Court File and Parties

Court File No.: CV-19-28527 Date: 2022-04-29 Ontario Superior Court of Justice

Between: Ronny Kaissieh, Plaintiff – and – Steven Done, Nick Tschilenge, Mofun Loft Inc., Mahmoud Rafih aka Hamoody Rafih, Rafih Automotive Group Inc. and Mercedes-Benz Canada Inc., Defendants

Counsel: Joseph Romano DeLuca, for the Plaintiff/Responding Party Peter W. Choe and Harvey Lim, for the Defendant/Moving Party, Mercedes-Benz Canada Inc. Adam Varro, for the Defendants, Mahmoud Rafih aka Hamoody Rafih and Rafih Automotive Group Inc., taking no position Steven Done, acting in person, taking no position No one appearing for the Defendant, Mofun Loft Inc. No one appearing for the Defendant, Nick Tschilenge

Heard: Written Submissions

Reasons for Decision Re: Costs

Verbeem J.

(i) Overview

[1] For reasons reported at 2022 ONSC 425, I allowed a motion to strike the statement of claim against the defendant, Mercedes-Benz Canada Inc. (“Mercedes”), because it failed to disclose a reasonable cause of action and it was frivolous and vexatious. The plaintiff, Mr. Kaissieh, did not seek leave to amend the statement of claim. As a result, I dismissed the action against Mercedes and prescribed a timetable for the delivery of written costs submissions, which I have received.

[2] For the following reasons, I fix the costs of the action, including the motion to strike, at $25,603.86, including HST and disbursements, which shall be payable by the plaintiff to Mercedes within 30 days.

(ii) The Applicable Legal Principles

[3] The following principles apply to the costs issues before me.

[4] An order of costs is discretionary. Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended, provides:

Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

[5] The discretion to award costs must be exercised in accordance with the facts and circumstances of the case and in accordance with the factors set out in r. 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990 Reg. 194 (“Rules”): see Andersen v. St. Jude Medical Inc. (2006), 208 O.A.C. 10 (Div. Ct.), at para. 22, leave to appeal to O.N.C.A. refused, 2006 CarswellOnt 7749.

[6] Rule 57.01(1) of the Rules provides:

In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

(i) any other matter relevant to the question of costs.

[7] A successful party does not have a right to costs, but it does have a reasonable expectation that a costs award will be made in its favour. Normally, costs follow the event and are awarded on a partial indemnity basis payable forthwith (within 30 days). In exceptional circumstances, discretion can be exercised to depart from any of those “norms”: see DUCA Financial Services Credit Union Ltd. v. Bozzo, 2010 ONSC 4601, at para. 5; and Yelda v. Vu, 2013 ONSC 5903, at para. 11, leave to appeal refused, 2014 ONCA 353.

[8] Fixing costs is not a “mechanical” exercise. A consideration of experience, rates charged, and hours spent is appropriate, but is subject to the overriding principle of “reasonableness” as applied to the factual matrix of the case, with a view to balancing “compensation of the successful party” with “the goal of fostering access to justice”: see Boucher v. Public Accountants Council (Ontario) (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291 (C.A.).

[9] The quantum awarded should reflect an amount that the court considers to be fair and reasonable within the factual matrix of the case, rather than a precise measure of the actual costs of the successful litigant: see Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. No 4495 (C.A.), at para. 4.

[10] An unsuccessful party’s impecuniosity is one of the factors that the court may consider when exercising its discretion to award and fix costs. The relevant principles in that regard are set out by Chapnik J. in Pilotte v. Gilbert, 2016 ONSC 1334, at paras. 10-11:

Under Rule 57.01(1)(i), the court may consider “any other matter relevant to the question of costs.” This includes a party’s financial position or situation of hardship. While impecuniosity and hardship should not eliminate or reduce a party’s liability for costs, it is one of the factors the court may consider in exercising its discretion under s. 131 of the Courts of Justice Act in determining a reasonable amount of costs: see Balasundaram v. Alex Irvine Motors Ltd., 2012 ONSC 5840, at para. 14; Walsh v. 1124660 Ontario Limited, 2007 27588 at paras. 15-20; Agius v. Home Depot Holdings Inc., 2011 ONSC 5272.

