Court File and Parties

COURT FILE NO.: CV-22-00676263-0000 DATE: 2022-03-14

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

HAMIDREZA RAHBAR and MARYAM ESMAEILI Applicants

– and –

EHSAN PARVIZI and SAMIN SHOKRI Respondents

COUNSEL: Romesh Hettiarachchi, for the Applicants Amanda Geiger, for the Respondents

HEARD: (In writing): March 14, 2022

ENDORSEMENT ON COSTS

A.A. SANFILIPPO, J.

[1] On February 10, 2022, the Applicants brought an urgent motion for an Order granting leave to obtain and register a Certificate of Pending Litigation (“CPL”) against title to property known municipally as 429 Sauve Crescent, Waterloo, Ontario (the “Subject Property”). I granted the Applicants’ motion, on the basis of reasons that followed on February 16, 2022: Rahbar v. Parvizi, 2022 ONSC 1104.

[2] I directed that if the parties could not agree on the issue of costs, the parties could deliver written costs submissions, in accordance with Rule 57.01(7) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The parties did not agree on the issue of costs, and the Applicants delivered written cost submissions on February 14, 2022, and the Respondents delivered written cost submissions on February 25, 2022.

A. The Parties’ Positions

[3] The Applicants, Hamidreza Rahbar and Maryam Esmaeili, were successful in obtaining the Order sought for leave to issue the CPL. This relief was sought urgently as there was a sale of the Subject Property pending for February 11, 2022.

[4] The Applicants’ Costs Outline states that the Applicants incurred actual fees of $13,635, consisting of 34.3 hours of services provided by the Applicants’ lawyer and two law clerks. The Applicants claimed 90% of these fees on a substantial indemnity basis, calculated as $12,271.50 plus a “counsel fee for attendance” of $2,362.50 for a total of $14,634 in legal fees.

[5] The Applicants’ claim for costs on a substantial indemnity basis was thereby said to total $16,999.15, consisting of $14,634 in legal fees, $1,902.42 in HST and $462.73 in disbursements. The Applicants’ claim for costs on a partial indemnity basis was $10,447.64, consisting of $8,862.75 in legal fees, $1,152.16 in HST and $462.73 in disbursements.

[6] The Applicants submitted that they were presumptively entitled to a cost award by reason of their success on the motion. Further, the Applicants maintained that they had made offers to settle the motion, in email communications of February 4 and 8, 2022, and that the result on the motion was “as favourable or more favourable” than the Applicants’ offer to settle the motion. The Applicants sought costs on a substantial indemnity basis, relying on Rules 49.10(1) and 49.02(2).

[7] The Respondents, Ehsan Parvizi and Samin Shokri, submitted that the costs of this motion were incurred to address only a small portion of the overall relief sought on the Application, and that most of the materials relied on in the motion will be used in the argument of the Application. The Respondents submitted that there was no basis for an award of costs on a substantial indemnity level, that Rule 49.10(1) was not engaged, and that the amount of costs claimed by the Applicants were unreasonable and excessive, even considered on a partial indemnity basis.

[8] The Respondents’ submitted that a fair and reasonable amount of costs for the motion would be $5,000 which, the Respondents’ submitted, should not be payable by the Respondents until after the hearing of the Application on March 29, 2022.

B. Governing Principles

[9] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides the court with discretion in the determination of costs. The exercise of this discretion is guided by the principles set out in Rule 57.01, and applicable jurisprudence, having regard for the overriding principles of reasonableness, fairness and proportionality: Barbour v. Bailey, 2016 ONCA 334, at para. 9; Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, at para. 12, leave to appeal refused, [2019] S.C.C.A. No. 82; Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 38; Zesta Engineering Ltd. v. Cloutier, 2002 CanLII 25577 (ON CA), [2002] O.J. No. 4495 (C.A.), at para. 4.

[10] Absent special circumstances, “costs follow the event”: Bell Canada v. Olympia & York Developments Ltd. (1994), 1994 CanLII 239 (ON CA), 111 D.L.R. (4th) 589 (Ont. C.A.); Yelda v. Vu, 2013 ONSC 5903, at para. 11, leave to appeal refused, 2014 ONCA 353; St. Jean v. Cheung, 2009 ONCA 9, at para. 4. Although there is no absolute entitlement to costs, the successful party is entitled to a reasonable expectation of an award of costs in the absence of special circumstances: Bell Canada, at p. 596; 1318706 Ontario Ltd. v. Niagara (Municipality) (2005), 2005 CanLII 16071 (ON CA), 75 O.R. (3d) 405 (C.A.), at paras. 48-52.

C. Analysis

[11] Through their success on the motion, the Applicants are entitled to an award in costs of the motion. I have determined that the Applicants shall receive an award of costs on a partial indemnity basis, not on the substantial indemnity basis that the Applicants have claimed. I will explain why.

[12] In Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66, at para. 28, the Court of Appeal stated that substantial indemnity costs are only warranted in two circumstances: by the operation of an offer to settle under Rule 49.10, and “where the losing party has engaged in conduct that is worthy of sanction”. This was reaffirmed by the Court of Appeal in Net Connect Installation Inc. v. Mobile Zone Inc., 2017 ONCA 766, 140 O.R. (3d) 77, at para. 8.

