Court File and Parties

COURT FILE NO.: CV-18-00597489

DATE: 2020-09-30

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: RE/MAX REALTRON REALTY INC., Plaintiff

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2458313 ONTARIO INC., 2524991 ONTARIO CORPORATION, QINGXIN SHAO also known as NEWRY SHAO and ZOUBO GU also known as STEVEN GU, Defendants

BEFORE: E.M. Morgan J.

COUNSEL: Paul Starkman, for the Plaintiff Jordan Goldblatt and Michele Valentini, for the Defendants

HEARD: Cost submissions in writing

COSTS ENDORSEMENT

[1] The Plaintiff brought a summary judgment motion in respect of its claim for damages resulting from an aborted real estate transaction. After a one-day hearing in motions court, I ordered the proceeding converted into a mini-trial which took place nine months later over the better part of five days.

[2] The result was entirely in the Defendants’ favour, with the Plaintiff’s claim being dismissed. As the mini-trial unfolded, it became patently obvious that the Defendants would win. The Plaintiff, who is a real estate broker, claimed that the Defendants had backed out of a property deal that he brokered only to subsequently purchase it in another name thereby depriving him of his commission. However, the new purchaser turned out to be a genuinely different investor group than the Defendants. The Plaintiff’s claim completely missed the mark.

[3] The Defendants made two offers to settle which are important to take into account. Although the first offer was more generous than the second, they both would have given the Plaintiff substantially more than what he ended up with at trial. The first offer, dated December 5, 2018, would have seen the Defendants pay the Plaintiff $75,000, all inclusive. Had the Plaintiff accepted this, not only the mini-trial but the entire summary judgment motion would have been avoided.

[4] The second offer submitted by the Defendants is dated January 11, 2019. Defendants’ counsel characterizes this as an offer to settle under Rule 49 of the Rules of Civil Procedure. It would have seen the Defendants pay the Plaintiff $10,000, all inclusive. This offer was made simultaneously with the withdrawal of the previous offer, and remained open until the beginning of trial. It was likewise rejected by the Plaintiff. Again, had the Plaintiff accepted the offer the motion and trial would both have been avoided.

[5] Under Rule 49, the effect of the of the January 11, 2019 offer is that the Defendants, having been successful at trial, are entitled to partial indemnity costs up until the date of the offer, and substantial indemnity costs thereafter. The Defendants’ Bill of Costs shows this to come to a total of $143,931.31, including disbursements and HST.

[6] Plaintiff’s counsel submits that this amount is excessive and disproportionate to the value of the claim, which was in the range of $140,000. Defendants’ counsel counters that the procedural complexity and expense of the proceeding was primarily the fault of the Plaintiff, who brought numerous motions and who sought repeated examinations of the Defendants’ deponents.

[7] It is Plaintiff’s counsel’s view that multiple discoveries were made necessary because the Defendants changed their theory of the case midstream. Indeed, the Defendants did amend their pleading to more carefully distinguish between themselves and the second buyer group, which had an overlap in a directorship with the first. However, Defendants’ counsel maintains that the separate identities of the first buyer group and the second buyer group for the property was always at the core of the defense. He argues that the defense theory simply got more fleshed out as facts materialized in the discovery process and more documentation emerged.

[8] Plaintiff’s counsel argues that the Defendants should pay the Plaintiff’s costs for the portion of the case up to and including the summary judgement motion, and that the Plaintiff should pay the Defendants’ costs for the portion thereafter only. His reasoning is, essentially, that since the Defendants’ summary judgment motion had to be converted into a mini-trial, it was not a successful motion. The argument goes on to contend that the Plaintiff, as winner of that motion, deserves costs of that stage of the proceedings, and that the Defendants only deserve costs of the mini-trial since that is the only stage in which they were successful.

[9] With respect, Plaintiff’s counsel’s characterization misses the point of the mini-trial. The trial of the issue of corporate ownership/investor identity was ordered as a result of the power that a motions judge has under Rule 20.05 to hear witnesses and order trial of an issue. It reflects the fact that the summary judgment motion was inconclusive on a paper record alone, but was ultimately conclusive after a week of viva voce testimony. The mini-trial was a continuation of the summary judgment motion. There is only one conclusive judgment at the end of the day, and that incorporates the evidence adduced in both parts of the process. While the Defendants did not prove their case until the mini-trial had concluded, the Plaintiff did not emerge as the successful party at any stage of the proceedings.

[10] Once the evidence of corporate ownership was made clear, the cloud of obscurity was lifted from the case. To be sure, I found myself wondering midway through the mini-trial why it was proceeding at all. By the time the trial began, the Plaintiff had had documentary disclosure, discovery and multiple examinations of the Defendants. Plaintiff and his counsel must have already known at the beginning of the week-long trial what became clear to me as the week unfolded – i.e. that the second purchaser group was substantially different than the first. And my thoughts in this regard were, of course, before I knew about the Rule 49 offer to settle, which was only disclosed to me with the Defendants’ post-trial cost submissions and which makes the decision to proceed apace all the more curious.

[11] In any event, the Plaintiff decided to take his chances at trial, which is never an inexpensive endeavor. In doing so, he chose to play a losing hand. The fact that it cost a disproportionate amount of money to get there cannot be visited on the Defendants. The Plaintiff is the author of his own disproportion.

[12] The Defendants’ request for costs may seem like a large amount given the size of the claim, but it is not particularly high as legal fees go. It covers a motion and five days of trial, with all of the documentation and preparation that task entails. On top of that, it reflects a substantial indemnity scale from January 2019 until the end of trial. I am not inclined to second guess counsels’ investment of time in preparing for and conducting the trial; it paid the dividends that the Defendants deserved.

[13] The Plaintiff shall pay the Defendants $143,931.31 in costs, inclusive of fees, disbursements, and HST.

E.M. Morgan J.

Date: September 30, 2020