Court File and Parties

COURT FILE NO.: CV-20-0966 DATE: August 17, 2023 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Tamara Bender, Applicant AND: Goran Dulovic, Respondent

BEFORE: MacNeil J.

COUNSEL: A. Bonnell – Lawyer for the Applicant Goran Dulovic – Self-represented

Decision on Costs

[1] This is my decision on costs relating to the application commenced by the Applicant and the two cross-applications commenced by the Respondent that were heard together concerning rights to use a driveway and a water well located on the Applicant’s property, among related relief. My decision in this regard is made further to my Reasons for Judgment released April 25, 2023. The Applicant was substantially successful on her application and the Respondent’s cross-applications were dismissed in their entirety.

[2] The parties were unable to settle the issue of costs incurred in connection with the proceeding and have made written submissions.

Position of the Applicant

[3] By the bill of costs attached to the written submissions filed on behalf of the Applicant, her full indemnity costs of the applications total $131,368.89, inclusive of HST and disbursements. She seeks an award of costs on a partial indemnity scale at the high end of the range to the date of her Rule 49 offer, dated September 30, 2021, and on a substantial indemnity basis thereafter (although there is no breakdown provided).

[4] It is the Applicant’s position that she was substantially successful on her application for a declaration that the Respondent has no rights over her property, and entirely successful in her opposition of the Respondent’s two cross-applications for a declaration for ownership of part of the Applicant’s property and a declaration for an easement over the said property. The Applicant submits that the issues at stake in the applications were of great importance to her given that the Respondent sought to claim use or ownership of her property and had already significantly interfered in her use and enjoyment of same. A significant amount of time and effort was required to prepare the materials necessary to both advance her application and oppose the Respondent’s cross-applications. The Applicant submits that she was required to prepare multiple affidavits and an extensive factum. She was also required to retain an expert, who prepared two expert reports, in order to refute the Respondent’s allegations. Cross-examinations on affidavits took place over four days. The applications themselves took a full day of hearing to argue.

[5] The Applicant argues that the proceeding was prolonged by the Respondent's conduct, including his changing of lawyers twice and then choosing to represent himself, which delayed timetables that had been set by court orders; and his refusal to proceed with cross-examinations which required the Applicant to bring a motion for directions, dated July 20, 2022.

[6] With respect to the motion for directions, while the Motion Judge who heard that motion declined to rule on costs, the Applicant takes the position that such costs should be payable to her.

[7] The Applicant’s offer to settle was served on or about September 30, 2021. The Applicant submits that she obtained a judgment as favourable as the terms of her offer. She did not seek any monetary amount besides costs, and she was successful in obtaining the declarations she sought with respect to her property rights.

[8] The legal work done on the file was appropriately delegated to junior counsel who did the majority of the work, under the supervision of senior counsel.

[9] The Applicant notes that the Respondent acknowledges in his responding submissions that he did not have a single favourable survey to support his position nevertheless he remained “entirely uncompromising” throughout the litigation. The Respondent made no attempts to settle the matter prior to trial, and he refused the Applicant’s request to mediate.

[10] With respect to the Respondent’s submissions about his inability to pay costs, the Applicant submits this factor should not be given much weight in reducing the costs amount awarded. Further, the fact that the Respondent was self-represented is not a valid reason for reducing the substantial amount of legal costs he caused the Applicant to incur.

Position of the Respondent

[11] It is the position of the Respondent that the Applicant was not successful in obtaining a favorable judgment regarding her claims of harassment, damages for trespass, nuisance or loss of enjoyment of her property, the cost of removing hydro lines and internet cables, punitive damages, or a request for a police enforcement clause. He estimates the combined claims in this regard is worth more than $300,000. The Respondent contends that he spent a lot of time defending himself from false allegations for harassment, trespass, nuisance, etc. Since the Applicant had two favorable land surveys and he had none, the case should have been relatively simple. So, most of the Applicant’s legal work must have concentrated around the claims for harassment, trespass, nuisance, etc.

[12] The Respondent submits that the Applicant’s engagement of her expert witness took a long time, and this significantly delayed the preceding. The Respondent’s position is that he did “nothing to unnecessarily extend the duration of the proceedings”. He is in poor health but he managed to participate in the proceedings, despite advice he received to the contrary.

