COURT FILE NO.: CV-19-618378
DATE: 2021 12 31
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF the Construction Act, RSO 1990, c. C.30, as amended
BETWEEN:
BRIAN STUCCO CONSTRUCTION INC.
E. Babayev, for the plaintiff
Plaintiff
- and -
MAHNAZ NILI-ARDAKANI, RUZBEH AKHLAGI also known as RUDY AKHLAGI, NEDA SIAH TIRI, SAEID REZAEI, SOUROUR JAFARI, and IRADJ MAHDI
M. Petrovic, for the defendant, Iradj Mahdi
Defendants
HEARD: In writing
COSTS ENDORSEMENT
Associate Justice Todd Robinson
[1] Trial of this action was scheduled to proceed on September 8, 2021. Prior to trial, a settlement was reached between the plaintiff, Brian Stucco Construction Inc. (“BSC”), and the defendant mortgagee, Iradj Mahdi (“Mahdi”). Their settlement disposed of the entire action, other than costs. I made a consent order embodying the terms of settlement and provided directions for exchanging written costs submissions.
[2] I have now had an opportunity to review and consider the written costs submissions filed by both BSC and Mahdi. BSC seeks recovery of its “total costs” of the action in the amount of $38,334.16, which seems to be recovery on a full indemnity basis. Mahdi submits that, if I am inclined to award any costs, they should not exceed $2,500 on a partial indemnity basis.
[3] There are several issues to be decided in assessing BSC’s claim for costs against Mahdi:
(a) whether BSC’s entitlement to costs is disputed;
(b) whether it is appropriate to assess costs at all since BSC and Mahdi settled the substantive disputes without any findings or determinations at trial; and
(c) if costs are to be assessed, then:
(i) whether BSC has any basis for a claim of full indemnity costs;
(ii) the extent to which Mahdi’s offers to settle, both prior to and during litigation, are properly considered; and
(iii) whether BSC should be awarded costs against Mahdi in the circumstances.
[4] Since the action was settled prior to trial and without any findings or determinations on the disputed priority issues between BSC and Mahdi, it is not possible for me to say which of BSC and Mahdi is truly the successful party. I have determined that this is a not a case where costs can be fairly awarded to BSC in the absence of any judicial determination on the merits of the parties’ positions. Even if I did view BSC as the successful party, the circumstances are such that I would still not have awarded costs. I find it fair and just that each party bear their own costs.
Discussion
Costs principles in lien actions
[5] Costs in lien actions are governed by s. 86 of the Construction Act, RSO 1990, c C.30. That section provides the court with broad discretion to award costs against a party or, in particular circumstances, a person who represented that party, including on a substantial indemnity basis.
[6] Procedure in a lien action is to be as far as possible of a summary character, having regard to the amount and nature of the liens in question: Construction Act, s. 50(3). Whether the conduct of a party has been consistent with the summary nature of lien proceedings is always relevant in assessing costs. Notably, such an assessment is expressly mandated by s. 86(2) of the Construction Act, which provides that where the least expensive course is not taken by a party, costs awarded to that party shall not exceed what would have been incurred had the least expensive course been taken.
[7] General costs principles and proper assessment of costs have been the subject of many judicial decisions. The most commonly cited costs decisions were made in the context of actions governed by the Rules of Civil Procedure, RRO 1990, Reg 190. Nevertheless, case law from non-lien actions is still largely applicable in lien actions governed by the Construction Act.
[8] Subsection 50(2) of the Construction Act provides that the rules of court apply to lien actions except to the extent they are inconsistent with the provisions and procedures in the act. Costs provisions in the Rules of Civil Procedure, such as the factors outlined in Rule 57.01(1), and related case law, thereby inform assessment of costs in lien actions, unless they are inconsistent with provisions such as s. 86 of the Construction Act.
[9] Only one case has been cited in the parties’ costs submissions (cited by Mahdi and addressed in reply by BSC): Sub-Terrain Directional Drilling Ltd. v. Carnello Civil Construction Limited, 2014 ONSC 7020 (Master). Although a costs decision in a lien action, the case does not address applicable costs principles in any detail. Rather, Master Wiebe (as he was then titled) provides only a brief statement of his jurisdiction to award costs before delving into case-specific factors.
