COURT FILE NO.: CV-19-00624020
DATE: 20211104
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Evgeni Evdassin
Applicant
– and –
Toronto Standard Condominium Corp. No. 1724
Respondent
Jonathan Shulman, for the Applicant
John De Vellis and Inderpreet Suri, for the Respondent
HEARD: in writing
Davies J.
REASONS FOR Decision ON COSTS
A. Overview
[1] Mr. Evdassin owns and lives in a unit in the condominium building operated by Toronto Standard Condominium Corporation No. 1724 (“the Condominium”).
[2] In 2017, the Condominium discovered the building was constructed using Kitec pipes, which are known to fail. The Condominium passed a resolution requiring owners to replace the Kitec pipes in their units. When Mr. Evdassin failed to replace his pipes, the Condominium brought an application under s. 134 of the Condominium Act, 1998, S.O. 1998, c.19, for a compliance order to force him to do so. The Condominium also sought a compliance order to prohibit Mr. Evdassin from abusing, harassing, threatening or intimidating anyone employed by the Condominium. I granted the application in part. I ordered Mr. Evdassin to allow the Condominium’s contractors to enter his unit to replace the Kitec pipes: TSCC No. 1724 v. Evdassin, 2020 ONSC 1520, 18 R.P.R. (6th) 136.
[3] In a separate ruling, I ordered Mr. Evdassin to pay $11,446.82 in costs on the Condominium’s compliance order application: TSCC No. 1724 v. Evdassin, 2020 ONSC 2673. The Condominium had sought full indemnity costs on its application totalling $22,906.93. I ordered Mr. Evdassin to pay costs on a partial indemnity basis only.
[4] Rather than simply enforcing the cost order I made, the Condominium demanded payment of its full fees from Mr. Evdassin under s. 134(5) of the Condominium Act and s. 2.2 of its Declaration. The Condominium advised that the $29,572.90 would be added to Mr. Evdassin’s common expenses. Mr. Evdassin did not pay the amount demanded so the Condominium registered a lien on his unit in the amount of $30,689.59 (the outstanding common expenses plus $681.64 in interest and $435.05 in legal fees to collect the expenses).
[5] Mr. Evdassin brought an application for a declaration that the lien is invalid. I dismissed his application and found the lien was valid: Toronto Standard Condominium Corporation No. 1724 v. Evdassin, 2021 ONSC 6271.
[6] The Condominium now seeks full indemnity costs on Mr. Evdassin’s application in the amount of $23,905.99. The Condominium argues that it is entitled to enhanced costs because Mr. Evdassin refused to accept a reasonable offer to settle and because Mr. Edvassin’s conduct has been reprehensible. The Condominium also argues that it is entitled to full indemnity costs under its Declaration and the Condominium Act.
[7] Mr. Evdassin did not file any submissions on the issue of costs.
[8] There are three issues for me to decide:
i. Does Mr. Evdassin’s conduct justify an enhanced costs order?
ii. Do the Condominium Act and the Condominium’s Declaration justify an order for full indemnity costs?
iii. Are the hours and rates claimed by the Condominium reasonable?
[9] I find that Mr. Evdassin’s conduct during this matter justifies an enhanced cost order. I also find that in the unique circumstances of this case a full indemnity costs order is appropriate to bring this matter to a final conclusion. Mr. Evdassin is ordered to pay the Condominium $23,905.99 in costs.
B. Does Mr. Evdassin’s conduct justify an enhanced costs order?
[10] As the successful party, the Condominium is presumptively entitled to costs on a partial indemnity scale. Costs on a higher scale can be awarded if I find Mr. Evdassin’s conduct during the litigation or leading up to the litigation was reprehensible, scandalous or outrageous and, therefore, worthy of sanction: Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3; Davies v. Clarington (Municipality) et al., 2009 ONCA 722, 100 O.R. (3d) 66, at para. 29.
[11] When a court wants to censure the conduct of a party with an elevated costs award, a substantial indemnity scale is normally used to calculate the costs. However, full indemnity costs can be awarded if the conduct worthy of sanction is especially egregious: Net Connect Installation Inc. v. Mobile Zone Inc., 2017 ONCA 766, 140 O.R. (3d) 77, at para. 8.
[12] The Condominium argues it is entitled to an elevated costs order for two reasons. First, the Condominium argues that an enhanced cost order is justified because Mr. Evdassin rejected its reasonable offer to settle. Second, the Condominium argues that Mr. Evdassin’s conduct was reprehensible.
a. Relevance of the offer to Settle
[13] On January 21, 2021, Mr. Evdassin served and filed his Notice of Motion seeking a declaration of invalidity of the lien, and his counsel requested a case conference to schedule the motion.