[13] The Respondent submits that he represented himself out of necessity as he is a retiree and has a very low income. He states that he does not have the ability to pay costs to the Applicant for the same reason. The Respondent contends that he did most of the work on the case by himself, and “he needed less time than [the] opposing side even though English is not his mother tongue”.

[14] With respect to the motion for directions, the Respondent argues that this was not necessitated by his conduct. He submits that he was ready for cross-examination, but it was cancelled by the Applicant’s lawyer. The Motion Judge who decided the motion for directions did not award costs to either party.

[15] Regarding the Applicant’s Rule 49 offer, the Respondent states that he does not understand how Rule 49 works since he is not a lawyer. He argues that no serious settlement talks ever took place between the parties, and the first direct contact between the parties was during the cross-examinations stage.

[16] The Respondent submits that, at the hearing, he was handed a different bill of costs from the Applicant’s counsel, one which shows costs amounts lower than those now being claimed, and it is not clear what has been added to the previous bill of costs. (The Respondent attached that initial version of the Applicant’s bill of costs with his responding submissions. The main difference between the two bills of costs is that the second version includes the Applicant’s costs in the amount of $17,805.50 for the motion for directions and her costs claimed for preparing and reviewing the bill of costs submitted to the court.)

[17] The Respondent requests that no costs be awarded to the Applicant as the costs being sought are unreasonably high, and he has no ability or money to pay costs to the Applicant.

General Principles

[18] 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.

[19] 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 establishes the fees and disbursements that are allowable under Rules 57.01 and 58.05.

[20] 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.

[21] Rule 49.10 of the Rules provides costs consequences where a party fails to accept an offer to settle. Where a plaintiff makes an offer to settle that is not accepted and obtains a judgment as favourable as or more favourable than the terms of the offer, Rule 49.10(1) provides that the plaintiff is entitled to partial indemnity costs to the date the offer was served and substantial indemnity costs thereafter, unless the court orders otherwise. The intent of Rule 49.10 is to induce settlements and avoid trials. The Ontario Court of Appeal has held that a court should depart from the costs consequences imposed by Rule 49.10 only where, after giving proper weight to the policy of the rule and the importance of reasonable predictability and the even application of the rule, the interests of justice require a departure: see Starkman v. Starkman, [1990] O.J. No. 1627, 28 R.F.L. (3d) 208 (Ont. C.A.), at para. 31.

[22] 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.

[23] 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 CarswellOnt 3955, 128 O.A.C. 2 (Ont. C.A.), at para. 22; and 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238 (Ont. S.C.J.), at para. 10.

[24] The primary principles in fixing costs are fairness, reasonableness and proportionality. An award of costs should be proportional to what was at stake.

[25] As stated by the Ontario Court of Appeal in Boucher v. Public Accountants Council (Ontario) (2004), 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 CarswellOnt 4020, [2002] O.J. No. 4495 (Ont. C.A.), at para. 4.)

Analysis

[26] The Applicant was substantially successful on her application and was entirely successful in obtaining a dismissal of the cross-applications. As a result, she is presumptively entitled to costs. The question is what is the appropriate quantum of costs that should be awarded.

Costs for motion for directions

[27] With respect to the Applicant’s request for costs relating to the motion for directions, I have reviewed the Order made by The Honourable Justice Braid, dated October 6, 2022 (“the Order”). In the Order, there is no reference to costs being awarded or reserved. The bulk of the terms of the Order were made on consent. In the circumstances, I decline to grant any award of costs for the motion for directions. As a result, that reduces the amount of the Applicant’s claim for costs by $17,805.50.

Substantial indemnity costs

[28] Generally speaking, substantial indemnity costs will be awarded where there has been “reprehensible, scandalous or outrageous conduct on the part of one of the parties”. The fact that a proceeding has little merit is no basis for awarding substantial indemnity costs: see Young v. Young, [1993] 4 S.C.R. 3 (S.C.C.), at para. 251. In the circumstances, while the Respondent was ultimately unsuccessful, I am not persuaded that his conduct was so reprehensible or scandalous or outrageous that it warrants an award of costs to the Applicant on a substantial indemnity basis. Accordingly, I will consider awarding costs on a partial indemnity basis.

