COURT FILE NO.: 41/2003

DATE: 20030627

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: Penyork Properties I Inc., Plaintiff, Appellant; and Wraps Inc. et al., Defendants, Respondents.

HEARD: April 3, 2003; written submissions as to costs May 9, 26, 2003.

BEFORE: Lane, Brockenshire and Cameron JJ.

COUNSEL: James P. McReynolds, for the Plaintiff, Appellant, Fernando Souza, for the Defendants, Respondents.

E N D O R S E M E N T (C O S T S)

[1] On April 3, 2003, we allowed an appeal from the motion judge who had refused to grant summary judgment to the plaintiff and dismissal of the respondent’s counterclaim. We substituted an order granting summary judgment as to liability, dismissing the counterclaim and directing an assessment of the damages. We have now received submissions as to costs.

[2] The appellant objects to the late delivery of the respondent’s costs materials and says we should not use it. We do not agree. We had directed that costs submissions be made within 30 days. The appellant submitted his on May 9, leaving but two days of the thirty for the respondent, who submitted his material on May 28. In our view, since the respondent is meant to respond to the submissions of the appellant in a thoughtful way, there was no unreasonable delay on the respondent’s part.

[3] The appellant submits that the result was very favourable to it. It obtained a judgment that had been refused and the dismissal of the counterclaim. That was what it sought except for the requirement that the damages be assessed. Costs should follow the event.

[4] The plaintiff made an offer to settle at a sum of money[^1] plus dismissal of the counterclaim. The defendant made no offer in response. The plaintiff submits that, although the terms of Rule 49 cannot apply, in the absence of quantification of the damages, the court should regard the offer and the defendant’s failure to respond in determining the costs order. Clearly, the court can take account of any offer, but this one cannot be given much weight, because at present there is no way of knowing whether it was a reasonable one.

[5] This action is upon a lease which provides, by section 16.03, that if suit is brought against the Tenant for breach of covenant and a breach is established, the Tenant is to pay to the Landlord all expenses including “reasonable solicitor’s and counsel fees on a solicitor and his own client basis.” The plaintiff submits that this clause applies and that it should have it costs on a full indemnity basis.

[6] The respondent submits that it is not timely to dispose of the costs issues until the damages have been assessed. They should be reserved to the assessment judge who will be in a better position then this court to make an appropriate determination, taking into account the matters raised by the appellant, but also in the light of the true magnitude of the appellant’s victory. A breach was established, but if there were no arrears of rent, as the Tenant contends, the victory may be more apparent than real. Further, success was significantly divided on the appeal. The appellant contended that this court should assess the damages on manifestly insufficient evidence, which not only was unreasonable, but also added to the cost of preparation of the appeal. It would be unreasonable to determine the costs issues at this stage, only part way through the action.

[7] We agree with the respondent’s position for the reasons advanced. The costs of the appeal and of the motion for leave are to be in the discretion of the judge hearing the assessment of the damages.

[8] The respondent makes further submissions as to directions relating to the conduct of the assessment. The appellant objects that these amount to a “proposed variance” of our order, without any motion to do so. We agree that these proposals are not properly before us.

Lane J.

Brockenshire J.

Cameron J.

DATE:

[^1]: We do not mention the amount in the light of Rule 49.06(2).