Overview

[1] This Endorsement concerns two matters that were not resolved in my Reasons for Decision issued on June 18, 2026.

[2] First, I found that, despite his denials at trial, Dharmesh Patel (“Dharmesh”) promised to pay $225,000 to the plaintiff, Surender Patel (“Surender”), pursuant to a promissory note signed on June 2, 2014. At the end of the trial, it emerged that the defendant, Dharmesh Patel (“Dharmesh”) had filed for a consumer proposal on October 16, 2014 that was approved on December 15, 2014. Pursuant to that proposal, Dharmesh was to pay creditors 12% of amounts owing. I decided that the amount that Dharmesh owed Surender was to be based on this 12% fraction of the total amount owing. I asked the parties to confer and seek agreement on damages in light of my reasons. The parties were unable to do so. I address the matter of damages first.

[3] Second, the parties were unable to agree on costs. I address this matter as well.

Damages

[4] The parties each provide excel spreadsheets with their respective calculations of damages.

[5] Surender approaches the matter in the following way. He calculates principal and interest owing on the basis of the $225,000 loan, less occasional payments made by Dharmesh, from the date of the promissory note to the date of trial. He then takes the accumulated amount at the date of trial and multiplies it by 0.12 to calculate the amount owing as of the date of trial. His calculation is $35,039.52.

[6] Dharmesh takes a different approach. He calculates interest from the date of the promissory note to the date of the filing of the proposal and adds it to the $225,000 principal to reach a total of $227,515.07. He multiplies this amount by 0.12, and subtracts subsequent payments of $9,500, to reach damages owing of $17,801.81. (Dharmesh alternatively calculates the amount based on the date of approval of the consumer proposal. Section 66.28 of the Bankruptcy and Insolvency Act R.S.C. 1985, c. B-3 identifies the date of filing as the relevant date for calculating a creditor’s claims and I focus on this date.)

[7] There are flaws in both approaches.

[8] Surender overestimates damages owing by waiting until the date of trial to apply the 12% multiplier to the amount owing. This incorrectly treats the principal owing as being unaffected by the filing of the consumer proposal. The consumer proposal implies that the amounts owing were reduced to 12% of the existing debts. To wait several years later to apply the 12% multiplier is to include in amounts owing interest on the full principal amount of $225,000, when following the proposal that principal amount was only 12% of the original. Interest is overstated following Surender’s approach.

[9] Dharmesh applies the 12% multiplier on the date of the filing of the proposal. He then subtracts the amounts paid at later dates to arrive at damages owing. The shortcoming with this approach is that it fails to account for interest accruing following the proposal. Even accepting that the amount owing as of the date of filing was $17,801.81, interest would accrue after that date. As explained in my reasons, a consumer debt not reported to the administrator is nevertheless affected by the proposal, but I do not accept that Patel ought to be exempt from paying interest on a debt that was not reported to the administrator.

[10] It may be that Dharmesh strove to calculate damages owing leaving pre-judgment interest to be determined separately. But whether one calculates the damages owing at the date of judgment, or the damages owing on the date of filing but with pre-judgment interest, it is necessary to account for interest at the contractually stipulated rate of 3%. Moreover, it is necessary to account not just for Dharmesh’s payments totaling $9,500 but also when they were made in order to calculate the interest that has accrued.

[11] The proper approach, in my view, is to calculate the principal and interest owing as of the date of filing; to multiply this amount by 12%; and then to calculate 3% interest on the amount owing from that point to the date of judgment, subtracting when made the occasional payments made by Dharmesh.

[12] By my calculations, the amount owing as of June 18, 2026 is $21,223.16.[1] Post-judgment interest accrues at 3% pursuant to the debt agreement.

Costs

[13] Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587, at paras. 59 to 66, reviews the general principles to be applied in awarding costs.

[14] Fixing costs is a discretionary decision under section 131 of the Courts of Justice Act R.S.O. 1990, c. C.43.

[15] In exercising my discretion, I may consider the factors listed in rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. These factors include the principle of indemnity (which in turn invites consideration of the experience of the lawyer, the hours involved and the rates charged), the amounts claimed and recovered, the complexity of and importance of the issues in the proceeding, proportionality, a party’s denial of something that should have been admitted, the reasonable expectations of the unsuccessful party, as well as any other matter relevant to costs.

[16] Costs follow the event: Stewart v. Toronto (Police Services Board), 2020 ONCA 460. There is a dispute about who was the successful party. Dharmesh claims that he was successful because damages are a fraction of what Surender was seeking. Moreover, certain claims of Surender, including unjust enrichment and a claim on an equitable mortgage, were unsuccessful.

[17] In my view, as against Dharmesh, Surender was successful. Dharmesh alleged that the promissory note was a fraud, offering a variety of non-credible explanations for his signature on the note, his payments to Surender, and various communications between him and Dharmesh. Because I found the promissory note authentic, the claim in unjust enrichment was not established – the note provided a juristic reason for the enrichment. But while Surender lost that battle, and a claim to an equitable mortgage, he won the war on the question of liability on the debt, which was the focus of the trial.