Offer to settle

[29] While the Applicant’s September 30, 2021 offer to settle was an offer that the Respondent was capable of accepting and while I am satisfied that the Applicant achieved a result which was as favourable as that offer, I have decided to exercise my discretion to not apply the costs consequences under Rule 49.10 because the Applicant was not wholly successful before me on her application. Her claims for damages for harassment, trespass, nuisance or loss of enjoyment of her property, remediation and the removal of hydro lines and internet cables were dismissed. Accordingly, I will reduce the costs amount awarded to reflect the end result. However, I note that there was not a significant amount of time spent on these issues at the hearing so the reduction will be proportionate.

Expert fees

[30] The Applicant claims the amount of $17,193.00 for expert fees she incurred. The expert reports obtained by the Applicant from Merredith MacLennan were supplied to the Respondent, as required by the Evidence Act, and were used in the hearing. I am also satisfied that they were reasonably necessary for the conduct of the proceeding. Accordingly, I find that the Applicant is entitled to reimbursement for expert fees she incurred.

Impecuniosity

[31] The court must exercise its discretion in a manner that balances the competing interests of the parties and considers all relevant factors. One factor that a court can consider is a party’s impecuniosity: see Burrell v. Peel (Regional Municipality) Police Services Board, 2007 CarswellOnt 6992, [2007] O.J. No. 4232 (Ont. S.C.J.), at paras. 54-55. However, while a party's limited financial circumstances can be taken into account regarding the quantum of costs, they should not be used as a shield against any liability for costs: see Jackson v. Mayerle, 2016 ONSC 1556 (S.C.J.) at para. 107.

[32] Although the Respondent asserts that he has no ability to pay costs, he did not provide any evidence respecting his actual income. While I have considered the Respondent’s submission that he is of limited financial means, I have given it limited weight in the circumstances.

What is fair and reasonable?

[33] The Respondent submits that the court should consider the initial bill of costs that was delivered to him on the day of the hearing. Given that Rule 57.01(5) requires the delivery of a bill of costs after the hearing of an application and given that I did hear some preliminary submissions respecting costs at the end of the hearing day, I accept the Respondent’s submission that the bill of costs delivered to him at the hearing is the appropriate bill of costs to be considered. That initial bill of costs does not include the costs claimed for the motion for direction totalling $17,805.50. It sets out total partial indemnity costs of $74,573.39; substantial indemnity costs in the amount of $100,105.18; and full indemnity costs in totalling $108,615.77.

[34] One of the factors to be considered in determining costs is the reasonable expectations of the unsuccessful party. Here, the Respondent filed his bill of costs which totalled $50,955.05.

[35] In reaching my decision, I have also considered the following factors: a. It was reasonable for the Applicant to have commenced her application and to have responded to the Respondent’s two cross-applications in the manner that she did. b. The matter was of greater than average complexity. c. The issues raised on the applications were of high importance to the parties. d. Expert evidence had to be obtained and led by the parties in respect of the title issues. e. The majority of the work done on the Applicant’s file was undertaken by a junior lawyer, under the supervision of a senior lawyer, and so the hourly rates claimed appear to me to be reasonable. f. The claimed disbursements appear to me to be reasonable in the circumstances. g. While the Respondent’s bill of costs shows that he incurred less legal fees, I accept that the Applicant had to undertake more work and prepare more materials than the Respondent in order to prosecute her application and respond to the two cross-applications. h. I have considered that the Respondent could reasonably have expected to pay costs in the event of lack of success on the application/cross-applications. i. The Applicant’s offer to settle was a very reasonable one in the circumstances. j. Given that there were no dockets or affidavit submitted by the Applicant, there is insufficient information for me to determine whether all of the legal time claimed is reasonable or whether there is any time/work that is duplicative or excessive.

[36] Having regard to all of the foregoing factors, and considering the balancing exercise required under Rule 57.01 and the guidance provided by the Boucher decision of the Ontario Court of Appeal, I find that a fair, reasonable and proportionate amount of costs to be awarded to the Applicant in the circumstances is $65,000.00, inclusive of legal fees, disbursements and HST.

Disposition

[37] In the result, the Respondent is ordered to pay to the Applicant costs fixed in the amount of $65,000.00, inclusive of HST and disbursements. Costs are ordered to be paid within 90 days.

MacNEIL J. Released: August 17, 2023