Court File and Parties

Court File No.: CV-23-00702603-0000
Date: 2025-04-14
Court: Superior Court of Justice - Ontario

Between:
Esther Gerstel Inc., Plaintiff
and
Denise Michelle Scott, Defendant

Before: Vermette J.

Counsel:
Michael Suria, for the Plaintiff
Lungile Tinarwo, for the Defendant

Heard: In writing

Endorsement as to Costs

Background

[1] On March 5, 2025, I released an endorsement (2025 ONSC 1448) granting the Plaintiff’s action and motion for summary judgment. Among other things, the Defendant was ordered to pay $815,000.00 to the Plaintiff pursuant to the loan and mortgage between the parties, plus interest at 22% per annum compounded monthly. I also ordered that the Plaintiff was entitled to possession of the property in issue, and leave was granted to issue a writ of possession with respect to the property.

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

A. Positions of the Parties

1. Position of the Plaintiff

[3] The Plaintiff seeks costs on a full indemnity basis in the total amount of $19,315.75, i.e., $15,902.60 for the costs of the motion for summary judgment, and $3,413.15 for the costs of the action.

[4] The Plaintiff states that it was predominantly successful in its action and its motion for summary judgment and, therefore, it is entitled to its costs.

[5] The Plaintiff points out that section 8 of the standard charge terms of the mortgage provides that the Plaintiff is entitled to recover all costs, legal fees (as between solicitor and client) and expenses which may be incurred in taking, recovering and keeping possession of the land. The Plaintiff submits that pursuant to this contractual right, it is entitled to recover from the Defendant the costs that it incurred with respect to the motion and the action on a full indemnity basis. The Plaintiff notes that courts generally enforce a mortgagee’s contractual right to recover the costs that it incurred on a solicitor-client basis in the course of a mortgage enforcement proceeding, except where it has been shown that the mortgagee engaged in inequitable conduct or where there are special circumstances which renders the imposition of solicitor and client costs unfair or unduly onerous.

[6] Based on the facts of this case, the Plaintiff argues that it has not engaged in any inequitable conduct, and that there are no special circumstances that would warrant an exercise of the court’s discretion as to costs contrary to the contractual terms of the mortgage.

[7] The Plaintiff states that: (a) the Defendant defended the action and opposed the motion despite acknowledging that a debt was owing; and (b) she failed to adhere to the court-ordered timetable for the motion, requiring an additional case conference.

2. Position of the Defendant

[8] The Defendant does not dispute that the Plaintiff is entitled to costs, but submits that the costs should be on a partial indemnity basis.

[9] The Defendant points out that while the Plaintiff was substantially successful on the motion for summary judgment, its success was based in part on an acknowledgement of debt by the Defendant.

[10] The Defendant states that throughout the proceeding, with the exception of counsel’s appearance at the hearing of the motion, she was an unsophisticated self-represented litigant. She argues that she did the best that she could in the circumstances, and that she had a lack of understanding or appreciation of the consequences of being unsuccessful on the motion. The Defendant submits that she acted in good faith despite the fact that the mortgage fell into default, and that she defended the claim on the basis that the amount sought by the Plaintiff was unclear.

[11] The Defendant states that she is a retired senior and not in a position to satisfy the costs sought by the Plaintiff. I note that in her Statement of Defence dated July 25, 2023, the Defendant pleaded that she was a part-time teacher for the Toronto Board of Education.

B. Discussion

1. Scale of Costs

[12] Section 8 of the standard charge terms of the mortgage provides as follows:

The Chargee may pay all premiums of insurance and all taxes, rates, levies, charges, assessments, utility and heating charges which shall from time to time fall due and be unpaid in respect of the land, and that such payments, together with all costs, charges, legal fees (as between solicitor and client) and expenses which may be incurred in taking, recovering and keeping possession of the land and of negotiating the Charge, investigating title, and registering the Charge and other necessary deeds, and generally in any other proceedings taken in connection with or to realize upon the security given in the Charge (including legal fees and real estate commissions and other costs incurred in leasing or selling the land or in exercising the power of entering, lease and sale contained in the Charge) shall be, with interest at the rate provided for in the Charge, a charge upon the land in favour of the Chargee pursuant to the terms of the Charge and the Chargee may pay or satisfy any lien, charge or encumbrance now existing or hereafter created or claimed upon the land, which payments with interest at the rate provided for in the Charge shall likewise be a charge upon the land in favour of the Chargee. Provided, and it is hereby further agreed, that all amounts paid by the Chargee as aforesaid shall be added to the principal amount secured by the Charge and shall be payable forthwith with interest at the rate provided for in the Charge, and on default all sums secured by the Charge shall immediately become due and payable at the option of the Chargee, and all powers in the Charge conferred shall become exercisable. [Emphasis added.]