[10] In Calibur Tool v. Ecotemp Manufacturing, 2020 ONSC 2511, King J. provides a helpful overview of general costs principles and jurisprudence, albeit in the context of deciding costs of an application. In my view, the following principles are equally applicable in lien actions, and are factors that I have considered:
(a) The overriding principle in determining costs is reasonableness, with a view to balancing compensation of the successful party with the goal of fostering access to justice as applied to the factual matrix of the particular case;
(b) A successful party does not have a right to costs, but does have a reasonable expectation that it will be awarded costs in its favour;
(c) Costs ordinarily follow the event and are generally awarded on a partial indemnity basis payable forthwith (within 30 days), but discretion may be exercised in exceptional circumstances to depart from those “norms”;
(d) The quantum of costs awarded should reflect an amount the court considers to be fair and reasonable within the factual matrix of the particular case rather than any exact measure of the actual costs to the successful litigant;
(e) The costs expectations of the unsuccessful party is a factor to be considered; and
(f) The court should seek to avoid inconsistency with comparable costs awards in other similar cases.
Is BSC’s entitlement to costs still disputed?
[11] In reviewing the parties’ submissions at trial on the settlement and their written costs submissions, it is apparent that there is a disconnect between them on BSC’s entitlement to costs. BSC’s characterizes the settlement as including a term that BSC’s costs be fixed or assessed. Mahdi’s counsel advised me that the parties’ agreement was for me to determine costs. Consistent with that, Mahdi’s costs submissions make several references to “if” costs are awarded.
[12] The disconnect is evident from the settlement emails exchanged on August 27, 2021. Mahdi’s counsel wrote to confirm a revised offer for Mahdi to pay $8,500, inclusive of pre-judgment interest, with the issue of costs be determined by me. The responding email sent by BSC’s counsel a short time later refers back to Mahdi’s formal Rule 49 offer dated August 19, 2021 and states that BSC agrees to settle the proceeding in exchange for payment of $8,500, inclusive of pre-judgment interest, payable in lump sum within 14 days, plus BSC’s costs to be assessed by the court and payable within 14 days of fixing.
[13] No written confirmation of the final agreed terms has been filed. I have only what was submitted at the trial hearing, prior to which my Assistant Trial Coordinator was only advised that the parties had “reached a resolution of the matter, with the issue of costs to be determined.”
[14] The email from BSC’s counsel on August 27, 2021 does not accept either the August 19 or August 27, 2021 offers from Mahdi. It contains new payment terms – i.e., a lump sum payment requirement and a 14-day payment period for both the settlement amount and fixed costs. In my view, Mahdi’s proposal that costs be determined by me and BSC’s term that costs be assessed or fixed are not the same. An agreement for me to determine costs suggests that it is open to for me to determine if costs are warranted at all as well as the amount. Agreement to have BSC’s costs assessed or fixed suggests that BSC’s entitlement to costs is conceded.
[15] There is nothing before me supporting that Mahdi clearly agreed to pay costs to BSC when settling for $8,500. His costs submissions support that he did not. In my view, absent clear agreement by the parties that BSC be paid costs, BSC’s entitlement to costs, as well as quantum, remains to be determined.
Should the parties’ settlement preclude an award of costs?
[16] Had BSC and Mahdi not settled, the primary trial dispute would have been the extent of priority of BSC’s lien over Mahdi’s mortgage. After liens were preserved against the property, but prior to perfection of BSC’s lien, Mahdi issued notice of sale under his mortgage. Ultimately, the property was sold by Mahdi under power of sale for $1.98 million. It appears that proper distribution of the sale proceeds would have been one central disputed issue.
[17] BSC’s trial position appears to have been that there would have been sufficient proceeds of sale to satisfy its lien, but for Mahdi’s delays in the sale process increasing interest charges and improper payments being made from sale proceeds that did not have priority to BSC’s lien. Mahdi does not appear to have disputed priority of BSC’s lien to the extent of deficiency in the 10% statutory holdback that the owners were required to retain, which is the priority provided in s. 78 of the Construction Act. However, Mahdi disputed any further priority.
