ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-19-70172

DATE: 2026-02-26

BETWEEN:

SUNRISE SUNSET WELLNESS LTD. Plaintiff – and – YUANHUI YE Defendant

Thomas Benstead , for the Plaintiff

Ran He, for the Defendant

HEARD: In Chambers in writing

Decision on COSTS

M. Bordin J.

Overview

[ 1 ] The plaintiff corporation purchased the defendant’s business, SALA Wellness and SPA Centre. Six weeks later, the plaintiff shut down the business in response to orders from the Town of Oakville for operating as an unlicensed Body-Rub Establishment. The plaintiff sought rescission of the contract or the return of the money paid to purchase the business and out-of-pocket expenses incurred as damages. The plaintiff framed its claim in negligent misrepresentation and breach of contract.

[ 2 ] As set out in my reasons for decision in Sunrise Sunset Wellness Ltd. v. Ye , 2026 ONSC 14 (“Reasons”) , t here were significant credibility issues with both the plaintiff and the defendant . I found that the plaintiff’s claims for negligent misrepresentations were not made out for a number of reasons and were precluded by the entire agreement clause. However, I found there was a breach of the representation in the agreement of purchase and sale that the business was being carried on in compliance with zoning, governmental regulations and any applicable restrictive covenants . The plaintiff’s damages were assessed at $70,000 but reduced to $35,000 for contributory fault.

[ 3 ] The parties have made written submissions on costs.

Position of the Parties

[ 4 ] The plaintiff seeks its costs of the action on a substantial indemnity basis in the amount of $53,011.13 plus disbursements of $6,468.93 (inclusive of HST).

[ 5 ] The plaintiff submits that it was “overall more successful than the defendant respecting the quantum of the Judgment”. In doing so, the plaintiff implicitly acknowledges success on the part of the defendant in resisting the full claim of the plaintiff.

[ 6 ] The plaintiff, relying on the factors in r. 57.01 of the Rules of Civil Procedure , R.R.O. 1990, Reg. 194 , submits that the work was done by lawyers of an appropriate year of call and the action was of moderate complexity. The plaintiff also criticizes the conduct of the defendant as a witness and submits that her conduct unnecessarily lengthened the proceeding and was improper and vexatious.

[ 7 ] The plaintiff submits this case is exempt from the simplified procedure cost consequences of r. 76.12.1(1) – which limits costs to $50,000 and disbursements to $25,000 – as the action was commenced before January 1, 2020. I agree.

[ 8 ] The defendant served two versions of her cost submissions. She relies on the second version in which she submits the plaintiff is entitled to no costs. The defendant submits that the plaintiff is not entitled to substantial indemnity costs as she did not beat her r. 49 offer.

[ 9 ] Further, the defendant submits that no costs should be awarded to the plaintiff because success in this case is split, the amount recovered by the plaintiff is only 30 percent of the amount claimed, and the final result is within the jurisdiction of Small Claims Court. The defendant concedes that the monetary limit of the Small Claims Court was increased to $35,000 after the action was commenced.

Legal principles

[ 10 ] Subject to the provisions of an Act or the rules of this court, costs are in the discretion of the court: s. 131 of the Courts of Justice Act , R.S.O. 1990, c. C. 43. In exercising that discretion, I may consider, in addition to the result in the proceeding and any offer to settle, the factors enumerated in r. 57.01 :

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer;

(h.1) whether a party unreasonably objected to proceeding by telephone conference or video conference under rule 1.08; and

(i) any other matter relevant to the question of costs.

[ 11 ] A costs award should reflect what the court views as a fair and reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs to the successful litigant: Zesta Engineering Ltd. v. Cloutier (2002), 2002 25577 (ON CA) , 21 C.C.E.L. (3d) 161 (Ont. C.A.), at para. 4 .

[ 12 ] In fixing costs, the overriding principle is reasonableness. As stated in Davies v. Clarington (Municipality) et al. , 2009 ONCA 722 , 100 O.R. (3d) 66, at para. 52 : “Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant”.

[ 13 ] The fixing of costs is not simply a mechanical exercise. It is necessary to step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA) , 71 O.R. (3d) 291 (C.A.), at paras. 24 and 26 .

[ 14 ] Costs may be adjusted based on a lack of success on some of the issues: Oz Optics Limited v. Timbercon, Inc. , 2012 ONCA 735 , at paras. 2 , 17, and 18.

[ 15 ] The principle that a successful party is entitled to costs should not be departed from except for very good reasons. For example, if there has been (1) misconduct of the parties, (2) miscarriage in the procedure, or (3) oppressive and vexatious conduct of proceedings: 1318706 Ontario Ltd. v. Niagara (Municipality) , 2005 16071 (ON CA) , 75 O.R. (3d) 405 , at para. 50 .

[ 16 ] Elevated costs are warranted only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties: Young v. Young , 1993 34 (SCC) , [1993] 4 S.C.R. 3, at p. 134.

