Court File No. CV-19-141743-0000 DATE : 20210304 ONTARIO SUPERIOR COURT OF JUSTICE THE HONOURABLE JUSTICE ) THURSDAY, THE 4TH DAY S. J. WOODLEY ) OF MARCH, 2021
BETWEEN:
AHMAD BEYGI, ELHAM BEYGI, MALIHEH RAFIEI HANJANI and THE ESTATE OF ALIREZA BEYGI, deceased, by its executor, Ahmad Beygi Plaintiffs
-and-
YOUSEF MAHMOUDZADEH, MOHAMMAD MAHMOUDZADEH, MAD BUILDERS LTD., SALOUMEH BAGHBANI NAJAFABAD, ALI REZA HAKIMI, ALIREA GOLNARAGHI GHOMI, ALIREZA MOHAJEL SADEGHI, AMIR HOSSEIN SALAMAT, ARAD AMANI, CHEHRAZ DADRAS, DARYL KING, DENIZ DIRIK, FARHAD RAD, FARSHAD SHIRVANIAN, HAMED SHAJARI, HOSSEIN RAHIMI, HOSSEIN SHAJARI, JANET CHRISTINE YATES, KAMRAN DARYUSHNEJAD, MEHDI KETABCHI HAGHIGHAT, MEHRANGIZ ATASHSOKHAN, MEHRDAD MIROSSINI, MONIR ATASHSOKHAN, NIMA ANDREW HAKIMI, NIMA BEHRAVESH, OMID PAKROH REZAEIE, ROUHOLAH ESKANDARI, SASAN SALAJEGHEH, SHADI JAHANFAR, SIAVASH RAD, and TABASOM EFTEKIHARI Defendants
REASONS FOR DECISION REGARDING COSTS
Facts and Overview
During his lifetime, the deceased Plaintiff, Alireza Beygi (“Alireza”), was a friend and business associate of several of the Defendants, who together purchased real estate properties for investment purposes.
Following Alireza’s death, his family (being the remaining Plaintiffs) became concerned with the security of the investments, in part, because Alireza’s interest was not recorded on title to the investment properties and there was no written agreement establishing their respective interests.
The Plaintiffs commenced an action claiming a partnership interest in the investment properties and (as it applies to this motion) more specifically certain property municipally known as 24 Sanderson Crescent., Richmond Hill, Ontario.
According to the materials originally filed on the motion, the property known as 24 Sanderson Crescent, was registered solely in the name of the defendant Nima Behravesh (“Nima”) despite being beneficially owned (in part) by the deceased Alireza as to a 22.5% interest and several other Defendants namely Nima, Yousef Mahmoudzadeh (“Yousef”), Shadi Jahanfar (“Shadi”) and Rouhollah Eskandari (“Rouhollah”), in differing interests.
On September 29, 2020, the Plaintiffs registered a caution against the subject property and provided the Defendants with a copy of the registered caution.
On October 7, 2020, the Plaintiffs brought a motion for a certificate of pending litigation and/or alternate relief after being advised that the property (24 Sanderson Crescent) had been sold without notice or consultation with them to the Defendant Farshad Shirvanian (“Farshad”).
The agreement of purchase and sale for the subject property was dated September 5, 2020, was signed by the Defendant Nima, solely, and had an accepted sale price of $1,369,000.00, with a closing date of October 9, 2020.
Although numerous Defendants including Nima filed a Notice of Intention to Act in Person, only one Defendant, Yousef, retained counsel to defend the motion.
The motion was originally heard in writing by Justice Vallee, who by the materials filed that morning by the Defendant Yousef, discovered that the closing date for the sale had been extended to December 21, 2020, pursuant to an Amendment dated September 24, 2020. Justice Vallee determined that the motion was no longer “urgent”, granted the Plaintiffs the right to file reply materials and having read such materials directed that the motion be adjourned and argued by Zoom hearing.
On December 17, 2020, five days prior to the anticipated closing, the parties appeared before me by Zoom to argue the motion.
Prior to attendance at the motion, and on November 11, 2020, the Plaintiff Ahmad Beygi (“Ahmad”) and the Defendant Yousef, were cross-examined on their affidavits filed in support of the motion.
After reviewing all materials filed and after hearing the submissions of counsel for the Plaintiffs and for the Defendant Yousef (no other Defendant having filed materials or made submissions to the Court), I delivered written Reasons for Decision dated December 17, 2020, which ordered as follows: i. The Plaintiffs’ motion seeking registration of a Certificate of Pending Litigation and alternatively for the sale of the property on such terms as are just, was dismissed; ii. The Defendants were required to hold back from the proceeds of sale and pay 22.5% of the net proceeds together with a further $22,500 (representing 22.5% of an anticipated vendor take back mortgage) into Court to the credit of the action; and iii. Subject to any offer to settle that may affect costs, as the Court has accepted the Defendants’ alternate position on the motion, the Defendants are entitled to their costs.