[18] The priority dispute between BSC and Mahdi was not the only trial issue. I had also directed that default judgment against Ruzbeh Akhlagi, Mahnaz Nili-Ardakani, and Neda Siah Tiri (the “Owner Defendants”), all of whom were previously noted in default, would also be addressed at trial. Although BSC indicates in its costs submissions that the Owner Defendants are bankrupt, no bankruptcy searches were filed and the only evidence of bankruptcy is an email from counsel for the third mortgagees, Saeid Rezaei and Sourour Jafari (the “Third Mortgagees”), stating it. Regardless, validity of BSC’s contract claim was a common issue to obtaining default judgment and proving its lien. Proving its lien would have been necessary for BSC to establish any priority over the mortgages.
[19] Although the action against the Third Mortgagees was resolved well prior to trial, it is not clear that priority of that mortgage would not still have been an issue at trial. Although a priority dispute between BSC and the Third Mortgagees was not proceeding, Mahdi’s position was that there was a shortfall in recovery under his mortgage after applying sale proceeds. It appears the Third Mortgagees received no payment under their mortgage. It follows that BSC’s entitlement to “excess” sale proceeds would seem to require consideration of other interests that may have priority to BSC’s lien.
[20] BSC and Mahdi agreed to an order for Mahdi to pay $8,500 to BSC, inclusive of pre-judgment interest, for discharge BSC’s lien, for payout of the security previously posted into court to vacate BSC’s lien, and for dismissal of the action. As a result of that settlement, all substantive trial issues were resolved, with costs being the only remaining dispute.
[21] Although I specifically raised with counsel the need to address case law on difficulties in assessing costs after a settlement between the parties, neither BSC nor Mahdi has done so. In my view, that case law must be considered in deciding costs of this action.
[22] In Waterloo North Condominium Corporation No. 161 v. Redmond, 2017 ONSC 1304, Broad J. discussed the long-standing principle that the court should be very reluctant to make an award of costs where all other issues between the parties have been resolved without court intervention. He reviewed various case law applying the principle and held, at para. 34, that embarking on a full examination and adjudication of the merits of the parties’ respective substantive claims and defences for the sole purpose of determining costs, when the substantive issues have been settled by the parties, runs counter to the principle that costs are incident to a determination of the parties’ rights and are not to be made themselves the subject matter of the litigation.
[23] In Muskala v. Sitarski, 2017 ONSC 2842, Myers J. held that, in his view, costs generally should not be awarded when parties settle “except for costs.” In expressing criticism of consent orders where costs remain unresolved, he made several observations, as follows:
(a) If parties are willing to settle and “throw the dice” on costs, then the parties are actually willing to settle without costs;
(b) If the goal of asking for costs is only to “poke the other side in the eye en passant”, then that is not an action conducive to settlement;
(c) Costs are not themselves the subject of a parties’ dispute, but rather are an incident of the determination of the parties’ rights, flowing directly from the court’s decision; and
(d) Where parties have settled their dispute, there is usually no way for the court to make necessary findings of fact to support a costs determination, such as assessing whether parties’ respective positions were reasonable. A party’s reasons for settling is typically unknown to the court. A defendant may well have good defences, but choose to consent for other reasons such as establishing their bona fides or buying peace.
[24] Myers J. characterized asking the court to determine costs when the parties are not prepared to incur the time, cost, or risk of arguing a matter on its merits solely because they have not settled costs as uploading a “disembodied decision on to the court”. He held that doing so is not a proportional or efficient use of court time and thereby declined to award any costs.
[25] Kearney v. Hill, 2017 ONSC 6306 is an example of a case where costs were awarded following a settlement. Monahan J. reiterated the court’s general reluctance to make a costs award against one of the parties where a proceeding is settled on all issues except for costs, noting expressly that “there may be many motivating factors for parties to enter into settlements, and the reasonableness or unreasonableness of any party’s position may depend on a myriad of factors.” Monahan J. also observed (as did Myers J. in Muskala) that there may be exceptional circumstances where it is appropriate to award costs despite a settlement having been reached. Ultimately, at para. 30, Monahan J. held that refusing to determine entitlement to costs would be inconsistent with the express agreement of the parties and, further, that parties may be unwilling or unable to voluntarily resolve substantive issues in dispute if they believe they will be unable to resolve costs issues through subsequent adjudication. Relying on particular conduct exhibited in that case, he awarded costs.
