Court File and Parties

COURT FILE NO.: CV-18-589962 DATE: 2018-12-11

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: APRIL BAILEY, Applicant AND: MELISA LESLEY ARBESMAN and DAVID ALEXANDER ARBESMAN, Respondents

BEFORE: Cavanagh J.

COUNSEL: Robert C. Watt, for the Applicant Kara Hamilton, for the Respondent

HEARD: November 15, 2018

COSTS ENDORSEMENT

[1] The applicant April Bailey is the owner of property municipally known as 25 Cameron Ave., Toronto, Ontario. The respondents, Melisa Lesley Arbesman and David Alexander Arbesman own the property next door at 27 Cameron Ave.

[2] In the course of renovations to their house, the respondents installed a metal exhaust vent on the east wall which encroached by a few inches onto the applicant’s property. The applicant asked the respondents to remove that part of the event that encroached on her property. The respondents did not do so. The applicant then brought an application to have the encroachment removed.

[3] The respondents opposed the application.

[4] Between May and July 2018, the respondents arranged for their HVAC contractor to put a different and shorter cap on the exhaust vent as part of other work that he was doing. Once this work was completed, the respondents obtained a survey that showed that there was no longer an encroachment.

[5] The applicant agrees that there is no longer an encroachment. The applicant does not intend to proceed with this application and, subject to my decision with respect to costs, asks for an order dismissing the application.

[6] The applicant arranged a hearing for 30 minutes to seek costs of the application. The respondents oppose the applicant’s request for costs, and they seek costs of the application from the applicant.

[7] In order to decide the issue of costs of this application, I need to decide whether the applicant would have succeeded on her application had the respondents not removed the encroachment. If I conclude that she would have been successful, she should receive an award of costs on the principle that costs should follow the event. If I conclude that the respondents would have been successful in opposing the application, they should receive an award of costs.

[8] I raised with counsel for the applicant and counsel for the respondents that the amount of time that had been set aside for this hearing on the question of costs was not sufficient for me to hear submissions on the merits of the application, and I invited counsel to arrange another date at which I could hear such submissions. Both counsel asked me to decide the question of costs based upon the documentary record, without hearing full submissions.

[9] The respondents filed a lengthy affidavit affirmed by Mr. Arbesman for this hearing. In his affidavit, Mr. Arbesman confirms that the respondents’ opposition to the application was and always has been that even if there is an encroachment, the respondents rely upon the terms of an agreement that they call the “Resolution Agreement” under which, they submit, they were not required to remove the encroachment.

[10] The Resolution Agreement was addressed by Mr. Arbesman in an affidavit affirmed on February 21, 2018. In this affidavit, Mr. Arbesman affirmed that that Resolution Agreement was made after the applicant was arrested and charged with assaulting Ms. Arbesman and after the applicant brought a private prosecution against Ms. Arbesman for mischief. According to Mr. Arbesman’s affidavit, both of the applicant and Ms. Arbesman attended at the criminal court on October 8, 2015 and agreed to enter into the Resolution Agreement in exchange for the charges against them being stayed.

[11] The Resolution Agreement provides in paragraph 3: “April Bailey agrees not to interfere or obstruct in any way with the exhaust pipe coming from 27 Cameron Ave. as shown in Exhibit “A”.” The exhaust pipe to which reference is made in the Resolution Agreement is the exhaust vent which the applicant alleged was causing the encroachment.

[12] The applicant swore a reply affidavit on March 28, 2018 in which she addressed the Resolution Agreement. According to the applicant’s evidence, the Resolution Agreement was made “to drop the criminal charges against both parties and to facilitate the Respondents to access my property to erect scaffolding in order to install metal fire shutters on the new upper windows of their home in order to pass inspection of the City of North York so that they could move back into their house”. According to the applicant’s evidence, the Resolution Agreement was not “meant to be a civil remedy or for personal purposes” and it was “never intended to create an encroachment, easement or licence over my lands”.

