Superior Court of Justice - Ontario

COURT FILE NO.: CV-21-00060004-000

DATE: 2023-02-01

RE: NEW HAVEN MORTGAGE CORPORATION AND COMMUNITY TRUST COMPANY, Plaintiffs

AND:

EVANGELIA CODINA AND ANGELA CODINA, Defendants

BEFORE: The Honourable Justice Robert B. Reid

COUNSEL: Jennifer Croswell, Counsel, for the Plaintiffs

Defendant Angela Codina personally and as estate trustee of the estate of Evangelia Codina, self-represented

HEARD: July 25, 2022; Costs submissions received by January 18, 2023

Corrected Decision – This correction was made on February 10, 2023 – Release date on page four has been corrected to February 1, 2023 – No change to content has been made.

DECISION ON COSTS OF MOTION

Background:

[1] The plaintiffs, as successor chargee, sued the defendants under power of sale because of a default under a charge. Evangelia Codina was chargor and Angela Codina was guarantor.

[2] Evangelia Codina died November 25, 2020. As of January 13, 2022, Angela Codina became the estate trustee for the estate of Evangelia Codina.

[3] The charge was redeemed on April 20, 2022.

[4] By motion, the defendants sought a declaration that the plaintiffs’ possession of the property was illegal. As well, the defendants sought a review and assessment of the funds that they paid to redeem the charge, and a reimbursement of any overpayment.

[5] By responding notice of motion, the plaintiffs sought an order dismissing the defendants’ counterclaim for damages or in the alternative an order for security for costs, an order declaring that references to offers to settle in the affidavit of Angela Codina dated March 16, 2022 were inadmissible, an order prohibiting Angela Codina from making further motions without leave and a declaration that she is a vexatious litigant. An order to continue was sought, as was an order amending the title of proceedings to include alleged aliases of Angela Codina.

[6] There was agreement that an order to continue should be granted and that references to offers to settle are inadmissible. As well, and after submissions, I ordered that the title of proceedings be amended so that the aliases of Angela Codina are to be included.

[7] The matters of a vexatious litigant declaration, the dismissal of the counterclaim, security for costs and the prohibition of further motions by the defendants were adjourned, to be returned by either side on 10 days notice. I am not seized of the matter.

[8] By decision dated December 12, 2022, I held that the taking of possession by the plaintiffs was legal and that there was no violation of the provisions of the Mortgages Act by the plaintiffs in proceeding as they did. I reviewed the fees and charges levied by the plaintiffs and found that excess charges had been made in the amount of $11,700 which I ordered be reimbursed by the plaintiffs to the defendants within 30 days following any costs order made on this motion.

[9] The parties were encouraged to resolve the issue of costs of the motion but were unable to do so. As a result, they submitted Bills of Costs and written submissions according to a timetable provided.

Positions of the Parties:

[10] The plaintiffs seek costs of $13,736.49 including HST and disbursements on a full indemnity basis. They rely on the contractually agreed terms of the Charge at paragraph 12 of the Additional Charge Terms, which state that:

It is agreed that all costs and expenses of the Chargee incurred in endeavouring to collect any money overdue under this Charge, including all legal costs on a solicitor and client basis, whether legal proceedings are instituted or not, shall be added to the principal and be payable forthwith by the Chargor.

[11] The plaintiffs also rely on a time-limited Offer to Settle made on March 3, 2022, (almost five months before the hearing of this motion on July 25, 2022) in which the plaintiffs offered to reduce the discharge amount by $14,855.93. The offer was not accepted and lapsed.

[12] The relief requested by the plaintiffs was either granted or adjourned. The relief requested by the defendants was not granted, except for a reimbursement of $11,700.

[13] The defendants request an order of no costs. They asserted that the amount claimed for costs of preparation and argument of a one-day motion was excessive. They note that the Offer to Settle was not available for acceptance at the time of the motion hearing. The defendants dispute the applicability of paragraph 12 of the Additional Charge Terms in that the charge had been redeemed in April 2022, prior to the motion hearing and before most of the claimed costs were incurred.

Discussion:

[14] The discretion to award costs arises from s. 131 of the Courts of Justice Act. I have considered the factors which guide the exercise of that discretion found in rule 57.01 of the Rules of Civil Procedure.

[15] An expired Offer to Settle has no impact on a costs award except to show that the party who made the offer had some willingness to compromise.

[16] I accept the submissions by the plaintiffs that the costs claimed related only to the preparation for and attendance on the motion.

[17] The hourly rates used are not unreasonable.

[18] The plaintiffs were successful in those aspects of their motion that were argued, although those items were not highly contentious.

[19] In their motion, the defendants achieved partial success in securing a reimbursement order of $11,700.

[20] The aspects of the defendants’ motion which were dismissed, namely the illegality of the plaintiffs’ possession of the property and the alleged breaches of the Mortgages Act, accounted for most of the submissions.

[21] A key question impacting this costs award is whether the costs claimed by the plaintiffs pursuant to the motions were incurred in endeavouring to collect money overdue under the charge. If so, the defendants would be obligated to pay under the Additional Charge Terms. The fact that the charge was redeemed in April 2022 does not answer that question, since the motions related to issues flowing from the plaintiffs’ collection efforts.

[22] I conclude that the plaintiffs were required to incur costs to defend their entitlement to keep the proceeds collected, against the defendants’ claims for reimbursement of those costs and the defendants’ counterclaim for damages. As such, at first instance, the plaintiffs should be entitled to their costs of the motions on a full indemnity (that is “solicitor and client”) basis pursuant to the charge terms. It is unnecessary to determine at this point whether future costs, incurred for example to declare the defendants to be vexatious litigants or for security for costs will attract the same entitlement.

[23] The matter cannot end there, however, since the defendants were successful in receiving some reimbursement. It would be unfair to permit a chargee to collect costs from a chargor when, for example, the chargee took improper collection efforts or received money to which it was not entitled. In this case, the plaintiffs should not be entitled to costs to the extent that the motion decision determined that the funds collected had been excessive. Put another way, since there was some divided success, the plaintiffs should not be entitled to recover all their costs.

[24] The provisions of rule 57.01 allow the court to consider a variety of factors in exercising its discretion as to costs, including the result. Here, the plaintiffs had no choice but to defend the defendants’ motion so as to protect collection efforts they had made. The unsuccessful claim by the defendants about illegal possession and breaches of the Mortgages Act were relatively complex and required a detailed response. However, the plaintiffs should be disentitled to costs to the extent that they were unsuccessful in justifying the sums required when the charge was redeemed.

[25] For the foregoing reasons, I consider that I have the discretion to make a costs order which follows the result of the motion, despite the contractual terms agreed by the parties. There will be an order that the defendants pay costs to the plaintiffs of the motions fixed in the amount of $10,000 inclusive of HST and disbursements, payable within 30 days.

Reid J.

Date: February 1, 2023