At the same time, there are other cases where hardship or impecuniosity have not been held to be relevant. Indeed, Lauwers J. in Greenhalgh v. Doura-Dummer (Township), [2011] O.J. No. 1675 (S.C.), at para. 36 referenced, “the problem posed for the system of justice if the costs disincentive established by the Rules were to be displaced by a rule that routinely advantaged a party's hardship in the exercise of judicial discretion over costs.”

(iii) The Parties’ Positions

(a) Mercedes’ Position

[11] As the successful party on the motion, which led to the dismissal of the action against it, Mercedes seeks costs in the amount of $54,441.33. In support of its position, Mercedes submits it made good faith efforts to settle the motion, which included:

1. It made a formal offer to settle the motion to strike dated September 3, 2021, pursuant to which the plaintiff would consent to an order dismissing the action against Mercedes on a without costs basis, if accepted before September 13, 2021, and on a “party and party costs basis less ten percent” payable by the plaintiff to Mercedes, if accepted after that date but before the commencement of the hearing of the motion. The offer remained open for acceptance until the motion hearing commenced. The offer was not accepted. Instead, it was met by a September 15, 2021 demand by the plaintiff that Mercedes pay him $75,000 to settle the action.
2. Prior to bringing its motion to strike, Mercedes made an offer to resolve the action on March 26, 2020, that was open for acceptance until April 22, 2020, pursuant to which the action would be discontinued against it on a without costs basis.
3. After the motion was argued, but before the court’s decision was released, Mercedes offered to consent to a dismissal of the action against it on a without costs basis. The plaintiff rejected its offer.
4. Mercedes calculates its costs as $46,398.06 plus HST and disbursements, premised on costs assessed on a partial indemnity basis up to September 3, 2021 (the date of its formal offer), and on a substantial indemnity basis thereafter. Nonetheless, after the release of the court’s reasons for its order striking the statement of claim, and dismissing the action against it, Mercedes offered to settle the costs issue on the basis that the plaintiff pay it $30,000 within 20 days. The plaintiff rejected that offer.

[12] In addressing the factors set out in r. 57.01(1) of the Rules, Mercedes observes that:

(i) The plaintiff claimed $100,000 in general damages and an unspecified amount of special damages against it, and recovered nothing;

(ii) In terms of complexity, the motion to strike was brought on two distinct bases (no reasonable cause of action and frivolous/vexatious claim) and involved asserted causes of action in negligence, vicarious liability, and waiver of tort;

(iii) The motion to strike raised important issues related to efficiency, as well as Mercedes’ ability to protect itself from a meritless claim, without having to incur expenses associated with defending the claim through trial;

(iv) The plaintiff took steps that unnecessarily lengthened the proceeding, specifically by filing voluminous affidavit evidence that was not admissible on the issue of whether the statement of claim disclosed a reasonable cause of action, and by misinterpreting case law and evidentiary rules applicable to the motion, which compelled Mercedes to deliver a reply factum;

(v) The plaintiff took an improper step in the proceeding by disclosing “without prejudice” communication in its motion materials;

(vi) In an early correspondence exchange between counsel, plaintiff’s counsel suggested Mercedes could be found “criminally liable” for aiding and abetting an alleged criminal conspiracy between its co-defendants;

(vii) The plaintiff failed to acknowledge that its assertion of waiver of tort as a cause of action was legally untenable, in accordance with recent Supreme Court of Canada jurisprudence; and

(vii) Members of the law firm representing Mercedes expended a cumulative total of 153.7 hours in relation to the plaintiff’s action. Those hours inform the quantum of Mercedes’ costs request.

(b) Position of the Plaintiff

[13] Despite being unsuccessful on both the motion and the action as against Mercedes, the plaintiff submits that a costs award should be made in his favour, pursuant to r. 57.01(2) of the Rules. He reasons that r. 21.02 of the Rules mandates that a party moving under r. 21.01 must do so promptly. A failure in that regard may be taken into account by the court in awarding costs. The plaintiff asserts that Mercedes’ motion was not brought promptly and, as a result, this is an appropriate case to award costs against Mercedes even though it was successful on the motion.