[13] Assessing these two circumstances, there was no conduct on the part of the Respondents that is worthy of sanction, and there was no offer to settle that engages Rule 49.10(1), which provides as follows:

Where an offer to settle,

(a) is made by a plaintiff at least seven days before the commencement of the hearing;

(b) is not withdrawn and does not expire before the commencement of the hearing; and

(c) is not accepted by the defendant,

and the plaintiff obtains a judgment as favourable as or more favourable than the terms of the offer to settle, the plaintiff is entitled to partial indemnity costs to the date the offer was served and substantial indemnity costs from that date, unless the court orders otherwise.

[14] The Applicants sent the Respondents offers to settle on February 4 and 8, 2022. The motion was heard on February 10, 2022. Neither of these offers to settle was sent “at least seven days before the commencement of the hearing” as is required to activate Rule 49.10(1).

[15] In addition, despite being granted leave to issue a CPL, the Applicants did not achieve a result that was “as favourable as or more favourable than the terms of the offer to settle”. The offer to settle sent by the Applicants on February 4, 2022 contained terms that went beyond the substance of this motion. For example, in order to forgo its demand for a CPL, the Applicants demanded that the Respondents direct a real estate broker to release funds in the amount of $50,000 that the broker was holding in trust to the credit of the Agreement of Purchase and Sale between the Applicants and the Respondents. The Applicants did not achieve this result on this motion.

[16] The Applicants’ offer to settle of 11:06 a.m. on February 8, 2022 contained not only this term, but others, including the requirement that the Respondents produce a Document Registration Agreement, which were beyond the scope of this motion for a CPL, and were not granted. The Applicants’ offer to settle of 3:03 p.m. on February 8, 2022 was an offer to settle the entire Application, not just the motion, and thereby had terms that went well-beyond the scope of this motion.

[17] Even viewing the February 4 and 8, 2022 offers to settle as offers to settle the motion, the Applicants did not achieve a result through the granting of leave to issue a CPL that was “as favourable as or more favourable than the terms of the offer to settle”. As a result, in my view, Rule 49.10(1) is not engaged, and the Applicants have not established a presumptive entitlement to an award of costs on a substantial indemnity basis. However, in accordance with Rule 49.13, I have nonetheless taken these offers to settle into account in the exercise of my discretion on the issue of costs.

[18] In fixing the amount of the cost award, the starting point is the Applicants’ Costs Outline which sets out a claim for partial indemnity costs in the amount of $10,447.64, consisting of $8,862.75 in legal fees, $1,152.16 in HST and $462.73 in disbursements. The partial indemnity hourly rates claimed in the Costs Outline are stated as 65% ($292.50) of the actual rate ($450), above the range set out by the Court of Appeal: Inter-Leasing, Inc. v. Ontario (Revenue), 2014 ONCA 683, at para. 5; Bain v. UBS Securities Canada Inc., 2018 ONCA 190, 46 C.C.E.L. (4th) 50, at para. 32.

[19] More significantly, the Applicants have included in their Costs Outlines legal fees that pertain to the Application, in general, and not specifically or exclusively to this motion. These include the drafting of the Notice of Application and the preparation of the affidavit evidence that forms part of the Application Record: Rule 38.09. I accept the Respondents’ submission that most of this affidavit evidence is relevant to the broader issues in this Application and will be addressed as part of the issue of costs upon determination of the Application.

[20] In consideration of the factors set out in Rule 57.01(1), I do not accept that the Respondents would reasonably expect to pay $10,447.64 on this motion for leave to issue a CPL (Rule 57.01(1)(0.b)). I do accept that the issues raised by the motion were equally important to all parties (Rule 57.01(1)(d)); no party acted in a way that lengthened unnecessarily the proceeding (Rule 57.01(1)(e)); and no party denied or refused to admit anything that should have been admitted (Rule 57.01(1)(g)).

[21] The objective of quantification of costs is to determine an amount that is fair, reasonable, and proportionate, understanding that the mathematical quantification of what the successful litigant has spent in legal fees is pertinent but not dispositive. The quantification of costs is not a mere mathematical exercise in as much as a determination of what is fair and reasonable: Boucher, at para. 38; Zesta, at para. 4.

[22] Considering all the factors set out in Rule 57.01, and applicable case law, and in the exercise of my discretion under s. 131 of the Courts of Justice Act, I conclude that it is fair, reasonable and proportionate to fix the Applicants’ costs of this motion, on a partial indemnity basis, payable by the Respondents, in the amount of $5,000, all inclusive of legal fees, disbursements and applicable taxes.

[23] The Respondents submitted that the cost award should be made payable after the hearing of this Application, scheduled for March 29, 2022. Rule 57.03(1) provides that the Court shall fix the costs of a motion “and order them to be paid within 30 days” unless the Court is satisfied that a different order would be more just. Considering that the Application will be heard within this 30-day period, I do not see that a different order would be more just. I will thereby order that the costs shall be paid by the Respondents within 30 days of the date of this Order.

D. Disposition

[24] On the basis of these reasons, I order as follows:

(a) The Applicants, Hamidreza Rahbar and Maryam Esmaeili, are awarded costs of this motion for leave to issue a Certificate of Pending Litigation, on a partial indemnity basis, payable within 30 days by the Respondents, Ehsan Parvizi and Samin Shokri, fixed in the amount of $5,000, all inclusive of legal fees, disbursements and applicable taxes.

A.A. SANFILIPPO J.

Dated: March 14, 2022