Court File and Parties

COURT FILE NO.: CV-20-00005029-00ES DATE: 20231010 SUPERIOR COURT OF JUSTICE – ONTARIO

IN THE MATTER OF THE ESTATE OF VIOLET MANOUSHAG HOUGASSIAN, deceased

BETWEEN:

SOLINA (SOLINEE) BRADHSHAW personally and in her capacity as named Estate Trustee of the Estate of Violet Manoushag Hougassian, deceased Plaintiff

AND:

JACK HOUGASSIAN, SONA SHEA, and JDJ MANAGEMENT INC. Defendants

BEFORE: Justice A.A. Sanfilippo

COUNSEL: Lionel Tupman and Devin McMurtry, for the Plaintiff Jarvis K. Postnikoff, for the Defendants Jack Hougassian and JDJ Management Inc. Sona Shea, acting in person

HEARD: In writing

Endorsement on Costs

[1] In my Reasons for Judgment issued June 26, 2023, I provided that if the parties were unable to agree on the issue of costs, they could deliver written submissions on costs in accordance with the timetable that was established. [1] The parties were not able to agree on the issue of costs, and delivered written submissions, which I have considered. [2]

[2] The Plaintiff, Solina Bradshaw, sought costs in the amount of $140,000.00, payable by the Defendant, Jack Hougassian. This represents an elevated cost award, between the amounts of partial indemnity costs and substantial indemnity costs set out in the Plaintiff’s Bill of Costs. The Plaintiff submitted she is entitled to an award of costs because she was successful in obtaining judgment on behalf of the Estate of Violet Manoushag Hougassian, deceased (the “Estate”). The Plaintiff claimed an elevated cost award because of the Defendant, Jack’s conduct, which she alleged was improper and vexatious, because of Jack’s failure to establish a limitation defence, and because of her attempts to settle through offers to settle that were close to the result achieved at trial and were unreciprocated by any reasonable attempt to settle by Jack.

[3] Jack submitted that he should receive costs on the basis that he was more successful at trial than Solina. Jack submitted that the judgment awarded to the Plaintiff in the amount of $125,900.44 represents only 26% of the net sale proceeds of the property that Solina sought to recover for the Estate: specifically, the house known municipally as 323 Cyrus Street, Cambridge, Ontario (the “Property”). Alternatively, Jack submitted that success in the trial was divided, because the Plaintiff did not establish her claims for unjust enrichment, including the proprietary remedy of constructive trust, or breach of fiduciary duty or fraud, while Jack established that he was entitled to reimbursement for renovation costs incurred by him and his company, JDJ Management Inc. (“JDJ Inc.”) to prepare the Property for sale at its highest value. Jack contended that the dismissal of Solina’s claim in fraud should give rise to an entitlement to a cost award on a substantial indemnity basis.

[4] Sona, who acted in person, sought costs in the amount of $10,000.00 “to compensate for time lost from work, emotional hardship and assorted travel costs relating to the hearing.”

[5] For the reasons that follow, I award the Plaintiff, Solina in her capacity as Estate Trustee, costs payable by Jack, fixed in the amount of $125,000.00, all-inclusive of fees, disbursements and applicable taxes. Jack and Sona’s claims for costs are dismissed.

[6] For brevity and clarity, I respectfully refer to the parties in this Endorsement on Costs by their first names, in the same manner as in the Reasons for Judgment.

I. ANALYSIS

[7] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides the Court with discretion in the determination of costs. The principles to be applied by the Court in the exercise of this discretion includes the factors enumerated in Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. In consideration of these principles, the overarching objective is to determine whether a party has established an entitlement to an award of costs and, if so, “to fix an amount of costs that is objectively reasonable, fair, and proportionate for the unsuccessful party to pay in the circumstances of the case:” Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587, [2022] O.J. No. 3632, at para. 61, citing Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d) 291 (C.A.), at para. 26. In Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, at para. 12, leave to appeal to the SCC refused, [2019] S.C.C.A. No. 82, Nordheimer J.A. stated that “proportionality and reasonableness are the touchstone considerations to be applied in fixing the amount of costs.”

