Court File and Parties

Date: 2019-07-30

Superior Court of Justice - Ontario

Re: David Cooper by his Litigation Guardian, Annette Cooper and Annette Cooper, Applicants

And: The Laundry Lounge, Inc. and André Fiset, Respondents

Before: Schabas J.

Counsel: André Fiset, for himself and the Laundry Lounge, Inc., Respondents Krista Chaytor and Caitlin Steven, Counsel for the Applicants

Heard: May 24, 2019

Costs Endorsement

[1] On May 27, 2019, I released an endorsement in this matter granting an application to terminate two commercial leases, require vacant possession of the premises in question and to order that all arrears due and owing as of May 24, 2019 – approximately $350,000 – be paid to the applicants. My endorsement also addressed a motion by the respondents to stay or dismiss the application – which motion I dismissed. In my endorsement, I invited submissions on costs, which I have received from the applicants, but not the respondents.

[2] The applicants seek costs on a substantial indemnity basis in the amount of $60,013. 68 for their application and an amount of $20,757.96 for the respondents’ motion. On a partial indemnity basis, the amounts sought are $46,557.08 and $15,642.45, respectively. All amounts are inclusive of HST and disbursements.

[3] The Court has a broad discretion when determining the issue of costs. Rule 57.01(1) sets out factors to be considered to achieve a result that is fair and reasonable for the unsuccessful party to pay: Boucher v. Public Accountants Counsel for Ontario, 2004 ONCA 14579, 2004 ONCA 14579 (Ont. C.A.). I have already found that the applicants are entitled to costs. The issue for me to determine is the appropriate scale and quantum.

[4] The applicants’ request for costs on a substantial indemnity basis arises from its view that it had an “almost unassailable claim”, and the respondent had no viable defence and took untenable positions, relying on Redwood Homes Inc. v. Reejam Holdings Corp, 2009 CarswellOnt 8811 at paras. 1, and 5 (Sup. Ct.) and Keiser v. Garber, 2019 ONSC 3241 at para. 11. They argue that there was no legitimate dispute, as the matter was clearly governed by the leases, which were breached by respondents who engaged in improper and unnecessary conduct prolonging their use of the premises and causing additional expense. This also included unnecessary and extensive cross-examinations in the litigation itself. Further, the applicants point to improper conduct by the respondents such as threatening to report applicants’ counsel to the Law Society and threatening to seek costs against her personally: Carleton Condominium Corp No 396 v. Burdet, 2015 ONSC 1361 at paras. 91 – 92.

[5] An award of costs on a substantial indemnity basis is exceptional. It can arise from the conduct of the unsuccessful party where it rises to a level that is considered reprehensible, egregious and worthy of sanction. As the Court of Appeal stated in Davies v. Clarington, 2009 ONCA 722 at para. 40:

[W]hile fixing costs is a discretionary exercise, attracting a high level of deference, it must be on a principled basis. The judicial discretion under rules 49.13 and 57.01 is not so broad as to permit a fundamental change to the law that governs the award of an elevated level of costs. Apart from the operation of rule 49.10, elevated costs should only be awarded on a clear finding of reprehensible conduct on the part of the party against which the cost award is being made. As Austin J.A. established in Scapillati, Strasser should be interpreted to fit within this framework -- as a case where the trial judge implicitly found such egregious behaviour, deserving of sanction.

[6] An elevated award of costs is usually based on conduct during the litigation. The mere fact that the unsuccessful party committed misconduct giving rise to the proceeding is generally not a sufficient basis for substantial indemnity, as the successful party can be compensated through an award of damages: Hunt v. TD Securities Inc., (2003) 2003 ONCA 3649, 66 O.R. (3d) 481 (C.A.). At the same time, however, regard must be had to the fact that the applicants had, in my view, an unassailable claim and the respondents did everything they could to stonewall the applicants to remain in the premises and avoid payment. This favours an elevated award.

[7] While the respondents’ conduct in the litigation process itself, standing alone, may not merit an elevated award; it must be considered in the context of the respondents’ broader objective of avoiding their clear legal obligations and doing everything they could to run up costs for the applicants. This included the lengthy and largely unnecessary cross-examinations and the bringing of a motion that had no merit, as well as the failure to produce documents to support expenses and other improper conduct.

[8] Mr. Fiset represented himself and his company on this application. However, he is not unsophisticated and knew how to navigate the process, based on prior experience representing himself. He was aware of the role of costs and that he could expect to pay a significant sum at the end of the proceeding.

[9] Having regard to all the circumstances, I find that costs should be awarded on a substantial indemnity basis. The conduct of the respondents, both in giving rise to the litigation, and the litigation itself, was reprehensible and is worthy of sanction. Further, having reviewed the bills of costs I find the amounts claimed to be reasonable and justified.

[10] Accordingly, the applicant shall be awarded costs of the application and motion as requested in the amounts of $60,013.68 and $20,757.96 respectively, inclusive of HST and disbursements.

Schabas J.

Date: July 30, 2019