Court File and Parties

COURT FILE NO.: CV-21-00669645-0000 DATE: 20240408 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: MANNING DEVELOPMENTS INC., Applicant AND: MUNICIPALITY OF LAKESHORE, Respondent

BEFORE: VERMETTE J.

COUNSEL: William A. Chalmers, for the Applicant Brendan van Niejenhuis, for the Respondent

HEARD: October 13, 2023, with written submissions delivered on January 19 and 25, 2024

Endorsement

[1] This Application relates to a dispute between the Applicant, Manning Developments Inc. (“Manning”), and the Respondent, Municipality of Lakeshore (“Lakeshore”), with respect to a Costs Sharing Agreement that they entered into in 2019. This is the second Application that I hear involving the same parties and the same Costs Sharing Agreement. [1]

[2] By the time this Application was heard, the only remaining issue of substance between the parties was costs, i.e., the costs of this Application and the costs of a related application. Both sides vigorously argue that they should be awarded costs.

[3] Ultimately, I award costs to Lakeshore, for the reasons set out below.

A. Factual Background

1. Costs Sharing Agreement between Manning and Lakeshore

[4] Manning is the registered owner of certain lands in Lakeshore (“Subject Lands”). The Subject Lands are located in an area of Lakeshore that is subject to an amendment to the Town of Lakeshore Official Plan known as the “Amy Croft Secondary Plan” (“Amy Croft Area”).

[5] Manning and Lakeshore are parties to a Costs Sharing Agreement made as of September 24, 2019 (“CSA”). The relevant sections of the CSA are as follows:

2. Subject to the terms and conditions of this Agreement, Lakeshore agrees to: (a) construct the municipal services necessary for the full development of all of the lands within the area to which the Amy Croft Secondary Plan applies. This includes, without limitation, the extension of Lanoue Street and Commercial Boulevard from their current termini to their point of intersection, required traffic signals, street lighting, sidewalks (both sides of the roads), all storm and sanitary sewer mains, watermains and an expansion of the existing stormwater management facility (the “Municipal Services”). Construction of the Municipal Services shall include, without limiting the generality of the foregoing, retaining a consulting engineer to design and oversee the construction of the Municipal Services and any necessary land acquisitions; (b) contribute the total sum of one million one hundred fifty thousand dollars ($1,150,000.00) towards the cost of constructing the Municipal Services; (c) employ the services of a professional engineer to complete the final design of the Municipal Services and to provide construction management services for their construction (“Managing Engineer”); and (d) employ a public tender process, to be conducted by the Managing Engineer, for the construction of the Municipal Services.

3. (a) Lakeshore agrees to provide Manning with an accounting of the costs incurred in designing and constructing the Municipal Services upon request; and (b) Manning shall be entitled to review the final engineering drawings for the Municipal Services to ensure, acting reasonably, there are sufficient service connections and adequate capacity for the Subject Lands.

4. As part of the land acquisition process for the extension of Lanoue Street, Lakeshore will acquire the lands for the extension of Lanoue Street as well as the lands between the said extension of Lanoue Street and the northerly property line of the Subject Lands, which lands are coloured over in light blue on the map attached as Schedule “B” and are comprised of four parcels labeled 0.14 ha, 0.02 ha, 0.16 ha and 0.09 ha. Once the construction of the Municipal Services has been completed and Manning has met all of its obligations under this Agreement, Lakeshore agrees to convey the two aforementioned parcels labeled 0.16 ha and 0.09 ha on Schedule “B” to Manning for the aggregate sum of one dollar ($1.00). […]

[6] Section 5 of the CSA contains a payment schedule for Manning. It provides, among other things, that Manning’s final payment of $279,600 is due and payable upon Lakeshore’s demand once the construction of the Municipal Services (as defined in the CSA) is substantially complete within the meaning of subsection 2(1) of the Construction Act, R.S.O. 1990, c. C.30.

2. First Application commenced by Manning against Lakeshore

[7] In May 2021, I heard an application brought by Manning for a series of declarations and mandatory orders in relation to the CSA (“First Application”).

[8] Manning sought the following declarations and orders in the First Application:

a. A declaration that pursuant to section 2 of the CSA, Lakeshore is obliged to forthwith construct the municipal services necessary for the full development of all of the lands within the Amy Croft Area. b. A declaration that the Subject Lands are included in the Amy Croft Area. c. A declaration that the municipal services necessary for the full development of all of the lands within the Amy Croft Area (referred to herein and in the CSA as the “Municipal Services”) include all municipal services necessary for the full development of the Subject Lands. d. A declaration that the Municipal Services necessary for the full development of the Subject Lands include, but are not limited to, those identified in section 2(a) of the CSA, and any other services certified by a land use planner as necessary to fully develop the Subject Lands. e. A mandatory order directing Lakeshore to construct the Municipal Services necessary for the full development of the Subject Lands, including, but not limited to, those identified in section 2(a) of the CSA, and any other services certified by a land use planner as necessary to fully develop the Subject Lands in such a way that there are sufficient service connections and adequate capacity for the Subject Lands. f. A mandatory order directing Lakeshore to provide Manning with an accounting of the costs incurred in designing and constructing the Municipal Services necessary for the full development of the Subject Lands. g. A mandatory order directing Lakeshore to provide Manning with the final engineering drawings for the Municipal Services necessary for the full development of the Subject Lands that provide sufficient service connections and adequate capacity for the Subject Lands.