[14] Alternatively, the plaintiff reasons that a consideration of the factors identified in r. 57.07 of the Rules, together with his impecuniosity, only supports an award of costs against him in the range of $2,500, at most. In that regard, the plaintiff says that: the motion did not involve complex issues; the outcome of the motion was important to both parties; he did nothing to unnecessarily shorten or lengthen the proceeding; he did not take any steps that were vexatious or improper; and he did not refuse to make any proper admissions.

[15] Finally, the plaintiff submits that the moving party’s various offers should not influence the quantum or scale of costs in this case because:

(i) Any offers to dismiss the proceeding made by Mercedes before its motion was delivered are not related to the motion and are therefore irrelevant;

(ii) Mercedes’ post-hearing offer to resolve costs does not qualify as a “rule 49” offer to settle under the Rules;

(iii) Apart from the operation of r. 49.10 of the Rules, elevated costs should only be awarded on a clear finding of reprehensible conduct by the party who is to pay costs. The plaintiff submits he did not engage in such conduct;

(iv) Although an element of compromise is not an essential factor of an offer to settle, where fairness is a relevant consideration, its absence can be a factor that the court considers when determining whether to decline to impose the costs consequence of r. 49.10: see Celanese Canada Inc. v. Canadian National Railway (2005), 2005 8663 (ON CA), 196 O.A.C. 60 (C.A), leave to appeal to S.C.C. refused, [2005] S.C.C.A. No. 245. The plaintiff submits that in this case, fairness is a consideration and the court should refuse to impose r. 49.10 costs consequences because: the motion was straightforward and constituted the earliest possible step in the proceeding; the costs claimed by Mercedes are exorbitant; the plaintiff attempted to resolve the action through compromise; Mercedes’ “settlement offers” lack an element of compromise; and the claims advanced against Mercedes were novel and reasonable and Mercedes’ offers were unreasonable.

(v) Mercedes’ “walk away” settlement offer arguably does not attract r. 49.10 consequences in the context of a motion to strike.

(iv) Disposition

(a) Mercedes is Entitled to Costs

[16] Absent a compelling reason, costs should follow the event. While Mercedes does not enjoy a right to costs, as the successful party (both in the action and on the motion to strike the statement of claim), it has a reasonable expectation that costs will be awarded in its favour and that the award will be payable within 30 days.

[17] The plaintiff submits there is a compelling reason to depart from a “normative” costs award in this instance, namely Mercedes’ “delay” in bringing its motion to strike. For the reasons that follow, I disagree.

[18] The plaintiff correctly observes that in accordance with r. 21.02 of the Rules, a motion brought pursuant to r. 21.01(1) for an order striking out a pleading on the ground that it discloses no reasonable cause of action must be made promptly, and a failure to do so may be taken into account by the court in awarding costs.

[19] The plaintiff relies on two authorities to support his position that a defendant’s failure to promptly move under r. 21.01 can justify the imposition of costs against the moving party even if its motion is successful, specifically: Fleet Street Financial Corp. v. Levinson, [2003] O.J. No. 441 (S.C.); and Colonna v. Bell Canada, [1993] O.J. No. 332 (Gen. Div.) (“Colonna”).

[20] In my view, neither of those cases articulate the proposition that a costs award should be made against a defendant who successfully moves to have a statement of claim struck against it, in circumstances where the defendant did not otherwise move “promptly”. Instead, those cases confirm that the consequences of a party’s failure to move promptly under r. 21.01 are not limited to the court potentially considering that conduct when determining costs; further, they support the proposition that a moving party’s failure to act promptly under r. 21.01 can, in appropriate circumstances, lead to the motion itself being dismissed. That is precisely what happened in Colonna, where the court relied upon an 18-month delay to dismiss the moving party’s motion to strike, with costs payable by the unsuccessful moving party to the successful party. The result of that case was entirely consistent with the normative approach to costs.