[26] BSC’s costs submissions focus on conduct by Mahdi in the course of litigation and on the ultimate result being more favourable to BSC than Mahdi’s pleaded position that BSC’s maximum lien priority could be no more than $2,436.70. The core of BSC’s submission is effectively that it was reasonable for BSC to commence and continue the litigation given the merits of its claim and, notably, the dispute with Mahdi about delays in sale of the property and amounts improperly paid from sale proceeds. Both are argued by BSC to have depleted sale proceeds that would otherwise have been available to satisfy BSC’s lien.
[27] As already noted, a successful party has a reasonable expectation that a costs award will be made in its favour, but does not have a right to costs. The problem with BSC’s costs position is that it hinges on being viewed as the successful party. I am unsure that is the case.
[28] BSC’s three trial affidavits were filed after the hearing on September 8, 2021 for my review in assessing costs. Mahdi’s two trial affidavits had been filed prior to the hearing. I have reviewed those affidavits in considering the parties’ costs submissions, which refer to them.
[29] Notwithstanding the $2,436.70 figure pleaded in Mahdi’s statement of defence, Mahdi’s trial position was that the maximum priority for BSC’s lien was $3,818. That is stated in the trial affidavit of Kamran Mahdi, apparently calculated from BSC’s claimed total contract value of $38,180. While settlement was agreed for $8,500, that itself is not necessarily an indicator of “success” for BSC.
[30] There is no privity of contract between BSC and Mahdi. BSC’s priority claim is firstly statutory and otherwise turns on assessing the reasonableness of the power of sale process. Because of the settlement, there will be no adjudication on the merits of BSC’s claim and allegations regarding the sale process. Mahdi’s reasons for settling are not before me. While BSC’s trial affidavits seek to quantify the extent of its priority challenge and the extent of excess sale proceeds that it argues should have been available to satisfy its lien, the actual extent of priority depends on a number of factors, on which there will be no findings.
[31] Had trial proceeded, my findings and determinations on the merits of BSC’s claim would directly bear on deciding if BSC was successful. In this case, there will be no findings on numerous key issues, including:
(a) the value of services and materials actually supplied by BSC;
(b) whether BSC was a “contractor” or “subcontractor” under the Construction Act (since it is unclear if BSC’s trial position was that Ruzbeh Akhlagi, with whom BSC contracted and who is not a registered owner, was a beneficial owner, an agent for the registered owners, or only a general contractor);
(c) proper calculation of the statutory holdback required to be retained by the Owner Defendants (or any of them);
(d) the extent of the priority of BSC’s proven lien over Mahdi’s mortgage under s. 78 of the Construction Act;
(e) proper calculation of the amounts owing under Mahdi’s mortgage;
(f) whether Mahdi did delay the power of sale process and, if so, whether doing so legally or equitably precludes Mahdi from claiming priority for additional mortgage interest accrued during the period of delay; and
(g) the extent of BSC’s entitlement to recover any portion of its proven lien above and beyond the deficiency in statutory holdback from any excess sale proceeds.
[32] As already noted, legal priority over Mahdi’s mortgage turns on BSC having a valid lien. Although it appears undisputed that BSC did perform some work, Mahdi did not concede or admit the value of services and materials supplied by BSC. Rather, Mahdi only acknowledged priority to the extent of 10% of the value of work actually performed. In an email dated July 26, 2021, submitted by BSC with its costs submissions, Mahdi’s counsel stated, “As previously stated, we understand that your client did not perform the entirety of the contract, and that the project did not progress past the first stage of the project.”
