COURT FILE NO.: CV-20-00009510
DATE: 2022-10-28
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Michel Charbonneau and Carole Charbonneau
Applicants
– and –
Adéle Gracie
Respondent
Daniel Sirois, for the Applicants
Michael Macnamara, for the Respondent
HEARD: Written Submissions
DECISION ON COSTS
K.E. Cullin, J.
Overview
[1] The applicants’ request for an order directing the sale of the parties’ jointly owned property was heard by me on February 8, 2022. On June 24, 2022, I granted the relief sought by the applicants, ordered the sale of the property, and advised the parties that written submissions could be made with respect to costs. This is my decision with respect to the issue of costs.
Positions of the Parties
[2] The respondent submits that each party should be required to bear their own costs of the application. She submits that she is an elderly woman on a fixed income who is being forced to sell her home; she notes that she has incurred $23,460.53 in legal costs to date. The respondent argues that the case raised novel issues in that it involved two separate dwellings on a single property. She also provides some particulars of the resolution discussions which were conducted between the parties in advance of the application.
[3] The applicants made submissions in reply. They submit that there were no r. 49 offers exchanged between the parties either in advance of or during the proceeding, and that the settlement proposals submitted by the respondent did not reflect the market value of the applicants’ interest in the property. They further argue that the issue before the court was not novel. They submit that there is no evidence before the court regarding the respondent’s financial situation, and that this ought not to be considered in determining the issue of costs.
The Law
[4] The court’s authority to award costs is set out in s. 131 (1) of the Courts of Justice Act, R.S.O. 1990, s.C.43, which 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 factors to be applied by the court in exercising its discretion under s. 131 of the Courts of Justice Act are enumerated in r. 57.01 of the Rules of Civil Procedure.
[6] As a general rule, costs are awarded having regard to the principle of indemnity noted in r. 57.01(1)(0.a); that is, they are payable to the successful party by the unsuccessful party. There are, however, situations and cases where this rule may not apply.
[7] In Mahar v. Rogers Cablesystems Ltd., 1995 CanLII 7129 (ON SC), Sharpe J. considered the court’s discretion not to award costs against an unsuccessful litigant. While that case addressed costs in the context of public interest litigation, in my view the principles enunciated are also general principles which bear consideration in litigation between private individuals. Specifically, he noted:
Orkin, The Law of Costs, 2nd ed., (1994), at pp. 2-33 to 2-34, describes the discretion as follows:
An action or motion may be disposed of without costs when the question involved is a new one, not previously decided by the courts on the theory that there is a public benefit in having the court give a decision; or where it involves the interpretation of a new or ambiguous statute; or a new or uncertain or unsettled point of practice; or where there were no previous authoritative rulings by courts; or decided cases on point; or where the application concerned a matter of public interest and both parties acted in complete good faith . . .
(References omitted)
The matter was considered in depth by the Ontario Law Reform Commission in its Report on Class Actions (1982), where the following summary was given of the court's discretion in this area (vol. III, p. 649):
While the general rule is well established in our legal system, there are well accepted exceptions that justify a denial of costs to a victorious party, even where there has been no misconduct by him or his lawyer. In some cases, a successful party may not be awarded costs where the issue determined is novel, where the court has been asked to interpret a new or ambiguous statute, or where the action is a "test case". The existence of certain exceptions indicates that the general rule is not immutable, but a rule that, however deeply entrenched, occasionally defers to special considerations dictating that its application is inappropriate.
(References omitted)
Analysis and Disposition
[8] While I do not concur with the respondent’s submission that this application raised novel legal issues, it is my view that it did present the court with an unusual set of facts, and certainly facts with respect to which there were no cases directly on point.
[9] It is unusual to encounter unrelated property owners with separate dwellings on jointly owned land, particularly in the absence of a co-tenancy agreement. Given that the respondent occupied her dwelling as a year-round residence and had so occupied her residence for an extended period of time, it is understandable why she would have sought direction from the court regarding her legal obligations as a co-tenant with the applicants.
[10] It is also my view that these proceedings potentially could have averted had both parties, and particularly the applicants, been more flexible in exploring resolution options in advance of pursuing this litigation. Specifically, I would observe:
a. As I noted in my reasons for decision, the applicants’ decision to act on their own to sell their interest in the property, without the assistance of an experienced real estate agent, and at a time when they were at odds with the respondent, was an invitation to mischief. It is not clear to me why they elected not to consult an agent when it became apparent that their efforts to sell the property on their own were failing. If they were unable to identify a willing agent as a result of the property’s unusual ownership arrangements, it would have been of assistance to have some evidence in support of this fact. In the absence of evidence, I am left to wonder whether the motivation was to avoid real estate fees, or whether they simply became frustrated after they encountered resistance to their own efforts to effect a sale. Either way, I view it as a missed opportunity to resolve this matter short of litigation.
b. In their costs submissions, the applicants note that they did not seriously consider the respondent’s offer to purchase their interest in the property for $150,000.00 as they had an appraisal which determined the value of the entire property to be $675,000.00 at its lowest. In my view, this position fails to consider the reality of the applicants’ ownership interest in the property, as it does not consider the following:
i. While it may be the case that the sale of the entire property to a single owner could attract a purchase price of $675,000.00 or higher, that is not the nature of the applicants’ interest in the property. They own a one-half interest in a property, in the absence of a co-tenancy agreement, with an unrelated owner who also resides in a separate dwelling located on the property. This one-half interest is, without a doubt, worth less than one-half of the value of the entire property sold as a whole. If this was not considered by the applicants, they missed the opportunity to resolve this matter short of litigation.
ii. This position does not consider the allocation of the value, if any, of the parties’ respective improvements to the property. There is no evidence before me with respect to this point.
[11] I am cognizant of the fact that the respondent’s conduct and position also did not create an atmosphere that was conducive to resolution. In my view, the fact that the respondent has been required to incur $23,460.53 in personal legal costs and to sell the property that she has owned and loved since 1978 more than adequately considers her role in causing this matter to be litigated.
[12] In the circumstances, I find that neither party shall pay costs to the other, and that each party shall assume their own costs of the application to the date of this order. This order is made without prejudice to the position of either party with respect to any future costs of:
a. Any proceeding to determine the allocation of the parties’ expenses for repairs and improvements to the property; and,
b. The reference with respect to the conduct of the sale of the property.
The Honourable Madame Justice K.E. Cullin
Released: October 28, 2022
COURT FILE NO.: CV-20-00009510
DATE: 2022-10-28
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Michel Charbonneau and Carole Charbonneau
Applicants
– and –
Adéle Gracie
Respondent
DECISION ON COST
K.E. Cullin, J.
Released: October 28, 2022