COURT FILE NO.: CV-16-553425

DATE: 2020 09 04

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE MATTER OF the Construction Lien Act, RSO 1990, c. C.30, as amended

BETWEEN:

OSMI HOMES INC.

H. Mandel, for the plaintiff

Plaintiff (Defendant by counterclaim)

• and -

ANIL KUMAR a.k.a. ANIL KUMAR KINGRANI

J.S.G. MacDonald, for the defendant

Defendant (Plaintiff by counterclaim)

HEARD: In writing

COSTS ENDORSEMENT

[1] Pursuant to reasons for judgment dated May 1, 2020, Osmi Homes Inc. ("Osmi Homes") was found to have proven entitlement to a lien in the amount of $86,244.38 under the former Construction Lien Act, RSO 1990, c. C.30 (the "CLA") (the provisions of which remain applicable to this proceeding by operation of Section 87.3 of the current Construction Act, RSO 1990, c. C.30). Osmi Homes was granted judgment in the same amount, plus pre-judgment interest pursuant to the Courts of Justice Act, RSO 1990, c. C.43. A schedule for written costs submissions was set if the parties could not agree as to costs.

[2] Written submissions were delivered. With those submissions, and despite the requirement in Rule 57.01(5) of the Rules of Civil Procedure, RRO 1990, Reg 194 that a bill of costs be filed after a trial, both parties have submitted costs outlines. Osmi Homes seeks its costs of the action on a partial indemnity basis in the amount of $69,701.77, inclusive of HST and disbursements. Notwithstanding that judgment has been granted against him, Mr. Kingrani nevertheless argues that he was the more successful party. He seeks his costs of the action on a substantial indemnity basis in the amount of $51,304.43, inclusive of HST and disbursements, or in the alternative on a partial indemnity basis in the amount of $37,160.48, inclusive of HST and disbursements. Osmi Homes' costs outline indicates that there were no offers to settle pursuant to Rule 49 of the Rules of Civil Procedure. If any non-Rule 49 offers to settle were made by either party in the course of litigation, neither relies on them in their respective costs submissions.

[3] Osmi Homes submits that, although not successful in establishing entitlement to most claimed extras, it was still successful in proving entitlement to a lien and in obtaining judgment, and that there is no reason that costs should not follow the event in this case. Osmi Homes further submits that Mr. Kingrani's allegations of deficiencies were not made out at trial, other than one minor deficiency with the front porch soffits and trim. Osmi Homes further submits that Mr. Kingrani's position on accounting of payments and loan credits was inconsistent between discoveries and trial, resulting in a substantial amount of time at trial on accounting. Osmi Homes also argues, essentially, that it was more successful on the payment accounting dispute since the court's determination was much closer to Osmi Homes' position on payments and loan credits than that of Mr. Kingrani.

[4] Mr. Kingrani submits that he was the more successful party because he was successful on the most important issues at trial, which took the greatest trial time, namely the disputes regarding the contract scope of work and validity of extras. Mr. Kingrani submits that his positions on these issues was almost entirely successful at trial, with success on 10 out of 12 sub-items that made up the dispute over extras. Mr. Kingrani also argues that the parties had divided success on other major trial issues, with Mr. Kingrani being successful on the issue of loan credits and only unsuccessful on issues taking up very little trial time.

[5] In determining costs, s. 86 of the CLA and Rule 57.01 of the Rules of Civil Procedure afford broad discretion to fashion a costs award that the court deems fit and just in the circumstances. The general principles applicable when determining costs are well settled. Costs are discretionary. Rule 57.01 sets out a non-exhaustive list of factors to be considered by the court in exercising that discretion, which are in addition to considering the result of the proceeding and any written offers to settle. Rule 1.04(1.1), which is also applicable, requires the court to make orders that are proportionate to the importance and complexity of the issues and to the amount involved in the proceeding.

