Court File and Parties

Newmarket Court File No.: CV-22-2946-00 Date: 2024-03-11 Ontario Superior Court of Justice

Between: Tracy Chan Wu and Cuong Quoc Liang, Applicants And: Nwoyibo B. Charles and RE/MAX Gold Realty Inc., Respondents

Counsel: Wendy Greenspoon-Soer, for the Applicants Mbong Elvira Akinyemi, for the Respondent, Charles Re/Max Gold Realty Inc., Not Appearing

Heard: In Writing

Decision on Costs

Healey, J.:

[1] The applicants successfully applied for an order requiring that the respondent’s deposit of $150,000 plus interest be forfeited to them because of the respondent’s breach of an agreement of purchase and sale.

[2] The respondent requests that no costs be ordered against her because of her personal financial circumstances, pleading impecuniosity. Beyond that, the written submissions filed on her behalf made no objection to the amount of fees being sought by the applicant.

[3] Faced with a similar plea from the unsuccessful party of inability to pay costs, the Divisional Court in Gravesande v. Toronto (City), 2006 CarswellOnt 2075 (Div. Ct.) refused to consider impecuniosity, stating that “it is not part of our mandate, nor relevant to the issue of costs, to consider the financial circumstances of the party who is ordered to pay costs” (at para. 7). The court completely changed this position in Kuffuor v. First Bus Canada, 2014 ONSC 2297 (Div. Ct.), where the court stated that “the financial circumstances of the losing party can be a consideration in a decision on costs and is captured by Rule 57.01(1)(i) as ‘any other matter relevant to the question of costs’” (at para. 37). In reaching that conclusion, the Divisional Court cited Belvedere v. Brittain Estate, 2009 ONCA 691 (Ont. C.A.), a case in which the Ontario Court of Appeal withheld costs because of the losing party's financial circumstances, but also because of what it described as the unfortunate circumstances of the case, being the express, but legally unenforceable, intention of the testator to benefit the losing party with a large sum of money through his estate but dying before he was able to give that intention legal effect. In doing so, the court in Belvedere noted that this was “one of those rare cases in which the court should exercise its discretion to make no costs award”.

[4] The approach in Kuffuor appears to be the one now adopted in this court. In Agius v. Home Depot Holdings Inc., 2011 ONSC 5272 at para. 17, Justice Ricchetti described the law as follows:

It would appear that impecuniosity, as a rule, should not and does not eliminate or reduce a party's liability for costs for the reasons expressed in Myers, Maher and Greenhalgh. Rather, impecuniosity of the paying party, if established, may be one of the factors the court could consider in the exercise of the courts discretion under s. 131 of the Courts of Justice Act in determining a reasonable amount of costs. This approach was described by Lane J. in Walsh v. 1124660 Ontario Ltd.:

In the present case, unlike Myers, we are dealing with costs after the trial is over, so no issue of on-going non-compliance with orders, or defying the court exists. There is no future conduct of this plaintiff to deter. The simple question is whether there can be a consideration of the paying party's means in considering the disposition of costs. In my opinion, the answer to this question must be yes where impecuniosity is demonstrated. Any other answer creates a straightjacket which is inconsistent with the discretionary nature of all costs orders. In my opinion, impecuniosity falls within Rule 57.01: "any other matter relevant to the question of costs." Whether to consider it as a factor in any particular case remains a matter within the discretion of the judge.

As a result, I am satisfied that impecuniosity, if established, is a factor the could may consider in the court's exercise of its discretion in determining costs but the court should do so cautiously keeping in mind the concerns described by the court in Myers and the other authorities. [Citations omitted, emphasis removed.]

[5] There are at least three reasons why relief against costs should not be made in this case. First, the respondent has not demonstrated impecuniosity through any reliable evidence. Second, the respondent took an unreasonable position in this litigation by clearly pointing the litigation finger at the real estate agent who represented her, Rohit Dogra, without ever starting a claim against him. This would be the reasonable step to take in order to attempt to recover the money that she has been asking the applicants to absorb, instead of continuing to run up fees by opposing this application. Third, the respondent had no viable basis to resist the forfeiture of the deposit, and a reasonable assessment of the facts in this matter should have led her to conclude that the applicants were blameless in this matter. Yet in her material, including in her cost submissions, she made baseless comments that impugned the character of the applicants.

[6] When served with an Offer to Settle from the applicants made as long ago as December 20, 2022, the respondent sat on it even though it would have limited her exposure to costs. The applicants offered that the deposit be forfeited, which was a foregone conclusion on the facts, and that the respondent pay costs up to the date of the offer on a partial indemnity basis and on a substantial indemnity basis thereafter until acceptance.

[7] The respondent waited until three days before the argument of the application to deliver a mirror Offer, with the deposit returned to her and costs payable by the applicants.

[8] The applicants’ Offer to Settle attracts the costs consequences of r. 49.10(1). Despite that, the applicants are proposing that costs be awarded at the midpoint between the partial indemnity and substantial indemnity rates even though the majority of their legal expenses were incurred after the date of their Offer.

[9] I have reviewed the Bill of Costs filed by the applicants. Total fees to $16,725.85 plus $500 for the preparation of cost submissions are reasonable given that this was a matter scheduled as a long motion, for which cross-examinations, a factum, compendium and book of authorities were prepared and undertaken. The fees are significantly less than the amount recovered. A great deal of the work was delegated to a first-year associate to reduce fees. The applicants’ primary lawyer has 31 years of experience. The respondent was represented throughout by counsel, it must be presumed that costs and the consequences of an Offer have been explained to her, and these fees therefore must be within her reasonable expectation.

[10] Considering the factors set out in r. 57.01(1) and the principles set out in the leading cases on costs such as Boucher v. Public Accountants Council for the Province of Ontario (2004), , 71 O.R. (3d) 291, 48 C.P.C. (5th) 56 (C.A.) and Anderson v. St. Jude Medical, Inc. (2006), , 264 D.L.R. (4th) 557, 208 O.A.C. 10 (Div. Ct), this court orders that the respondent shall pay costs of this application to the applicants fixed in the amount of $17,100 inclusive.

[11] This court orders that the revised draft order submitted by counsel shall issue. The amount of costs has been adjusted downward to account for the fact that this costs order has been made 28 days after the original order and the post-judgment interest earned in that period.

Madam Justice S.E. Healey Released: March 11, 2024