COURT FILE NO.: CV-18-2229-0000
DATE: 2018 12 17
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Peel Standard Condominium Corporation No. 773
Carol A. Dirks, for the Applicant
Applicant
- and -
2120526 Ontario Inc., 9008870 Canada Inc. C.O.B. AST Computers Sales and Service, Desi Trading Inc. and Tarsem Dhillon
Allen C. Gerstl, for the Respondents 2120576 Ontario Inc., 9008870 Canada Inc. C.O.B. as AST Computers Sales and Service, and Desi Trading Inc.
Respondents
David A. Seed, for the Respondent Tarsem Dhillon
COSTS ENDORSEMENT
Fowler Byrne J.
[1] This endorsement follows my decision dated November 23, 2018, in which the Applicant sought various declarations as against the Respondents 2120526 Ontario Inc. (“212”), 9008870 Canada Inc. C.O.B. AST Computers Sales and Service (“AST”), and Desi Trading Inc. (“Desi”). The Respondent Tarsem Dhillon (“Dhillon”) supported the application. The Applicant was successful on almost all of the declarations sought. The Applicant and Dhillon were also awarded their costs and were invited to make submissions on quantum, scale, and liable party.
Position of Applicant
[2] The Applicant seeks full indemnity costs in the amount of $24,771.93. In the alternative, it seeks substantial indemnity costs in the sum of $20,320.30. It seeks an order that 212 be liable for the entirety of these costs and that a portion of those costs be paid by AST and Desi, which, if collected, reduce the amount owned by 212. The Applicant does not seek any cost as against Dhillon.
[3] The Applicant argues that the application was not necessary, as 212, AST, and Desi already agreed by way of undertaking not to sell or display the subscription service or equipment from their unit without the permission of the Applicant or by court order. It was only after these Respondents were caught on surveillance to be engaging in activities in breach of their undertaking that they argued that Dhillon did not hold exclusive licensing rights for Indian subscriptions and that AST and Desi had previously acquired these rights.
[4] Finally, the Applicant relies on art. 6.1 of the Registered Declaration for the Applicant (the “Declaration”) and s. 134(5) of the Condominium Act, 1998, S.O. 1998, C. 19 (the “Act”), arguing that the owner (being 212) is ultimately responsible for these costs, which would be added to the common expenses of their unit.
Position of Respondent Dhillon
[5] Dhillon seeks partial indemnity costs in the sum of $23,198, inclusive of HST and disbursements.
[6] Dhillon argues that as a result of the structure of the Act, he had no right to proceed as against other respondents directly. It was his obligation to obtain the evidence of the offending activity and present it to the Applicant for its consideration. Dhillon was also required to participate in the application as a named party and risk having a cost order as against him.
[7] In support of his request for costs, Dhillon outlines the attempts he made in 2016 and 2017 to resolve the matter without resorting to court proceedings. He also highlights a potential of two years of lost revenue as a result of the improper competition of the other Respondents and the fact that he was forced to incur the cost of hiring a private investigator in order to prove the offending conduct.
Position of Respondents 212, AST, and Desi
[8] It is the position of these Respondents that the materials put forth by Dhillon dealt mainly with the legality of his business. Accordingly, most of the affidavit material by Dhillon was largely and unnecessarily duplicative of the Applicant’s material.
[9] These Respondents also submit that they acted reasonably with regards to their actions, given various alleged statements made by the Applicant’s president.
[10] These Respondents therefore state that cost should only be paid on a partial indemnity basis, noting that the costs requested by the Applicant were grossly disproportionate when compared to the costs outline of these Respondents. Counsel for these Respondents submitted a costs outline showing their partial indemnity costs in the sum of $5,904.30, inclusive of fees, disbursements, and taxes.
Analysis
[11] Generally, subject to the provisions of relevant legislation or the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the costs of 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: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 131(1).
[12] Rule 57.01(1) of the Rules of Civil Procedure outlines the factors that may be considered by the court when making an award as to costs. These factors include:
a) the experience of a party’s lawyer and the rates charged;
b) the amount of costs an unsuccessful party could reasonably expect to pay in relation to the proceeding;
c) the relief claimed and the amount recovered;
d) the apportionment of liability;
e) the complexity of the proceeding;
f) the importance of the issues;
g) the conduct of any party that tended to unnecessarily shorten or lengthen the duration of proceeding;
h) whether any step in the proceeding was improper, vexatious, or unnecessary, or taken through negligence, mistake, or excessive caution;
i) a party’s denial or a refusal to admit anything that should have been admitted;
j) whether it is appropriate to award any costs or more than one set of costs for separate proceedings; and
k) generally, any other matter which is relevant to the question of costs.