[21] I do not preclude the possibility that the circumstances of a particular case may justify the court departing from the normative approach and awarding costs in favour of a plaintiff who is otherwise unsuccessful in resisting a motion to strike its statement of claim on the basis that it discloses no reasonable cause of action. However, I do not find that such circumstances are operable in this case.

[22] As I explained in my reasons allowing the motion, I am persuaded that the bases of liability asserted against Mercedes in negligence and vicarious liability were almost entirely founded in conclusory allegations of law that were not adequately supported by pleadings of adequate (or any) material facts. I further found that as a result of the Supreme Court of Canada’s decision in Atlantic Lottery Corp. Inc. v. Babstock, 2020 SCC 19, [2020] 447 D.L.R. (4th) 543, the plaintiff’s asserted cause of action against Mercedes in “waiver of tort” was not legally tenable. As a result, the statement of claim was fatally flawed and, in my view, even before the motion was brought, it was patently discernable that the pleading was incapable of surviving judicial scrutiny on a motion to strike. After pragmatic attempts to extricate itself from the action without incurring the legal expenses associated with a motion proved unsuccessful, Mercedes brought, and was successful on, its motion to strike.

[23] Moreover, Mercedes’ alleged failure to act promptly in bringing its r. 21.01 motion must be evaluated in context. The action is premised on events that occurred between October 2017 and January 2018. The statement of claim was issued on December 19, 2019, and was served on Mercedes on March 6, 2020. Approximately one week later, legislation was enacted in Ontario suspending all limitation periods during the time period between March 16 and September 14, 2020, as a result of the COVID-19 pandemic.

[24] Mercedes served a notice of intent to defend on March 26, 2020. At the same time, counsel for Mercedes sent correspondence to plaintiff’s counsel in which, among other things, he:

(i) Disclosed his view that the claim against Mercedes was without merit;

(ii) Observed that the allegations in the statement of claim focused almost entirely on Mercedes’ co-defendants, with only a cursory reference to Mercedes, and that the statement of claim alleged that Mercedes itself was defrauded by the conduct of the other defendants;

(iii) Disclosed that Mercedes may bring a motion to strike; and

(iv) Made an offer to resolve the action against Mercedes on the basis of a discontinuance against it, on a without costs basis, open until April 2, 2020.

[25] Counsel for the plaintiff and counsel for Mercedes exchanged further correspondence throughout April 2020, concerning the merits of the claim. On April 28, 2020, counsel for Mercedes indicated, among other things, that he was instructed to clearly convey that Mercedes would not pay anything to the plaintiff to settle the claim and that if Mercedes was forced to respond to the action, it would seek costs on a solicitor and client basis. Mercedes’ counsel also wrote:

We ask that you advise if and when the plaintiff chooses to move this matter forward. Given our discussions and the impact of COVID-19 on the timelines, we will not prepare a defence at this time. We trust that you will not take any steps to note our client in default without providing reasonable notice. [Emphasis added.]

[26] Through correspondence dated May 5, 2020, plaintiff’s counsel confirmed that Mercedes’ counsel had communicated Mercedes’ position “clearly and legibly”. He addressed some issues related to the merits of the action and proposed that counsel engage in a Zoom call to further discuss the matter. Counsel for Mercedes declined that request in correspondence dated May 14, 2020, and instead invited plaintiff’s counsel to correspond in writing, if he had “anything further to present”.

[27] On May 26, 2020, plaintiff’s counsel wrote to defendant’s counsel initially stating, “I have been given instructions to discuss settlement, prior to the filing of your client’s pleadings.” Plaintiff’s counsel also observed that discovery “may take a lot of time and resources” and reiterated that his client was amenable to settlement.

[28] Nothing more appears to have happened until November 2020, when plaintiff’s counsel first requested that Mercedes deliver a statement of defence. During November and December 2020, Mercedes requested a total of three extensions to deliver its statement of defence, which were all agreed to by plaintiff’s counsel and all necessitated by personal- and health-related issues experienced by Mercedes’ counsel.

[29] On January 7, 2021, plaintiff’s counsel was advised that Mercedes’ counsel, with the day-to-day carriage of the file, had returned to work and had received instructions to bring a motion to strike the statement of claim against Mercedes, before delivering a statement of defence.