[9] I released my decision in the First Application on September 1, 2021. I declined to grant the relief sought by Manning because I concluded that the relief requested in the First Application would have no practical utility at that stage and that, in many respects, the Application was premature and not ripe for adjudication. See Manning Developments Inc. v. Corporation of the Town of Lakeshore, 2021 ONSC 5863 at para. 42. In addition, I made some observations regarding the meaning of the expression “full development” in the CSA (see paras. 45-54) and the timing for the execution of Lakeshore’s obligations under the CSA (see paras. 55-59).

3. This Application

[10] The Notice of Application in this proceeding was issued on September 20, 2021, less than three weeks after I released my decision in the First Application. Manning seeks the following relief:

a. An order compelling Lakeshore to provide Manning with an accounting of the costs incurred in designing and constructing the Municipal Services pursuant to and in accordance with section 6(a) of the CSA. b. An order compelling Lakeshore to provide to Manning for its review the final engineering drawings for the Municipal Services pursuant to and in accordance with section 6(b) of the CSA. c. An order compelling Lakeshore to convey to Manning for $1.00 two parcels of land pursuant to and in accordance with section 7 of the CSA. d. An order compelling Lakeshore to provide two studies. e. An order compelling Lakeshore to advise what steps Lakeshore has taken since its receipt of the two studies to proceed to design and oversee the construction of the Municipal Services as required by section 2(a) of the CSA. f. An order compelling Lakeshore to identify: (i) what steps Lakeshore asserts remain to be taken that are necessary for the full development of all of the lands within the area to which the Amy Croft Secondary Plan applies; (ii) what actions Lakeshore is taking to complete those steps; and (iii) when those steps are anticipated to be completed.

[11] While the Notice of Application was formally issued on September 20, 2021, counsel for Manning sent a draft version of the Notice of Application to counsel for Lakeshore on September 2, 2021, i.e., the day after I released my decision in the First Application.

[12] Also on September 2, 2021, counsel for Manning requested a case conference before me. A case conference was scheduled on September 3, 2021, and Manning’s draft Notice of Application was sent to me prior to the case conference. A further case conference was held before me on September 29, 2021, after the Notice of Application had been issued. At that time, I seized myself of this Application at the request of the parties, and I scheduled the hearing of the Application for January 27, 2022. I also established a timetable for the exchange of materials and other steps prior to the hearing.

4. Action commenced by Manning against Lakeshore councillors and staff and adjournment of this Application

[13] On December 7, 2021, Manning commenced an action against all of Lakeshore’s Council members, including the Mayor and Deputy Mayor, and four senior staff members. Lakeshore is not named as a party. In the action, Manning claims damages for misfeasance in public office in the amount of $30 million (“Misfeasance Action”).

[14] On December 14, 2021, a few hours only before a Council meeting, Manning sent a copy of its Statement of Claim to Lakeshore and served it personally on some of the defendants.

[15] On Monday, December 20, 2021, Manning’s lawyer sent a Notice of Discontinuance to Lakeshore’s lawyer by e-mail. The Notice of Discontinuance was not served on any of the defendants at that time.

[16] On January 7, 2022, a case conference was held before me to discuss a request by Lakeshore to adjourn the hearing of the Application as a result of the impact of the Misfeasance Action on Lakeshore’s ability to proceed with the litigation. Since the request was opposed, I scheduled a formal motion to adjourn for January 13, 2022. After reviewing the materials filed by the parties and hearing counsel’s submissions on January 13, 2022, I released an endorsement on January 14, 2022 adjourning the hearing of the Application sine die, and scheduling a case conference for January 20, 2022 so that counsel could provide an update to the Court.

[17] My endorsement dated January 14, 2022 sets out the relevant facts. It reads, in part:

At 5 p.m. on Tuesday, December 14, 2021, the Respondent’s Council was scheduled to meet in closed session for purposes of receiving solicitor-client privileged advice and making certain decisions requiring instructions for purposes of responding to this Application and other outstanding litigations matters involving the Applicant. A few hours before the meeting, the Applicant delivered to the Municipality a statement of claim alleging misfeasance in public office against all of the Respondent’s Councillors and certain senior staff members, who were all named as defendants. Some of the defendants were served personally with the statement of claim during that same afternoon.

The agenda items requiring instructions with respect to this Application were withdrawn from the December 14, 2021 Council meeting agenda in light of serious concerns under the Municipal Conflict of Interest Act (“Act”) and so that independent legal advice could be obtained and received by the Councillors and senior staff members named as defendants with respect to their statutory and other obligations.

While the Applicant advised that it intended to discontinue the action on December 20, 2021, the lawyer retained to provide legal advice to the Councillors took the position that the Councillors would remain in a position of conflict unless and until the Applicant consented to an order that the discontinuance of its action was a complete defence and estoppel to any future claim by the Applicant arising from the same material facts. The Councillors’ lawyer also expressed the intention to seek recovery of the costs incurred on behalf of his clients as a result of the action.

In the afternoon of January 11, 2022, i.e. two days before this case conference, the Applicant formally served Notices of Discontinuance on the defendants. While the discontinuance against the Mayor, Deputy Mayor and senior staff was without prejudice, the discontinuance against the remaining six Councillors was with prejudice and stated that it was a defence to a subsequent action by the Applicant as against these defendants, as referred to in Rule 23.04 of the Rules of Civil Procedure.

A special meeting of the Council to reconvene and take such decisions and make such declarations as may in their view be appropriate under the Act relating to the litigation involving the Applicant, with the benefit of advice from their counsel, has been scheduled for January 18, 2022. If all Councillors declare a pecuniary interest in matters related to the Applicant, they will not be able to take part in the discussion of or vote on any question in respect of the matter (section 5(1) of the Act) and an application to a judge may be required if the number of Councillors who are not disabled from participating is less than two (section 7(2) of the Act).