[13] The issue of costs was considered by the Ontario Court of Appeal in the case of Boucher v. Public Accountants Council (Ontario) (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (Ont. C.A.). In Boucher, Armstrong J. states, at para. 26, that r. 57.01(3) makes it clear that the fixing of costs 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 r. 57.01. Overall, the objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in a particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant. Armstrong J. continues that failure to refer to the overriding principle of reasonableness can produce a result that is contrary to the fundamental objective of access to justice. In deciding what is fair and reasonable, the expectation of the parties concerning the quantum of a costs award is a relevant factor: at para. 38.
i. Costs for the Applicant
[14] The courts have long recognized that condominium litigation is different from other litigation and has traditionally resulted in a higher level of costs, including full indemnity costs. The Act was created so that innocent unit holders in the condominium would not be burdened financially through their common expenses for the costs incurred by the condominium corporation to enforce compliance with the Act or a Declaration as against one particular offending owner: see Sennek v. Carleton Condominium Corporation No. 116, 2018 ONSC 1921, at paras. 20-24.
[15] Section 134(5) of the Act states that if a corporation, after bringing an application pursuant to s. 134, obtains an award of damages or costs in an order made against an owner or occupier of the unit, these damages or costs, together with any additional costs to the corporation in obtaining the order, shall be added to the common expenses for the unit and the corporation shall specify a time for payment by the owner of the unit.
[16] In addition, s. 6.1 of the Declaration of the Applicant states as follows:
Each owner shall indemnify and save harmless the Corporation from and against any loss, cost, damage, injury or liability whatsoever which the Corporation may suffer or incur resulting from or caused by an act or omission of such owner, his family, guests, visitors or tenants to or with respect to the common elements and/or all other units, except for any loss, costs, damages, injury or liability caused by an insured (as defined in any policy or policies of insurance) and insured against by the Corporation. All payments to be made by an owner pursuant to this Article shall be deemed to be additional contributions toward common expenses payable by such Owner and shall be recoverable as such.
[17] The philosophy of substantial or full indemnity costs in condominium litigation is not contrary to the principles set forth in Boucher. The Ontario Court of Appeal case of Metropolitan Toronto Condominium Corp. No. 1385 v. Skyline Executive Properties Inc. (2005), 2005 CanLII 13778 (ON CA), 253 D.L.R. (4th) 656 (Ont. C.A.), at para. 38, states that the language of s. 134(5) of the Act contemplates recovery by the condominium corporation of costs beyond those addressed in a court order, so long as they are actually incurred by the condominium corporation and were incurred in obtaining the compliance order. At para. 49, the court did not find this was contrary to the principles set forth in Boucher. Boucher spoke to the reasonableness of costs assessed as between parties to the litigation. The right of a condominium corporation to also charge to the unit owner additional costs to fully indemnify it for the costs of enforcing the declarations of the condominium corporation are simply additional costs unique to the Act.
[18] When determining what is fair and reasonable, the expectations of 212, AST, and Desi are particularly relevant. The Applicant warned these Respondents of its intention to seek full indemnification for any costs incurred as a result of their violations of the Declaration by its letters dated October 5, 2016, and December 2, 2016. In particular, in the latter letter, Applicant’s counsel warned that the costs of any application they commence would range between $10,000 and $30,000. In further letters from Applicant’s counsel to 212 and counsel for AST and Desi, dated April 11, 2018, Applicant’s counsel again warned of their intention to seek full indemnification and, at that time, estimated the cost to be $20,000-$30,000 or more, plus HST and disbursements. Accordingly, the Applicant’s request for full indemnity costs in the sum of $24,771.93 should not be unexpected to the responding parties.
[19] Bearing in mind the other factors set forth in r. 57.01(1), I find that the amount claimed is reasonable. The Applicant was almost completely successful in its application and the amount claimed is proportionate to the complexity and importance of the issues. Given that 212 could expect to have to fully indemnify the Applicant pursuant to the Act and the Declaration, it is appropriate that costs on a full indemnity basis be awarded to the Applicant in these circumstances.
