SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

COURT FILE NO.: CV-15-10911-00CL
CV-15-10919-00CL

DATE: 20150805

RE: REMARKABLE ENERGY INC.

Applicant AND:

CROSSCURRENT ENERGY CORP.

Respondent

And Re: CROSSCURRENT ENERGY CORP.

Applicant

AND:

REMARKABLE ENERGY INC. and VASILLIOS SHINAS

Respondents

BEFORE: Newbould J.

COUNSEL: Hilary Book and Scott McGrath, for the Applicant/Respondents

John J. Adair and Valerie Hogan, for the Respondent/Applicant

ENDORSEMENT

[1] In my endorsement of June 8, 2015 I ordered that Remarkable is entitled to relief from forfeiture and that the time to repay the Crosscurrent loan is to be 60 days from the date (i) that Crosscurrent provides to Remarkable all documents in its possession relating to the contract with Lite Source and relating to the work done by Lite Source, including all representations, warranties and guarantees provided by Lite Source, which Crosscurrent is ordered to provide; (ii) the date that the amount owing by Remarkable to Crosscurrent has been established, including the amounts for principal, interest and legal expenses.

[2] Subsequently, the documents were provided on June 15, 2015 and on the following day the parties agreed on the amount of the outstanding loan, being principal and interest to August 15, 2015, and Denton’s legal fees and disbursements, totalling 363,224.90.

[3] Remarkable now requests an order that Crosscurrent pay it costs of the application and that as Crosscurrent has no assets, those costs be deducted from the amount to be paid on the outstanding loan. It further requests an order that the 60 day period for repayment should start when a decision on costs is released. Crosscurrent takes the position that Remarkable is not entitled to any costs and that the 60 day period runs from June 16, 2015. Crosscurrent also takes the position that it is entitled to its costs of enforcing its debenture security under the terms of the debenture.

[4] Dealing with the claim for costs by Remarkable, I recognize that it is quite normal in cases in which relief from forfeiture is granted that the applicant is required to pay the costs of the responding party. It is a matter of discretion and often the respondent had no role to play in the actions of the applicant that required relief. It should also be remembered, however, that the granting of relief from forfeiture involves an exercise of discretion. In this case, I was quite critical of the actions of Crosscurrent in failing to provide relevant information and the positions it was taking, actions which prevented Remarkable from acting to repay the loan. See paragraphs 50 to 55 of my endorsement. This is a case in which Remarkable is entitled to its costs of its application on which it was successful.

[5] Remarkable seeks costs of $34,227.06 on a partial indemnity bases, inclusive of disbursements and HST. This amount appears quite reasonable, taken the number of affidavits and the cross-examinations involved, including the cross-examination of Mr. Shinas in Court at the request of Crosscurrent. It was a very serious matter for Remarkable and Crosscurrent had to know that. It also compares quite favourably with the costs claimed by Crosscurrent. Taking into account the factors in rule 57.1, Crosscurrent is ordered to pay costs of $34,227.06 to Remarkable. I also order that these costs may be paid by setting them off against the amount to be paid on its loan obligation to Crosscurrent. Otherwise, in light of the information provided by Crosscurrent on its answers to undertakings that it has no funds to pay Denton’s, the cost award in favour of Remarkable would likely not be paid.

[6] Crosscurrent seeks costs of $47,465.42 on a full indemnity basis, said to be the costs of enforcing its debenture security. The debenture contains a typical provision that the debtor will pay all costs and expenses, including all legal fees, in the enforcement of the debenture. Exactly how much of these costs were incurred in enforcing the debenture is not said. No doubt part of the costs were incurred in the application by Crosscurrent to enforce what it said was a binding agreement with Remarkable to purchase the FIT Contract. That claim was withdrawn at the outset of the hearing of the applications.

[7] Normally a court will enforce contractual terms for costs. However, an agreement cannot oust the court’s discretion in the matter. See Bosse v. Mastercraft, 1995 931 (ON CA), [1995] O.J. No. 884 (C.A.), para. 66. In that case, the Court of Appeal stated:

As a general proposition, where there is a contractual right to costs, the court will exercise its discretion so as to reflect that right. However, the agreement of the parties cannot exclude the court’s discretion; it is open to the court to exercise its discretion contrary to the agreement. The court may refuse to enforce the contractual right where there is good reason for so doing ‑ where, for instance, the successful mortgagee has engaged in inequitable conduct or where the case presents special circumstances which render the imposition of solicitor and client costs unfair or unduly onerous in the particular circumstances.

[8] In this case, I am of the view that the contractual right of Crosscurrent to its costs should not be enforced. Its conduct was inequitable, as discussed, and caused the need for the application for relief by Remarkable. Also its positions taken during the litigation in refusing to produce obviously relevant information were not reasonable. I decline to order any costs payable by Remarkable to Crosscurrent.

[9] It is only with the release of this decision that Remarkable is now in a position to pay Crosscurrent what it is owed. Had Remarkable paid Crosscurrent before now without having any offset for its legal costs, there would be no assurance that if and when any liability of Crosscurrent for costs was established, Crosscurrent would have any funds left to pay those costs. Taken the actions of Crosscurrent and its tactical decisions to try to prevent Remarkable from proceeding with the agreement, there is no assurance that any funds paid to it by Remarkable would remain in Crosscurrent.

[10] In the circumstances, it is fair that the 60 day period for Remarkable to pay the balance owing to Crosscurrent in accordance with this endorsement runs from today’s date, and it is so ordered.

Newbould J.

Date: August 5, 2015