Court File and Parties

COURT FILE NO.: CV-21-77517

DATE: December 15, 2022

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 5000933 Ontario Inc., Applicant/Respondent in Counter-Application

AND:

Khalid Mahmood and Ume Kalsoom, Respondents/Applicants in Counter-Application

BEFORE: MacNeil J.

COUNSEL: C. Neil – Lawyer for the Applicant O. Hoque – Lawyer for the Respondents

ADDITIONAL REASONS CONCERNING COSTS

[1] This decision deals with the costs of the application made by the Applicant, 5000933 Ontario Inc. (“5000933”), seeking a declaration that the agreement of purchase and sale was repudiated by the Respondent, Khalid Mahmood (“Mr. Mahmood”), and that it is entitled to resell the lands, along with other related relief; and the counter-application made by the Respondents seeking a declaration that the agreement of purchase and sale remains in full force and effect, a declaration that 5000933 is in breach of the agreement, and an order for specific performance.

[2] 5000933 was mostly successful on its application in that I granted a declaration that the agreement of purchase and sale was terminated by virtue of the breach of Mr. Mahmood, as purchaser, in failing to close, and a declaration that 5000933 was free to remarket and relist the property for sale. I directed, however, that there shall be a summary hearing on the remaining issues of 5000933’s damages and whether Mr. Mahmood’s deposit is forfeited. The Respondents’ counter-application was dismissed in its entirety.

[3] The parties were unable to settle the issue of costs incurred in connection with the application and counter-application. They have made written submissions.

Position of the Applicant

[4] 5000933 seeks the amount of $26,092.69 in legal fees (inclusive of HST) plus $75.60 in disbursements, for a total of $26,168.29.

[5] 5000933 relies on its Rule 49 offer, dated December 17, 2021, in support of an award of its costs on a substantial indemnity scale from the date the offer to settle was served and partial indemnity costs prior to that date. 5000933 submits that its offer would have resulted in a better outcome for the Respondents since they would not be faced with a summary hearing regarding damages/deposit monies, with its attendant costs, or be liable for costs of the main hearing.

[6] It is noted on behalf of the Applicant that the Respondents have not challenged the hourly rate of the Applicant’s counsel, and that it is a rate similar to that charged by counsel for the Respondents even though there is a significant difference in their respective years of call.

Position of the Respondents

[7] The Respondents delivered their cost submissions on September 26, 2022. The submissions were due by September 20, 2022. Counsel for the Respondents did not provide any explanation for the lateness of the submissions and did not request an extension. I have discretion to permit the late filing and, since the Applicant was able to file its reply submissions by the deadline of September 27th, I am prepared to accept the Respondents’ late filed submissions since there was no prejudice to 5000933 from the late filing. However, counsel are well advised to provide an explanation for any lateness and request an extension from the Court if a situation of late filing arises.

[8] The Respondents submit that success was divided and that there should be no costs awarded to either party or, alternatively, costs should be reserved to the court which will determine the remainder of the issues. In the further alternative, the Respondents contend that costs of $5,000 would be proportionate in the circumstances. They argue that the costs sought by the Applicant are excessive and should be reduced significantly. For instance, they submit that the document record was “thin”; there was only one day’s cross-examination on the Applicant’s affidavit; the Applicant has included in its bill of cost items related to the motion for removal of a Caution which was settled by the parties and not the subject matter of the hearing for which costs are being adjudicated; and the Application required only a day of hearing.

[9] The Respondents submit that they did not litigate with any nefarious objective. They were trying to complete the purchase of their “dream home” for which they had paid a significant deposit.

The Law

[10] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides that an award of costs is in the discretion of the court.

[11] Rule 57.01(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that, when the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs. Tariff A of the Rules of Civil Procedure establishes the fees and disbursements that are allowable under Rules 57.01 and 58.05.

[12] Rule 57.01(1) sets out factors to be considered by the court in exercising its discretion to award costs, including:

• the result in the proceeding;

• any offer to settle or to contribute made in writing;

• 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;

• 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;

• the amount claimed and the amount recovered in the proceeding;

• the complexity of the proceeding;

• the importance of the issues;

• the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

• whether any step in the proceeding was: (i) improper, vexatious or unnecessary, or (ii) taken through negligence, mistake or excessive caution;

• a party’s denial of or refusal to admit anything that should have been admitted; and

• any other matter relevant to the question of costs.

[13] Rule 1.04(1.1) provides that, in applying the rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.

[14] Modern costs rules are designed to advance five main purposes: (1) to indemnify successful litigants for the cost of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage and sanction inappropriate behaviour by litigants; and (5) to encourage settlements: see Fong v. Chan, 1999 CanLII 2052 (ON CA), 1999 CarswellOnt 3955, 128 O.A.C. 2 (Ont. C.A.), at para. 22; and 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, 2010 CarswellOnt 9939 (Ont. S.C.J.), at para. 10.

[15] The primary principles in fixing costs are fairness, reasonableness and proportionality.

[16] As stated by the Ontario Court of Appeal in Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (Ont. C.A.), at para. 26, when fixing costs, the calculation of hours and time rates is only one factor to be taken into account. The overall objective is "to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant." (See also Zesta Engineering Ltd. v. Cloutier, 2002 CanLII 25577 (ON CA), 2002 CarswellOnt 4020, [2002] O.J. No. 4495 (Ont. C.A.), at para. 4.)

Analysis

[17] 5000933 was successful on the bulk of its application and was entirely successful in obtaining a dismissal of the counter-application. As a result, it is presumptively entitled to costs. The question is what is the appropriate quantum of costs that it should be awarded.

[18] The issue of 5000933’s damages and the issue of whether or not the Respondents’ deposit should be forfeited ultimately were not determined by me on this Application and still require a summary hearing. Accordingly, I will exercise my discretion to not apply the costs consequences under Rule 49.10 and to reduce the amount awarded to reflect that the Applicant was not wholly successful before me on the Application.

[19] This application and counter-application did not involve simple legal issues; and I do not agree with the Respondents’ contention that the record was “thin”. This matter required a long hearing and involved the filing of supplementary and reply materials. I am also of the view that the Applicant’s offer to settle was a very reasonable one in the circumstances.

[20] Having regard to the factors in Rule 57.01 and the guidance provided by the Boucher decision of the Ontario Court of Appeal, I find that a fair and reasonable amount of costs to be awarded to the Applicant on a partial indemnity basis is $15,000.00, inclusive of legal fees, disbursements and HST.

[21] In the result, costs are payable by the Respondents to the Applicant in the amount of $15,000.00, all inclusive. Costs are ordered to be paid within 60 days.

B. MacNeil J.

MacNEIL J.

Released: December 15, 2022