[20] Given that 212 is bound by the Declaration as an owner of a unit in the Gore Plaza, they are liable to the Applicant for costs.
[21] There was no evidence presented by 212, AST, or Desi regarding any tenancy agreement as between these parties and whether the tenant or sub-tenant was also required to abide by the Declaration. In response to this application, 212 only swore an affidavit agreeing with the evidence of Divjyot Singh, the principal of AST. Nonetheless, 212, AST, and Desi all responded to the application, denying the interpretation of the Declaration advanced by the Applicant and Dhillon, and AST took the lead. Accordingly, all these Respondents should bear responsibility for the costs of this matter.
ii. Costs of the Respondent Dhillon
[22] The philosophy behind s. 134(5) of the Act does not necessarily apply to Dhillon. There is no authority allowing him to levy his costs as against offending unit owners alone. That being said, the other unit owners in the condominium corporation will not be required to share in the expenses incurred by Dhillon in order to advance his case.
[23] Considering the factors set forth in r. 57.01(1) of the Rules of Civil Procedure, Dhillon obtained the necessary information that would allow the Applicant to be successful on this application. Of particular concern to Dhillon in this application was the protection of his business. He argued that he invested in his business in reliance of his exclusive use of his unit, which included securing licensing agreements with various entities in India, allowing him to stream the content which forms the basis of his rental business. It therefore is unsurprising that Dhillon would provide materials dealing with the legality of his business. That being said, the remainder of his materials were duplicative of those submitted by the Applicant.
[24] Dhillon’s partial indemnity costs exceed those of the Applicant. The bill of costs submitted outlines the time that Dhillon’s counsel took in order to advance Dhillon’s position. It is not surprising that the amount of time spent by Dhillon’s counsel on this matter would exceed that of the Applicant, given that Dhillon was required to do the legwork that showed the breach of the exclusive use clause, which was required before the condominium corporation could take the necessary steps to enforce the Declaration. It is also noted that a difference in Dhillon’s bill of cost versus that of the Applicant is that Dhillon’s counsel had a higher hourly rate, which likely was due to his lawyer’s expertise in the area of intellectual property.
[25] When considering what is fair and reasonable with respect to Dhillon, there was no expectation by the Respondents 212, AST, and Desi that they would be required to fully indemnify Dhillon, as they would potentially have to indemnify the Applicant. Accordingly, it is fair and reasonable that an award of partial indemnity be made. Although Dhillon was required to participate in the hearing of the application, the decision granted in this application was more as a result of a strict interpretation of the Condominium Declaration, rather than the protection of intellectual property rights. Accordingly, the higher hourly rate charged by a lawyer specializing in intellectual property is not necessarily warranted. Accordingly, a more appropriate partial indemnity award in the circumstances is $15,000.00.
[26] In setting this amount I am mindful of the lower amount claimed in the joint costs outline of 212, AST, and Desi. The lower amount claimed by these Respondents is not unreasonable, given that their counsel only became counsel of record shortly before the application was argued. While there was evidence of some letters exchanged between this counsel and the other counsel over the preceding two years, it is evident from the materials put forth in the application that counsel for the Applicant and for Dhillon put more time into this file, which was neither unreasonable or excessive.
Conclusion
[27] Accordingly, I made the following orders:
(a) The Respondents 212, AST, and Desi, jointly and severally, shall pay the Applicant’s costs of this application on a full indemnity basis, fixed in the amount of $24,771.93, inclusive of fees, disbursements, and taxes, payable forthwith; and
(b) The Respondents 212, AST, and Desi, jointly and severally, shall pay the Respondent Dhillon’s costs of this application on a partial indemnity basis, fixed in the amount of $15,000.00, inclusive of fees, disbursements, and taxes, payable forthwith.
_______________________ Fowler Byrne J.
Released: December 17, 2018
COURT FILE NO.: CV-18-2229-0000
DATE: 2018 12 17
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Peel Standard Condominium Corporation No. 773
Applicant
- and -
2120526 Ontario Inc., 9008870 Canada Inc. C.O.B. AST Computers Sales and Service, Desi Trading Inc. and Tarsem Dhillon
Respondents
COSTS ENDORSEMENT
Fowler Byrne J.
Released: December 17, 2018