[33] It would have been necessary for BSC to prove the extent and value of work performed in order to obtain both a declaration that its lien was valid and judgment against any of the defendants, not just Mahdi. There is no evidence suggesting Mahdi had any direct knowledge of BSC’s required scope of work or the extent of work performed. I find nothing unreasonable about Mahdi, a named defendant with no privity of contract to BSC, requiring BSC to prove the validity of its lien. Notably, in response to BSC’s trial evidence outlining the contract with Ruzbeh Akhlagi, the work performed, materials sourced and supplied, and payments received, Mahdi tendered evidence challenging BSC’s claim as being “inflated” and that Ruzbeh Akhlagi had provided a written acknowledgement that BSC had been paid in full (which was denied by BSC).
[34] In my view, BSC’s “success” against Mahdi cannot reasonably be measured without assessing the extent of Mahdi’s actual liability. That liability turns on two determinations: first, the price of the services or materials actually supplied by BSC under its contract and, second, the merits of BSC’s allegations about Mahdi’s delays in selling the property, improper accounting of the amounts owing under the mortgage, improper payments made from the proceeds of sale, and inaccurate accounting of the proceeds of sale.
[35] Based on the affidavit evidence tendered by both sides, the issues between BSC and Mahdi are not straightforward. Assessing BSC’s “success” requires me to conduct what amounts to a shadow trial solely for the purposes of a costs award. I agree with Myers J.’s comments in Muskala that such an exercise is neither a proportional nor efficient use of court time. In my view, it is also not fair or appropriate to consider and weigh that affidavit evidence in assessing the likelihood of BSC’s success against Mahdi or the reasonableness of the parties’ positions in circumstances where anticipated cross-examination on the affidavits did not occur and the parties have not put forward their legal arguments on the priority dispute.
[36] Case law supports that disembodied costs awards following a settlement may be appropriate in exceptional circumstances. Nevertheless, I find no exceptional circumstances here. Despite BSC’s efforts to paint Mahdi as having acted unreasonably, nothing supports a finding similar to that made in Kearney that Mahdi and his counsel were the drivers of the length and cost of this litigation.
[37] BSC argues that Mahdi caused unnecessary delay and expense in the course of litigation, pointing to delays by Mahdi’s counsel in accepting service, Mahdi’s purported refusal to share any information on whereabouts of the Owner Defendants, an allegedly deficient affidavit of documents, and increased trial preparation due to inconsistent accounting and incomplete records from Mahdi. There is no indication of the extent of any increased costs incurred as a result of such actions and conduct.
[38] In any event, nothing supports that Mahdi’s counsel ought to have accepted service of the statement of claim or that it was unduly onerous to serve it personally (the default manner of service for an originating process). Similarly, nothing supports that Mahdi had information to share about the whereabouts of the Owner Defendants that was unreasonably withheld. BSC’s characterization that Mahdi “refused to share any information” is an overstatement of a response from Mahdi’s counsel that they had no instructions to assist in serving the Owner Defendants. Furthermore, the nature and extent of the alleged deficiencies in Mahdi’s affidavit of documents is not explained, nor the costs ramifications of the purportedly deficient affidavit of documents and incomplete or inconsistent records. The dockets filed by BSC to not seem to support any material cost increases.
[39] Put simply, there is nothing exceptional about this case or in Mahdi’s conduct that warrants assessment of costs in the absence of any judicial findings or determinations on the merits. I am thereby exercising my discretion not to award any costs. Each party shall bear its own costs.
Would BSC otherwise be entitled to costs against Mahdi?
[40] In the event I am wrong in exercising my discretion as I have done, I have considered whether BSC would otherwise be entitled to costs against Mahdi, on what scale, and in what amount. Having performed that assessment, I would have reached the same result that both parties should bear their own costs.
Appropriate scale of costs
[41] BSC has provided no authority supporting its claim for full indemnity costs against Mahdi. BSC argues that it was fully within Mahdi’s contemplation that BSC’s costs would be similar to his own, and since BSC’s actual costs are in line with Mahdi’s own costs (at least as BSC calculates them), the quantum sought is reasonable and fair in the circumstances.