[30] Mercedes’ motion record was delivered March 12, 2021, approximately one year after it was served with the statement of claim. The motion was eventually adjourned to a special appointment date in October 2021 for a hearing.

[31] In all of the circumstances, including the impact of COVID-19 on the justice system and the delay connected with defence counsel’s personal and health issues, I do not find that Mercedes failed to act promptly in bringing the motion. The case was still at the pleadings stage at the time Mercedes’ motion was brought. There is no evidence that any parties had exchanged affidavits of documents or engaged in examinations for discovery before that time.

[32] Even if I found that Mercedes failed to act promptly in bringing its motion, I would not find that its failure in that regard disentitles it to costs. The motion was necessitated by the plaintiff’s failure to properly plead the various bases of liability asserted against Mercedes. As a result, Mercedes was forced to incur costs related to both the motion and the action. Mercedes was overwhelmingly successful. Mercedes is entitled to costs. The next issue is the appropriate scale.

(b) The Scale of the Costs Award

[33] I accept that Mercedes is entitled to its costs on a partial indemnity basis for the action, apart from the motion to strike, which I will address separately. Mercedes’ costs of the action that are unrelated to the motion were all incurred before the motion was brought in March 2021. The action was dismissed against Mercedes. The scale of costs, apart from the motion, is partial indemnity.

[34] I now turn to the scale of costs applicable to the motion to strike and the impact of Mercedes’ September 3, 2021 offer to settle the motion, which I will determine pursuant to the combined effect of rr. 49.10 and 49.02(2) of the Rules.

[35] Rule 49.10 of the Rules provides:

49.10 (1) 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 to settle was served and substantial indemnity costs from that date, unless the court orders otherwise.

(2) Where an offer to settle,

(a) is made by a defendant 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 plaintiff,

and the plaintiff obtains a judgment as favourable as or less 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 the defendant is entitled to partial indemnity costs from that date, unless the court orders otherwise.

(3) The burden of proving that the judgment is as favourable as the terms of the offer to settle, or more or less favourable, as the case may be, is on the party who claims the benefit of subrule (1) or (2).

[36] Rule 49.02(2) mandates that r. 49.02(1) and rr. 49.03 to 49.14 apply to motions, with necessary modifications.

[37] Similar to the approach taken in Tabrizi v. Kaushal et al., 2017 ONSC 7660 (Master), the necessary modifications in relation to the costs of Mercedes’ motion involve substituting the phrase “moving party” for “plaintiff” and the phrase “responding party” for “defendant” when reading r. 49. When applying the operative provisions of r. 49 to the circumstances before me, I find that Mercedes is the “plaintiff” and Mr. Kaissieh is the “defendant” for the purpose of determining the r. 49.10 costs consequences applicable to Mercedes’ offer to settle the motion.

[38] Mercedes’ motion was entirely successful. The statement of claim was struck against Mercedes, without leave to amend, and the action was dismissed against it. But for the potential r. 49.10 costs consequences, I find that Mercedes would have been entitled to costs of the motion on a partial indemnity scale.

[39] To trigger the costs consequences of r. 49.10, Mercedes has the onus to establish that all of the requirements of that rule have been met. It has done so. The offer was made more than seven days before the hearing of the motion. It was not withdrawn, and it did not expire before the hearing of the motion commenced. It was not accepted. I am satisfied that Mercedes, as the moving party, obtained a judgment that was as favourable or more favourable than the terms of its offer. I will explain.

[40] The terms of Mercedes’ offer proposed that the action against it would be dismissed on consent. That term was as favourable as the result of the motion. The offer also provided that if it was accepted on or before September 13, 2021, the plaintiff would not pay any costs. If it was accepted after that time, but before the motion commenced, Mr. Kaissieh would pay party-and-party costs, less ten percent. That term is more favourable than the result of the motion, pursuant to which Mr. Kaissieh is presumptively responsible to pay partial indemnity costs, with no discount (before the effect of the offer is considered).