[6] Costs awards should reflect what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier, 2002 CanLII 25577 (ON CA), [2002] OJ No. 4495 (CA) at para. 4; Davies v. Clarington (Municipality), 2009 ONCA 722 at para. 52. The overall objective is fixing an amount that is fair and reasonable in the particular proceeding, having regard to the expectations of the parties concerning the quantum of costs: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 OR (3d) 291 (CA) at paras. 26 and 38.

[7] I deal first with Mr. Kingrani's claim for costs of the action. I do not agree that Mr. Kingrani was the more successful party, and find no basis upon which to award Mr. Kingrani his costs of the action, either on a substantial or partial indemnity basis. Regardless of the success of certain defence positions at trial, judgment was awarded against Mr. Kingrani. He was, in the result, an unsuccessful defendant. While Osmi Homes did not obtain a judgment for as much as it sought, it still obtained judgment for amounts that the court found Mr. Kingrani ought to have paid. No offers to settle were put before me to support that this action was unnecessary for Osmi Homes to prove its entitlement to payment.

[8] The only case cited by Mr. Kingrani in support of his claim for costs is the decision in Luxterior Design Corp. v. Gelfland, 2015 ONSC 990 (Master). In particular, Mr. Kingrani points to one purpose of costs being to discourage inappropriate behaviour by litigant. The evidence of Osmi Homes' principal, Hitesh Jhaveri, is said to have been "rife with suspect credibility". Osmi Homes' claim is also argued to have included clearly overreaching claims.

[9] In my view, Luxterior does not assist Mr. Kingrani. In that case, Master Wiebe did consider the conduct at trial of the defendant owners in his assessment of costs. However, as acknowledged by Mr. Kingrani in his costs submissions, Master Wiebe viewed that conduct as demonstrating "a level of deviousness and deception that the court should actively discourage with a costs award." Master Wiebe further noted that s. 86 of the CLA contemplates a heightened costs award "where a party has prejudiced or delayed the conduct of [the] action": Luxterior, supra at paras. 39 and 45. It is, in my view, significant that Master Wiebe held, at para. 38, that the unsuccessful defendants' positions and evidence at trial "bordered on the absurd".

[10] As outlined in my reasons for judgment, I did determine that Mr. Jhaveri's evidence should generally be given less weight than that of Mr. Kingrani. There were also instances, though, in which I found Mr. Kingrani's evidence to lack credibility or reliability and preferred the evidence of Mr. Jhaveri. Osmi Homes failed to meet its evidentiary onus in respect of a number of its positions and many of the alleged extras. Put simply, I am not satisfied that there is any basis to find that Mr. Jhaveri or Osmi Homes took absurd positions or acted in a devious or deceptive manner in the course of litigation or trial.

[11] No case law has been provided or is relied upon by Mr. Kingrani to support that an unsuccessful defendant advancing some successful arguments at trial is entitled to her/his costs of the action, despite a judgment against her/him. I note also that substantial indemnity costs are generally only warranted were there has been reprehensible, scandalous or outrageous conduct on the part of a party: Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 SCR 3 at p. 134. I do not agree with Mr. Kingrani that any conduct of Osmi Homes or Mr. Jhaveri rises to that level.

[12] Mr. Kingrani also argues that I should consider Osmi Homes' failure to agree to have the separate lien action regarding construction at 492 Wellington Crescent, Oakville (the "Wellington Project") transferred from Milton and referred to be heard together with this action. Section 86(2) of the CLA provides that, where the least expensive course is not taken, the costs allowed shall not exceed what would have been incurred had the least expensive course been taken. Mr. Kingrani argues that Osmi Homes' refusal to consent to transfer and trial together of the two actions increased costs to both litigants and the public.

[13] I do not agree that Osmi Homes' "failure" to consent to transfer the Milton action is a factor in costs of this action. It is not clear to me that transfer from Milton and reference of that proceeding to be tried together with this action would have resulted in a less expensive course. The Wellington Project was the subject matter of a separate contract, for a separate house, with variant specifications and features from the subject project. While there may be similar legal issues in both actions, the only apparent overlapping evidentiary issue is the allocation of payments as between the two projects.

