COURT FILE NO.: CV-17-1768-00
DATE: 2023 01 27
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Shazia Tariq Paracha, Tariq Paracha, and Shabana Zain
Plaintiffs
-and-
Naqi Construction Ltd., Rabia Batool, and Muhammad Ali
Defendants
BEFORE: Bloom, J.
COUNSEL: Rosemary A. Fisher, counsel for the Plaintiffs
Tariq Wasey Khan, counsel for the Defendants
C O S T S E N D O R S E M E N T
[1] This is my ruling on the issue of costs in respect of the proceeding for which I delivered reasons for judgment dated December 6, 2022.
ARGUMENTS OF THE PARTIES
[2] The Plaintiffs seek costs on a full indemnity basis of $579,834.02 based on their success at trial, their attempts to settle the case, unproven allegations of misconduct by the Defendants, refusal by the Defendants to admit facts, including the Plaintiffs’ status as investors, and delay caused by the Defendants, including by unfocussed cross-examinations.
[3] The Defendants seek costs in an amount I should determine, and, alternatively, an order that no costs are to be determined until any appeals are finally decided.
[4] The Defendants submit that the Plaintiffs were not fully successful; and that it is not clear whether the Plaintiffs offer was exceeded.
[5] The Defendants submit that their costs on a full indemnity basis are $282,550.40; and that, unless I find that they engaged in reprehensible, scandalous, or egregious behaviour, the Plaintiffs are not entitled to costs on a substantial indemnity basis.
GOVERNING LEGAL PRINCIPLES
[6] The applicable rule in this matter is Rule 57.01 which provides:
57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) 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;
(0.b) 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;
(a) the amount claimed and the amount recovered in the proceeding;
(b) the apportionment of liability;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(f) whether any step in the proceeding was,
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(g) a party’s denial of or refusal to admit anything that should have been admitted;
(h) whether it is appropriate to award any costs or more than one set of costs where a party,
(i) commenced separate proceedings for claims that should have been made in one proceeding, or
(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer;
(h.1) whether a party unreasonably objected to proceeding by telephone conference or video conference under rule 1.08; and
(i) any other matter relevant to the question of costs. R.R.O. 1990, Reg. 194, r. 57.01 (1); O. Reg. 627/98, s. 6; O. Reg. 42/05, s. 4 (1); O. Reg. 575/07, s. 1; O. Reg. 689/20, s. 37.
Costs Against Successful Party
(2) The fact that a party is successful in a proceeding or a step in a proceeding does not prevent the court from awarding costs against the party in a proper case. R.R.O. 1990, Reg. 194, r. 57.01 (2).
Fixing Costs: Tariffs
(3) When the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs. O. Reg. 284/01, s. 15 (1).
Assessment in Exceptional Cases
(3.1) Despite subrule (3), in an exceptional case the court may refer costs for assessment under Rule 58. O. Reg. 284/01, s. 15 (1).
Authority of Court
(4) Nothing in this rule or rules 57.02 to 57.07 affects the authority of the court under section 131 of the Courts of Justice Act,
(a) to award or refuse costs in respect of a particular issue or part of a proceeding;
(b) to award a percentage of assessed costs or award assessed costs up to or from a particular stage of a proceeding;
(c) to award all or part of the costs on a substantial indemnity basis;
(d) to award costs in an amount that represents full indemnity; or
(e) to award costs to a party acting in person. R.R.O. 1990, Reg. 194, r. 57.01 (4); O. Reg. 284/01, s. 15 (2); O. Reg. 42/05, s. 4 (2); O. Reg. 8/07, s. 3.
Bill of Costs
(5) After a trial, the hearing of a motion that disposes of a proceeding or the hearing of an application, a party who is awarded costs shall serve a bill of costs (Form 57A) on the other parties and shall file it, with proof of service. O. Reg. 284/01, s. 15 (3).
Costs Outline
(6) Unless the parties have agreed on the costs that it would be appropriate to award for a step in a proceeding, every party who intends to seek costs for that step shall give to every other party involved in the same step, and bring to the hearing, a costs outline (Form 57B) not exceeding three pages in length. O. Reg. 42/05, s. 4 (3).
Process for Fixing Costs
(7) The court shall devise and adopt the simplest, least expensive and most expeditious process for fixing costs and, without limiting the generality of the foregoing, costs may be fixed after receiving written submissions, without the attendance of the parties. O. Reg. 42/05, s. 4 (3).
[7] In Apotex Inc. v. Eli Lilly, 2022 ONCA 587, [2022] O.J. No. 3632 at paras. 59 to 66 (CA) Justice Roberts for the Court set out the proper approach to applying that provision:
(a)General Principles
59 The relevant principles to be applied in a court's exercise of its discretion to award costs under s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 are well established. They include the myriad factors enumerated in rule 57.01(1) of the Rules of Civil Procedure, such as: the result achieved, the amounts claimed and recovered, the complexity and importance of the issues in the proceeding, as well as "any other matter relevant to the question of costs". This is not a mechanical exercise or a rubber stamp.
