Court File and Parties

COURT FILE NO.: CV-22-00686432-0000 CV-22-00687332-0000 DATE: 20240430

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

EVA GLADYS ADUSEI and MARK ANTHONY GRUENBERG Applicants – and – ANTHONY RAVINDRA and ANOSHINI MANOGARAN Respondents

Counsel: Romesh Hettiarachchi, for the Applicants Paul Dollak, for the Respondents

BETWEEN:

ANTONY RABEE ANTON RAVINDRA and ANOSHINI MANOGARAN Applicants – and – EVA GLADYS ADUSEI, MARK ANTHONY GRUENBERG and RE/MAX COMMUNITY REALTY INC. Respondents

Counsel: Paul Dollak, for the Applicants Romesh Hettiarachchi, for the Respondents Eva Gladys Adusei and Mark Anthony Gruenberg

HEARD: In writing

Endorsement as to Costs

VERMETTE J.

[1] These two Applications arise out of a residential real estate transaction that failed to close. On January 19, 2024, I released Reasons for Judgment (2024 ONSC 432) dismissing the Application commenced by Eva Gladys Adusei and Mark Anthony Gruenberg (together, the “Buyers”), and granting the Application commenced by Antony Rabee Anton Ravindra and Anoshini Manogaran (together, the “Sellers”). RE/MAX Community Realty Inc. (“RE/MAX”) was ordered to release the deposit to the Sellers, and the Buyers were ordered to pay damages to the Sellers in the amount of $110,000.00.

[2] The parties were not able to agree on costs and have delivered costs submissions.

Positions of the parties

a. Position of the Sellers

[3] The Sellers seek costs in the amount of $77,472.36 ($63,927.00 in fees, $4,690.25 in disbursements and $8,855.11 in HST) for the two proceedings.

[4] The Sellers’ position is that they are presumptively entitled, at a minimum, to their partial indemnity costs for both proceedings. They point out that they obtained a judgment that entirely dismissed the Buyers’ Application and awarded them all the relief that they sought at the hearing in connection with their own Application.

[5] The Sellers served an offer to settle on February 2, 2023 with the following terms:

a. RE/MAX to release the deposit to the Sellers; b. the Buyers to pay to the Sellers the sum of $109,000.00; c. the Buyers to pay to the Sellers prejudgment interest on the sum of $109,000.00 from June 30, 2022; and d. the Buyers to pay the Sellers’ partial indemnity costs of both proceedings, to be agreed upon or assessed.

[6] The Sellers submit that the relief that they obtained was more favourable than the terms of their offer and, therefore, they are entitled to substantial indemnity costs for the period following their offer. They argue that while they exceeded their offer by only $1,000.00, less attempt at compromise should be expected where the quantum is not seriously in issue and the defence appears to have little merit.

[7] In relation to the Buyers’ Application, the Sellers state that while Rule 49.10 does not apply if an applicant fails to recover any judgment, it remains open to the Court to take a defending party’s offer into account under Rules 57.01(1) and 49.13 and award substantial indemnity costs from the date of the offer on that basis. According to the Seller, it would be apt to proceed this way because the Buyers’ Application for relief from forfeiture had no merit.

[8] The Sellers argue that despite their patent lack of merit, the Buyers advanced many arguments that never should have been put forward at all. The Sellers state that this forced their counsel to spend significantly more time to prepare the case than if the Buyers had conducted the litigation reasonably, with a commensurate impact on the fees claimed in the bill of costs. The Sellers further state that costs were also increased during the proceedings by such things as the Buyers repeatedly demanding indulgences of time, despite an agreed-upon and court-ordered timetable.

[9] The Sellers provide the following explanations as to why their costs were higher than the Buyers:

a. the Sellers’ counsel’s level of experience and therefore rate is substantially higher; b. only the Sellers hired an expert, with all the work that this entails; c. it is easier for a party to simply take an unsupported position than it is to refute it, the latter task posing the potentially limitless challenge of proving a negative; and d. the Buyers’ lawyer should have required less time as he had made similar arguments in a previous lawsuit.

b. Position of the Buyers

[10] The Buyers submit that any costs award in favour of the Sellers ought to reflect the reasonable expectations of the losing party and mirror the complexity and importance of the issues in the proceedings. The Buyers’ position is that the Sellers’ costs should be limited to $20,000.00, exclusive of HST and disbursements.

[11] The Buyers acknowledge that the Sellers, as the successful parties, are entitled to be indemnified for a portion of their legal fees. The Buyers agree with the Sellers that the issues to be resolved were not complex. They state that there is no evidence of any delay that is material to the increased costs.

[12] The Buyers submit that costs must be fair and reasonable. They point out that they spent in actual fees less than half of what the Sellers claim for their partial indemnity costs. Given the discrepancy between the amounts, the Buyers argue that the Sellers’ costs may either be the result of counsel’s failure to work efficiently, or the Sellers needlessly engaging in overly adversarial strategies.

[13] The Buyers disagree that the positions that they argued were not meritorious. They state the following:

a. advancing novel points of law is not prima facie ground for elevated legal costs; b. the Sellers failed to state the law of repudiation in their factum, leaving the Buyers to raise these issues for the first time as Respondents; and c. the Sellers denied that an act of repudiation occurred prior to closing.

[14] The Buyers do not address the issue of the Sellers’ offer to settle in their costs submissions.