[8] The Court of Appeal has instructed that the purposes of an award of costs are to indemnify the successful party of the legal costs they incurred; to encourage settlement; to deter frivolous actions and defences; and to discourage unnecessary steps that unduly prolong the litigation: 1465778 Ontario Inc. v. 1122077 Ontario Ltd., 82 O.R. (3d) 757 (C.A.), at para. 26; Fong v. Chan (1999), 46 O.R. (3d) 330 (C.A.), at para. 22.

A. The Determination of Success

[9] Consideration of success is the starting point in the determination of the issue of costs.

[10] The issue of entitlement to an award in costs is informed by the “result in the proceeding”, a factor set out in Rule 57.01(1). The case law has well-established that absent special circumstances, “costs follow the event”: Bell Canada v. Olympia & York Developments Ltd. (1994), 111 D.L.R. (4th) 589 (Ont. C.A.); Yelda v. Vu, 2013 ONSC 5903, [2013] O.J. No. 4246, at para. 11, leave to appeal refused, 2014 ONCA 353; St. Jean v. Cheung, 2009 ONCA 9, [2009] O.J. No. 27, at para. 4; 1318706 Ontario Ltd. v. Niagara (Municipality) (2005), 75 O.R. (3d) 405 (C.A.), at paras. 48-52.

[11] Solina was successful in establishing an entitlement to judgment. Jack and JDJ Inc. were ordered to pay Solina, in her capacity as Estate Trustee, the amount of $115,900.44 as her interest in the Property, and $10,000.00 as damages for personal property belonging to the Estate. [3] The Plaintiff thereby recovered judgment where Jack and JDJ Inc. had sought to establish that the Plaintiff had no entitlement to any amount in judgment.

[12] I do not accept Jack’s submission that since the Plaintiff sought recovery of the entirety of the net proceeds from the sale of the Property, currently held in trust in the amount of $486,858.39, and recovered a 26% interest, that Jack was successful in retaining a 74% interest. The Plaintiff was successful in establishing a purchase money resulting trust when Jack said that there was none, and in recovering a portion of the net proceeds from the sale of the Property when Jack maintained that he was entitled to all the proceeds. To use the terminology expressed by the Court of Appeal in Mihaylov v. 1165996 Ontario Inc., 2017 ONCA 218, [2017] O.J. No. 1351, at para. 8, the Plaintiff succeeded on the dispute that “drove” the proceeding. To be successful in this trial for the purposes of establishing an entitlement to an award of costs, the Plaintiff did not have to establish the entirety of her claim.

[13] Jack’s alternative submission, that success at trial was divided, was not established. Although the Plaintiff failed to establish her claim in unjust enrichment, the proprietary remedy of constructive trust, and her claim that Jack breached a fiduciary duty and engaged in fraud, these causes of action led to the remedy that the Plaintiff achieved: namely, a share in the net proceeds from the sale of the Property. This did not result in divided success.

[14] Solina and Jack had off-setting success on other issues. Solina established an entitlement to damages based on Jack’s removal of personal property belonging to the Estate, and Jack established an entitlement to reimbursement for renovation costs incurred by him and JDJ Inc. to prepare the Property for sale. Jack failed to establish his claim for recovery of funeral expenses and his limitation defence, while Solina failed to establish her alternate causes of action. Through these issues, both parties extended the duration of the proceeding, which is a pertinent factor in the exercise of my direction under Rule 57.01(1)(e), but this did not result in divided success in the manner argued by Jack.

[15] Solina has established the basis for an award of costs, sought only against Jack, arising from her success at trial.

B. Fixing the Amount of Costs Payable by Jack to Solina

[16] I will now examine the relevant factors applicable to fixing the amount of costs.

(a) The Scale of Costs

[17] The Plaintiff’s Bill of Costs sets out a claim for costs on a partial indemnity scale of $113,118.85, all-inclusive of fees, disbursements, and applicable taxes. [4] The Plaintiff’s Bill of Costs shows that these costs total $169,678.28 on a substantial indemnity basis. [5] The Plaintiff sought costs on a “somewhat elevated amount” of $140,000.00, all-inclusive.

[18] The Plaintiff sought elevated costs on the basis of Jack’s conduct, which according to the Plaintiff, was improper and vexatious in three ways. First, Jack removed personal property belonging to the Estate while understanding that Solina was the Estate Trustee under the Will. Second, Jack brought voluminous objections to the admissibility of Solina’s affidavit evidence at the start of trial even though these objections should have been brought sooner. Third, Jack referred to Solina in a derogatory and offensive manner while testifying under oath, in an out of court examination.