[41] Since the requirements of r. 49.10 are met, the costs consequences set out therein (with necessary modifications) are applicable. Therefore, Mercedes as the successful moving party is entitled to partial indemnity costs related to the motion up to the date of the offer (September 3, 2021) and costs on a substantial indemnity basis thereafter.

[42] I decline to exercise my discretion under r. 49.10 to order a costs consequence that differs from the one set out above, despite Mr. Kaissieh’s request that I do so. His submissions in that regard do not persuade me that deviating from the presumptive result of his failure to accept Mercedes’ offer to settle the motion, would lead to a fair and just result. In arriving at this conclusion, I am mindful that Mr. Kaissieh submits, among other things, that the defendant’s offer to settle lacked any real element of compromise. I disagree.

[43] Mercedes’ offer to settle was made specifically in the context of its motion to strike, in which the legal tenability of the pleading was the primary issue. The motion could only have resulted in an order by which all, some, or none of the provisions of the statement of claim against Mercedes were struck. The motion could not have resulted in substantive monetary relief being awarded against Mercedes in respect of the underlying merits of the action. In that context, Mr. Kaissieh’s “non-compromise” characterization of the lack of an offer to pay him a monetary amount as a term of a proposed settlement of Mercedes’ motion conflates the issue at stake on the motion (whether the statement of claim disclosed a reasonable cause of action) and the underlying evidenced-based merits of the proposed action.

[44] The “compromise” underwriting Mercedes’ offer to settle was a costs concession that was fair and reasonable in the context of the nature of the hearing in which it was made (motion to strike) and the early stage of the proceeding.

[45] Similarly, the plaintiff posits that “walk-away offers” do not “arguably” have r. 49 costs consequences in the context of a motion to strike. In support of that assertion, he relies on Parent v. Leach, [2008] O.J. No. 2304 (S.C.) (“Parent”), and Beland v. Hill, 2012 ONSC 4855 (“Beland”). However, each of those cases dealt with the costs consequences of offers to settle made by defendants in the context of the action as a whole, and in circumstances where the action against the defendant was ultimately dismissed on the evidence-based merits at trial. Those cases specifically addressed the issue of whether a defendant in such circumstances should be entitled to substantial indemnity costs after the date of its offer.

[46] The operable circumstances in Parent and Beland are not the same as those before me. Here, Mercedes’ offer was made to settle a motion. With necessary modifications to r. 49.10 (as contemplated by r. 42.01(2)), the word “plaintiff” is read as “moving party”, (i.e. Mercedes) for the purpose of determining the costs consequences of the offer. That is a distinguishing difference from the circumstances in Parent and Beland, where the parties who made the offers were properly regarded as defendants when the costs consequences of r. 49.10 were determined.

[47] As a result of the foregoing, I am persuaded that Mercedes is entitled to its partial indemnity costs for the motion up to the date of its offer to settle and substantial indemnity costs thereafter.

[48] The remaining issue is quantum.

(c) Fixing the Quantum of the Costs Award

[49] In fixing the quantum of costs, and with reference to r. 57.07, I find that:

1. The plaintiff claimed $100,000 in general damages and an unspecified amount of special damages against Mercedes, and he received nothing.

2. No liability was apportioned to Mercedes.

3. The action raised important issues for both parties.

4. The complexity of the issues falls in the range of modest to moderate. The plaintiff identified three distinct bases of liability against Mercedes in the statement of claim: negligence, vicarious liability, and waiver of tort as a cause of action. The plaintiff failed to adequately plead any of the elements of the tort of negligence. The asserted cause of action in waiver of tort was legally untenable. The asserted basis of vicarious liability lacked adequate pleadings of material facts in support.

5. Apart from delay related to COVID-19 and the exigent family and health issues experienced by defence counsel, I do not find that either party engaged in conduct that unnecessarily lengthened the duration of the proceeding. I further find that the delay resulting from the foregoing factors was, by its nature, a neutral factor that was not attributable to the fault of either party. Mercedes’ resort to a r. 21.01 motion definitely shortened the duration of the proceeding against it.

