COURT FILE NO.: CV-17-580143
DATE: 20210813
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Ruoqi wanG
Plaintiff
- and -
ahmad rezapoor
Defendant
Andrew Ostrom, for the Plaintiff
Stefan Juzkiw, for the Defendant
HEARD at Toronto: in writing
Reasons for Decision RE COSTS
DAVIES J.
A. Overview
[1] Ruoqi Wang sued Ahmad Rezapoor for damages arising from a failed real estate transaction. Ms. Wang brought a summary judgment motion, which I granted on March 1, 2021 (Wang v. Rezapoor, 2021 ONSC 1466). Mr. Rezapoor was ordered to pay Ms. Wang $161,951.40 in damages.
[2] Ms. Wang now seeks $15,975 in costs. She argues that she is entitled to costs on a partial indemnity basis up to the date on which she served an offer to settle. She argues that she is entitled to costs on a substantial indemnity basis for the costs incurred thereafter. Ms. Wang argues that Mr. Rezapoor’s conduct throughout this matter also justifies something more than partial indemnity costs.
[3] Mr. Rezapoor takes the position that costs should be fixed at no more than $8,000, which is less than Ms. Wang’s costs on a partial indemnity scale. Mr. Rezapoor argues that a reduced cost award is justified for several reasons. First, Mr. Rezapoor argues that Ms. Wang was not entirely successful on the application. Second, Mr. Rezapoor argues that costs claimed are excessive. Third, Mr. Rezapoor argues that his conduct throughout this matter was reasonable. Finally, Mr. Rezapoor argues that he is under a disability and is of modest means.
[4] I find that Ms. Wang is entitled to costs on a partial indemnity scale to the date of her offer to settle and thereafter she is entitled to her costs on a substantial indemnity scale. Mr. Rezapoor is ordered to pay Ms. Wang $15,975 in costs. Given that Mr. Rezapoor appears to be of modest means, he will be given 90 days to pay.
B. Was Ms. Wang Successful on the Summary Judgment Application?
[5] Mr. Rezapoor takes the position that Ms. Wang should be awarded no more than $8,000 in costs because she was not entirely successful on the summary judgment motion. I disagree.
[6] Ms. Wang was entirely successful on the summary judgment motion. She was awarded the full damages she sought on the summary judgment motion. Mr. Rezapoor agreed to pay $738,000 for Ms. Wang’s house. Mr. Rezapoor gave Ms. Wang an $18,000 deposit but failed to close. Ms. Wang ultimately sold her house for $605,000. The damages awarded to Ms. Wang represents the difference between the price Mr. Rezapoor agreed to pay and the eventually sale price (less Mr. Rezapoor’s deposit) plus all the legal fees, mortgage fees, interest and insurance costs incurred by Ms. Wang to carry the property.
[7] Costs are discretionary. Every costs award must be fair and reasonable in all the circumstances: Boucher v. Public Accountants Council for the Province of Ontario, 2004 CanLII 14579 (ON CA) at para. 24. Nonetheless, as the successful party Ms. Wang is presumptively entitled to costs on a partial indemnity scale. I should not depart from the presumption in favour of awarding Ms. Wang costs without a good reason to do so: Bell Canada v. Olympia & York Development, 1994 CanLII 239 (ON CA), [1994] O.J. No. 343.
[8] Mr. Rezpaoor argues that he is of limited means and suggests his financial circumstances justify a departure from the general rule. While I am sympathetic to Mr. Rezapoor’s position, it would not be reasonable to award costs below partial indemnity in the circumstances of this case.
[9] Mr. Rezapoor litigated this matter in a way that added significantly to its cost and complexity. He initially pleaded that the agreement of purchase and sale (APS) was not enforceable because Ms. Wang misrepresented to him that the property could be subdivided. Mr. Rezapoor swore an affidavit on the summary judgment motion that was completely inconsistent with his statement of defence. On the summary judgment motion, Mr. Rezapoor took the position that he did not sign the APS and the signatures on the APS were forged. Mr. Rezapoor also took the position on the summary judgment motion that he was not capable of entering a contract at the time the APS was signed because he was on pain medication.
[10] Mr. Rezapoor did not seek to amend his statement of defence. Nor did he seek to withdraw the admissions in his statement of defence that he signed the APS and paid an $18,000 deposit towards the purchase price of the property. He simply advanced a new defence and did not adduce any evidence in support of the allegations of fraud and misrepresentation in his statement of defence. Mr. Rezapoor’s change in position made this matter unnecessarily complicated and costly. He cannot now complain the costs incurred by Ms. Wang are too high.
[11] There is no reason to depart from the general rule that Ms. Wang, as the successful party, is entitled to her costs on a partial indemnity basis at a minimum. The real issue is whether Ms. Wang should be awarded some or all of her costs on a substantial indemnity scale.
C. Rule 49 Offer to Settle
[12] Ms. Wang made a formal offer to settle on March 29, 2018.
[13] Rule 49.10(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, says that if the plaintiff makes an offer to settle that is not accepted by the defendant and if the plaintiff secures a judgment that is more favourable than the offer, the plaintiff is entitled to partial indemnity costs to the date of the offer and substantial indemnity costs from that date unless the Court orders otherwise. The burden is on Ms. Wang to establish that rule 49.10(1) applies in this case.
[14] For rule 49.10(1) to apply, four conditions must be the met:
• The offer was made seven days before the summary judgment motion,
• The offer was not withdrawn and did not expire before the summary judgment motion,
• Mr. Rezapoor did not accept the offer, and
• Ms. Wang secured a judgment that was more favourable than her offer.
