Gillis et al. v. Lacasse et al., 2025 ONSC 2200
COURT FILE NO.: CV-17-73598
DATE: 2025/04/11
ONTARIO SUPERIOR COURT OF JUSTICE
RE: Kayla Gillis and Kirk Moxley, Plaintiffs
-and-
Francine Lacasse, Francine Lacasse in her capacity as estate trustee of the estate of Gaston Lavictoire (deceased) and the estate of Gaston Lavictoire (deceased), Defendants
BEFORE: Justice H. J. Williams
COUNSEL:
Ryan Flewelling, for the Plaintiffs
Stéphane Hutt, for the Defendants
Jennifer Therien, for the Third Party
HEARD: In Writing
Costs Decision
Procedural Background
[1] At a pre-trial conference on June 14, 2024, the plaintiffs and the defendants agreed to settle the plaintiffs’ claim for $14,000 with costs “to be determined.”[^1]
[2] Following the pre-trial conference, the plaintiffs and the defendants were unable to agree on costs. On June 21, 2024, their counsel wrote to the court jointly to ask me to rule on costs, based on written submissions. I agreed.[^2]
Overview
[3] In their statement of claim filed September 11, 2017,[^3] the plaintiffs claimed $100,000 for “breach of contract, negligence and negligent/fraudulent misrepresentation with respect to the physical state of real property at 420 Lavictoire Street, Clarence Creek, Ontario.”
[4] The plaintiffs brought their action under the simplified procedure in Rule 76 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. At the time, the procedure was mandatory for claims of $100,000 or less.
[5] In their statement of claim, the plaintiffs pleaded that on August 16, 2015, after taking possession of the Lavictoire St. house, they discovered: (a) a horizontal crack in a foundation wall that had not been present when they inspected the property; and (b) that the previous owner had removed a support beam from the ceiling, which had not been apparent to the plaintiffs on inspection because it was concealed by a “California ceiling.”
[6] The plaintiffs pleaded that the defendant Francine Lacasse’s failure to advise the plaintiffs about the crack and the missing support beam caused “loss/damage to the plaintiffs which will be particularized before trial.”
[7] At the June 2024 pre-trial conference, the plaintiffs and the defendants agreed to settle the action for $14,000.
The Plaintiffs’ Position with Respect to Costs
[8] The plaintiffs seek full indemnity costs of $56,764.60, comprised of fees of $53,045.37 and disbursements of $3,719.23. Alternatively, the plaintiffs ask for substantial indemnity costs of $50,002.88. (The $50,000 cap on costs in Rule 76 cases does not apply to actions started before January 1, 2020.)
[9] The plaintiffs argue they are entitled to full indemnity costs because the defendant Ms. Lacasse “deliberately withheld key facts and evidence which provoked and then prolonged” the litigation. The plaintiffs say Ms. Lacasse’s conduct is worthy of “a heavy costs sanction.”
[10] The plaintiffs submit they obtained estimates of the cost of repairing the foundation that were in the $100,000 range, but they ultimately fixed it themselves.
[11] The plaintiffs argue that they should not be “penalized” for doing the work themselves and then settling for an amount that is within in the jurisdiction of the Small Claims Court. They argue that their conduct “pales in comparison to Lacasse’s conscious decision to not disclose a material adverse change in the property and withhold material evidence in the litigation”. The plaintiffs accuse Ms. Lacasse of “engaging in deception.” They say she attempted to hide a water infiltration problem and failed to disclose text messages that showed that she was aware of the problem and had asked the third party to correct it.
[12] The plaintiffs also submit that the third-party claim prolonged the litigation and made it more complex and time-consuming.
The Defendants’ Position with Respect to Costs
[13] The defendants are Francine Lacasse and the estate of Gaston Lavictoire. Ms. Lacasse was Mr. Lavictoire’s daughter and the executor of his estate. The house purchased by the plaintiff was owned by Mr. Lavictoire, who lived in the house until his death in 2013.