[14] A case conference was held on January 26, 2021 and the matter was scheduled to be heard on April 9, 2021. A timetable was established for the exchange of materials. Cross-examinations were to be completed by March 2, 2021 and the Condominium’s factum was due on March 29, 2021.
[15] The hearing did not proceed on April 9, 2021 because of a conflict in my schedule. Counsel were advised of the conflict on April 7, 2021.
[16] On March 31, 2021 – 10 days before the scheduled hearing – the Condominium made an offer to settle for $23,937.88 or 78% of the amount owing under the lien. The offer remained open until 5 minutes after the hearing commenced. The only condition on the offer was that if Mr. Evdassin accepted the offer after April 5, 2021, the Condominium would be entitled to partial indemnity costs from April 5, 2021 until the date the offer was accepted. Mr. Evdassin did not accept the Condominium’s offer.
[17] Rules 49.10 and 49.13 of the Ontario Rules of Civil Procedure, R.R.O. 1990, Reg. 194 define the circumstances in which an offer to settle is relevant to costs. The cost consequences in Rule 49.10 do not apply when, as here, an offer is served by a defendant and the Applicant recovers nothing: Schwark v. Cutting, 2010 ONCA 299, 57 E.T.R. (3d) 1, at para. 6.
[18] Rule 49.13 says that I can consider the Condominium’s offer in my exercise of discretion with respect to costs. But rule 49.13 does not fundamentally change the law governing elevated cost awards. Costs awards on a scale higher than partial indemnity are still only appropriate on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made: Davies, at paras. 28-30. In other words, if I find that Mr. Evdassin’s conduct was reprehensible it is open to me to award costs on an enhanced scale and, in those circumstances, it would be open to me to consider the offer to settle when fixing the costs.
b. Was Mr. Evdassin’s conduct reprehensible or worthy of sanction?
[19] In my view, Mr. Evdassin’s conduct was especially reprehensible and worthy of sanction. To be clear, it was counsel’s conduct that was reprehensible and worthy of sanction. However, I am entitled to assume that Mr. Evdassin’s counsel was acting on his client’s instructions when he acted in an outrageous and reprehensible manner. During the last appearance on this matter, Mr. Evdassin also confirmed that he had confidence in his counsel and how his counsel had handled his application.
[20] After the hearing of Mr. Evdassin’s application on July 6, 2021, it came to light that the Law Society of Ontario had suspended Mr. Evdassin’s lawyer, Jonathan Shulman. The suspension took effect after the application materials were filed, but before the application was argued. I convened a hearing on September 3, 2021 to receive submissions on what impact, if any, Mr. Shulman’s suspension had on my jurisdiction to rule on Mr. Evdassin’s application to set aside the lien. During that hearing, I gave Mr. Evdassin an opportunity to make submissions on his own behalf. Mr. Evdassin said he understood the implications of Mr. Shulman’s suspension. He told me he had confidence in Mr. Shulman and wanted me to rely on Mr. Shulman’s submissions to rule on his application. This supports my assumption that Mr. Shulman was acting on Mr. Evdassin’s instructions.
[21] There are six aspects of counsel’s conduct that are especially outrageous and reprehensible.
[22] First, Mr. Evdassin’s counsel made repeated, unsubstantiated allegations of professional misconduct against counsel for the Condominium. Mr. Shulman accused counsel for the Condominium of misleading the court, violating court orders, abusing the Court process and being in a conflict of interest. None of Mr. Shulman’s allegations against opposing counsel have been substantiated in any way. Making unproven allegations of misconduct is a recognized basis for making an enhanced costs award: Catford v. Catford, 2013 ONCA 58, at para. 4.
[23] Second, Mr. Evdassin’s counsel repeatedly requested interim injunctive relief during case conferences without notice to the Court or opposing counsel and without any supporting materials.
[24] Third, Mr. Evdassin’s counsel repeatedly failed to respond in a timely manner to correspondence from opposing counsel and the Court. Two case conferences were scheduled which would have been unnecessary if Mr. Shulman had responded to counsel or the court. Mr. Shulman’s conduct added significantly to the cost and complexity of the matter. One of the case conferences, which was convened for the sole purpose of setting a new date for the application, lasted more than 90 minutes because Mr. Shulman was argumentative, disruptive and belligerent.