60 A proper costs assessment requires a court to undertake a critical examination of the relevant factors as applied to the costs claimed and then "step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable": Restoule v. Canada (Attorney General), 2021 ONCA 779, 466 D.L.R. (4th) 2, at para. 356, citing Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 24. However, as this court recently reiterated in Restoule, at para. 357, referencing Murano v. Bank of Montreal (1998), 1998 CanLII 5633 (ON CA), 163 D.L.R. (4th) 21 (Ont. C.A.), at para. 100, "this overall sense of what is reasonable 'cannot be a properly informed one before the parts are critically examined'".
61 The overarching objective is 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, rather than to fix an amount based on the actual costs incurred by the successful litigant: Boucher, at para. 26.
62 While the reasonable expectation of the parties concerning the amount of a costs award is a relevant factor that informs the determination of what is fair and reasonable, it is not the only, determinative factor and cannot be allowed to overwhelm the analysis of what is objectively reasonable in the circumstances of the case. To hold otherwise would result in the means of the parties artificially inflating costs with the concomitant chilling effect on access to justice for less wealthy parties. As this court cautioned in Boucher, at para. 37:
The failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice. The costs system is incorporated into the Rules of Civil Procedure, which exist to facilitate access to justice. There are obviously cases where the prospect of an award of costs against the losing party will operate as a reality check for the litigant and assist in discouraging frivolous or unnecessary litigation. However, in my view, the chilling effect of a costs award of the magnitude of the award in this case generally exceeds any fair and reasonable expectation of the parties.
63 Although each costs assessment is a fact-driven exercise related to a particular case, consistency with comparable awards in like cases is desirable and the reasonableness of costs that represent an outlier must be objectively and carefully scrutinized, taking into account the chilling effect on litigation that this kind of award could have: Boucher, at para. 37; Berry v. Scotia Capital Inc., 2010 ONSC 5489, 271 O.A.C. 229 (Div. Ct.), at para. 36.
64 That said, the amount of the costs award by itself does not mean that the award is unreasonable or reflect an error in principle. As the Divisional Court noted in Andersen v. St. Jude Medical, Inc. (2006), 2006 CanLII 85158 (ON SCDC), 264 D.L.R. (4th) 557 (Ont. Div. Ct.), at para. 22 "[a]ppellate intervention based solely on quantum is problematic because there is no meaningful way to determine when a number is too high". Again, the question is, as Boucher instructs, whether the costs are reasonable, fair, and proportionate for the losing party to pay in the particular circumstances of the case or whether the magnitude of the costs "generally exceeds any fair and reasonable expectation of the parties".
65 Costs that are reasonable, fair, and proportionate for a party to pay in the circumstances of the case should reflect what is reasonably predictable and warranted for the type of activity undertaken in the circumstances of the case, rather than the amount of time that a party's lawyer is willing or permitted to expend. The party required to pay the successful party's costs "must not be faced with an award that does not reasonably reflect the amount of time and effort that was warranted by the proceedings": Gratton-Masuy Environmental Technologies Inc. v. Building Materials Evaluation Commission (2003), 2003 CanLII 8279 (ON SCDC), 170 O.A.C. 388 (Div. Ct.), at para. 17. As this court instructed in Moon v. Sher (2004), 2004 CanLII 39005 (ON CA), 246 D.L.R. (4th) 440 (Ont. C.A.), at para. 33:
If a lawyer wants to spend four weeks in preparing for a motion when one week would be reasonable, this may be an issue between the client and his or her lawyer. However, the client, in whose favour a costs award is made, should not expect the court in fixing costs to require the losing party to pay for over-preparation, nor should the losing party reasonably expect to have to do so. [Emphasis added.]
66 The party seeking costs bears the burden of proving them to be reasonable, fair, and proportionate. The absence of dockets is not an automatic bar to proving or receiving an award of costs: Leonard v. Zychowicz, 2022 ONCA 212, at para. 33. However, absent dockets, a description of the activities for which fees and disbursements are claimed must be sufficient to permit for the kind of close scrutiny that the court is required to undertake. The material provided for the assessment must allow the court to come to a conclusion as to the amount of time reasonably required by the party seeking costs to deal with all aspects of the proceedings for which costs are claimed, including whether there was over-lawyering or unnecessary duplication of legal work: Restoule, at para. 355. Bald statements do not assist the court with this task but give rise to the kind of mechanical calculation of hours times rates that this court cautioned against in Boucher, at para. 26, and in McNaughton Automotive Limited v. Co-operators General Insurance Co., 2009 ONCA 598, 255 O.A.C. 362, at para. 17.
