Homes by Hendriks Inc. v. Honsberger, 2025 ONSC 3454

Court File No.: CV-23-00061348-000
Date: 2025-06-11
Superior Court of Justice – Ontario

Between:
Homes by Hendriks Inc., Plaintiff

And:
Marc Frederich Honsberger, Rachel Pauline Honsberger, Computershare Trust Company of Canada and CWF Group Mortgages Inc., Defendants

Before: Robert B. Reid

Counsel:
D. Schmuck, Counsel, for the Plaintiff
N. J. Kasozi, K. Ludwig, Counsel, for the Defendants Honsberger

Heard: 2025-02-11; Costs submissions due 2025-05-20

Corrected May 16, 2025 to include additional name of counsel for defendants on page 1 as underlined. No change to content.

Decision on Costs of Motion

Introduction

[1] The defendants, Marc Frederich Honsberger and Rachel Pauline Honsberger (the “Honsbergers”), moved for an order discharging the construction lien registered against their property municipally known as 3150 King Street, Vineland, Ontario, (the “property”) pursuant to the provisions of ss. 35 and 47 of the Construction Act, RSO 1990, c C.30 (the “Act”).

[2] In the alternative, the Honsbergers sought an order reducing the plaintiff’s construction lien.

[3] By decision dated April 10, 2025, the request that the lien be vacated was dismissed. The request that the lien amount be reduced was granted and the lien was reduced by $145,121.47. The plaintiff, Homes by Hendriks Inc. (“HBH”), was unsuccessful in its argument that the court lacked jurisdiction to deal with the reduction in the lien.

[4] The parties were invited to resolve the issue of costs between themselves but were unable to do so. Therefore, cost submissions were made pursuant to the schedule established in the decision.

Positions of the Parties

[5] The Honsbergers seek an award of costs in the substantial indemnity amount of $56,380.87, relying on s. 86 of the Act, against both HBH and its principal, Darren Hendriks. Alternatively, the Honsbergers seek costs in the blended partial indemnity/substantial indemnity amount of $51,313.32 reflecting the different scale of costs applicable before and after making the offer to settle. As a further alternative, they seek costs on a partial indemnity basis in the amount of $42,915.72 based on the factors set out in r. 57.01 of the Rules of Civil Procedure, RRO 1990, Reg 194 (“the Rules”).

[6] HBH opposes any order of costs against Mr. Hendriks personally and submits that the Honsbergers’ offer to settle was not exceeded by the terms of the decision. As to the r. 57.01 factors, HBH notes that the decision reflected only partial success for the Honsbergers. In the circumstances, HBH seeks a costs order in its favour as to some of its partial indemnity claim of $29,763.24.

Analysis

[7] The court’s authority to award costs is established by s. 131 of the Courts of Justice Act, RSO 1990, c C.43. The factors to be considered by the court in exercising its discretion are set out in r. 57 of the Rules.

[8] In addition, s. 86(1) of the Act provides that:

Subject to subsection (2), any order as to the costs in an action, application, motion or any other step in a proceeding under this Act is in the discretion of the court, and an order as to costs may be made against,

(a) a party to the action or motion; or

(b) a person who represented a party to the action, application or motion, where the person,

(i) knowingly participated in the preservation or perfection of a lien, or represented a party at the trial of an action, where it is clear that the claim for a lien is without foundation, is frivolous, vexatious or an abuse of process, or is for a wilfully exaggerated amount, or that the lien has expired, or

(ii) prejudiced or delayed the conduct of the action,

and the order may be made on a substantial indemnity basis, including where the motion is heard by a person other than a judge or the action has been referred under section 58.

Should there be a costs order against Darren Hendriks personally?

[9] Darren Hendriks is a representative of HBH and therefore subject to the provisions of s. 86(1)(b) of the Act.

[10] The authority to award costs against a representative of the lien claimant is permissive, not mandatory. It should be imposed in situations where the representative of the lien claimant has engaged in the conduct described, namely registering a claim for a lien that is without foundation, is frivolous, vexatious or an abuse of process, or is for a wilfully exaggerated amount. Those actions, as a group, are indicative of conduct that is reprehensible and worthy of sanction.

[11] In the decision on the motion, I concluded that there was a wilful exaggeration of the claim as the basis for the reduction of the lien amount under s. 35(1) of the Act and reduced the amount of the lien accordingly. I disallowed the lien claims for materials which had been received by HBH but not delivered to the jobsite and disallowed the lien claims for some project management fees. While the exaggerated lien claim was obviously wilful (as opposed to accidental), I do not find that it was so egregious as to justify the imposition of liability on Mr. Hendriks personally.

What is the effect of the Honsbergers’ offer to settle?

[12] In their offer to settle of July 22, 2024, the Honsbergers proposed resolving the motion based on a reduction of the lien by $65,000 and a payment of costs by HBH of $10,000. In exchange, the motion was to be withdrawn.

[13] The Honsbergers submit that their full indemnity costs up to the offer to settle were in the range of $41,000, meaning that on a partial indemnity basis the costs were significantly higher than the $10,000 contained in the offer. There was no evidence that HBH wanted to accept the offer subject to assessment of costs.

[14] Although the Honsbergers failed in their claim to have the lien discharged, that fact is irrelevant to the consequences of the offer, since that claim for relief would have been encompassed in the offered dismissal of the motion.

[15] The provisions of r. 49 are designed to encourage settlement. When a valid offer is not accepted, and the plaintiff receives an award as favourable or more favourable than the offer, r. 49.10(1) provides that the plaintiff is entitled to partial indemnity costs to the date the offer was served, and substantial indemnity costs thereafter, unless the court orders otherwise.

[16] In this case, the Honsbergers claim $51,313.32 based on the combination of partial indemnity costs to the date of the offer and substantial indemnity costs thereafter.

[17] HBH submits that the Honsbergers’ claim is excessive, in comparison with its own costs. However, I note that the Honsbergers’ claim for substantial indemnity costs is about 30 per cent higher than HBH’s costs on the same scale, and it is to be expected that the moving party incurs more costs than the responding party. As such, I do not find the Honsbergers’ claim to be disproportionate or greater than the amount that reasonably could have been foreseen by HBH.

[18] I conclude that by virtue of the offer to settle, the Honsbergers are entitled to a costs award of $51,313.32 payable by HBH.

[19] In the circumstances of the relevant offer to settle, it is unnecessary to consider HBH’s costs claim based on what it submitted was partial success at the motion hearing.

Reid J.
Date: June 11, 2025