[42] Although not cited by either party, in Net Connect Installation Inc. v. Mobile Zone Inc., 2017 ONCA 766, at para. 8, the Court of Appeal held that an award of costs on an elevated scale is justified in only very narrow circumstances, such as where an offer to settle is engaged or where the losing party has engaged in behaviour worthy of sanction. Substantial indemnity costs are typically awarded by the court to express its disapproval of a party’s conduct, while full indemnity costs are reserved for conduct that is especially egregious.
[43] Although s. 86 of the Construction Act provides me with broad discretion in awarding costs, including on a substantial indemnity basis, there must be good reason to depart from the typical partial indemnity scale. There is nothing before me supporting any improper, egregious, abusive, or vexatious conduct by Mahdi or any other factor (including offers to settle, discussed below) warranting elevated costs to BSC, let alone full indemnity costs. Even if I had awarded costs, I would have found no basis to deviate from the partial indemnity scale.
Impact of offers to settle
[44] Various offers to settle were exchanged in the period leading up to trial, most of which are appended to BSC’s costs submissions. Offers from BSC have ranged from $20,000 to $30,000, all inclusive. Offers from Mahdi have ranged from $7,000 to $10,000, all inclusive. Mahdi’s latest two offers were for $5,000, excluding pre-judgment interest and costs, and $8,500, including pre-judgment interest, but excluding costs. The offers exchanged in late August 2021, with trial pending, led to the ultimate settlement.
[45] In opposing BSC’s costs claim, Mahdi also relies on two pre-litigation offers to settle made on his behalf at a meeting on April 15, 2019, one for $7,000 and another for $10,000, both of which are said to have been rejected. BSC argues that neither of Mahdi’s pre-litigation offers should he considered, since the $7,000 offer was oral and does not constitute an offer under Rule 49 of the Rules of Civil Procedure and there is no evidence of the $10,000 offer.
[46] I disagree that oral offers to settle cannot be considered in assessing costs under s. 86 of the Construction Act. Rule 49.13 permits the court to consider any offer to settle when exercising its discretion with respect to costs, albeit that the rule specifically contemplates written offers. However, Rule 49 only applies in a lien action to the extent it is not inconsistent with the Construction Act. In my view, applying Rule 49 in a manner that curtails my discretion to consider any offer to settle is inconsistent with the broad language in s. 86 of the Construction Act and the scheme of the act.
[47] As already noted, lien actions are to be as far as possible of a summary character and costs recovery for a party not taking the least expensive course of action is limited to those costs that would have been incurred if the least expensive course had been taken. I have thereby considered all offers to settle, including Mahdi’s pre-litigation oral offers, in assessing costs and, in particular, whether BSC has taken the least expensive course of action with respect to its claim against Mahdi.
Quantum of costs
[48] Mahdi raises three primary challenges to BSC’s claim for costs against him:
(a) Mahdi’s pre-litigation offer to settle for $10,000, if accepted, would have been as favourable to BSC as the result;
(b) BSC improperly claims against Mahdi for costs incurred pursuing the other defendants and steps taken with Mahdi’s consent for which Mahdi should have no liability; and
(c) Principles of indemnity, reasonable expectations of the parties, the outcome, complexity of the proceeding, and proportionality are all factors favouring Mahdi.
[49] On the first challenge, I agree with BSC that there is no evidence supporting that a $10,000 offer was ever made, but BSC’s reply submissions stop there. They do not deny that the offer was made, but rather only point out that Mahdi has tendered no evidence of it. Regardless, the pre-litigation oral offer of $7,000 is admitted and specifically noted in BSC’s trial evidence. Substantially all of BSC’s claimed costs were incurred after that offer was made, since the lien had not yet been perfected. The $8,500 result is higher than that original offer, but the amount of legal expenses incurred by both sides is disproportionate to the $1,500 difference.
[50] BSC argues that it had a reasonable prospect of recovering against the Owner Defendants when the oral offer was made, so would not have settled the action for $7,000. However, nothing in the costs submissions of either party supports or suggests that Mahdi’s offer was to settle the entire action. The $7,000 offer is referenced in the affidavit of Ugur Yucel sworn August 6, 2021, in which Mr. Yucel states, “Mr. Mahdi boasted that he had lots of money, and the best Jewish lawyers, and that we could never win against him. He offered us $7,000 to go away, but we refused.” Mr. Yucel does not say that the offer was to settle the entire action. He is speaking specifically about Mahdi’s purported statement that BSC could not win against Mahdi.
