagues worked on the file. I take this opportunity to add that Mr. Bisceglia’s conduct and submissions throughout this litigation were of an outstanding quality and he and his team are to be commended for their efforts.

[38] Having made the above observations, I am mindful of the caution outlined in Boucher v. Public Accountants Council for the Province of Ontario, 71 O.R. (3d) 291 of the need to facilitate access to justice. However that principle cannot eclipse the concern over the need to discourage and manage unnecessary litigation. Access to justice has to work both ways. For eleven years, the Mauros were held hostage to an evolving claim that put all of their actions on their property into question. These eleven years were preceded by seven years of challenges, and at least aspects of the action suggested an attempt to re-litigate the complaints of the first seven years, see paragraphs 15 – 44 of my Reasons for Judgment.

[39] The trial may have concluded with a determination of “just” the water issue, with the balance of all other claims being abandoned by Ms. Liddy, but the Mauros had to incur very substantial costs to defend Ms. Liddy’s evolving claim. They faced very complex arguments, and indeed were subjected to very serious and eventually unfounded allegations of improper conduct right until the end of the trial with the persistent claim for punitive damages.

[40] Contrary to Ms. Liddy’s response that many of her issues concerned the City of Vaughan and that most of the time spent did not relate to the Mauros, I accept the Mauros’ submissions that their defence was intricately connected to many of the issues between Ms. Liddy and the City of Vaughan and required their ongoing participation in all court attendances leading up to the trial. There may have been some traction to this argument had Ms. Liddy discontinued her allegations against Mr. Mauro’s relationship to the City of Vaughan officials.

[41] Was it necessary for two senior counsel to attend on the trial on behalf of the Mauros at all times? This question was not raised by Ms. Liddy but it did cross my mind as I reviewed the hours for Mr. Bisceglia, a 1993 Call, and Mr. Souza, a 1995 Call. Having posed the question, I am satisfied that the issues were complex, the documents in the thousands of pages, and the number of witnesses who were called to testify, 20 in total, that the division of labour was nimble, and that it would have been exceptionally difficult for counsel to produce the high quality of representation without the input of two senior counsel.

[42] The subject of the mistrial and its effects on the duplication of effort required extra scrutiny over counsel’s dockets but that only revealed an additional 70 hours between February 20 and November 2, 2018 that were connected to the effects of the mistrial. The trial preparation time between November 6 and November 13, 2018 was not duplicated time. It related to the preparation of the defence witnesses who were not previously prepared. In other words, in my scrutiny of the dockets leading up to January 29, 2018 and the first few weeks of the trial, there were no entries concerning the preparation of the defence witnesses. That further suggested to me counsel’s very deliberate use of their time. As for the time expended on the preparation of the closing submissions, the time docketed was very reasonable and explained the quality product that was submitted.

[43] The minimal hours related to the mistrial are easily explained by the fact that although the interruption of the trial was characterized as a mistrial, the parties did not have to start over. Justice Sanfilippo ordered that the judge who would assume the trial would be bound to the following conditions:

a) all evidence taken at trial until the date of the order for the mistrial shall be transcribed and shall constitute evidence in the new trial; and

b) all exhibits entered at trial until the date of the mistrial order shall be trial exhibits in the new trial; and

c) all evidentiary and other rulings made to the date of the mistrial order shall apply in the new trial, save and except for the ruling on February 15, 2018 in relation to the documents referred to as the “Majkot Documents”.

[44] These conditions resulted in almost five weeks of review by me, in the absence of the parties, of all the transcripts and the exhibits to allow me to get up to speed and to appreciate the technically dense evidence. None of the parties were burdened by my additional preparation / reading time.