[15] I am satisfied that rule 49.10(1) applies in this case. Ms. Wang served her offer to settle more than 18 months before the summary judgment motion. The offer was not withdrawn and it did not expire before the summary judgment motion was heard. Ms. Wang offered to settle her claim for $50,000 including costs. As a condition of the offer, Mr. Rezapoor would also forfeit his $18,000 deposit. Ms. Wang was awarded more in damages on the summary judgment motion than her offer to settle.
[16] The Court of Appeal has made it clear that the cost consequences in rule 49.10(1) should be imposed when the rule applies. I should only depart from the general rule if I find that it is in the interests of justice to do so after considering the policy rationale for the rule and the value of consistency in its application: Starkman v. Starkman, (1990) 1990 CanLII 6793 (ON CA), 75 O.R. (2d) 19.
[17] I am not satisfied that the interests of justice require a departure from rule 49.10(1) in this case. Ms. Wang is entitled to partial indemnity costs to March 29, 2018 and she is entitled to her costs on a substantial indemnity scale for work done thereafter.
D. Unsubstantiated allegations of fraud
[18] In his statement of defence, Mr. Rezapoor alleged that Ms. Wang misrepresented the size of her property and also misrepresented that it could be subdivided into two lots. Mr. Rezapoor pleaded that the ASP was void and unenforceable because of Ms. Wang’s fraud or misrepresentation. Mr. Rezapoor also pleaded that his $18,000 deposit should be returned to him because of Ms. Wang’s fraud or misrepresentation. Mr. Rezapoor tried to advance a different defence on the summary judgment motion and did not adduce any evidence to support the serious allegations he made against Ms. Wang.
[19] Substantial indemnity costs are often awarded when an unsuccessful party makes unproven allegations of fraud or deceit: Murano v. Bank of Montreal, 1998 CanLII 5633 (ON CA). Recklessly attacking the integrity of a party is extremely serious. Higher cost awards are one way for the Court to denounce litigants who make meritless allegations of fraud or dishonesty and to deter other litigants from engaging in similar conduct: Manning v. Epp, 2006 CanLII 35631 (ON SC) at para. 8.
[20] The fact that Mr. Rezapoor made unsubstantiated allegations of fraud and deceit against Ms. Wang further justifies an enhanced cost award in this case.
E. Are the costs claimed excessive?
[21] Mr. Rezapoor argues that the number of hours counsel spent on the summary judgment is excessive. I disagree.
[22] Counsel spent less than 10 hours preparing the summary judgment motion record.
[23] Counsel spent less than 5 hours preparing to cross-examine Mr. Rezapoor on his affidavit in which he advanced an entirely new defence. Mr. Rezapoor’s affidavit was more than 150 pages long with the attachments. The attachments included several letters and reports from Mr. Rezapoor’s treating physicians. The attachments also included a report from a forensic document examiner in support of Mr. Rezapoor position that he did not sign the APS. I ultimately found that all the reports and letters were inadmissible hearsay. Nonetheless, Ms. Wang’s counsel had to review the reports and, quite reasonably, cross-examined Mr. Rezapoor on the content of those reports.
[24] Counsel spent just over 6 hours preparing the factum and 3 hours preparing for oral argument on the summary judgment motion.
[25] It was entirely reasonable for counsel to spend 23.7 hours preparing for the summary judgment motion, particularly in light of the fact that Mr. Rezapoor raised an entirely new defence in his response to the motion.
F. Conclusion
[26] In fixing costs, I must assess the reasonableness of the costs, particularly from the perspective of the losing party: Davies v. Clarington (Municipality), 2009 ONCA 722 at para. 52. The hours spent and the rates charged by Ms. Wang’s counsel are relevant. But fixing costs is not simply a mathematical exercise whereby the court multiplies the hours claimed by counsel’s hourly rate: Ontario v. Rothmans Inc., 2013 ONCA 353 at para. 134, Coldmatic Refrigeration of Canada Ltd. v. Leveltek Processing LLC, 2005 CanLII 1042 (ON CA) at para. 8. Rather, I must consider what is reasonable in the circumstances of this case.
[27] Rule 57.01 sets out several factors I can consider in assessing what would be reasonable, including the time spent, the experience of counsel, the results achieved, the complexity of the matter, the conduct of the parties and the amount the unsuccessful party could reasonably expect to pay.
[28] Mr. Rezapoor did not submit a costs outline. I, therefore, have no basis to compare the costs claimed by Ms. Wang to the costs incurred by Mr. Rezapoor. Nevertheless, I am satisfied that the hourly rate charged by Ms. Wang’s lawyer is reasonable given his level of experience. I am also satisfied that the hours he spent are reasonable in light of the complexity of the issues.
[29] It is reasonable to expect Mr. Rezapoor to pay $15,975 in costs given that he made unsubstantiated allegations of fraud and misrepresentation against Ms. Wang, he rejected Ms. Wang’s reasonable offer to settle, he unduly complicated the case by advancing conflicting defences and adducing evidence in an inadmissible form, and he was unsuccessful on the motion.
[30] Mr. Rezapoor is still quite young and has had significant health issues. After several unsuccessful attempts, he received his real estate licence in early 2018. In January 2020, he was practicing real estate with his father. Mr. Rezapoor filed his 2020 tax return as part of his cost submissions. His tax return shows he reported $29,000 in income in 2020.
[31] Mr. Rezapoor is ordered to pay Ms. Wang $15,975 in costs. Given the evidence of Mr. Rezapoor’s modest income, he will be given 90 days to pay this costs order.
Davies J.
Released: August 13, 2021
COURT FILE NO.: CV-17-580143
DATE: 20210813
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Ruoqi wanG
Plaintiff
- and -
ahmad rezapoor
Defendant
REASONS FOR DECISION
Davies J.
Released: August 13, 2021