York Condominium Corporation No. 366, 2017 ONSC 4605

COURT FILE NO.: CV-16-558523 DATE: 20170728

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: York Condominium Corporation No. 201, Applicant AND: York Condominium Corporation No. 366 and York Condominium Corporation No. 102, Respondents

BEFORE: Mr. Justice Monahan

COUNSEL: Jonathan Fine, for the Applicant Antoni Casalinuovo, for the Respondent York Condominium Corporation No. 366 Timothy Duggan, for the Respondent York Condominium Corporation No. 102

ENDORSEMENT

[1] On June 27, 2017, I released my endorsement in this matter, finding that York Condominium Corporation 201’s (“YCC 201”) appeal of an arbitrator’s ruling did not raise a question of law and thus was not appealable under s.45(1) of the Arbitration Act, 1991, S.O. 1991, c.17. Alternatively, even assuming that the arbitrator’s award was appealable, I found it was reasonable and should be upheld. Finally, I dismissed YCC 201’s application to set aside the arbitrator’s award on grounds that the arbitrator had failed to treat YCC 201 equally and fairly.

[2] In my endorsement I found that the respondent, York Condominium Corporation 366 (“YCC 366”) was entitled to its costs on the appeal. I left it to the parties to settle the quantum and, failing agreement, to make written submissions on the issue.

[3] In its written submissions, YCC 366 seeks costs on a full indemnity basis in the amount of $22,228.86 or, in the alternative, on a substantial indemnity basis, in the amount of $18,008.88.

[4] Amongst the factors relied upon by YCC 366 in its submissions are the following:

(a) Courts have awarded substantial or full indemnity costs in condominium litigation on the basis of fairness to the innocent neighbours who had no involvement in the matter. This is especially so where, as in this proceeding, a party is seeking compliance with governing documents such as a shared facilities agreement;

(b) YCC 366’s costs on a full or partial indemnity basis are less than the costs outline provided by YCC 201 at the hearing of the matter; YCC 201 would have claimed $39,847.07 on a full indemnity and $24,453.08 on a partial indemnity basis;

(c) Prior to any attendance at Civil Practice Court, YCC 366 served an offer to settle which would have resulted in a better outcome for YCC 201 than was obtained on the appeal; YCC invited YCC 201 to withdraw its appeal and have the matter returned to the arbitrator without any costs order;

(d) YCC 201 was entirely unsuccessful and its position on the appeal was devoid of merit;

(e) The matter was complex in that it involved issues concerning the standard of review of an arbitrator’s decision and whether there was an extricable error in law that was subject to appeal.

[5] For its part, YCC 201 submits that costs should be awarded on a partial indemnity basis, in the amount of $11,495, which is 60% of the substantial indemnity fees claimed by YCC 366.

[6] Amongst the factors relied upon by YCC 201 in support of its submission that costs should be awarded on a partial indemnity basis are the following:

(a) Success in litigation is not, in itself, a reason to expect full indemnity costs; the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay, rather than any exact measure of the successful party’s actual costs;

(b) The issues were not complex and, in fact, were straightforward;

(c) There was no allegation of misconduct or unnecessary steps taken by YCC 201;

(d) YCC did not advance allegations of fraud or dishonesty;

(e) YCC’s pursuit of the appeal was not reprehensible and was brought in good faith; and

(f) The provisions of Rule 49.10 relating to offers to settle do not apply to appeals and, in any event, YCC 366’s settlement offer as “an offer to capitulate with no element of compromise”.

[7] Section 131(1) of the Courts of Justice Act, R.S.O. 1990 c. C-43 provides that the costs of and incidental to a proceeding are in the discretion of the court and the court may determine by whom and to what extent the costs shall be paid. Rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 lists the general principles that are considered, in addition to the result in the proceeding and any offer to settle made in writing. These factors include: the principle of indemnity; 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; the complexity of the proceeding; and the importance of the issues.

[8] I have carefully considered the written submissions of the parties, in light of the principles identified in Rule 57.01, and find the following considerations to be particularly pertinent in arriving at a fair and reasonable measure of costs:

(a) YCC 201’s position on the appeal was largely without merit. The errors it alleged to have been made by the arbitrator did not rise to the level of errors of law and thus were not even appealable under the Arbitration Act. Moreover, its allegation that the arbitrator had failed to treat YCC 201 equally and fairly seemed to be based largely on the fact that the arbitrator had made procedural rulings that limited the scope of the issues to be considered in phase one of a two-phase arbitration, without prejudice to YCC 201’s right to argue these matters in phase two. Moreover all the procedural rulings of the arbitrator were made after careful consideration of submissions by the parties. There was no evidence before me indicating anything unfair about the manner in which the arbitrator conducted the phase one proceeding;

(b) YCC’s offer to have the matter remitted to the arbitrator, without costs, in order to proceed with phase two of the arbitration was reasonable in the circumstances. The dispute between the parties over the responsibility to fund the expenses of the shared recreation centre had been ongoing for some years. YCC 201’s position that it had no obligation to contribute to the common expenses of the recreation centre was a significant issue that needed to be resolved expeditiously. The parties agreed to a two-phase arbitration in the hopes of achieving a speedy resolution. Instead, by appealing the phase one arbitrator’s ruling, a ruling that was merely intended to set the stage for the phase two proceeding, and on grounds that were largely without merit, YCC has caused a year of delay. Moreover, YCC 201’s description of YCC 366’s settlement offer as one involving “capitulation” is inconsistent with the policy of the Condominium Act, 1998, S.O. 1998, c.19, to have condominium disputes resolved through mediation and arbitration;

(c) Courts have previously awarded substantial or full indemnity costs in cases involving the enforcement of governing documents such as the shared facilities agreement;

(d) At the hearing of the appeal, YCC 201 sought to add to the relief claimed on the appeal by seeking an order removing the arbitrator. Moreover YCC 201 did not suggest whether, or how, a new arbitrator should be appointed. At the very least this would have delayed the resolution of the dispute even further, without any clear path to resolution. Seeking this additional relief at this late stage of the appeal process was utterly without merit; and

(e) YCC 201’s bill of costs calculated its own costs, payable on a partial indemnity basis, as being over $24,000, indicating that a costs award in this range would represent an amount that it should have expected to pay if unsuccessful.

[9] Taking all of these factors into consideration, I would award costs in favour of YCC 366 on a substantial indemnity basis, which I fix in the amount of $18,008.88, including HST and disbursements, payable within 30 days.

Monahan J.

Released: July 28, 2017