Costs Endorsement

Court File No.: CV-21-86599 & CV-21-88099
Date: 2025/01/10
Ontario Superior Court of Justice

Between:
Herminia Bada, Applicant
– and –
Ernestina Bada, Respondent

And Between:
Ernestina Bada, Applicant
– and –
Herminia Bada, Michele Bada, and Fernando Bada, Respondents

Appearances:
Keith A. MacLaren / Noémie Ducret, Perley-Robertson, Hill & McDougall LLP, for the Applicant
Cheryl Letourneau / Morgan McCartney, Vice and Hunter LLP, for the Respondent
Cheryl Letourneau / Morgan McCartney, Vice and Hunter LLP, for the Applicant
Keith A. MacLaren / Noémie Ducret, Perley-Robertson, Hill & McDougall LLP, for the Respondent

Heard: Costs submissions in writing.

Williams J.

Overview

[1] This was the trial of a mother-daughter dispute over a life interest in a home in Ottawa’s Sandy Hill neighbourhood. I found that the mother retained a life interest in the property. I found that although the mother had signed an Acknowledgment and Direction that removed the life interest from the property’s title, I could not be satisfied that she had understood the implications of doing so.

[2] Ryan Bell J. had ordered that two applications, one started by the mother and one by the daughter, be tried together:

Application #1:
Court file # CV-21-86599.
Parties: Herminia Bada (applicant); Ernestina Bada (respondent)
Notice of application issued May 27, 2021.
Relief sought:
a) A declaration that Herminia retains a life interest in the Marlborough property;
b) An order restraining Ernestina from evicting Herminia from the property;
c) A declaration that Ernestina cannot unilaterally force Herminia from her living accommodation; and
d) An order for the accounting of funds Ernestina borrowed on a line of credit, obtained from Herminia’s rental property and withdrew from Herminia’s bank accounts.

Application #2:
Court file # CV-21-88099
Parties: Ernestina Bada (applicant); Herminia Bada, Michelle Bada and Fernando Bada (respondents)
Notice of application issued December 9, 2021.
Relief sought:
a) A declaration that Herminia has relinquished her life interest in the Marlborough property;
b) A declaration that Ernestina is the sole owner of the property;
c) A declaration that Ernestina may deal with the property, including the sale of the property, in any manner that she determines at her sole discretion;
d) An order that Michelle and Fernando are restrained from entering onto and/or trespassing at the property during the time that Ernestina is the sole owner of the property; and
e) Damages in the amount of $25,000 for the damage to the property caused by Michelle and/or Fernando.

[3] In respect of the two applications, Herminia, Michelle and Fernando Bada now seek costs of $142,690.32, comprised of substantial indemnity fees of $134,778.16 and disbursements of $7,912.16.

[4] Ernestina Bada argues that, at best, Herminia, Michelle and Fernando should be awarded some minimal disbursements. Ernestina submits that Herminia’s contention that she had not signed the Acknowledgement and Direction, which I found to be untrue, was one of the reasons Ryan Bell J. had concluded that it was necessary for the applications to be resolved by viva voce evidence at a trial. Ernestina argues that Herminia’s lie added significantly to the cost of the litigation. She also argues that although Herminia was the successful party at trial, she should be sanctioned for her untruthfulness.

Costs: Some Legal Principles

[5] Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides that the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court.

[6] Although discretionary, a court must fix costs on a principled basis. (Davies v. Clarington (Municipality) et al., 2009 ONCA 722, at para. 40.)

[7] Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, 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.

[8] The fact that a party is successful in a proceeding does not prevent the court from awarding costs against the party in a proper case. (Rule 57.01(2) of the Rules.)

[9] Nothing in Rule 57 affects the authority of the court under s. 131 of the Courts of Justice Act to award or refuse costs in respect of a particular issue or part of a proceeding, to award a percentage of assessed costs or award assessed costs up to or from a particular stage of a proceeding or to award substantial or full indemnity costs. (Rule 57.01(4) of the Rules.)

[10] 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, at para. 26.)

[11] 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 of the Rules; 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, at para. 92.)

Analysis

[12] I will begin by considering some of the relevant factors under Rule 57.01.

[13] Both sides were represented by experienced counsel with the assistance of junior counsel. Work appears to have been appropriately delegated. The fees of the lawyers who represented Herminia, Michelle and Fernando were somewhat higher than those of the lawyers who represented Ernestina: Herminia, Michelle and Fernando’s lawyers’ partial indemnity fees were $89,692.49; Ernestina’s lawyers’ partial indemnity fees were $77,566.50.

[14] The proceeding was of moderate complexity.

[15] The proceeding was of significant importance to the parties. These family members were locked in a bitter dispute. The proceeding would determine whether Herminia had an on-going right to remain in the home she had owned for a long time but had given to Ernestina. The plan had been that Ernestina and her two daughters would move into the home and live there with Herminia. Ernestina would pay all of the expenses associated with the property. Herminia would continue to live at the property for the rest of her life or for as long as she wanted to remain there. The life interest would end when Herminia no longer lived at the property on a permanent basis. However, after about four and a half years, the relationship between Herminia and Ernestina soured. Herminia made it known that she did not approve of Ernestina’s boyfriend. Herminia’s behaviour became erratic. There were some physical encounters between Herminia and Ernestina. Herminia and Ernestina could no longer live under the same roof. The breakdown in the relationship had significant financial consequences for Ernestina, who had taken out a $390,000 mortgage to renovate the home before she moved in. Ernestina could not afford both to continue to pay the home’s expenses and to live elsewhere.