6. In response to the motion, Mr. Kaissieh delivered a voluminous affidavit, which was admissible with respect to Mercedes’ request to strike the statement of claim on the basis that it was frivolous and vexatious. The affidavit proved to be largely irrelevant to the basis upon which the claim was ultimately struck, namely that the pleading itself lacked adequate pleaded material facts to support the legal conclusory allegations made against Mercedes.

7. Mr. Kaissieh asserts that he is impecunious. Impecuniosity and financial hardship should not eliminate or reduce a party’s liability for costs; however, it is one of the factors that the court may consider in exercising its discretion under s. 131 of the Courts of Justice Act. With his submissions, he has filed his 2020 Notice of Assessment evidencing $64,475 total income (line 150) and $57,153 in taxable income (line 260), as well as a T4 for 2021 evidencing total income of $58,247 from his employment as a bus driver. He has also produced a single page from a multi-page document entitled “Minutes of Settlement”, with reference to a family law proceeding, purportedly demonstrating that he is required to pay child support in the amount of $700 per month commencing January 1, 2022.

   Even though they are not backed by a sworn affidavit, I accept Mr. Kaissieh’s Notice of Assessment and T4 as evidence of the plaintiff’s employment income in the respective years to which they relate. I have difficulty accepting the page from the Minutes of Settlement as conclusive evidence of an ongoing child support obligation because there is no evidence that the Minutes were executed by the ostensible parties to the settlement, and a court order in accordance with the Minutes has not been produced.

   Mr. Kaissieh has the onus to establish his impecuniosity through evidence. He has not done so. Evidence of impecuniosity should be robust. There should be no unanswered questions. Full financial disclosure is required. The plaintiff must satisfy the court that he has no ability to muster funding to continue the case: see Morton v. Canada (Attorney General), 2005 6052 (ON SC), 75 O.R. (3d) 63 (S.C.), at para. 32.

   Mr. Kaissieh offers no other evidence of his asserted impecuniosity. He has not delivered a fulsome financial statement nor any particulars of his assets, including bank accounts and RRSPs. He has offered no evidence or submissions that his ability to carry on the litigation against the other defendants will be jeopardized by a costs award against him, in favour of Mercedes. He simply argues that based on his employment income, it would be unfair if costs acted as a barrier “for a litigant like him”.

   In this instance, Mr. Kaissieh has not delivered any evidence that establishes impecuniosity. I do accept that Mr. Kaissieh is of relatively modest means from an employment income perspective, and I will give modest weight to his financial circumstances in fixing the quantum of costs.

8. In terms of improper or vexatious conduct by the parties, Mercedes takes issue with correspondence from plaintiff’s counsel, early in the proceeding, suggesting that ultimately, if the facts disclose that Mercedes had knowledge of the “straw buy” scheme during its implementation, Mercedes may have criminally aided and abetted an unlawful criminal conspiracy. After referring to a number of other things, plaintiff’s counsel closed that correspondence by suggesting early resolution of the claim.

   I do not find the foregoing correspondence to be a factor requiring a greater quantum of costs than the quantum I am inclined to award. In this case, Mercedes quickly responded to the impugned correspondence and raised its concern. Plaintiff’s counsel replied thereafter and adequately explained that he was not threatening a criminal complaint to induce a settlement. That position is consistent with the way that I read the original correspondence with which Mercedes takes issue (i.e. I find there was no threat that the plaintiff would initiate a criminal process against Mercedes in the absence of early resolution). Moreover, the plaintiff did not allege criminal conduct against Mercedes in the statement of claim and specifically excluded Mercedes from the parties that he alleged were members of a conspiracy.

9. In terms of the indemnity principle, I have no doubt that the three lawyers and one articling student who worked on this matter on behalf of Mercedes, actually incurred the time disclosed in the costs outline and charged the rates set out therein. But, that does not end the issue. Fixing costs is not simply a mechanical function of arithmetic. While indemnity is an important principle, so too are the principles of proportionality, reasonableness (including an amount an unsuccessful party could reasonably expect to pay in the circumstances), and overall fairness.

   Mercedes has incurred actual fees totalling $52,059 together with HST totalling $6,767.67, and disbursements in the amount of $743.51, for a total amount of $59,570.18, in a case that ended against it at the pleadings stage without delivery of a statement of defence. A temporal breakdown of that quantum follows.

