Court File and Parties

COURT FILE NO.: CV-21-00667682-0000 DATE: 20220112 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 2464212 ONTARIO LTD. c.o.b. SALON DAVACHI AND: NAJEMEH REZAINIA-TAJALLI

BEFORE: VERMETTE J.

COUNSEL: Varoujan Arman, for the Plaintiff Paul Dollak, for the Defendant

HEARD: In writing

COSTS ENDORSEMENT

[1] On December 14, 2021, I released an endorsement dismissing the Plaintiff’s motion for various relief, including a mandatory interlocutory order requiring the Defendant landlord to immediately restore the Plaintiff’s access and possession to certain leased premises. The parties were not able to agree on costs and have delivered costs submissions.

Positions of the parties

a. The Defendant’s position

[2] The Defendant asks for costs in the all-inclusive amount of $61,808.53 on a substantial indemnity basis or, in the alternative, $41,803.01 on a partial indemnity basis.

[3] The Defendant states that the Plaintiff’s motion made repeated allegations of unlawful, illegal or abusive conduct against her and that the Court made no such finding. She argues that costs should be ordered to be paid on a substantial indemnity scale as a result of these disparaging allegations.

[4] With respect to costs on a partial indemnity basis, the Defendant points out that the amount reflected in the Plaintiff’s costs outline is close to the amount being sought by the Defendant, and that the approximate $4,000 difference is mainly a function of the higher rate charged by counsel for the Defendant given his higher number of years of experience.

[5] The Defendant takes the position that by virtue of an agreement made by counsel in advance of the hearing, costs are to be awarded not only against the Plaintiff, but also against its principal, Floora Davachi.

b. Position of the Plaintiff

[6] The Plaintiff submits that no costs award should be issued at this time and that the costs of the motion should be determined at trial or at a later motion for summary judgment. The Plaintiff disagrees that the Defendant was wholly successful in opposing the Plaintiff’s motion. It states that while the Defendant was successful with respect to the termination based on the Defendant’s desire to sell her building, the Court did not rule on the termination based on rent arrears and raised questions regarding the calculations set out in the Notice of Default.

[7] In the alternative, the Plaintiff submits that an appropriate quantum for the Defendant’s costs would be $10,000. It argues that the quantum of costs sought by the Defendant is excessive. The Plaintiff contrasts the length of its motion materials and the number of affidavits they included to the Defendant’s 57-page Responding Motion Record and two affidavits. The Plaintiff further points out that it had to deliver two sets of motion materials (as the initial set was delivered on an urgent basis and had to be changed) and a Statement of Claim. The Plaintiff also states that it is impecunious and that it has had no revenue stream since April 14, 2021.

[8] Finally, the Plaintiff argues that no costs award should be made against Ms. Davachi personally. It states that the idea that Ms. Davachi would take on any personal liability was always premised upon her becoming a plaintiff first. Given that the Defendant opted not to consent to the Amended Statement of Claim, Ms. Davachi never did become a plaintiff.

Discussion

a. Entitlement to costs

[9] The Defendant was successful on this motion. The fact that I did not have to rule on certain issues to dispose of the motion does not change this fact. In my view, there are no factors in this case that militate against the general principle that costs should follow the event and that the costs of the motion should be fixed and ordered to be payable within 30 days pursuant to Rule 57.03(1)(a) of the Rules of Civil Procedure.

b. Scale of costs

[10] As has been observed in many cases, costs on the elevated scale are exceptional and are reserved for those situations when a party has displayed reprehensible, scandalous or outrageous conduct: see Quickie Convenience Stores Corp. v. Parkland Fuel Corporation, 2021 ONCA 287 at para. 4.

[11] As stated above, the Defendant refers to allegations of unlawful, illegal or abusive conduct contained in the Plaintiff’s Factum in support of her argument that this is an appropriate case for substantial indemnity costs. However, most of these allegations relate to the termination based on rent arrears, with respect to which I have made no finding.

[12] Therefore, I conclude that this is not an appropriate case for costs on an elevated scale.

c. Quantum

[13] While the Plaintiff alleges impecuniosity, there is no evidence supporting its allegation. The fact that the Plaintiff may not have had a revenue stream for many months is insufficient to establish impecuniosity. Therefore, I do not take the Plaintiff’s allegation of impecuniosity into consideration when determining the quantum of costs.

[14] I do not accept the Plaintiff’s arguments with respect to the quantum of costs sought by the Defendant. While the Defendant may not have prepared as many affidavits as the Plaintiff, she had to consider the Plaintiff’s affidavits, investigate the facts and determine her response and position. I note that the total number of hours spent by counsel for the Defendant is less than counsel for the Plaintiff. Given that the amount of partial indemnity costs incurred by both sides is similar, it should have been within the reasonable expectations of the Plaintiff that a significant amount of time would be required to respond to her motion and that the Defendant would incur substantial costs in doing so. Nevertheless, it is my view that the number of hours and the costs reflected in both parties’ costs outlines are a bit high for this kind of motion and in light of the facts of this case. Therefore, the Defendant’s costs should be slightly reduced to reflect an amount that is fair and reasonable in the circumstances.

d. Ms. Davachi’s liability to pay costs

[15] In my view, the exchange of correspondence between counsel is clear that Ms. Davachi was going to be liable for costs in the event that the Plaintiff was unsuccessful on the motion. On November 5, 2021, counsel for the Plaintiff sent an e-mail to counsel for the Defendant which read, in part:

Regarding the Supplementary Affidavit of Ms. Davachi to give the personal undertaking as to damages, I’ll share my position here so that you can consider it in determining your recommendation to your client. You made the point that leave of the court is required for an affidavit and that the rationale is that parties can’t shore up their case after crosses. We can certainly agree on that, but in this case, my position is that the affidavit is for a procedural matter only and it does not give any new evidence that you would need to cross-examine on. As well, during Ms. Davachi’s cross-examination, you raised for the first time, that your client’s position would be that it is fraudulent for an undertaking as to damages to be given by a corporate entity that does not have any assets (to be fair there was some related mention of this is the landlord’s responding affidavit, but it was not articulated in the same way). Since we are offering something that your client wants, which is firmly to your client’s benefit, and since there is no new substantive evidence being offered, it is appropriate that leave be granted to have the affidavit go in. With that in mind, please consider, and let me know your client’s position. If your client will consent to the affidavit going in, in exchange, we will confirm that Ms. Davachi is also a moving party on the motion, so your client will have certainty around costs issues. Ideally we would get agreement on these issues today so I can update and reflect this is in My Factum. If not, I will of course not assume anything, and will have the Factum accurately set out the current state of affairs. [Emphasis added.]

[16] Ultimately, the Defendant consented to the late filing of Ms. Davachi’s affidavit. As a result, I agree with the Defendant that costs should be awarded against both the Plaintiff and Ms. Davachi.

Conclusion

[17] Taking the foregoing into account, as well as the factors set out in Rule 57.01(1) of the Rules of Civil Procedure, I find that the fair and reasonable award of costs on a partial indemnity basis in favour of the Defendant is in the all-inclusive amount of $37,000.00. In my view, this is an amount that the Plaintiff and Ms. Davachi should reasonably have expected to pay in the event that the Plaintiff was unsuccessful on the motion, especially in light of the amount of the Plaintiff’s own costs outline.

[18] Accordingly, I order that the Plaintiff and Ms. Davachi pay to the Defendant her costs of the motion in the all-inclusive amount of $37,000.00 within 30 days.

Vermette J. Date: January 12, 2022