I disagree with the Applicant’s position that the service of the Notices of Discontinuance in the action has rendered moot the grounds advanced by the Respondent in support of its request for an adjournment. Given that the Notices of Discontinuance were only served very recently, there is no evidence before me as to the Councillors’ position and whether they still believe that they are in a position of conflict / have a pecuniary interest with respect to decisions relating to the Applicant. Among other things, the issue of costs remains unresolved at this time. Councillors need a reasonable amount of time to obtain legal advice on the current state of affairs before they can participate in decisions and provide instructions regarding litigation involving the Applicant. As stated above, the issues will be discussed at a meeting next week (on January 18, 2022).

In my view, the consideration of the relevant factors overwhelmingly favour the granting of an adjournment. I agree with the Respondent that, in the current situation, the Respondent is unable to properly defend itself on the Application. This is because the Respondent is unable to provide instructions with respect to the litigation at this time. Even if the situation is “regularized” after the January 18, 2022 meeting, which is uncertain, this will leave insufficient time to complete the remaining steps before the hearing of the Application.

The issue of the inability to provide instructions is not limited to the preparation of the answers to undertakings and the consideration of the questions taken under advisement and the refusals. In any event, the solution proposed by the Applicant – that the questions taken under advisement all be considered as refusals and that all the undertakings requiring information from the Councillors be answered on the basis that the information cannot be obtained – is unsatisfactory for a number of reasons. First, the Applicant has suggested that it would ask the Court to draw adverse inferences from the refusals/incomplete answers. This would be unfair to the Respondent. Second, refusing to allow the Respondent to properly answer and consider the questions, in the absence of any urgency considerations, is inconsistent with the objective of a determination of the matter on its substantive merits.

No urgency nor any prejudice have been demonstrated by the Applicant. Further, the current situation is of the Applicant’s own making. The Respondent and the defendants to the action have attempted to respond in a timely manner to the situation created by the Applicant and the ever-changing litigation landscape with respect to the action. This is not a situation where the Respondent is attempting to delay the progress of the litigation.

In my view, it is necessary to grant the request for adjournment to allow the Respondent to properly prepare for the Application and have a fair chance to make out its case, and to promote an orderly, complete and fair adjudication of the issues on the Application.

While I am granting the adjournment, as the judge seized of this matter, I have to ensure that the Respondent is taking reasonable steps to bring this matter “back on track” as soon as possible. Accordingly, I have ordered counsel to attend before me at a case conference on January 20, 2022 so that an update can be provided to me following the January 18, 2022 meeting. If appropriate, the hearing of the Application will be rescheduled at that time. If not, a further case conference will be scheduled[.]

[18] At the case conference on January 20, 2022, counsel for Lakeshore advised that he had been instructed to bring an application under subsection 7(2) of the Municipal Conflict of Interest Act, R.S.O. 1990, c. M.50 (“MCIA”). I provided some assistance with the scheduling of that application (“MCIA Application”), which was to be heard in writing by a judge other than me. I also directed counsel to contact my assistant to schedule another case conference before me after the determination or resolution of Lakeshore’s MCIA Application.

5. MCIA Application and rescheduling of the Application

[19] Lakeshore’s MCIA Application was heard in writing by Justice Myers. On March 26, 2022, Justice Myers granted the order requested by Lakeshore under subsections 7(2) and (3) of the MCIA. His endorsement reads, in part:

Manning Developments Inc. wishes to undertake a development project and has launched several legal proceedings against the applicant to enforce its perceived rights. It has sued all members of council leading to a situation where they have all had to declare pecuniary interests under the [MCIA]. As a result they are all precluded from acting on the litigation qua councillors.

This is precisely the situation contemplated by ss. 7(2) and (3) of the statute. The situation here is narrow and well-defined. […] I also agree that by creating an obligation for court approval of any settlement proposed in the Manning litigation, the court can guard against the potential for conflict or the appearance of conflict that could arise by councillors preferring their own interests over those of the municipality.

I agree that this matter is properly brought without notice. In Vaughan, the protagonist was granted a right to intervene. No such application has been made here.

I agree that while no costs will be awarded in this proceeding, the applicant should maintain its right to seek recovery of its costs in its other proceedings in the event that a court finds that those proceedings precipitated this one and that it is reasonable under section 131 of the Courts of Justice Act for the applicant to be reimbursed for some or all of the costs it incurred in this proceeding.

I need to express as well my great appreciation for the quality of the material delivered by the applicant. It was not only complete and comprehensive, but the degree of disclosure was exemplary. At least three issues were raised in the factum which could have been argued had there been a responding party representing the ratepayers. The matters were dealt with fairly, with distinctions fully explained, and reasonable outcomes proposed. Counsel did not overreach and was exquisitely fair. I am greatly appreciative. [Emphasis added.]

[20] One of the affidavits filed by Lakeshore in support of the MCIA Application included the following paragraph with respect to the issue of costs:

I understand that some of these costs are subject to recovery in other proceedings as of right. To the extent that these are costs associated from this Application, which is brought ex parte and without notice, Lakeshore does not ask for an order from this Court for costs, as I understand that there is no other party against whom it would be fair to order them in the absence of their participation and an opportunity to respond. Lakeshore does ask the Court to refrain from making any order that would preclude Lakeshore from seeking its costs arising from this Application in another appropriate forum in due course.

[21] On April 13, 2022, another case conference was held before me. At that time, I scheduled the hearing of the Application for June 23, 2022, and I established a timetable for the remaining steps in the Application.