[45] I did require some trial management attendances to work through some of the more technical logistics associated with the conduct of an electronic trial and my access to the documents brief using the iPad provided to the court. However, I also note that these conferences proved to be especially necessary as a means of ensuring that Ms. Liddy’s newest counsel, who was the fourth counsel on file, and who took carriage of the matter after the declaration of the mistrial would be ready to continue with the trial in November. Where I initially expected to have only a couple of meetings, several more were required for Ms. Liddy’s counsel’s benefit. Moreover, this advance preparation made it possible to conclude the trial in under nine days, where the first part of the trial, that involved only a potion Ms. Liddy’s evidence took over 15 days. In those nine days, I heard from the remainder of Ms. Liddy’s witnesses, the City of Vaughan witnesses, and Ms. Mauro’s witnesses. Parenthetically, the dismissal of the City of Vaughan claims, did not represent any substantial savings in time because it came after most of the City of Vaughan witnesses testified. Moreover, given the persistent allegations against Mr. Mauro, the City of Vaughan witnesses had to be called in any event of the dismissal of the Vaughan claims, because they had to address the alleged improper relations to Mr. Mauro.

[46] Insofar as who should bear the costs of the mistrial and whether Ms. Liddy should shoulder at least part of the blame for that occurrence, that assessment is difficult to determine in the absence of full submissions and the participation of the City of Vaughan. At the same time, the fees attributable to the mistrial are relatively limited and do not exceed $30,000. The costs associated with such an endeavour would effectively cancel out the sum in question. Much was made of Ms. Liddy’s unwillingness to give up on the possibility of an apprehension of bias argument had the mistrial not been declared, such that her position forced Justice Sanfilippo’s hand and left him with no option but to declare the mistrial.

[47] To be clear, it is not my role, and I do not have any jurisdiction to revisit Justice Sanfilippo’s decision. However, I cannot fault Ms. Liddy for her apprehension. More significantly, given Ms. Liddy’s allegations of public misfeasance against the City of Vaughan officials, however unfounded they may have been, it was incumbent on the City of Vaughan defendants and their counsel to take extra care to avoid any appearances whatsoever of any appearance of bias. This should have been an issue that was raised and clarified long before trial ever started and by all appearances, that did not occur. In such circumstances, as much as the Mauros were saddled with additional costs, those ought not to be borne by Ms. Liddy and accordingly, I will take the additional 70 hours of time into account in my overall assessment of what is a reasonable costs award.

[48] In addition to the fees, Ms. Liddy challenged Ms. Mauro’s disbursements as excessive and questioned the necessity for Ms. Mauro and the City of Vaughan defendants to have separate experts. Having relied extensively on the evidence of all the experts to obtain a clear understanding of the various technical issues that were raised, I disagree entirely with Ms. Liddy’s challenge. As among the experts, Mr. Albanese’s technical evidence was most accessible, compelling, and essential to understanding the magnitude and the significance of Mr. Ip’s admissions.

[49] Finally, Ms. Liddy’s complaint that the costs of $32,047.31 in disbursements for Mr. Albanese were excessive and unnecessary is rich, given that her own costs for Mr. Ip’s expert opinion and testimony, which had very limited terms of reference and did not go nearly far enough to support Ms. Liddy’s claims came to $30,501.04.

iii. 57.01(1)(0.b) the amount of costs that the unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

[50] One of the most compelling elements of this analysis, as it relates to Ms. Liddy’s reasonable expectations, rests with Ms. Liddy’s own claim for costs thrown away, which as of March 18, 2020, she claimed came to $367,351.34 on a partial indemnity basis, and $446,561.67 on a substantial indemnity basis. At that time, Ms. Liddy admitted that the matter was complex and as in the current submissions, she alleged that the defendants caused significant delays and contributed to the complexity of the case. She also submitted that in light of the defendants’ behaviour and overall conduct, partial indemnity should be calculated at 70% instead of the usual 60% rate.