[19] The Court of Appeal has stated that “costs on the elevated scale are exceptional and are reserved for those situations when a party has displayed reprehensible, scandalous, or outrageous conduct”: Quickie Convenience Stores Corp. v. Parkland Fuel Corporation, 2021 ONCA 287, [2021] O.J. No. 2352, at para. 4, citing Montréal (Ville) v. Octane Stratégie Inc., 2019 SCC 57, 440 D.L.R. (4th) 1, at para. 95. I find that Jack’s removal of the Deceased’s personal property, belonging to the Estate, does not rise to the level of justifying an award of elevated costs because this conduct has already been addressed in the damage award granted to the Plaintiff for the loss of this personal property. The objections to the admissibility of Solina’s affidavit evidence was addressed efficiently at trial, did not appreciably expand the length of trial and, in some respects, was sustained.

[20] Jack’s derogatory and offensive reference to Solina, provided under oath in an out of court examination conducted in this proceeding was, in my view, reprehensible, and is deserving of an elevated award of costs to discourage and sanction this inappropriate conduct.

[21] Solina also engaged in reprehensible conduct. Solina made unsubstantiated allegations of fraud and misconduct by Jack that were not proven at trial. Solina’s claim in civil fraud was dismissed. [6] In Unisys Canada Inc. v. York Three Associates Inc., 150 O.A.C. 49, at paras. 15-16 (C.A.), the Court of Appeal held that unproven allegations of this nature are “sufficiently reprehensible to warrant” an award of costs on an elevated scale.

[22] I found at trial that the relationship between Solina and Jack was marred by conflict, as evidenced by unworthy comments in their written communications, and in their evidence and conduct toward each other that did not flatter either of them. [7] It is well-established that conduct is an important factor in the Court’s exercise of discretion on the issue of costs: Render v. ThyssenKrupp Elevator (Canada) Limited, 2022 ONCA 310, [2022] O.J. No. 1840, at para. 89. Solina and Jack both conducted themselves in this proceeding in ways that exposed each of them to a claim for an elevated cost award. There is basis to express disapproval for conduct on the part of both.

(b) Offers to Settle

[23] Neither party delivered an Offer to Settle that engages the principles set out in Rule 49.10. However, Solina delivered an Offer to Settle that came close to activating Rule 49.10(1), and thereby entitling her to costs on a substantial indemnity basis from the time of delivery of the Offer to Settle.

[24] Solina delivered an Offer to Settle dated August 27, 2021, wherein she offered to settle by receipt of payment by Jack of $200,000.00 to be divided equally between the two Estate beneficiaries, Solina and Sona, plus costs of $80,000.00. On November 14, 2022, Solina delivered a further Offer to Settle wherein she offered to settle by receipt of payment by Jack of $150,000.00 to Solina and Sona, and $75,000.00 in costs (the “November 2022 Offer to Settle”). This Offer to Settle was open for acceptance until the start of trial. Solina recovered the amount of $125,900.44, which fell short of the amount demanded. Jack did not deliver any Offer to Settle under Rule 49.

[25] The November 2022 Offer to Settle does not engage Rule 49.10(1) because Solina did not obtain a “judgment as favourable as or more favourable than the terms of the offer.” However, it was close. I will take the November 2022 Offer to Settle into consideration under Rule 49.13, which provides as follows: “Despite rules 49.03, 49.10 and 49.11, the court, in exercising its discretion with respect to costs, may take into account any offer to settle made in writing, the date the offer was made and the terms of the offer.” Such a consideration falls within the category of “any other matter relevant to the question of costs”, as provided by Rule 57.01(i), and supports the fixing of an elevated cost award.

(c) What Costs Could Jack Reasonably Expect to Pay?

[26] Rule 57.01(1)(0.b) provides that a relevant factor in the exercise of my discretion is “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.” Jack filed a Bill of Costs wherein he claimed $111,505.86, all-inclusive. [8] This is very close to the Plaintiff’s Bill of Costs of $113,118.85, all-inclusive. I have considered the Plaintiff’s Bill of Costs, for the purposes of Rule 57.01(0.a). I find the costs claimed by the Plaintiff to be reasonable for this three-year-old proceeding, resulting in a 5-day trial.

