Court File and Parties

COURT FILE NO.: CV-18-77889 DATE: 2024/04/18 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Rolf Baumann, Plaintiff AND: Gregory Capello and 1693876 Ontario Inc., Defendants

BEFORE: Rees J.

COUNSEL: J.F. Lalonde, for the Plaintiff Michael Rappaport, for the Defendants

HEARD: In writing

Costs Endorsement

[1] On January 16, 2024, I granted judgment in favour of the plaintiff, Rolf Baumann. I invited the parties to make costs submissions if they were not able to agree on costs.

[2] In the event, the parties were unable to agree and they filed costs submissions.

The parties’ positions

[3] The plaintiff seeks costs in the proceedings on a partial indemnity basis up to trial preparation, and he seeks costs on a substantial indemnity basis for trial preparation and trial, plus disbursements and HST, for a total of $119,678.45.

[4] By contrast, the defendants argue that the court should apply s. 29 of the Courts of Justice Act, R.S.O. 1990, c. C.43, which applies in Small Claims Court proceedings, and cap any cost award at 15 percent because the plaintiff was only awarded $30,000 in damages, which is below the $35,000 monetary limit of the Small Claims Court. The defendants further argue that the issues at trial were not overly complicated and not overly important given the plaintiff’s basement was used for storage and was not used as a living space. The defendants argue that the plaintiff’s refusal to serve offers to settle or attend mediation lengthened the proceedings unnecessarily.

Analysis

[5] The plaintiff’s action was brought in the Superior Court of Justice under the simplified procedure. Accordingly, costs are not governed by s. 29 of the Courts of Justice Act.

The law

[6] The $50,000 cap on costs and disbursements for simplified proceedings does not apply to this action because it was commenced before January 1, 2020: Rule 76.12.1(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[7] In exercising my discretion in awarding costs, I may consider any relevant matter and Rule 57.01(1) sets out a list of factors that the court may consider. I need not repeat these here, but I have considered them. The most significant factor to consider is that the amount of costs must be reasonable and fair.

[8] Apart from the operation of Rule 49.10, substantial indemnity costs are warranted “only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties”: Young v. Young, [1993] 4 S.C.R. 3, at p. 134, per McLachlin J. It is an exceptional order. Substantial indemnity costs should not be awarded unless there is some form of reprehensible conduct, either in the circumstances giving rise to the cause of action, or in the proceedings, which makes such costs desirable as a form of chastisement: Mortimer v. Cameron (1994), 17 O.R. (3d) 1 (C.A.), at p. 23. See also McBride Metal Fabricating Corp. v. H. & W. Sales Co. (2002), 59 O.R. (3d) 97 (C.A.), at para. 39; and Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66.

[9] As the Court of Appeal observed in Davies, a “distinction must be made between hard-fought litigation that turns out to have been misguided, on the one hand, and malicious counter-productive conduct, on the other. The former, the thrust and parry of the adversary system, does not warrant sanction: the latter well may”: at para. 45.

This is an appropriate case to award substantial indemnity costs

[10] This is an appropriate case to award substantial indemnity costs to the plaintiff for trial preparation and trial. The defendants’ conduct in the circumstances giving rise to the cause of action and during proceedings deserve to be sanctioned through costs. I come to this conclusion for three reasons.

[11] First, Mr. Capello deliberately departed from the building plans he submitted to, and which were approved by, the city. Mr. Capello never had any intention of abiding by them. He acted with a shocking lack of concern for his neighbour. Mr. Capello persisted despite an order of non-compliance from the city. His conduct markedly departed from ordinary standards of decent behaviour.

[12] Second, Mr. Capello did not take adequate remedial measures in response to two interim orders made by this court. As I concluded in my reasons for judgment, this is deserving of deterrence and denunciation. Mr. Capello did not adequately divert to the street the water from his property’s downspouts and scuppers, as ordered by Justice Calum MacLeod on November 29, 2019. The nuisance continued. Nor did he adequately rearrange the flow of the water from the roof of his property to be drained to the front of his property and not drained underground, as ordered by Justice Robert Smith on February 21, 2020. Again, the nuisance continued. Prompt remediation in response to the interim orders of the court would have abated the nuisance. Mr. Capello’s conduct in failing to abide by court orders was outrageous.

[13] I acknowledge that Mr. Capello had health challenges, but his cycling accident did not contribute to his conduct. Even accepting that his cancer diagnosis and treatment and subsequent COVID-19 contributed to some delay in alleviating the nuisance, it neither explains nor excuses his egregious conduct towards his neighbour. Further, racing to do remedial work during trial – work that failed to address the real cause of the nuisance – does not alleviate the need for costs sanctions.

[14] Unlike punitive damages, which I ultimately declined to order because they would be disproportionate on top of a mandatory injunction, awarding costs on a substantial indemnity scale is fair and reasonable.

[15] Although the damages awarded at trial were relatively modest, the more important relief was a permanent mandatory injunction. It was entirely reasonable for the plaintiff to bring this action and reject the defendants’ offers to settle in the face of the defendants’ failure to remediate the nuisance. Given the injunctive relief sought and obtained by the plaintiff, it was appropriate for the plaintiff to prosecute this action in the Superior Court of Justice by way of simplified procedure, rather than in the Small Claims Court. The latter cannot award injunctive relief.

[16] Finally, at trial, Mr. Capello breached the witness exclusion order in respect of Mohammed Nayef and improperly shaped the contents of Mr. Nayef’s affidavit to the point that it significantly undermined the value of Mr. Nayef’s opinion evidence. Mr. Capello’s tendering of multiple versions of this affidavit wasted time at trial.

[17] For these reasons, it is appropriate to award costs in the proceedings on a partial indemnity basis up to trial preparation, and to award costs on a substantial indemnity basis for trial preparation and trial.

Reasonableness of costs claimed

[18] I have carefully reviewed the bill of costs filed by the plaintiff. Overall, the costs are fair and reasonable. The plaintiff proceeded efficiently and there is no basis to conclude that a step in the proceedings was unnecessary. Further, the plaintiff elected to proceed by way of simplified procedure. The plaintiff’s materials were well-prepared. Work was appropriately divided between counsel and his paralegal at trial, and work allocated appropriately throughout the proceedings.

[19] That said, I make a modest downward adjustment for overall reasonableness.

Disposition

[20] I award $110,000 in costs to the plaintiff, inclusive of disbursements and HST.

Justice Owen Rees Date: April 18, 2024