Court File and Parties

COURT FILE NO.: 57658/17 (St. Catharines) DATE: 20210305 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: FERNANDO SILVA CARDOSO and MARIA ILDEBERTA DO COUTO BOTELHO CARDOSO, Applicant AND: DIANE BENJAMIN, Respondent

BEFORE: The Honourable Mr. Justice R. A. Lococo

COUNSEL: Andrea M. Mannell, for the Applicants Andrea L. Parliament, for the Respondent

HEARD: By written submissions received January 26 to February 3, 2021

Endorsement – Costs

I. Introduction

[1] By application brought in October 2017, the applicants sought a declaration that they were the owners by adverse possession of a parcel of land (referred to as the “Disputed Lands”) legally owned by the respondent, the owner of the adjacent property. The respondent conceded that the applicants had a lawful claim to part of the Disputed Lands (referred to as the “Common Grounds”). As set out in Reasons for Judgment dated January 5, 2021 (reported at 2021 ONSC 13), I granted judgment declaring the applicants to be the lawful owners by adverse possession of the Common Grounds but not the balance of the Disputed Lands. Costs were left to be determined following written submissions.

[2] As noted in the Reasons for Judgment, at para. 11, ownership of the Disputed Lands was the subject of a previous application brought in August 2015 by the respondent’s predecessor in title, Property Partners & Associates Inc. (whose principal is the respondent’s husband). That application was dismissed on consent of all three parties, with costs to be determined as part of the current application.

II. Respondent’s position

[3] In her written submissions, the respondent claims substantial indemnity costs from the applicants with respect to both applications. The respondent also says that the applicants should bear the costs of implementing the judgment (that is, the required plans, surveys, title registrations and legal descriptions).

[4] To support her claim for substantial indemnity costs for both applications, the respondent relies on written offers to settle made in November 2016 (relating to the 2015 application) and August 2019 (relating to the current application), which offered the applicants the same terms as the 2021 judgment, according to the respondent. While conceding that the November 2016 offer does not meet the requirements of r. 49.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the respondent says that offer was part of the respondent’s consistent pattern of conduct (dating from before the 2015 application was brought) to reach an accommodation that would provide the applicants with legal title to part of the Disputed Lands in the immediate vicinity of the applicants’ dwelling and at the same time allow the respondent to proceed with her building plans in compliance with municipal requirements.

[5] The respondent says that the applicants unreasonably failed to engage in meaningful settlement discussions, justifying an award of substantial indemnity costs against them throughout. The respondent also says that the applicants should bear the costs of implementing the judgment, since they are the beneficiaries of the adversely possessed lands (as ordered in the judgment) and should have accepted the offer to settle in 2016.

III. Applicants’ position

[6] In their written submissions, the applicants claim partial indemnity costs for both applications, given the partial success of their claim. In the current application, they were successful in establishing adverse possession over part of the Disputed Lands. They also say that Property Partners was clearly not the successful party in the first application, in which it sought a declaration that the applicants’ dwelling and garden illegally encroached on the neighbouring property and requested removal of the encroachments.

[7] The applicants also dispute that there is any basis for a substantial indemnity costs award against them, arguing among other things that: (i) the composition of the land offered in Property Partners’ November 2016 offer (which was made in response to an earlier offer from the applicants) was not the same as the Common Grounds awarded in the judgment; (ii) the November 2016 offer was irrelevant since it was no longer open for acceptance after the first 2015 application was dismissed on consent; (iii) neither offer complied with r. 49.10; (iv) even if the offers complied with r. 49.10, the result would be that the respondent (as the responding party to the application) would be entitled under r. 49.10(2) to partial (not substantial) indemnity costs from the date of the offer; and (v) there was no other justification for substantial indemnity costs based on the applicants’ conduct.

IV. Legal principles

[8] The determination of costs is in the court’s discretion: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131. Consistent with previous case law, the successful party in a proceeding has a reasonable expectation of being awarded costs in the absence of special circumstances: see Bell Canada v. Olympia & York Developments Ltd. (1994), 17 O.R. (3d) 135 (C.A.), at p. 142.

[9] Costs are normally awarded on a partial indemnity basis, with two limited exceptions when “elevated costs” are warranted, as set out in Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66, at para. 28:

This court … has repeatedly said that elevated costs are warranted in only two circumstances. The first involves the operation of an offer to settle under rule 49.10, where substantial indemnity costs are explicitly authorized. The second is where the losing party has engaged in behaviour worthy of sanction.