[25] Fourth, Mr. Evdassin’s position on his application to set aside the lien was entirely without merit. He argued that the Condominium was not entitled to recover any costs beyond what I ordered him to pay. That position is inconsistent with the plain language of the Condominium Act and the Condominium’s Declaration. It is also inconsistent with the Court of Appeal’s decision in MTCC No. 1385 v. Skyline Executive Properties, 2005 CanLII 13778 (ON CA), 253 D.L.R. (4th) 656. Finally, it was inconsistent with my reasons on costs in this case, in which I wrote the following, at paras. 15-16:
The Condominium’s argument seems to be that it intends to register the actual costs incurred against Mr. Evdassin’s common expenses under s. 134(5) of the Condominium Act and the Declaration, so it only makes sense for my order to reflect the full amount as well. In my view, this argument conflates the Court’s obligation to determine what costs are reasonable and just with the Condominium’s authority to enforce a costs order and recover additional actual costs beyond those ordered by the Court. As Doherty J.A. held in Skyline, the availability of this enforcement mechanism in s. 134(5) of the Act does not in any way derogate from the Court’s jurisdiction to determine the appropriate award of costs as between the parties.
Cost awards on a full indemnity scale have been granted in some cases where a Condominium corporation obtained a compliance order against a unit owner who had breached the Act or rules. The rationale for granting costs on a full indemnity basis in those cases is that it would not be fair or equitable for innocent unit owners to bear the costs of the Condominium corporation pursuing a compliance order against a unit owner for their breach of the rules. In other words, if Mr. Evdassin is not required to pay the full costs of the litigation, the innocent, compliant unit owners would have to bear the burden of the remaining legal fees incurred by the Board, which would be unfair. This argument is compelling but is fully addressed by s. 134(5) of the Condominium Act which provides a mechanism for the Condominium to recover its actual costs for obtaining a compliance order should it choose to do so. [citations omitted]
[26] I made it clear to Mr. Evdassin in my original costs order that even though I was only ordering costs on a partial indemnity basis, the Condominium could recover its full costs through another mechanism.
[27] Fifth, Mr. Evdassin argued that he had already paid some of the Condominium’s legal fees that formed the basis for the lien. This argument amounts to a suggestion that the Condominium’s lien was fraudulent. The documents filed by Mr. Evdassin did not support this allegation of fraud. Unsubstantiated allegations of fraud are another recognized basis for granting an enhanced costs award: Catford, at para. 4.
[28] Sixth, Mr. Evdassin failed to respond to the Condominium’s efforts to settle the issue of costs. In my reasons dismissing Mr. Evdassin’s application to set aside the lien, I strongly urged the parties to settle the costs to bring finality to this litigation. Counsel for the Condominium reached out to Mr. Evdassin’s counsel to discuss the issue. Rather than engage in a meaningful discussion on the issue of costs, Mr. Shulman threatened to report the Condominium’s counsel to the law society and to issue a claim against counsel personally for negligence and libel. Mr. Shulman also suggested that the Condominium’s counsel was in a conflict of interest.
[29] Any one of the concerns I have identified could justify an enhanced cost order. Viewed cumulatively, however, Mr. Shulman’s conduct was especially outrageous. His conduct is particularly egregious in light of the entirely reasonable settlement offer made by the Condominium. Had Mr. Evdassin accepted the reasonable offer to settle, significant cost would have been saved and the Condominium would not have been subjected to his abusive conduct. In my view, this is one of the rare cases where costs on a full indemnity basis are justified because Mr. Evdassin’s conduct was so reprehensible and abusive.
[30] The Condominium argues that I should also consider the fact that Mr. Shulman has made allegations against the court when assessing Mr. Evdassin’s conduct. In an email sent to the Court, Mr. Shulman said he intends to file a complaint with the Human Rights Tribunal of Ontario. He claims I failed to adequately accommodate him during the hearing on September 3, 2021. He also said he intends to file a complaint against me with the Judicial Council. I asked the Regional Senior Justice’s office to respond to Mr. Shulman’s correspondence about his complaints and I do not know whether any complaint has been filed. In exercising my discretion on the issue of costs, I have not considered counsel’s comments about his intention to file a complaint against me.
[31] Making a complaint or an allegation against the court is different than making unsubstantiated allegations of fraud or professional misconduct against an opposing party or counsel. Making unsubstantiated allegations about an opposing party will often justify an enhanced costs award to vindicate the innocent party or compensate the target of the unsubstantiated allegations for damage done. The Court has no interest to vindicate. In addition, requiring one party to pay enhanced costs to the other party will not compensate for the harm caused by an unfounded allegation against the Court. To the extent a complaint or allegation against the Court is unfounded, that will be determined in a separate process. It is not something to be considered on the issue of costs: Aganeh v. Aganeh, 2017 ONSC 6386, at para. 29.
C. What is the relevance of the Condominium Act and Declaration?
[32] The Condominium argues that it is also entitled to full indemnity costs under s. 134(5) of the Condominium Act and its Declaration.