[13] The applicant refers in her affidavit to letters from the respondents in which they assert that as part of the Resolution Agreement the applicant granted them an easement and therefore she has no legal basis for her claim. In one of the letters, dated December 2, 2016, Mr. Arbesman states that the respondents reject the applicant’s claim that there is any encroachment by the exhaust vent onto the applicant’s property, and that the vent ends right at the lot line.

[14] Ms. Arbesman affirmed a further affidavit on April 5, 2018. In this affidavit, Ms. Arbesman affirmed that she entered into the Resolution Agreement “so that my contractors could have the access they needed to install our fire shutters, and because Bailey promised not to raise the height of the existing fence or to interfere or obstruct in any way the exhaust pipe coming from 27 Cameron.” Ms. Arbesman states that the Resolution Agreement was intended to be a civil remedy.

[15] In Sattva, the Supreme Court of Canada held that the interpretation of contracts has evolved towards a practical, common-sense approach not dominated by technical rules of construction. The overriding concern is to determine the intent of the parties and the scope of their understanding. To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. Surrounding circumstances will be considered in interpreting the terms of a contract, but they must never be allowed to overwhelm the words of the contract. The goal of examining such evidence is to deepen the decision-maker’s understanding of the mutual and objective intentions of the parties as expressed in the words of the contract. While surrounding circumstances are relied upon in the interpretative process, courts cannot use them to deviate from the text such that the court effectively creates a new agreement. See Sattva at paras. 47, 57 and 58.

[16] The Resolution Agreement does not include any provision by which the applicant expressly grants an easement over her property in favour of the respondents. The respondents confirmed in their December 2, 2016 letter that they did not know when the Resolution Agreement was made that the venting pipe encroached on the applicant’s property. There is no evidence that the applicant knew when the Resolution Agreement was made that the exhaust vent encroached on her property. In the absence of evidence that either of the applicant or the respondents knew there was an encroachment when the Resolution Agreement was made, I do not read the words used in paragraph 3 of the Resolution Agreement, when considered in the context of the Resolution Agreement read as a whole and in the circumstances in which the agreement was made, to provide for a grant of an easement without an expiration date over the applicant’s property.

[17] I conclude that the applicant was entitled to seek and obtain an order removing the encroachment onto the applicant’s property. As a result, I conclude that the applicant is entitled to an order for costs of the application.

[18] The applicant seeks costs on a substantial indemnity scale on the ground that the respondents should not have opposed the application. I disagree. The respondents did not act in a reprehensible way by opposing the application based upon their interpretation of the Resolution Agreement. Costs should be awarded on a partial indemnity scale.

[19] The fixing of costs is not a mechanical exercise and does not begin and end with a calculation of hours times rates. The introduction of a costs grid was not meant to produce that result, but rather to signal that this is one factor in the assessment process, together with the other factors in rule 57.01 of the Rules of Civil Procedure. In addition to the factors in rule 57.01, the court must consider the amount that would be fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than the amount fixed by the actual costs incurred by the successful litigant: Boucher v. Public Accountants Council for the Province of Ontario, 2004 14579 (ON CA), 2004 CarswellOnt 2521 (C.A.) at para. 26.

[20] The fees claimed by the applicant on a partial indemnity scale based upon 37.63 hours at a partial indemnity hourly rate of $225 are $8,466.75. This includes fees for services including all application materials as well as motion materials for a motion brought by the respondents for an order converting the application to an action. The applicant also seeks a counsel fee of $900 for his appearance on this application. The applicant seeks disbursements of $439.

[21] In my view, the amount of costs that would be fair and reasonable for the respondents to pay on this application, having regard to the factors in rule 57.01(1) and the principles in Boucher, is $8,000 all-inclusive.

[22] I fix costs of this application to be paid by the respondents to the applicant in the amount of $8,000. The application is otherwise dismissed.

Cavanagh J.

Date: December 11, 2018