Court File and Parties

COURT FILE NO.: 12298/18 (Welland) DATE: 20190411 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: THE CORPORATION OF THE TOWN OF PELHAM, Applicant AND: FONTHILL GARDENS INC., Respondent

BEFORE: The Honourable Mr. Justice R.A. Lococo

COUNSEL: Brent K. Harasym, for the Applicant Peter A. Mahoney, for the Respondent

HEARD: By written submissions dated February 14 to 28, 2019

Endorsement – costs

[1] As set out in Reasons for Judgment dated January 25, 2019 (reported at 2019 ONSC 567), I granted the application of the Corporation of the Town of Pelham for a declaration that the Respondent Fonthill Gardens Inc. does not have an option to purchase from the Town certain specified real property. The judgment also directs the deletion of a Notice of Option to Purchase from the title to that property, to take effect in 30 days. The costs of the application (as well as the costs of the Respondent’s prior unsuccessful motion to stay the application) were left to be determined based on written submissions.

[2] The Town says that since it was the successful party on the application and the motion, the Respondent should be ordered to pay the Town’s costs. The Town’s bill of costs calculates its costs at (i) $30,476.03 on a substantial indemnity basis, and (ii) $23,049.11 on a partial indemnity basis, in each case including disbursements of $768.33.

[3] The Respondent does not agree. As indicated further below, the Respondent says that in practical terms, the Town has not achieved its objective of clearing a cloud from title to allow it to close the sale of Town land to a third party. The Respondent therefore submits that no costs should be awarded. In the alternative, the Respondent challenges the amount of the Town’s costs claim as excessive in the circumstances, and also argues that substantial costs are not warranted in this case.

[4] Consistent with previous case law, the successful party in a proceeding has a reasonable expectation of being awarded costs in the absence of special circumstances: see Bell Canada v. Olympia & York Developments Ltd. (1994), 17 O.R. (3d) 135 (C.A.), at p. 142. As indicated by the Ontario Court of Appeal in previous decisions, costs are normally awarded on a partial indemnity basis except in a “rare and exceptional case”, based on “egregious or reprehensible conduct that warrants sanction”: see Foulis v. Robinson (1978), 21 O.R. (2d) 769 (C.A.), at p. 776; Mortimer v. Cameron (1994), 17 O.R. (3d) 1 (C.A.), at pp. 22-23; and McBride Metal Fabricating Corp. v. H & W Sales Co. (2002), 59 O.R. (3d) 97 (C.A.), at paras. 37-38.

[5] The Respondent’s argument in favour of no costs award is based on its position that the Town should not be treated as the successful party in this case. As noted in the Reasons for Judgement, at para. 2, the Town brought the application in order to satisfy a condition of closing for the sale of part of the subject land to a third party. That condition required the deletion from title of the Notice of Option to Purchase. I found that the Respondent did not have an option to purchase that property and was not entitled to register notice of an interest that it did not have. I also directed that the Notice of Option to Purchase be deleted from title, to take effect in 30 days. Because that direction was not effective immediately, the Town could not have satisfied the closing condition before the 30-day period elapsed. In my Reasons for Judgment, however, I also found (contrary to the Town’s submission) that the Respondent in fact had an interest in the property that was capable of being registered on title, in a form acceptable to the Registrar of Titles, even though that interest did not constitute an option to purchase. According to the Respondent, “the net result of the application is that one form of notice has been replaced with another form of notice.” Therefore, the Town has not advanced its ability to sell the land to the third party, according to the Respondent.

[6] With respect to the prior motion to stay the application, the Respondent argued that given the results of the application, the parties would now have to proceed with an arbitration under the Purchase Option and Cost Sharing Agreement (referred to in the Reasons for Judgment, at paras. 6-12) in order to determine the respective rights and obligations of the parties. While the Town successfully opposed the Respondent’s motion to stay the application pending arbitration, the result was to delay the arbitration, without achieving any practical results. Therefore, no costs should be awarded for the stay motion, according to the Respondent.

[7] While I found some limited merit to the Respondent’s submissions, I am not persuaded that the Town should be denied its costs in this case. While the relief that the Town initially sought in its application was cast more broadly, the terms of the relief I granted tracked what the Town requested in its factum filed prior to the application hearing, with the additional proviso that the direction to delete the Notice of Offer to Purchase from title did not take effect for 30 days. I recognize that the latter term may have provided the Respondent with the opportunity to register a different form of notice on title (subject to its acceptance by the Director of Titles), causing further difficulty in meeting the closing condition for sale of the property. For that reason, it would be reasonable to conclude that the Town’s success on the motion was less than complete, justifying a downward adjustment of the amount of costs awarded. However, I do not agree that no costs award would be justified in those circumstances. The Respondent opposed even the narrower relief ultimately sought, after unsuccessfully seeking to derail the application by its stay motion. In my view, the fact that the Town’s success on the application may have been less than complete should not mean the Respondent is able to avoid the cost consequences of its own lack of success on the application and the stay motion.

[8] Accordingly, I have concluded that there should be an award of costs in the Town’s favour for both the application and the stay motion, with an appropriate downward adjustment to reflect the fact that its success on the application was less than complete. I agree with the Respondent’s submission that any such award should be on a partial indemnity basis. No “egregious or reprehensible conduct” has been drawn to my attention that would warrant a substantial indemnity costs award.

[9] In determining the amount of costs to award, I also considered the Respondent’s submission that the amounts claimed in the Town’s bill of costs were excessive. Upon review of the limited level of detail set out in the bill of costs, I agree that there may have been some limited duplication of effort that should be taken into account. However, in general terms, the amounts claimed did not appear out-of-line for a preliminary motion and an application that required fairly extensive affidavits and deponents’ cross-examinations.

[10] In any case, as noted by the Ontario Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), at para. 26, when fixing costs, the calculation of hours and time rates is only one factor to be taken into account. The overall objective is “to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant.”

[11] In all the circumstances, I would fix the Town’s costs at $14,000 including disbursements and tax, payable by the Respondent within 30 days.

The Honourable Mr. Justice R.A. Lococo Date: April 11, 2019

cited_cases: legislation: [] case_law: - title: "Pelham (Town of) v. Fonthill Gardens Inc., 2019 ONSC 567" url: "https://www.canlii.org/en/on/onsc/doc/2019/2019onsc567/2019onsc567.html" - title: "Bell Canada v. Olympia & York Developments Ltd. (1994), 17 O.R. (3d) 135 (C.A.)" url: "https://www.canlii.org/en/on/onca/doc/1994/1994canlii239/1994canlii239.html" - title: "Foulis v. Robinson (1978), 21 O.R. (2d) 769 (C.A.)" url: "https://www.canlii.org/en/on/onca/doc/1978/1978canlii1307/1978canlii1307.html" - title: "Mortimer v. Cameron (1994), 17 O.R. (3d) 1 (C.A.)" url: "https://www.canlii.org/en/on/onca/doc/1994/1994canlii10998/1994canlii10998.html" - title: "McBride Metal Fabricating Corp. v. H & W Sales Co. (2002), 59 O.R. (3d) 97 (C.A.)" url: "https://www.canlii.org/en/on/onca/doc/2002/2002canlii41899/2002canlii41899.html" - title: "Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.)" url: "https://www.canlii.org/en/on/onca/doc/2004/2004canlii14579/2004canlii14579.html"