SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 1465152 Ontario Limited, Applicant

AND

Amexon Development Inc., Respondent

BEFORE: F.L. Myers J.

COUNSEL:
Catherine Francis, for the Applicant

W. Eric Kay, for the Respondent

HEARD: Written Submissions

COSTS endorsement

[1] In my handwritten endorsement dated June 27, 2014, I granted the application restraining the respondent landlord from terminating the applicant’s lease to its business premises without cause. As to costs, I wrote:

Absent unusual circumstances costs should follow the event on a partial indemnity basis. If counsel cannot agree …

[2] On July 14, 2014, I received costs submissions from the applicant seeking costs of the application on a full indemnity basis or a substantial indemnity basis in addition to the partial indemnity basis that I had indicated. The ground stated for punitive costs being sought was that the application was “necessitated by bad faith and arrogant conduct of the respondent/landlord.”

[3] The respondent landlord wanted to terminate the applicant’s lease to empty its building for redevelopment. It gave notice of eviction to the applicant, the last remaining tenant in the building, relying on the doctrine of efficient breach of contract to allow the landlord to evict the applicant and pay it damages without being held up for ransom. The tenant applied for an injunction restraining the landlord from purporting to terminate the lease and re-entering the premises. I held that, based on precedent, in circumstances like these, the Court will not get involved in affecting the balance of negotiating power between sophisticated parties. I also raised a concern for future abuses if landlords are given carte blanche to throw out tenants just because a better deal comes along. There is also a possibility of the applicant arguing for restitutionary damages to claim a piece of the landlord’s gain or savings. In all, the issues were legally complex although factually straightforward.

[4] As part of its grounds to evict the applicant, the respondent landlord appears to have tried to inflate trivial breaches of the lease. In my endorsement, I said that the landlord’s conduct “raises issues of bad faith”. I was speaking of “bad faith” in the sense used in McKinlay Motors Ltd. v. Honda Canada Inc. (1984), 249 A.P.R. (Nfld. S.C.) i.e. colourable conduct designed to bring about an end to a contract despite an appearance of compliance. I was not suggesting that the respondent landlord had misbehaved in the lawsuit or acted in a reprehensible manner. Moreover, I was aware of the issue, having noted it in my endorsement, before I suggested that costs should follow event on a partial indemnity basis absent unusual circumstances. So it is apparent that I did not and do not see that issue as a basis to alter the normal costs award. The applicant has raised no unusual circumstances to justify an increase in the costs. The landlord has committed no misconduct nor has it done anything to bring it near the rare cases of punitive costs reserved for “reprehensible” conduct.

[5] I have reviewed the Bill of Costs and the Costs Outline provided by counsel for the applicant. The respondent landlord does not oppose the partial indemnity quantum sought of $29,831.49 inclusive of disbursements and HST. The rates and the time as claimed appear to be quite reasonable. However, given the absence of any reasonable basis to claim punitive costs, the costs submissions should not have been necessary. In exercising discretion under s.131 of the Courts of Justice Act, R.S.O. 1990, c.C.43 in particular, Rule 57.01(1)(f)(i) unnecessary proceedings are a proper consideration in assessing the quantum of costs. Page limits are not intended to incentivize parties to take a low ante gamble on costs. Here, for the cost of a mere two pages, the applicant sought to increase its costs by approximately $22,000 without any real basis to do so. Page limits are imposed to highlight that costs matters are usually so routine that written argument is generally unnecessary and inefficient. The page limits are designed to encourage settlement not to create a low entry fee gamble. Therefore, there should be a downside to prevent parties from taking a low-cost shot at doing better. Absent reasonable grounds, such submissions just waste the time and resources of counsel opposite and the Court. I award costs of the costs process to the respondent landlord in the amount of $1,500 thereby reducing the costs payable by it to $28,331.49. The respondent landlord shall pay costs to the applicant of $28,331.49 inclusive of disbursements and taxes within thirty (30) days.

F.L. Myers J.

Date: July 24, 2014