Discussion

a. Offer to settle of the Sellers

[15] Rule 49.10 of the Rules of Civil Procedure provides a presumption as to costs where an offer to settle is not accepted, “unless the court orders otherwise”. The discretion to depart from the presumption as to costs in Rule 49.10 is not unfettered and must be exercised in accordance with the purpose of the Rule. The presumption should be applied in the vast majority of cases. Resort should only be had to the exception where, after giving proper weight to the policy of the general rule, and the importance of reasonable predictability and the even application of the Rule, the interests of justice require a departure. See Barresi v. Jones Lang Lasalle Real Estate Services Inc., 2019 ONCA 884 at paras. 17-18.

[16] An offer to settle need not contain an element of compromise to qualify as an offer that will attract costs consequences under Rule 49.10 of the Rules of Civil Procedure. However, the court may take into account the absence of compromise together with other factors when considering whether to depart from the normal rule imposing costs consequences: see OPB Realty Inc. v. Canada International Medical Suppliers Company Limited, 2015 ONSC 6 at para. 7 and Walker Estate v. York Finch General Hospital, 43 O.R. (3d) 461 (C.A.). The required element of compromise is to be viewed in the circumstances of the case. In a case where quantum of damages and liability are all in dispute, a more significant attempt at compromise is viewed as desirable. In a case where the quantum is not seriously in issue and the defence appears to have little merit, less attempt at compromise should be expected. See BLM Group Inc. v. IBIS International Business Intelligence Services Corporation at para. 7 (Ont. S.C.J.) (“BLM”).

[17] I find that the Sellers have discharged their burden under Rule 49.10(3) of proving that the judgment obtained is more favourable to them than the terms of their offer. However, given that the difference between the judgment and the offer is only $1,000.00, the question of whether this Court should exercise its discretion to depart from the presumption as to costs in Rule 49.10 is raised.

[18] In my view, the policy underlying Rule 49.10 and the interests of justice do not require a departure from the general rule in this case. While very limited, there was an element of compromise in the Sellers’ offer and there is no evidence before me that the Buyers sought to engage in settlement discussions or make a counteroffer. Given the circumstances of this case and my findings on the various issues raised, I conclude that this case is one where less attempt to compromise should be expected: see BLM at para. 7.

[19] I also find that the fact that there were two Applications and that the Sellers were Respondents in the Buyers’ Application does not have an impact on the application of Rule 49.10 in this case, for the following reasons:

a. The two Applications were treated like one piece of litigation. b. The Sellers’ Application was the broadest in scope and raised the issues that were the real focus of the litigation. c. The only substantive relief sought in the Buyers’ Application was relief from forfeiture, but the Buyers’ position was, in fact, that the deposit should not be forfeited and they did not really address the issue of relief from forfeiture. I found in paragraph 109 of my Reasons for Judgment that there were no grounds supporting relief from forfeiture. Given the absence of arguments by the Buyers on this issue, the question of relief from forfeiture is addressed in only two sentences in the Reasons for Judgment.

[20] Consequently, I find that the costs consequences in Rule 49.10 are triggered and that the Sellers are entitled to substantial indemnity costs from the date of their offer to settle.

b. Quantum

[21] As noted by the parties, there is a significant difference in the amounts and the number of hours set out in the parties’ respective bills of costs. The Buyers’ bill of costs reflects actual fees in the amount of $25,068.75, and 45.65 hours spent by the Buyers’ lawyer (with additional time spent by an articling student). In contrast, the Sellers’ bill of costs reflects actual fees in the amount of $75,840.00 and 104.4 hours spent by the Sellers’ lawyer (with additional time spent by a paralegal and a law clerk).

[22] The difference between the actual hourly rates of the lawyers involved ($600 for the Sellers’ lawyer and $525 for the Buyers’ lawyer) explains part of the difference in the amounts. The major difference, however, is the time spent.

[23] I agree with many of the Sellers’ submissions as to why their costs and the time spent by their lawyer are higher than the Buyers’. Among other things, based on the Sellers’ materials and the fact that they retained an expert, it was to be expected that their lawyer would have spent more time on the matter than the Buyers’ lawyer. Further, I am of the view that the time spent by the Buyers’ lawyer as reflected in the Buyers’ bill of costs is significantly lower than one would expect. For instance, the total number of hours reported with respect to examinations is 7.95. There were three cross-examinations, including the cross-examination of an expert witness. It does not appear realistic to me that it would have taken only 7.95 hours to a lawyer to both prepare for and attend three cross-examinations. In addition, answers to undertakings were prepared, and there is no separate time entry for that task. If the time for preparing the answers to undertakings is part of the 7.95 hours, this makes this number even more unrealistic.

[24] Despite the foregoing, I find that it is appropriate to apply a reduction to the costs sought by the Sellers to take into account the likelihood of some overkill, and to ensure the overall reasonableness of the costs award in light of all the circumstances of the case, including the amounts in issue in the litigation.

Conclusion

[25] Taking the foregoing into account, as well as the factors set out in Rule 57.01(1) of the Rules of Civil Procedure and the reasonable expectations of the parties, I find that the fair and reasonable award of costs in favour of the Sellers is on a partial indemnity basis to February 2, 2023 and on a substantial indemnity basis from February 3, 2023 onward in the all-inclusive amount of $55,000.00. In my view, this is an amount that the Buyers should reasonably have expected to pay in the event that they were unsuccessful in the Applications. The costs are to be paid by the Buyers to the Sellers within 30 days.

Vermette J.

Released: April 30, 2024