Court File and Parties

COURT FILE NO.: CV-16-549951 DATE: 20170103 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Allied Properties REIT, 460 King Street West Inc. and 1301585 Ontario Limited, Applicants AND: 1064249 Ontario Inc., Respondent

BEFORE: Madam Justice Kristjanson

COUNSEL: David S. Reiter and Meghan A. Cowan, for the Applicants Patrick Di Monte for the Respondent

HEARD: By Written Submissions

Costs Endorsement

[1] In a decision dated September 6, 2016, I granted the Applicants a statutory injunction pursuant to section 380 of the City of Toronto Act, S.O. 2006, c. 11, Sch. A (“COTA”) and declaratory relief, to restrain the use of the Respondent’s property as a commercial parking lot. The decision issued on the grounds that the use of the property as a commercial parking lot contravened City of Toronto By-Law 438-86 (the “Zoning By-law”), and was not a legal non-conforming use: Allied Properties v. 1064249 Ontario Inc., 2016 ONSC 6665. The parties then made written costs submissions.

Scale of Costs: Substantial Indemnity Costs and the Public Interest

[2] The Applicants seek a substantial indemnity award on two bases. First, the Applicants submit that the municipal by-law context reflects the public interest, and imposing the burden of the cost of enforcement on a member of the public would be unjust. They analogize to Law Society of Upper Canada administrative hearings, which have held that costs related to enforcing public interest by-laws are properly borne by the offender and not the public at large: Law Society of Upper Canada v. Baker, 2006 ONLSHP 21 at para. 12. The Applicants rely on “the factual recognition that there is a cost associated with the enforcement of the law, and the equitable recognition that the cost of requiring enforcement should be borne by the offender and not members of the public.”

[3] The Respondent submits that substantial indemnity costs should be awarded only to mark the court’s disapproval of the conduct of a party, that the purpose is punitive and reserved to rare and exceptional cases: Prinzo v. Baycrest Centre for Geriatric Care, (2001), 215 D.L.R. (4th) at para. 75; Hunt v. TD Securities Inc., [2003] OJ 3245 at para. 123 (C.A.).

[4] The Court of Appeal has affirmed the exceptional nature of substantial indemnity cost awards in Davies v. Clarington, 2009 ONCA 722, [2009]O.J. No. 4236 (C.A.), where the Court found that behaviour worthy of sanction would include “reprehensible” or “egregious” conduct, including “specific acts or a series of acts that clearly indicated an abuse of process.” These factors do not apply here.

[5] Self-governing professions such as the Law Society of Upper Canada may adopt a different approach to issues of costs than the courts. However, when civil litigation proceeds in this court, then the Rules of Civil Procedure and this court’s jurisprudence must govern the costs consequences.

[6] Section 380 of the City of Toronto Act, 2006 provides that if any city by-law is contravened “the contravention may be restrained by application at the instance of a taxpayer or the City”. As I noted in my original decision, there is a public interest in ensuring that municipal by-laws are obeyed, which underlies the legislature’s decision to provide for a statutory injunction by a taxpayer to restrain contravention. However, the legislation does not establish special costs rules applicable to statutory injunctions. That a taxpayer must bear the burden of enforcing a municipal by-law where the City chooses not to act is part of the scheme designed by the legislature, and redress lies through legislative change.

[7] The Applicants also argue for substantial indemnity costs on the grounds that the Respondent “deliberately and on an informed basis” chose to ignore the relevant municipal by-law; continued to do so after the City asked it to stop the contravention; constructed an argument for which there was no support in fact; and obfuscated answers on a cross-examination. None of these matters reach the level of “reprehensible” or “egregious” conduct worthy of sanction through a substantial indemnity costs award. I find the Applicants are entitled to costs on a partial indemnity scale.

Quantum of Costs

[8] The statutory framework governing costs is set out in the Courts of Justice Act and the Rules of Civil Procedure. Fixing of costs is a discretionary decision under s.131 of the Courts of Justice Act, and is to be exercised with reference to factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)) and the concept of proportionality, which includes the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the importance and complexity of the issues (57.01(1)(c) and (d)). Rule 1.04(1.1) of the Rules of Civil Procedure requires the court to consider proportionality, as orders are to be proportionate to the importance and complexity of the issues and the amount involved in the proceeding, thus reinforcing the principles set out in Rule 57.01(1).

[9] Ultimately, the court is to determine what is “fair and reasonable” in fixing costs, with a view to balancing compensation of the successful party with the goal of fostering access to justice, rather than reflect the amount of actual costs incurred by the successful litigant: Boucher v Public Accountants Council (Ontario) at paras. 26 and 37-38.

[10] The Applicants seek fees in the amount of $49,080.31; disbursements in the amount of $5,846.63; and expert invoices in the amount of $13,701.25, all inclusive of HST. The Respondent submits a partial indemnity bill in the amount of $6,660.00 to indicate its’ expectations.

[11] The Applicants point to the complexity of the materials, which required a planning expert to trace both the zoning history and the uses of the property over 23 years involving expert affidavits, cross-examination of the Respondent and the preparation of a supplementary factum. They also rely on the importance of the issue as it involves the public interest as articulated in Toronto’s Official Plan and its King Spadina Secondary Plan.

[12] The Respondent submits that the Bill of Costs, which includes approximately 143 hours of lawyer time, indicates a degree of over-preparation which the court should not compensate, and requests that the matter be referred to an assessment. I will not refer the matter to assessment. The Court of Appeal in Boucher v Public Accountants Council (Ontario) has held that there is a presumption that costs shall be fixed by the court unless the court is satisfied that it has before it an exceptional case. The court should only refer a matter to assessment if the assessment process “will be more suited to effect procedural and substantive justice.” Thus, “[t]here must be some element to the case that is out of the ordinary or unusual that would warrant deviating from the presumption that costs are to be fixed. Neither complex litigation nor significant amounts in legal fees will be enough for a case to be exceptional. The judge should be able to fix costs with a reasonable review of the work completed without having to scrutinize each and every docket”: Boucher v Public Accountants Council (Ontario) at paras 15-16.

[13] As stated by Price, J. in David v. TransAmerica Life Canada, 2016 ONSC 1777 at para. 22:

In reviewing a claim for costs, the court does not undertake a line by line analysis of the hours claimed, and should not second-guess the amount claimed, unless it is clearly excessive or overreaching. It considers what is reasonable in the circumstances and, taking into account all the relevant factors, awards costs in a global fashion.

[14] The matter was important to the taxpayers, which are adjacent property owners, and reflected a public interest in restraining the contravention of municipal by-laws. The matter was legally and factually complex, requiring extensive affidavit evidence covering a variety of municipal by-law amendments and property use issues. The materials were well-prepared and extremely helpful in understanding a complex matter, although the amount of time expended was significant. The hourly rates are consistent with the Costs Bulletin, adjusted for inflation. However, an approach based on a number of hours alone is not “fair and reasonable” in the context of litigation, and poses real access to justice issues. The overriding principle of reasonableness must be applied to the factual matrix of this case: Jugmohan v. Royle, 2015 ONSC 4844 at paras. 62-65.

[15] I have considered the legal principles set out above and the submissions of counsel, and applied them to the facts of this case. I award the Applicants costs as follows, fixed and payable within 30 days:

(a) Fees inclusive of HST, 40,500, which includes the $500 ordered by Justice Firestone on May 30, 2016; plus (b) Disbursements, including expert invoices, inclusive of HST, 19,547.88.

Kristjanson J. Date: January 3, 2017