[13] Contractual terms that touch on the issue of costs do not bind the court in the exercise of its judicial discretion to determine a costs award. However, as a general proposition, where there is a contractual right to costs, a court will exercise its discretion so as to reflect that right. The court may refuse to enforce a contractual term where it has good reason to do so, including where the prevailing party has engaged in inequitable conduct or where the case presents special circumstances that render the imposition of full-indemnity costs unfair or unduly onerous. In all cases, notwithstanding the contractually agreed-upon scale of costs, the quantum of the prevailing party’s costs must be fair, reasonable and proportionate having regard to the circumstances of the case. See Burr v. Tecumseh Products of Canada Limited, 2023 ONCA 135, paras. 129-133 and Bossé v. Mastercraft Group Inc..

[14] In my view, there are no circumstances or reasons in this case that would justify not enforcing the Plaintiff’s contractual right to costs. The Defendant has been in default under the mortgage for a significant period of time and she has acknowledged that she owes a substantial amount of money to the Plaintiff. As pointed out in paragraph 31 of my endorsement dated March 5, 2025, the Defendant does not appear to have taken any steps since this action was commenced more than 1.5 years ago to obtain relevant documents and clarify her doubts with respect to the amounts owing. I find that the Plaintiff has not engaged in inequitable conduct in this case.

[15] I also find that there are no special circumstances in this case that would render the imposition of full-indemnity costs unfair or unduly onerous. While the Defendant states that she is not in a position to satisfy the costs sought by the Plaintiff, there is no evidence before me regarding the Defendant’s financial position. Further, a party without means cannot expect to be immune from a costs order. Courts have recognized the importance of avoiding a situation in which litigants without means can ignore the rules of the court with impunity. See Agius v. Home Depot, 2011 ONSC 5272, paras. 13-18 and Francis v. Leo A. Seydel Limited o/a Canadian Tire Associate Store #126, 2021 ONSC 6874, para. 32. I note that, in this case, the Defendant did not comply with a court-ordered timetable and failed to attend at Civil Practice Court. The Rules of Civil Procedure also apply to self-represented parties. The Defendant could not simply ignore the action, the motion and her financial obligations to the Plaintiff.

[16] Consequently, I find that the appropriate scale of costs in this case is full indemnity, in accordance with the terms of the mortgage.

2. Quantum

[17] As stated above, even costs on a full indemnity basis must be fair, reasonable and proportionate having regard to the circumstances of the case.

[18] I have reviewed the Plaintiff’s costs outline. I find that the hourly rate of the Plaintiff’s lawyer is reasonable.

[19] However, it is my view that a reduction to the amount sought is necessary based on the following two factors:

a. The Plaintiff’s bill of costs and costs outline show that all the work (including more “administrative” work) was done by one lawyer, who has 15 years of experience. The principle of indemnification for reasonable costs requires that legal tasks that do not require the skill and experience of a senior counsel be appropriately delegated to less expensive timekeepers. If the choice is made to have all or the bulk of legal tasks performed by a senior lawyer, it is not a choice for which the opposing party should be obliged to pay at senior counsel’s rate. See Romspen Investment Corporation v. 6711162 Canada Inc., 2014 ONSC 3480, para. 4 and Browne v. Toronto Star Newspapers Limited, 2015 ONSC 2968, para. 14.

b. While the Defendant acknowledged owing money under the mortgage, she denied an obligation to pay the renewal fees claimed by the Plaintiff and she was successful on this point. Had the Plaintiff not tried to “overreach” by claiming $60,000 in renewal fees, this matter would likely have been easier to resolve. In the exercise of my discretion with respect to costs, I find that it is appropriate to take into account the divided success on the motion.

[20] 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 (including the contractual terms they agreed upon), I find that the fair and reasonable award of costs in favour of the Plaintiff is on a full indemnity basis in the all-inclusive amount of $15,500.00. In my view, this is an amount that the Defendant should reasonably have expected to pay in the event that she was unsuccessful on the motion and the action.

C. Conclusion

[21] Accordingly, the Defendant is ordered to pay costs to the Plaintiff on a full indemnity basis in the amount of $15,500.00 within 30 days.

Sylvia C. Vermette
Date: April 14, 2025