[16] With respect to the parties’ litigation conduct, Ernestina filed several affidavits four days after a court-imposed deadline and some further affidavits almost a month later. This resulted in the postponement of cross-examinations and the payment of a cancellation fee to Herminia’s interpreter. I do not, however, fault Ernestina for the late filing of the affidavit of lawyer Anthony Boyle, as this affidavit was filed to respond to Herminia’s unanticipated evidence that she had not signed the Acknowledgement and Direction. In July 2022, Ernestina attempted to sell the property, while the parties’ applications were outstanding, and without notice to Herminia. This prompted Herminia to bring a motion for a certificate of pending litigation she would not otherwise have brought.

[17] In August 2022, Herminia offered to settle the applications by purchasing the property from Ernestina for the amount outstanding on the mortgage Ernestina had registered against the property. In September 2022, Herminia repeated the offer and added a further $50,000 payment. In their costs submissions, Herminia, Michelle and Fernando portrayed these offers as allowing Ernestina to lighten her debt load. However, the home, which Ernestina had accepted from her mother in lieu of an inheritance, and which she had renovated, was worth well in excess of the amount outstanding on the mortgage. It is difficult not to interpret the offers as anything other than attempts by Herminia, Michelle and Fernando to capitalize on Ernestina’s desperate financial situation.

[18] I am persuaded by Ernestina’s argument that Herminia should be sanctioned for lying to the court about not having met with the lawyer, Mr. Boyle, and about not having signed the Acknowledgement and Direction. Ernestina relies on Collins v. Saga Yachts Inc., 1998 CarswellOnt 2482, in which Quinn J. reduced a party’s costs to reflect adverse findings of credibility and said the following at para. 75:

Impeccable attention to the truth is required of all litigants; to be effective the administration of justice demands nothing less. The reckless tongue, so commonplace outside the courtroom, has no place inside the courtroom. In my view, those litigants to whom truth is a vagrant companion must pay a price, even where, in the end, their claim or defence, as the case may be, is allowed. Untruthfulness must attract censure.

[19] In addition to censuring untruthfulness on principle, in this case, Herminia’s denial that the signature on the Acknowledgement and Direction was hers was a significant factor in Ryan Bell J.’s conclusion that the parties’ applications required a trial. On September 7, 2022, Ryan Bell J. granted a motion by Herminia to have the applications decided by a trial. Ryan Bell J. wrote:

I am satisfied that the issues to be determined go beyond the interpretation of a document and there are material facts in dispute. For example, Herminia's evidence is that she has no recollection of the meeting with the lawyer, Mr. Boyle, and that the signature on the Acknowledgement and Direction pursuant to which her life interest was removed from title to the property is not her signature. The authenticity of a signature was a factual issue that should be resolved on viva voce evidence at trial: Tarion Warranty Corporation v. Heritage Homes By Invidata (Phase 3) Inc., 210 ONSC 5056, at para. 18. The evidence surrounding the discharge of Herminia's life interest from title is in dispute.

[20] As a result of Ryan Bell J.’s decision, which was based at least in part on Herminia’s evidence that she did not sign the Acknowledgement and Direction, the applications, which were both scheduled to be heard on September 7, 2022, were heard instead over the course of a five-day trial, followed by written closing submissions. (I am in no way being critical of Ryan Bell J. My intention here is to underscore that Herminia’s claim that she did not sign the Acknowledgment and Direction, which I found to be untrue, was at least one of the reasons the applications took up five days of court time instead of one.)

[21] In my reasons for decision, in finding that Herminia had lied, I made allowances for her advanced age. I found, however, that given the clarity and strength of her evidence in other areas, I was satisfied that she was not mistaken when she said she had never met with Mr. Boyle, she was not telling the truth. I noted that Herminia’s assertion that Mr. Boyle was lying about having met with her, reflected very poorly on her.

[22] Although I am of the view that Herminia should be penalized for her dishonesty, she was the successful party, and I am not prepared to disallow her claim for costs altogether. The facts remain that Herminia was required to bring her application to stop Ernestina from selling the home and that I found in Herminia’s favour on the central life interest issue.

[23] I must fix costs in an amount that would be fair and reasonable for the losing party, Ernestina, to pay.

[24] Herminia, Michelle and Fernando have not satisfied me that there is any basis for an award of costs on a substantial indemnity basis.

[25] Having considered all of the relevant factors, I have concluded that $45,000 in partial indemnity fees, plus HST, plus disbursements of $7,000 would be fair and reasonable in this case. The $45,000 is roughly one-half of the partial indemnity fees claimed by Herminia, Michelle and Fernando. I reduced their claim for disbursements by a little over $900 to reflect my acceptance of Ernestina’s objections to their claim for printing and binding costs and for registration of a “POA”.

Disposition

[26] Ernestina shall pay Herminia, Michelle and Fernando $45,000 in fees, $5,850 in HST on fees and $7,000 in disbursements, inclusive of HST.

Date: January 10, 2025

Williams

Released: January 10, 2025