[51] As recognized in Boucher, at paragraph 38, the expectations of the parties in the determination of costs award is a relevant factor. In this instance, if by March 2018 Ms. Liddy’s substantial indemnity costs were at $446,561.67 she was already exceeding Ms. Mauro’s costs very significantly. To put this figure into some perspective, Ms. Mauro’s counsel’s fees for trial preparation and trial attendance to the conclusion of the trial, including closing submissions, came to $360,976.50 and represented approximately 860 hours of work by multiple counsel, though principally by Mr. Bisceglia and Mr. Souza. That figure, when reduced for costs purposes, came to $324,878.85 for substantial indemnity and $216,585.90 for partial indemnity. In contrast to these figures, Ms. Liddy’s fees for trial preparation and attendance, only until March 15, 2018, were reported to be $315,439.41 for substantial indemnity and $245,341,77 for partial indemnity. Given counsel’s submission at the time that he claimed partial indemnity at 70% of total fees and substantial indemnity at 90%, his actual fees would have been $350,488.23.

[52] In sum, where Ms. Mauro’s total trial-related fees came to $360,976.50, Ms. Liddy’s trial-related fees, just to March 15, 2018 came to $350,488.23. This comparison underscores the reasonableness of Ms. Mauro’s fees relative to Ms. Liddy’s fees. More to the point, on the specific consideration of expectations, Ms. Liddy would have, or ought to have, expected at least a claim for fees of $350,000 for the trial-related activities from the Mauros, given her own costs.

[53] In addition, by the time of Ms. Liddy’s costs submission, she would have heard her expert’s very material admissions during his testimony about the problems in her own backyard. That should have magnified the reality of her jeopardy. Combined with her understanding of her own costs, I conclude that Ms. Mauro’s cost claim was entirely within Ms. Liddy’s contemplation.

iv. 57.01(1)(a) the amount claimed and the amount recovered in the proceeding

[54] Ms. Liddy’s claim was dismissed in its entirety. Her claim for $500,000 in damages and $50,000 in punitive damages against Ms. Mauro was never abandoned. The claims were very significant, especially as they related to the allegations of improper relations between the Mauros and the City of Vaughan. As I already noted and explained, it cannot go unnoticed that although the claims against Vaughan were dismissed with prejudice and with costs, the mirroring allegations against Mr. Mauro’s inappropriate relations with the Vaughan officials were pursued aggressively and pointedly both in Mr. Mauros’ cross-examination as well as the cross-examinations of specific Vaughan representatives. As such, the jeopardy to Ms. Mauro was very real and required very substantial costs to defend the various allegations.

v. 57.01(1)(b) the apportionment of liability

[55] This particular consideration is not engaged given the dismissal on consent of all the claims against the City of Vaughan defendants, and the eventual dismissal of the claims against Ms. Mauro. It would have been engaged had there been findings against one or more of the defendants.

vi. 57.01(1)(c) the complexity of the proceeding

[56] The proceeding was rendered complex by Ms. Liddy’s shifting positions and multiple amendments to her statement of claim. The issues for my determination were eventually reduced to the consideration of who was causing the water problems and why the water was not being contained at the common property boundary line, but it did not start out that way. As I already discussed, challenges to Mr. Mauro’s purchase of the sliver of land at the back of his property and then the construction of a retaining wall, though eventually abandoned, resulted in hours of testimony concerning the purchase, Vaughan’s conduct, and the various interactions with the Toronto and Region Conservation Authority, (TRCA).

[57] In addition, the persisting challenges to Ms. Mauro’s construction of a pool and various accessory structures resulted in extensive evidence being led on the City of Vaughan’s Fence By-Law and details on whether and how Mr. Mauro complied with those requirements. Even though the questions had nothing to do with the cause for the water problem, the various witnesses for Ms. Mauro and Vaughan were cross-examined at length and in exhaustive detail about Mr. Mauro’s applications, certain missteps, the corrections to those missteps, the minor variance application, and the challenges to the OMB. The persistent questions about how the Mauros went about to purchase the sliver of land, how the retaining wall was constructed and authorized, the steps that were taken to obtain a fence permit for the construction of the pool operated largely as a distraction to the actual issues that had to be determined. If anything, even though early on in the trial Ms. Liddy admitted to giving up on the claims related to the sliver of land and the retaining wall, the pronounced questioning in cross-examination felt like a backdoor attempt to relitigate these issues. For the purposes of costs, the focus on these irrelevant issues took up significant and unnecessary time. The court should not have had to engage with or consider any of the evidence related to Mr. Mauro’s various construction activities, especially since it was not disputed that the Mauros eventually passed all inspections.