[14] The defendants seek costs from the plaintiffs. The defendants say the plaintiffs made serious allegations against the defendants, including fraudulent misrepresentation and intentionally concealing a defect (the missing support beam.) The defendants say the plaintiffs maintained these allegations, even after they knew or should have known that they could not be proven.
[15] The defendants also argue that the plaintiffs should be denied costs under Rule 57.05 of the Rules of Civil Procedure, because they brought their action in the Superior Court of Justice, albeit under Rule 76, and then settled for $14,000, an amount within the jurisdiction of the Small Claims Court. The defendants note the costs of both parties would have been considerably lower had the plaintiff started their action in the Small Claims Court.
[16] The defendants also argue that an offer to settle they served in July 2023 should have a bearing on the disposition of costs.
[17] The defendants’ offer was for $25,000 all-inclusive. The plaintiffs did not accept the offer.
[18] The defendants argue that, had the plaintiffs started their action in Small Claims Court, their costs recovery would have been limited to $5,250 in fees, plus their disbursements of $3,719. Section 29 of the Courts of Justice Act, R.S.O. 1990, c. C.43, limits costs in the Small Claims Court to 15 per cent of the amount claimed, unless the court concludes it is necessary to make a different order to punish a party. When the plaintiffs started their action, the Small Claims Court jurisdiction was $25,000; it was increased to $35,000 on January 1, 2020. Fifteen per cent of $35,000 is $5,250.
[19] The defendants argue that the plaintiffs should have accepted the $25,000 offer, because the $14,000 they ultimately settled for, plus the maximum amount of costs they could have been awarded in Small Claims Court adds up to less than $25,000. ($14,000 + $5,250 + $3,719 = $22,969.) The defendants argue that they beat their offer.
[20] The defendants also note that the offer stated that if it was not accepted by August 9, 2023, the defendants would be required to pay the defendants’ costs following the date of the offer.
[21] The defendants seek costs from the date of their July 2023 offer of $35,152.32, inclusive of full indemnity fees of $29,416 plus HST, plus disbursements of $1,912.24. Although this was not clearly set out in the defendants’ costs submissions, I infer the request for full indemnity costs was based on the plaintiffs’ allegations of fraud and deceit, which the defendants argue were unfounded.
Costs: Some Legal Principles
[22] Section 131(1) of the Courts of Justice Act provides that the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court.
[23] Although discretionary, a court must fix costs on a principled basis. (Davies v. Clarington (Municipality) et al., 2009 ONCA 722, para 40.)
[24] Rule 57.01(1) of the Rules of Civil Procedure sets out the factors the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing, in exercising its discretion under section 131 of the Courts of Justice Act to award costs. These factors include the principle of indemnity, including the experience of the lawyer involved, the hourly rate and the hours spent. They include the complexity of the proceeding and the importance of the issues. They also include certain conduct of the parties, including conduct that may have shortened or lengthened the duration of the proceeding or that was improper, vexatious, or unnecessary.
[25] The Court of Appeal has made it clear that the fixing of costs does not begin and end with a calculation of hours times rates. It says the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay rather than an amount fixed by the actual costs incurred by the successful litigant. (Boucher v. Public Accountants Council for the Province of Ontario, para 26.)
[26] In Davies, the Court of Appeal noted that it had repeatedly said that elevated (that is to say, full or substantial indemnity as opposed to partial indemnity) costs are warranted in only two circumstances: (1) where specifically authorized through the operation of an offer to settle under rule 49.10; or (2) where the losing party has engaged in behaviour worthy of sanction. Substantial indemnity costs are only awarded in rare and exceptional cases. (St. Elizabeth Home Society v. Hamilton (City), 2010 ONCA 280, para 92.)
[27] Rule 57.05 of the Rules of Civil Procedure provides that if a plaintiff recovers an amount within the monetary jurisdiction of the Small Claims Court, the court may order that the plaintiff shall not recover any costs.
