Court File and Parties
Court File No.: CV-18-589868 Date: 2023-07-06 Superior Court of Justice - Ontario
Re: Hardev Singh Rai, Plaintiff And: Surjeet Sahanan and The Estate of Paramjit Sahanan, Defendants
Before: Vermette J.
Counsel: M. Gosia Bawolska, for the Plaintiff Howard L. Shankman, for the Defendants
Heard: In writing
Endorsement as to Costs
1On March 7, 2023, I released an endorsement (2023 ONSC 1546) granting the Defendants’ motion to set aside the default judgment of Stinson J. dated February 28, 2019 as against the Estate of Paramjit Sahanan (“Default Judgment”). [1]
2The parties were not able to agree on costs and have delivered costs submissions.
Positions of the parties
a. Position of the Defendants
3The Defendants seek costs on a partial indemnity basis in the amount of $6,920.75.
4The Defendants argue that in the absence of exceptional circumstances, the general rule is that the unsuccessful party is ordered to pay costs to the successful party on a partial indemnity scale.
5The Defendants point out that Ms. Sahanan retained counsel shortly after receiving the Default Judgment and that her counsel then contacted counsel for the Plaintiff. The Defendants also note that they provided a draft Statement of Defence to the Plaintiff prior to the hearing of the motion. They state that despite the foregoing, the Plaintiff refused to consent to setting aside the Default Judgment and chose to oppose the motion and press ahead with its motion for various relief, most of which was dependent upon the Default Judgment remaining in effect.
6The Defendants submit that the time spent by their lawyer and the amount claimed are reasonable in the circumstances.
b. Position of the Plaintiff
7The Plaintiff seeks costs on a substantial indemnity basis in the amount of $12,403.74. The partial indemnity figure set out in his costs outline is $9,615.56.
8The Plaintiff requests costs thrown away on a substantial indemnity scale against both the Estate and Ms. Sahanan personally. He states that as a result of the Defendants’ default, he incurred costs and disbursements with respect to the Default Judgment, the enforcement of the Default Judgment, and the motion for default judgment against Ms. Sahanan personally. He further states that none of these costs would have been incurred if the Defendants had complied with their obligations under the Rules of Civil Procedure.
9The Plaintiff submits that it is common practice that the defendant pays costs thrown away to the plaintiff when a default judgment is set aside, even if the plaintiff unsuccessfully opposes a motion to set aside the default judgment. The Plaintiff argues that it was reasonable for him to rely on the finality of the Default Judgment and oppose the Defendants’ motion. He notes that while the Defendants sought the Plaintiff’s consent to set aside the Default Judgment, no compensation was offered. He points out that the Defendants provided little to no factual evidence on the motion to set aside the Default Judgment, and that the Defendants did not have a plausible explanation for their default and extensive delay. According to the Plaintiff, the Defendants’ evidence was inconsistent and sparse at best.
10In addition to his costs thrown away, the Plaintiff seeks costs of both the Defendants’ motion to set aside the Default Judgment and his own motion for various relief, which was adjourned sine die as a result of my decision to grant the Defendants’ motion. The Plaintiff argues that it was reasonable for him to bring his motion and to oppose the Defendants’ motion given the Defendants’ failure to respond from 2018 to 2022.
11The Plaintiff asks that the Defendants pay costs thrown away before they are granted leave to file their defence.
c. Reply of the Defendants
12The Defendants state that while it is common to require a defendant to pay costs thrown away by the plaintiff when the default judgment is set aside, there is no evidence before the Court showing that the Plaintiff incurred any costs thrown away in this case. The Defendants point out that the dockets submitted by the Plaintiff reveal that all the time was spent in respect of the two motions that were before the Court. They submit that the time spent by the Plaintiff in preparing for his motion and the Defendants’ motion to set aside the Default Judgment were not costs thrown away; rather, they were costs incurred solely as a result of the position taken by the Plaintiff in his opposition to the Defendants’ motion.
13The Defendants argue that there is no basis for the imposition of substantial indemnity costs against either party in this case.
14The Defendants also argue that there is no general rule in Ontario that a party seeking an indulgence is not entitled to costs. They state that the issue of costs is an exercise of discretion.
Discussion
15In my view, the parties should bear their own costs and there should be no order as to costs.
16The Plaintiff is not entitled to his costs of his motion, which was wide-ranging. That motion was not heard and was not determined. The Plaintiff may be able to claim some of the costs incurred on his motion if a similar motion is brought back in the future.
17With respect to the costs of the motion to set aside the Default Judgment, I accept the Defendants’ submission that there is no general rule in Ontario that a party seeking an indulgence is not entitled to costs. A blanket assertion that a party is not entitled to costs if that party seeks the court’s indulgence is not consistent with the general principles of costs. Ultimately, the issue of costs on this type of motion is an exercise of discretion. See Strathmillan Financial Limited v. Teti, 2021 ONSC 7603 at paras. 48-50 and Atlantic Construction Group Inc. v. 2567616 Ontario Inc., 2021 ONSC 4118 at para. 10.
18While there is no dispute between the parties that it is common to require a defendant to pay costs thrown away by the plaintiff when a default judgment is set aside, I agree with the Defendants that there is no evidence before the Court showing that the Plaintiff incurred any costs thrown away in this case. The Plaintiff was self-represented when he obtained the Default Judgment in February 2019. After obtaining the Default Judgment, he did not take any steps until May 2022. Further, I am not satisfied that the 1.5 hours in the Plaintiff’s costs outline for “[e]nforcement of default judgment, investigation of assets of estate” qualify as costs thrown away. It is more likely than not that this time was spent in relation to the Plaintiff’s motion, which did not proceed. The Plaintiff’s costs outline does not include particulars about this time, such as the date on which the work was done and more information about what exactly was done. There is no evidence of concrete steps that were taken to enforce the Default Judgment against the Estate.
19Even though the Defendants were successful on the motion, I found that: (a) Ms. Sahanan did not have a plausible excuse or explanation for the Defendants’ default in complying with the Rules of Civil Procedure; and (b) her evidence on this point was sparse, inconsistent with other evidence and did not reflect a real effort to respond to the Plaintiff’s claim. The motion to set aside the Default Judgment was made necessary only because of the Defendants’ lack of diligence. In these circumstances, it is my view that the Defendants should not be awarded costs.
20While it may not have been unreasonable for the Plaintiff to oppose the Defendants’ motion in light of the delay in this case and the Defendants’ sparse evidence, it does not mean that the Plaintiff should be rewarded for doing so by being awarded costs. After all, the Plaintiff is the unsuccessful party on the motion.
21Taking the foregoing into account, as well as the factors set out in Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, I find that it is fair and reasonable not to order costs (i.e., that the parties bear their own costs) with respect to the Defendants’ motion to set aside the Default Judgment.
Vermette J. Date: July 6, 2023
Footnotes
1The Default Judgment was granted only against the Estate, not against the Defendant Surjit (misspelled in the title of proceeding) Sahanan.