Court File and Parties

Date: 2024-07-04 Superior Court of Justice – Ontario

Re: GAERTNER BARON PROFESSIONAL CORPORATION, Plaintiff And: LOUAI ALALA ET AL., Defendants

Before: Parghi J.

Counsel: Karen Sanchez, for the Plaintiff Ryan Manilla, for the Defendants

Heard: July 1, 2024 (in writing)

Endorsement

[1] The Defendants were noted in default. They sought to set aside the noting in default and oppose the Plaintiff’s motion for default judgment. By the time the parties appeared for a case conference before me on June 17, 2024, they had settled the issues other than costs. In my Endorsement of June 17, I set aside the noting in default on consent, heard the parties on costs briefly, and requested brief written costs submissions from them.

[2] The Plaintiff submits that it incurred $11,961.05 in actual costs, during the time frame of November 7 (the date on which the Defendants were noted in default) to November 29 (the date on which default judgment motion materials were served on the Defendants). The Plaintiff alleged during the case conference that the Defendants had a “troubling pattern” of ignoring orders and had responded to the Plaintiffs only when served with the Motion Record for the motion for default judgment. Substantial indemnity costs were appropriate in light of the “totality of the Defendants’ actions” and to “send a signal” to them.

[3] The Defendants acknowledge that some amount of costs could reasonably be awarded against them but disagree with the Plaintiff’s characterization of their conduct. They submit that the Plaintiff’s frustration lies in part with previous service issues for which the Defendants were not responsible (as they did not reside at the address where they were served). They did not delay: they tried to resolve the matter, and, when they could not, they retained counsel promptly. The Defendants describe the amount of time in respect of which costs are sought (32 hours) as excessive.

[4] In exercising my discretion to fix costs under section 131 of the Courts of Justice Act, R.S.O. 1990, c C.43, I may consider the factors enumerated in Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg 194. Those factors include the result achieved, the amounts claimed and recovered, the complexity and importance of the issues in the proceeding, the principle of indemnity, the reasonable expectations of the unsuccessful party, and any other matter relevant to costs.

[5] In the recent case of Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587, the Ontario Court of Appeal restated the general principles to be applied when courts exercise their discretion to award costs. The Court held that, when assessing costs, a court is 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”. The overarching objective is to fix an amount for 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. 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. 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.

[6] Although the noting in default and default judgment were resolved by the parties without a hearing, these general principles nonetheless apply, and I have kept them in mind while considering the appropriate costs award in this case.

[7] I find that the costs sought by the Plaintiff are excessive. They are attributable in part to the Plaintiff’s unduly aggressive response after the Defendants made clear that they wished to resolve the matter and not be noted in default.

[8] The Plaintiff noted the Defendants in default on November 7, 2023, one day after the deadline for delivering a Statement of Defence had elapsed. On November 10, the Plaintiff advised the Defendants, who were self-represented, that they had been noted in default and that the Plaintiff would be bringing a motion for default judgment. On November 14, the Defendants asked the Plaintiff for a meeting to discuss the situation and find a solution. That meeting took place on November 15 and did not result in a resolution.

[9] The Plaintiff asserts that the Defendants did not request during the November 15 meeting that the noting in default be set aside. In my view, such a claim misses the mark. The Defendants may not have used the language of “setting aside the noting in default” during the meeting, but nor could they be expected to. They were self-represented individuals. Their actions made clear that they wanted the Plaintiff to set aside the noting in default and try to address the matter on the merits: they contacted the Plaintiff promptly after learning of the noting in default, they requested a meeting with the Plaintiff, they expressly described the goal of the meeting as achieving a resolution of the issues between themselves and the Plaintiff, and they attended and participated in the meeting. There is no suggestion that they did so in bad faith. It is clear they wished to set aside the noting in default and defend, and try to resolve, the matter. I do not accept the Plaintiff’s assertion to the contrary. I find that, by the conclusion of the November 15 meeting, the Plaintiff ought reasonably to have understood that the Defendants wished to set aside the noting in default and intended to try to do so.

[10] Nonetheless, the Plaintiff requisitioned a default judgment motion date the day after the failed November 15 meeting.

[11] On December 1, counsel for the Defendants first contacted the Plaintiff and advised that they would be seeking to set aside the noting in default. By this time, the Plaintiff ought reasonably to have understood that the Defendants wished to set aside the noting in default. The December 1 call merely confirmed what the Plaintiff should have already known. I therefore view the Plaintiff’s claim for costs for time spent between November 15 and December 1 with some circumspection.

[12] I now turn to the factors enumerated in Rule 57.01 and the discretion afforded me when fixing costs. I accept the Plaintiff’s argument that, given the nature of the relief sought, relatively detailed affidavit evidence was required. I am also of the view that it was reasonable for the Plaintiff to have spent time on both the noting in default and the motion for default judgment prior to the failed meeting on November 15, given the litigation timetable in place. At the same time, I note the speed with which the Defendants requested a meeting with the Plaintiff to try to resolve the issue, and the speed with which they later retained counsel, who engaged with Plaintiff’s counsel. I note the speed with which the Plaintiff moved to note the Defendants in default and schedule a default judgment motion. I note that the parties ultimately consented to setting aside the noting in default, an outcome that counsel for the Defendants requested on December 1 and which the Plaintiff ought reasonably to have understood the self-represented Defendants to be requesting on November 15.

[13] The Plaintiff’s costs for the time frame up to and including the November 15 meeting are in the range of $3,100, excluding HST. On a partial indemnity basis, that is approximately $1,860, excluding HST. In my view, costs are appropriately assessed on a partial indemnity basis. Nothing about the Defendants’ conduct in respect of the noting in default and motion for default judgment warrants a substantial indemnity award against them.

[14] I consider a costs payment by the Defendants of $900, plus HST, to be appropriate. This considers the Rule 57.01 factors, including the parties’ conduct and the necessity of the various steps in the proceeding. It is also a fair and reasonable result, in all the circumstances. The Defendants shall pay this amount within 30 days.

Parghi J. Date: July 4, 2024