Citation: Smith v. 2249778 Ontario Inc., 2015 ONSC 2578
COURT FILE NO.: C-1227-14
DATE: 2015-04-28
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Glenn Smith
Applicant
- AND -
2249778 Ontario Inc.
Respondent
COUNSEL:
J. Greg Murdoch, C. Davis, for the Applicant
Ross F. Earnshaw, for the Respondent
HEARD: Written submissions
Ruling on Costs
[1] I rely on the facts set out in my judgment dated January 26, 2015.
[2] The tenant sought a declaration that the landlord permit the assignment of a lease. The lease provided that the landlord could not unreasonably withhold its consent to a request by the tenant to assign the lease. The tenant requested the landlord’s consent to assign the lease. The lease gave the landlord, upon the tenant requesting the landlord’s consent to assign the lease, the option of denying the request to assign the lease and terminating the lease. If the landlord did this, the tenant by giving notice, could require the landlord to reinstate the lease. The landlord denied the tenant’s request to assign the lease and gave notice to the tenant of termination of the lease. The tenant withdrew its request to assign the lease and the landlord reinstated the lease.
[3] The tenant argued that the landlord could not deny its consent to assign the lease unreasonably and terminate the lease. I followed the reasoning of Justice C.S. Brooker in Orbus Pharma Inc. v. Kung Man Lee Proporties Inc. 2008 ABQB 754, [2008] A.J. No. 1430. I held that the terms of the lease were valid giving the landlord the right to terminate the lease upon the tenant’s request to assign the lease without the landlord giving a reason and giving the tenant the right to have the lease reinstated.
[4] The landlord seeks costs either on a substantial indemnity basis in the amount of $15,098.45 or on a partial indemnity basis in the amount of $9,928.16, both including disbursements and HST.
[5] The landlord relies on sections of the lease as follows:
11.7 The Tenant shall indemnify and save harmless the Landlord from and against any and all claims, actions, costs, causes of action, damages, demands for damages, losses and other liabilities and expenses (including, without limitation, those in connection with bodily injury (including death), personal injury, illness or discomfort or damage to property and legal fees on a full indemnity basis) due to arising from or out of, an occurrence in, on or at the Premises or the occupancy or use by the Tenant of the Premises or any other part of the Building or occasioned wholly or in part by any act or omission of the Tenant, its officers, employees, agents, contractors, invitees, licensees or by any Person (excluding the Landlord and those for whom the Landlord is at law responsible) permitted by the Tenant to be on the Premises or the Project or due to or arising out of any breach by the Tenant of this Lease.
15.4 The Tenant shall pay to the Landlord upon demand: (a) interest at the Default Rate on all Rent required to be paid hereunder from the due date for payment until fully paid and satisfied; and (b) the Landlord’s then current reasonable administration charge for each Notice of default given by the Landlord to the Tenant under this Lease. The Tenant shall pay and indemnify the Landlord against damages, costs and expenses (including, without limitation, all legal fees on a solicitor and client basis) incurred in enforcing the terms of this Lease, or with respect to any matter or thing which is the obligation of the Tenant under this Lease, or in respect of which the Tenant has agreed to insure or indemnify the Landlord.
[6] The tenant states that s. 11.7 refers to damages and expenses occasioned by an “occurrence” or the “occupancy or use by the tenant” which do not apply to these facts. It submits that s. 15.4 cannot be interpreted to give the landlord insurance for legal costs against the tenant bringing applications of the nature of the application in this case.
[7] The tenant relies on s. 12.1 which states the following:
…In cases where the Landlord has withheld the Landlord’s consent the tenant agrees that the tenant’s only remedy will be to bring an application for a declaration that such proposed Transfer should be allowed…
This section gives the tenant the right to apply to the court to determine if the landlord has unreasonably withheld its consent to the tenant assigning the lease. There is no mention of legal costs.
[8] There appears to be no case in Ontario which addresses the issue which this case raises of the landlord denying a tenant’s request to assign a lease and the landlord being required in accordance with the terms of the lease to reinstate the lease on notice by the tenant. The tenant submits that this is in the nature of a test case which should not attract costs. If the court does award costs it submits that the “costs should be consistent with an unsuccessful party’s expectations of what costs should be.” It suggests a reduced amount of $5,000.
[9] Sections of Rule 57.01 that apply are as follows:
57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,
(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;
(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;
(a) the amount claimed and the amount recovered in the proceeding;
(c) the complexity of the proceeding;
(d) the importance of the issues;
(i) any other matter relevant to the question of costs
[10] In my view, the impact of the tenant’s position on the reasonable expectation of the parties is diminished by its failure to file a bill of costs of its own. In Risorto v. State Farm Mutual Automobile Insurance Co. 2003 CanLII 43566 (ON SC), [2003] O.J No. 990 Justice Winkler (as he then was) stated the following:
[10] The attack on the quantum of costs, insofar as the allegations of excess are concerned, in the present circumstances is no more than an attack in the air. I note that State Farm has not put the dockets of its counsel before the court in support of its submission. Although such information is not required under r. 57 in its present form, and the rule enumerates certain factors which would have to be considered in exercising the discretion with respect to the fixing of costs in any event, it might still provide some useful context for the process if the court had before it the bills of all counsel when allegations of excess and "unwarranted over-lawyering" are made. In that regard, the court is also entitled to consider "any other matter relevant to the question of costs". (See r. 57.01(1)(i)). In my view, the relative expenditures, at least in terms of time, by adversaries on opposite sides of a motion, while not conclusive as to the appropriate award of costs, is still, nonetheless, a relevant consideration where there is an allegation of excess in respect of a particular matter.
[11] I am mindful of the principles set out by the Court of Appeal in the judgment of Justice Armstrong in Boucher v. Public Accountants [2004] O.J No. 263 as follows:
[37] The failure to refer, in assessing costs, to the overriding principle of reasonableness, can produce a result that is contrary to the fundamental objective of access to justice. The costs system is incorporated into the Rules of Civil Procedure, which exist to facilitate access to justice. There are obviously cases where the prospect of an award of costs against the losing party will operate as a reality check for the litigant and assist in discouraging frivolous or unnecessary litigation. However, in my view, the chilling effect of a costs award of the magnitude of the award in this case generally exceeds any fair and reasonable expectation of the parties.
[38] In deciding what is fair and reasonable, as suggested above, the expectation of the parties concerning the quantum of a costs award is a relevant factor. See City of Toronto v. First Ontario Realty Corporation (2002), 2002 CanLII 49482 (ON SC), 59 O.R. (3d) 568 at 574 (S.C.). I refrain from attempting to articulate a more detailed or formulaic approach. The notions of fairness and reasonableness are embedded in the common law. Judges have been applying these notions for centuries to the factual matrix of particular cases.
[12] The landlord was successful. Cost should follow the event. On the other hand the tenant had a good argument and there was no case law in Ontario to guide the parties. I am of the view that the landlord having been successful is entitled to an award of costs. Notwithstanding the tenant’s failure to file its own bill of costs, I am the view that the figure suggested by the tenant if any costs are awarded of $5,000 is fair and reasonable.
[13] There will be an order that the tenant pay the landlord costs fixed in the amount of $5,000 within 30 days.
P.B. Hambly, J.
Released: April 28, 2015
CITATION: Smith v. 2249778 Ontario Inc., 2015 ONSC 2578
COURT FILE NO.: C-1227-14
DATE: 2015-04-28
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Glenn Smith
Applicant
- AND -
2249778 Ontario Inc.
Respondent
REASONS FOR JUDGMENT
P. B. Hambly, J.
Released: April 28, 2015