6. Adjournment of the Application at Manning’s request and rescheduling of the Application

[22] A further case conference was held before me on June 10, 2022 to deal with an adjournment request by Manning. I agreed to adjourn the Application sine die, but directed counsel to contact my assistant in early November 2022 to schedule a case conference before me.

[23] My endorsement dated June 10, 2022 reads as follows:

The Applicant sought an adjournment of the Application based on two main grounds. First, the Respondent’s answers to undertakings, questions taken under advisement and refusals, which are substantial, were served five days late and, in light of significant trial commitments of counsel for the Applicant in the coming weeks, the timetable is no longer realistic. Second, and more importantly, events that are taking (or have taken) place may obviate the need to deal with the relief sought in the Application, except for the issue of costs. Counsel for the Applicant proposed that the Application be held in abeyance (“standstill”) and adjourned sine die until the relevant events have taken place.

While counsel for the Respondents did not have formal instructions with respect to the adjournment request, he expressed concerns about the significant costs incurred by the Respondent so far and expressed the view that, instead of being adjourned, the Application should be abandoned. No other prejudice was articulated in relation to an adjournment.

In my view, the adjournment should be granted. Since the parties are reserving their rights with respect to costs and I am ordering that the adjournment shall have no impact on the parties’ respective positions and arguments with respect to costs, I do not see any prejudice to the Respondent if the adjournment is granted. Further, it would not be a good use of judicial resources to proceed with the Application at this time, in light of the ongoing events and the likelihood that it may ultimately not be necessary to deal with the Application, aside from the issues [sic] of costs. If, in fact, it is no longer necessary to proceed with the substantive issues raised in the Application, I strongly encourage the parties to try to agree on costs. If the parties are not able to agree on costs, I will consider the parties’ submissions in light of the full context of this matter, about which I am well aware.

The parties will provide me with an update at a case conference in November 2022. If the parties are of the view that there should be a case conference before that time, they can contact my assistant.

[24] The next case conference took place on January 23, 2023. At that time, counsel for Manning advised that Manning wished to proceed with the Application and the hearing was scheduled for October 13, 2023.

7. Decision of the Ontario Land Tribunal dated May 25, 2023 and motion in the Misfeasance Action

[25] As noted in my decision in the First Application, Manning filed an appeal to the Ontario Land Tribunal (“OLT”) following Lakeshore’s failure to make a decision on Manning’s zoning by-law amendment application at the February 2, 2021 Council meeting. Manning’s appeal was filed on February 14, 2021.

[26] The appeal was heard on December 12-15, 2022. On May 25, 2023, the OLT released its decision dismissing Manning’s appeal (). Among other things, the OLT made the following findings (at para. 37):

The Tribunal finds that without a servicing solution to address the sewage issues, the proposed Zoning By-law Amendment is premature and does not have appropriate regard for the adequate provision and efficient use of sewage services. It finds that the absence of planned or existing municipal sewage services to meet the needs of the proposed development does not allow for the type of development that would be facilitated by the proposed Zoning By-law Amendment.

[27] Manning subsequently sought leave to appeal the OLT’s decision to the Divisional Court.

[28] There was a motion in the Misfeasance Action scheduled to be heard in March 2024 to determine the quantum of the defendants’ costs and the terms of the discontinuance.

B. Status of the Application at the time of the hearing

[29] Manning admits that Lakeshore has already done most of the things requested in the Notice of Application, including the following:

a. Lakeshore has provided Manning with an accounting of the costs incurred in designing and constructing the Municipal Services. b. Lakeshore has provided Manning with the final engineering drawings for the Municipal Services. c. Lakeshore has provided Manning with the two studies that were requested. d. Lakeshore has advised what steps it has taken since the receipt of the two studies to proceed to design and oversee the construction of the Municipal Services. e. Lakeshore has identified: (i) what steps it asserts remain to be taken that are necessary for the full development of all of the lands within the area to which the Amy Croft Secondary Plan applies; (ii) what actions Lakeshore is taking to complete those steps; and (iii) when those steps are anticipated to be completed.

[30] Lakeshore agrees that (c), (d) and (e) above have been done and, consequently, the relief sought in this regard is moot.

[31] Lakeshore’s position with respect to (a) and (b) above (i.e., accounting and final engineering drawings) is that the relief sought in this regard is unripe because Lakeshore still awaits the final engineering drawings and issuance of final invoicing to permit an accounting.

[32] Whether Lakeshore has provided the required accounting and final engineering drawings does not require an order because it has either been done (according to Manning) or it could not be done at the time of the hearing but Lakeshore does not dispute its obligation to do so (according to Lakeshore). An order would have no practical effect and would not resolve any controversy between the parties.

[33] Aside from the issue of costs, the only relief sought in the Notice of Application that, according to Manning, has not been completed is the conveyance to Manning for $1.00 of two parcels of land pursuant to section 7 of the CSA.

[34] At the hearing, Lakeshore advised the Court that Lakeshore was prepared to proceed with the transaction and had appointed a solicitor for that purpose. However, the cheque in the amount of $279,600 provided by Manning in 2021 had to be replaced as the cheque had not been cashed and was now stale-dated. [2]

[35] Section 7 of the CSA is clear. The conveyance of the two parcels in issue is to take place “[o]nce the construction of the Municipal Services has been completed and Manning has met all of its obligations under this Agreement”. Other than the restoration of some landscaping that was to be done late in the fall of 2023, the construction of the Municipal Services was completed shortly before the hearing of the Application. For the purpose of section 7 of the CSA, Lakeshore was prepared to accept that the condition that the construction of the Municipal Services had been completed was met, and proceed with the conveyance. However, the other condition in section 7 had not been met at the time of the hearing: Manning had not met all of its obligations under the CSA as its final payment was still owing under the CSA. While Manning sent a cheque to Lakeshore in 2021, Lakeshore was not ready to convey the two parcels. I note that section 5 of the CSA states that Manning’s final payment of $279,600 is due and payable upon Lakeshore’s demand once the construction of the Municipal Services is substantially complete. Manning unilaterally sent his cheque before the construction of the Municipal Services was substantially complete and needs to provide a replacement cheque.

