Court File and Parties

COURT FILE NO.: 650/20 DATE: 2021-02-23 SUPERIOR COURT OF JUSTICE-ONTARIO

RE: KELLY MARTIN, Applicant AND: 11037315 CANADA INC., 2670082 ONTARIO CORP., and AUTODOME LTD., Respondents

BEFORE: Gibson J.

COUNSEL: Dennis Van Sickle, counsel for Applicant Samir Chhina, counsel for Respondent 2670082 Ontario Corp.

HEARD: December 10, 2020 and January 19, 2021

COSTS ENDORSEMENT

Overview

[1] In my Endorsement in this matter of December 23, 2020, 2020 ONSC 8087, I granted the Applicant Kelly Martin’s Application to set aside a Default Judgment obtained in a foreclosure action. The property at issue is 1560 Reeves Gate, Unit 22, Oakville, Ontario (“the Property”).

[2] I did so on the basis of the equitable principles set out in Winters v. Hunking, 2017 ONCA 909, and also on the basis that the Default Judgment was irregularly obtained.

[3] In my Order of December 23, 2020, I ordered that:

a. The Default Judgment is set aside;

b. The Property at 1560 Reeves Gate, Unit 22, Oakville, Ontario should forthwith be listed for sale;

c. The net proceeds of sale in excess of $425,000 shall be paid to the Applicant Kelly Martin; and,

d. 110 shall forthwith pay to the Applicant Kelly Martin the proceeds it received from the sale of the Property that are in excess of that amount contemplated by paragraph 1(c) of its statement of claim.

[4] By its Notice of Motion dated January 5, 2021, the Respondent 2670082 Ontario Corp. (“267”) moved pursuant to Rule 59.06(2) of the Rules of Civil Procedure for an order varying the Order of the Court made on December 23, 2020, on the basis that new facts have arisen or been discovered.

[5] The new fact which 267 submitted was in the form of a letter dated July 24, 2019, sent by registered mail by the principal of the Respondent 11037315 Canada Inc. (“110”), Roy D’Mello, to the Applicant Kelly Martin. 267 submits that, while the Applicant had submitted that she had received no notice of the assignment of the mortgage, this happened because she did not claim registered mail, which in this case would have notified her of the assignment.

[6] 267 thus submits that this letter supports its position that 110 had made all legally necessary attempts at notifying the Applicant, but because of her own actions or inaction, she did not receive the notice of assignment, nor notice that she was in default. It asserts that the Applicant deliberately chose not to accept notice.

[7] 110 was put on notice of the original application. 110 chose not to participate in the litigation or appear at the hearings on November 23, 2020 and January 19, 2021. 110 has not made submissions as to costs. 267 submits that it was not in possession of the Assignment Letter until it was provided by 110’s principal Mr. D’Mello after the Court’s decision of December 23, 2020 was released.

[8] In my Endorsement dated January 29, 2021, 2021 ONSC 748, I concluded that 267 had fallen short in demonstrating that the new evidence it proffers of the letter which Mr. D’Mello now says he sent concerning the assignment of Ms. Martin’s mortgage could not have been put forward by the exercise of reasonable diligence in the original proceedings, as well as in demonstrating the cogency of this evidence. I assessed that 267 had thus not met its onus to show that all the circumstances justify making an exception to the fundamental rule that final judgments are exactly that, final. I thus concluded that this was not an appropriate instance to exercise my discretion to re-open the hearing, and dismissed the Respondent 267’s motion seeking a variation of the Order of December 23, 2020.

[9] In my Endorsements I encouraged the parties to agree on costs but directed that, if they were unable to do so, they might make written submissions to me as to costs. The Applicant and the Respondent 267 have now done so.

Costs Submissions of the Applicant

[10] In respect of the first Endorsement dated December 23, 2020 pertaining to the Application, the Applicant Kelly Martin claims costs on a full indemnity basis from the Respondent 267 and its director, Shan Mangal, on a joint and several basis due to what she submits was the “reprehensible, scandalous and outrageous” conduct of Mr. Mangal, and asks that 110 be required to contribute to her costs on a partial indemnity basis. She submits that it is within the Court’s inherent jurisdiction to award costs against a non-party (such as Mr. Mangal) in situations of gross misconduct, vexatious conduct, or conduct that undermines the fair administration of justice. She asks that she be awarded costs totalling $71,229.74.