[27] I find that Jack could reasonably expect to be liable for the partial indemnity costs sought by the Plaintiff. In the circumstances, I also conclude that the Jack could reasonably expect to be liable for a cost award above the amount of his lawyer’s Bill of Cost, considering his experience of cost issues in this proceeding. Jack was ordered to pay a cost award to Solina of $25,000.00 on the dismissal of Jack’s summary judgment motion. Jack could reasonably expect that having incurred this cost exposure on a single day summary hearing that he could also be liable to a cost award five times this amount after a five-day trial.

(d) The Complexity of the Proceeding/Importance of the Issues

[28] Rule 57.01(1)(c) provides that a relevant factor in the exercise of my discretion is the complexity of the proceeding. This proceeding was of modest complexity, from the standpoint of both the factual evidence and the legal issues.

[29] Rule 57.01(1)(d) provides that the importance of the issues to the parties is material to my exercise of discretion on the issue of costs. The issues raised by this proceeding were undoubtedly important to Solina, Jack and Sona. The trial raised their shared life experience, their dealings with their parents and the transfers resulting from their mother’s death.

(e) The Role of Rule 76.13

[30] Jack submitted that Solina should be denied costs on the basis of Rule 76.13(2). Specifically, Jack contended that Solina recovered a monetary judgment that is below $200,000.00 and ought to have brought this action under Rule 76 using the Simplified Procedure.

[31] I do not accept this submission. This action was the product of two Applications that were joined and consolidated by the Order of Justice Conway issued December 9, 2020, and then converted from an Application to an Action by the Order of Justice Dietrich issued February 10, 2022. [9] By Trial Management Endorsement issued January 17, 2023, I ordered, on the consent of the parties, that “the affidavit evidence filed in the Application Records, which will form part of the Trial Record, will be used as the parties’ direct examination evidence, as supplemented by any additional questioning that the parties may be advised to conduct, including to frame the witness’ testimony, tender the affidavit evidence and present the witness’ evidence.” The procedure fashioned for this trial simulated the summary trial process set out in Rule 76.12. As a result, there is no basis for a cost ruling under Rule 76.13.

(f) Conclusion – Fixing the Costs Payable by Jack to Solina

[32] The overarching objective is to determine a cost quantification that is objectively fair and reasonable, and not simply an arithmetic or mechanical measure of the actual costs incurred by a successful litigant: Apotex Inc., at para. 61; Barbour v. Bailey, 2016 ONCA 334, [2016] O.J. No. 2352, at para. 9; Boucher, at paras. 26 and 38; Zesta Engineering Ltd. v. Cloutier, at para. 4. The Court of Appeal has instructed that after consideration of the relevant factors to be applied to the costs claimed, the Court should then “step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable:” Apotex Inc., at para. 60, applying Restoule v. Canada (Attorney General), 2021 ONCA 779, 466 D.L.R. (4th) 2, at para. 356.

[33] Having considered all applicable principles set out by the case law and under Rule 57.01, and in the exercise of my discretion, as set out in s. 131 of the Courts of Justice Act, I have concluded that it is reasonable, fair, just and proportionate to fix the Plaintiff’s costs of this proceeding in the amount of $125,000.00, all-inclusive, payable by the Defendant, Jack.

C. Sona’s Claim for Costs

[34] Sona did not file a Bill of Costs, as required by Rule 57.01(5) and by para. 167 of the Reasons for Judgment. Sona’s written cost submissions consisted of an undated letter sent by email on July 21, 2023. Sona stated that Solina’s inclusion of her in this action was “designed to cause turmoil, stress and financial hardship”. Sona sought $10,000.00 as compensation for lost salary, emotional hardship, and assorted travel costs.

[35] In Girao v. Cunningham, 2021 ONCA 18, at para. 9, the Court of Appeal confirmed the principles for awarding fee allowances to self-represented litigants, as earlier stated in Benarroch v. Fred Tayar & Associates P.C., 2019 ONCA 228, at paras. 19-20 and in Fong v. Chan (1999), 46 O.R. (3d) 330, [1999] O.J. No. 4600 (Ont. C.A.), at para. 26. The Court of Appeal instructed in these cases that the litigant acting in person should only be awarded costs when they “can demonstrate that they devoted time and effort to do the work ordinarily done by a lawyer retained to conduct the litigation and that, as a result, they incurred an opportunity cost by forgoing remunerative activity.”

