Court File and Parties

COURT FILE NO.: CV-24-96401 DATE: 2024-11-13 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Lukus Abraham, Applicant AND Andrew Abraham and A. Abraham Holdings Ltd., Respondents

BEFORE: Justice R. Ryan Bell

COUNSEL: Geoffrey Cullwick, for the Applicant Christopher S. Spiteri, for the Respondents

HEARD: In writing

Costs Endorsement

Overview

[1] Lukus Abraham applied for an order enforcing an arbitration award against Andrew Abraham and A. Abraham Holdings Ltd. (together, “Andrew”). I granted the application and invited the parties to make written submissions in the event they were unable to agree on costs of the application: Abraham v. Abraham, 2024 ONSC 5315.

[2] The parties have not agreed on costs. As the successful party, Lukus seeks his costs on a substantial indemnity basis, including HST and disbursements, in the amount of $38,088.45. He submits that an order for substantial indemnity costs is appropriate given Andrew’s litigation conduct. In the alternative, Lukus submits that because he met his r. 49.10 offer to settle, he is entitled to partial indemnity costs up to the date of his offer to settle, and substantial indemnity costs thereafter, for a total amount of $37,138.85, all-inclusive.

[3] Andrew does not dispute Lukus’ entitlement to costs; however, Andrew submits that costs should only be awarded on a partial indemnity basis in the total amount of $7,500. I do not have the benefit of Andrew’s own bill of costs, nor did Andrew address the impact of Lukus’ offer to settle in his submissions.

[4] For the following reasons, I order that Andrew pay Lukus costs in the amount of $34,000, all-inclusive. These costs are to be paid within 30 days.

Scale of costs

[5] Elevated costs may be warranted where a party has engaged in conduct that is reprehensible, scandalous, or outrageous: Davies v. Clarington (Municipality), 2009 ONCA 722, at para. 28. Costs on the higher scale can be awarded as a “form of chastisement” and as a “mark of the court’s disapproval of a litigant’s conduct”: Manning v. Herb Epp, at para. 7.

[6] I disagree with Lukus that this is one of the “rare circumstances” where the level of costs should be increased to mark the court’s disapproval of the conduct of a party in the litigation. In my view, Andrew’s approach to the application was ill-conceived and Andrew was, ultimately, unsuccessful in opposing the application. However, that does not render Andrew’s litigation conduct egregious, reprehensible, or scandalous. I decline to award substantial indemnity costs to Lukus on this basis.

[7] I reach a different conclusion, however, based on Lukus’ offer to settle. Lukus served a valid r. 49.10 offer to settle early in the litigation, well before the application was heard. His offer required that Andrew consent to judgment on the terms of the arbitrator’s award and costs award. The result obtained by Lukus on the application was as favourable as the terms of his offer to settle. An offer to settle need not contain an element of compromise to qualify as an offer that will attract costs consequences: The Canada Soccer Association Incorporated v. Association de Soccer de Brossard, 2023 ONSC 2240, at para. 15, citing OPB Realty Inc. v. Canada International Medical Suppliers Company Limited, 2015 ONSC 6, at para. 7. In my view, Lukus is entitled to his partial indemnity costs up to the date of service of his r. 49.10 offer to settle and his substantial indemnity costs thereafter.

Quantum of costs

[8] The fixing of costs is not a mechanical exercise. Costs “should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant”: Boucher v. Public Accountants Council for the Province of Ontario. The incurring of costs and time spent by counsel is essentially a judgment call, and the prudence of counsel’s judgment must be considered at the time the work was done.

[9] Andrew submits that the hourly rates charged by Lukus’ counsel are “excessive and unreasonable” for this geographic region. I disagree – apparently, they are identical to the hourly rates charged by Andrew’s own counsel. While counsel for Lukus have less years of experience than counsel for Andrew, they were successful on behalf of their client on the application. Andrew’s reliance on the observations of M. Smith J. in Brahma v. HR Services, 2022 ONSC 2645, at para. 48 is misplaced. In Brahma, the matter proceeded in Ottawa. M. Smith J. expressed concerns with the defendant’s actual hourly rates, which ranged from $954 for senior counsel to $346.50 for an articling student. Counsel for the defendant in Brahma worked in Toronto. That is not the case here.

[10] The application was of considerable importance to Lukus. The arbitration award was binding on the parties the day it was made. Andrew ceased making payments to Lukus under the settlement agreement after approximately four months. There was uncontroverted evidence before me that Lukus required the money awarded as damages to live his life and support his family.

[11] The matter was not overly complex. At the same time, however, Andrew sought an adjournment of the application for the purpose of cross-examining Lukus. There were numerous questions refused on Lukus’ cross-examination, all of which I ruled were properly refused. Lukus’ counsel was required to respond to Andrew’s (unsuccessful) effort to rely on a forensic accounting report that was not before the arbitrator and was not the subject matter of a motion to introduce fresh evidence. I do expect some duplication of effort occurred in the tasks performed by junior counsel. It is for this reason that I make a modest reduction in the costs awarded.

Conclusion

[12] Taking into account all of the above, the relevant r. 57.01 factors, Boucher, and Lukus’ r. 49.10 offer to settle, I conclude it is fair and reasonable to require Andrew to pay Lukus’ partial indemnity costs up to and including July 3, 2024, and his substantial indemnity costs thereafter, in the total amount $34,000, all-inclusive. This amount is to be paid by Andrew to Lukus within 30 days.

Justice R. Ryan Bell Date: November 13, 2024