[8] Other jurists have also helpfully commented on the factor of proportionality. In Dang v. Anderson 2017 ONSC 2150 at paras. 12 to 15 Justice Trimble of this court stated:
12 I wish to say a word about proportionality in this case. The Plaintiff's costs submissions, in the main, are that the Defendant's claim for costs is not proportional. In fact, she says "Costs now claimed by Defendant's counsel are completely overkill and offend the rule of proportionality..." In the context of this case, I note the irony of the submission.
13 Proportionality should not override other considerations when determining costs. Further, determining proportionality should not be a purely retrospective inquiry based on the award. Proportionality should not be used as a sword used to undercompensate a litigant for costs legitimately incurred (Aacurate General Contracting Ltd. v. Tarasco, 2015 ONSC 5980 (S.C.J.) at para. 13 to 17). A cost award may still be reasonable and exceed the award of damage in appropriate circumstances (A & A Steelseal Waterproofing Inc. v. Kaslovski, 2010 ONSC 2652 (S.C.J.) at para. 21).
14 In Aacurate, supra, McCarthy, J. said:
I am mindful that the principle of proportionality calls upon the court to consider the amount claimed for costs in relation to the amount recovered in the judgment, as well as the reasonable expectation of the parties. In my view, however, proportionality cannot and should not be routinely invoked to save litigants from the actual costs of proceedings in circumstances where those litigants have put forth a wholly unmeritorious defence to a legitimate claim or have caused the proceeding to become unduly prolonged or complicated. The principle should be applied thoughtfully and in a balanced fashion along with the other factors set out in rule 57.01.
15 Further, an undue focus on proportionality ignores principles of indemnity and access to justice (see Gardiner v. MacDonald Estate, 2016 ONSC 2770 (S.C.J.) at para. 65). The trial judge must make an award that is fair and appropriate, overall.
[9] The legal context into which proportionality fits is discussed by Justice Trimble in Gilbank (c.o.b. as Star Design) v. Cooper, [2022] O.J. No. 51 at para. 22 (Sup.Ct.):
22 In exercising its discretion on the basis of these legal principles, and in determining what costs are payable, the court should consider the following questions in the following order:
a.Which was the successful party, and in what way?
b.Are there Offers to Settle under Rule 49.10 and what impact do they have?
c.What effect do the enumerated factors in Rule 57.01(1) have?
d.Are there any Offers to Settle that should be considered under Rule 49:13?
e.How does proportionality under R. 1.04(1) affect the analysis?
f.What is fair and reasonable for the paying party to pay?
[10] Rule 49.13 is also to be borne in mind in considering costs:
Discretion of Court
49.13 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. R.R.O. 1990, Reg. 194, r. 49.13.
ANALYSIS
[11] I have concluded that a costs award of $400,000, inclusive of fees, disbursements and applicable taxes in favour of the Plaintiffs and made jointly and severally as against the Defendants is appropriate in this matter, and I so order. It is payable within 90 days. I shall now explain the reasoning by which I have arrived at this result. My reasoning is based on an application of the principles stated above to the case at bar.
[12] The Plaintiffs were substantially successful on the Coomer transaction, entirely successful on the McSweeney transaction, substantially successful on the Sykes transaction, and completely successful on the CedarOaks transaction. I conclude that they had substantial success in this proceeding.
[13] Moreover, they made a reasonable offer to settle of $1,150,000.
[14] The proceeding was long and arduous; the trial alone took over a month of court time. The evidence was complex, involving four separate real estate transactions.
[15] The Defendant Ali was the dominant individual on the Defendants side during the transactions and the trial. In my analysis of the Coomer transaction I found that he misrepresented the truth at this trial repeatedly. Particularly shameless was his baseless allegation that the Plaintiffs had introduced mould to the property.
[16] Despite the Plaintiffs’ substantial success, the offer they made, and the conduct of Ali, I also had to arrive at a result that was reasonable, fair, and proportionate in the circumstances of this case. Accordingly, I also took into account the quantum of the sums claimed by the parties, my ultimate findings in respect of those claims, and the length and difficulty of the proceeding for the Plaintiffs.
Bloom, J.
DATE: January 27, 2023
COURT FILE NO.: CV-17-1768-00
DATE: 2023 01 27
SUPERIOR COURT OF JUSTICE – ONTARIO
Shazia Tariq Paracha, Tariq Paracha, and Shabana Zain
Plaintiffs
-and-
Naqi Construction Ltd., Rabia Batool, and Muhammad Ali
Defendants
BEFORE: Bloom, J.
COUNSEL: Rosemary A. Fisher, counsel for the Plaintiffs
Tariq Wasey Khan, counsel for the Defendants
COSTS ENDORSEMENT
Bloom, J.
DATE: January 27, 2023