[33] The Condominium made the same argument for full indemnity costs on its initial application for a compliance order against Mr. Evdassin. The Condominium argued that if Mr. Evdassin were not ordered to pay the full costs of the litigation, the innocent, compliant unit owners would have to bear the burden of the remaining legal fees incurred by the Board, which would be unfair. While this is a compelling argument, I declined to order full indemnity costs on the Condominium’s original application. I found that s. 134(5) of the Condominium Act and s. 2.2 of the Condominium’s Declaration create an enforcement mechanism only. The Act and Declaration do not change the Court’s jurisdiction and obligation to determine the appropriate award of costs as between the parties: Skyline, at para. 50. Nor do they require the Court to grant full indemnity costs. However, I expressly found that the Condominium could recover its actual costs for obtaining a compliance order without a Court order should it wish to do so.
[34] I remain of the view that the Condominium Act and the Condominium’s Declaration do not provide an independent basis for me to award costs on a full indemnity scale. However, Mr. Evdassin’s application to set aside the lien highlights the difficulties that can arise when the legislative regime allows Condominium corporations to recover more than what the Court orders in costs. If I were not satisfied that Mr. Evdassin’s conduct justifies full indemnity costs, there would likely be further litigation between the parties. The Condominium would likely again try to collect its full legal fees for Mr. Evdassin’s application as common expenses (which it is entitled to do under the Condominium Act and its Declarations). Mr. Evdassin would likely dispute the amount of the common expenses assessed by the Condominium. The Condominium would likely register another lien if Mr. Evdassin did not pay the common expenses for its full fees. And Mr. Evdassin would likely bring another application to set aside that lien.
[35] It is not in anyone’s interests for the parties to continue to fight over the costs of this litigation and incur further costs in the process. I am hopeful that this costs order will finally bring an end to the litigation between the parties.
D. Are the costs claimed reasonable?
[36] Having decided that Mr. Evdassin’s conduct justifies costs on a full-indemnity scale, I must still be satisfied that the costs claimed by the Condominium are reasonable, meaning they reflect the fair and reasonable expectations of the unsuccessful litigant: Davies, at para. 52; Boucher v. Public Accountants Council for the Province of Ontario, 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291, (C.A.) at para. 24.
[37] The costs and disbursements claimed by the Condominium on full indemnity basis total $23,905.99.
[38] In total, the Condominium’s counsel spent 56.2 hours preparing for the hearing. This includes reviewing Mr. Evdassin’s application record, preparing responding materials, corresponding or attempting to correspond with Mr. Evdassin, uploading materials to CaseLines and attending case conferences. It should be noted that notwithstanding Mr. Shulman’s abusive conduct, the Condominium’s counsel assisted him in uploading Mr. Evdassin’s materials to CaseLines.
[39] I am satisfied that the hours claimed by the Condominium are reasonable. Even though there were no cross-examinations in this case, the issues raised by Mr. Evdassin required the Condominium to prepare a detailed responding application record to demonstrate, for example, that the payments made by Mr. Evdassin were not related to the lien in question. Mr. Evdassin challenged the validity of the lien on several grounds, which each required a response from the Condominium.
[40] There were also several case conferences in this matter which could have been avoided if Mr. Evdassin’s counsel was more responsive to inquiries from counsel and the Court. I find that Mr. Shulman’s conduct unnecessarily lengthened the duration of the proceedings.
[41] I am also satisfied that the rates charged by counsel are reasonable given their years of experience. Much of the work on the file was done by a junior lawyer or articling student at a lower hourly rate than primary counsel’s, which is entirely appropriate.
[42] I asked Mr. Shulman to submit a Bill of Costs following the hearing. One of the factors I can consider in assessing costs is the amount of costs an unsuccessful party could reasonably expect to pay. One way for the court to determine what an unsuccessful party could reasonably expect to pay is to compare the Bill of Costs of the winning and losing party. Mr. Shulman failed to provide me with his Bill of Costs. Without it, I do not know, for example, how much time Mr. Shulman spent preparing for the Application or what hourly rate he was charging Mr. Evdassin.
[43] Even without a Bill of Costs from Mr. Shulman, I am satisfied that the costs claimed by the Condominium are reasonable in all the circumstances. Mr. Evdassin is ordered to pay the Condominium $23,905.99 in costs inclusive of HST and disbursements.
Davies J.
Released: November 4, 2021
COURT FILE NO.: CV-19-00624020
DATE: 20211104
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Evgeni Evdassin
Applicant
– and –
Toronto Standard Condominium Corp. No. 1724
Respondent
REASONS FOR DECISION ON COSTS
Davies J.
Released: November 4, 2021