Court File and Parties

Court File No.: CV-15-293 Date: 2019-08-21 Superior Court of Justice - Ontario

Re: The Corporation of Loyalist Township, Applicant (respondent by counter-application) And: The Fairfield-Gutzeit Society, Respondent (applicant by counter-application)

Before: Mr. Justice Graeme Mew

Counsel: David M. Adams, for the Applicant (respondent by counter-application) Roberto D. Aburto and Jacob A. Polowin, for the Respondent (application by counter-application)

Heard: In Writing

ENDORSEMENT on costs

[1] This litigation related to two historic properties located in the Village of Bath. It has been unfortunate litigation because, as I indicated in my Reasons for Decision, reported at 2019 ONSC 2203, both parties are concerned to preserve these historical buildings.

[2] In as much as the Township sought, and succeeded in obtaining, a determination that it was entitled to specific performance of an agreement of 31 October 1997 obliging the respondent to make an offer to sell the properties to the Township for a purchase price of $2.00 each, the Township was successful. The Society, however, also enjoyed some success in that I found that the Township had not vacated when its leases of the two properties expired.

[3] I also found that neither party had adhered to the spirit, let alone the letter of 31 October 1997 agreement, which provided that in the event of any breach of any term or condition of the agreement by either of the parties, they would agree to negotiate for a reasonable period of time in good faith to attempt to remedy the breach in a manner mutually satisfactory to the parties before exercising their strict legal rights by action or otherwise.

[4] Although I found that this provision was, essentially, aspirational, and that it did not amount to a condition precedent, much of the litigation (although not, as I previously observed, the hearing of the application itself) was pursued in an intermittently aggressive manner.

[5] The Township has expended $196,006.72 in legal fees, disbursements and applicable taxes. The Society has incurred costs of $122,193.87. These are significant sums for, respectively, a rural municipality and a small charitable organisation.

[6] On 14 June 2017, the Township made an offer to settle for the transfer of the properties at a purchase price of $2.00 each payable by the Township (i.e. what was subsequently ordered by me) but offered, in addition, to pay the partial indemnity costs of the Society. Accordingly, the Township seeks its partial indemnity costs from the commencement of the proceeding until its offer to settle of 14 June 2017, and substantial indemnity costs thereafter.

[7] The Township submits that, calculated on this basis, its costs should be fixed in the all-inclusive amount of $170,647.85.

[8] The Society, emphasising its not-for-profit charitable status, staffed by volunteers, and funded by donations and community fundraising, submits that each party should bear its own costs. Reliance is placed on a decision of Taliano J. in Niagara-on-the-Lake Conservancy Society v. Niagara-on-the-Lake (Town) (2001), 20 M.P.L.R. (3d) 84 (ONT. S.C.J.). That case involved an application seeking a declaration that a resolution of the town authorising the relocation of its library was null and void. The Town had conducted some of its business leading up to passing the contested resolution behind closed doors. Taliano J expressed, “serious misgivings about the propriety of the Town’s practice of meeting behind closed doors to discuss issues of importance to the citizens of the community”. He continued, at para. 7:

To reward the Town by ordering the applicant to pay costs of the proceedings is neither fair nor equitable under the circumstances. Nor does it seem right to penalize the applicant for raising matters that involve the public interest. The applicant is a non-profit body whose members work without compensation for the betterment to the community. Their activities have been entirely lawful and high-minded. In that sense, their work should be nurtured and not discouraged.

[9] While similar words of encouragement could be made concerning the ongoing good works of the Society, I do not find the Society to be blameless. It was, after all, the Society which, despite the provisions of the agreement which it had entered into, listed the properties for sale on the Multiple Listings Service, without first offering the properties for sale to the Township. To compound matters, the Society’s president then implausibly claimed that listing the properties for sale had simply been a method of testing the market for the properties but that at no time had the Society actually intended to dispose of its interests in the properties other than to an organisation having similar objects to the Society. As I observed at para. 66 of my decision, I cannot reconcile that statement with the listings which stated that the properties were “being offered to the public”.

[10] As previously indicated, however, the Township does not come out of this dispute covered in glory either. The Township well knew that the terms of its occupation of the buildings placed the Society under a great deal of pressure because of the expense of maintaining the buildings and keeping them in good repair, those expenses being out of proportion to the revenue being received from the Township. And, ultimately, the Township overstayed and did not vacate the premises when required to do so.

[11] What can, however, be said definitively, is that the Township made a very reasonable offer to settle. The Society would, with the benefit of hindsight, have done well to have accepted it. Notwithstanding the Society’s charitable status, some responsibility has to be taken by the Society for costs (ultimately coming out of the taxes paid by the ratepayers of Loyalist Township) that were incurred after the offer to settle was made.

[12] As the Society points out, Rule 49.10 does provide the court with discretion not to follow the usual costs consequences of a party having obtained a judgment as favourable as, or more favourable than the terms of its offer to settle.

[13] I am also required to have regard to the usual factors set out in Rule 57 and, in particular, considerations of proportionality and the reasonable expectations of the parties.

[14] Having weighed all of these factors in the context of the parties to this litigation and the manner in which it has been conducted, I order that The Fairfield-Gutzeit Society will pay Loyalist Township’s costs of the two applications fixed in the all-inclusive amount of $75,000.00.

Mew J.

Date: 21 August 2019