[14] Section 86(2) of the CLA cannot be read in isolation from the remainder of the legislation. Section 67(1) of the CLA requires that the procedure in a lien action shall be as far as possible of a summary character, having regard to the amount and nature of the liens in question. There is insufficient information and evidence on the Wellington Project before me to agree with Mr. Kingrani that there would clearly be a costs savings from the two actions proceeding to trial together, or that transfer and trial together of the Milton action would not have unduly complicated and delayed the procedure in this lien action, contrary to s. 67(1).

[15] The Milton action has been held in abeyance pending disposition of this lien action. In my reasons for judgment, I have made determinations on the allocation dispute, which should narrow trial issues regarding the Wellington Project. I do not know the specific issues and evidentiary support available to each party regarding their positions in the Milton action. However, if Mr. Kingrani's submission is correct that the same issues are in dispute (with which Osmi Homes does not agree), then my determinations on evidentiary issues and credibility may well assist the parties in reaching a settlement of the Milton action.

[16] I turn now to the factors I have considered in fixing the quantum of costs. In exercising of my discretion regarding costs, I have considered all relevant factors outlined in section 86 of the CLA and Rule 57.01 of the Rules of Civil Procedure, and have applied the principles from Boucher. Without going through every factor in detail, I note the following:

(a) While Osmi Homes' claim for costs is higher than that of Mr. Kingrani, Osmi Homes' counsel is a lawyer with greater experience, having been called to the bar in 1979. It is thereby not surprising that the actual hourly rates charged to Osmi Homes were higher than those charged to Mr. Kingrani. The partial indemnity claim by Osmi Homes is only $105 per hour higher on a partial indemnity scale that the claim by Mr. Kingrani for its trial counsel, who was called in 2004.

(b) Mr. Kingrani submits that $58,100, plus HST, is beyond the reasonable expectations of the parties. I do not agree. This action was commenced in 2016 and proceeded through litigation to a 5-day trial. Osmi Homes claimed $223,915.83 in unpaid services and materials, in response to which Mr. Kingrani denied any liability and advanced a $53,722.73 set-off and counterclaim. In my view, the partial indemnity costs claimed by Osmi Homes are not clearly beyond the reasonable expectations of the parties in all the circumstances.

(c) While I found that total payments and loan credits allocated to the subject project were in an amount greater than what was admitted by Osmi Homes, my determination was an amount substantially less than what was claimed by Mr. Kingrani. I found that many of the payments alleged by Mr. Kingrani were not substantiated.

(d) Notwithstanding the above, accounting between the two projects was an issue on which the evidence from both parties was less than ideal. By all appearances, the accounting dispute did not genuinely crystallize until the parties exchanged trial affidavit evidence. It is unclear to me how the extent of the dispute regarding accounting, including proof and accounting of loans for which credits were given, was not known prior to trial, in which case trial time on accounting issues may well have been shortened.

(e) Osmi Homes was successful in proving timeliness of its lien, which was not admitted. Although Osmi Homes bore the evidentiary burden of proving timeliness, Mr. Kingrani advanced no argument for why the lien was not timely and the evidence did not support completion or abandonment of the contract more than 45 day prior to preservation of Osmi Homes' lien. I agree with Osmi Homes that, absent a reasonable argument supporting expiry of Osmi Homes' lien rights (and none was advanced), Mr. Kingrani ought to have admitted the timeliness of the lien.

(f) I agree with Osmi Homes that Mr. Kingrani was almost entirely unsuccessful in his set-off and counterclaim for incomplete and deficient work. Only one minor deficiency with the front porch ceiling soffits and trim was substantiated on the evidence and the allowed set-off for incomplete installation of toilets and supply and installation of an air conditioning unit ultimately equalled the credit already given by Osmi Homes.

(g) Osmi Homes was substantially unsuccessful in proving claimed extras and in arguing that many items were properly viewed as extras rather than as part of the base contract scope of work. Osmi Homes was only able to obtain judgment for approximately 40% of its total claim. As noted above, that is still success in proving that Osmi Homes was owed payment on account of the services and materials it supplied to the project. However, it does not mean that the success of Mr. Kingrani on disputed issues of base contract scope of work and extras is moot. Mr. Kingrani's success is a factor that, in my view, is appropriately considered in fixing costs.

