COURT FILE NOS.: CV-19-00616377-0000 and CV-19-00630372-0000
DATE: 20210913
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
2598508 ONTARIO INC.
Applicant
– and –
2394049 ONTARIO INC. o/a GOODMAN GREEN SOLUTIONS
Respondent
Amandeep S. Dhillon and Rahul Gandotra, for the Applicant
Bernard Gasee and Derek Ketelaars, for the Respondent
AND BETWEEN:
2394049 ONTARIO INC.
Applicant
– and –
2598508 ONTARIO INC., KALEXIA DEVELOPMENT CORP., HURON REALTY LIMITED PARTNERSHIP, ACRE REALTY INVESTMENT MANAGEMENT INC., KAI XU and QUIN XU
Respondents
Bernard Gasee and Derek Ketelaars, for the Applicant
Amandeep S. Dhillon and Rahul Gandotra, for the Respondents
HEARD: September 13, 2021
VERMETTE J.
ENDORSEMENT AS TO COSTS
[1] On July 30, 2021, I released reasons for judgment in these applications granting the relief sought by the Applicant 2598508 Ontario Inc. (“259”)[^1] and dismissing the Cross-Application of 2394049 Ontario Inc. operating as Goodman Green Solutions (“GGS”). The parties were not able to agree on costs and have delivered costs submissions and bills of costs.
Positions of the parties
a. 259’s submissions
[2] 259 seeks costs of both Applications on a substantial indemnity basis in the amount of $75,408.47. It submits that GGS’s conduct unnecessarily lengthened the proceedings, increased the costs incurred by 259 and warrants an award on a substantial indemnity basis. Among other things, 259 refers to a number of adjournments allegedly caused by GGS and significant difficulties in scheduling cross-examinations. It also states that GGS willfully and intentionally delayed the litigation for almost two years by commencing its Cross-Application which was devoid of merit.
[3] 259 relies on two Rule 49 offers to settle that it served on January 5, 2021 and argues that its offers to settle were more favourable to GGS than the judgment rendered at trial. 259 submits that pursuant to Rule 49.10 of the Rules of Civil Procedure, it is entitled to its costs on a substantial indemnity basis from January 5, 2021. If this Court only grants costs on a substantial indemnity basis from the date of the offers to settle, the amount of costs sought by 259 is $19,796.62 on a partial indemnity basis for the period preceding its offers to settle and $46,793.06 on a substantial indemnity basis from the date of its offers to settle, for a total of $66,589.68.
[4] With respect to quantum, 259 states that the amount of work done and the costs incurred by 259 in respect of both Applications should not be compared to GGS’s bill of costs – which totals $46,508.89 on a substantial indemnity basis and $31,486.67 on a partial indemnity basis – because, among other things, GGS’s bill of costs does not include the time of all the lawyers of record who worked on the matter, notably Diana Young.
b. GGS’s submissions
[5] GGS submits that it was reasonable and appropriate for GGS to litigate the Application and the Cross-Application, and that any delay in litigating the proceedings (which it denies) can be explained to a significant extent by the COVID-19 pandemic. According to GGS, this is not an extreme case where the conduct of GGS should or could warrant an award of substantial indemnity costs.
[6] GGS argues that 259’s success in the proceedings turned on novel points of law regarding the definition of a “prepayment” under a mortgage and the application of the principles set out in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 to the interpretation of mortgages. According to GGS, this militates in favour of significantly lessening and mitigating any costs consequences of the Application and Cross-Application. GGS also argues that any costs award to 259 should be reduced further as a result of the following: (a) 259 was entirely unsuccessful with respect to certain arguments; and (b) the amounts at stake were relatively small.
[7] Finally, GGS submits that this Court should not consider 259’s Rule 49 offers to settle dated January 5, 2021 as they were not a real compromise of the claims and, as a result, they were not true offers to settle.