[58] Even without the noted challenges, the evidence concerning the grading, the operation of swales, the underground surfaces, the drainage of properties, the lot draining designs for subdivisions, the review of erosion patterns, the consideration of permeable and impermeable surfaces, the calculation of surface storm water drainage, and the preparation of and interpretation of topographical surveys engaged complex considerations and made the involvement of experts essential to the understanding of why Ms. Liddy had water problems on her side of the property.

[59] Ultimately, even though the trial should never have been as complicated as it was made out to be, it does not negate the fact that it involved 25 days of trial evidence, twenty witnesses, written closing submissions, and two additional days for oral closing submissions.

vii. 57.01(1)(d) the importance of the issues

[60] Although with the benefit of hindsight, the approach to the issues was misguided and the effort that was expended to ultimately identify the cause for the water problems was out of all reasonable proportion, there can be no doubt that the issues were very important for all involved. The allegations against the Mauros impugned their overall integrity. They had to advance a vigorous defence, separate and apart from the City of Vaughan defendants. The water issue, however inadequately it was handled, was also an important issue for Ms. Liddy. Nobody wants water to pool in their property. While I do not for a moment diminish Ms. Liddy’s frustration with the water and the improper drainage on her property, it is unfortunate that she tied those concerns to a host of other allegations for which she had only suspicions but no evidentiary support.

viii. 57.01(1)(e) the conduct of the parties

[61] My consideration of this element of the rule pulls together some of my preceding observations. The procedural history was unnecessarily tortured and misguided. From my review of the 32 orders and endorsements in the period between March 24, 2011 to January 2018 before Masters Haberman and McAfee and Justices Hood, Archibald, Akhtar and Wilson, as much as I can see that the Vaughan defendants were especially aggressive in the defence of the claims against them, they were responding to the request for numerous irrelevant documents.

[62] The defendants also had to respond to multiple amendments to the statement of claim, multiple changes to Ms. Liddy’s legal representation, the repeated listing and delisting of the case for trial, and a host of related difficulties, all of which were initiated by Ms. Liddy. The assignment of the matter to case management did not reign in the procedural nightmare that followed. The trial should have been a fairly straight forward inquiry into the causes for the water problem, but Ms. Liddy rendered it into something far more extraordinary.

[63] These difficulties tie into the finding that contrary to Ms. Liddy’s current submission that her complaint all along concerned the water problems in her backyard, the history of the claims and their magnitude prove otherwise. In light of Ms. Liddy’s demonstrated and remarkable determination to challenge any and all of the Mauros’ construction activities on their own property as either illegal or contrary to various by-laws and regulations, I actually find it disingenuous to suggest at this late stage that the case was only about the pooling water on her property.

[64] Whether Ms. Liddy’s concerns were real or whether they were part of a strategy to wear the defendants down and extract a lucrative settlement, Ms. Liddy’s strategy devolved into a pursuit that lost all sense of proportion. While I find that the Mauros’ offers to settle represented bona fides attempts to reign in the dispute, especially in light of the allegations associated with the punitive damages, but also given the extraordinary and ultimately unsupported claim to damages of $500,000, they had no choice but to mount a vigorous defence.

