SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-11-431612
DATE: 20120709

RE: Austin Pharma Drugs Ltd, plaintiff

Albion Kipling Medical Building Corp., defendant

BEFORE: Justice Newbould

COUNSEL:
David Preger, for the receiver A. Farber and Partners Inc.

Craig Mills, for CIT Financial Limited

Catherine Patterson, for the defendant

E N D O R S E M E N T

[ 1 ] On June 15, 2012 I granted a motion by the receiver of Austin, supported by CIT, the senior secured creditor of Austin, for relief in connection with the lease between Austin and the defendant Albion. In particular, I granted a declaration that the lease had been effectively renewed for a second term of five years effective August 1, 2011. The landlord had taken the position that the lease had not been renewed. I ordered costs to be paid to the receiver and to CIT.

[ 2 ] The receiver seeks costs on a partial indemnity basis of $35,458.99 inclusive of HST. CIT seeks costs on a partial indemnity basis of $18,984.57 inclusive of HST. The landlord takes the position that total costs for both parties of $30,000 inclusive of HST would be fair and reasonable.

[ 3 ] The landlord asserts that the time spent by the various lawyers for the receiver and CIT is excessive and points out that its own costs calculated at a partial indemnity rate of $350 would be $18,455. It is difficult, of course, in hindsight for a court to be overly critical of time spent by counsel, and on the face of the bill of costs, nothing stands out as being particularly excessive. It is contended, for example, by the landlord that while cross-examinations of four persons took approximately 3 hours, the time docketed for preparation and attendance on those various occasions by counsel for the receiver and CIT totalled 14.4 and 5.5 hours. That the cross- examinations took only three hours is no indication of the length of time required for preparation. Often lengthy preparation results in shorter but successful cross-examinations.

[ 4 ] It is asserted also that only one counsel should normally have been involved for the receiver and CIT. I am in no position come to the conclusion. It is normal for receivers, who are court-appointed officers, to appear only for themselves and for other interested parties to be represented by separate counsel. Also in this case CIT as a senior secured creditor had an obvious interest in participating to ensure that its position was protected.

[ 5 ] One must take into account in this case that the stakes were particularly high. The going concern value of the plaintiff's pharmacy business is tied to its lease and had the landlord succeeded in its position that there was no lease, there would have been little hope of any substantial recovery by the receiver for its creditors, including its secured creditors owed in excess of $17 million. The landlord's principal deposed that it was his belief that if the premises were exposed to the market, another pharmacist would pay at least $4 million for the right to enter into a long-term lease. The landlord had to know that the tenant and its principal secured creditor would strongly oppose the termination of the lease.

[ 6 ] Disbursements are not contested other than a disbursement of approximately $1000 for computerized legal research. It is asserted that this expense should be covered by a lawyer’s overhead and not charged to the losing party. I do not agree. Time spent on legal research is a normal disbursement included in cost awards, and the fact that the research was done by computer, which is now the norm, is no reason to deny those costs to the successful party.

[ 7 ] Taking into account all of the circumstances and the factors referred to in rule 57.01, including what the landlord in this case could reasonably expect to pay for losing the motion, I fix the costs of the receiver, inclusive of HST, at $30,000 and the costs of CIT at $16,000, inclusive of HST, both to be paid within 30 days.

Newbould J.

DATE: July 9, 2012