SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Starwood Acquisitions Inc.

v.

267 O’Connor Limited

BEFORE: MASTER R.A. MUIR

COUNSEL: Brad Teplitsky for the plaintiff Andrew Lenz for the defendant

ENDORSEMENT - COSTS

[1] This costs endorsement arises out of a motion brought by the plaintiff for an order granting it leave to issue a certificate of pending litigation (“CPL”).

[2] On July 23, 2014 I released my reasons for decision. I concluded that the plaintiff had not met the applicable test for issuing a CPL and I dismissed the plaintiff’s motion. My endorsement also requested written costs submissions. I have now received and considered those submissions.

[3] The defendant seeks elevated costs in the amount of $10,000.00 for the appearance before Master Dash on April 25, 2014. The defendant seeks partial indemnity costs in the amount of approximately $28,000.00 for the balance of the motion. The plaintiff argues that the defendant has acted in bad faith and should be denied its costs. Alternatively, the plaintiff submits that a partial indemnity costs order of approximately $15,000.00 to $20,000.00 would be reasonable in the circumstances.

[4] The court’s general authority to award costs as between parties to litigation is found in section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, which provides that costs are in the discretion of the court. Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”) sets out a non-exhaustive list of factors the court is to consider when awarding costs. Rule 1.04(1.1) is also applicable. It requires the court in applying the Rules to make orders that are proportionate to the importance and complexity of the issues and to the amount involved in the proceeding.

[5] When dealing with costs, the overall objective for the court is to fix an amount that is fair and reasonable for the unsuccessful party who generally must pay the costs of the successful party. See Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. No. 4495 (C.A.) at paragraph 4 and Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), [2004] O.J. No. 2634 (C.A.) at paragraph 26. In Clarington (Municipality) v. Blue Circle Canada Inc., 2009 ONCA 722 the Court of Appeal stated as follows at paragraph 52:

Rather than engage in a purely mathematical exercise, the judge awarding costs should reflect on what the court views as a reasonable amount that should be paid by the unsuccessful party rather than any exact measure of the actual costs of the successful litigant.

[6] These are the factors and principles I have considered and applied in determining the costs issues on this motion.

[7] The defendant was completely successful. In the usual course the defendant would be entitled to its partial indemnity costs. It is my view that the usual practice should be followed in connection with this motion. I do not accept the plaintiff’s allegations of bad faith. In my view, the position taken by the defendant in connection with this motion and the underlying transaction cannot be characterized as improper or amounting to bad faith. The defendant vigorously opposed the plaintiff’s motion. This relatively complex motion was prepared and argued over a short period of time. In such situations there are bound to be minor inconsistencies and inaccuracies in any party’s evidence. However, I can see nothing in the record that would allow me to conclude that the defendant deliberately misled the court or otherwise acted in bad faith.

[8] The plaintiff’s costs submissions also refer to global settlement discussions between the parties while my decision was under reserve. In my view, such submissions are not relevant to the issue of the costs of the motion.

[9] I have therefore concluded that the defendant is entitled to its partial indemnity costs for this motion. I am not prepared to make an elevated costs order for the appearance before Master Dash. Elevated costs should only be awarded on the basis of a clear finding of reprehensible conduct. See Clarington at paragraph 40. The plaintiff’s conduct surrounding the appearance before Master Dash cannot be described in such terms.

[10] In terms of quantum, I would note that the amount requested by the defendant should come as no surprise to the plaintiff. The plaintiff did not prepare and serve a costs outline of its own, despite my request that it do so. However, the plaintiff’s costs submissions indicate that it has incurred actual costs of approximately $50,000.00 in connection with the motion.

[11] This motion was relatively complex. Extensive material was delivered including lengthy affidavits and factums. Cross-examinations were held. The issues were obviously very important to the defendant as a CPL would have encumbered its property and prevented it from selling or re-financing. The amounts involved are significant. This is a valuable piece of commercial property. The sale price agreed to between the plaintiff and the defendant was $11,400,000.00. In my view, the costs claimed by the defendant are fair and reasonable in the circumstances, other than the partial claim for elevated costs.

[12] I have therefore concluded that it is fair and reasonable for the plaintiff to pay the defendant’s partial indemnity costs of this motion fixed in the amount of $35,000.00, inclusive of HST and disbursements. These costs shall be paid within 30 days.

September 10, 2014

Master R.A. Muir