Court File and Parties

OTTAWA COURT FILE NO.: 13-57696 DATE: 2018/12/20 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 1550988 Ontario Limited o/a Premier Drycleaners, Plaintiff AND Burnford Realty Limited, Defendant

BEFORE: Madam Justice S. Corthorn

COUNSEL: David Debenham, counsel for the Plaintiff Andrew J. F. Lenz, counsel for the Defendant

HEARD: In Writing

Costs Endorsement

Introduction

[1] Premier Drycleaners brought a motion for summary judgment, seeking an award of damages and an order for an assignment of a commercial lease. Premier was unsuccessful on the motion. The claim for an assignment of the lease was dismissed (Premier Dry Cleaning v. Burnford, 2017 ONSC 2582). Costs of the summary judgment motion are reserved until the litigation is determined in its entirety (Premier Dry Cleaning v. Burnford, 2017 ONSC 4407).

[2] In the Reasons for Judgment on the motion, an order was made for the parties to proceed with a mini-trial. The parties subsequently agreed that the mini-trial would be restricted to the following two issues:

a) Is Premier entitled to rectification of the 2008 Lease to include the terms of a document executed by the parties in 2007?

b) If the answer to (a) is “No”, are the parties bound by the terms of the 2007 Document, as a stand-alone document independent of the terms of the 2008 Lease? (“the Second Issue”)

[3] The mini-trial was conducted over two days in December 2017. The claim for rectification was dismissed (Premier Dry Cleaning v. Burnford, 2018 ONSC 3869). A decision on the second issue was not required because Burnford acknowledged that the parties are bound by the terms of the 2007 Document, as a stand-alone document independent of the terms of the 2008 Lease.

[4] The parties were unable to agree upon costs of the mini-trial and delivered written submissions.

[5] A number of issues raised by the pleadings remain to be determined. Those issues include:

a) Did Burnford fulfil its obligations to Premier, pursuant to the terms of the 2007 Document, with respect to an extension of the 2008 Lease (i.e. as the end of the term of the lease approached in March 2013)?

b) If the answer to (a) is “No”, to what damages, if any, is Premier entitled?

[6] In the event the parties are unable to resolve the litigation through negotiation, they are to make submissions as to the steps to be taken to bring the litigation to a conclusion. As of the date of this endorsement, the parties have not made submissions in that regard.

[7] This endorsement addresses costs of the mini-trial.

Positions of the Parties

a) Burnford

[8] Burnford seeks its costs of the mini-trial on a substantial indemnity basis in the amount of $28,938.91 or on a partial indemnity basis totalling $19,092.82. Burnford requests that the costs, if awarded, be payable within 30 days of the date of the costs order.

[9] Burnford submits that it is entitled to its costs of the mini-trial because the only issue that required determination (i.e. rectification) was decided in its favour. As the successful party on that issue, Burnford submits that it is presumptively entitled to its costs. It also submits that the costs are payable on a substantial indemnity basis because it was readily apparent to both parties, prior to the commencement of the mini-trial, that the claim for rectification would be dismissed.

b) Premier

[10] Premier seeks its costs of the mini-trial, payable in the cause. Premier does not request costs payable on a particular scale, leaving it open to the court to determine whether costs, if payable, are payable on a substantial or partial indemnity basis. If payable on the former scale, the costs claimed total $25,937.22 and on the latter scale, $20,218.62.

[11] Premier relies on the alleged failure of Burnford to admit, prior to the second day of the mini-trial, that the parties are bound by the terms of the 2007 Document, as a stand-alone document independent of the terms of the 2008 Lease. Premier submits that, had that admission been made prior to the mini-trial, it would not have been required to pursue the remedy of rectification. The issue of rectification would have been rendered moot and Premier would have been able to rely on the terms of the 2007 Document alone in support of its claim for damages. Premier relies on the lack of a timely admission in that regard in support of its claim for costs of the mini-trial to be payable to it in the cause.

[12] In the alternative, Premier submits that Burnford is not entitled to costs of the mini-trial because its success on the mini-trial is a partial result only. Costs should not be awarded until an overall result of the action is determined. Premier submits that it may still succeed in its claim against Burnford and recover damages.

c) Burnford (in reply)

[13] In response, Burnford submits that it was clear well in advance of the mini-trial that it acknowledged that it was bound by the terms of the 2007 Document, as a stand-alone document independent of the 2008 Lease. In support of that position, Burnford points to paragraph 68 of its factum and book of authorities (on the mini-trial).