[36] Again, there is no real dispute between the parties. Lakeshore does not dispute its obligation under section 7 of the CSA. Now that the construction of the Municipal Services has been completed, Lakeshore is prepared to convey the two parcels if Manning complies with its payment obligation under the CSA, which is an express condition to the transfer. Further, and in any event, until this condition is met, there can be no order compelling Lakeshore to convey the two parcels.

[37] I now turn to the issue of costs, which is the only real issue left on this Application. I first review the positions of the parties.

C. Positions of the Parties

1. Position of Manning

a. Costs of the Application

[38] Manning’s position is that it succeeded in obtaining nearly all the relief sought in its Application without the need for a court order. In light of that success, Manning seeks its costs.

[39] Manning submits that the Application would not have been necessary had Lakeshore complied with its obligations. It argues that Lakeshore has played a shell game and that it is not true that the relief sought was going to happen in any event. Manning points out that Lakeshore has repeatedly reserved its rights with respect to the remedy of rescission. Manning states that the fact that Lakeshore provided information in answers to undertakings constitutes a concession that Lakeshore had to provide the information and that the Application was justified. That is the case even if Lakeshore says that the information was unnecessary.

[40] Manning relies, among other things, on Colistro v. TBay Tel, 2013 ONSC 5952 at para. 24 (“Colistro”) in support of the following principle: where, prior to a scheduled hearing, a motion is resolved on the basis that the responding party agrees to the relief sought in the motion, and it was reasonable to have brought the motion, it is fair to award costs to the moving party for costs incurred in preparing, serving and filing its motion materials.

b. Costs of the MCIA Application

[41] Manning points out that Rule 57.03(3) of the Rules of Civil Procedure provides that there shall be no costs to any party on a motion made without notice, unless the court orders otherwise. It argues that Lakeshore has failed to offer any meaningful justification for its contention that the Court should exercise its discretion to depart from the presumption that costs are not to be awarded in connection with an ex parte proceeding. Manning’s position is that Lakeshore has failed to set out how the interests of justice require a departure from Rule 57.03(3).

[42] Manning submits that costs recoverable in other proceedings should not be lumped in with, or claimed in, the MCIA Application.

[43] Manning argues that Lakeshore should not be entitled to costs of the MCIA Application that it continued to prosecute on the basis of purported pecuniary interests which only exist because of the demands by the defendants in the Misfeasance Action for concessions that may well be determined to be unjustifiable.

[44] Manning states that Lakeshore’s bill of costs only contains unhelpful bald descriptions of the activities undertaken and is not sufficient to permit the kind of close scrutiny that the Court is required to undertake. According to Manning, Lakeshore’s bill of costs is insufficient to allow the Court to come to a conclusion as to the amount of time reasonably required by Lakeshore’s counsel to deal with the MCIA Application. Manning argues that these deficiencies are fatal to Lakeshore’s claim for costs and that costs should be denied.

c. Scale of costs

[45] Manning submits that the appropriate scale is partial indemnity as it did not display reprehensible, scandalous or outrageous conduct.

2. Position of Lakeshore

a. Costs of the Application

[46] Lakeshore submits that Manning’s Application has changed nothing about Lakeshore’s obligations or the timing of their discharge. Lakeshore states that the relief sought is, on its face, simply a restatement – in the form of requested orders – of things that Lakeshore agrees it is to do and agrees that it will do. Lakeshore also states that some of the relief sought in the Application was unnecessary and some was premature at first, with the prematurity issue disappearing as construction proceeded. Lakeshore argues that the only thing that Manning has succeeded to do is generating unnecessary layers of expenses and consuming unnecessarily large quantities of staff, Council and lawyer time.

[47] Lakeshore’s position is that it was always going to perform its obligations under the CSA and that Manning should not be rewarded for its purposeless, wasteful and abusive conduct in the form of costs. Rather, Manning should pay Lakeshore’s costs. Lakeshore submits that Manning’s conduct was designed to improperly pressure Lakeshore’s staff and elected officials to make decisions favouring Manning and at odds with their duties to the public they serve.

[48] Lakeshore states that several of the factors set out in Rule 57.01(1) are pertinent and ought to drive an award of costs in Lakeshore’s favour.

[49] Lakeshore argues that the Application sought to compel compliance with obligations that Lakeshore never contested, but which could not be performed because they awaited the completion of work by other parties. Lakeshore points out that Manning also sought in the Application to obtain a sort of discovery as to the status of the non-completed construction, which was provided both through formal questioning and informally through discussions directly between the principals from time to time. Lakeshore submits that none of this was ever useful or valuable in and of itself, and that it was a waste of judicial and public monies.

