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Civil Litigation Dicta - Simplified Procedure - General. Sundial Homes (Sharon) Limited v. Wei
In Sundial Homes (Sharon) Limited v. Wei (Ont CA, 2025) the Ontario Court of Appeal allowed leave for appeal of a costs award, and then the costs appeal itself, in a simplified action.
Here the court considers when and if a matter should be treated under the simplified rules [para 26], here when assessing an issue under R76.13 ['Simplified Procedure - Costs Consequences']:[21] The costs consequences under r. 76.13 are triggered when a party brings a claim under the ordinary procedure, as opposed to the simplified procedure under r. 76, and subsequently recovers a money judgment that is less than the amount prescribed under the Rules. It is agreed that in this case, at the relevant time, that prescribed amount was $100,000. The operative provision of r. 76.13(3) reads:The plaintiff shall not recover any costs unless,
(a) the action was proceeding under this Rule [i.e., simplified procedure] at the commencement of the trial; or
(b) the court is satisfied that it was reasonable for the plaintiff,
(i) to have commenced and continued the action under the ordinary procedure, or
(ii) to have allowed the action to be continued under the ordinary procedure by not abandoning claims or parts of claims that do not comply with subrule 76.02 (1), (2) or (2.1) [which mandate simplified procedure]. [22] There is no issue that the appellant was entitled to commence this action under the ordinary procedure since it was, at that time, seeking damages in the amount of $1,671,363.95. As may be obvious, the issuance of the statement of claim predated the resale of the house. However, as matters progressed during the course of the action, the amount that the appellant could reasonably have expected to recover for damages dropped significantly. Indeed, when the house was resold on July 15, 2018 for $1,430,000, those damages had already dropped to less than $250,000.
[23] As earlier noted, the appellant held deposits of $140,050.80. Deposits are a deduction from the damages that are to be awarded: Azzarello v. Shawqi, 2019 ONCA 820, 439 D.L.R. (4th) 127, at paras. 49-55, and the authorities cited therein, leave to appeal refused, [2019] S.C.C.A. No. 521. Thus, when one is considering the damages that are actually in issue, one has to deduct the amount of the deposits. In this case, that left the additional damages being pursued very near the $100,000 limit.
[24] The appellant attempted to drive up its damages claim, over the amount of the lost purchase price, through two mechanisms. One is that it sought prejudgment interest at the rate of 11.95% under the agreement of purchase and sale. The trial judge disallowed that interest rate on the basis that it was stipulated in a standard form contract that was not brought to the attention of the respondent. The other is the claim that the upgrades, addressed in the main appeal, were to be treated as non-refundable.
[25] Ultimately, the appellant recovered damages in the amount of $70,036.31. That amount is below the prescribed amount of $100,000 and thus the costs consequences of r. 76.13 are triggered. The language of r. 76.13 is mandatory. It stipulates that a party “shall not recover any costs” unless the court is satisfied that it was reasonable for the party to continue the action under the ordinary procedure.
[26] I do not view it as reasonable for the appellant to have continued the action under the ordinary procedure in circumstances where it knew that there was a significant risk that it would ultimately recover less than the prescribed amount. It sought to avoid having its damage claim fall below that limit through the two questionable mechanisms I have set out above. It should have known the risks associated with that effort. It could choose to take those risks, but it must suffer the consequences of having made the wrong choice.
[27] On the point of reasonableness, I would add that this is not a case like ones the appellant cited which involved jury verdicts; or the assessment of general damages for personal injuries; or issues of contributory negligence; or where the issues involved were complicated thus requiring the fulsome discovery process under the ordinary procedure.
[28] The objective behind the simplified rules is to make claims for lesser amounts move more expeditiously and at less cost. It is an attempt to address, in one small way, the burgeoning costs of civil litigation along with the inordinate amount of time it takes to get cases through the court system. If the simplified rules are to achieve those objectives, then they must be enforced: Garisto v. Wang, 2008 ONCA 389, 91 O.R. (3d) 298, at para. 17. Parties must know that if they wrongly start or continue a claim under the ordinary procedure, there will be consequences to that decision. To quote the commentary to r. 76, these costs consequences are “the device that drives the whole system”: Michael Foulds & Peter Henein, eds., Watson & McGowan’s Ontario Civil Practice 2025 (Toronto: Carswell, 2024), at p. 1614.
[29] As a result, I would apply the costs consequences of r. 76.13(3) and deny the appellant its costs of the action.
[30] Therefore, I would grant leave to appeal the costs award, allow the cross-appeal, and set aside the trial judge’s award of costs in favour of the appellant.
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