Scale of costs
[8] Substantial indemnity costs are only warranted in rare and exceptional cases where a party has engaged in behaviour worthy of sanction, such as where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties: Davies v. Clarington (Municipality), 2009 ONCA 722 at paras. 28-33. In my view, the conduct of GGS in this case does not rise to the egregious level required to award costs on a substantial indemnity basis. Hard-fought litigation is insufficient to justify an elevated costs award: see Davies v. Clarington (Municipality), 2009 ONCA 722 at paras. 42-46.
[9] However, the difficulties caused by GGS’s conduct and unresponsiveness during the litigation, as well as the fact that it chose to allege – unsuccessfully – a settlement between the parties which required the Applications to proceed by way of trial, are relevant factors to take into account when assessing the reasonableness of the quantum of costs sought by 259, both in general and when considered in light of the amounts in issue in the Applications.
Rule 49 Offers
[10] 259’s offer to settle dated January 5, 2021 with respect to its Application is for the entirety of the amount it was claiming, i.e. $35,971.08. The only “compromise” in the offer is that 259’s costs from January 5, 2021 until 10:00 a.m. on February 1, 2021 were to be paid on a partial indemnity basis instead of substantial indemnity basis.
[11] 259’s offer to settle of the same date with respect to GGS’s Cross-Application provided that 259 and the other Respondents in the Cross-Application would pay to GGS the sum of $100.00 in full and final settlement of the Cross-Application, and that the Cross-Application would be dismissed on a without costs basis.
[12] An offer to settle need not contain an element of compromise to qualify as an offer that will attract costs consequences under Rule 49.10 of the Rules of Civil Procedure. However, the court has a very narrow discretion to deny the costs consequences of this Rule and may consider the absence of compromise together with other factors when considering whether to depart from the normal rule imposing costs consequences: OPB Realty Inc. v. Canada International Medical Suppliers Company Limited, 2015 ONSC 6 at para. 7 and Walker Estate v. York Finch General Hospital (1999), 1999 CanLII 2158 (ON CA), 43 O.R. (3d) 461 (C.A.).
[13] In my view, 259’s offers to settle have to be considered globally given the significant overlap between the Application and the Cross-Application and the way they were litigated. When they are considered together, the offers to settle do include an element of compromise, although not a significant one. Further, I am of the view that, in the circumstances of this case, fairness and the interests of justice do not require a departure of the normal costs consequences under Rule 49.10 of the Rules of Civil Procedure.
[14] As a result, 259 is entitled to costs on a substantial indemnity basis from the date of its offers to settle.
Quantum
[15] I reject GGS’s argument that this case raised a novel point of law regarding the definition of a “prepayment” under a mortgage. As stated in paragraph 81 of my Reasons for Judgment, there is no accepted definition of “prepayment” and this case turned on the specific wording and interpretation of the prepayment clause in the mortgage in question.
[16] I also reject GGS’s suggestion that I should parse the arguments made by the parties in the proceedings and allocate or “subtract” costs based on which argument was successful or unsuccessful. 259 was successful on the Applications and is entitled to its costs. None of the unsuccessful arguments that 259 raised had any significant impact on the length or complexity of the proceedings.
[17] I conclude from my review of 259’s bill of costs that the hours spent by 259’s lawyers and the costs sought by 259 are generally reasonable in the circumstances. However, I will apply a small reduction to ensure the overall reasonableness of the costs award in light of all the circumstances of this case (including the amount in issue and the factors mentioned in paragraph 9 above) and to take into account potential duplication of work given the number of timekeepers involved.
Conclusion
[18] Taking the foregoing into account, as well as the factors set out in Rule 57.01(1) of the Rules of Civil Procedure, I find that the fair and reasonable award of costs in favour of 259 for the Application and the Cross-Application, on a partial indemnity basis until January 5, 2021 and on a substantial indemnity basis from that date, is in the all-inclusive amount of $60,000.00. In my view, this is an amount that GGS should reasonably have expected to pay in the event that it was unsuccessful on the Applications, especially given the Rule 49 offers and the fact that this matter had to proceed to trial.
[19] The costs are to be paid by GGS within 30 days.
Vermette J.
Released: September 13, 2021
[^1]: References to 259 in this endorsement include 259 and all the Respondents to the Cross-Application brought by GGS.