[11] In respect of the second Endorsement dated January 29, 2021, pertaining to the motion to vary, the Applicant submits that she should be awarded costs on a substantial indemnity basis against the moving party 267 in the amount of $7,500.

Costs Submissions of the Respondent 267

[12] The Respondent 267 submits that its position in the litigation was reasonable. It questions whether the Applicant Ms. Martin actually incurred the costs claimed if her counsel was acting on a pro bono basis. It submits that the costs sought by the Applicant in the amount of $71,229.74 for the application and $7,500 for the motion to vary, are extremely unreasonable. It suggests that account should be taken that 267 has paid the carrying costs associated with the property since its purchase in January 2020, and that an amount of $43,279.92 should be set off against any costs awarded in favour of the Applicant. It says that the costs claimed by the Applicant are excessive and that the total costs payable for the application should not exceed $20,000 plus HST and disbursements of no more than $1,545.46 for both the main application and the subsequent motion to vary.

Applicant’s Reply Submissions

[13] In reply, the Applicant notes that counsel for 267, while asserting that time spent by counsel for the Applicant is excessive, has not filed a Bill of Costs or otherwise disclosed the amount of time spent on behalf of 267 in these proceedings. Counsel for the Applicant confirms that he was not retained on a pro bono or contingency basis, and submits that 267’s submissions to the contrary are without merit.

Law of Costs in Civil Matters

[14] The factors that a court may consider in exercising its discretion under s.131 of the Courts of Justice Act to award costs, in addition to the result of the proceeding and any offers to settle made in writing, are set out in Rule 57.01 of the Rules of Civil Procedure. Amongst these are: 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; the amount claimed; the complexity of the proceedings; the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding; the importance of the issues; and any other matter relevant to the question of costs.

[15] Costs should be fixed in an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding. Regard must be had to the principle of proportionality. Costs regardless of the scale must be fair and reasonable and within the expectation of the parties and proportional having regard to the issues at stake: Boucher v. Public Accountants Council (Ontario), [2004] O.J. No. 2634 (Ont.C.A.).

Assessment

[16] I note that 267 has not submitted a Bill of Costs in these proceedings. As noted by Daley J. in Hanna v. Bazuik, 2010 ONSC 6166 at para. 21, its submission that the Applicant claims costs based on excessive time spent is thus unlikely to be persuasive. This is not determinative but represents a factor that should be taken into account in determining the amount of costs that is fair and reasonable.

[17] The actions of both 267 and 110 in this matter are somewhat troubling. However, I do not discern on the facts of this case before me a basis to pierce the corporate veil and award costs against Mr. Mangal personally.

[18] The Applicant was wholly successful on both the application and the motion to vary. There is no doubt that the matter was of great importance to her. The issues were of moderate complexity. The written and oral submissions of the Applicant’s counsel were cogent and well presented.

[19] I consider that, in the circumstances, the submission of 267 that the carrying costs of the property from January 2020 onwards should be set off against the costs award against it, are without merit. 267 was not an innocent bona fide purchaser for value without notice. In pursuing the course it did it must be assessed to have chosen to bear the risk of an adverse outcome, and attendant costs consequences.

[20] However, with regard to the factors of reasonable and proportionality of the costs claimed, $71,229.74 is too high in the circumstances of this case.

[21] Having regard to all the relevant factors, including the outcome of the proceedings, and proportionality of the costs to the value of the claim at issue, I consider that a fair and reasonable amount for the losing parties to pay in costs would be $50,000 in respect of the Application, and $7,500 in respect of the motion to vary.

Order

[22] Accordingly, the Court Orders that:

a. In respect of the Application, the losing parties shall pay costs to the Applicant fixed at $50,000 all inclusive. Of this, 267 shall pay $35,000, and 110 $15,000; and,

b. 267 shall pay costs to the Applicant in respect of the motion to vary fixed at $7,500 all inclusive.

M. Gibson J. Date: February 23, 2021