[65] In contrast to Ms. Liddy’s behaviour, I am satisfied that Ms. Mauro and her counsel did what they could to collaborate with the other defendants and to streamline their evidence. To illustrate this point, while Ms. Liddy required over 15 days to lead her evidence, the defendants collectively led their evidence in under nine days. The use of the electronic record and storage of all the documents, photographs, reports, and videos made the trial exceptionally efficient and enabled the transition from Justice Sanfilippo to the continuation of the trial before me with the least disruption.

[66] As for Ms. Liddy’s conduct in relation to her claim for damages, separate and apart from the issue of liability, it cannot go unnoticed that Ms. Liddy did not advance any evidence to quantify her damages or to explain the basis over which she pursued the $500,000 in general damages and the $50,000 in punitive damages. Ms. Liddy may not have appreciated the significance of an evidentiary foundation to such claims but after four different counsel on the file, somebody ought to have turned their minds to either lead the supporting evidence, in accordance of course with the rules of evidence, or alternatively, to withdraw those claims.

[67] The sum of these difficulties underscores the reasonableness of Ms. Mauro’s costs claim. She would not be facing such extraordinary costs if the procedural path to trial were straight forward and focused. A trial that should not have exceeded four or five days focused on the cause of the water pooling took on a very expensive direction because of Ms. Liddy’s strategy.

ix. 57.01(1)(g – i)

[68] The balance of the Rule 57.01(1) considerations are not particularly applicable to this case.

x. Partial Indemnity v. Substantial Indemnity considerations

[69] The only other issue left for my consideration, before I sum up my findings to determine the appropriate costs award relates to the applicable costs scale. Ms. Mauro seeks an award on a substantial indemnity basis, which translates into an award of $650,024.12. In the alternative, she asks that costs be assessed on a partial indemnity scale until January 18, 2018, the date of her Rule 49 offer, and costs on a substantial indemnity basis thereafter.

[70] In support of those claims, she submitted that the allegations of punitive damages and illegality were never substantiated and that alone ought to justify a higher cost award. She highlighted the conclusion in Manning v. Epp, 2006 CarswellOnt 6508 at paras 7- 8 that a court will award costs on a higher scale when a party makes unproved allegations that are rooted in assertions of dishonesty and go to the heart of a person’s integrity. Similarly, the court in Pinder v. Farmers’ Mutual Insurance Company, [2019] ONSC 610, at paragraphs 47 - 51 held that unproven allegations of bad faith and requests for punitive damages will entitle a party to costs on a substantial indemnity basis.

[71] Relying on Davies, counsel for Ms. Mauro highlighted the reference to conduct that is reprehensible, scandalous or outrageous to argue that in such circumstances, costs can be awarded as a form of chastisement and as a way of showing the court’s disapproval of such conduct. Although counsel was careful in the way he ascribed the specific adjectives to Ms. Liddy’s conduct, he was highly critical of her approach to the litigation, her refusal to be reasonable, and ultimately concluded that the action should never have been brought. Counsel also referred the court to S & A Strasser Ltd. v. Richmond Hill (Town) (1990), 1 O.R. (3d) 243 (ONCA), at paragraph 11 to support the position that in instances where a defendant makes an offer and the plaintiff is unsuccessful costs should be awarded on a partial indemnity scale until the date of the offer and on a substantial indemnity basis thereafter.

[72] Ms. Liddy opposed the submission and took exception to the characterization of her conduct as reprehensible, scandalous, or outrageous. In her view her conduct and expectations were reasonable. Counsel argued that substantial indemnity costs should be awarded only in exceptional cases, see Dyer v. Mekinda Snyder Partnership Inc., [1998] O.J. No. 2204.

[73] In my review of the case law, I find that the most authoritative pronouncement on this issue is found in Davies. Following a review of Strasser, Epstein J.A. held that Strasser had limited application. After referring to a number of cases in support of that conclusion, she noted:

In summary, while fixing costs is a discretionary exercise, attracting a high level of deference, it must be on a principled basis. The judicial discretion under the 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.

