COURT FILE NO.: CV-20-82965
DATE: 2022-10-13
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Gibsons LLP, Solicitors
AND
Rui De Lima and 255 Richmond Road Holdings Inc., Applicants
AND
Gibsons LLP and D. Kenneth Gibson, Respondents
BEFORE: The Honourable Mr. Justice Marc Smith
COUNSEL: John Parr Telfer, Counsel for the Solicitors Patrick Simon, Counsel for the Applicants Jason Rabin, Counsel for the Respondents
HEARD: In writing
COSTS DECISION
M. Smith J
[1] On July 29, 2022, I declined to confirm the Assessment Officer's decision (2022 ONSC 4387). The Respondents were therefore successful on their motion.
[2] The parties were encouraged to agree on the issue of costs. They were unable to do so. The Respondents seek partial indemnity costs in the amount of $30,749.59, inclusive of taxes and disbursements.
[3] The Applicants strongly oppose the Respondents’ request and argues that it is an “absurd cost to bring the motion and does not fit within the reasonable party’s expectations”.
[4] For reasons that follow, the Respondents are awarded costs in the amount of $15,000, all-inclusive.
Legal principles
[5] Costs are at the discretion of the court: s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43.
[6] Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) sets out the factors to be considered by the court in the exercise of its discretion.
[7] The overriding principles of fairness and reasonableness must be applied to each individual case: Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.).
Position of the parties
The Respondents
[8] The Respondents submit that the motion was complex because the evidentiary record of the six-day assessment hearing was placed before the court by the Applicants. Furthermore, the Applicants’ responding factum was 25 pages, along with 15 cases in their Book of Authorities.
[9] The Respondents say that although the court’s decision on the motion was based on the lack of sufficiency of reasons, it was open to the court to re-open and re-evaluate the entire case. As such, the preparation and planning were much higher.
The Applicants
[10] The Applicants’ first argument is the absurdity of the amount of costs being sought by the Respondents for a two-hour motion. They say that one of the reasons that these costs may be elevated is that midway through the preparation of motion materials, new counsel was added.
[11] The Applicants’ second argument is that the costs should remain in the cause because: “At the end of the day, His Honour ordered a new trial.” The Applicants’ reasoning for this argument is set out in paragraphs 5 to 9 of their written cost submissions:
5 In their Notice of Motion, Mr. Gibson et al. sought an Order that the Assessment Officer make a report that contains her findings and conclusions. They also sought an order that the Assessment Officer’s oral report not be confirmed.
6 The final result, as found at paragraph 53 of the Reasons for Decision, is that this assessment proceed before the Application Judge.
[53] The most just and fair approach to take is that this matter be returned to the judge hearing the application and that it be determined under the normal course of that proceeding.
7 The Applicants acknowledge there is a disagreement between counsel regarding the meaning of this result. The Applicants suggest His Honour meant that this solicitor’s assessment, which is a proceeding (as defined in the Rules) brought by way of application as per the Solicitors Act s.13 , would be heard by a judge, not an assessment officer. The Applicants have tried to reach the court house to obtain a case conference to see how to resolve this issue, but the courthouse is seemingly unable - or worse refuses –to acknowledge receipt of emails.
8 If the Applicants’ interpretation of the result is right – and the Applicants submit it is in light of the fact that there was no requests nor submissions made on joinder or consolidation with another court proceeding – then this means the matter will return for reassessment before a judge. A judge can make findings of fraud, so this is advantageous to the Applicants, and not necessarily a loss given His Honour did not disagree on Madame Bender’s result, but rather her means of arriving at this result. Given this and the fact that Mr. Gibson et al. were not successful on their fraud ground, the Applicants submit success was divided. Where a motion has been properly made and success divided, the usual disposition of costs is in the cause.
9 If the Applicant is wrong and His Honour actually ordered this matter be terminated in its current form and be heard in the context of another court proceeding thereby depriving the Applicants of their statutory and court ordered right to an assessment on the basis of inadequate reasons of an assessment officer, then an appeal will likely reverse that finding on the basis that such a remedy was not requested by the moving parties nor were any parties provided with an opportunity to make submissions on why such a result is wrongheaded, to state it politely.
[12] It is therefore submitted that, because I ordered a new trial, the costs should be left at the discretion of the judge who will preside over the new trial.
Analysis
Costs in the cause
[13] Let me first address the Applicants’ request that costs should be payable in the cause because I ordered a new trial. I disagree.
[14] A historical review of the proceedings is helpful in the analysis.
a. On or about October 25, 2019, Law Loans Ltd. commenced mortgage enforcement proceedings against the Applicants, claiming that the total amount owed was $260,646.01. The controlling mind of Law Loans Ltd. is one of the Respondents, Mr. D. Kenneth Gibson.
b. On or about November 28, 2019, the Applicants commenced an application (Court File No.: CV-19-82106) against Law Loans Ltd. (the “Mortgage Application”).
c. On or about January 10, 2020, the Applicants obtained an order from Hackland J. stopping the mortgage enforcement proceedings and permitting the amendment of the Mortgage Application.
d. On June 8, 2020, the Applicants amended their Mortgage Application. The relief sought by the Applicants in the Amended Mortgage Application, include, without limitation, the following: a declaration that the mortgage enforcement proceedings are null and void; a declaration that the mortgage enforcement proceedings are improper because the balance claimed by Law Loans Ltd. contains substantial sums not properly chargeable; and a declaration that Law Loans Ltd.’s calculations of the balance owing is patently wrong.
e. On or about January 19, 2021, the Applicants obtained an order from McLean J. directing that the assessment of Gibson LLP’s accounts proceed to be assessed by the Assessment Officer (Court File No.: CV-20-82965).
f. The assessment hearing proceeded in June 2021 and on August 10, 2021, the Assessment Officer delivered her oral decision and ruled that Gibson LLP’s accounts be reduced from $221,336,66 to $35,000, with a further reduction of $15,000 for the costs of the assessment.