   Prior to delivery of its motion in March 2021, Mercedes incurred actual legal expenses of $6,917 (fees) founded on 28.3 hours of legal services. The written materials filed with the parties’ submissions, indicate that during that time: Mercedes delivered a notice of intent to defend; and had some sporadic communications with plaintiff’s counsel, which were followed by a period of inactivity for several months. Then, in late 2020 and early 2021, correspondence was exchanged between counsel, in which the defence requested various extensions to file a statement of defence, which were routinely granted by plaintiff’s counsel. The statement of defence was never delivered.

   Based on the description of the litigation activity engaged in by Mercedes’ counsel during this time (as set out in Mercedes’ costs outline), the issues in the proceeding, and the r. 57.07 factors and findings set out above, I find a fair, reasonable, and proportional amount, and one which Mr. Kaissieh ought reasonably to have expected would be awarded against him on a partial indemnity basis for the costs incurred by Mercedes before the motion was delivered, to be $3,500.

   Mercedes has incurred actual legal expenses (fees) totalling $11,616 based on 35.2 hours of legal services for the time period beginning with the service of the notice of motion in March 2021 until the time Mercedes made its offer to settle the motion on September 3, 2021. The work done during this time primarily consisted of legal research and matters related to scheduling the special appointment motion. In all the circumstances of the case, including the r. 57.07 factors and findings set out above, I find that a fair, reasonable, and proportional amount, and one which Mr. Kaissieh ought reasonably to have expected to pay on a partial indemnity basis, in the event that he was unsuccessful on the motion, for the costs associated with the legal services provided during this period (March 2021 to September 3, 2021), to be $3,500.

   Mercedes incurred actual legal expenses (fees) of $16,533 based on 50.6 hours of legal services during the period of time after the offer was served (September 3, 2021) and prior to preparation for the hearing of the motion itself. The nature of the services performed during this time primarily related to further legal research, review of the plaintiff’s responding materials, and the preparation of primary and reply facta. In all the circumstances, including the r. 57.07 factors and findings set out above, I find a fair, reasonable, and proportional amount, and one which Mr. Kaissieh ought reasonably to have expected to pay on a substantial indemnity basis associated with the services performed during this period of time, to be $8,000.

   Mercedes incurred actual legal expenses (fees) related to preparation for and argument at the special appointment motion of $12,353, based on 34.6 hours of legal services including two counsel appearing at the motion, the latter of which I find was unnecessary. Based on all of the circumstances, including the r. 57.07 factors and findings as set out above, I find a fair, reasonable, and proportional amount, and one which Mr. Kaissieh ought reasonably to have expected to pay on a substantial indemnity basis for services performed during this time, to be $6,000.

   Mercedes incurred $1,650 dollars in actual legal expenses (fees), arising from post-hearing legal services of five hours, primarily related to attempts at costs negotiations and, ultimately, the preparation of written costs submissions (primary and reply). In all the circumstances, including the r. 57.07 factors and findings set out above, I find a fair, reasonable, and proportional amount, and one which Mr. Kaissieh ought reasonably to have expected to pay on substantial indemnity basis in relation to these services in the event he was unsuccessful on the motion, to be $1,000.

[50] In the result, I conclude a fair, reasonable, and proportional amount for costs in the operable circumstances of this case, and one which the plaintiff ought reasonably to have anticipated he would be required to pay in the event that he did not accept Mercedes’ offer to settle the motion and he was ultimately unsuccessful, to be $22,000 in fees (broken down above) plus HST of $2,860, and disbursements of $743.51 (all of which I find reasonable), for an all-inclusive amount of $25,603.51.

(d) Nature of the Order

[51] For the foregoing reasons, an order will go that:

The plaintiff, Ronny Kaissieh, shall, within 60 days, pay the defendant, Mercedes-Benz Canada Inc., the amount of $25,603.51 as costs of the action, including costs of Mercedes-Benz Canada Inc.’s motion to strike the statement of claim.

“original signed and released by Verbeem J.”

Gregory J. Verbeem

Justice

Released: April 29, 2022