[51] That the $7,000 offer was for settlement of BSC’s claim against Mahdi is consistent with Mahdi’s written offers and position in the litigation. None of those written offers propose dismissal of the entire action. All offers and communications put before me appear focused on the action as against Mahdi and Mahdi’s position that BSC’s priority was limited to the deficiency in statutory holdback.
[52] In my view, whether or not the $10,000 offer was made, if BSC had accepted the undisputed $7,000 offer in exchange for dismissal as against Mahdi, it would have been overall more favourable to BSC than the ultimate result. Although characterized by Mr. Yucel as a “lowball offer”, the property had not yet been sold at that point, so it is unclear what viable claim against Mahdi was available to BSC at that time beyond priority to the extent of deficiency in statutory holdback.
[53] With the exception of the offers exchanged between BSC and Mahdi in late August, which led to the ultimate settlement, all other offers were made on an all-inclusive basis. I do not view those all-inclusive offers as assisting either party in costs submissions. The offers do not indicate what portions of the all-inclusive sums constitute principal, interest, or costs, absent which they have little usefulness to my costs determination.
[54] On the second challenge, it is neither fair nor just to hold Mahdi liable for costs incurred by BSC solely to pursue remedies against other defendants. BSC argues that since Mahdi offered to resolve “the entire matter” (which I am not certain is an accurate characterization), costs of the entire matter should be assessed against him. I do not agree. BSC perfected its lien against the Owner Defendants and the mortgagees. As stated by BSC itself in its submissions, when perfecting its lien, it had a reasonable prospect of recovering against the Owner Defendants. While BSC may have focused on Mahdi when it no longer viewed recovery from the Owner Defendants as being viable, Mahdi did not make BSC’s litigation decisions about who to sue and what steps to take. It was BSC’s decision to settle with the Third Mortgagees. It was also BSC’s decision not to pursue its claim against the Owner Defendants, whose non-payment led to the lien and this lien action.
[55] I am not convinced that Mahdi is reasonably liable to BSC for its costs incurred to serve other defendants, note the Owner Defendants in default, or negotiate settlement with the Third Mortgagees. Mahdi consented to the order obtained by BSC extending the time for service, which was necessary and, in my view, was not necessitated by Mahdi’s conduct. Also, nothing before me supports that Mahdi was given notice that costs would be sought against him later, despite his consent. The order does not reserve costs.
[56] Significantly, BSC has made no effort in its bill of costs to distinguish the quantum of costs incurred by steps in the litigation. The bill of costs provided is a single, undivided block of all work with a single, aggregated hourly total and an average billable rate. A party seeking costs of an action should be organizing its bill of costs in a manner that assists the court in seeing the steps taken and costs requested for each step, which BSC has not done.
[57] The format of BSC’s bill of costs makes assessing costs nearly impossible, unless I perform the work of vetting the supporting dockets and calculating the amount claimed for each step. For example, since I would not allow costs of the motion to extend time for service had I awarded costs, to remove those costs I would be required to review the dockets, find the relevant entries, assessing what portion of a docket for both the motion and other tasks should be allocated, calculate the fees incurred, and then deduct that amount. That is not work that the court should be expected to do itself.
[58] On the third challenge, my earlier comments generally apply. I also agree with Mahdi that costs incurred were disproportionate to the amount at issue, but they were disproportionate on both sides.
[59] Particularly given the result, I am not satisfied that BSC has taken the least expensive course of action in pursuing its claim against Mahdi. Based on how the bill of costs has been prepared and the docket entries written, I cannot readily determine which costs relate specifically to the claim against Mahdi. Nevertheless, the factors in this case are such that, in my view, the fair and appropriate result is that there be no award as to costs.
Disposition
[60] For the foregoing reasons, I find that it is fair, reasonable, and just in all the circumstances that BSC and Mahdi each bear their own costs. Order accordingly.
ASSOCIATE JUSTICE TODD ROBINSON
DATE: December 31, 2021