[15] Once I declined to confirm the Assessment Officer’s decision, I exercised my discretion under r. 54.09(4) of the Rules, and determined, as set out in paragraph 53 of my Reasons for Decision dated July 29, 2022, that the most fair and just order was that the matter be returned before a judge hearing the Mortgage Application.
[16] During the motion, the Respondents clearly articulated that if the certification is denied, the court has four options: (1) review the transcripts of the assessment hearing and substitute the Assessment Officer’s decision; (2) send the matter back for a new assessment hearing before an Assessment Officer; (3) require the Assessment Officer to provide further reasons for her findings and conclusions; or (4) let the Mortgage Application proceed in the normal course of that proceeding. The Applicants did not address any of these options during argument.
[17] There are two reasons why the fourth option is the most appropriate in the circumstances. First, the determination of the quantum of the debt owed under the mortgage, namely the Gibson LLP’s accounts, is at the heart of the Mortgage Application. Second, allegations of fraud have been made by the Applicants against the Respondents. It is reasonable and necessary that the issues of fraud be determined by a judge. Notably, the Applicants prefer that it be heard by a judge. As stated by the Applicants in their written submissions, they submit: “A judge can make findings of fraud, so this is advantageous to the Applicants”.
[18] Returning the matter to be heard by a judge under the Mortgage Application is not, in my view, ordering a new trial. I am not ordering a new assessment hearing before an Assessment Officer because I do not find this option to be an appropriate remedy. The assessment hearing has already taken place in accordance with the order of McLean J., and the certification of the Assessment Officer’s decision has not been confirmed. As ordered, the most just and fair remedy is that the Mortgage Application continues to its conclusion and, within the confines of the Mortgage Application, the judge determines the appropriate quantum of the Gibson LLP’s accounts, as well as all other issues under the Mortgage Application, including the Applicants’ fraud allegations.
[19] Therefore, I disagree with the Applicants that costs should remain in the cause.
Costs of the motion
[20] Turning now to the determination of the quantum of the costs of the motion, there is no doubt that the Respondents were successful in their motion. The Assessment Officer’s decision was not confirmed. Accordingly, the Respondents are presumptively entitled to their costs.
[21] I agree with the Applicants’ submissions that the costs sought by the Respondents in the amount of $30,749.59 is not within the reasonable expectations of the parties.
[22] The Respondents’ Bill of Costs for this motion reflects that there were four timekeepers: three lawyers and one senior law clerk. The total time spent in this matter was 123.5 hours. Conversely, the Applicants’ Bill of Costs show that there was only one lawyer that worked on the file, with a total time of 64.6 hours, representing $16,862.54, inclusive of taxes. The Applicants did not incur any disbursements.
[23] Although the time spent by a moving party is usually more than a party responding to the motion, I find that the time spent by the Respondents’ legal team was excessive, primarily because there were multiple timekeepers, causing a duplication of work.
[24] Regarding the hourly rates for the Respondents’ legal team, I find their partial indemnity rates to be appropriate and commensurate with experience.
[25] The issues were important for the parties, but the motion was not overly complex.
[26] While the Respondents argue that they needed more time to prepare because of the sheer volume of documents, the grounds advanced by the Respondents to oppose the confirmation of the Assessment Officer’s report was, in large part, limited to one issue, namely the inadequacy of reasons. I am not persuaded by the Respondents’ argument.
[27] The disbursements incurred by the Respondents were significant for this type of motion. The largest item incurred were the costs of the transcripts of the assessment hearing in the amount of $3,834.00. The Assessment Officer’s decision was made orally and a copy of the transcripts of the oral decision was required. The balance of the transcripts could have been useful if I had decided to substitute the Assessment Officer’s decision. However, the Respondents argued that the best option was to send the matter back to the judge hearing the Mortgage Application, rather than substituting the decision of the Assessment Officer. As such, I find that only a small portion of the costs of the transcripts is recoverable.
Disposition
[28] For these reasons, in exercising my discretion, and in applying the overriding principles of fairness, proportionality and reasonableness, the costs are fixed at $15,000, inclusive of disbursements and taxes. These costs are payable by the Applicants to the Respondents within 60 days of this Costs Decision.
M. Smith J
Released: October 13, 2022
COURT FILE NO.: CV-20-82965
DATE: 2022-10-13
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Gibsons LLP, Solicitors
– and –
Rui De Lima and 255 Richmond Road Holdings Inc.
Applicants
– and –
Gibsons LLP and D. Kenneth Gibson
Respondents
COSTS DECISION
M. Smith J
Released: October 13, 2022