[10] In Young v. Young, [1993] 4 S.C.R. 3, at p. 134, McLachlin J. describes the circumstances in which elevated costs are warranted as "only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties.” In a similar vein, except where r. 49.10(1) applies, the Ontario Court of Appeal has indicated that elevated costs based on a party’s conduct should be awarded only in a “rare and exceptional case”, based on “egregious or reprehensible conduct that warrants sanction”: see Foulis v. Robinson (1978), 21 O.R. (2d) 769 (C.A.), at p. 776; Mortimer v. Cameron (1994), 17 O.R. (3d) 1 (C.A.), at pp. 22-23; and McBride Metal Fabricating Corp. v. H & W Sales Co. (2002), 59 O.R. (3d) 97 (C.A.), at paras. 37-38.

V. Analysis and conclusion

[11] In the circumstances of this case, I have concluded that for the purpose of determining costs, the respondent was the successful party and should be awarded partial indemnity costs for both applications.

[12] At the application hearing, the positions that the parties advocated broadly provided two alternatives: (i) find the applicants entitled to all of the Disputed Lands, as they requested; or (ii) find the applicant entitled to part of that parcel in the immediate vicinity of the applicants’ dwelling, as the respondent previously proposed. I found that the former finding was not established, but the latter one was. While the particulars of the parties’ positions may have evolved over time, at least since the 2017 application was commenced, there was little indication of flexibility in the applicants’ position. In contrast, the respondent’s position (and that of her predecessor in title), as articulated at the motion hearing, had been broadly the same for some time. The latter position was the one adopted in the judgment. In these circumstances, consistent with both sides’ prior agreement that costs of the 2015 application should be determined as part of the current application, I consider it appropriate that the costs be awarded to the respondent for both applications.

[13] That being said, I do not see sufficient justification for awarding costs at an enhanced level beyond partial indemnity costs. It is common ground that Property Partners’ 2016 offer did not meet the requirements of r. 49.10. After reviewing the terms of the respondent’s August 2019 offer in the current application, I find that that offer does not meet the requirements of r. 49.10 either.

[14] While the respondent’s 2019 offer to settle would have provided the applicants with ownership of the same lands as the judgment, at least two other terms of the offer take it outside of r. 49.10.

[15] First, the offer would require the applicants to pay “all costs associated with preparing the necessary plans, surveys, title registrations, and legal descriptions to affect [sic] the terms of the Settlement Agreement.” As noted above, the respondent’s justification for that requirement is that the applicants are the beneficiaries of the lands awarded in the judgment and should have accepted the respondent’s offer to settle in 2016. I agree with the applicants that the November 2016 offer is irrelevant in this context. As well, while the applicants benefit from the judgment by acquiring legal title to the Common Grounds, the respondent also benefits by the removal of the cloud on her title to the balance of the Disputed Lands, which (among other things) has prevented her from proceeding with her plans for her property. In these circumstances, I consider it appropriate for the parties to share the implementation costs equally, as set out further below.

[16] Second, the 2019 offer would require the applicants to pay the respondent’s legal costs for both applications on a substantial indemnity basis. I see no sufficient justification for that requirement. The applicant acted reasonably in bringing an application to establish possessory title to the Disputed Lands. While they did not accept either offer to settle, those offers did not meet the requirements of r. 49.10. As well, I see nothing in the applicants’ conduct that would justify the conclusion that this is a “rare and exceptional case” that requires substantial indemnity costs based on “egregious or reprehensible conduct that warrants sanction”. In reaching that conclusion, I took into account r. 49.13, which provides that in exercising its discretion with respect to costs, the court may take into account any offer to settle in writing even if it does not comply with r. 49.10. However, based on previous case law, I do not consider it appropriate to grant substantial indemnity costs in reliance on r. 49.13 in the absence of conduct that otherwise warrants sanction: see Mortimer, at pp. 22-23; Prinzo v. Baycrest Centre for Geriatric Care (2002), 60 O.R. (3d) 474 (C.A.), at para. 76.

[17] Turning now the quantum of costs, in the respondents’ bills of costs, the aggregate amount for fees, disbursements and tax (calculated on a partial indemnity basis) totals $14,563.23 for both applications. As set out in the applicants’ bills of costs, the aggregate amount of partial indemnity costs that the applicants seek for both applications (if found the successful parties) is $18,341.58. In these circumstances, I find the amount the respondent seeks to be reasonable and appropriate and make an award in her favour in that amount.

VI. Disposition

[18] Accordingly, as additional terms of my judgment dated January 5, 2021:

a. The applicants and the respondent shall equally share the costs associated with preparing the required plans, surveys, title registrations and legal descriptions to effect the terms of the judgment; and

b. The respondent’s costs of the application (including her costs of the 2015 application) are fixed at $14,563.23 including disbursements and tax, payable by the applicants within 30 days.

The Honourable Mr. Justice R.A. Lococo Date: March 5, 2021