[74] In Kay v. Caverson, [2011] O.J. No. 5688, the court commented on Davies and held the following:

Thus, in Davies, the Court of Appeal clearly states that even when a defendant makes a bon fide substantial settlement offer, and the plaintiff’s claim is dismissed, this is not by itself sufficient to support an award to the defendant of substantial indemnity costs after the date of the offer. Elevated costs should only be awarded where there is a finding of reprehensible or egregious conduct of the part of the plaintiff. Aguis v. Home Depot Holdings Inc., 2011 ONSC 5272, [2011] O.J. No. 4424.

[75] Having regard for the above authorities, while I found Ms. Liddy’s overall conduct unfortunate, very frustrating and in specific instances reprehensible, I am reluctant to add the adjectives “scandalous” and “outrageous”, though admittedly, this is a very close call. There can be no doubt that Ms. Liddy’s persistent pursuit of punitive damages against the Mauros and the underlying allegation that they engaged in illegal activity and took advantage of their relationships with specific City of Vaughan officials was highly problematic and reprehensible. Even if Ms. Liddy had some reasons at the very outset to be suspicious of the construction activities or to question whether Mr. Mauro was following the various requirements, she should have given up that fight as soon as she learned that Mr. Mauro eventually complied with all the various requirements.

[76] While I am inclined, even if reluctantly, to give Ms. Liddy the benefit of the doubt until the commencement of trial, given the abandonment of the personal claims against Bill Robinson and Michael Ridgwell in February 2018, and before the mistrial declaration, she should have been taking a long hard look at her claim for punitive damages against Ms. Mauro and abandoning it at that time. At the very least, the punitive claim should have been abandoned together with the dismissal of the City of Vaughan claims. Instead, it hung over the Mauros like a black cloud and caused them much emotional distress, in addition to financial costs. In my view, this persistent allegation was continued in bad faith, was mean-spirited, and was designed to challenge very directly the Mauros’ personal integrity. That alone should attract substantial indemnity for part of the case.

[77] Compounding my concern over the claim for punitive damages is Ms. Liddy’s inexplicable failure to lead any evidence to support her claim for damages. Apart from certain questionable invoices issued by her landscapers, she offered no evidence to support her damages or how she came to a claim for $500,000. Her expert witness gave some evidence on damages that essentially involved the tearing down of Mauro’s accessory structures but his terms of reference for the opinion did not ask him to study why the water was escaping the swale or how the problem could be fixed. His off the cuff suggestions for a fix to the problem did not follow the evidentiary rules and as a result were not reliable. For the purposes of costs, although this omission did not rise to the level of being scandalous or outrageous, to expend so much in resources and to use so much time and to offer no reliable evidence on damages was certainly audacious and awfully close to amounting to reprehensible conduct.

In light of these findings, I find it appropriate to assess costs at a partial indemnity scale up until the beginning of trial on January 29, 2018, and on a substantial indemnity basis thereafter.

CONCLUSION

[78] Given the foregoing analysis, Ms. Mauro acted reasonably throughout the litigation. She and her family were subjected to years of unnecessary stress and legal costs and blamed by Ms. Liddy for problems that were due to Ms. Liddy’s own mishandling of her backyard maintenance. The issues were serious and the litigation was rendered complex and was prolonged through no fault of the Mauros.

[79] The offers to settle from the Mauros were more than reasonable and revealed a spirit of compromise and an attempt to regain some perspective with respect to the disproportionate relationship between the nature of the problem and the associated legal costs.

[80] The punitive damages claim went to the heart of the Mauros’ integrity. There was absolutely no evidentiary foundation to that claim and the Mauros should never have been subjected to such a smear.

[81] The costs of the mistrial should not be borne by Ms. Liddy. The responsibility for this issue lies primarily at the feet of the City of Vaughan.

[82] Given these findings, and following my review of the Bill of Costs, I fix costs at $585,000, inclusive of costs for disbursements and applicable taxes.

Tzimas J.

Released: July 16, 2020