[50] Lakeshore states that Manning made the proceeding exceptionally complex, and held two full days of cross-examination of Lakeshore’s affiant, resulting in approximately 152 undertakings, 382 questions taken under advisement and 61 refusals. According to Lakeshore, all of this was totally unnecessary.

b. Costs of the MCIA Application [3]

[51] Lakeshore points out that Justice Myers did not award costs one way or the other, and that he ordered that Lakeshore was entitled to ask for its costs in another appropriate proceeding if it is found that that proceeding necessitated the MCIA Application. Lakeshore submits that this Court may consider the costs associated with the MCIA Application and should award them on the basis of the Rule 57.01 principles. Lakeshore specifically refers to the factor set out in Rule 57.01(1)(h)(i), i.e., where a party commences separate proceedings for claims that should have been made in one proceeding.

[52] Lakeshore states that the lack of a good faith purpose for commencing the Misfeasance Action is impossible to ignore given that Manning’s response was to immediately attempt to discontinue the proceeding.

c. Scale of costs

[53] Lakeshore seeks costs on a substantial indemnity basis. It submits that the conduct of the Application, and the conduct of the Applicant more broadly, meet the level requiring sanction. Lakeshore states that malicious counter-productive conduct and the need to discourage harassment of another party by the pursuit of fruitless litigation warrant substantial indemnity costs.

[54] Lakeshore states the following in its Factum:

At some point one must simply recognize the obvious reality that a developer who threatens to appeal everything, sue personally, sue duplicatively and while advised by a highly-qualified law firm is probably doing so deliberately and with awareness as to the lack of substantive merit. Six litigation matters in pursuit of a single purpose, over a short period, along with a history of threatening communications, demonstrates a pattern of conduct of using litigation to exert short-term leverage and not for bona fide purposes of seeking adjudication of a real dispute.

D. Discussion

1. Entitlement to costs of the Application

[55] I generally agree with Lakeshore’s position that the Application has changed nothing about Lakeshore’s obligations under the CSA or the timing of their discharge. Further, the Application is of little or no practical utility and does not address the real issues between the parties regarding Manning’s proposed development on the Subject Lands, which mainly relate to sanitary sewage conveyance capacity.

[56] My decision in the First Application discusses factors supporting the conclusion that the issues raised by Manning in that application were premature and not ripe for adjudication. Despite this and the fact that it was advised on August 12, 2021 that the construction of the Municipal Services was not complete, Manning was ready to commence a new and overlapping Application on September 2, 2021, the day after I released my decision in the First Application, and did formally commence the Application a few weeks later, on September 20, 2021.

[57] I will discuss briefly each of the heads of relief sought by Manning in this Application. The discussion below shows that the relief sought was premature, not ripe for adjudication and/or of little or no practical utility:

a. Order compelling Lakeshore to provide an accounting. Manning sought a similar order in the First Application. In my decision, I noted that the order sought simply repeated the language in the CSA, and that there was no evidence before me that an accounting was requested and refused. I stated that there was no “real” dispute on this issue: see para. 44(f).

A request for an accounting was made before this Application was commenced. However, such request was made before the construction of the Municipal Services was completed. Although the CSA does not refer to a “final” accounting, it is my view that this is how the CSA should be interpreted – an accounting of the costs incurred in designing and constructing the Municipal Services cannot be provided until all the costs have been incurred and the construction has been completed. Even if I were to accept Manning’s submission that it could request an accounting before construction was completed, this request seems to have no real practical purpose and would not justify the bringing of the Application. I note that the CSA contains a projected accounting for the project.

b. Order compelling Lakeshore to provide the final engineering drawings. Manning sought a similar order in the First Application. In my decision, I stated the following on this point (see para. 44(g)):

This order generally repeats the language of section 6(b) of the Agreement. It is premature and does not relate to a “real” dispute between the parties. It is obvious from the facts set out in the “Factual background” section above that the final engineering drawings requested are not available because no final decision has been made. Further, there is no evidence before me that Lakeshore has taken the position that Manning is not entitled to receive a copy of such drawings when they are available. [Emphasis in the original.]

Contrary to the provision regarding the accounting, the CSA explicitly refers to the final engineering drawings. The evidence before me is that such drawings are not available yet, but that Lakeshore provided Manning with the original engineering drawings. Lakeshore has not taken the position that Manning is not entitled to receive a copy of the final drawings when they are available.

c. Order compelling Lakeshore to convey the two parcels. Section 7 of the CSA is clear: the construction of the Municipal Services has to be completed (and Manning has to have met all its obligations under the CSA) before the obligation to convey the two parcels is triggered. When this Application was commenced, Manning knew that the construction of the Municipal Services had not been completed.

d. Order compelling Lakeshore to provide two studies. At the time the Application was commenced, Manning had already received one of the two studies, and the second study had not yet been completed and was not available.

e. Order compelling Lakeshore to advise what steps it has taken since its receipt of the two studies. As stated above, the second study had not been received when the Application was commenced, and there is evidence that there had been discussions between Manning and Lakeshore regarding the first study. In any event, the legal basis for this order is unclear and has not been articulated. Among other things, the CSA does not impose such an obligation on Lakeshore.

f. Order compelling Lakeshore to identify what steps remain to be taken that are necessary for the full development of all of the lands within the area to which the Amy Croft Secondary Plan applies. In my decision in the First Application, I found that the meaning of the words “full development” could not be fully ascertained at that time. It could not be better ascertained the day after (or a few weeks after) my decision. Further, the legal basis for this order is unclear and has not been articulated. Among other things, the CSA does not impose such an obligation on Lakeshore.

[58] I also note that at the time of Manning’s request for an adjournment in June 2022, it was apparent to Manning (if it had not been apparent earlier) that “events that are taking (or have taken) place may obviate the need to deal with the relief sought in the Application, except for the issue of costs.” Manning refused to abandon its Application and the matter was adjourned sine die. Despite this, Manning asked six months later that the Application be rescheduled. At the time of the hearing nine months later, the only real issue between the parties was costs, as expected more than one year earlier.