[18] Dharmesh did not report the existence of his debt to Surender in 2014 to the administrator of his consumer proposal, which was improper and raises questions (not before the court) about whether it would have been approved had he done so. Nor did Dharmesh advance the consumer proposal as a defence in the trial – it only arose in response to Surender’s cross-examination on the issue. I found that Surender was responsible for raising the issue, and thus it was open to the defence to rely on the proposal despite not raising it prior to the end of the trial. But this does not imply that Dharmesh was substantively successful: he is liable on a debt he denied incurring, and only because Surender happened to raise the consumer proposal is the quantum of damages not what it otherwise would have been. In my view, Surender was the successful party.

[19] The defendant, Bina Patel submits that she is owed costs because she was successful: she was not found liable, only Dharmesh was. I do not exercise my discretion to award costs to Bina. Bina and Dharmesh’s defences were, as their counsel put it, non-severable. There was negligible incremental cost from defending Bina and Dharmesh rather than simply Dharmesh. Bina and Dharmesh both benefited from Surender’s advances and clearly presented a joint defence. Bina supported Dharmesh’s claims on a number of issues, support that I did not find to be credible. And while there is no physical evidence that Bina did or did not sign the promissory note, that is in part because Dharmesh took the original after he signed it, and it was never seen again.

[20] In the circumstances, I find that while Bina was not found liable, Surender is not obligated to pay her costs. I also find, however, that because Bina was not liable, she is not obligated to pay Surender’s costs. I order costs against Dharmesh, but not Bina.

[21] Surender asks for substantial indemnity against Dharmesh given Dharmesh’s conduct in this litigation. Dharmesh relied on rather implausible theories to explain certain pieces of evidence – for example, his email was hacked twice to enable the hacker to send Surender emails that were entirely consistent with Dharmesh owing a debt to Surender. He was dishonest in reporting that he had never declared bankruptcy both in response to an undertaking, and then initially on the witness stand. I could go on. It is reasonable to conclude that Dharmesh acted improperly in accusing Surender of fraud in respect of the promissory note, which could justify substantial indemnity costs: Tataryn v. Diamond & Diamond, 2021 ONSC 3573.

[22] In the circumstances, however, I do not award substantial indemnity costs. It is true that Dharmesh’s conduct raised the costs of the trial. But it is also true that by failing to raise the consumer proposal and its implications at an earlier stage, Surender increased the costs of the trial. Surender is not solely responsible for this outcome, of course: Dharmesh failed to report the debt to the consumer proposal administrator in 2014 and failed to raise it as a defence until Surender brought it up. But Surender bears sufficient responsibility for the failure to bring the matter up earlier that I do not elevate costs above a partial indemnity amount. Both parties bear responsibility for litigating this case as though it were a $300,000-plus case, when the consumer proposal put the financial stakes comfortably in small claims territory. I do not order substantial indemnity costs in these circumstances.

[23] I conclude that Dharmesh, but not Bina, owes Surender costs on a partial indemnity basis. On this basis, Surender claims $51,657 in costs. Dharmesh submits that the costs claimed by Surender are excessive. I disagree.

[24] One consideration pursuant to r. 57 is the expectations of the unsuccessful party. Counsel for Dharmesh, whose defence was not severable from Bina’s defence, incurred full costs of $89,052.44, or costs on a partial indemnity basis of $53,808.87. This factor strongly suggests that the costs claimed by Surender are reasonable: his partial indemnity costs are lower than Dharmesh’s costs, which suggests that they ought to have been within the reasonable expectations of the unsuccessful party.

[25] Another consideration is the principle of indemnity. Surender relied most significantly on a 1992 call charging reasonable rates that varied between $575 to $750 over the course of this proceeding. Surender’s lawyers collectively spent 176 hours on this matter, while Dharmesh’s lawyers collectively spent a little over 200 hours on the matter. The fact that the hours spent by the defence in fact exceeded that of the plaintiff offers strong support for the reasonableness of the hours claimed.

[26] On proportionality, it is true that the costs are high relative to the damages ultimately awarded. But again, the fact that the implications of the consumer proposal were not appreciated by the parties well before trial is the responsibility of both parties. The damages claimed by Surender were reasonable but for the consumer proposal, and the costs are proportionate in relation to the claim.

[27] In summary, the costs claimed by Surender are reasonable. Surender is not required to pay Bina’s costs, but neither is Bina required to pay Surender’s costs. Dharmesh shall pay Surender costs on a partial indemnity basis in the amount of $51,567.00.

______________________________

E. Iacobucci J

Date: August 24, 2026

1I relied on the spreadsheet supplied by Surender to reach this number, applying a 12% multiplier to the date owing as of the filing of the consumer proposal on October 16, 2014, but otherwise relying on his calculations. His spreadsheet accounts for not only the payments by Dharmesh, but how they affected interest accruing after the payments were made.

Patel v. Patel, 2026 ONSC 4865

Case Summary

Overview

Damages

Costs

Patel v. Patel, 2026 ONSC 4865

Case Summary

Overview

Damages

Costs