[ 17 ] An award of costs on an elevated scale is justified only under 49.10 or where the losing party’s conduct is worthy of sanction, such as “conduct of a reprehensible nature” or “specific acts or a series of acts that clearly indicated an abuse of process": McBride Metal Fabricating Corp. v. H. & W. Sales Co . (2002), 2002 41899 (ON CA) , 59 O.R. (3d) 97 (C.A.), at para. 39 ; Davies v. Clarington (Municipality) , 2009 ONCA 722 , 100 O.R. (3d) 66, at para. 28 .

[ 18 ] The conduct includes the circumstances giving rise to the cause of action as well as conduct in the proceedings: Mortimer v. Cameron (1994), 1994 10998 (ON CA) , 17 O.R. (3d) 1 (C.A.), at p. 23; Davies , at para. 30 ; and Mars Canada Inc. v. Bemco Cash & Carry Inc ., 2018 ONCA 239 , 140 O.R. (3d) 81, at para. 43 .

[ 19 ] The award is made to mark the court's disapproval of the conduct of a party in the litigation or as a form of chastisement: Mortimer , at p. 23; Clarington , at para. 30; and McBride , at para. 39.

Analysis

[ 20 ] The conduct of the defendant cited by the plaintiff in its cost submissions does not rise to the level entitling the plaintiff to substantial indemnity costs. Further, the plaintiff did not beat its offer to settle.

[ 21 ] With respect to the quantum of costs to which the plaintiff is entitled, I note that the plaintiff was unsuccessful in its claim for negligent misrepresentation. The plaintiff claimed approximately $108,000 in the statement of claim. The plaintiff was contributorily at fault and responsible for 50 percent of its damages. The damages awarded to the plaintiff for breach of contract represented approximately 33 percent of the amount claimed.

[ 22 ] The plaintiff and defendant had two lawyers in attendance at trial (except for closing submissions) and claims for both their time in full. Junior counsel for the plaintiff conducted the trial. This may be necessary for training purposes but is excessive in a claim for costs given the modest amount claimed and the conduct of the trial. The hourly rates claimed are not unreasonable.

[ 23 ] The plaintiff failed to address evidentiary, factual and legal issues. Further, the evidence of both parties was problematic as set out in my Reasons. I highlight two issues here with the conduct of the plaintiff.

[ 24 ] First, my Reasons set out my concerns regarding the alleged osteopath licence put forward by the plaintiff at trial. Those concerns include that it was never explained h ow the plaintiff’s representative could become an osteopath in less than 10 days. More importantly, there were two versions of the “licence” tendered at trial. They differed in significant respects. While I did not conclude that the licence was fraudulent, I was not persuaded that it was a legitimate document or that the plaintiff’s representative ever became an osteopath.

[ 25 ] The second issue relates to the misstating of the purchase price in the agreement of purchase and sale to avoid paying HST. The parties agreed that the actual purchase price was $85,000. However, the stated purchase price in the agreement of purchase and sale was $10,000. The parties did this to avoid paying HST. The plaintiff either wanted this to reduce the amount it had to pay or agreed to go along with it.

[ 26 ] There is authority for the proposition that where a party has engaged in inappropriate conduct, the court may deny costs.

[ 27 ] In Pagliaroli v. Rite-Pak Produce Co. Limited , 2010 ONSC 3729 at para. 76 , the court, citing International Paper Industries Ltd. v. Top Line Industries Inc., [1996] B.C.J. No. 1914 (S.C.) ; and Bellamy v. Timbers (1914), 1914 529 (ON CA) , 19 D.L.R. 488 (S.C.C.), noted that there is “ample authority for the proposition that those participating in illegal activity may be deprived of costs entirely, even if successful”.

[ 28 ] In Bellamy , at p. 501, Riddell J. stated:

To the above amount the plaintiff is entitled by the law, and we have no power to deprive him of a judgment accordingly.

But costs are in our discretion. The plaintiff is, on his own skewing, a swindler, taking money he has no right to, when his unfortunate customer does not know the law. His conduct is so shamefully dishonest as well as criminal that we should shew our disapprobation by denying him costs either here or below.

The attention of the Attorney-General and of the County Attorney of the County of Kent should be drawn to this open, avowed, wilful and persistent violator of the statutes of Canada.

[ 29 ] In 1151139 Ontario Inc. v. Woodbine-Applecreek Developments Inc. , 2005 23329 (Ont. S.C.), at para. 1 , the court declined to award costs where neither side came to court with “clean hands” .

[ 30 ] Taking all this into consideration, I begin with the proposition that in the ordinary course, the plaintiff, as the successful party, would be entitled to costs. However, the plaintiff would only be entitled to partial indemnity costs. Based on the plaintiff’s bill of costs, I would set the plaintiff’s partial indemnity costs at $29,000 plus HST and disbursements.

[ 31 ] I would reduce that amount further to $8,000 plus HST and disbursements as a result of the amount recovered in the action, the lack of success on some of the claims, the manner in which the trial was conducted, and that only one lawyer’s time should have been claimed for most of the trial.

[ 32 ] Further, I find that the plaintiff did not come to court with clean hands and appears to have engaged in unlawful activity, particularly with respect to the alleged osteopath licence and the avoidance of HST obligations. As a result, I decline to award any costs to the plaintiff.

[ 33 ] In the result, I find that the plaintiff is not entitled to any costs of the action.

M. Bordin J.

Released: February 26, 2026