COURT FILE NO.: CV-21-670068
DATE: 2022 10 11
SUPERIOR COURT OF JUSTICE - ONTARIO
IN THE MATTER OF the Construction Act, RSO 1990, c C.30, as amended
RE: INFINITE CONSTRUCTION DEVELOPMENT LTD., Plaintiff
- and -
YADONG CHEN, Defendant
BEFORE: Associate Justice Todd Robinson
COUNSEL: P. Starkman, for the defendant (moving party)
C. Tan and R. He, for the plaintiff
HEARD: In writing
COSTS ENDORSEMENT
[1] The parties have been unable to agree on costs of the defendant’s motion previously argued before me. On that motion, Yadong Chen (“Chen”) sought an order discharging the lien of the plaintiff, Infinite Construction Development Ltd. (“Infinite”), vacating the registrations of Infinite’s claims for lien and certificate of action, and dismissing this action or, alternatively, that security for costs be ordered. Chen was substantially successful on the motion.
[2] I have now had an opportunity to review and consider the parties’ costs submissions. Chen seeks his substantial indemnity costs of the motion in the amount of $31,817.06 or, in the alternative, partial indemnity costs of $25,323.51. Infinite submits that each party should bear their own costs or, alternatively, that a costs award should be no more than $8,000 to $10,000 on a partial indemnity basis.
[3] Costs in a lien action are governed by s. 86 of the Construction Act, RSO 1990, c C.30. It provides the court with broad discretion in awarding costs, including on a substantial indemnity basis. However, I do not accept Chen’s argument for why substantial indemnity costs are warranted and should be awarded.
[4] Chen relies on a pre-motion letter dated October 28, 2021, in which his counsel requested that Infinite voluntarily vacate its construction liens and certificate of action and dismiss the action on the basis that Infinite’s claim had no merit. Chen submits that the letter is an offer to settle that was unreasonably refused by Infinite, thereby supporting substantial indemnity costs. I agree with Infinite that the letter is not fairly viewed as an offer to settle. There is no “offer” or compromise contained in the letter, such as consenting to a dismissal without costs. Rather, it was a position letter demanding discharge of the lien, failing which a motion would be brought. The subsequent letter from Chen’s counsel similarly includes no indication of a compromise. Infinite also correctly points out that the action has not been dismissed in its entirety, so even if the letter was an “offer” the result has been less favourable than the full dismissal proposed.
[5] Chen has advanced no other argument supporting substantial indemnity costs. Accordingly, I find that partial indemnity is the appropriate scale of costs.
[6] Infinite submits that, considering the number of unsuccessful arguments advanced by Chen, success on the motion was divided. Infinite argues that it is thereby appropriate for the parties to each bear their own costs. I disagree.
[7] Infinite is correct that Chen was unsuccessful in a number of his arguments. Nevertheless, Chen was still substantially successful in obtaining the primary relief he sought on the motion. The only relief not obtained was full dismissal of the action and the alternative relief seeking security for costs. I fully dismissed Infinite’s primary causes of action, leaving only its claims in unjust enrichment and quantum meruit. I was not prepared to dismiss those claims in the absence of any argument or case law supporting that Infinite could not maintain them. I also held that Chen had not met its threshold onus of demonstrating good reason to believe that Infinite lacks sufficient assets in Ontario to satisfy an adverse costs award.
[8] Chen submits that Infinite’s claims in unjust enrichment and quantum meruit are untenable, pointing to Boxuan Ma’s admission during cross-examination that he did not speak with Chen until August 26, 2020. However, I am not prepared to make further determinations on the merits of the motion in the context of costs submissions. Chen failed to advance any argument on why Infinite’s claims in unjust enrichment and quantum meruit could not succeed. As a result, I declined to dismiss Infinite’s claim insofar as those causes of action. In my view, to entertain substantive submissions from Chen now on those matters as a consideration in costs would be procedurally unfair to Infinite.