In accordance with my Reasons for Decision, the parties filed costs submissions.
The Defendant Yousef seeks full indemnity costs and/or substantial indemnity costs. Yousef advises that he served a Rule 49 Offer to Settle dated October 30, 2020, that is a better result for the Plaintiffs then achieved at the hearing. The Defendant Yousef also submits that full and/or substantial indemnity costs are warranted “as the Plaintiffs’ conduct was especially egregious: the Plaintiffs made unfounded allegations of fraud and improper conduct; Yousef made several offers to settle that should have been accepted; the Plaintiffs’ motion was also wholly devoid of merit; and the Plaintiffs’ materials even impugned the integrity of Yousef’s solicitor”. The Defendant Yousef submits that in the circumstances, a fair and reasonable amount of costs inclusive of HST would be $29,807.82 + $2,511.78 for disbursements.
In an unusual turn of events, the Plaintiffs also seek full indemnity costs and/or substantial indemnity costs on the grounds that unbeknownst to the Court or the Plaintiffs, the Defendants had already finalized the sale and transfer of the subject property on December 7, 2020, ten days prior to the motion being argued. In other words, the October 7, 2020 attendance, the November 11, 2020 cross-examinations, and the December 17, 2020 hearing itself were all meaningless as one or more of the Defendant beneficial owners engaged in self-help and finalized the sale of the property prior to the scheduled hearing date.
The Plaintiffs submit that all other Defendant beneficial owners of the property, namely Nima, Yousef, Shadi and Rouhollah, would likely have known of the amended closing date weeks prior to December 7, 2020. In these circumstances, the Plaintiffs argue that Yousef is liable for the costs incurred by the Plaintiffs, on a substantial indemnity basis, up to and including the adjournment granted on October 7, 2020, and that the Defendants Nima, Yousef, Shadi and Rouhollah, are jointly and severally liable on a full indemnity basis for all costs incurred from the sale being December 7, 2020 to the hearing date being December 17, 2020.
In support of this submission the Plaintiffs note that Nima was present during Yousef’s examination for an indeterminate amount of time and joined the December 17, 2020 Zoom motion call. As a result, Shadi, Nima, Rouhollah and, and Yousef should be required to pay for the Plaintiffs’ legal costs on a full indemnity basis three weeks prior to December 7, 2020 to the date of the hearing on December 17, 2020. The Plaintiffs seek costs of $29,171.33 plus HST and $2,267.02 for disbursements or $26,973.74 plus HST and $2,267.02 for disbursements on a substantial indemnity basis.
The facts as known by the Court at the date of the motion on December 17, 2020, and the anticipated pending December 21, 2020 sale are contained in my Reasons for Decision dated December 17, 2020 found at Beygi et al v. Mahmoudzadeh 2020 ONSC 7944.
The “new” facts that reveal that the property had already been sold by December 17, 2020, are summarized above.
Additional facts that are relevant for the purposes of this cost decision are as follows: a. The sale price of the property was $1,369,000 as per the original Agreement of Purchase and Sale; b. The purchaser Farshad did not require the $100,000 vendor take back mortgage and instead on closing obtained and registered a first mortgage with the Bank of Nova Scotia in the amount of $1,700,000; c. The lawyer that acted on the sale was Homayoon Sanayei; d. There is no evidence that the Defendant Yousef or his lawyer, David Nuri, had knowledge that the sale had taken place prior to the December 17, 2020 hearing; and e. Despite the sale having occurred ten days prior to the hearing and release of my Reasons for Decision, the Plaintiffs’ share, being 22.5% of the net sale proceeds, were withheld on closing and have been paid into Court to the credit of the action.
Analysis and Costs Ruling
I accept the Defendants’ submission that as they were the successful party on the motion they are presumptively entitled to their costs.
However, having considered the “new evidence” proffered by the Plaintiffs, I am greatly concerned with the gamesmanship that was engaged by at least one or more of the Defendant beneficial owners in this matter.
Had the “new evidence” not been proffered, the Defendant Yousef would be entitled to his costs pursuant to Rule 57.01, 57.03 and Rule 49.10 of the Rules of Civil Procedure.
The question to be determined by me is whether this “new evidence” has any effect on the usual cost consequences.
Having considered this issue at length, and given the unusual circumstances of this case, I find that the “new evidence” requires action by the Court, if only to maintain the integrity and dignity of the legal process.
Parties cannot come to court with unclean hands and seek relief. Parties cannot deceive the court and not expect to face consequences. In the present case, the Court and the Plaintiffs were deceived. It is possible that Yousef was also deceived. This deception cannot go unchallenged.
As there is no evidence as to who perpetrated the deception, no individual party shall be tasked with the burden of answering the court. However, there exists a specific fund from which costs may be made payable, being the net proceeds of sale of 24 Sanderson Crescent, Richmond Hill, and it is from this fund that the costs shall be paid.