Analysis
[28] The plaintiffs and the defendants have each asked me to consider the opposite side’s conduct. The plaintiffs say they are entitled to full indemnity costs because of Ms. Lacasse’s alleged fraudulent misrepresentation and deception. The defendants claim full indemnity costs because they say the plaintiffs alleged this improper conduct on the part of Ms. Lacasse without being able to prove it.
[29] No findings have been made about the parties’ conduct—the parties settled the case before it went to trial. Although most of the affidavits the parties intended to rely on at trial were included in their pre-trial conference briefs, the parties’ joint trial management plan contemplated a five-day trial where all witnesses would be cross-examined. I do not, obviously, have the benefit of the evidence that would have been available to the trial judge had the matter proceeded to trial.
[30] In Bondy-Rafael v. Potrebic, 2019 ONCA 1026, the Court of Appeal considered the correct analytical approach when a court is fixing costs when an action is settled before its adjudication on the merits.
[31] In Bondy-Rafael, a judge was asked to fix the costs of a motor vehicle accident case that had settled. The judge considered the merits of the case and concluded that one of two groups of defendants was entirely liable for the plaintiffs’ damages. He assessed costs against those defendants only.
[32] The Court of Appeal disagreed with the judge’s approach. The Court of Appeal said the judge should not have attempted to determine fault for the accident in the absence of a proper record and a trial. The Court said that permitting the adjudication of the parties’ respective liability for damages following a settlement would run contrary to the purpose of settlements and trial fairness. The Court said that by their settlement, parties agreed to resolve the issue of the parties’ respective potential liability for the plaintiff’s damages without a trial. Citing Waterloo North Condominium Corporation No. 161 v. Redmond, 2017 ONSC 1304, para 34, the court said it would therefore be inappropriate for the court to embark on “a full examination and adjudication of the merits of the parties’ substantive claims and defences for the sole purpose of determining the question of costs.”
[33] In Bondy-Rafael, the Court of Appeal decided that the two groups of defendants should contribute equally to the plaintiffs’ costs, having contributed equally to the settlement and for other reasons.
[34] The Court of Appeal noted that the following passage from McLellan v. Powassan Lumber Co. (1914), 26 O.W.R. 323 (Ont. H.C.), at p. 324 remained applicable, despite the passage of more than a century:
Costs are in truth incident to a determination of the rights of the parties and ought not to be made themselves the subject matter of the litigation. When the merits for any reason cannot be determined, there ought not to be a pretended investigation of the merits for the purpose of awarding costs.
[35] I am not able to determine whether Ms. Lacasse acted improperly. It would be an error for me to attempt to do so in these circumstances. I will not, therefore, consider the plaintiffs’ submission that they should be awarded full indemnity costs because Ms. Lacasse acted fraudulently or the defendants’ submission that they should be awarded full indemnity costs because the plaintiffs alleged that Ms. Lacasse acted fraudulently, without being able to prove it.
[36] Having considered the parties’ remaining costs submissions, I will make the following observations I consider relevant to the costs issues in this case:
The plaintiffs acknowledge that they settled the action for an amount that was within the jurisdiction of the Small Claims Court. Their only response to Rule 57.05 of the Rules of Civil Procedure, which says that in the circumstances, the court may order that they not recover any costs, was that this should be weighed against Ms. Lacasse’s conscious decision to not disclose a material adverse change in the property and withhold material evidence and that Ms. Lacasse’s infraction should be considered more serious. As I explained above, there is and there will be no finding about Ms. Lacasse’s conduct, including whether she consciously chose to withhold evidence.
The plaintiffs have not attempted to persuade me that it was reasonable for them not to have started their action in the Small Claims Court. In their costs submissions, they do not explain why they believed it was reasonable to claim $100,000 or to commence their action in the Superior Court. They produced estimates of the cost to waterproof the foundation of the house that were in the $100,000 range, however, these estimates were dated about 21 months after the plaintiffs started their action.