[59] As stated above, Manning relies on Colistro and the principle that where, prior to a scheduled hearing, a motion is resolved on the basis that the responding party agrees to the relief sought in the motion, and it was reasonable to have brought the motion, it is fair to award costs to the moving party for costs incurred in preparing, serving and filing its motion materials. [Emphasis added.] Such reliance is misplaced. As the foregoing shows, it is my view that it was not reasonable for Manning to bring the Application.

[60] In light of the foregoing, I find that Lakeshore is entitled to its costs of the Application.

2. Entitlement to costs of the MCIA Application

[61] I am of the view that Lakeshore is also entitled to part of its costs of the MCIA Application. While Rule 57.03(3) of the Rules of Civil Procedure states that there shall be no costs to any party on a motion made without notice, this is subject to the court ordering otherwise. Here, Justice Myers ordered otherwise and maintained Lakeshore’s right to seek recovery of its costs in its other proceedings “in the event that a court finds that those proceedings precipitated [the MCIA Application] and that it is reasonable under section 131 of the Courts of Justice Act for the applicant to be reimbursed for some or all of the costs it incurred in this proceeding.”

[62] It is clear from the parties’ communications after the service of the Misfeasance Action that this Application was the main proceeding that precipitated the MCIA Application, although there were other outstanding proceedings between Manning and Lakeshore as well. In my view, it is reasonable for Lakeshore to be reimbursed for some of the costs it incurred in the MCIA Application in this proceeding and to depart from the general principle set out in Rule 57.03(3) for the following reasons, among others:

a. Less than six weeks before the hearing of the Application (and the six weeks included Christmas Day, New Year’s Day and the holiday associated with them), at a time where there were a number of steps left to be taken by the parties before the hearing, and just before a Council meeting where instructions were to be provided regarding the Application, Manning communicated the existence of the Statement of Claim and the Misfeasance Action to Lakeshore and some of the defendants in that action. The effect of the Misfeasance Action on the ability of Council and staff to instruct Lakeshore’s counsel in this Application was entirely predictable in light of the MCIA. b. Less than one week later and less than two weeks after the issuance of the Statement of Claim, Manning advised that it intended to discontinue the Misfeasance Action. This raises the question of why the Misfeasance Action was commenced in the first place if Manning was prepared to discontinue it so quickly. The fact that Manning advised that it was going to discontinue the Misfeasance Action almost as soon as it was brought strongly suggests that the bringing of the Misfeasance Action at the time that it was brought was incautious and injudicious, and based on an improper, invalid and/or flimsy justification. c. Rule 23.05 of the Rules of Civil Procedure provides that any party to an action that has been discontinued may, within 30 days after the action is discontinued, make a motion respecting the costs of the action. Such a motion was brought and, at the time of the hearing, the issue of costs (and other issues) remained unresolved. The issue of costs, in itself, appears to create a pecuniary interest and trigger the application of section 5 of the MCIA. Given that all the Council members were defendants in the Misfeasance Action, section 7 of the MCIA was engaged, as noted by Justice Myers in his endorsement. I do not accept Manning’s suggestion that there was no basis for a declaration of pecuniary interest by the defendants in the Misfeasance Action. In any event, Lakeshore is not a person who decided to declare a pecuniary interest, but it was the entity who had to deal with the consequences of such declarations. d. In January 2022, Manning vigorously contested Lakeshore’s request for an adjournment of the Application, which request was based on the situation created by the commencement of the Misfeasance Action. While the adjournment was granted, I made it clear in my endorsement dated January 14, 2022 that as the judge seized of the Application, I wanted to ensure that Lakeshore would take reasonable steps to bring the matter “back on track” as soon as possible, and I required the parties to return before me at case conferences to provide updates. As a result, Lakeshore was required to take the necessary steps to be able to proceed with the Application in a timely manner, which included the bringing of the MCIA Application.

[63] Thus, the MCIA Application was necessary to allow Lakeshore to continue to take steps in the litigation involving Manning, including this Application. The need for the MCIA Application was entirely of Manning’s own making.

[64] In light of the foregoing, including Justice Myers’ endorsement, Manning’s decision to discontinue the Misfeasance Action almost as soon as it was commenced, the central role played by this Application in precipitating the MCIA Application, and the fact that the MCIA Application needed to be brought in relation to other proceedings in addition to this Application, I find that it is reasonable and appropriate to award to Lakeshore 60% of its costs of the MCIA Application in the context of this proceeding. I only grant Lakeshore 60% of its costs in recognition of the fact that the MCIA Application also benefited, and was required by, other proceedings.

3. Scale of costs

[65] As has been observed in many cases, costs on an elevated scale are exceptional and are reserved for those situations when a party has displayed reprehensible, scandalous or outrageous conduct: see Quickie Convenience Stores Corp. v. Parkland Fuel Corporation, 2021 ONCA 287 at para. 4.

[66] In my view, Manning has engaged in behaviour worthy of sanction. Manning was unsuccessful on the First Application because the relief requested would “have no practical utility at this stage” and, in many respects, the First Application was “premature and not ripe for adjudication” (see para. 42). Despite this, the day after the release of my decision in the First Application, Manning’s counsel sent a draft Notice of Application to Lakeshore’s counsel showing that Manning was ready to bring another Application that overlapped with the First Application and that would again have no practical utility at this stage and that was in many respects premature and not ripe for adjudication. The Application was formally commenced a few weeks later.