The Plaintiffs’ commenced the motion as their interest in the property was not secured on title or by written agreement and the Defendants’ refused and/or neglected to share information regarding the pending sale of the property. Although the Plaintiffs were unsuccessful on the motion, they were successful in securing their monetary interest in the property. The Plaintiffs’ concerns that they were not being kept informed about the sale were CLEARLY legitimate given the Defendants’ deceit in the face of continuing and pending legal proceedings. The Plaintiffs were successful in securing their interest and are entitled to costs for the period up to the date the Defendants’ Offer to Settle was served, being October 30, 2020.
Having reviewed the Plaintiffs’ Bill of Costs and considered the principles set out in Rule 59.01, I find that the hourly rate charged by counsel for the Plaintiffs to be very reasonable and the time spent to be appropriate. I fix the Plaintiffs’ costs for this period at $10,000.00 inclusive plus disbursements of $236.97 for total costs owing to the Plaintiffs fixed at $10,236.97, to be paid by from the fund being the net proceeds of sale of 24 Sanderson Crescent, Richmond Hill. As 22.5% of the proceeds have been paid into Court, the Plaintiffs shall be paid the sum of $2,303.31 from those proceeds paid into Court. In the event the remaining proceeds of sale have already been distributed to the remaining beneficial owners, the remaining costs totaling $7,933.66 shall be paid to the Plaintiffs within 30 days of the date herein by the remaining beneficial owners, being the Defendants, Nima, Yousef, Shadi and Rouhollah, jointly and severally, as they may agree and failing agreement to be paid proportionally in accordance with their beneficial ownership share.
As for the costs owing from October 30, 2020, the Defendants served an Offer to Settle that was not accepted by the Plaintiffs that was equal to or better than the result achieved. This fact remains true regardless of whether the property was sold prior to or following the motion. In the circumstances, the Plaintiffs are NOT entitled to costs from any party from the date of the Defendants’ Offer to Settle.
As for the Defendant Yousef, he is the only Defendant that retained counsel and actively participated in the proceedings. Yousef appeared to answer the claims of the Plaintiffs. Yousef offered a resolution to the dispute that was not accepted by the Plaintiffs but was accepted by the Court.
Having considered the Bill of Costs of the Defendant Yousef as filed with the Court, and having considered Rule 49.10 and the Offer made by Yousef, that was made with the consent of all Defendant beneficial owners, I find that Yousef is entitled to substantial indemnity costs from October 30, 2020 to December 17, 2020.
As for the amount of costs payable to Yousef, having considered the general principles and factors in exercising my discretion as outlined at Rule 57.01 of the Rules of Civil Procedure, I find that the amount of time spent by Mr. Nuri to be reasonable (subject to adjustments for duplication between counsel and some other adjustments). Mr. Nuri is a skilled litigator and the hourly fee charged by him, his associate and law clerk are appropriate. Having reviewed the Defendant Yousef’s Bill of Costs, I fix the Defendant Yousef’s costs at $12,000.00 inclusive of HST plus $2,511.78 for disbursements for a total amount of $14,511.78.
This now leads me to the question of who should bear Yousef’s costs of the motion.
There is no evidence that Yousef was aware that the sale closed on December 7, 2020 and there is no evidence that Yousef received his proceeds of sale on December 7, 2020. However, at least one or more of the Defendant beneficial owners were aware that the property had been sold and at least one or more of the Defendants chose to remain silent.
Having considered the “new evidence” that the property had been sold prior to the hearing, it is my view in the exercise of my discretion that this fact disentitles any Defendant, including Yousef, from obtaining costs for the motion directly from the Plaintiffs. At least one or more of the Defendant beneficial owners of the property were aware that the property closing had been moved forward. At least one or more of the Defendant beneficial owners of the property were aware that the December 17, 2020 motion had been rendered moot. At least one or more of the Defendant beneficial owners of the property determined that the sale would be moved forward from December 21, 2020 to December 7, 2020, and through deception whether express or implied, made a mockery of the court proceedings.
It is appropriate in the present case that Yousef also receive his costs to be paid from the fund, being the net proceeds of sale of 24 Sanderson Crescent, Richmond Hill.
Accordingly, pursuant to Rule 58.08 (2), I order that the Defendant Yousef’s costs for the motion fixed at $14,511.78 inclusive, shall be paid within 30 days from the fund being the net proceeds of sale of 24 Sanderson Crescent, Richmond Hill. As 22.5% of the proceeds have been paid into Court, the Defendant Yousef shall be paid the sum of $3,265.15 from those proceeds paid into Court on account of the Plaintiffs’ proportionate share. In the event the remaining proceeds of sale have already been distributed to the remaining beneficial owners, the remaining costs totaling $11,246.63 shall within 30 days of the date herein be paid by the remaining beneficial owners, being the Defendants, Nima, Yousef, Shadi and Rouhollah, jointly and severally, as they may agree and failing agreement to be paid proportionally in accordance with their beneficial ownership share.
Madam Justice S. J. Woodley