The plaintiffs argue that the defendants increased the cost of the proceeding by starting a third party claim against the contractors who replaced the septic tank in the house after the plaintiffs agreed to purchase the house and before the sale closed. However, in the statement of claim, the plaintiffs pleaded as follows: “After making inquiries with the workers who did the septic repairs the plaintiffs learned that Francine Lacasse directed the workers to repair an existing foundation issue and in so doing the workers damaged the foundation wall further, thereby causing the Crack.” As the plaintiffs had pleaded that the contractors who replaced the septic tank caused the crack in the foundation, I cannot find that it was unreasonable for the defendants to have started a third-party claim against the contractors.
The defendants argue that the costs consequences under Rule 49 of the Rules of Civil Procedure should apply to their July 19, 2023 offer, and that the plaintiffs should pay the defendants’ costs after July 19, 2023.[^4]
I find that the Rule 49 costs consequences do not apply to the defendants’ offer. The offer was for $25,000. The offer stipulated that if it was accepted after August 9, 2023, the plaintiff would be required to pay the costs of the defendants from the date of the offer to the date of acceptance of the offer.
It is beyond dispute that an offer to settle must have such clarity that the party presented with the offer can, with certainty, understand and calculate the amount being offered. It is a well understood principle when dealing with Rule 49, that offers must be crystal clear in order to attract the cost consequences attendant with the Rule: see Rooney (Litigation Guardian of) v. Graham, and Malik v. Sirois. (Davies v. The Corporation of the Municipality of Clarington, 2019 ONSC 2292, para 100.)
The defendants’ offer did not specify whether the plaintiffs would be required to pay their costs on a partial, substantial or full indemnity basis or provide any indication as to how the costs might be calculated. I find that the offer was not sufficiently clear to attract the Rule 49 costs consequences; after August 9, 2023, the plaintiffs could not have known with certainty how much the offer was worth.
Despite this conclusion, I will nonetheless consider the offer, as I am authorized to do under Rule 49.13 of the Rules of Civil Procedure.
[37] My task is to fix an amount of costs that is fair and reasonable for the unsuccessful party to pay. (Boucher, at para. 26.) As the defendants agreed to pay the plaintiffs $14,000 to settle the action, albeit on a “without prejudice” basis, I consider the defendants to be the unsuccessful party.
[38] To this end, I consider it significant that the plaintiffs started an action for $100,000 in the Superior Court of Justice and incurred costs of almost $57,000 before settling the action for $14,000, which is $11,000 less than the jurisdiction of the Small Claims Court at the time they started their action.
[39] In my view, the plaintiffs should have done more to assess their claim before they started their action. For example, in para. 21 of their costs submissions, the plaintiffs say that their “case was based on an allegation that [Ms.] Lacasse failed to disclose known water infiltration issues.” However, their statement of claim makes no reference to water infiltration; the only alleged deficiencies are a crack in the foundation and a missing beam. (It appears from one of the statements of account filed by the plaintiffs that their claim was subsequently amended.) Further, the plaintiffs claimed $100,000 in damages, but, as I noted above, they did not particularize any losses in the statement of claim. They do not appear to have obtained estimates of the cost of the foundation repair until almost two years after they started their action. I am prepared to give them the benefit of the doubt and assume that they had at least some sense of the cost of the foundation work before they issued the claim. That said, in their costs submissions, they failed to explain why they believed it was reasonable for them to have commenced and continued their action in the Superior Court. They said only that when they started the action, they had contemplated hiring professionals to do the work but then did it themselves because they could not afford the professionals. They did not elaborate.
[40] The plaintiffs did the repair work in January 2021. As of that time, they should have known that their claim was within the Small Claims Court jurisdiction, which was $25,000 when they issued their claim and had increased to $35,000 on January 1, 2020. The plaintiffs did not transfer their action to Small Claims Court. There was no suggestion in the material before me that they attempted to do so. Had the plaintiffs transferred their action to the Small Claims Court, the costs incurred by all parties would have been lower than they ultimately were.