[36] Sona did not do the work ordinarily conducted by a lawyer. Sona did not appear at the Trial Management Conferences of January 5 and 17, 2023. Sona had no role in the preparation of the Trial Management Report to Trial Judge. Sona did not call witnesses at trial. No trial time was allocated to Sona’s defence as the Plaintiff did not seek Judgment against Sona. Sona attended at trial as she would have as a litigant, but for the brief time that Sona spent in opening and closing submissions and questioning Solina.

[37] This finding alone is sufficient to deny Sona any costs. Had it been necessary, I would also have found that Sona did not demonstrate that she incurred an opportunity cost by loss of employment income while attending at trial. Sona did not set out any basis for her claim that she lost income. And Sona’s claim for “emotional hardship” is not a proper claim for costs. It would have had to be brought as a claim for general damages, which it was not.

[38] Finally, I observe that Sona seeks costs from Solina, who was acting in a representative capacity on behalf of the Estate, when Solina’s success in this action benefits Sona in her capacity as a beneficiary in the residue of the Estate. It would not be fair nor reasonable for Sona to be awarded costs from Solina.

[39] In the exercise of my discretion, Sona’s claim for costs is dismissed.

II. DISPOSITION

[40] On the basis of the reasons set out herein, I order: (a) The Defendant, Jack Hougassian, shall forthwith pay the Plaintiff, Solina Bradshaw, personally and in her capacity as named Estate Trustee of the Estate of Violet Manoushag Hougassian, deceased (the “Estate”), costs of this proceeding, fixed in the amount of $125,000.00, all-inclusive of legal fees, disbursements, and applicable taxes. (b) The claims for costs by Jack Hougassian and Sona Shea are dismissed.

[41] The lawyers for the parties may deliver to my judicial assistant a form of draft Judgment, after agreeing on its form and content, and filing it on CaseLines. It shall comprise the disposition set out in this Endorsement and in the Reasons for Judgment. In the event of disagreement, any party may request the scheduling of a Case Conference to settle the form of Judgment.

Justice A.A. Sanfilippo Date: October 10, 2023

Footnotes

[1] Bradhsaw v. Hougassian, 2023 ONSC 3266, [2023] O.J. No. 2947, at para. 167 (“Reasons for Judgment”).

[2] Costs Submissions of the Plaintiff dated July 21, 2023, together with Bill of Costs dated January 23, 2023; Costs Submissions of the Defendants, Jack Hougassian and JDJ Management Inc., dated July 24, 2023; Cost Submissions of Sona Shea, undated, sent July 21, 2023; Responding Cost Submission of the Defendants, Jack Hougassian and JDJ Management Inc., dated July 28, 2023; Responding Cost Submissions of the Plaintiff, dated August 18, 2023.

[3] Reasons for Judgment, para. 165: “On the basis of these reasons, the Plaintiff shall have judgment as follows: The Defendants, Jack Hougassian and JDJ Management Inc. shall pay the Plaintiff, Solina (Solinee) Bradshaw, in her capacity as Estate Trustee of the Estate of Violet Manoushag Hougassian, deceased (“Estate”), the amount of $115,900.44 as the beneficial interest of the Estate in the net, adjusted sale proceeds of the property known municipally as 323 Cyrus Street, Cambridge, Ontario; (b) The Defendant, Jack Hougassian, shall pay the Plaintiff, Solina (Solinee) Bradshaw, in her capacity as Estate Trustee of the Estate, the amount of $10,000.00, as damages for personal property belonging to the Estate.”

[4] Consisting of legal fees of $95,322.00, HST of $12,391.86 and disbursements of $5,404.99, inclusive of HST.

[5] Consisting of legal fees of $142,983.00, HST of $18,587.79 and disbursements of $8,107.49, inclusive of HST.

[6] Reasons for Judgment, at para. 112: “The Plaintiff fell well-short of establishing any of the four elements required for civil fraud. The Plaintiff’s claim in civil fraud is dismissed.”

[7] Reasons for Judgment, at paras. 33 and 36.

[8] Consisting of legal fees of $89,027.50, HST of $11,573.58 and disbursements of $10,905.78, inclusive of HST.

[9] Reasons for Judgment, paras. 9-12.