COURT OF APPEAL FOR ONTARIO

CITATION: Lone Oak Properties Ltd. v. Baillie, 2020 ONCA 614

DATE: 20200929

DOCKET: C67421

Pepall, Benotto and Coroza JJ.A.

BETWEEN

Lone Oak Properties Ltd.

Applicant (Appellant)

and

Clayton Baillie and Wilma Baillie

Respondents (Respondents)

Michelle L. Kropp and Kenneth J. Peacocke, for the appellant

Matthew J. R. Chapman, for the respondents

Heard and released orally: September 25, 2020 by video conference

On appeal from the judgment of Justice Lynda Templeton of the Superior Court of Justice, dated August 6, 2019.

REASONS FOR DECISION

[1] The appellant is a developer of a small subdivision. The respondents purchased a vacant lot from the appellant which was subject to a time-limited restrictive covenant limiting the size of ancillary buildings to 48 by 24 feet. The respondents built a shed measuring 60 by 30 feet. The appellant applied to the Superior Court for a declaration that the shed breached the covenant and for an order requiring its removal.

[2] The application judge dismissed the appellant’s application with costs of $29,000. This reflected costs on a partial indemnity basis up to the date of the respondents’ offer to withdraw the application and on a substantial indemnity basis thereafter.

[3] The appellant appeals the dismissal of its application and the award of costs.

[4] The restrictive covenant expired on September 15, 2019 and this would indicate that the appeal is moot.

[5] The appellant submits that there are community interests at stake and as such, this court should exercise its discretion to hear and determine the appeal on its merits.

[6] We do not agree.

[7] As found by the application judge, the restrictive covenant was not part of a building scheme. The tangible and concrete dispute between the parties has disappeared, there is no evidence that it will recur, and there is no issue of public or constitutional importance (see: Borowski v. Canada, 1989 CanLII 123 (SCC), [1989]1 S.C.R. 342 at para. 39).

[8] The appellant seeks leave to appeal costs.

[9] Rule 49.10(7) provides that when the defendant (in this case the respondent) makes an offer, and the plaintiff (in this case the appellant), obtains a judgment that is as favourable or less favourable than the offer to settle, the defendant is entitled to partial indemnity costs. There is nothing in the rule that would support an award of substantial indemnity costs when the plaintiff obtains nothing (see Groh v. Steele, 2017 ONSC 4925 at paras 8,9).

[10] The respondent submits that, nonetheless, the award of costs is a matter of discretion and it was open to the application judge to award substantial indemnity costs after the date of the offer. The award of substantial indemnity costs is extraordinary. The application judge erroneously anchored her award of substantial indemnity costs on r. 49 and did not articulate reasons for the award or its timing beyond a reference to the respondents’ offer to settle.

[11] The application judge erred by awarding costs on a substantial indemnity basis to the respondents after the date of their offer.

[12] Leave to appeal costs is granted and the costs award is reduced to $20,000. The appeal is otherwise dismissed as moot. Costs of the appeal are payable to the respondent in the amount of $10,000 inclusive of disbursements and HST.

“S.E. Pepall J.A.”

“M.L. Benotto J.A.”

“S. Coroza J.A.”