COURT FILE AND PARTIES

COURT FILE NO.: CV-12-470106
DATE: 20140428

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Prima Java Inc., Applicant

AND:

Java Joe’s Franchise Services Inc., Java Joe’s Inc., Costa Kiriakopoulos and Peter Kiriakopoulos, Respondents

BEFORE: R. F. Goldstein J.

APPEARANCE:
Michael Kleinman, for the Applicant
Arnold Zweig, for the Respondents

costs ENDORSEMENT

[1] The Applicant sought a declaration that a franchise agreement was of no force or effect. The Applicant also sought damages. The Respondents were, respectively, the corporate franchisors and directors of the corporate franchisors. The Applicant had purchased the franchise from a third party. The key issue in the Application was whether the purchase of the franchise was “effected” through the franchisor, although there were obviously other issues. I found that the application largely turned on questions of credibility. I found that I could not determine those questions on an application. I therefore converted the application into an action, as I was of the view that it was the fairest way to determine the issue. The parties were then invited to make submissions as to costs.

[2] The Respondents argue that they were the successful parties on the application and that they are, therefore, entitled to their costs in the usual manner. The Respondents seek the amount of $5,737.29 on a partial indemnity basis. They do not seek substantial indemnity costs.

[3] The Applicants argue that there is only one real issue to be determined on a trial, which is whether or not the Respondents can successfully avail themselves of the exemption from the disclosure requirements in the Arthur Wishart Act. They argue that since I did not deal with the merits of the application, it was merely a procedural step and resolved nothing. The Applicants argue further that the trial judge is the party best suited to determine the issue of costs given that some cross-examination has already occurred. In the alternative, the Applicants argue that the amount sought is excessive, although I must say that I do not find anything unreasonable or excessive about the costs sought by the Respondents.

[4] The guiding principle in matters of costs is that the court should set an amount that is fair and reasonable in the circumstances: Boucher v. Public Accountants Council for Ontario, 2004 14579 (Ont.C.A.), 71 O.R. (3d) 291, [2004] O.J. No. 2643 (C.A.).

[5] The usual rule is that costs are awarded to the successful party: Schreiber v. Mulroney, 2007 31754 (ON SC), [2007] O.J. No. 3191 (Sup.Ct.).

[6] In this case, I agree with the Applicants that neither party enjoyed success. Although it is true that the Respondents sought to convert the application into an action, and sought costs, the Application did not definitively settle any of the merits. Certainly the decision to convert the application into an action meant that at this stage there was merit to both sides of the case. I agree with the Applicants, therefore, that the trial judge will be in the best position to determine costs. Although I am loath to “kick the can down the road” for the next judge, I think that it is the most fair outcome for both parties. Accordingly, the costs of this motion are left to the trial judge.

R. F. Goldstein J.

Date: April 28, 2014