[9] I also do not accept Infinite’s converse argument on merits. Infinite submits that the surviving claims in unjust enrichment and quantum meruit still arise out of the same factual matrix, with substantially the same scope of evidence to be led by the parties, and will still require an extensive trial on the merits. I disagree. My dismissal of the lien, breach of contract, and breach of trust remedies has substantially narrowed the scope of remaining issues and ought also to reduce the extent of evidence required for a fair disposition of the claims in unjust enrichment and quantum meruit. I have made findings that, at least in my view, will directly bear on them.
[10] Also, my decision not to dismiss the claims in unjust enrichment and quantum meruit is not the same as finding them to be meritorious claims requiring a trial. They were simply not addressed by Chen in his motion.
[11] I agree with Chen that the majority of the motion materials and motion argument was focused on discharge of Infinite’s lien and dismissal of the action, with the unsuccessful security for costs relief representing only a minor portion of the overall motion. Contrary to Infinite’s submission, the number of paragraphs in Chen’s factum dealing with security for costs is not an accurate or helpful indicator.
[12] I agree with Infinite, however, that several unsuccessful or unnecessary arguments advanced by Infinite did increase the time and cost of the motion, which is a factor in deciding costs. Those include Chen’s arguments regarding the Statute of Frauds, RSO 1990, c S.19, bad faith by Infinite, exaggeration of the registered construction liens, and security for costs. I do not agree with Infinite, though, that these arguments “consumed significant resources and time” or had the effect of “unduly complicating and lengthening the motion and its materials.”
[13] The issues on the motion were important to both parties. For Chen, his property was encumbered by two registered construction liens that he viewed as invalid and untenable. The motion sought to discharge Infinite’s claimed lien and clear title to the property, as well as end the action against Chen. For Infinite, its ability to pursue any compensation for claimed unpaid supply of services and materials was directly at issue on the motion.
[14] I agree with Chen that the motion was of moderate complexity. Substantial materials were filed, including lengthy cross-examination transcripts, and there were quite a number of issues, but the law and evidence were, for the most part, fairly straightforward. Issues of the oral assignment, agency, and whether Infinite was factually a “contractor” or a “subcontractor” under the Construction Act did add complexity.
[15] Chen urges me to consider as a factor that Infinite’s response to the motion was clearly inadequate because Infinite failed to tender any evidence from Will Zhang and Clark Cai, who were alleged by Infinite to be Chen’s agents. I am not prepared to draw what amounts to an adverse inference against Infinite for the purposes of deciding costs. Both parties had a “best foot forward” evidentiary onus. Chen himself gave evidence on his discussions with Will Zhang and Clark Cai, yet he too did not tender affirmative evidence from them.
[16] Chen also argues that the examination of Guantong Wu (Chen’s new contractor) was unnecessary and not even relied upon by Infinite on the motion. Neither Mr. Wu’s affidavit nor his cross-examination had any particular bearing on my decision and they had limited evidentiary value on the motion. However, Mr. Wu did make statements about the timing of Infinite’s last work. Although those statements were not ultimately necessary to my decision on timeliness, it was not unreasonable or improper for Infinite to cross-examine Mr. Wu on his affidavit in the circumstances.
[17] Despite Infinite’s arguments that Chen’s costs claim is excessive, the amount claimed by Chen is, in my view, clearly within Infinite’s reasonable expectations for unsuccessfully oppposing the motion. Infinite’s own costs outline sets out partial indemnity costs of $22,223.71, including HST and disbursements.
[18] Overall, I find nothing disproportionate or unreasonable in the time or partial indemnity rates claimed by Chen. I agree with Chen’s submission that allocation of work between senior and junior lawyers was appropriate.
[19] For the above reasons, I fix the fair and reasonable amount of partial indemnity costs payable by Infinite to Chen for the motion in the amount of $20,000.00, including HST and disbursements, payable forthwith. Order accordingly.
ASSOCIATE JUSTICE TODD ROBINSON
DATE: October 11, 2022