[14] In that paragraph, Burnford set out the issues to be determined on the mini-trial and its position with respect to each:

Burnford respectfully submits that the questions posed by the Court in the context of the mini-trial should be answered as follows …

a) Is Premier entitled to rectification of the 2008 Lease to include the terms of the 2007 Document? No

b) If the answer to (a) is “No”, are the parties bound by the terms of the 2007 Document, as a stand-alone document independent of the 2008 Lease? Burnford was but is no longer bound by the terms of the 2007 Document as it discharged any and all obligations owed to Premier when it provided a lease to Premier in February of 2013. (Emphasis per the original.)

[15] Burnford submits that, in responding to any of Premier’s pleadings, it had no option but to deny the allegations made with respect to the 2007 Document. Burnford argues that no other option was available to it because the relevant paragraphs alleged not only the existence of the 2007 Document but a breach by Burnford of the terms of that document. As a result, it could not, in its pleading, have made the admission subsequently made in its factum on the mini-trial.

[16] With Burnford having made its position clear, however, in its factum with respect to the mini-trial, Premier had the option of abandoning the claim for rectification of the 2008 Lease and relying exclusively on the terms of the 2007 Document in support of its claims for damages. Having chosen to continue to pursue the claim for rectification, and failing in doing so, Premier is not entitled to costs of the mini-trial.

Disposition

[17] I find that there shall be no costs of the mini-trial.

Analysis

[18] Burnford is the successful party on the mini-trial. As such, it is presumptively entitled to its costs of the mini-trial on a partial indemnity basis. For the reasons that follow, I decline to award either party costs of the mini-trial. I turn first to Burnford’s conduct.

[19] In the summer of 2017, the parties made submissions with respect to the issues to be determined on the mini-trial. In August 2017, the parties were aware that those issues would be as set out in paragraph 3 above. Burnford could, as early as August 2017, have made both the court and Premier aware of its position with respect to the Second Issue. No explanation has been provided as to why that position was not made known prior to the delivery of Burnford’s factum for the mini-trial.

[20] By the time Burnford delivered its factum for the mini-trial, work was done on Premier’s behalf in preparation for the mini-trial. Some of that work related to the Second Issue. That work could have been avoided had Burnford’s position on the Second Issue been made known or clear at an earlier date. I find that Burnford’s conduct falls within the scope of r. 57.01(1)(g) of the Rules of Civil Procedure: “a party’s denial of or refusal to admit anything that should have been admitted”.

[21] As a result of Burnford’s conduct, Premier was denied the opportunity to decide, before preparation was begun for the mini-trial, as to whether (a) the mini-trial would be necessary and/or (b) it would abandon its claim for rectification of the 2008 Lease.

[22] I find that regardless of whether Burnford is ultimately successful in securing a dismissal of the balance of the claims made by Premier, Burnford should not be rewarded for costs of a part of the proceeding that could easily have been avoided by one or both of (a) an earlier, clear statement of its position with respect to the Second Issue, and (b) communication with Premier, beyond the paragraph in its factum addressing that issue.

[23] I have also reviewed the pleadings in this action. I do not agree with Burnford’s submission that it was not possible in its pleading to clearly set out its position with respect to the 2007 Document. There is nothing about the allegations in the amended amended statement of claim that precluded Burnford from doing so. Burnford had the opportunity to deliver a statement of defence to the amended amended statement of claim but chose not to do so.

[24] I turn next to Premier’s conduct and its requests for costs of the mini-trial, payable in the cause. There are circumstances in which an unsuccessful party may be awarded costs of a step in a proceeding. This matter is not one of those circumstances.

[25] Upon receipt of Burnford’s factum, it was open to Premier to seek clarification, if any, that it required with respect to the former’s position on the Second Issue before determining whether to proceed with the mini-trial and/or to abandon the claim for rectification. Premier has not provided any explanation as to why, upon receipt of Burnford’s factum, it did not abandon its claim for rectification.

[26] Premier chose instead to attempt to add to the complexity of the mini-trial by introducing an issue that was clearly outside the scope of the mini-trial. Premier raised the issue of whether the 2007 Document created an option exercisable by Premier (i.e., as opposed to a contractual obligation on the part of Burnford to offer Premier an extension of the 2008 Lease). I am satisfied that Burnford did not incur significant costs in addressing that issue. Burnford did not address that issue in its factum (or in a responding/reply factum). During oral submissions the issue was addressed succinctly by counsel for Burnford. Regardless, time was spent and resources were invested in addressing the issue.

[27] I find that Premier added to the duration of the mini-trial by attempting to add an issue that was outside the scope of the mini-trial (r. 57.01(1)(e)).

Disposition

[28] I order that there shall be no costs payable with respect to the mini-trial.

Released: December 20, 2018 Madam Justice Sylvia Corthorn