[67] Considering this Application in the context of the First Application, the other litigation between Manning and Lakeshore and the manner in which Manning interacts with Lakeshore, I find that this Application constituted “harassment of another party [Lakeshore] by the pursuit of fruitless litigation”: see Davies v. Clarington (Municipality), 2009 ONCA 722 at para. 45. Therefore, I conclude that Lakeshore is entitled to costs on a substantial indemnity basis with respect to the Application.

[68] However, I am not prepared to order costs on a substantial indemnity basis with respect to the MCIA Application because this was an ex parte Application in which Manning did not participate. Further, Lakeshore was not a party to the Misfeasance Action. Finally, at the time of the hearing of this Application, there were outstanding proceedings: (a) with respect to the manner in which the defendants to the Misfeasance Action reacted after the discontinuance (i.e., motion scheduled for March 2024); and (b) involving allegations against Lakeshore similar to the allegations raised in the Misfeasance Action (i.e., in the counterclaim brought by Manning against Lakeshore in the action commenced by Beachside Development Ltd.). In my view, it would not be appropriate to order substantial indemnity costs while these proceedings are outstanding and in the absence of other factors strongly militating for substantial indemnity costs.

4. Quantum

[69] While Lakeshore did not attach dockets or other evidence in support of its claim for fees to its bills of costs, the absence of dockets is not an automatic bar to proving or receiving an award of costs: see Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587 at para. 66. Given my familiarity with this matter and the fact that I have seen the materials that were prepared for the litigation, I find that the description of the work done in Lakeshore’s bills of costs is sufficient to allow me to scrutinize the reasonableness of the amount of time spent and the amount of costs claimed.

[70] With respect to the Application, Lakeshore seeks costs on a substantial indemnity basis in the amount of $137,681.19. Manning’s bill of costs reflects costs on a substantial indemnity basis in the amount of $172,090.19.

[71] Lakeshore’s lawyers spent a significantly higher number of hours on the case than Manning, but this was to be expected given, among other things, the extensive number of undertakings given and questions taken under advisement during the two cross-examinations of Lakeshore’s affiant. Further, the nature of the Application and Lakeshore’s contested request for an adjournment after the service of the Misfeasance Action also support the expectation that the Respondent would have to spend more time on the litigation than the Applicant. Despite this, Manning’s costs are higher because the rates used by Manning’s lawyers, while not unusual in the Toronto legal market, are higher than the rates used by Lakeshore’s lawyers.

[72] As I stated in my decision on costs with respect to the First Application (2021 ONSC 6382 at para. 15), it is my view that it should have been within the reasonable expectations of Manning that, in light of the nature of the Application and the fact that Lakeshore is a public body, a significant amount of time would be required to respond to the Application. However, given the very high number of hours involved, and in order to ensure the overall reasonableness of the costs award in light of all the circumstances of the case, I find that it is appropriate to apply a small reduction to the costs sought by Lakeshore. In my view, the appropriate and reasonable amount of costs on a substantial indemnity basis is $125,000.00.

[73] With respect to the MCIA Application, Lakeshore seeks costs on a partial indemnity basis in the amount of $29,031.96. Again, a significant number of hours was spent on this matter by Lakeshore’s counsel. While it was to be expected that Lakeshore’s counsel would need to spend some time communicating and coordinating with the independent counsel appointed for the defendants in the Misfeasance Action and with others in preparation for the MCIA Application, I note that only one affidavit was prepared specifically for the MCIA Application. Further, the MCIA Application was brought ex parte and was unopposed.

[74] As I did with respect to Lakeshore’s costs of the Application, I find that it is appropriate to apply a reduction to the costs sought by Lakeshore with respect to the MCIA Application in order to ensure the overall reasonableness of the costs award in light of all the circumstances of the case. In my view, the appropriate and reasonable amount of costs on a partial indemnity basis is $22,500.00. Sixty percent of this amount is $13,500.00.

E. Conclusion

[75] The Application is dismissed.

[76] With respect to costs, taking the foregoing into account, as well as the factors set out in Rule 57.01(1) of the Rules of Civil Procedure and the reasonable expectations of the parties, I find that the fair and reasonable awards of costs in favour of Lakeshore are as follows: (1) with respect to this Application, costs on a substantial indemnity basis in the all-inclusive amount of $125,000.00; and (2) with respect to the MCIA Application, costs on a partial indemnity basis in the all-inclusive amount of $13,500.00, representing 60% of Lakeshore’s costs on a partial indemnity basis for the MCIA Application. In my view, these are amounts that Manning should reasonably have expected to pay in the event that it was unsuccessful in the Application and as a result of its decision to bring and discontinue the Misfeasance Action in the manner and at the time that it did.

[77] Manning is ordered to pay these costs to Lakeshore within 30 days.

Vermette J. Date: April 8, 2024

[1] My decision on the first Application is Manning Developments Inc. v. Corporation of the Town of Lakeshore, 2021 ONSC 5863.

[2] Lakeshore included additional evidence on this point in its costs submissions with respect to the MCIA Application. Since a motion to adduce fresh evidence was not brought, I will not consider this evidence. However, given my conclusion on the issue of the transfer of the two parcels, which is based on the parties’ evidence and submissions as of the date of the hearing, it is unnecessary to give to Lakeshore the opportunity to bring a motion to adduce fresh evidence because I decline to make any order with respect to the conveyance of the two parcels.

[3] Lakeshore’s written submissions with respect to the costs of the MCIA Application state that counsel sent e-mails to my assistant to seek clarification and directions regarding the timetable for the exchange of submissions, but that they received no response. I am very sorry for this. Counsel’s e-mails were not forwarded to me or brought to my attention.