(h) Mr. Kingrani correctly notes that costs of his motion returnable in July 2017 before Master Pope were reserved to reference master on consent of the parties. Osmi Homes' costs outline does include a claim for costs relating to the motion for an order for trial, returnable on the same date as that motion, but it is unclear if those hours include responding to Mr. Kingrani's motion. In my view, costs of that motion are appropriately considered in assessing costs payable to Osmi Homes. I have determined that Mr. Kingrani is entitled to his partial indemnity costs of that motion, as discussed below. Since it is unclear if the hours claimed by Osmi Homes in relation to the court attendance on July 11, 2017 includes the motion before Master Pope, I have discounted the hours on that date.

(i) Osmi Homes makes no costs claim in respect of its original counsel, who was retained to preserve and perfect the lien, and also makes no claim for law clerk time. On the whole, I do not view the time and disbursements claimed in Osmi Homes' costs outline as being unreasonable. However, in the absence of having clerk time reflected, I cannot assess if amounts claimed for work more properly performed by a junior lawyer or clerk, such as preparing affidavits of documents, undertakings lists, and answers to undertakings, is reasonable, particularly given the higher hourly rate of Osmi Homes' counsel.

[17] Having weighed the factors in section 86 of the CLA and Rule 57.01 of the Rules of Civil Procedure, including the ultimate outcome, I find that the fair and reasonable amount of costs payable by Mr. Kingrani to Osmi Homes in respect of the action is $38,000.00, inclusive of HST and disbursements, less Mr. Kingrani's partial indemnity costs of the motion before Master Pope.

[18] The circumstances of Mr. Kingrani's motion are significant in assessing costs of that motion. Notwithstanding that the judgment of reference referring this action to a construction lien master had been obtained in December 2016, Osmi Homes had not obtained an order for trial by July 2017. Osmi Homes also failed to produce an affidavit of documents, despite having received one from Mr. Kingrani and despite repeated requests for one. Mr. Kingrani accordingly moved for an order granting leave for discoveries, compelling Osmi Homes to provide its Schedule A productions, and for a litigation timetable. The motion was resolved prior to the hearing, and Osmi Homes obtained an order for trial from Master Albert on July 11, 2017, the same date as Mr. Kingrani's motion came on for a hearing before Master Pope. Exchange of affidavits of documents and Schedule A productions had been completed by the time of the first hearing for directions before Master Albert.

[19] As discussed above, s. 67(1) of the CLA requires lien actions to be of a summary character and s. 86(2) expressly contemplates that costs allowed to a party be limited by what would have been incurred had the least expensive course been taken. Mr. Kingrani's motion appears to have been necessary in order to move the action forward to trial. In my view, notwithstanding that Mr. Kingrani was the unsuccessful party in the action, he is entitled to set-off his partial indemnity costs. Having reviewed Mr. Kingrani's costs outline, the costs claimed in relation to the motion before Master Pope are an aggregate of 16.8 hours of time by two lawyers, which calculates to a claim of $3,162.25, plus HST and disbursements, on a partial indemnity basis. Having regard to the costs principles discussed above, in my view, partial indemnity costs of $3,000.00, inclusive of HST and disbursements, are appropriately granted to Mr. Kingrani and set-off against Osmi Homes' costs of the action.

[20] I accordingly order that Mr. Kingrani pay to Osmi Homes costs of this action fixed in the amount of $35,000.00, inclusive of HST and disbursements.

[21] In my reasons for judgment, I directed that the parties prepare and file a draft report in the form prescribed by the CLA by no later than the deadline for reply costs submissions. The parties were unable to reach agreement, but have indicated they would make further efforts upon receipt of my costs decision. If agreement still cannot be reached, a hearing may be scheduled through my Assistant Trial Coordinator for the purpose of settling the report.

MASTER TODD ROBINSON

DATE: September 4, 2020```