[41] Then, on July 19, 2023, the defendants served their $25,000 offer to settle. As I noted above, despite my conclusion that the defendants’ offer does not attract the Rule 49 costs consequences, Rule 49.13 provides that I may take it into account.
[42] In my view, the plaintiffs acted unreasonably by not accepting the defendants’ offer. At the time the offer was served, the plaintiffs knew they had repaired the foundation themselves. They knew that their damages were within the jurisdiction of the Small Claims Court. If they had transferred their action to the Small Claims Court, where it clearly belonged at that point, the most they could have recovered in costs would have been 15 per cent of the damages claimed plus their disbursements. As I noted above, in my review of the defendants’ position, the $14,000 the plaintiffs settled for, plus $5,250 (15 percent of the $35,000 the plaintiffs could have claimed) plus $3,719 (their disbursements as of June 2024 which I will assume were approximately the same amount in July 2023) totals $22,969. The defendants’ $25,000 offer was fair and, based on these assumptions, more than the plaintiffs would have recovered in Small Claims Court. Further, at the time the offer was made, the plaintiffs knew or should have known that if they proceeded to trial in the Superior Court, (a) the litigation would be more expensive for all parties than it would be in the Small Claims Court; and (b) because of Rule 57.05, the plaintiffs were accepting the risk that they would be awarded no costs.
[43] Following the date of the offer, the defendants incurred full indemnity costs of more than $35,000 that they would not have incurred had the plaintiffs accepted their offer.
[44] I considered whether to award the plaintiffs no costs under Rule 57.05. In all of the circumstances, I concluded that it would be more appropriate for the defendants to pay the plaintiffs’ costs to the date of the offer and for the plaintiffs to pay the defendants’ costs following the date of the offer. The result, however, is not significantly different from a “no costs” award.
[45] The costs of both parties should be on a partial indemnity basis. As I noted above, I am not in a position to make any findings in respect of the parties’ conduct that might justify costs on a different scale.
[46] I have reviewed the parties’ bills of costs. I do not consider the hourly rates charged by either legal team to be unreasonable. For an action under Rule 76 in the Superior Court of Justice, I do not consider the hours worked to be unreasonable.
[47] To calculate the plaintiffs’ partial indemnity fees to July 19, 2023, I have added the partial indemnity fees claimed for 2017 to 2022 and for half of 2023. The total, inclusive of HST, is $20,307.50. I will grant the plaintiffs their full disbursements claim of $3,719.23. The total is $24,026.73.
[48] To estimate the defendants’ partial indemnity fees from July 19, 2023 to the date of the settlement, I have calculated 60 percent of the defendants’ full indemnity fees for that period. The total, inclusive of HST, is $19,944.48. The defendants’ disbursements from July 19, 2023 to the date of settlement were $1,912.24. The total is $21,856.72.
[49] The difference is $2,170.01.
Disposition
[50] For these reasons, I have concluded that it would be fair and reasonable for the defendants to pay the plaintiffs costs in the amount of $2,170.01, inclusive of fees, disbursements and HST.
Justice H. J. Williams
Date: April 11, 2025
[^1]: The third-party claim was settled at the pre-trial conference.
[^2]: Although it appears that the plaintiffs’ costs submissions were filed in August, through no fault of counsel, the submissions did not make their way to me. After my assistant reached out to counsel in February 2025 to ask whether all submissions had been filed, the plaintiffs’ submissions, dated August 16, 2025, were forwarded to my assistant.
[^3]: The plaintiffs issued a notice of action on August 11, 2017.
[^4]: Although Rule 49.10 provides for a defendant to be paid partial indemnity costs following the date of an offer that is not accepted, the defendants in this case are requesting full indemnity costs.